UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE

LABOR STANDARDS CASE DIGESTS (S. Y. 2014-2015)

SUBMITTED BY:

GARCY KATE D. GO – LLB 2 (EH306)

SUBMITTED TO: ATTY. JEFFERSON M. MARQUEZ

TABLE OF CONTENTS

Basic Principles 1. Singer Sewing Machine vs. NLRC, 193 SCRA 271 2. Manila Golf Club vs. IAC, 237 SCRA 207 3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96] 4. Carungcong vs. Sunlife, 283 SCRA 319 5. Ramos vs. CA, 380 SCRA 467 6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004 7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004] 8. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005] 9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006 10. Francisco vs. NLRC, 500 SCRA 690 [06] 11. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006 12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007 13. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008 14. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March 4, 2009 15. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622, January 25, 2011 16. Caong, Jr. vs. Begualos, GR No. 179428, Jan. 26, 2011 17. Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011 18. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011 19. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011 20. Lirio vs. Genovia, G.r. No. 169757, November 23, 2011 21. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012 22. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012 23. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012 24. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014 HIRING OF EMPLOYEE 25. Ollendorf vs. Abrahanson, 38 Phil 585 26. Del Castillo vs. Richmond, 45 Phil. 679 27. PT&T vs. NLRC, 272 SCRA 596 [1997] 28. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., G.R. No. 162994, Sept. 17, 2004 29. City of Manila vs. Laguio, G.R. No. 118127, April 12, 2005 30. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006 31. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007 32. Yrasuegui vs. Phil Air Lines, G.R. No. 168081, October 17, 2008 WAGE & THE WAGE RATIONALITAZION ACT 33. Ilaw at Buklod ng Manggagawa vs. NLRC, 198 SCRA 586 [1991] 34. Employers Confederation of the Phils., vs. NWPC, 201 SCRA 759 [1991] 35. Mabeza vs. NLRC, 271 SCRA 670 36. Joy Brothers Inc., vs. NWPC, 273 SCRA 622 [1997] 37. Prubankers Asso. Vs. Prudential Bank, 302 SCRA 74 [1999] 38. Millare vs. NLRC, 305 SCRA 501 39. International School Alliance of Educators vs. Quisumbing, 333 SCRA 13 [2000] 40. Bankard Employees Union vs. NLRC, G.R. No. 140689, Feb. 17, 2004 41. Odango vs. NLRC, G.R. No. 147420, June 10, 2004 42. C. Planas Commercial vs. NLRC, G.R. No. 144619, Nov. 11, 2005 43. EJR Crafts Corp., vs. CA, G.R. No. 154101, March 10, 2006 44. Pag Asa Steel Works vs. CA, G.R. No. 166647, March 31, 2006 45. Metropolitan Bank vs. NWPC, G.R. No. 144322, Feb. 6, 2007 46. Equitable Bank vs. Sadac, G.R. No. 164772, June 8, 2006, citing Songco vs. NLRC, 183 SCRA 618 47. S.I.P. Food House et al., vs. Batolina, GR No. 192473, Oct 11, 2010 48. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011 49. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013 50. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No. 198783, April 15, 2013

Garcy Kate D. Go LLB2 EH306 Page 2

51. The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor et al., GR No. 150326, March 12, 2014 WAGE ENFORCEMENT AND RECOVERY 52. Rajah Humabon Hotel vs. Trajano, 226 SCRA 332 53. Guico vs. Sec of Labor, G.R. No. 131750, November 16, 1998 54. Ex-Bataan Vetrerans Security Agency vs.. Sec. Of Labor, et al., G.R. No. 152396, November 20, 2007, citing Cireneo Bowling Plaza vs. Sensing, G.R. No. 146572, Jan. 14, 2005 55. Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008 56. Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency, G.R. No. 167708, August 22, 2008 57. National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641, Nov. 11, 2008 58. Jethro Intelligence & Security Corp., vs. SOLE, et al., GR No. 172537, Aug. 14, 2009 59. Phil Hoteliers Inc., et al., vs. National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chpater, GR No. 181972, Aug. 25, 2009 60. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141, Feb. 26, 2010 61. People’s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652, March 6, 2012 Resolution on the main Decision of May 8, 2009 62. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012 WAGE PROTECTION PROVISION & PROHIBITIONS REGARDING WAGES 63. GAA vs. CA, 140 SCRA 304 64. Nestle Phils., vs. NLRC, 193 SCRA 504 65. Five J Taxi vs. NLRC, 235 SCRA 556 66. Phil. Veterans Bank vs. NLRC, G.R. No. 130439, Oct. 26, 1999 67. Phil Appliances Corp., vs. CA, G.R. No. 149434, June 3, 2004 68. Agabon vs. NLRC, G.R. No. 158693, Nov. 17, 2004 69. American Wire & Cable Daily Rated Employees vs. American Wire, G.R. No. 155059, April 29, 2005 70. Honda Phils., vs. Samahang Malayang Manggagawa sa Honda, G.R. No. 145561, June 15, 2005 71. Producers Bank vs. NLRC, 355 SCRA 506 72. Jardin vs. NLRC, G.R. No. 119268, February 23,2000 73. Manila Jockey’s Club Employees Labor Union vs. Manila Jockey Club, G.R. No. 167601, March 7, 2007 74. San Miguel Corp et al., vs. Layoc, Jr., et al., G.R. No. 149640, October 19, 2007 75. San Miguel Corp., vs. Pontillas, G.R. No. 155178, May 7, 2008 76. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225 SCRA 562 and Sevilla Trading vs. AVA Tomas Services, G.R. No. 152456, April 28, 2004 77. Aguanza vs. Asian Terminal Inc., et al., GR No. 163505, Aug. 14, 2009 78. Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis Transport et al., GR No. 182114, April 5, 2010 79. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, GR No. 188949, July 26, 2010 80. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010 81. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November 28, 2011 82. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013 83. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014 84. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No. 181806, March 12, 2014 85. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo PAYMENT OF WAGES 86. Congson vs. NLRC, 243 SCRA 260 [1995] 87. North Davao Mining vs. NLRC, 254 SCRA 721 [1996] 88. National Federation of Labor vs. CA, G.R. No. 149464, Oct. 19, 2004 89. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006 CONDITIONS OF EMPLOYMENT 90. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997] 91. Simedarby vs. NLRC, 289 SCRA 86 [1998] 92. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]

Garcy Kate D. Go LLB2 EH306 Page 3

93. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007 94. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008 MINIMUM LABOR STANDARD BENEFITS 95. Union of Filipro Employees vs. Vicar, 205 SCRA 203 [1992] 96. National Sugar Refinery Corp., vs. NLRC, 220 SCRA 452 [1993] 97. Salazar vs. NLRC, 256 SCRA 273 [1996] 98. Labor Congress of the Phils., vs. NLRC, G.R. No. 1239381, May 21, 1998 99. Mercidar Fishing Corp., vs. NLRC, G.R. No. 112574, October 8, 1998 100. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002 101. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002 102. Lambo vs. NLRC, 317 SCRA 420 103. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004 104. Asian Transmission vs. CA, 425 SCRA 478 [2004] 105. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005 106. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005 107. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006 108. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004 109. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533 [1998] 110. PNCC Skyway Traffic Management and Security Division Workers Organization, GR No. 171231, Feb. 17, 2010 111. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012 112. Villuga vs. NLRC, 225 SCRA 537 [1993] 113. CJC Trading vs. NLRC, 246 SCRA 724 [1995] 114. Pantranco North Express vs. NLRC, 259 SCRA 161 [1996] 115. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004 116. Rufina Patis vs. Alusitain, G.R. No. 146202, July 14, 2004 117. Sta Catalina College vs. NLRC, 416 SCRA 243 118. Honda Phils., vs. Samahan ng mga Manggagawa sa Honda, G.R. No. 145561, June 15, 2005 119. Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007 120. Intercontinental Broadcasting Corp., vs. Amarilla, G.R. No. 162775, October 27, 2006 121. Letran Calamba Faculty & Employees Association vs. NLRC et al., G.R. No. 156225, January 29, 2008 122. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs. Dela Serna, 228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995] 123. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734, May 14, 2008 124. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008 125. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010 126. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September 12, 2012 127. Padillo vs. Rural bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013 128. T/SGP Larkins vs. NLRC, G.R. No. 92432, February 23, 1995 129. UERM Memorial Medical Center vs. NLRC, G.R. No. 110419, March 3, 1997 130. Phil Tranco Services vs. NLRC, G.R. No. 124100, April 1, 1998 131. St. Martin Funeral Homes vs. NLRC, G.R. No. 130866, September 16, 1998 132. Ludo & Luym Corp., vs. Saornido, G.R. No. 140960, January 20, 2003 133. Hansin Engineering & Construction vs. CA, G.R. No. 165910, April 10, 2006 134. Phil. Journalist Inc. vs. NLRC, G.R. No. 166421, Sept. 5, 2006 135. Balagtas Multi-purpose Coop. Vs. CA, G.R. No. 159268, Oct. 27, 2006 136. St. Martin Funeral Homes vs. NLRC, G.R. No. 142351, Nov. 22, 2006 137. DOLE Phils. Vs. Esteva, G.R. No. 161115, Nov. 30, 2006 138. Intercontinental Broadcasting Corp., vs. Panganiban, G.R. No. 151407, February 6, 2007 139. Far East Agricutural Supply vs. Lebatique, G.R. No. 162813, February 12, 2007 140. Letran Calamba Faculty & Employees Association vs. NLRC, G.R. No. 156225, January 29, 2008 141. Metro Transit Organization vs. Piglas NFWU-KMU et al., G.R. No. 175460, April 14, 2008 142. J.K. Mercado & Sons Agricultural Enterprises, Inc., vs Sto. Tomas, G.R.No. 158084, August 29, 2008

Garcy Kate D. Go LLB2 EH306 Page 4

143. J. Phil. Marine Inc., vs. NLRC, G.R. No. 1753661, August 11, 2008; but see Ilagan vs. Court of Appeals, G.R. No. 162089, July 9, 2008 144. Sy vs. ALC Industries, G.R. No. 168339, October 10, 2008 145. PCI Travel Corp., vs. NLRC, G.R. No. 154379, October 31, 2008 146. Lopez vs. Q. C. Sports Club, G.R. No. 164032, January 19, 2009 147. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012 148. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012 149. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012

Garcy Kate D. Go LLB2 EH306 Page 5

BASIC PRINCIPLES

Singer Sewing Machine vs. NLRC January 24, 1991, 193 SCRA 271 Facts: Singer Machine Collectors Union-Baguio (SIMACUB), private respondent, filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company (Singer). Singer opposed the petition claiming that the collectors are not employees but are independent contractors as evidenced by the Collection Agency Agreement (Agreement) between them. The Med-Arbiter granted the petition. Aggrieved, Singer appealed to the Secretary of Labor. The Secretary of Labor affirmed the Med-Arbiter’s Decision and denied Singer’s motion for reconsideration, hence, this petition for certiorari to review the order and resolution of the Secretary of Labor and Employment. Singer alleges that the collectors are not employees but independent contractors. It supported its allegation by stating the following stipulations in the Agreement: (a) a collector is designated as a ‘collecting agent’ who is to be considered at all times as an independent contractor and not employee of Singer, (b) collection are to be made monthly or oftener, (c) an agent is paid a commission of 6% of all collections plus a bonus, xxx , (g) his services shall be terminated in case of failure to satisfy the required performance required. Private respondent, on the other hand, relied on other features of the same Agreement. Among which are that an agent shall utilize only receipt forms authorized and issued by Singer; an agent has to submit and deliver at least once a week or as often as required a report of all collections made using report forms furnished by Singer; and the monthly collection quota, which quota they deemed as a control measure over the means by which an agent is to perform his services. They also relied on Article 280 of the Labor Code and on Section 8 Rule 8, Book III of the Omnibus Rules defining job-contracting. Issue: Whether or not collectors of Singer are employees and therefore are constitutionally granted the right to join or form labor organization for purposes of collective bargaining. Ruing: No, collectors of Singer are not employees. Hence, they are not entitled to the constitutional right to join or form labor organization for purposes of collective bargaining. The Supreme Court mainly applied the control test where the existence of employer-employee relationship is determined by the following elements: (a) selection and engagement of the employee, (b) payment of wages, (c) power of dismissal and (d) power to control the employee’s conduct although the latter is the most important element. In that regard, it was ruled that the element on the power to control the employee’s conduct – the most important element – was absent. The forms, schedule of delivery and quota were controls used only for the result of the job, if they were really controls. There were also other circumstances uncontroverted in the pleadings that made the Supreme Court rule that they are independent contractors like: (1) collectors are not required to observe office hours nor report everyday; (2) they do not have to devote their time exclusively for Singer; (3) the manner and method of effecting collections are left to their discretion xxx (5) they are paid strictly on commission basis. These circumstances negate that Singer had any control as to the manner by which collectors perform collections. Art. 280 is not instructive because it only deals with casual and regular employees while the provision in the Omnibus Rules is only relevant in ascertaining whether the employer is solidarily liable with the contractor or subcontractor.

Garcy Kate D. Go LLB2 EH306 Page 6

Manila Golf Club vs. IAC September 27, 1994, G.R. No. 64948

Facts: Three separate proceedings, all initiated by Llamar and his fellow caddies gave rise to the present petition for review which was originally filed with the Social Security Commission (SSC) via petition of 17 persons who styled themselves "Caddies of Manila Golf and Country Club- PTCCEA" for coverage and availment of benefits under the Social Security Act as amended, "PTCCEA" being the acronym of a labor organization, the "Philippine Technical, Clerical, Commercial Employees Association," with which the petitioners claimed to be affiliated. The petition alleged in essence that although the petitioners were employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as such with the SSS. At about the same time, two other proceedings bearing on the same question were filed or were pending. The respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees.

Issue: Whether or not persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS).

Ruling: The private respondent Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that petitioner is under no obligation to report him for compulsory coverage to the Social Security System. No pronouncement as to costs.

The caddies were paid by the players, not by the Club, and that they observed no definite working hours and earned no fixed income. The Court does not agree that the facts necessarily or logically point to such an employer-employee relationship, and to the exclusion of any form of arrangements, other than of employment that would make the Llamar’s services available to the members and guest of the Manila Golf Club. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufference but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment.

The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess.

The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last number for the day.

Garcy Kate D. Go LLB2 EH306 Page 7

Encyclopedia Britannica (Philippines), Inc. vs NLRC November 4, 1996, G.R. No. 87098

Facts: Limjoco, herein private respondent, was a Sales Division of Encyclopedia Britannica and was in charge of selling the products through some sales representatives. As compensation, he would receive commissions from the products sold by his agents. He was also allowed to use the petitioner’s name, goodwill and logo. It was agreed that office expenses would be deducted from Limjoco’s commissions.

In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner for alleged non-payment of separation pay and other benefits and also illegal deduction from sales commissions. Petitioner alleged that Limjoco was not an employee of the company but an independent dealer authorized to promote and sell its products and in return, received commissions therein. Petitioner also claims that it had no control and supervision over the complainant as to the manners and means he conducted his business operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner and was assigned in the sales department.

The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the decision and opined that there was no evidence supporting allegation that Limjoco was an independent contractor or dealer.

Issue: Whether or not there was an employee-employer relationship between the parties.

Ruling: There was no employee-employer relationship. In determining the relationship, the following elements must be present: selection and engagement of the employee, payment of wages, power of dismissal and power to control the employee’s conduct. The power of control is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employee-employer relationship. Under the control test, an employee-employer relationship exists where the person for whom the services are performed reserves a right to control not only the end to be achieved, but also the manner and means to be employed in reaching that end.

The issuance of guidelines by the petitioner was merely guidelines on company policies which sales managers follow and impose on their respective agents. Limjoco was not an employee of the company since he had the free rein in the means and methods for conducting the marketing operations. He was merely an agent or an independent dealer of the petitioner. He was free to conduct his work and he was free to engage in other means of livelihood.

In ascertaining the employee-employer relationship, the factual circumstances must be considered. The element of control is absent where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated in according to the result of his efforts and not the amount thereof. Hence, there was no employee-employer relationship.

Garcy Kate D. Go LLB2 EH306 Page 8

Carungcong vs Sunlife, 283 SCRA 319

Facts: Susan Carungcong began her career as an agent of Sun Life Assurance Company of Canada by signing a “Career Agents or Unit Manager’s Agreement”, which provided that she shall be an Independent Contractor, that there were limitations on her authority, and that the contract may be terminated by death, or written notice with or without cause. Later, she signed a further agreement entitled “Manager’s Supplementary Agreement”, which provided the same provisions with that of the first agreement. Later, she signed a third agreement entitled “New Business Manager”. This third contract also provided limitations on her authority and that she should be considered as an Independent Contractor not an employee.

Due to some anomaly in the way Susan Carungcong prepared the report so that she will be reimbursed with her expenses incurred for the purpose of gaining or producing income such that she made it appear that she paid for the food of her agents but in fact and in truth she did not. So she was given a letter advising of the termination of her relationship with Sunlife. So she filed a complaint before the NLRC and was adjudged to have been illegally dismissed because there was an employer-employee relationship.

Issues: Whether or not there was an employer-employee relationship between Carungcong and Sunlife.

Ruling: The Supreme Court ruled that there was no employer-employee relationship, which means that Carungcong was an Independent Contractor not an Employee, because “control”, which was one of the elements of the four-fold test was absent. Absence of control means that there was no employer-employee relationship between the parties. Hence, Carungcong was not illegally dismissed.

The Supreme Court reasoned that Insurance business is imbibed with public interest and thus subject to regulation by the State. The State, in order to protect the public, enacted the Insurance Code, which provided for the rules and regulations to be followed by the Insurance companies. Thus, as an inevitable consequence the Insurance Company, like Sunlife, issued rules and regulations to be followed by Carungcong but this control was latent in the kind of business which Carungcong was into and these rules and regulations were mainly aimed at promoting the results the parties so desired and did not necessarily create any employer- employee relationship, where the employer’s controls had to interfere in the methods and means by which the employee would like to employ to arrive at the desired result.

Garcy Kate D. Go LLB2 EH306 Page 9

Ramos vs Court of Appeals, 380 SCRA 467

Facts: Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted to the medical center the day before the operation. On the following day, she was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the scheduled operation.

Dr. Guiterrez tried to intubate Erlinda. The nail beds of Erlinda were bluish and there was a discoloration in her left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she died.

The family of Ramos sued them for damages.

Issue: Whether or not there was an employee-employer relationship that existed between the Medical Center and Drs. Hosaka and Guiterrez.

Held: No, employer-employee relationship between the doctors and hospital did not exist.

Private hospitals hire, fire, and exercise real control over their attending and visiting consultant staff. While consultants are not technically employees, the control exercised, the hiring and the right to terminate consultants fulfill the hallmarks of an employer-employee relationship with the exception of payment of wages. The control test is determining.

In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors. It has been consistently held that in determining whether an employer-employee relationship exists between the parties, the following elements must be present: (1) selection and engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only the end to be achieved, but the means to be used in reaching such an end.

The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient who pays the consultants. The hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospital’s obligation is limited to providing the patient with the preferred room accommodation and other things that will ensure that the doctor’s orders are carried out.

The court finds that there is no employer-employee relationship between the doctors and the hospital.

Garcy Kate D. Go LLB2 EH306 Page 10

Sonza vs. ABS-CBN June 10, 2004, GR No. 138051

Facts: In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and Developments Corporation (MJMDC), a television program. Referred to in the Agreement as “Agent”, MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonza’s services a monthly talent fee of P310, 000 for the first year and P317,000 for the second and third year of the agreement.

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he will irrevocably resign in view of the recent events concerning his program and career, that he is waiving and renouncing recovery of the remaining amount stipulated in the Agreement, but reserves the right to seek recovery of the other benefits under said agreement.

On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service incentive leave, 13th month pay , signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the ground that there was no employer-employee relationship between them. ABS-CBN insists that Sonza was an independent contractor.

Issue: Whether an employer-employee relationship exists.

Ruling: The Court sustained ABS-CBN’s contention and hence, dismissed the petition.

The Supreme Court ratiocinated that Independent contractors often present themselves to possess unique skills, expertise, talent, to distinguish them from ordinary employees. The specific selection and hiring of Sonza, because of his unique skills, talent, and celebrity status not possessed by an ordinary employee, is a circumstance indicative of an independent contractual relationship. Whatever benefits Sonza enjoyed arose from a contract and not because of an employer-employee relationship. Sonza’s talent fees are so huge and out of the ordinary that they indicate more an independent contractual relationship.

Applying the control test in the case at bar, the Court found that Sonza is not an employee but an independent contractor. First, ABS-CBN engaged Sonza’s services specifically to co-host the “Mel and Jay” program. ABS-CBN did not assign any other work to Sonza. To perform his work, Sonza only needed his skills and talent. Sonza delivered his lines appeared on the television and sounded on radio, all outside the control of ABS-CBN. Sonza did not have to work eight hours a day. The Agreement required Sonza to attend only rehearsals and tapings. ABS-CBN could not dictate the contents of Sonza’s script. Sonza had a free hand on what to say or discuss in his shows. Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonza’s work.

Garcy Kate D. Go LLB2 EH306 Page 11

Lazaro vs. Social Security Commission July 30, 2004, G.R. No. 138254

Facts: Private respondent Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three employers. Among the respondents was herein petitioner Angelito L. Lazaro (“Lazaro”), proprietor of Royal Star Marketing (“Royal Star”), which is engaged in the business of selling home appliances. Petitioner states that 1) Laudato was not a sales supervisor of Royal Star, but was a mere sales agent whom he paid purely on commission basis.2) Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star while respondents contended that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudato’s social security contributions.

Issue: Whether or not respondent is an employee, bringing her under the coverage of the Social Security Act.

Ruling: Ladauto is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the “control test,” that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished.

The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. The relevant factor remains, as stated earlier, whether the"employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.

Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. A supervisor is exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes.” Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results.

Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work.

Garcy Kate D. Go LLB2 EH306 Page 12

Phil. Global Comm. vs. De Vera G.R. No. 157214; June 7, 2005

Facts: Philippine Global Communications inc. is a corporation engaged in the business of communication services and allied activities while Ricardo de Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. The controversy rose when petitioner terminated his engagement.

In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the respondent’s proposal in a document denominated as retainership contract which will be for a period of one year, subject to renewal and clearly stated that respondent will cover the retainership the company previously with Dr. Eulau. The agreement went until 1994, in the years 1995-1996, it was renewed verbally. The turning point of the parties’ relationship was when petitioner, thru a letter bearing the subject TERMINATION – RETAINERSHIP CONTRACT, informed Dr. de Vera of its decision to discontinue the latter’s retainer contract because the management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises.

On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC, alleging that he had been actually employed by the company as its company physician since 1991. The commission rendered decision in favor of Philcom and dismissed the complaint saying that de Vera was an independent contractor. On appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a regular employee and directed the company to reinstate him. Philcom appealed to the CA where it rendered decision deleting the award but reinstating de Vera. Philcom filed this petition involving the difference of a job contracting agreements from employee-employer relationship.

Issue: Whether or not there exists an employee-employer relationship between the parties.

Ruling: SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com.

Upon reading the contract dated September 6, 1982, signed by the complainant himself , it clearly states that is a retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware that the ‘contract’ was good only for one year, as he signed the same without any objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis.The labor arbiter added the indicia, not disputed by respondent, that 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); and was in fact 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 elements of an employer- employee relationship are wanting in this case. The record 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.

The power to terminate the parties’ relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause. Remarkably absent is the element of control whereby the employer has reserved the right to control the employee not only as to the

Garcy Kate D. Go LLB2 EH306 Page 13 result of the work done but also as to the means and methods by which the same is to be accomplished. Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. In fine, the parties themselves practically agreed on every terms and conditions of the engagement, which thereby negates the element of control in their relationship.

Principle of Law: Any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latter’s business, even without being hired as an employee. There was no employee-employer relationship in a case where element of control of the employer over the employee is absent.

Garcy Kate D. Go LLB2 EH306 Page 14

ABS-CBN vs Nazareno (2006) G.R. 164156

Facts: ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’ identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. There was a revision of the schedule and assignments and that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC.

Issue: WON the respondents are regular employees?

Ruling: Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists. The reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides: REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

Any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists.The fact that respondents received pre-agreed “talent fees” instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors.

Garcy Kate D. Go LLB2 EH306 Page 15

There are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the activities performed in relation to the particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the ff:

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioner’s personnel department just like any ordinary employee.

Second. The so-called “talent fees” of respondents correspond to wages given as a result of an employer-employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.

Garcy Kate D. Go LLB2 EH306 Page 16

Francisco vs. NLRC, 500 SCRA 690 (06)

Facts: In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. In 1996, she was designated Acting Manager, and was able to perform the duties of such for 5 years. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January 2001, she was replaced by Liza R. Fuentes as Manager. She alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, she did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. The Labor Arbiter ruled in favor of the petitioner. The NLRC affirmed with modification the Decision of the Labor Arbiter. On appeal, the Court of Appeals reversed the NLRC decision. The appellate court denied petitioner’s motion for reconsideration, hence, the present recourse.

Issue: Whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation.

Held: The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency. By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer. Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and Respondent Corporation. It is therefore apparent that petitioner is economically dependent on Respondent Corporation for her continued employment in the latter’s line of business. The petition is GRANTED.

Garcy Kate D. Go LLB2 EH306 Page 17

Nogales et. al. vs. Capitol Medical Center G.R. No. 142625, December 19, 2006

Facts: Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada"). Corazon was admitted at the CMC. Dr. Estrada ordered the injection of ten grams of magnesium sulfate. However, Dr. Ely Villaflor ("Dr. Villaflor"), who was assisting Dr. Estrada, administered only 2.5 grams of magnesium sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, piece of cervical tissue was allegedly torn. The baby came out in an apnic, cyanotic, weak and injured condition. Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Dr. Noe Espinola ("Dr. Espinola"), head of the Obstetrics-Gynecology Department of the CMC, was apprised of Corazon's condition by telephone. Upon being informed that Corazon was bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Despite Dr. Espinola's efforts, Corazon died.

Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners mainly contended that defendant physicians and CMC personnel were negligent in the treatment and management of Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of defendant physicians and hospital staff.

Trial court rendered judgment finding Dr. Estrada solely liable for damages.

The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an independent contractor-physician. The Court of Appeals applied the "borrowed servant" doctrine considering that Dr. Estrada was an independent contractor who was merely exercising hospital privileges. This doctrine provides that once the surgeon enters the operating room and takes charge of the proceedings, the acts or omissions of operating room personnel, and any negligence associated with such acts or omissions, are imputable to the surgeon.

Issues: (1.) Whether CMC is vicariously liable for the negligence of Dr. Estrada; (2.) WON there is employer-employee relationship between Dr. Estrada and CMC

Held: Dr. Estrada is not an employee of CMC, but an independent contractor. However, CMC is still vicariously liable.

The Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. Dr. Estrada is not an employee of CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority." The doctrine of apparent authority essentially involves two factors to determine the liability of an independent-contractor physician. The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not make express representations to the patient that the treating physician is an employee of the hospital; rather a representation may be general and implied. The doctrine of apparent authority is A specie of the doctrine of estoppel. Article 1431 of the Civil Code provides that "through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon." CMC impliedly held out Dr. Estrada as a member of its medical staff.

Garcy Kate D. Go LLB2 EH306 Page 18

Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority. First, CMC granted staff privileges to Dr. Estrada. Second, CMC made Rogelio sign consent forms printed on CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding to Dr. Espinola, who was then the Head of the Obstetrics and Gynecology Department of CMC, gave the impression that Dr. Estrada as a member of CMC's medical staff was collaborating with other CMC-employed specialists in treating Corazon. WHEREFORE, the Court PARTLY GRANTS the petition. The Court finds respondent Capitol Medical Center vicariously liable for the negligence of Dr. Oscar Estrada.

Garcy Kate D. Go LLB2 EH306 Page 19

Coca cola Bottlers vs. Dr. Climaco GR No. 146881 February 5, 2007

Facts: Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers Phil.(petitioner) by virtue of a Retainer Agreement. Among the terms and conditions under their retainer agreement are: 1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either party may terminate the contract upon giving a 30-day written notice to the other; 2. That petitioner shall compensate respondent a retainer fee of P3,800/month. The DOCTOR may charge professional fee for hospital services rendered in line with his specialization; 3. That in consideration of the retainer’s fee, the DOCTOR agrees to perform the duties and obligations in the COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer agreement; 4. That the DOCTOR shall observe clinic hours at the company’s premises from Monday to Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m and 3:00pm to 4:00pm. It is further understood that the DOCTOR shall be on call at all times during the other workshifts to attend to emergency case(s); 5. That no employee-employer relationship shall exist between the company and the DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of the agreement, respondent continued to perform his functions as company doctor to petitioner until he received a letter dated march 9, 1995 from the company ending their retainership agreement.

Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular employee of petitioner and thus prayed from payment of all the benefits of a regular employee including 13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus. Also, respondent filed another complaint for illegal dismissal against petitioner.

In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed by the Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer- employee relationship existed between petitioner company and respondent.

However when it was elevated to CA for review, the latter ruled that employer-employee relationship existed between the parties after applying the four-fold test: (1) power to hire employee (2) payment of wages (3) power to dismissal (4) and power to control over the employee with respect to the means and methods by which the work is to be accomplished.

The CA held it in this wise: 1. First, the agreement provide “the company desires to engage on a retainer basis the services of a physician and the said DOCTOR is accepting such engagement”. This clearly shows that coca-cola company exercised its power to hire. 2. Secondly, the agreement showed that petitioner would compensate the doctor for P3,800/month. This would represent the element of payment of wages. 3. Thirdly, it was provided in the agreement that the same shall be valid only for 1 year. “the said term notwithstanding, either party may terminated the contract upon giving 30-day written notice”. This would show that petitioner had the power to dismissal. 4. Lastly, the agreement reveal that Coca-cola control over the conduct of respondent in the latter’s performance of his duties sas a doctor for the company.

Hence, this petition filed by Coca-cola company

Garcy Kate D. Go LLB2 EH306 Page 20

Issue: Whether or not there exist an employer-employee relationship between the parties.

Ruling: The Court agrees with the finding of the Labor Arbiter and the NLRC.

The Court held that the Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over the performance by respondent of his duties.

The Court citing the case of Neri vs. NLRC said, petitioner company, through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved. In other words, what was sought to be controlled by the petitioner company was actually the end result of the task. The guidelines or the Comprehensive Medical Plan were laid down merely to ensure that the desired end result was achievedbut did not control the means and methods by which respondent performed his assigned tasks.

The Supreme Court further held that, an employee is required to stay in the employer’s workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here. The respondent does not dispute that fact that outside of the two (2) hours that he is required to be at petitioner company’s premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, respondent maintains his own private clinic attending his private practice in the city, where he services his patients and bills them accordingly.

The Court finds that the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement.

The Supreme Court also notes that the Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination. Therefore, the petition was GRANTED.

Garcy Kate D. Go LLB2 EH306 Page 21

Calamba mdeical center VS. NLRC, et. Al. GR No. 176484, Nov. 28, 2008

Facts: Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.

After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha was not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

Issue: Whether or not there exists an employer-employee relationship between petitioner and the spouses-respondents?

Ruling: Drs. Lanzanas are declared employee by the petitioner hospital. Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task.

That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough that it has the right to wield the power.

With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation or incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor Code.

Moreover, respondents were made subject to petitioner-hospital's Code of Ethics,the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against persons, property and the hospital's interest.

More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms which reflect their status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law is premised on the existence of an employer-employee relationship, except in cases of compulsory coverage of the self-employed.

Garcy Kate D. Go LLB2 EH306 Page 22

Escasiñas, et. al. vs. Shangrila-Las Mactan Island Resort, et. al

Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-la’sMactan Island Resort (Shangri-la) in Cebu of which she was a retained physician. In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work of nurses under her. Issue: Whether or not there exists an employer-employee relationship between Shangri-la and petitioners. Ruling: The Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests do not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-la’s principal business – operation of hotels and restaurants. As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employee’s last drawn salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-la’s guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS premium as well as their wages if they were not indeed her employees. With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, “Clinic Policies and Employee Manual” claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-la’s regular workers, governs how they perform their respective tasks and responsibilities.

In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners’ employer.

Garcy Kate D. Go LLB2 EH306 Page 23

Tongko vs. The Manufacturer’s Life Insurance Co., Inc. November 7, 2008

Facts: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days notice in writing.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongko’s Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their earnings and would want to revert to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition.

Issue: Wehther or not Tongko was an employee of Manulife and that he was illegally dismissed.

Ruling: Yes. In the instant case, Manulife had the power of control over Tongko that would make him its employee.Several factors contribute to this conclusion.

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that: The Agent hereby agrees to comply with all regulations and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the

Garcy Kate D. Go LLB2 EH306 Page 24

Company's products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership.Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses.

Among the company regulations of Manulife are the different codes of. The fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents.

Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means and methods by which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with Manulife.

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of Manulife.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the validity of the termination of employment rests on the employer. Failure to discharge this evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just cause and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employer's dismissal of an employee, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to identify the specific acts by which Tongko's employment was terminated much less support the same with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must be concluded that Tongko was illegally dismissed.

Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

Garcy Kate D. Go LLB2 EH306 Page 25

Caong, Jr. vs. Begualos, GR No. 179428, Jan. 26, 2011

Facts: Petitioners filed a complaint against the respondent on the grounds of illegal dismissal. Their allegations are they were not availed of the due process of law when they were dismissed, there was no just cause and the respondent disregarded that there are days that boundary could not be met due to the scarcity of passengers. The respondent countered that they were not employees hence they are not covered by the labor code, and that there is no such illegal dismissal since he only suspended them because they have arrears to be paid which was resulted from the lack of payment of boundary.

The labor arbiter favored the respondents contention, that there was no illegal dismissal, the respondent was just imposing sanction on the petitioners for not paying the full amount of boundary, thus resulted to suspension.

The petitioner appealed the case, however it was denied thus the case went up to the Supreme Court.

Issue: Whether or not there was employee and employer relationship between the parties and there was an illegal dismissal in case.

Ruling: Yes, there is employee and employer relationship.

The Supreme Court held that in boundary system, it shall not be treated as lessee and lessor relationship, the existence of boundary does not negate the employee and employer relationship.

However on the issue of illegal dismissal, the court ruled that there is no illegal dismissal. Since the respondent was just exercising his prerogative as an employer, thus he has the right to suspend them due to not paying the full amount of boundary.

Garcy Kate D. Go LLB2 EH306 Page 26

Atok Big Wedge Company vs Gison GR No. 169510, August 8, 2011

Facts: Respondent was engaged as part-time consultant on retainer basis by petitioner. As a consultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants within the area covered by the company's mineral claims. Respondent was likewise tasked to perform liaison work with several government agencies, which he said was his expertise.Petitioner did not require respondent to report to its office on a regular basis, except when occasionally requested by the management to discuss matters needing his expertise as a consultant. As payment for his services, respondent received a retainer fee of P3,000.00 a month. The said arrangement continued for the next eleven years.

Sometime thereafter, since respondent was getting old, he requested that petitioner cause his registration with the Social Security System (SSS), but petitioner did not accede to his request. He later reiterated his request but it was ignored by petitioner considering that he was only a retainer/consultant.

On the same date petitioner, issued a memorandum advising respondent that within 30 days from receipt thereof, petitioner is terminating his retainer contract with the company since his services are no longer necessary. Respondent filed a complaint for illegal dismissal, unfair labor practice, underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay with the National Labor Relations Commission (NLRC).

ISSUE: Whether or not there existed an employer-employee relationship between the petitioner and respondent.

Ruling: To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: a. the selection and engagement of the employee; b. the payment of wages; c. the power of dismissal; and d. the power to control the employee's conduct, or the so-called "control test."

Of these four, the last one is the most important. The so-called "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other things, respondent was not required to report everyday during regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks using his own means and method. Respondent was assigned tasks to perform, but petitioner did not control the manner and methods by which respondent performed these tasks. Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee of the petitioner.

Garcy Kate D. Go LLB2 EH306 Page 27

Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011

Facts: Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in 1993. As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and orders the start of the cockfight. He also distributes the winnings after deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting cocks, determines the fighting cocks’ physical condition and capabilities to continue the cockfight, and eventually declares the result of the cockfight. For their services as masiado rand sentenciador, Semblante receives PhP 2,000 per week or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had both been issued employees’ identification cards that they wear every time they report for duty. They alleged never having incurred any infraction and/or violation of the cockpit rules and regulations. On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents. Respondents denied that petitioners were their employees and alleged that they were associates of respondents’ independent contractor, Tomas Vega. Respondents claimed that petitioners have no regular working time or day and they are free to decide for themselves whether to report for work or not on any cockfighting day. In times when there are few cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so respondents assert, were only issued identification cards to indicate that they were free from the normal entrance fee and to differentiate them from the general public. In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of respondents as they performed work that was necessary and indispensable to the usual trade or business of respondents for a number of years. The Labor Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay petitioners their back wages and separation pay. Respondents’ counsel received the Labor Arbiter’s Decision on September 14, 2004. And within the 10-day appeal period, he filed the respondents’ appeal with the NLRC on September 24, 2004, but without posting a cash or surety bond equivalent to the monetary award granted by the Labor Arbiter. The NLRC held in its Resolution of October 18, 2006 that there was no employer-employee relationship between petitioners and respondents, respondents having no part in the selection and engagement of petitioners, and that no separate individual contract with respondents was ever executed by petitioners. The CA upheld the NLRC decision.

Issues: Whether or not there exists an employer/employee relationship between Semblante, et al. and the spouses LOOT. Ruling: The petitioners are NOT employees of respondents, since their relationship fails to pass muster the four-fold test of employment We have repeatedly mentioned in countless decisions: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, which is the most important element.

Garcy Kate D. Go LLB2 EH306 Page 28

As found by both the NLRC and the CA, respondents had no part in petitioners’ selection and management; petitioners’ compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their “expertise that is characteristic of the cockfight gambling,” and were never given by respondents any tool needed for the performance of their work. Respondents, not being petitioners’ employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or prerogative to do so in the first place.

Garcy Kate D. Go LLB2 EH306 Page 29

Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011

Facts: Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were invited to join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala, however, changes were made on the terms of their employment.

Bernarte, was not made to sign a contract during the first conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was only during the second conference when he was made to sign a one and a half month contract for the period July 1 to August 5, 2003.

January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.

Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a contract.

The Court of Appeals denied the motion for reconsideration.

Complainants entered into two contracts of retainer with the PBA in the year 2003. The first contract was for the period January 1, 2003 to July 15, 2003; and the second was for September 1 to December 2003. After the lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not employees of the PBA. Their respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their contracts, which they knew were fixed.

Labor Arbiter’s decision, on 31 March 2005, declared petitioner an employee whose dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the payment of back wages, moral and exemplary damages and attorney’s fees.

In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiter’s judgment. The dispositive portion of the NLRC’s decision reads:

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.

The Court of Appeals found petitioner an independent contractor since respondents did not exercise any form of control over the means and methods by which petitioner performed his work as a basketball referee. The Court of Appeals held:

While the NLRC agreed that the PBA has no control over the referees’ acts of blowing the whistle and making calls during basketball games, it, nevertheless, theorized that the said acts refer to the means and methods employed by the referees in officiating basketball games for the illogical reason that said acts refer only to the referees’ skills. How could a skilled referee

Garcy Kate D. Go LLB2 EH306 Page 30 perform his job without blowing a whistle and making calls? Worse, how can the PBA control the performance of work of a referee without controlling his acts of blowing the whistle and making calls?

Issues: Whether petitioner is an employee of respondents, which in turn determines whether petitioner was illegally dismissed

Ruling: At any rate, the NLRC declared the issue on the finality of the Labor Arbiter’s decision moot as respondents’ appeal was considered in the interest of substantial justice. We agree with the NLRC. The ends of justice will be better served if we resolve the instant case on the merits rather than allowing the substantial issue of whether petitioner is an independent contractor or an employee linger and remain unsettled due to procedural technicalities.

The existence of an employer-employee relationship is ultimately a question of fact. As a general rule, factual issues are beyond the province of this Court. However, this rule admits of exceptions, one of which is where there are conflicting findings of fact between the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the present case.

To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (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 on the means and methods by which the work is accomplished. The so-called “control test” is the most important indicator of the presence or absence of an employer- employee relationship.

We agree with respondents that once in the playing court, the referees exercise their own independent judgment, based on the rules of the game, as to when and how a call or decision is to be made. The referees decide whether an infraction was committed, and the PBA cannot overrule them once the decision is made on the playing court. The referees are the only, absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make and cannot control the referee when he blows the whistle because such authority exclusively belongs to the referees. The very nature of petitioner’s job of officiating a professional basketball game undoubtedly calls for freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes. In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner is required to report for work only when PBA games are scheduled or three times a week at two hours per game. In addition, there are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees’ salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents.

Garcy Kate D. Go LLB2 EH306 Page 31

Lirio vs Genovia G.R. No. 169757, NOVEMBER 23, 2011

Facts: On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of moral and exemplary damages.

In his Position Paper, respondent Genovia alleged, among others, that on August 15, 2001, he was hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor). He was employed to manage and operate Celkor and to promote and sell the recording studio's services to music enthusiasts and other prospective clients. He received a monthly salary of P7,000.00. They also agreed that he was entitled to an additional commission of P100.00 per hour as recording technician whenever a client uses the studio for recording, editing or any related work. He was made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of the time, he still rendered eight hours of work or more. All the employees of petitioner, including respondent, rendered overtime work almost every day, but petitioner never kept a daily time record to avoid paying the employees overtime pay.

Respondent stated that a few days after he started working as a studio manager, petitioner approached him and told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such services. As agreed upon, the additional services that respondent would render included composing and arranging musical scores only, while the technical aspect in producing the album, such as digital editing, mixing and sound engineering would be performed by respondent in his capacity as studio manager for which he was paid on a monthly basis. Petitioner instructed respondent that his work on the album as composer and arranger would only be done during his spare time, since his other work as studio manager was the priority. Respondent then started working on the album.

Respondent alleged that before the end of September 2001, he reminded petitioner about his compensation as composer and arranger of the album. Petitioner verbally assured him that he would be duly compensated. By mid-November 2001, respondent finally finished the compositions and musical arrangements of the songs to be included in the album. Before the month ended, the lead and back-up vocals in the ten (10) songs were finally recorded and completed. From December 2001 to January 2002, respondent, in his capacity as studio manager, worked on digital editing, mixing and sound engineering of the vocal and instrumental audio files.

Thereafter, respondent was tasked by petitioner to prepare official correspondence, establish contacts and negotiate with various radio stations, malls, publishers, record companies and manufacturers, record bars and other outlets in preparation for the promotion of the said album. By early February 2002, the album was in its manufacturing stage. ELECTROMAT, manufacturer of CDs and cassette tapes, was tapped to do the job. The carrier single of the album, which respondent composed and arranged, was finally aired over the radio on February 22, 2002.

On February 26, 2002, respondent again reminded petitioner about the contract on his compensation as composer and arranger of the album. Petitioner told respondent that since he was practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a high compensation, and he should be thankful that he was given a job to feed his family. Petitioner informed respondent that he was entitled only to 20% of the net profit, and not of the gross sales of the album, and that the salaries he received and would continue to

Garcy Kate D. Go LLB2 EH306 Page 32 receive as studio manager of Celkor would be deducted from the said 20% net profit share. Respondent objected and insisted that he be properly compensated. On March 14, 2002, petitioner verbally terminated respondent’s services, and he was instructed not to report for work.

Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds, and no hearing was conducted before he was terminated, in violation of his constitutional right to due process. Having worked for more than six months, he was already a regular employee. Although he was a so called “studio manager,” he had no managerial powers, but was merely an ordinary employee.

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that he be paid separation pay, back wages and overtime pay; and that he be awarded unpaid commission in the amount of P2,000.00 for services rendered as a studio technician as well as moral and exemplary damages.

Respondent’s evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which was certified correct by petitioner,[2] and Petty Cash Vouchers[3] evidencing receipt of payroll payments by respondent from Celkor.

In defense, petitioner stated in his Position Paper[4] that respondent was not hired as studio manager, composer, technician or as an employee in any other capacity of Celkor. Respondent could not have been hired as a studio manager, since the recording studio has no personnel except petitioner. Petitioner further claimed that his daughter Celine Mei Lirio, a former contract artist of ABS-CBN Star Records, failed to come up with an album as the latter aborted its project to produce one. Thus, he decided to produce an album for his daughter and established a recording studio, which he named Celkor Ad Sonicmix Recording Studio. He looked for a composer/arranger who would compose the songs for the said album. In July 2001, Bob Santiago, his son-in-law, introduced him to respondent, who claimed to be an amateur composer, an arranger with limited experience and musician without any formal musical training. According to petitioner, respondent had no track record as a composer, and he was not known in the field of music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to co-produce the album based on the following terms and conditions: (1) petitioner shall provide all the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer and arranger of all the lyrics and the music of the five songs he already composed and the revival songs; (4) petitioner shall have exclusive right to market the album; (5) petitioner was entitled to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his share of the net profits and only until such time that the album has been produced.

According to petitioner, they arrived at the foregoing sharing of profits based on the mutual understanding that respondent was just an amateur composer with no track record whatsoever in the music industry, had no definite source of income, had limited experience as an arranger, had no knowledge of the use of sound mixers or digital arranger and that petitioner would help and teach him how to use the studio equipment; that petitioner would shoulder all the expenses of production and provide the studio and equipment as well as his knowledge in the use thereof; and Celine Mei Lirio would sing the songs. They embarked on the production of the album on or about the third week of August 2002.

Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is one of an informal partnership under Article 1767of the New Civil Code, since they agreed to contribute money, property or industry to a common fund with the intention of

Garcy Kate D. Go LLB2 EH306 Page 33 dividing the profits among themselves. Petitioner had no control over the time and manner by which respondent composed or arranged the songs, except on the result thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner contended that no employer-employee relationship existed between him and the respondent, and there was no illegal dismissal to speak of.

Issue: Whether or not employer-employee relationship exists?

Ruling: Yes. The elements to determine the existence of an employment relationship are: (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’s conduct. The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner,[31] which showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers,[32] showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid monthly wages of P7, 000.00. Petitioner wielded the power to dismiss as respondent stated that he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against petitioner. The power of control refers merely to the existence of the power. It is not essential for the employer to actually supervise the performance of duties of the employee, as it is sufficient that the former has a right to wield the power. Nevertheless, petitioner stated in his Position Paper that it was agreed that he would help and teach respondent how to use the studio equipment. In such case, petitioner certainly had the power to check on the progress and work of respondent.

Garcy Kate D. Go LLB2 EH306 Page 34

Charlie Jao vs Bcc Products Sales, Inc. GR No. 163700, April 18, 2012

Facts: Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCC's business; that on October 19, 1995, the security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC where he then worked; that his attempts to report to work in November and December 12, 1995 were frustrated because he continued to be barred from entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal dismissal, reinstatement with full backwages, non-payment of wages, damages and attorney's fees.

Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's interests or investments in BCC.; that their issuance of the ID to petitioner was only for the purpose of facilitating his entry into the BCC premises in relation to his work of overseeing the financial operations of BCC for SFC; that the ID should not be considered as evidence of petitioner's employment in BCC; that petitioner executed an affidavit in March 1996, 20 stating, among others, as follows:

1. I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed by, Sobien Food Corporation with the same business address as abovestated; 2. In the course of my association with, or employment by, Sobien Food Corporation (SFC, for short), I have been entrusted by my employer to oversee and supervise collections on account of receivables due SFC from its customers or clients; for instance, certain checks due and turned over by one of SFC's customers is BCC Product Sales, Inc., operated or run by one Terrance L. Ty, (President and General manager).

Petitioner counters, however, that the affidavit did not establish the absence of an employer- employee relationship between him and respondents because it had been executed in March 1996, or after his employment with respondents had been terminated on December 12, 1995; and that the affidavit referred to his subsequent employment by SFC following the termination of his employment by BCC.

Issue: The sole issue is whether or not an employer-employee relationship existed between petitioner and BCC.

Ruling: In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following incidents, to wit: (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 on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important element.

Petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such agreement on terms of employment may be understandable and expected if he was a common or ordinary laborer who would not jeopardize his employment by demanding such document from the employer, but may not square well with his actual status as a highly educated professional.

Petitioner's admission that he did not receive his salary for the three months of his employment by BCC, as his complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he later filed against the respondents for non-payment of wages indicated, further

Garcy Kate D. Go LLB2 EH306 Page 35 raised grave doubts about his assertion of employment by BCC. If the assertion was true, we are puzzled how he could have remained in BCC's employ in that period of time despite not being paid the first salary of P20,000.00/month. Moreover, his name did not appear in the payroll of BCC despite him having approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the insincerity of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he averred that he had been barred from entering the premises of BCC on October 19, 1995, 27 and thus was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally dismissed on December 12, 1995 when respondents' security guards barred him from entering the premises of BCC, 28 causing him to bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint against him. The wide gap between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering that the several incidents affecting the veracity of his assertion of employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the other proofs he presented, like the affidavits of some of the employees of BCC, the ID, and the signed checks, bills and receipts. Suffice it to be stated that such other proofs were easily explainable by respondents and by the aforestated circumstances showing him to be the employee of SFC, not of BCC.

Garcy Kate D. Go LLB2 EH306 Page 36

Legend Hotel vs Realuyo GR 153511, July 18, 2012

Facts: This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive leave pay, and 13111 month pay.

Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night that was given to him after each night’s performance; that his rate had increased to P750.00/night; and that during his employment, he could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel’s restaurant manager had required him to conform with the venue’s motif; that he had been subjected to the rules on employees’ representation checks and chits, a privilege granted to other employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss of his employment made him bring his complaint.2

Issue: Whether there exists an employer-employee relationship

Ruling: Employer-employee relationship existed between the parties. The issue of whether or not an employer-employee relationship existed between petitioner and respondent is essentially a question of fact. The factors that determine the issue include who has the power to select the employee, who pays the employee’s wages, who has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is accomplished.10 Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.

A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He was undeniably employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant from September 1992 until his services were terminated on July 9, 1999.

First of all, petitioner actually wielded the power of selection at the time it entered into the service contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence that respondent had only offered his services to provide live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s position that what had really transpired was a negotiation of his rate and time of availability. The power of selection was firmly evidenced by, among others, the express written recommendation dated January 12, 1998 by Christine Velazco, petitioner’s restaurant manager, for the increase of his remuneration.

Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent fees that were not included in the definition of wage under the Labor Code. Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate of remuneration was later increased to P750.00 upon restaurant manager Velazco’s recommendation. There is no denying that the remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality of the music he played during

Garcy Kate D. Go LLB2 EH306 Page 37 the hours of performance each night, taking into account the prevailing rate for similar talents in the entertainment industry

Respondent’s remuneration, albeit denominated as talent fees, was still considered as included in the term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration.

Thirdly, the power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This is the so- called control test, and is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end. A review of the records shows, however, shows that respondent performed his work as a Pianist under petitioner’s supervision and control. Specifically, petitioner’s control of both the end achieved and the manner and means used to achieve that end was demonstrated by the following, to wit: a) He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week; b) He could not choose the place of his performance; c) The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and d) He was subjected to the rules on employees’ representation check and chits, a privilege granted to other employees.

Garcy Kate D. Go LLB2 EH306 Page 38

The New Philippine Skylanders, Inc., vs. Dakila G.r. No. 199547, Sept. 24, 2012

Facts: November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees Association- WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor.

In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLU’s supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees Association -National Congress of Workers (PSEA- NCW), and to maintain continuity within the organization, allowed the former officers of PSEA- PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW.

On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered with the Department of Labor and Employment.

PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the request.

PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSI’s refusal to bargain collectively with its workers, the company through its president and personnel manager, was also liable for interfering with its employees’ union activities

Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA’s organizational meeting thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which was detrimental to their interests.

PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.

Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint.

Labor Arbiter declared PSEA’s disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice.

As PSEA-NCW’s personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid.

Garcy Kate D. Go LLB2 EH306 Page 39

PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC upheld the Decision ofthe Labor Arbiter.

Ruling: Local unions have a right to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for them. Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into existence.

There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.

The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union.

Garcy Kate D. Go LLB2 EH306 Page 40

Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014

This case concerns the effect on the status of employment of employees who entered into a Service Franchise Agreement with their employer.

Facts: On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister companies collectively called “Bandag”. Bandag offered repair and retread services for used tires. In 1998, however, Bandag developed a franchising scheme that would enable others to operate tire and retreading businesses using its trade name and service system. Petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs) with Bandag for the operation of their respective franchises. Under this SFA, Bandag would provide funding with the petitioners subject to regular liquidation of revolving funds. The expenses of these funds will be deducted from their sale in order to determine their income. After some time, petitioners began to default on their obligations to submit periodic liquidations of their operational expenses in relation to the revolving funds Bandag provided them. Bandag terminated their SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non–payment of wages, incentive pay, 13th month pay and damages against Bandag with the National Labor Relations Commission (NLRC). Petitioners contend that despite the SFA, they remained employees of Bandag. For its part, Bandag pointed out that petitioners freely resigned from their employment and decided to avail themselves of the opportunity to be independent entrepreneurs under the franchise scheme that Bandag had. Thus, no employer–employee relationship existed between petitioners and Bandag.

Issue: Whether or not petitioners remained to be Bandag’s salesmen under the franchise scheme it entered into with them.

Ruling: No, petitioners were no longer employees of Bandag the moment they entered into the SFA. Franchising is a business method of expansion that allows an individual or group of individuals to market a product or a service and to use of the patent, trademark, trade name and the systems prescribed by the owner.

The tests for determining employer–employee relationship are: (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. The last is called the “control test,” the most important element.

When petitioners agreed to operate Bandag’s franchise branches in different parts of the country, they knew that this substantially changed their former relationships. They were to cease working as Bandag’s salesmen, the positions they occupied before they ventured into running separate Bandag branches. They were to cease receiving salaries or commissions. Their incomes were to depend on the profits they made. Yet, petitioners did not then complain of constructive dismissal. They took their chances, ran their branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners’ work. It points out that Bandag: (a) retained the right to adjust the price rates of products and services; (b) imposed minimum processed tire requirement (MPR); (c) reviewed and regulated

Garcy Kate D. Go LLB2 EH306 Page 41 credit applications; and (d) retained the power to suspend petitioners’ services for failure to meet service standards. But uniformity in prices, quality of services, and good business practices are the essence of all franchises. A franchisee will damage the franchisor’s business if he sells at different prices, renders different or inferior services, or engages in bad business practices. These business constraints are needed to maintain collective responsibility for faultless and reliable service to the same class of customers for the same prices.

This is not the “control” contemplated in employer–employee relationships. Control in such relationships addresses the details of day to day work like assigning the particular task that has to be done, monitoring the way tasks are done and their results, and determining the time during which the employee must report for work or accomplish his assigned task.

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer– employee relationship with Bandag. These funds do not represent wages. They are more in the nature of capital advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners’ incomes depended on the profits they make, controlled by their individual abilities to increase sales and reduce operating costs.

Garcy Kate D. Go LLB2 EH306 Page 42

HIRING OF EMPLOYEE

Ollendor vs Abrahanson 38 Phil 585

Facts: An agreement was entered into by Ollendorff and Abrahamson whereby theformer agreed to employ Abrahamson and the latter bound himself to work for him for a period of 2yrs with a salary of P50 per week. Included in the agreement is a prohibition of Abrahamson from engaging in a similar or competitive business to anywhere within the Philippine Islands for a period of five years. The duties performed by the defendant were such to make it necessary for him to be generally knowledgeable of Ollendorff’s business, moreover, he had been engaged in similar work for several years even before his employment of the plaintiff’s embroidery business.

After some months from his departure for the US, Abrahamson returned to Manila and is now a manager of the Philippine Underwear Co. This corporation, unlike Ollendorff’s, does not maintain a factory in Phil. Islands but send material and embroidery designs from New York to its local representative here who employs Filipino needle workers to embroider the designs and make up the garments in their homes. The only difference between plaintiff's business and that of the firm by which the defendant is employed, is the method of doing the finishing work -- the manufacture of the embroidered material into finished garments. Plaintiff commenced an action to prevent by injunction, any further breach of that part of defendant's contract of employment by which he agreed that he would not "enter into or engage himself directly or indirectly . . . in a similar or competitive business to that of (plaintiff) anywhere within the Philippine Islands for a period of five years . . ." from the date of the agreement.

Issue: WON the part of the agreement restraining the defendant from engaging into similar business of the plaintiff is void?

Ruling: The contract was not void as constituting an unreasonable restraint of trade. The rule in this jurisdiction is that the obligations created by contracts have the force of law between the contracting parties and must be enforce in accordance with their tenor. (Civil Code, art 1091.) The only limitation upon the freedom of contractual agreement is that the pacts established shall not be contrary to "law, morals or public order." (Civil Code, Art. 1255.)

Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that the validity of restraints upon trade or employment is to be determined by the intrinsinc reasonableness of restriction in each case, rather than by any fixed rule, and that such restrictions may be upheld when not contrary to afford a fair and reasonable protection to the party in whose favor it is imposed.

Examining the contract here in question from this stand point, it does not seem so with respect to an employee whose duties are such as of necessity to give him an insight into the general scope and details of his employers business. A business enterprise may and often does depend for its success upon the owner's relations with other dealers, his skill in establishing favorable connections, his methods of buying and selling -- a multitude of details, none vital if considered alone, but which in the aggregate constitute the sum total of the advantages which the result of the experience or individual aptitude and ability of the man or men by whom the business has been built up. Failure or success may depend upon the possession of these intangible but all important assets, and it is natural that their possessor should seek to keep them from falling into the hands of his competitors. It is with this object in view that such restrictions as that now under consideration are written into contracts of employment. Their purpose is the protection of the employer, and if they do not go beyond what is reasonably necessary to effectuate this purpose they should be upheld.

Garcy Kate D. Go LLB2 EH306 Page 43

Del Castillo vs. Richmond G.R. No. L-21127; February 9, 1924

Facts: The case was instituted to declare the contract of services entered into by Alfonso del Castillo as null and void. Del Castillo alleges that the provisions and conditions contained in the third paragraph of said contract constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to public policy, and are unnecessary in order to constitute a just and reasonable protection to the defendant; and asked that the same be declared null and void and of no effect.

The said contract constituted an illegal and unreasonable restriction upon the right of the plaintiff to contract and was contrary to public policy. It will be noted that the restrictions placed upon the plaintiff are strictly limited (a) to a limited district or districts, and (b) during the time while the defendant or his heirs may own or have open a drugstore, or have an interest in any other one within said limited district.

Issue: Whether or not the said restraint is reasonable.

Ruling: SC ruled that the restriction is reasonable and not contrary to public policy.

The law concerning contracts which tend to restrain business or trade has gone through a long series of changes from time to time with the changing conditions of trade and commerce. With trifling exceptions, said changes have been a continuous development of a general rule.

The early cases show plainly a disposition to avoid and annul all contracts which prohibited or restrained any one from using lawful trade " at any time or at any place," as being against the benefit of the state. Later, however, the rule became well established that if the restraint was limited to "a certain time" and within "a certain place", such contracts were valid and not "against the benefit of the state." Later cases, and we think the rule is now well established, have held that a contract in restraint of trade is valid provided there is a limitation upon either time or place. A contract, however, which restrains a man entering into a business or trade without either a limitation as to time or place, will be held invalid.

As stated in the case of Ollendorf vs. Abrahamson, The public welfare of course must always be considered, and if it be not involved and the restraint upon one party is not greater than protection to the other requires, contracts like the one we are discussing will be sustained. The general tendency, we believe, of modern authority, is to make the test whether the restraint is reasonably necessary for the protection of the contracting parties. If the contract is reasonably necessary to protect the interest of the parties, it will be upheld.

In that case we held that a contract by which an employee agrees to refrain at a given length of time, after the expiration of the term of his employment, from engaging in business, competitive with that of his employer, is not void as being in restraint of trade if the restraint imposed is not greater than that which is necessary to afford a reasonable protection.

Garcy Kate D. Go LLB2 EH306 Page 44

PT & T vs. NLRC G.R. No. 118978; May 23, 1997

Facts: Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever Agreement which she signed with Petitioner Company, her employment was to be immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent’s services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.

It now appears that private respondent had made the a representation that she was single even though she contracted marriage months before, in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor sent to private respondent a memorandum requiring her to explain the discrepancy. In that memorandum, she was reminded about the company’s policy of not accepting married women for employment.

Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT&T.

Issue: Whether or not discrimination merely by reason of the marriage of a female employee is expressly prohibited by Article 136.

Ruling: SC ruled that the stipulation is violative of Art. 136 of the Labor Code.

An employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, “from hiring to firing,” except in cases of unlawful discrimination or those which may be provided by law. Petitioner’s policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution.

Respondent’s act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work.

The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:

“ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.”

Garcy Kate D. Go LLB2 EH306 Page 45

Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of an employee are categorized as a “sex-plus” discrimination where it is imposed on one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by federal job discrimination laws.

Petitioner’s policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right.

Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioner’s policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.

Garcy Kate D. Go LLB2 EH306 Page 46

Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils. G.R. No. 162994, Sept. 17, 2004

Facts: Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines(glaxo) as medical representative on Oct.24,1994 thereafter signed a contract of employment which stipulates among others that he agrees to study and abide existing company rules; to disclose to management any existing of future relationship by consanguinity or affinity with co- employees or employees of competing drug companies and if ever that such management find such conflict of interest,he must resign. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s employment with the company, the management and the employee will explore the possibility of a “transfer to another department in a non- counterchecking position” or preparation for employment outside the company after six months.

Reminders from Tecson’s district manager did not stop him from marrying.Tecson married Bettsy, an Astra’s Branch Coordinatior in Albay. She supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area.

Tecson was reassigned to another place and was not given products that the Astra company has and he was not included in products seminars and training.

Tecson requested for time in complying said policy by asking for a transfer in the Glaxo’s milk division in which the other company had no counterpart. Thereafter, he bought the matter to Grievance Committee but the parties failed to resolve such issue, Glaxo offered Tecson a separation pay of one-half (½) month pay for every year of service, or a total of P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.

Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not err in rendering its decision. A recon was filed in appellate court but it was denied, hence this petition for certiorari. Petitioners contention it was violative of constitutional law which is the equal protection clause and he was constructively dismissed while the respondents contention that it is a valid exercise of it s management prerogatives.

Issue: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of another pharmaceutical company is valid?

Ruling: This petition was denied. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures.

Garcy Kate D. Go LLB2 EH306 Page 47

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth.

The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships.

There was no merit in Tecson’s contention that he was constructively dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City- Agusan del Sur sales area, and when he was excluded from attending the company’s seminar on new products which were directly competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. The record does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer.

Garcy Kate D. Go LLB2 EH306 Page 48

City of Manila vs. Laguio G.R. No. 118127, April 12, 2005

Facts: Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the business of operating hotels, motels, hostels and lodging houses.[5] It built and opened Victoria Court in Malate which was licensed as a motel although duly accredited with the Department of Tourism as a hotel.[6] On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining Order[7] (RTC Petition) with the lower court impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the City Council of Manila (City Council). MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be declared invalid and unconstitutional.[8] Enacted by the City Council[9] on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993, the said Ordinance is entitled–

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA- MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.

In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its enumeration of prohibited establishments, motels and inns such as MTDC’s Victoria Court considering that these were not establishments for “amusement” or “entertainment” and they were not “services or facilities for entertainment,” nor did they use women as “tools for entertainment,” and neither did they “disturb the community,” “annoy the inhabitants” or “adversely affect the social and moral welfare of the community.”

Issue: Whether or not Ordinance No. 7783 of City of Manila is a valid exercise of police power.

Ruling: It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable regulations looking to the promotion of the moral and social values of the community. However, the worthy aim of fostering public morals and the eradication of the community’s social ills can be achieved through means less restrictive of private rights; it can be attained by reasonable restrictions rather than by an absolute prohibition. The closing down and transfer of businesses or their conversion into businesses “allowed” under the Ordinance have no reasonable relation to the accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments will not per se protect and promote the social and moral welfare of the community; it will not in itself eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila. It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the governmental interference itself, infringes on the constitutional guarantees of a person’s fundamental right to liberty and property.

Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of the Ordinance may seek autonomy for these purposes.

Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their bonds in intimate sexual conduct within the motel’s premises¾be it stressed that their consensual sexual behavior does not contravene any fundamental state policy as contained in the Constitution.[72] Adults have a right to choose to forge such relationships with others in the confines of their own private lives and still retain their dignity as free persons. The liberty protected by the Constitution allows persons the right to make this choice.[73] Their right to liberty under the due process clause gives them the full right to engage in their conduct without intervention of the government, as long as they do not run afoul of the law. Liberty should be the rule and restraint the exception.

Garcy Kate D. Go LLB2 EH306 Page 49

Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must include privacy as well, if it is to be a repository of freedom. The right to be let alone is the beginning of all freedom¾it is the most comprehensive of rights and the right most valued by civilized men

All considered, the Ordinance invades fundamental personal and property rights and impairs personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power to enact the Ordinance and is therefore ultra vires, null and void.

Garcy Kate D. Go LLB2 EH306 Page 50

Star Paper Corp., vs Simbol (2006) G.R. 164774

Facts: Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy to which Simbol complied.

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company. 2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above.

Issue: WON the policy of the employer banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative?

Ruling: Petitioners’ sole contention that "the company did not just want to have two or more of its employees related between the third degree by affinity and/or consanguinity" is lame.

Article 136 of the Labor Code which provides: It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

The requirement is that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative. It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. e. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure.

The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.

Garcy Kate D. Go LLB2 EH306 Page 51

Del Monte Phils. V. Velasco G.R. No. 153477; March 6, 2007

Facts: Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized by Del Monte. On June 1987, petitioner warned Velasco of its absences and was repeatedly reminded that her absence without permission may result to forfeiture of her vacation leave.

Another warning was sent due to her absences without permission which eventually led to the forfeiture of her vacation entitlement. On September 1994, a notice of hearing was sent to Velasco informing her of the charges filed against her for violating the Absence without leave rule. On January 1995, after the hearing, Del Monte terminated the services of Velasco due to excessive absence without leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted that she was absent since she was suffering urinary tract infection and she was pregnant.

She sent an application for leave to the supervisor. Upon check up of the company doctor, Velasco was advised to rest. On the following check-ups, she was again advised to rest where this time, she was not able to get secure a leave.

The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that respondent was illegally dismissed and was entitled to reinstatement. Petitioner appealed to CA where it dismissed its claim and affirmed NLRC, thus, this petition.

Issue: Whether or not the dismissal was illegal?

Ruling: Yes. In this case, by the measure of substantial evidence, what is controlling is the finding of the NLRC and the CA that respondent was pregnant and suffered from related ailments. It would be unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate or the Discharge Summary. It can be safely assumed that the absences that are not covered by, but which nonetheless approximate, the dates stated in the Discharge Summary and Medical Certificate, are due to the continuing condition of pregnancy and related illnesses, and, hence, are justified absences.

The termination was illegal since it comes within the purview of the prohibited acts provided in Article 137 of the Labor Code. Based on Article 137, it shall be unlawful for any employer (1) to deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code; (2) to discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; and (3) to discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act of the employer is unlawful, it being contrary to law.

Garcy Kate D. Go LLB2 EH306 Page 52

YRASUEGUI V. PHIL. AIRLINEGR NO. 168081; Oct. 17, 2008

Facts: This case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.

Petitioner was a former international flight steward of PAL. He had problems meeting the required weight standards for cabin and crew. He was advised to go on leave without pay several times to address his weight concerns, to no avail. PAL had him grounded until such time he satisfactorily complies with the weight standards and he was directed to report every two weeks for weight checks.

On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately

The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner.[15] However, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor. NLRC affirmed the decision of the Labor Arbiter, with modifications.

The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employee’s position. The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest.

Issue: Whether or not the petitioner was illegally dismissed.

Ruling: I. The obesity of petitioner is a ground for dismissal under Article 282(e)[44] of the Labor Code. [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an employee’s position.

By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They applyprior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being overwieight impedes mobility in times of emergencies where seconds are precious.

Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his regular allowances.

Garcy Kate D. Go LLB2 EH306 Page 53

WAGE & THE WAGE RATIONALIZATION ACT

Ilaw at Buklod Manggagawa vs NLRC (1991) 198 SCRA 586

Facts: The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of San Miguel Corporation, more or less, working at the various plants, offices, and warehouses located at the National Capital Region presented to the company a "demand" for correction of the significant distortion in the workers' wages. In that demand, the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows: Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission having jurisdiction over the workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the wage rates prescribed under this Section.

Issue: WON the strike is legal in the resolution of wage distortion.

Ruling: Strike is not legal as a means of resolving wage distortion. The strike involving the issue of wage distortion is illegal as a means of resolving it. The legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed therefore. It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. In the instance of "distortions of the wage structure within an establishment" resulting from "the application of any prescribed wage increase by virtue of a law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of settlement of the issue.

The provision states that the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising there from shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order.

The legislative intent that solution of the problem of wage distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of the employees or management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the Act. Section 16, Chapter I of these implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by the parties and eventually by compulsory arbitration, declares that, "Any issue involving wage distortion shall not be a ground for a strike/lockout."

Garcy Kate D. Go LLB2 EH306 Page 54

Employers Confederation of the Phils.vs. NWPC

Facts: The Regional Tripartite Wages and Productivity Board of the National Capital Region issued Wage Order No. NCR-01-A pursuant to the authority given by RA No. 6727, otherwise known as the Wage Rationalization Act. Wage Order No.NCR-01-A, amending the formerly issued WO No. NCR-1 increasing the minimum wage by Php 17.00 daily in the National Capital Region, read as follows:

Sec.1 Upon the effectivity of this wage order, all workers and employees in the private sector in the NCR already receiving wages above the statutory minimum wage rates up to Php 125.00 per day shall also receive an increase of Php 17.00 per day.

Employers Confederation of the Philippines assailed the RTWPB’s grant of an across the board wage increase to workers already being paid more than the existing minimum wage rates (that is up to Php 125.00 a day) as an alleged excess of authority, and alleged that under RA No. 6727, the boards may only prescribe “minimum wages” and not determine “salary ceilings.” ECOP added that RA No. 6727 was meant to promote collective bargaining as the primary mode of settling wages, and in its opinion, the board cannot preempt collective bargaining agreements by establishing ceilings. Another contention by ECOP was that wage is a legislative function, and RA No. 6727 delegated to the regional boards “no more than the power to grant minimum wages” and in the absence of a clear statutory authority the “boards may no more than adjust floor wages”.

Issue: Whether the RTWPB-NCR has authority to determine salary ceilings.

Ruling: As provided by the NWPC, the determination of wages generally involves two methods, the “floor wage method” and the “salary ceiling method” The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase.

The RTWPB,in this case, in issuing WO No. NCR-01-A fixed minimum wages according to the “salary ceiling method.”

Disputes are appropriate subjects of collective bargaining and grievance procedure, but bargaining has helped very little in correcting wage distortions. With the establishment of the salary ceiling method as a practice in minimum wage fixing, wage distortion disputes were minimized.

It is not disputed that wage fixing is a legislative function, nevertheless the rule is it can be validly delegated provided that sufficient standards are set forth. What these standards are provided for under Art. 124 of the Act (RA No. 6727).

RA No. 6727 did not intend the boards to set floor wages alone. If such be the case, the Act would have no need for a board but an accountant to keep track of the latest consumer price index, or better, would have Congress done it as the need arises. The Act sought a thinking group bound by statutory standards.

Garcy Kate D. Go LLB2 EH306 Page 55

Mabeza vs NLRC 271 SCRA 670

Facts: Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law.||| The instrument provides among others 4. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and that we are treated well. 5. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of informing the authorities concerned and to dispute the alleged report of the Labor Inspector of the Department of Labor and Employment conducted on the said establishment on February 2, 1991. As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse to the private respondent. After she refused to proceed to the City Prosecutor's Office — on the same day the affidavit was submitted to the Cordillera Regional Office of DOLE — petitioner avers that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. Issue: Whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice. Ruling: The pivotal question in any case where unfair labor practice on the 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 employee's 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 standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty.

Garcy Kate D. Go LLB2 EH306 Page 56

JOY BROTHERS INC vs. NWPC, 273 SCRA 622

Facts: A wage order was issued which provided for wage increase for all private sector workers and employees in the NCR receiving 154 pesos. Petitioner applied for exemption from said wage order on the ground that it was a distressed establishment. The RTWPB denied petitioner’s application for exemption after holding that the corporation accumulated profits amounting to 40,000 for the period under review.

Issue: Whether or not petitioner is exempted

Ruling: The NWPC Revised Guidelines on Exemption provided that exemption from compliance with the wage increase may be granted to distressed establishment whose paid-up capital has been impaired by at least 25% or which registers capital deficiency or negative net worth.

Since wage order was published on December 1, 1993 and thus became effective on December 16, 1993, the coverage of the interim period shall be the three quarter prior to December 16, 1993, the third quarter ending on September 30, 1993. The petitioner errs in claiming that said interim period is up to December 15, 1993 or December 31, 1993. Hence, petitioner is not exempted.

Garcy Kate D. Go LLB2 EH306 Page 57

Prubankers Association vs Prudential Bank (1999) 302 SCRA 74

Facts: The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who had rendered service for at least three (3) months before its effectivity, and for the same period thereafter, in the following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas in the Bicol Region.

On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03.

On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the implementation of the said wage orders. It demanded in the Labor Management Committee meetings that the petitioner extend the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates of petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration.

Issue: WON a wage distortion resulted from respondent's implementation of the Wage Orders.

Ruling: The court ruled that there is no wage distortion since the wage order implementation covers all the branches of the bank.

The hierarchy of positions was still preserved. The levels of different pay classes was not eliminated. The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727, which reads: Standards/Criteria for Minimum Wage Fixing — . . ."As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation."

Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3)The elimination of the distinction between the two levels and (4) The existence of the distortion in the same region of the country.

A disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought to be preserved by the concept of wage distortion.

Garcy Kate D. Go LLB2 EH306 Page 58

Millare vs NLRC, 305 SCRA 501

Facts: Petitioners numbering one hundred sixteen (116) occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.

In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners.

Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials.

PICOP grants the following allowances:  Staff allowance/managers allowance to those who live in rented houses near the mill site which ceases whenever a vacancy occurs in the company’s free housing facilities.  Transportation allowance in the form of advances for actual transportation expenses subject to liquidation is given to key officers and managers who use their own vehicles in the performance of their duties. This privilege is discontinued when the conditions no longer obtain.  Bislig allowance is given to managers and officers on account of the hostile environment prevailing therein. Once the recipient is transferred elsewhere, the allowance ceases.

Applying Art. 97, par. (f), of the Labor Code which defines "wage," the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by respondent PICOP and regularly received by petitioners, formed part of the latter's wages.

On appeal, the National Labor Relations Commission (NLRC) did not view in favor of the Executive Labor Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that the allowances did not form part of the salary base used in computing separation pay.

Issue: Whether or not the allowances in question are considered facilities customarily furnished.

Ruling: The Staff/Manager's allowance may fall under "lodging" but the transportation and Bislig allowances are not embraced in "facilities" on the main consideration that they are granted as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure that petitioners render quality performance. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. That the assailed allowances were for the benefit and convenience of respondent company was supported by the circumstance that they were not subjected to withholding tax.

In addition, the Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig.

Garcy Kate D. Go LLB2 EH306 Page 59

International Alliance of Educators vs. Quisumbing, 333 SCRA 13 [2000]

Facts: International school, Inc., pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. The decree authorizes the School to employ its 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. These include housing, transportation, shipping costs, taxes, and home leave allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than that of local-hires. The School justifies the difference on two “significant economic disadvantages” that foreign-hires have to endure, namely: (a) the “dislocation factor” and (b) limited tenure.

Petitioner union claims that the point-of-hire classification by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. When the CBA negotiation reached a deadlock, the Secretary of Labor assumed jurisdiction. The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates, as he said: The principle “equal pay for equal work” does not find application in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population.

The Acting Secretary of Labor found that the non-Filipino local-hires received the same benefits as the Filipino local-hires. The parties’ CBA points to the conditions and provisions for salary and professional compensation: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25% differentiation is reflective of the agreed value of displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS).

Issue: Is the ruling of the Acting Secretary of Labor justified?

Ruling: If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. There is no evidence that foreign-hires perform 25% more efficiently or effectively than local-hires. Both groups have similar functions and responsibilities, which they perform under similar conditions.

While the need of the School to attract foreign-hires is recognized, 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 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 allowances.

The State has the right and duty to regulate the relations between labor and capital. These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, public policy, courts will not hesitate to strike down these stipulations. We find the point-of-hire classification by employed by respondent School to justify the distinction in the salary rates of foreign-hires and local-hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires.

Garcy Kate D. Go LLB2 EH306 Page 60

BANKARD EMPLOYEES UNION v. NLRC GR No. 140689, Feb. 17, 2004

Facts: Bankard, Inc. classifies its employees by levels, to wit: Level I, Level II, Level III, Level IV, Level V. On November 28, 1993, its Board of Directors approved a “New Salary Scale” , made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industry’s labor market.

Bankard’s move drew the Bankard Employees Union_WATU, the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard to press for the increase in the salary of its old, regular employees. It’s request remained unheeded. So it filed a Notice of Strike on August 26, 1993 on the ground of discrimination and other acts of Unfair Labor Practice.

Petitioner maintains that for purposes of wage distortion, the classification is not one based on “levels” or “ranks” but on two groups of employees, the newly hired and the old, in each and every level, and not between and among the different ranks in the salary structure.

Issue: Whether the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees without increasing the salary rates of old employees resulted in wage distortion within the contemplation of Article 124 of the Labor Code.

Ruling: Prubankers Association v. Prudential Bank and Trust Company laid down the four elements of wage distortion, to wit: (1) An existing hierarchy of position with corresponding salary rates, (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; (4) The existence of the distortion in the same region of the country. Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of differentiation.

To determine the existence of wage distortion, the “historical” classification of the employees prior to the wage increase must be established. Likewise, it must be shown that as between the different classification of employees, there exists a “historical” gap or difference. In the present case, the employees of private respondent have been “historically” classified in levels I to IV and not on the basis of their length of service. The entry of new employees to the company ipso facto places them under any of the level mentioned in the new salary scale which private respondent adopted. Petition cannot make a contrary classification of private respondent’s employees without encroaching upon recognized management prerogative of formulating a wage structure. In this case, one based on level.

It is thus clear that there is no hierarchy of positions between the newly hired and regular employees of Bankard, hence, the first element of wage distortion provided in the Prubankers case is wanting. While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases where the nature of their work differs. For purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary.

Even assuming that there is a decrease In the wage gap between the pay of the old employees and the newly hired employees, to the court’s mind the gap is NOT significant as to obliterate or result in severe contraction of the intentional quantitive differences in the salary rates between the employee group./

Garcy Kate D. Go LLB2 EH306 Page 61

Aside from that the alleged “wage distortion” as the increase in the wages and salaries of new- hires was not due to a prescribed law or wage order.

If the compulsory mandate under Article 124 of the Labor Code to correct “wage distortion” is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified.

In fine, absent any indication that the voluntary increase of salary rates by an employer was done arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any legitimate purpose other than to discriminate against the regular employees, this Court will not step in to interfere with this management prerogative.

Garcy Kate D. Go LLB2 EH306 Page 62

Odango vs NLRC (2005) G.R. 147420

Facts: Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment found ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the DOLE directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC praying for payment of wage differentials, damages and attorney’s fees.

On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage differentials amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECO appealed the Decision to the NLRC where it reversed the Labor Arbiter’s Decision. The NLRC denied petitioners’ motion for reconsideration. Petitioners then elevated the case to CA where it dismissed the petition for failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific instances where the NLRC abused its discretion. The appellate court denied petitioners’ motion for reconsideration.

Issue: Whether or not the petitioners are entitled to money claims.

Ruling: Petitioners are not entitled to money claims or wage differentials.

The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary of Labor which was declared null and void since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.

Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. Petitioners’ claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. Petitioners’ line of reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal protection clause.

Garcy Kate D. Go LLB2 EH306 Page 63

C. Planas Commercial vs NLRC (2005) G.R. 144619

Facts: In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave pay, and premium pay for rest day and holiday and night shift differential against petitioners in the Arbitration Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic products and fruits of different kinds with more than 24 employees. Respondents were hired on January 1990, May 1990 and July 19991 as laborers and were paid below the minimum wage for the past 3 years. They were required to work for more than 8 hours a day and never enjoyed the minimum benefits. Petitioners filed their comment stating that the respondents were their helpers.

The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with the NLRC where it granted the money claims. Petitioners appealed with the CA but it was denied. It said that the company having claimed of exemption of the coverage of the minimum wage shall have the burden of proof to the claim.

Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic products and fruits to the customers for personal use, thus exempted from the application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria Market and the level of its business activity requires and sustains only less than ten employees at a time. Petitioners contend that private respondents were paid over and above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that private respondents’ claim for underpayment has no factual and legal basis. Petitioners claim that since private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to prove such allegation which private respondents failed to do.

Issue: WON petitioner is exempted from the application of minimum wage law.

Ruling: Petitioners have not successfully shown that they had applied for the exemption.

R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all workers and employees in the private sector. Section 4 of the Act provides for exemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another, including family drivers. Also, retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act.

Garcy Kate D. Go LLB2 EH306 Page 64

EJR CRAFTS CO. VS. CA ,G.R. No. 154101; March 10, 2006

Facts: On August 22, 1997, an inspection was conducted on the premises of petitoner’s offices wherein it was found that certain violations of labor standards laws were committed. On the same day, the Notice of Inspection Result was received by and explained to, the manager, with the corresponding directive that necessary restitution be effected within five days from said receipt.

As no restitution was made, the Regional Office conducted summary investigations. Despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore, petitioner failed to question the findings of the Labor Inspector received by and explained to the manager.

The inspection was prompted by the filing of respondents sometime in 1997 against petitioner a complaint for underpayment of wages, regular holiday pay, and other benefits.

On November 6, 1997, the Regional Director issued a ruling against petitioner, which was appealed, but later on denied.

On the petition, petitioner argued that the Regional Director has no jurisdiction over the case since respondents have ceased to be connected with petitioner at the time of the filing of the complaint as well as when the inspection/investigation was conducted. Thus, there being no ER-EE relationship, the claims of payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiter.

Issue: Whether or not the Regional Director had jurisdiction to hear the case.

Ruling: Yes, it does.

Aside from photocopies of documents entitled “Release and Quitclaim,” no other evidence was adduced by the petitioner to substantiate this claim. These documents, being mere photocopies are unreliable and incompetent without the original and deserves little credence or weight.

As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. Since it is a time- honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the former’s favor.

Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 65

Pag Asa Steel Works vs. CA GR No. 166647, March 31, 2006

Facts: Petitioner is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees of petitioner. On Jan. 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of the NCR issued Wage Order No. NCR-06. It provided for an increase of P13.00 per day in the salaries of employees receiving the minimum wage, and a consequent increase in the minimum wage rate to P198.00 per day. Petitioner and the Union negotiated on how to go about the wage adjustments. Petitioner forwarded a letter to the Union with the list of the salary adjustments of the rank- and-file employees after the implementation of Wage Order No. NCR-06. On Sept. 23, 1999, petitioner and the Union entered into a CBA, effective July 1, 1999 until July 1, 2004.

On Nov. 1, 2000, W age Order No. NCR-08 9 took effect. Section 1 thereof provides: Upon the effectivity of this Wage Order, private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of P26.50 per day, thereby setting the new minimum wage rate in the National Capital Region at P250.00 per day.

Then Union president requested petitioner to implement the increase under Wage Order No. NCR-08 in favor of the company's rank-and-file employees. Petitioner rejected the request, claiming that since none of the employees were receiving a daily salary rate lower than P250.00 and there was no wage distortion, it was not obliged to grant the wage increase.The Union elevated the matter to the NCMB. When the parties failed to settle, they agreed to refer the case to voluntary arbitration.

The Union alleged that it has been the company's practice to grant a wage increase under a government-issued wage order, aside from the yearly wage increases in the CBA. It averred that petitioner paid the salary increases provided under the previous wage orders in full (aside from the yearly CBA increases), regardless of whether there was a resulting wage distortion, or whether Union members' salaries were above the minimum wage rate. Wage Order No. NCR- 06, where rank-and-file employees were given different wage increases ranging from P10.00 to P13.00, was an exception since the adjustments were the result of the formula agreed upon by the Union and the employer after negotiations. The Union averred that all of their CBAs with petitioner had a "collateral agreement" where petitioner was mandated to pay the equivalent of the wage orders across-the-board, or at least to negotiate how much will be paid. It pointed out that an established practice cannot be discontinued without running afoul of Article 100 of the Labor Code on non-diminution of benefits.

For its part, petitioner alleged that there is no such company practice and that it complied with the previous wage orders (Wage Order Nos. NCR-01-05) because some of its employees were receiving wages below the minimum prescribed under said orders. As for Wage Order No. NCR- 07, petitioner alleged that its compliance was in accordance with its verbal commitment to the Union during the CBA negotiations that it would implement any wage order issued in 1999. Petitioner further averred that it applied the wage distortion formula prescribed under Wage Order Nos. NCR-06 and NCR-07 because an actual distortion occurred as a result of their implementation. It asserted that at present, all its employees enjoy regular status and that none receives a daily wage lower than the P250.00 minimum wage rate prescribed under Wage Order No. NCR-08.

Issue: Whether or not the petitioner is obliged to grant an increase to its employees as a matter of practice.

Garcy Kate D. Go LLB2 EH306 Page 66

Ruling: The petition is meritorious. We rule that petitioner is not obliged to grant the wage increase under Wage Order No. NCR-08 either by virtue of the CBA, or as a matter of company practice. We agree with petitioner's contention that the issue on the ambiguity of the CBA and its failure to express the true intention of the parties has not been expressly raised before the voluntary arbitration proceedings.

It is submitted that employers (unless exempt) in Metro Manila (including the [petitioner]) are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. Neither could they insist for an adjustment of P26.50 increase under Wage Order #8. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of P26.50 per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the workers.

We find no evidence to prove that the grant of a wage-order-mandated increase to all the employees regardless of their salary rates on an agreement collateral to the CBA had ripened into company practice before the effectivity of Wage Order No. NCR-08. Respondent Union failed to adduce proof on the salaries of the employees prior to the issuance of each wage order to establish its allegation that, even if the employees were receiving salaries above the minimum wage and there was no wage distortion, they were still granted salary increase. Only the following lists of salaries of respondent Union's members were presented in evidence: (1) before Wage Order No. NCR-06 was issued; (2) after Wage Order No. NCR-06 was implemented; (3) after the grant of the first year increase under the CBA; (4) after Wage Order No. NCR-07 was implemented; and (5) after the second year increase in the CBA was implemented.

Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. In this case, petitioner granted the increase under Wage Order No. NCR-07 on its belief that it was obliged to do so under the CBA.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 65171 and Resolution dated January 11, 2005 are REVERSED and SET ASIDE. The Decision of the Voluntary Arbitrator is REINSTATED. No costs.

Garcy Kate D. Go LLB2 EH306 Page 67

Metropolitan Bank vs. NWPC GR No. 144322, Feb. 6, 2007

Facts: The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan, by virtue of RA No. 6727, otherwise known as the Wage Rationalization Act, issued Wage Order No. R-02-03. Section 1 of the Order states as follows: Sec. 1 Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of the employment are granted an across the board increase of Php 15.00 daily.

The Bankers’ Council for Personnel Management (BCPM), on behalf of its member banks, requested exemption from the coverage of the Wage Order since its member banks are already paying more than the prevailing minimum wage rate in the National Capital Region (NCR), which is their principal place of business. NWPC denied such request.

Metropolitan Bank and Trust Company later filed a petition for Certiorari and Prohibition with the Court of Appeals seeking for the nullification of the WO on grounds that RTWPB acted beyond its authority when it issued the WO without any ceiling or qualification and that the implementation of the WO will cause the petitioner, and other similarly situated employers, to incur huge financial losses and suffer labor unrest.

Issue: Whether Wage Order No. R-02-03 is valid.

Ruling: There are two ways of fixing the minimum wage: the "floor-wage" method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary- ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase.

In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor- wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. The Wage Order granted additional benefits not contemplated by R.A. No. 6727.

The WO herein question is null and void insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the separability clause of the WO, Sec. 1 is declared valid with respect to employees earning the prevailing minimum wage rate.

Garcy Kate D. Go LLB2 EH306 Page 68

Equitable Bank vs. Sadac G.R. No. 164772; June 8, 2006

Facts: Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine lawyers of petitioner Bank’s Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership of the department. On the ground of lack of confidence in Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, Sadac was removed from his office

Labor Arbiter rendered decision that Sadac’s termination was illegal and entitled to reinstatement and payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for execution of judgment where it gave its computation which amounted to P 6.03 M representing his back wages and the increases he should have received during the time he was illegally dismissed. The Bank opposed to Sadac’s computation. The Labor Arbiter favor Sadac’s computation. NLRC, upon appeal by the bank, reversed the decision. CA reversed the decision of NLRC. Hence, this petition.

Issue: Whether or not the computation of back wages shall include the general increases.

Ruling: To resolve the issue, the court revisits its pronouncements on the interpretation of the term back wages. Back wages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former’s unlawful act or bad faith.

In the case of Bustamante v. National Labor Relations Commission, It said that the Court deems it appropriate to reconsider such earlier ruling on the computation of back wages by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, back wages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.

There is no vested right to salary increases. Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. The conclusion is that Sadac’s computation of his full backwages which includes his prospective salary increases cannot be permitted.

Garcy Kate D. Go LLB2 EH306 Page 69

SIP Food House et al vs. Batolina, GR No. 192473

Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents) worked as waiters and waitresses in the canteen.

In February 2004, GMPC terminated SIP’s “contract as GMPC concessionaire.The termination of the concession contract caused the termination of the respondents’ employment, prompting them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. NLRC ruled in favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate court’s ruling that it was the employer of the respondents, claiming that it was merely a labor-only contractor of GMPC

Issue: Whether or not SIP was liable to them for their statutory benefits, although it was not made to answer for their lost employment due to the involuntary nature of the canteen’s closure

Ruling: The employer-employee relationship issue.

The CA ruled out SIP’s claim that it was a labor-only contractor or a mere agent of GMPC. We agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC because they exercised the essential elements of an employment relationship with the respondents such as hiring, payment of wages and the power of control, not to mention that SIP operated the canteen on its own account as it paid a fee for the use of the building and for the privilege of running the canteen. The fact that the respondents applied with GMPC in February 2004 when it terminated its contract with SIP, is another clear indication that the two entities were separate and distinct from each other. We thus see no reason to disturb the CA’s findings.

The respondent’s money claims

We likewise affirm the CA ruling on the monetary award to Batolina and the other complainants. The free board and lodging SIP furnished the employees cannot operate as a set- off for the underpayment of their wages. We held in Mabeza v. National Labor Relations Commission that the employer cannot simply deduct from the employee’s wages the value of the board and lodging without satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear from the records that SIP failed to comply with these requirements.

On the collateral issue of the proper computation of the monetary award, we also find the CA ruling to be in order. Indeed, in the absence of evidence that the employees worked for 26 days a month, no need exists to recompute the award for the respondents who were “explicitly claiming for their salaries and benefits for the services rendered from Monday to Friday or 5 days a week or a total of 20 days a month.”

Garcy Kate D. Go LLB2 EH306 Page 70

SLL INTERNATIONAL CABLES SPECIALIST vs. NLRC

Facts: Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. Soon after they were engaged as private employees for their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 and in October of the same year, the latter was increased to P155.00.

On May 21, 1999, private respondents for the 4th time worked with Lagon's project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997- December 1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including private respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be given anymore time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorney's fees

Issue: Whether or not the respondent should be allowed to recover the differential due to the failure of the petitioner to pay the minimum wage. Whether or not value of the facilities that the private respondents enjoyed should be included in the computation of the "wages" received by them

Ruling: As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents -- which will show that overtime, differentials, service incentive leave and other claims of workers have been paid -- are not in the possession of the worker but in the custody and absolute control of the employer.

In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi.

On whether the value of the facilities should be included in the computation of the "wages" received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the wages of the employees not more than 70% of the

Garcy Kate D. Go LLB2 EH306 Page 71 value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees' wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value.[20] Mere availment is not sufficient to allow deductions from employees' wages.[21]

These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employee's salaries. It also failed to provide proof of the employees' written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects.

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of dismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners to comply with the payment of the prescribed minimum wage.

The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

Garcy Kate D. Go LLB2 EH306 Page 72

Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013

Fact: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas City, Metro Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance incentive earned during the year immediately preceding 12 months) No. of Years in Service.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to the amount of PhP496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."

(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice. The only two pieces of evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was included in their retirement package even if they did not meet the sales and collection qualifiers. Therefore, the failure of employer to grant him his SMI is a violation on the principle of non- diminution of benefits.)

Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice

Ruling: Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare, and to afford them full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor." There is diminution of benefits when the following requisites are present: 1. the grant or benefit is founded on a policy or has ripened into a practice over a long period of time; 2. the practice is consistent and deliberate; 3. the practice is not due to error in the construction or application of a doubtful or difficult question of law; and 4. The diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to

Garcy Kate D. Go LLB2 EH306 Page 73 be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice.

The granting of the SMI in the retirement package of Velazquez was an isolated incident and could hardly be classified as a company practice that may be considered an enforceable obligation. To repeat, the principle against diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate; it presupposes that a company practice, policy and tradition favorable to the employees has been clearly established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed by them. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable or enforceable right. Company practice, just like any other fact, habits, customs, usage or patterns of conduct, must be proven by the offering party who must allege and establish specific, repetitive conduct that might constitute evidence of habit or company practice.

Garcy Kate D. Go LLB2 EH306 Page 74

Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc. GR No. 198783, April 15, 2013

Facts: Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the plant in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling operators who man its Bottling Line 2. All of them are male and they are members of herein respondent Royal Plant Workers Union (ROPWU).

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their request was likewise granted. Sometime in September 2008, the chairs provided for the operators were removed pursuant to a national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner for bottling operators, wherein every bottling operator is given the responsibility to keep the machinery and equipment assigned to him clean and safe. The program reinforces the task of bottling operators to constantly move about in the performance of their duties and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him, a bottling operator does not need a chair anymore, hence, petitioner’s directive to remove them. Furthermore, CCBPI rationalized that the removal of the chairs is implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to their persons. As bottling operators are working with machines which consist of moving parts, it is imperative that they should not fall asleep as to do so would expose them to hazards and injuries. In addition, sleeping will hamper the efficient flow of operations as the bottling operators would be unable to perform their duties competently.

Issue: Whether or not the removal of the bottling operators’ chairs was a valid exercise of management prerogative. ---YES

Ruling: According to the Union, such removal constitutes a violation of the 1) Occupational Health and Safety Standards which provide that every worker is entitled to be provided by the employer with appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and humane condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of CCBPI which provides for a safe and healthy workplace by maintaining a productive workplace and by minimizing the risk of accident, injury and exposure to health risks; and 4) diminution of benefits provided in Article 100 of the Labor Code.

The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place, and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their duties and responsibilities more efficiently. The chairs were not removed indiscriminately. They were carefully studied with due regard to the welfare of the members of the Union. The removal of the chairs was compensated by: a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period from 15 to 30 minutes between rotations.

Garcy Kate D. Go LLB2 EH306 Page 75

Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances of operators sleeping on the job while in the performance of their duties and responsibilities and because of the fact that the chairs were not necessary considering that the operators constantly move about while working. In short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPI’s exercise of its management prerogative was made in good faith without doing any harm to the workers’ rights.

The rights of the Union under any labor law were not violated. There is no law that requires employers to provide chairs for bottling operators. There was no violation either of the Health, Safety and Social Welfare Benefit provisions under Book IV of the Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs was compensated by the reduction of the working hours and increase in the rest period. The directive did not expose the bottling operators to safety and health hazards.

The Union should not complain too much about standing and moving about for one and one- half (1 ½) hours because studies show that sitting in workplaces for a long time is hazardous to one’s health. The CBA between the Union and CCBPI contains no provision whatsoever requiring the management to provide chairs for the operators in the production/manufacturing line while performing their duties and responsibilities.

The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general principles of justice and fair play because the bottling operators’ working time was considerably reduced from two and a half (2 ½) hours to just one and a half (1 ½) hours and the break period, when they could sit down, was increased to 30 minutes between rotations. The bottling operators’ new work schedule is certainly advantageous to them because it greatly increases their rest period and significantly decreases their working time. A break time of thirty (30) minutes after working for only one and a half (1 ½) hours is a just and fair work schedule. The operators’ chairs cannot be considered as one of the employee benefits covered in Article 10016 of the Labor Code. In the Court’s view, the term "benefits" mentioned in the non- diminution rule refers to monetary benefits or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees’ wage, salary or compensation making them enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or privileges involved in those cases mainly concern monetary considerations or privileges with monetary equivalents. Without a doubt, equating the provision of chairs to the bottling operators is something within the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100 of the Labor Code do not show even with the slightest hint that such provision of chairs for the bottling operators may be sheltered under its mantle.

Garcy Kate D. Go LLB2 EH306 Page 76

National Wages and Productivity Commission et al., vs The Alliance of Progressive Labor et al. G.R. No. 150326, March 12, 2014

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the NWPC to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels; to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and to review regional wage levels set by the RTWPBs to determine whether the levels were in accordance with the prescribed guidelines and national development plans, among others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act No. 6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region, provinces or industries therein; and to issue the corresponding wage orders, subject to the guidelines issued by the NWPC.

Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October 14, 1999 imposing an increase of P25.50/day on the wages of all private sector workers and employees in the NCR and pegging the minimum wage rate in the NCR at P223.50/day.6 However, Section 2 and Section 9 of Wage Order No. NCR–07 exempted certain sectors and industries from its coverage

Section 2. The adjustment in this Order does not cover the following:

A. [W]orkers in the following sectors which were granted corresponding wage increases on January 1, 1999 as prescribed by Wage Order No. NCR–06: a.1. Agriculture workers –Plantation P12.00

–Non–plantation P18.50

a.2. Cottage/handicraft industry P16.00

a.3. Private hospitals with bed capacity of 100 or less P12.00

a.4. Retail/Service establishments

–Employing 11–15 workers P12.00

–Employing not more than 10 workers P19.00

B. Workers in small establishments employing less that ten (10) workers.

x x x x

Section 9. Upon application with and as determined by the Board, based on documentation and other requirements in accordance with applicable rules and regulations issued by the Commission, the following may be exempt from the applicability of this Order:

1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;

Garcy Kate D. Go LLB2 EH306 Page 77

2. Exporters including indirect exporters with at least 50% export sales and with forward contracts with their foreign buyers/principals entered into on or twelve (12) months before the date of publication of this Order may be exempt during the lifetime of said contract but not to exceed twelve (12) months from the effectivity of this Order.

Feeling aggrieved by their non–coverage by the wage adjustment, the Alliance of Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR–07. They contended that neither the NWPC nor the RTWPB–NCR had the authority to expand the non–coverage and exemptible categories under the wage order; hence, the assailed sections of the wage order should be voided.

The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR–07. It observed that the RTWPB’s power to determine exemptible categories was adjunct to its wage fixing function conferred by Article 122(e) of the Labor Code, as amended by Republic Act No. 6727; that such authority of the RTWPB was also recognized in NWPC Guidelines No. 01, Series of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that the power of the RTWPB–NCR to determine exemptible categories was not an adjunct to its wage fixing function. CA favored the respondents and granted the petition for certiorari. Hence, this appeal by petition for review on certiorari by the NWPC and RTWPB–NCR.

Issue: Whether or not the RTWPB–NCR had Ruling: the RTWPB–NCR had the authority to provide additional exemptions from the minimum wage adjustments embodied in Wage Order No. NCR–07 The NWPC promulgated NWPC Guidelines No. 001–95 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum wage rates by region, province and industry. Section 1 of Rule VIII of NWPC Guidelines No. 001– 95 recognized the power of the RTWPBs to issue exemptions from the application of the wage orders subject to the guidelines issued by the NWPC (this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS Exemption of establishments from compliance with the wage increases and cost of living allowances prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary difficulties due to losses maintain the financial viability of their businesses and continued employment of their workers; (2) encourage the establishment of new businesses and the creation of more jobs, particularly in areas outside the National Capital Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail and service sector, that have a limited capacity to pay.

The following categories of establishments may be exempted upon application with and as determined by the Board:

1. Distressed establishments 2. New business enterprises (NBEs) 3. Retail/Service establishments employing not more than ten (10) workers 4. Establishments adversely affected by natural calamities

Garcy Kate D. Go LLB2 EH306 Page 78

Under the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the authority to include in the wage orders establishments that belonged to, or to exclude from the four enumerated exemptible categories.

If the exemption was outside of the four exemptible categories, like here, the exemptible category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and justifiable reason or reasons for the inclusion of such category. It is the compliance with the second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the RTWPB–NCR had substantial and justifiable reasons in exempting the sectors and establishments enumerated in Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings, social–economic data and informations gathered prior to the issuance of Wage Order No. NCR–07. The very fact that the validity of the assailed sections of Wage Order No. NCR–07 had been already passed upon and upheld by the NWPC meant that the NWPC had already given the wage order its necessary legal imprimatur. Accordingly, the requisite approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory standards and bound by the rules and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs investigate and study all the pertinent facts to ascertain the conditions in their respective regions. Hence, they are logically vested with the competence to determine the applicable minimum wages to be imposed as well as the industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR–07 is presumed to be regularly issued in the absence of any strong showing of grave abuse of discretion on the part of RTWPB–NCR. The presumption of validity is made stronger by the fact that its validity was upheld by the NWPC upon review.

Garcy Kate D. Go LLB2 EH306 Page 79

WAGE ENFORCEMENT AND RECOVERY

Rajah Humabon Hotel vs Trajano (1993) G.R. 100222-23

Facts: Subsequent to the initial pleading filed by respondent-employees before the regional director of DOLE for redress in regard to underpaid wages and non-payment of benefits, petitioners were instructed to allow the inspection of the employment records of respondents on April 4, 1989. However, no inspection could be done on that date on account of the picket staged by other workers. At the re-scheduled examination after closure of petitioners' business on April 16, 1989, instead of presenting the payrolls and daily time records of private respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director has no jurisdiction over the case because the employer-employee relationship had been served as a result of the closure of petitioners' business, apart from the fact that each of the claims of private respondents exceeded the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or the New Labor Relations Law.

Issue: Who between the Regional Director of DOLE and the Labor Arbiter has jurisdictional competence over the complaint of private respondents?

Ruling: Regional Director had no jurisdiction over the case.

Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the Labor Code gives concurrent jurisdiction to both the Secretary of Labor (or the various regional directors) and the labor arbiters over money claims among the other cases mentioned by Article 217 of the Labor Code. This provision merely confirms/reiterates the enforcement/adjudication authority of the Regional Director over uncontested money claims in cases where an employer-employee relationship still exists.

However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven days after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were amended, there is no doubt that the regional directors can try money claims only if the following requisites concur: (1) the claim is presented by an employee or person employed in domestic or household service, or house helper under the code; (2) the claimant, no longer being employed, does not seek reinstatement; and (3) the aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00). Thus, the power to hear and decide employees' claims arising from employer-employee relations, exceeding P5,000.00 for each employee should be left to the Labor Arbiter as the exclusive repository of the power to hear and decide such claims.

In the instant case, a simple examination of the labor arbiter's impugned order dated September 25, 1989 readily shows that the aggregate claims of each of the twenty-five employees of petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over the case. Hence, the petition is granted and the public respondent is directed to refer the workers' money claims to the appropriate Labor Arbiter for proper disposition.

Garcy Kate D. Go LLB2 EH306 Page 80

Guico vs. Sec of Labor

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

On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Orderfavorable to the 21 employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated December 21 and 22, 1994, could not cause the dismissal of the labor standards case against the petitioner since the same were executed before the filing of the said case. Moreover, the employees repudiated said waiver and quitclaim. Second, he held that despite the salary increase granted by the petitioner, the daily salary of the employees was still below the minimum daily wage rate of P119.00 under Wage Order No. RB-I-03. Thirdly, he held that the removal of the commission and incentive schemes during the pendency of the case violated the prohibition against elimination or diminution of benefits under Article 100 of the Labor Code, as amended. The Regional Director awarded the claimants ONE MILLION EIGHTY ONE THOUSAND SEVEN HUNDRED FIFTY SIX PESOS AND SEVENTY CENTAVOS (P1,081,756.70) representing their backwages, well over P5,000.

On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He ruled that the Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as amended. He pointed out that Republic Act No. 7730 repealed the jurisdictional limitations imposed by Article 129 on the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized representatives. In addition, he held that petitioner is now estopped from questioning the computation made by the Regional Director as a result of the compromise agreement he entered into with the employees. Lastly, he reiterated his ruling that the Receipt, Waiver and Quitclaim signed by the employees was not valid.

Issue: Whether or not the Regional Director of the Department of Labor and employment can award claims even more than P5,000.

Held: Yes, the Regional Director can award claims of over P5,000. The visitorial power of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code, viz: Art. 128 (b) — Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of the Code and other labor legislation based on the findings of the labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

Garcy Kate D. Go LLB2 EH306 Page 81

EX-BATAAN VETERANS SECURITY AGENCYVS. SOLE, G.R. No. 152396; November 20, 2007

Facts Petitioner is in the business of providing security services while respondents are employees assigned to the National Power Corporation. On February 20, 1996, respondents instituted a complaint for underpayment of wages against petitioner before the Regional Office of the DOLE. On March 7, 1996, the Regional Office conducted a complaint inspection of the Plant, and violations of labor standards laws were found. On the same date, the Regional Office issued a notice of hearing, requiring petitioner and respondents to attend.

On August 19, 1996, the Director of the Regional Office issued an order in favor of respondents. Petitioner filed a motion for reconsideration, questioning the jurisdiction of the Regional Director, which was denied. Petitioner appealed to the SOLE, which affirmed the Regional Director’s orders. Petitioner appealed to the CA, which dismissed the petition. In the petition, the petitioners argue that 1) The Regional Director did not acquire jurisdiction over petitioner because he failed to comply with section 11, Rule 14 of the 1997 Rules of Civil Procedure. The notice of hearing was served at the Plant, not at petitioner’s main office, and addressed to its VP. 2) Under articles 129 and 217(b) of the Labor Code, the Labor Arbiter, not the Regional Director, has exclusive and original jurisdiction over the case because the individual monetary claim of respondents exceeds P5000. 3) The case falls under the exception clause in article 128(b) of the Labor Code. The Regional Director should have certified the case to the arbitration branch of the NLRC.

Issue: (1.) Whether or not the SOLE or his duly authorized representatives acquired jurisdiction over petitioner. (2.) Whether or not the SOE or his duly authorized representatives have jurisdiction over the money claims which exceed P5000.

Ruling: 1. YES, THEY HAVE. The Rules on the Disposition of Labor Standards Cases in the Regional Offices (rules) specifically state that notices and copies of orders shall be served on the parties or their duly authorized representatives at their last known address or, if they are represented by counsel, through the latter. The rules shall be liberally construedand only in the absence of any applicable provision will the Rules of Court apply in a suppletory character.

In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao, detachment commander and bookkeeper of EBVSAI, respectively, appeared before the Regional Director. They claimed that the 22 March 1996 notice of hearing was received late and manifested that the notices should be sent to the Manila office. Thereafter, the notices of hearing were sent to the Manila office. They were also informed of EBVSAI’s violations and were asked to present the employment records of the private respondents for verification. They were, moreover, asked to submit, within 10 days, proof of compliance or their position paper. The Regional Director validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional Director after receiving the notices of hearing and after appearing before the Regional Director.

2. YES, THEY DO. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives.

Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus:

Garcy Kate D. Go LLB2 EH306 Page 82

Art. 128 Visitorial and enforcement power. --- (b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where the relationship of employer- employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to [the labor standards provisions of this Code and other] labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase “(N)otwithstanding the provisions of Articles 129 and 217of this Code to the contrary x x x” thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representatives to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officer or industrial safety engineer made in the course of inspection.

The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000. However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results.

In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause. The Court notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. It was only in its supplemental motion for reconsideration before the Regional Director that EBVSAI questioned the findings of the labor regulations officer and presented documentary evidence to controvert the claims of private respondents. But even if this was the case, the Regional Director and the Secretary of Labor still looked into and considered EBVSAI’s documentary evidence and found that such did not warrant the reversal of the Regional Director’s order. The Secretary of Labor also doubted the veracity and authenticity of EBVSAI’s documentary evidence. Moreover, the pieces of evidence presented by EBVSAI were verifiable in the normal course of inspection because all employment records of the employees should be kept and maintained in or about the premises of the workplace, which in this case is in Ambuklao Plant, the establishment where private respondents were regularly assigned.

Garcy Kate D. Go LLB2 EH306 Page 83

Sapio vs Undaloc Construction (2008) G.R. 155034

Facts: The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was assigned to was already finished, he being allegedly a project employee. But petitioner asserted that he was a regular employee having been engaged to perform works which are "usually necessary or desirable" in respondents' business.

Issue: WON the Appellate court erred in failing to dismiss respondent's petition for certiorari brought before it on the ground that respondents failed to attach certified true copies of the NLRC's decision and resolution denying the motion for reconsideration.

Ruling: Appellate Court was right.

In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining and/or Preliminary Injunctionfiled with the Court of Appeals on 22 November 2001, petitioner did not raise this procedural issue. Neither did he do so when he moved for reconsideration of the 8 May 2002 Decision of the Court of Appeals. It is only now before this Court that petitioner proffered the same. This belated submission spells doom for petitioner. More fundamentally, an examination of the Court of Appeals rollo belies petitioner as it confirms that the alleged missing documents were in fact attached to the petition.

To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. These payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00.

Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims rests on the employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and convincing evidence in support of his claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to overcome the disputable presumption of regularity.

Garcy Kate D. Go LLB2 EH306 Page 84

Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency, G.R. No. 167708, August 22, 2008

Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay Veteran’s Security and Investigation Agency, Inc. as security guards sometime in 1988. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with respondent security agency on July 6, 2000. They were not given new assignments and their benefits (including 13th month pay, overtime pay and holiday pay as well as wage differentials due to underpayment of wages) were withheld by respondent security agency. This prompted them to file a complaint for violation of labor standards in the regional office of the Department of Labor and Employment in the National Capital Region (DOLE-NCR).

A labor inspector acted on the complaint, Manuel M. Cayabyab. He conducted an inspection on October 3, 2000. His assessment is that the respondents should comply with the labor standards through payment or question in it to the DOLE-NCR within 5 days. Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor employment officer’s findings. Thus, in his May 10, 2001 order, the Regional Director of the DOLE-NCR adopted the findings and computation of Cayabyab as to the unpaid benefits due to petitioners Agapay and Alonso, Jr.

Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it. Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary of Labor and Employment found that respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. Thus, the appeal was dismissed and the DOLE-NCR Regional Director’s May 10, 2001 order was declared final and executory. The Secretary of Labor and Employment denied reconsideration.

Respondents elevated the case to the CA, at first the CA dismissed their appeal and upheld the DOLE’s decision. But the CA granted their reconsideration and modified DOLE”s decision, Invoking the case of Star Angel Handicraft v. National Labor Relations Commission. Thus, the case was appealed by the petitioner in supreme court.

Issue: whether or not the CA was right in granting the appeal.

Ruling: No, the employer’s motion to reduce the appeal the bond was no in accordance with the art. 128 of Labor code, the last paragraph of the said provision provides:”an order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from”

Clearly the respondents did not post bail, when they appealed the case at the DOLE-NCR. The CA’s amended decision also contradicted the spirit that animates all labor laws, the promotion of social justice and the protection of workers. The posting of a cash or surety bond to perfect an appeal of an order involving a monetary award has a two-fold purpose: (1) to assure the employee that, if he finally prevails in the case, the monetary award will be given to him upon dismissal of the employer’s appeal and (2) to discourage the employer from using the appeal to delay or evade payment of his obligations to the employee.[17] The CA disregarded these pro-labor objectives when it treated respondents’ failure to post the required bond with undue leniency. The CA should have resolved any doubt in the implementation and interpretation of the Labor Code and its implementing rules in favor of labor.

Garcy Kate D. Go LLB2 EH306 Page 85

Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the appeal bond because the Court recognized the NLRC’s existing practice at that time to allow the reduction of the appeal bond “upon motion of appellant and on meritorious grounds.” In fact, the practice was subsequently institutionalized in the rules of procedure of the NLRC which now allow the reduction of the amount of the bond “in justifiable cases and upon motion of the appellant.”

Garcy Kate D. Go LLB2 EH306 Page 86

National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641, Nov. 11, 2008

Facts: DENR ordered the indefinite suspension of MARCOPPER's operations for causing damage to the environment of the Province of Marinduque by spilling the company's mine waste or tailings from an old underground impounding area into the Boac River, in violation of its ECC. NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. It filed a complaint with the NLRC against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's fees.

NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations, its members were not paid the wages due them for six months. It further claimed that its members are also entitled to be paid their separation pay pursuant to their collective bargaining agreement with MARCOPPER and under existing implementing rules of the Labor Code. There had been an illegal strike which occurred.

Issue: Whether or not it is necessary that MARCOPPER file an appeal bond

RULING: In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with respect to the NAMAWU members who were no longer company employees. The CA decision decreeing the termination of employment of those involved in the illegal strike case had already been issued at that time. We subsequently ruled on the same issue during the time the environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed MARCOPPER's appeal for failure to file the requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a settled matter that the NLRC was in no position to disregard. In this light, the CA was correct in reversing the dismissal of MARCOPPER's appeal for failure to file an appeal bond. Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWU's complaint with respect to its 615 previously dismissed members.

Garcy Kate D. Go LLB2 EH306 Page 87

JETHRO INTELLIGENCE & SECURITY CORPORATION vs. Secretary of Labor

Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint1 filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the Department of Labor and Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakult’s premises in Calamba, Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order No. 18-02.

By Order3 of September 9, 2004, the DOLE Regional Director, noting petitioners’ failure to rectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials, regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium.

Jethro appealed to the Secretary of Labor and Employment (SOLE), faulting the Regional Director for, among other things, basing the computation of the judgment award on Garcia’s affidavit instead of on the data reflected in the payrolls for 2001 to 2004 which was denied.

Issue: Whether or not SOLE or his duly authorized representative has jurisdiction over money claims that exceed 5,000.

Ruling: In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakult’s premises in Calamba, as Jethro’s offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law.

Jethro’s failure to keep payrolls and daily time records in Yakult’s premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law.

Garcy Kate D. Go LLB2 EH306 Page 88

Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries – Dusit Hotel Nikko Chapter (2009) G.R. 181972

Facts: Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and workers of all private sectors, identified as follows in Section 1 thereof: Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of THIRTY PESOS (P30.00) per day payable in two tranches as follows: Amount of ECOLA Effectivity P15.00 5 November 2001 P15.00 1 February 2002 On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to Director Alex Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory arbitration before the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel; and requesting immediate assistance on this matter. On 24 May 2002, Rasing sent Dir. Maraan another letter following-up his previous request for assistance.

Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first Inspection, the report showed that Dusit Hotel is exempt from complying with WO no. 9. Due to the Second request for inspection, DOLE representative conducted another round of inspection and the Labor Standards Officer noted the following in her inspection report: * Non-presentation of records/payrolls * Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09-> ECOLA covering the periods from Nov. 5/01 to present.

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or correction of the noted violations within five days from receipt of the Notice, and to submit any question on the findings of the labor inspector within the same period, otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel Manager Rogelio Santos. In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No. 000215-02 — the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union — granting the hotel employees the following wage increases, in accord with the CBA:

Effective January 1, 2001 - P500.00/month Effective January 1, 2002 - P550.00/month Effective January 1, 2003 - P600.00/month

On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR, through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, 11 as amended by Republic Act No. 8188.

Garcy Kate D. Go LLB2 EH306 Page 89

Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002, arguing that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and the Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees' share in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would already be receiving salaries beyond the coverage of WO No.

Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27 December 2002, setting aside its earlier Order dated 22 October 2002 for being moot and academic, in consideration of the NLRC Decision dated 9 October 2002; and dismissing the complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit.

Issues: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latter's Decision dated 9 October 2002. Whether Dusit Hotel is liable for the double indemnity for violation of the wage order.

Ruling: The Court rules in the negative. It must be noted that the hotel employees have a right to their share in the service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:

Article 96.Service charges. — All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other.

The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2 (m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of Inspection Result "shall specify the violations discovered, if any, together with the officer's recommendation and computation of the unpaid benefits due each worker with an advice that the employer shall be liable for double indemnity in case of refusal or failure to correct the violation within five calendar days from receipt of notice". A careful review of the Notice of Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan, already issued its Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188.

Garcy Kate D. Go LLB2 EH306 Page 90

Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered position as against capital, it is equally mindful of the protection that the law accords to capital. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.

Garcy Kate D. Go LLB2 EH306 Page 91

Tiger Construction and Development Corp. vs. Abay et al.

The general rule is that any decision rendered without jurisdiction is a total nullity and may be struck down at any time, the party that asserts it must be in good faith and not evidently availing thereof simply to thwart the execution of an award that has long become final and executory.

Facts: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpayment of 13th month pay. The case was then set for summary hearing.

Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the same Code, this instant case should be referred back to the National Labor Relations Commission (NLRC) Sub-Arbitration Branch V, Naga City, on the ground that the aggregate money claim of each worker exceeds the jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).

Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas), in an apparent reversal of Director Manalo’s endorsement, issued another inspection authority on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials conducted another investigation of petitioner’s premises and the same violations were discovered.

According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office after July 25, 2002 were null and void for want of jurisdiction. aving the case in her office once more, Director Manalo finally issued an Order dated January 29, 2003 denying petitioner’s motion for reconsideration for lack of merit

Issue: Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution stage.

Ruling: The petition lacks merit. Petitioner admits that it failed to appeal the January 29, 2003 Order within the period prescribed by law. It likewise admits that the case was already in the execution process when it resorted to a belated appeal to the DOLE Secretary. Petitioner, however, excuses itself from the effects of the finality of the Order by arguing that it was allegedly issued without jurisdiction and may be assailed at any time.

Director Manalo’s initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was within the latter’s jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore retained the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by law and not by the interested parties, much less by one of them, and should be exercised precisely by the person in authority or body in whose hands it has been placed by the law. [18]

We also cannot accept petitioner’s theory that Director Manalo’s initial endorsement of the case to the NLRC served as a dismissal of the case, which prevented her from subsequently assuming jurisdiction over the same. The said endorsement was evidently not meant as a final disposition of the case; it was a mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from

Garcy Kate D. Go LLB2 EH306 Page 92 subsequently deciding the case after the mistake was rectified and the case was returned to her by the DOLE Secretary, particularly since it was a labor case where procedural lapses may be disregarded in the interest of substantial justice.

In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no longer be questioned (as it is final and executory), we can no longer entertain petitioner’s half-hearted and unsubstantiated arguments that the said Order was allegedly based on erroneous computation and included non-employees. Likewise, we find no more need to address petitioner’s contention that the CA erred in dismissing its petition on the ground of its belated compliance with the requirement of certification against forum-shopping.

Garcy Kate D. Go LLB2 EH306 Page 93

People’s Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al. March 6, 2012 Resolution on the main Decision of May 8, 2009

Facts: Jandeleon Juezan (“Juezan”) filed a complaint before the DOLE against Bombo Radyo Phils. (“Bombo Radyo”) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE conducted a plant level inspection. The Labor Inspector in his report wrote, Management representative informed that (Juezan) complainant is a drama talent hired on a per drama ‘participation basis’ hence no employer-employer relationship existed between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking, etc. The management has no control of the talent if he ventures into another contract with other broadcasting industries.

Issue: Whether or not the Secretary of Labor has the power to determine the existence of an employer-employee relationship.

Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRC’s determination of the existence of an employer-employee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an employer-employee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to follow, the same guide the courts themselves use. The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the employer’s power to control the employee’s conduct. The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer- employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed in the first place.

It must also be remembered that the power of the DOLE to determine the existence of an employer-employee relationship need not necessarily result in an affirmative finding. The DOLE may well make the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court.

Garcy Kate D. Go LLB2 EH306 Page 94

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court.

Garcy Kate D. Go LLB2 EH306 Page 95

Superior Packaging Corp. vs. Balagsay et al., October 10, 2012

Facts: The petitioner engaged the services of Lancer to provide reliever services to its business, which involves the manufacture and sale of commercial and industrial corrugated boxes. According to petitioner, the respondents were engaged for four (4) months from February to June 1998 and their tasks included loading, unloading and segregation of corrugated boxes.

Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz), for underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of salary. Upon receipt Department of Labor and Employment (DOLE) conducted an inspection of the petitioner’s premises and found several violations, to wit: (1) Non-presentation of payrolls and daily time records; (2) Non-submission of annual report of safety organization; (3) Medical and accident/illness reports; (4) Non-registration of establishment under Rule 1020 of Occupational and Health Standards; and (5) No trained first aide.

Due to the petitioner’s failure to appear in the summary investigations conducted by the DOLE, an Order was issued on June 18, 2003 finding in favor of the respondents and adopting the computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and 38/100 (P 840,463.38).

Petitioner filed a motion for reconsideration on the ground that respondents are not its employees but of Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its motion because petitioner failed to support its claim that the respondents are not its employees, and even assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13 of the Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to contractual employees to the extent of the work performed when the contractor fails to pay its employees wages.

Their appeal to the Secretary of DOLE was dismissed thus, l petitioner and Luz filed a petition for certiorari with the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in that Luz was absolved of any personal liability under the award. Hence, this petition for review under Rule 45 of the Rules of Court.

Issue: Whether or not DOLE has authority to determine the existence of an employer-employee relationship? Whether Superior Packaging Corporation may be held solidarily liable with Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims?

Ruling: The petition is bereft of merit.

The DOLE clearly acted within its authority when it determined the existence of an employer- employee relationship between the petitioner and respondents as it falls within the purview of its visitorial and enforcement power under Article 128(b) of the Labor Code. The determination of the existence of an employer-employee relationship by the DOLE must be respected.

With regard to the contention that there is no evidence to support the finding that the respondents rendered overtime work and that they worked on their rest day, the resolution of

Garcy Kate D. Go LLB2 EH306 Page 96 this argument requires a review of the factual findings and the evidence presented, Court said that it is not a trier of facts and it applies with greater force in labor cases. Hence, where the factual findings of the labor tribunals or agencies conform to, and are affirmed by, the CA, the same are accorded respect and finality, and are binding to Supreme Court.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of respondents and liable to the latter for their unpaid money claims.

At the time of the respondents employment in 1998, the applicable regulation was DOLE Department Order No. 10, Series of 1997. Under said Department Order, labor-only contracting was defined as follows: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.

Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

According to the CA, the totality of the facts and surrounding circumstances of this case point to such conclusion that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that the petitioner failed to produce any written service contract that might serve as proof of its alleged agreement with Lancer.

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the "labor only" contractor is considered as a mere agent of the principal, the real employer. The former becomes solidarily liable for all the rightful claims of the employees.

Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents unpaid money claims.

Garcy Kate D. Go LLB2 EH306 Page 97

WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

Gaa vs. CA G.R. No. L-44169; December 3, 1985

Facts: Rosario Gaa is occupying a managerial/ supervisory position in El Grande Hotel. A Notice of Garnishment upon El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said garnishment on the ground that her "salaries, commission and, or remuneration are exempted from execution under Article 1708 of the New Civil Code.

Issue: Whether or not the renumeration of Gaa are exempted from execution or attachment pursuant to Art. 1708 of the Civil Code.

Ruling: SC held that, “We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. Petitioner Rosario A. Gaa is definitely not within that class.

Garcy Kate D. Go LLB2 EH306 Page 98

Nestle Phils. vs. NLRC G.R. No. 85197 March 18, 1991

Facts: The private respondents were employed by the petitioner either as sales representatives or medical representatives. By reason of the nature of their work they were each allowed to avail of the company's car loan policy. Under that policy, the company advances the purchase price of a car to be paid back by the employee through monthly deductions from his salary, the company retaining the ownership of the motor vehicle until it shall have been fully paid for. All of the private respondents availed of the petitioner's car loan policy.

Respondents were dismissed from service because of their participation in the strike/ certain irregularities. As such, they filed a case of illegal dismissal before the NLRC. In the Notices of Dismissal, they were asked by the Company to settle the accounts payable of their car loans or return the car for proper disposition. The Company filed a civil suit to recover possession of the cars. Private respondents sought a temporary restraining order in the NLRC to stop the company from cancelling their car loans and collecting their monthly amortizations pending the final resolution of their appeals in the illegal dismissal case. NLRC granted the TRO.

Issue: Whether or not NLRC is correct in granting the TRO in favor of the respondents pending the case of illegal dismissal.

Ruling: Nestlé's demand for payment of the private respondents' amortizations on their car loans, or, in the alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It involves debtor-creditor relations, rather than employee-employer relations. The NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunction to stop the company from enforcing the civil obligation of the private respondents under the car loan agreements and from protecting its interest in the cars which, by the terms of those agreements, belong to it (the company) until their purchase price shall have been fully paid by the employee. The terms of the car loan agreements are not in issue in the labor case. The rights and obligations of the parties under those contracts may be enforced by a separate civil action in the regular courts, not in the NLRC.

Garcy Kate D. Go LLB2 EH306 Page 99

Five J Taxi vs. NLRC G.R. No. 111474 August 22, 1994

Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi drivers. Aside from the daily "boundary", they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer for any deficiency in their "boundary," for every actual working day.

Issue: Whether or not the car wash payment is an illegal deduction as contemplated in the Labor Code.

Ruling: SC held that the amount doled out was paid directly to the person who washed the unit, thus we find nothing illegal in this practice, much more to consider the amount paid by the driver as illegal deduction in the context of the law. Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments they made. It will be noted that there was nothing to prevent private respondents from cleaning the taxi units themselves, if they wanted to save their P20.00.Car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play.

Garcy Kate D. Go LLB2 EH306 Page 100

Phil. Veterans Bank vs. NLRC G.R. No. 130439 October 26, 1999

Facts: Due to financial losses, the Philippine Veterans Bank was placed in receivership pursuant to the order of the Central Bank of the Philippines. Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina, were terminated from work and given their respective separation pay and other benefits. Dr. Molina filed a complaint before NLRC. He demanded the implementation of the Wage Orders No. 1 and 2. Both the Labor Arbiter and NLRC granted the petition of Molina.

Issue: Whether or not Molina is entitled to the increase of his salary pursuant to Wage Orders No. 1 and 2.

Ruling: SC held that Molina’s salary is within the coverage of the said wage orders. W.O. 1 expressly states that employees having a monthly salary of not more than P3,802.08 are entitled to receive the mandated wage increase. Undeniably, MOLINA was receiving a monthly salary of P3,754.60. This fact alone leaves no doubt that he should benefit from said wage order. On the other hand, W.O. 2 raised the ceiling for entitlement to the wage increase. If MOLINA was covered by the earlier wage order, with more reason should the later wage order apply to him.

Garcy Kate D. Go LLB2 EH306 Page 101

Philippine Appliances Corp. vs. CA G.R. No. 149434; June 3, 2004

Facts: Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators, freezers and washing machines. Respondent United Philacor Workers Union- NAFLU is the duly elected collective bargaining representative of the rank-and-file employees of petitioner. During the collective bargaining negotiations between petitioner and respondent union in 1997 (for the last two years of the collective bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner offered the amount of four thousand pesos (P4,000.00) to each employee as an "early conclusion bonus". Upon conclusion of the CBA negotiations, petitioner accordingly gave this early signing bonus. After the expiration of the CBA, both parties negotiated for a new CBA. However, it resulted to a deadlock. The respondent union filed before the NCMB a notice of strike due to bargaining deadlock. The Department of Labor and Employment took cognizance of the case and ordered, among other things, herein petitioner to award signing bonus. Petitioner argued that the award of the signing bonus was patently erroneous since it was not part of the employees’ salaries or benefits or of the collective bargaining agreement. It is not demandable or enforceable since it is in the nature of an incentive.

Issue: Whether or not the award of a signing bonus by the Secretary of Labor is correct.

Ruling: SC held that the signing bonus must not be awarded.

The CBA negotiation between petitioner and respondent union failed notwithstanding the intervention of the NCMB. Respondent union went on strike for eleven days and blocked the ingress to and egress from petitioner’s two work plants. The labor dispute had to be referred to the Secretary of Labor and Employment because neither of the parties was willing to compromise their respective positions regarding the four remaining items which stood unresolved. While we do not fault any one party for the failure of the negotiations, it is apparent that there was no more goodwill between the parties and that the CBA was clearly not signed through their mutual efforts alone. Hence, the payment of the signing bonus is no longer justified and to order such payment would be unfair and unreasonable for petitioner.

Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable obligation.

Garcy Kate D. Go LLB2 EH306 Page 102

Agabon vs NLRC (2004) G.R. 158693

Facts: Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claimsand on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims.

Issue: WON respondent’s dismissal is illegal and if not, entitles them benefits.

Ruling: The dismissal is legal and entitles them of payment of benefits. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full back wages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee’s last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process.

The Court ruled that respondent is liable for petitioners’ holiday pay, service incentive leave pay and 13th month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same so as “to further protect the level of real wages from the ravages of world- wide inflation.” Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 103

American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R. 155059

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 employee’s basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29, Christmas Party and Promotional Increase.

Issue: WON the respondent company violated Article 100 of the Labor Code.

Ruling: The company is not guilty of violating Art. 100 of the Labor Code.

Article 100 of the Labor Code provides: PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.– Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

The certain benefits and entitlements are considered bonuses. A bonus can only be enforceable and demandable if it has ripened into a company practice. It must also be expressly agreed by the employer and employee or it must be on a fixed amount.

The assailed benefits were never subjects of any agreement between the union and the company. It was never incorporated in the CBA. Since all these benefits are in the form of bonuses, it is neither enforceable nor demandable.

Garcy Kate D. Go LLB2 EH306 Page 104

Honda Philippines Vs. Samahan Ng Malayang Manggagawa Sa Honda

Facts: Petitioner Honda and Respondent union forged a Collective Bargaining Agreement which averred that Honda shall maintain the present practice in the implementation of the 13th and 14th month pay. Such CBA is effective until 2000. In the later part of 1998, the parties started re-negotiations.

However, when the talk between the parties did not go well, respondent union filed a Notice to Strike on the ground of bargaining deadlock. Honda then filed a notice of Lockout in which the DOLE ordered the party to cease and desist from committing acts.

The union filed a second Notice of Strike on ground of unfair labor, in which they went into pocketing of the premises of Honda. DOLE then assumed jurisdiction and subjected the issue to the NLRC for compulsory arbitration for which the employees were ordered to return to work. The management of Honda, on 22 Nov. 1999, then issued a memorandum announcing its new computation of the 13th and 14th month pay to be granted to employees whereby the 31-day strike shall be considered unworked days for purposes of computing said benefits.

Thus, the union opposed the pro-rated computation of the bonuses and the matter was brought before the Grievance Machinery. The Labor Arbiter ordered Honda to compute each provision in full month basic pay. Ca affirmed the decision of the labor arbiter.

Issue: WON the pro-rated computation of the 13th month pay and the other bonuses in question is valid and lawful

Ruling: Such pro-rated computation is invalid.

It is well noted that the CBA refers to the negotiated contract between a legitimate labor organization and the employer. It is the law between the parties and compliance therewith is mandated by express policy of the law.

Honda did not adduce evidence to show that the 13th month, 14th month and financial assistance benefits were previously subject to pro-rating. Thus, such was an implicit acceptance that prior to the strike, a full month basic pay computation was the “present practice” intended to be maintained in the CBA.

Lastly, to allow pro-ration of the 13th month pay is to undermine the wisdom behind the law and the mandate that the workingman’s welfare should be the primordial and paramount consideration. DENIED.

Garcy Kate D. Go LLB2 EH306 Page 105

Producers Bank vs NLRC () 335 SCRA 506

Facts: Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a conservator for the purpose of protecting its assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to uniform allowance, the acting conservator of the petition expressed objection resulting an impasse between the petitioner bank and respondent union. The deadlock continued for at least six months. The private respondent, to resolve the issue filed a case against petitioner for unfair labor practice and flagrant violation of the CBA.

The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the implementation of the CBA.

Issue: WON the employees who have retired have no personality to file an action since there is no longer an employer-employee relationship.

Ruling: Employees who have retired still have the personality to file a complaint.

Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees to sever his employment with the former. The very essence of retirement is the termination of employer-employee relationship.

Retirement of the employee does not in itself affect his employment status especially when it involves all rights and benefits due to him, since these must be protected as though there had been no interruption of service. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted as it were a continuing consideration of services rendered as well as an effective inducement foe remaining with the corporation. It is intended to help the employee enjoy the remaining years of his life.

When the retired employees were requesting that their retirement benefits be granted, they were not pleading for generosity but merely demanding that their rights, embodied in the CBA, be recognized. When an employee has retired but his benefits under the law or CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the status of an employee entitled to the protection of the Labor Code, one of which is the protection of the labor union.

Garcy Kate D. Go LLB2 EH306 Page 106

Jardin vs. NLRC

Facts: Angel Jardin, et. Al. are drivers of Philjama International Inc., a domestic corporation engaged in the operation of “Goodman Taxi”. Jardin, et. al. drive Philjama’s taxicabs evry other day on a 24 hour work schedule under the “boaundary system”. Philjama admitted that a deduction of Php 30.00 is regularly against Jardin et. al.’s daily earnings. Such fee is supposedly for the washing of the taxi units.

Believing that the imposed deductions of Php 30.00 on their daily wages is illegal, Jardin et. al formed a labor union to protect their rights and interests. Learning about the plans of Jardin et. al, Philjama terminated them from service. Jardin et. al believed that they were dismissed because of the formed labor union in which they are leaders and active members. Because of this, Jardin et. al. filed a complaint against Philjama for unfair labor practice, illegal dismissal and illegal deduction of washing fees.

The labor arbiter dismissed the case for lack of merit. On appeal, the NLRC reversed the labor arbiter’s judgment declaring that the dismissal was illegal and ordered that Jardin et. al. be reinstated. Philjama filed its motion for reconsideration. On its second motion for reconsideration, NLRC then reversed its prior decision saying that there exists no employee- employer relationship between the parties; thus, it has no jurisdiction to hear and decide the case. It held that the relationship between the parties is that of a leasehold which is covered by the Civil Code rather than the Labor Code.

Aggrieved, Jardin et. al sought for reconsideration. Such was denied by the NLRC. Consequently, they raised the case to the Supreme Court.

Issues: a.) Whether NLRC has jurisdiction to entertain Philjama’s second motion for reconsideration which is admittedly a pleading prohibited under NLRC rules. b.) Whether there exists an employer-employee relationship.

Ruling: NLRC committed grave abuse of discretion for entertaining Philjama’s second motion for reconsideration. As provided for under Rule 7, Sec. 14 of its New Rules of Procedure, only one motion for reconsideration from the same party shall be entertained by the NLRC. When Philjama filed its first motion for reconsideration, which was denied, the NLRC already had ample time to rectify errors/mistakes it may have committed before recourse to courts may be had. Thus, when Philjama filed its second motion for reconsideration, public respondent should have forthwith denied it.

There exists an employer-employee relationship between Jardin et. al and Philjama International, Inc.

SC said, to quote: “In a number of cases decided by this Court, we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee.

We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the owner’s hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the

Garcy Kate D. Go LLB2 EH306 Page 107 owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee.

We have applied by analogy the abovestated doctrine to the relationships between bus owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently between taxi owners/operators and taxi drivers in the case of Martinez vs. NLRC, 272 SCRA 793, 800 (1997) Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer.”

The deduction of Php 30.00 that is supposedly for the washing of taxi units is not illegal in the context of the law. After a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it. Car washing after tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. --- Hence, Jardin et.al (drivers) are not entitled to reimbursement of washing charges.

Garcy Kate D. Go LLB2 EH306 Page 108

Manila Jockey’s Club Employees Labor Union vs. Manila Jockey Club, G.R. No. 167601, March 7, 2007

Facts: Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective Bargaining Agreement (CBA) with Manila Jockey Club Employees Labor Union-PTGWO. Under Section 1 Article IV of their CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. All work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such with exception to those monthly compensation which includes work performed during Saturday, Sunday, and Holiday when races are held at the Club. The CBA likewise reserved in management prerogatives including the determination of the work schedule. An inter-office memorandum was later issued declaring that the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The memorandum, however, sustained the 9:00 a.m. to 5:00 p.m. schedule for non-race days.

Before the voluntary arbitrators of the National Conciliation and Mediation Board, petitioners questioned the memorandum as violative of the prohibition against non-diminution of wages and benefits guaranteed the CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. They claimed that as a result of the memorandum, the employees are precluded from rendering their usual overtime work from 5:00 p.m. to 9:00 p.m.

Issue: Whether or not the change in the work schedule violated Article 100 of the Labor Code on the non-diminution of wages and benefits guaranteed under the parties’ CBA.

Ruling: No. It was evident that the change in work schedule was justified, it being a management prerogative. Respondent, as employer, cited the change in the program of horse races as reason for the adjustment of the employees’ work schedule. It rationalized that when the CBA was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to change the employees' work schedule as there was no work to be done in the morning. It is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays. However, Section 2, Article XI expressly reserves on respondent the prerogative to change existing methods or facilities to change the schedules of work.

Moreover, Manila Jockey Club was not obliged to allow all its employees to render overtime work every day for the whole year, but only those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay was not given to each employee consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of benefits.

Garcy Kate D. Go LLB2 EH306 Page 109

San Miguel Corp., vs Layoc Jr. Et al., (2007) G.R. 149640

Facts: Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel Corporation. They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on different dates until such time that they were promoted as supervising security guards. From the commencement of their employment, the private respondents were required to punch their time cards for purposes of determining the time they would come in and out of the company's work place. Corollary, the private respondents were availing the benefits for overtime, holiday and night premium duty through time card punching. However, in the early 1990's, the San Miguel Corporation embarked on a Decentralization Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more efficient and effective management of their respective operations.

As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation implemented on January 1, 1993 a "no time card policy" whereby the Supervisory I and II composing of the supervising security guards of the Beer Division were no longer required to punch their time cards. Consequently, on January 16, 1993, without prior consultation with the private respondents, the time cards were ordered confiscated and the latter were no longer allowed to render overtime work. However, in lieu of the overtime pay and the premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected by the "No Time Card Policy" were given a 10% across-the-board increase on their basic pay while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from P2,000.00 to P2,500.00 a month. Hence, this complaint filed for unfair labor practice, violation of Article 100 of the Labor Code of the Philippines, and violation of the equal protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of the New Civil Code of the Philippines.

Issue: Whether or not the circumstances in the present case constitute an exception to the rule that supervisory employees are not entitled to overtime pay.

Ruling: Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not apply to managerial employees.

The other provisions in the Title include normal hours of work (Article 83), hours worked (Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article 87), undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and computation of additional compensation (Article 90). It is thus clear that, generally, managerial employees such as respondents are not entitled to overtime pay for services rendered in excess of eight hours a day. Respondents failed to show that the circumstances of the present case constitute an exception to this general rule.

Aside from their allegations, respondents were not able to present anything to prove that petitioners were obliged to permit respondents to render overtime work and give them the corresponding overtime pay. Even if petitioners did not institute a "no time card policy," respondents could not demand overtime pay from petitioners if respondents did not render overtime work. The requirement of rendering additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 110

San Miguel Corp vs Pontillas (2008) G.R. 155178

Facts: On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily wage company guard. In 1984, respondent became a monthly-paid employee which entitled him to yearly increases in salary. On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article 100 of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential and backwages, against petitioner. Respondent questioned the rate of salary increase given him by petitioner.

On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioner’s Vice President and VisMin Operations Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not receive any written order from Capt. Fortich, his immediate superior.

In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation.In a letter dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company rules and regulations, particularly for Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior.

Issue: WON respondent’s dismissal from employment is legal.

Ruling: Respondent was dismissed for a just cause.

An employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. The records show that respondent was not singled out for the transfer. Respondent’s transfer was the effect of the integration of the functions of the Mandaue Brewery – Materials Management and the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations.

Moreover, the employer exercises the prerogative to transfer an employee for valid reasons and according to the requirements of its business, provided the transfer does not result in demotion in rank or diminution of the employee’s salary, benefits, and other privileges. In this case, we found that the order of transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer but he refused to receive the notices on the pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and other privileges. Respondent’s persistent refusal to obey petitioner’s lawful order amounts to wilful disobedience under Article 282 of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 111

Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225 SCRA 562 and Sevilla Trading vs. AVA Tomas Services, G.R. No. 152456, April 28, 2004

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner's rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration.

The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the giving of the contested benefits in full, irrespective of the actual service rendered within one year has not ripened into a practice. He also interpreted the phrase "for each year of service" found in the pertinent CBA provisions to mean that an employee must have rendered one year of service in order to be entitled to the full benefits provided in the CBA. Respondent filed a Petition for Review before the Court of Appeals. The appellate court found that petitioner had an existing voluntary practice of paying the aforesaid benefits in full to its employees; thereby rejecting the claim that petitioner erred in paying full benefits to its seven employees. The appellate court noted that aside from the affidavit of petitioner's officer, it has not presented any evidence in support of its position that it has no voluntary practice of granting the contested benefits in full and without regard to the service actually rendered within the year.

Issues: 1. Whether or not the petitioners should grant 13th month pay, bonus and leave encashment in full regardless of actual service rendered. 2. Whether or not the prorated payment of the said benefits constitutes diminution of benefits under Article 100 of the Labor Code.

Ruling: On the first issue, according to petitioner, there is a one-year cutoff in the entitlement to the benefits provided in the CBA, which is evident from the wording of its pertinent provisions as well as of the existing law. There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The clear wording of the provisions does not allow any other interpretation. Anent the 13th month pay and bonus, the CBA provisions did not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total compensation, which an employee receives for the whole calendar year. The bonus is also equivalent to the amount of the 13th month pay given, or in proportion to the actual service rendered by an employee within the year.

On the second issue, it is a settled rule that any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare," and "to afford labor full protection." Said mandate in turn is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor."

Garcy Kate D. Go LLB2 EH306 Page 112

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered.

Petitioner claims that its full payment of benefits regardless of the length of service to the company does not constitute voluntary employer practice. It points out that the payments had been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. According to petitioner, it was only in 2003 that the accounting department discovered the error. Petitioner further argues that for a grant of a benefit to be considered a practice, it should have been practiced over a long period of time and must be shown to be consistent, deliberate and intentional, which is not what happened in this case.

True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group. Petition denied.

Garcy Kate D. Go LLB2 EH306 Page 113

Aguanza vs. Asian Terminal Inc., et al., GR No. 163505, Aug. 14, 2009

Facts: Petitioner GualbertoAguanza was employed with respondent company Asian Terminal, Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator and was assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the port of Manila. Aside from his basic pay, he received meal allowance, fixed overtime pay and out-of port allowance [when the barge is assigned outside Metro Manila].

Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned at the Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20, 1997, respondent James Keith issued a memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 and because of that, its crew would no longer be entitled to out of port benefits of 16 hours overtime and P200 a day out-of port allowance. Due to the said development, Aguanza questioned the diminution of his benefits. Aguanza insisted on reporting to work in Manila although his barge, Bismark IV, and its other crew were already permanently based in Mariveles, Bataan. Aguanza was not allowed to time in in Manila because his work was in Mariveles, Bataan. He therefore was not able to render his services, and was accordingly not paid for doing nothing. Because of private respondents’ refusal to give him any work assignment and pay his salary, Aguanza filed a complaint for illegal dismissal against respondents.

Issue: Was Aguanza constructively dismissed?

Ruling: No. The transfer of operations is a valid exercise of management prerogative. Aguanza asserts that his transfer constituted constructive dismissal, while ATI asserts that Aguanza’s transfer was a valid exercise of management prerogative.

ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s assertions, a valid exercise of management prerogative. The transfer of employees has been traditionally among the acts identified as a management prerogative subject only to limitations found in law, collective bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. On the other hand, the transfer of an employee may constitute constructive dismissal "when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee." Aguanza’s situation is not within the purview of this discussion.

When ATI transferred Bismark IV’s operations to Bataan, ATI offered Aguanza similar terms: basic pay for 40 hours of work from Monday to Friday, overtime pay for work done in excess of eight hours per day, overtime pay for work done on Saturdays and Sundays, no additional allowance and no transportation for working in Bataan. The circumstances of the case made no mention of the salary structure in case Bismark IV being assigned work outside of Bataan; however, we surmise that it would not be any different from the salary structure applied for work done out-of-port. We, thus, agree with the NLRC and the appellate court when they stated that the fixed overtime of 16 hours, out-of-port allowance and meal allowance previously granted to Aguanza were merely supplements or employment benefits given on condition that Aguanza’s assignment was out-of-port. The fixed overtime and allowances were not part of Aguanza’s basic salary. Aguanza’s basic salary was not reduced; hence, there was no violation of the rule against diminution of pay.

Garcy Kate D. Go LLB2 EH306 Page 114

Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis Transport et al., GR No. 182114, April 5, 2010

Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on commission basis at 9% of the gross revenue per trip. He, after due notice and hearing, terminated from employment after an accident on April 20, 2002 where he was deemed to have been driving recklessly. He then filed a complaint for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because of his union activities, other drivers who had met accidents not having been dismissed from employment. He later amended his complaint to implead his co-respondent union and add as grounds unfair labor practice and reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay.

Upon appeal, with respect to Taroy’s claim for refund, the Labor Arbiter ruled in his favor for if, as contended by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses for fuel and maintenance also charged to overhead expense. The Labor Arbiter thus concluded that “it would appear that the tollgate fees are deducted from the gross revenues and not from the salaries of drivers and conductors, but certainly the deduction thereof diminishes the take home pay of the employees.

Issue: Whether the tollgate fee deductions which resulted to an underpayment given to Taroy is illegal?

Ruling: The deduction is considered illegal.

The amounts representing tollgate fees were deducted from gross revenues and not directly from Taroy’s commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroy’s 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroy’s wages in violation of Article 113 vis-à-vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroy’s written consent or authorization, the deduction is considered illegal.

Besides, the invocation of the rule on “company practice” is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits.

Garcy Kate D. Go LLB2 EH306 Page 115

Central Azucarera De Tarlac Vs. Central Azucarerade Tarlac Labor Union-Nlu

Facts: Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioner’s rank-and-file employees. The controversy stems from the interpretation of the term “basic pay,” essential in the computation of the 13th-month pay.

The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its employees the mandatory thirteenth (13th) - month pay since 1975. The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioner’s computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006. On November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted until September 2006. In December 2006, petitioner gave the employees their 13th-month pay based on the employee’s total earnings during the year divided by 12. Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13th-month pay. NLRC ruled in favor of the respondent and CA reversed itd ruling and ruled in favor of the Unyon. Hence the petition.

Issue: Whether or not Azucarera did not adhere to the proper computation of the 13th-month pay.

Ruling: The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage. It is equivalent toone-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. If the employee worked for only a portion of the year, the 13th-month pay is computed pro rata.

On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

Furthermore, the term “basic salary” of an employee for the purpose of computing the 13th- month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.

Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included in the term “basic salary” for purposes of computing the 13th- month pay of employees. From the inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to insure uniformity in the interpretation,

Garcy Kate D. Go LLB2 EH306 Page 116 application, and enforcement of the provisions of P.D. No. 851 and its implementing regulations.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error.

This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith.

Garcy Kate D. Go LLB2 EH306 Page 117

SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on probationary status

During respondent’s employment, Hartmannshenn was often abroad and, because of business exigencies, his instructions to respondent were either sent by electronic mail or relayed through telephone or mobile phone. During meetings with the respondent, Hartmannshenn expressed his dissatisfaction over respondent’s poor performance. respondent acknowledged his poor performance and offered to resign from the company.

On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on November 22 and 24, 2005, notified respondent of his arrival through electronic mail messages and advised him to get in touch with him. Respondent claimed that he never received the messages. Hartmannshenn instructed Taguiang not to release respondent’s salary.

Respondent served on SHS a demand letter and a resignation letter. It is precisely because of illegal and unfair labor practices such as these that I offer my resignation with neither regret nor remorse.

Appealing for the release of his salary respondent filed a Complaint against the petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages; exemplary damages, and attorney’s fees, costs of suit, and legal interest.

Issues: Whether or not the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise of management prerogative.

Ruling: Withholding respondent’s salary was not a valid exercise of management prerogative. Management prerogative refers “to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work.” Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee.

Any withholding of an employee’s wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below: ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Garcy Kate D. Go LLB2 EH306 Page 118

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.

In this case, the withholding of respondent’s salary does not fall under any of the circumstances provided under Article 113. Neither was it established with certainty that respondent did not work from November 16 to November 30, 2005. Hence, the Court agrees with the LA and the CA that the unlawful withholding of respondent’s salary amounts to constructive dismissal.

Garcy Kate D. Go LLB2 EH306 Page 119

Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November 28, 2011

Facts: Respondents were employed as goldsmiths by the petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. There were incidents of theft involving goldsmiths in Niña Jewelry's employ: The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or negligence in handling the gold entrusted to them, requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter's salaries per week.

The petitioner alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations allowing the former to deduct from the latter's salaries amounts not exceeding 15% of their take home pay should it be found that they lost the gold entrusted to them. The deposits shall be returned upon completion of the goldsmiths' work and after an accounting of the gold received.

The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option but to post the deposits. The next day after the policy was imposed, the respondents no longer reported for work and signified their defiance against the new policy which at that point had not even been implemented yet. The respondents alleged that they were constructively dismissed by the petitioner as their continued employments were made dependent on their readiness to post the required deposits. The respondents then filed a complaint for illegal dismissal and for the award of separation pay against the petitioner, and later filed their amended complaint which excluded their earlier prayer for separation pay but sought reinstatement and payment of back wages, attorney's fees and 13th month pay.

Issues: 1) Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their goldsmiths requiring them to post cash bonds or deposits; and 2) Whether or not there is constructive dismissal.

Ruling: 1) NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition against requiring deposits and effecting deductions from the employees' salaries.

ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: a) (a)In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; b) (b)For union dues, in cases where the right of the worker or his union to check- off has been recognized by the employer or authorized in writing by the individual worker concerned; and c) (c)In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. Article 114.Deposits for loss or damage — No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.

The petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor. The petitioners failed to

Garcy Kate D. Go LLB2 EH306 Page 120 prove that their imposition of the new policy upon the goldsmiths under Niña Jewelry's employ falls under the exceptions specified in Articles 113 and 114 of the Labor Code.

2) There is NO constructive dismissal. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.

The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from the workers' salaries. As attested to by the respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason behind the implementation of the new policy. Instead of airing their concerns, the respondents just promptly stopped reporting for work.

Garcy Kate D. Go LLB2 EH306 Page 121

Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013

Facts: Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In addition to his compensation and benefit package, a car was offered to him under which one- half of the cost of the vehicle is to be paid by the company and the other half to be deducted from petitioner's salary. The car valued at 280,000 which Locsin paid through salary deductions of 5,000 per month.

On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his monthly salary and applied as part of his share in the car plan. Upon resignation, petitioner made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with the company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood at P116,380.00 if he opts to purchase the same.

On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a Complaint for the recovery of monetary claims consisting of unpaid salaries, commissions, sick/vacation leave benefits, and recovery of monthly salary deductions which were earmarked for his cost-sharing in the car plan.

Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the service vehicle under the car plan.

Ruling: Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely incidental and insignificant, because for the most part the vehicle was under Mekeni's control and supervision. Free and complete disposal is given to the petitioner only after the vehicle's cost is covered or paid in full. Until then, the vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner had to cover to be able to perform his work effectively and generate business for his employer, the service vehicle was an absolute necessity, or else Mekeni's business would suffer adversely. Thus, it is clear that while petitioner was paying for half of the vehicle's value, Mekeni was reaping the full benefits from the use thereof.

Under Article 22 of the Civil Code, “every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him." Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective promotion of its business. It may not, under the claim that petitioner's payments constitute rents for the use of the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not carry such a condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using the vehicle was merely incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation package. The vehicle is an asset that belonged to Mekeni.

Garcy Kate D. Go LLB2 EH306 Page 122

Just as Mekeni is unjustly enriched by failing to refund petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart contribution to the car plan, as this would unjustly enrich him at Mekeni's expense.

Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under the car plan agreement amounting only to the extent of the contribution Locsin made, totalling to the amount of P112,500.00.

Garcy Kate D. Go LLB2 EH306 Page 123

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014

Facts: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union (THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and Illegal Lockout, with moral and exemplary damages and attorney’s fees, against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).

1st CAUSE: In their desire to improve their working conditions, respondents and other employees of held their first formal meeting on November 23, 2003 to discuss the formation of a union. The following day, seventeen (17) employees were barred from entering petitioners’ factory premises located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered to go on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work assignments, while subcontractors were continuously hired to perform their functions. Respondents sought the assistance of the National Conciliation and Mediation Board. Subsequently, an agreement between petitioners and THS-GQ Union was reached. Petitioners agreed to give priority to regular employees in the distribution of work assignments. Respondents averred, however, that petitioners never complied with its commitment but instead hired contractual workers. Instead, Respondents claimed that the work weeks of those employees in the SBFZ plant were drastically reduced to only three (3) days in a month.

2nd CAUSE: On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued to hold the certification election in both T&H Shopfitters and Gin Queen. On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers and members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the forthcoming certification election. When the certification election was scheduled on October 11, 2004, the employees were escorted from the field trip to the polling center in Zambales to cast their votes. The remaining employees situated at the SBFZ plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for "no union" prevailed.

3rd CAUSE: A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed its employees of the expiration of the lease contract between Gin Queen and its lessor in Castillejos, Zambales and announced the relocation of its office and workers to Cabangan, Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland. The said union officers and members were made to work as grass cutters in Cabangan, under the supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees assigned in Cabangan did not report for work. The other employees who likewise failed to report in Cabangan were meted out with suspension.

PETITIONERS’ DEFENSE: In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that there is no employer-employee relationship between the former and respondents. Further, Gin Queen avers that its decision to implement an enforced rotation of work assignments for

Garcy Kate D. Go LLB2 EH306 Page 124 respondents was a management prerogative permitted by law, justified due to the decrease in orders from its customers, they had to resort to cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a rotational basis. It explains that its failure to present concrete proof of its decreasing orders was due to the impossibility of proving a negative assertion. It also asserts that the transfer from Castillejos to Cabangan was made in good faith and solely because of the expiration of its lease contract in Castillejos. It was of the impression that the employees, who opposed its economic measures, were merely motivated by spite in filing the complaint for ULP against it.

Issues: Whether ULP acts were committed by petitioners against respondents.

Ruling: ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article 248) of the Labor Code,13 to wit: Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self- organization; x x x x (c) To contract out services or functions being performed by union members when such will interfere with, restrain, or coerce employees in the exercise of their right to self- organization; x x x x (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. x x x

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the exclusion of union members, before the scheduled certification election; 2) the active campaign by the sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4) the continuous hiring of subcontractors performing respondents’ functions; 5) assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a rotational basis for union members, taken together, reasonably support an inference that, indeed, such were all orchestrated to restrict respondents’ free exercise of their right to self-organization.

The Court is of the considered view those petitioners’ undisputed actions prior and immediately before the scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in selecting their exclusive bargaining representative.

Garcy Kate D. Go LLB2 EH306 Page 125

Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No. 181806, March 12, 2014

Facts: Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and Staff Association, on the other hand, is a duly registered labor organization acting as the sole and exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008. On August 16, 2005, petitioner, through its President, Atty. Maglaya , issued a Memorandum providing guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation which states that vacation and sick leave credits are not automatic as leave credits would be earned on a month-to-month and only vacation leave is commuted or monetized to cash which is effected after the second year of continuous service of an employee.

Respondents questioned the guidelines for being violative of existing practices and the CBA which provide that all covered employees are entitled to 15 days sick leave and 15 days vacation leave with pay every year and that after the second year of service, all unused vacation leave shall be converted to cash and paid to the employee at the end of each school year, not later than August 30 of each year.

Respondent file a grievance complaint on the implementation of the vacation and sick leave policy. Petitioner also announced its plan of implementing a one-retirement policy which was unacceptable to respondent.

Respondent submitted affidavits to prove that there is an established practice of giving two retirement benefits, one from the Private Education Retirement Annuity Association (PERAA) Plan and another from the CBA Retirement Plan.

The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum dated August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one and the same. It maintains that there is no established company practice or policy of giving two retirement benefits to its employees. Respondent belies the claims of petitioner and asserts that there are two retirement plans as the PERAA Retirement Plan, which has been implemented for more than 30 years, is different from the CBA Retirement Plan. Respondent further avers that it has always been a practice of petitioner to give two retirement benefits and that this practice was established by substantial evidence as found by both the Voluntary Arbitrator and the CA.

Issue: Whether or not the respondents are entitled to two retirement plans.

Ruling: The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it must be consistently and deliberately made by the employer over a long period of time. Respondent was able to present substantial evidence in the form of affidavits to support its claim that there are two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early as 1997. Petitioner, on the other hand, failed to present any evidence to refute the veracity of these

Garcy Kate D. Go LLB2 EH306 Page 126 affidavits. Petitioner's assertion that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one and the same is not supported by any evidence.

The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave credits of an employee at the start of the school year. The Memorandum dated imposes a limitation not agreed upon by the parties nor stated in the CBA, so it must be struck down.

Garcy Kate D. Go LLB2 EH306 Page 127

Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, Citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

Facts: The respondent was employed as a sales clerk and assigned at the petitioner’s boutique. Her primary tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients, cashiering and reporting to the accounting department. The petitioner learned that some of their employees had access to their POS system with the use of a universal password given to them by a certain Elmer Flores, who in turn learned of the password from the respondent. The petitioner then conducted an investigation and asked the petitioner to explain why she should not be disciplinarily dealt with. During the investigation the respondent was placed under preventive suspension. After investigation the petitioner terminated the respondent on the grounds of loss of trust or confidence. This respondent was given her final wage and benefits less the inventory variance incurred by the store. This urged the respondent to file a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation pay. The labor arbiter ruled in her favour awarding her backwages. The petitioner appealed the decision in the NLRC and the decision was reversed. However, upon the respondent’s petition for certiorari in the court of appeals the decision was reinstated. Hence, this petition.

Issue: Whether the negative sales variance could be validly deducted from the respondent’s wage?

Ruling: No, it cannot be deducted in this case.

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a trade, occupation or business where the practice of making deductions or requiring deposits is recognized to answer for the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the employee, the employer may make wage deductions or require the employees to make deposits from which deductions shall be made, subject to the following conditions: a) That the employee concerned is clearly shown to be responsible for the loss or damage; b) That the employee is given reasonable opportunity to show cause why deduction should not be made; c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage; and d) That the deduction from the wages of the employee does not exceed 20 percent of the employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative variance it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show cause the deduction from her last salary should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:

[T]he petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by the

Garcy Kate D. Go LLB2 EH306 Page 128

Secretary of Labor through the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that without proofs that requiring deposits and effecting deductions are recognized practices, or without securing the Secretary of Labor's determination of the necessity or desirability of the same, the imposition of new policies relative to deductions and deposits can be made subject to abuse by the employers. This is not what the law intends.

Garcy Kate D. Go LLB2 EH306 Page 129

PAYMENT OF WAGES

Congson vs. NLRC G.R. No. 114250; April 5, 1995

Facts: Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondents were hired as piece-rate employees uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement. They work for 7 days a week. Due to alleged scarcity of tuna, Congson notified his proposal to reduce the rate-per-tuna movement. When they reported the following day, they found out that they were already replaced with new set of workers. They wanted to have a dialogue with the management, but they waited in vain. Thus, they filed a case before NLRC for underpayment of wages (violation of the minimum wage law) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law. He averred that NLRC should have considered as forming a substantial part of private respondents' total wages the cash value of the tuna liver and intestines private respondents were entitled to retrieve. He argued that the combined value of the cash wage and monetary value of the tuna liver and intestines clearly exceeded the minimum wage fixed by law.

Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

Issue: Whether or not the form of payment by Congson is valid pursuant to Article 102 of the Labor Code.

Ruling: Petitioner's practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to the above cited provision of the Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

Garcy Kate D. Go LLB2 EH306 Page 130

North Davao Mining vs. NLRC G.R. No. 112546; March 13, 1996

Facts: Due to financial losses, North Davao Mining Corporation laid off workers. Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the company’s closure on May 31, 1992. It appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days’ pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up to 1990.

Issue: Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time.

Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2½ hours by travel and the risks in commuting all the time in collecting complainants’ salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. Corollary, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days.

Garcy Kate D. Go LLB2 EH306 Page 131

National Federation of Labor vs. CA, G.R. No. 149464, Oct. 19, 2004

Facts: American Rubber Company, Inc. (ARCI) entered into a Farm Management Agreement (FMA) with Sime Darby Pilipinas, Inc. (SDPI) to manage, administer, develop, cultivate and improve the rubber plantation in Latuan, Isabela, Basilan. However, SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation in Latuan, Isabela, Basilan effective January 17, 1998. Thus on December 17, 1997, SDPI served formal notices of termination to all employees of the plantation effective January 17, 1997. In complaince with the collective bargaining agreement of the National Federation of Labor (NFL), which was the duly registered bargaining agent of SDPI, and SDPI, the separation pay of the employees was computed in accordance with the provisions of the Labor Code. On January 17, 1998, each of the herein petitioners received their separation pay which was equivalent to one-half pay for every year of service, and other benefits which were all lumped in one check. However, the petitioners filed a complaint for deficiency in separation pay raising the issue of non-payment of the exact computation of separation pay. They contended that the private respondents is bound by its policy of granting separation pay equivalent to one-month pay for every year of service to its retrenched employees.

Issue: Whether or not the petitioners are entitled to separation pay equivalent to one month pay for every year of employment with private respondents.

Ruling: According to the Supreme Court, Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business insolvency should be paid separation pay equivalent to one-month pay or at least one-half month pay for every year of service, whichever is higher. In the case at bar, the petitioners had served the respondent SDPI for a period longer than six months. Hence, their separation pay computed at one-half month pay per year of service is more than the minimum one month pay. Also, the court emphasized that the collective bargaining agreement should prevail as a contract governing the employer and the employees respecting the terms of employment, which in this case, they agreed on the terms of termination pay should be in accordance with the provisions of the Labor Code. Consequently, Artcle 283 of the Labor Code, which grants separation pay equivalent to one- month pay or one-half month pay for every year of service, whichever is higher, to the employees retrenched due to business closures, should apply.

Garcy Kate D. Go LLB2 EH306 Page 132

Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006

Facts: The Heir of Sara Lee is engaged in the direct selling of a variety of product lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as “Independent Business Managers” (IBMs) or “Independent Group Supervisors” (IGSs), depending on whether they sell individually or through their own group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell the same products to their own customers at fixed prices also determined by the petitioner.

In turn, the dealers are paid “Services Fees,” or sales commissions, the amount of which depends on the volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late remittances, the petitioner imposes a “Credit Administration Charge,” or simply, a penalty charge, on the value of the unremitted payment.

The dealers under this system earn income through a profit margin between the discounted purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-day “rolling due date” of each of its IBMs and IGSs through the employment of “Credit Administration Supervisors” (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with control systems through which data is readily generated. Under this organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM).

Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch.

Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the petitioner who happens to be respondent’s sister-in-law, from the 52-day limit to an “unauthorized” term of 60 days. The respondent made the instruction just before the computer data for the computation of the Service Fee accruing to Ms. Rey- Petilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions.

Garcy Kate D. Go LLB2 EH306 Page 133

Issue: WON the respondent is entitled to 13th month pay.

Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay as well as the “monthly salary increase of 10 percent per year for two years based on her latest salary rate.” The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of back wages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the company’s fiscal situation, the employee’s future performance on the job, or the employee’s continued stay in a position. In short, absent any proof, there is no vested right to salary increases.

Garcy Kate D. Go LLB2 EH306 Page 134

CONDITIONS OF EMPLOYMENT

San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association, sent a letter requesting for the expeditious implementation and payment by respondent, San Juan De Dios Hospital, of the '40-hours/5-day workweek' with compensable weekly two (2) days off provided for by Policy Instruction No. 54 issued by the Secretary of Labor. Said policy instruction purports to implement R.A. No. 5901, otherwise known as “An Act Prescribing Forty Hours A Week of Labor For Government and Private Hospitals Or Clinic Personnel.” Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their claims for statutory benefits under the above-cited law and policy issuance. However, the Labor Arbiter and, subsequently, NLRC dismissed the complaint. Hence, this petition ascribing grave abuse of discretion on the part of NLRC in concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901 and Article 83 of the Labor Code.

Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon completion of 40-hour/5-day workweek, is valid based on existing labor laws.

Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the provision of Article 83 of the Labor Code, as well as to R.A. No. 5901.

A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two days off with pay. Petitioners' position is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901. Section 15 of aforementioned implementing rules grants specific rate of additional compensation for work performed on Sunday or for work performed in excess of forty hours a week. Policy Instruction No. 54 unduly extended the statute.

Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labor and petitioner’s assertion. The Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute.

Garcy Kate D. Go LLB2 EH306 Page 135

Simedarby vs. NLRC, 289 SCRA 86 [1998]

Facts: Prior to the present controversy, the factory employees of Sime Darby Pilipinas, Inc. enjoyed a 30-minute paid “on call” lunch break in their daily work schedule of 7:45 am to 3:45 pm. The petitioner company passed a memorandum dated Aug 12 1992 advising all factory- based workers, except those in the Warehouse and Quality Assurance Department, of a change in work schedule that discontinued the 30-minute paid “on call” lunch break and set an uninterrupted 1 hour lunch break in lieu thereof.

Private respondents then filed a complaint for unfair labor practice, discrimination, and evasion of liability with the Labor Arbiter who dismissed the complaint, ruling that the elimination of the 30-minute lunch break was a valid exercise of management prerogative. Appeal was made to respondent NLRC who reversed the decision of the Labor Arbiter, declaring that the new work schedule deprived the employees of the benefits of a time-honored company practice and that such change also resulted in an unjust diminution of employee benefits.

The OSG recommended the present petition to be granted, alleging that the new memorandum containing the work schedule was not discriminatory not did it constitute unfair labor practice.

Issue: Whether or not the memorandum dated Aug 14 1992 discontinuing the 30-minute paid “on call” lunch break constituted unfair labor practice and diminution of benefits

Ruling: The Supreme Court sustained petitioner, holding that it is clearly a management prerogative to fix the work schedules of company employees. Under the old schedule, the employees are compensated during their 30-minute lunch break, but in essence it is still working time since the workers could be called upon to work. Whereas in the new schedule, the employees are given a longer break of 1 hour, though uncompensated, it is uninterrupted as workers on their break are no longer “on call”. The change in schedule would improve company productivity as well as enhance the comfort of workers who could enjoy an uninterrupted break.

The Supreme Court also reiterated the policy that while social justice and the protection of the working class is ensured by the Constitution, the same fundamental law also protects the right of the management to regulate all aspects of employment as well as to retain the prerogative of changing work schedules according to the exigencies of the enterprise. So long as this prerogative is exercised in good faith, the Court upholds such exercise.

Garcy Kate D. Go LLB2 EH306 Page 136

Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]

Facts: Private respondent (Dr. Herminio A. Fabros) was employed as flight surgeon at petitioner company (PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on duty from 4:00 in the afternoon until 12:00 midnight.

On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. Upon receiving the call the nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and was rushed by Mr. Eusebio to the hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why no disciplinary sanction should be taken against him.

In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.

Finding private respondent’s explanation unacceptable, the management charged private respondent with abandonment of post while on duty.

Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals.

Issue: WON being a full-time employee, private respondent is obliged to stay in the company premises for not less than eight (8) hours.

Ruling: NO. Employees are not prohibited from going out of the premises as long as they return to their post on time.

Articles 83 and 85 of the Labor Code read: Art. 83. Normal hours of work.—The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, “health personnel” shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (emphasis supplied) Art. 85. Meal periods.—Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.

Garcy Kate D. Go LLB2 EH306 Page 137

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: Sec. 7. Meal and Rest Periods.—Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee; (a) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (b) Where the establishment regularly operates not less than sixteen hours a day; (c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and (d) Where the work is necessary to prevent serious loss of perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to their posts on time. Private respondent’s act, therefore, of going home to take his dinner does not constitute abandonment.

Garcy Kate D. Go LLB2 EH306 Page 138

Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007

Facts: On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the company's decision to suspend its operations from December 18, 1997 to January 5, 1998 due to the currency crisis that affected its business operations. Linton submitted an establishment termination report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering the said period. The company's operation was to resume on January 6, 1998. On January 7, 1997, Linton issued another memorandum informing them that effective January 12, 1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation basis for three working days only instead for six days a week. On the same day, Linton submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays.

Issue: WON there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six to three the number of working days with the employees working on a rotation basis.

Ruling: The compressed workweek arrangement was unjustified and illegal.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of working hours — that the company was suffering from losses.

Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the employer's operation of a business or undertaking for a period not exceeding six (6) months.

Records show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these standards.

Garcy Kate D. Go LLB2 EH306 Page 139

Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008

Facts: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners are its regular employees, occupying the positions of helper, shipment helper and factory workers, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees.

Tryco and the petitioners signed a Memorandum of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. As provided, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.

On a letter dated March 26, 1997, the Bureau of Animal Industry of the Department of Agriculture reminded Tryco that its production should be conducted in San Rafael, Bulacan, not in Caloocan City.

Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner Aya-ay to report to the company’s plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997. Subsequently, through a Memorandum dated May 9, 1997, Tryco also directed the other petitioners Egera, Lariño and Barte to report to the company’s plant site in Bulacan.

BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997.

In August 1997, petitioners filed their separate complaints for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. Petitioners alleged that the company acted in bad faith during the CBA negotiations because it sent representatives without authority to bind the company, and this was the reason why the negotiations failed. Also, the management transferred petitioners from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4.

Issue: Whether or not the company committed Unfair Labor Practices

Ruling: NO. Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to effect a massive transfer of employees. There is not proof to support this claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the government agency concerned.

Also, Tryco’s decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively.

Garcy Kate D. Go LLB2 EH306 Page 140

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. In this case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. Such contention is untenable because the Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. The distance from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living accommodations in the area and prevent them from commuting to Metro Manila daily to be with their families.

Finally, MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. In addition, D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme. Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme

Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written.

Garcy Kate D. Go LLB2 EH306 Page 141

MINIMUM LABOR STANDARD BENEFITS

Union Filipro Employees vs Vivar (1992) 205 SCRA 203

Facts: Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay.

Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. However, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986.

Issue: WON sales personnel are excluded in the payment of holiday pay.

Ruling: Field personnel are not entitled to holiday pay.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty."

The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work. Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

"Rule IV Holidays with Pay. SECTION 1. Coverage. — This rule shall apply to all employees except: (e) Field personnel and other employees whose time and performance is unsupervised by the employer

The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns and (6) proper truck maintenance. The criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination.

Garcy Kate D. Go LLB2 EH306 Page 142

National Sugar Refinery Corp., vs. NLRC

Facts: Petitioner owns a corporation fully owned by the government which operates 3 sugar refineries in the country. One day, petitioner implemented a JEP or Job Evaluation Program affecting all employees from rank-and-file to department heads. All positions were re- evaluated and all employees including the members of the respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. Before the JEP, the members of the respondent union were treated in the same manner as rank-and-file employees and entitled to overtime pay, rest day, and holiday pay. But with the implementation of the JEP, the members of the respondent union were considered managerial staff for purposes of compensation and benefits they enjoyed a 50% increase in their basic pay, an increased COLA and an allowance for holiday or rest day work. Two years after JEP implementation, the members of the union filed a case against petitioner for payment of overtime; rest day and holiday pay invoking Article 100 on Non-diminution of Benefits.

Issue: Are they correct?

Ruling: NO. The Supreme Court found creditable merit for the petitioner. The members of the respondent union are supervisory employees as defined in Article 212(m) of the Labor Code. But for purposes of determining whether they are entitled to overtime pay, rest day pay and holiday pay, said employees should be considered as “officers and members of the managerial staff” as defined under Article 82, Book III of the Labor Code and amplified in Section 2 Rule I Book III of the Rules Implementing the Labor Code. Perforce, they are not entitled to the mentioned benefits.

The distinction made by the NLRC on the basis of whether or not the union members are managerial employees, to determine the latter’s entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that that these union members are supervisory employees and this is one instance where nomenclatures or titles of their jobs conform to the nature of their functions. Hence, to distinguish them from a managerial employee as defined in Article 82 or 212(m) of the Labor Code is puerile and inefficacious.

The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers and members of the managerial staff. The distinction therefore should have been made along that line and its corresponding conceptual criteria. The payment of the benefits to the employees did not ripen into a contractual obligation. Prior to the JEP, they could not be categorically classified as officers and members of the managerial staff considering that they were treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by the 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. The test requires a showing that the employer agreed to continue giving the benefits knowing full well that said employees are not covered by the law requiring payment thereof. In the case at bar, respondent union failed to establish that petitioner has been motivated or is wont to give these benefits out of pure generosity.

Garcy Kate D. Go LLB2 EH306 Page 143

Salazar vs. NLRC, g.r. no. 109210; april 17, 1996

Facts: On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after completion of the project and that petitioner's services in excess of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour.

On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991.

On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila. Arguments

Petitioner: 1) Since he performs his duties in the project site or away from the principal place of business of his employer (herein private respondent), he falls under the category of "field personnel." However, his case constitutes the exception to the exception because his actual working hours can be determined as evidenced by the disbursement vouchers containing payments of petitioner's salaries and overtime services. Field personnel may include managerial employees. 2) Private respondent compensated him for his overtime services as indicated in the various disbursement vouchers he submitted as evidence. Thus, he is entitled to the benefits. 3) He is entitled to separation pay.

Issue: Whether or not petitioner may be considered as managerial employee. Whether or not petitioner is entitled to separation pay.

Ruling: 1. NO, HE MAY NOT.

In his original complaint, petitioner stated that the nature of his work is "supervisory- engineering." Similarly, in his own petition and in other pleadings submitted to this Court, petitioner confirmed that his job was to supervise the laborers in the construction project. Hence, although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the Labor Code, and sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely under another exempt category"officers or members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules.

That petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As previously determined, petitioner falls under the exemptions and therefore has no legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime services. However, this does not translate into a right on the part of petitioner to demand additional payment when, under the law, petitioner is clearly exempted therefrom.

Garcy Kate D. Go LLB2 EH306 Page 144

2. NO, HE IS NOT.

The applicable provision is Article 280 of the Labor Code which defines the term "project employee," thus: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific period or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

In the case at bench, it was duly established that private respondent hired petitioner as project or construction engineer specifically for its Monte de Piedad building project. Accordingly, as project employee, petitioner's services are deemed coterminous with the project, that is, petitioner's services may be terminated as soon as the project for which he was hired is completed.

Petitioner, thus, has no legal right to demand separation pay. Policy Instruction No. 20 entitled "Stabilizing Employer-Employee Relations in the Construction Industry" explicitly mandates that: xxx xxx xxx Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes. xxx xxx xxx Department Order No. 19 of the Department of Labor and Employment (DOLE) entitled "Guidelines Governing the Employment of Workers in the Construction Industry" promulgated on 1 April 1993, reiterates the same rule.

Garcy Kate D. Go LLB2 EH306 Page 145

Labor Congress of the Phils., vs. NLRC, G.R. No. 1239381, May 21, 1998

Facts: The 99 petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of money claims and for violation of labor standards laws

Issue: Whether or not petitioners are entitled back wages.

Ruling: 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.

That being said, the amount of backwages to which each petitioner is entitled, however, cannot be fully settled at this time. Petitioners, as piece-rate workers, have been paid by the piece. There is need to determine the varying degrees of production and days worked by each worker.

Garcy Kate D. Go LLB2 EH306 Page 146

Mercidar Fishing Corp., vs. NLRC, G.R. No. 112574, October 8, 1998

Facts: This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non- payment of five days service incentive leave for 1990. Private respondent had been employed as a "bodegero" or ship's quartermaster on February 12, 1998. He complained that he had been constructively dismissed by the petitioner when the latter refused him assignments aboard its after he had reported to work on May 28, 1990.

Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990. However, when he came back for the certification September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises.

Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work.

Issue: Whether or not the fishing crew members are considered field personnel as classified in Art. 82 of the Labor Code.

Ruling: Art. 82 of the Labor Code provide: "The provisions of this title [Working Conditions and Rest Periods] shall apply to all employees in all establishments and undertakings whether to profit or not, but not to government employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations."

"Field personnel" Shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of workin the field cannot be determined with reasonable certainty.

In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner’s business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's patron or master.

Garcy Kate D. Go LLB2 EH306 Page 147

San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002

Facts: On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office, conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered that there was underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it was received by and explained to its personnel officer Elena dela Puerta. SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. Hence, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance order, dated 17 December 1993, directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from the receipt of the order.

SMC appealed to the DOLE main office in Manila. However, the appeal was dismissed for lack of merit and the order of Director Macaraya was affirmed. SMC went to SC for relief via a petition for certiorari, which the Court referred to the Court of Appeals. The appellate court modified the order with regards the payment of Muslim holiday pay from 200% to 150% of the employee's basic salary. Its motion for reconsideration having been denied for lack of merit, SMC filed a petition for certiorari before the SC

Issues: (a) Whether or not public respondents seriously erred and committed grave abuse of discretion when they granted Muslim Holiday Pay to non-Muslim employees of SMC. (b) Whether or not SMC was not accorded with due process of law in the issuance of the compliance order. (c) Whether or not regional director Macaraya, undersecretary Trajano and undersecretary Espanol have jurisdiction in issuing the assailed compliance orders.

Ruling: The court ruled the issues in negative. Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays: (a) ‘Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram; (b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar month of Rabi-ul-Awwal; (c) Lailatul Isrā Wal Mi’rāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the twenty-seventh day of the seventh lunar month of Rajab; (d) ‘Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal, commemorating the end of the fasting season; and (e) ‘Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhū’l-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created; (2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities.

Garcy Kate D. Go LLB2 EH306 Page 148

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides: Art. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the provisions of this Code shall be applicable only to Muslims." However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. 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 worker’s faith or religion. In addition, the 1999 Handbook on Workers’ Statutory Benefits, categorically stated: Considering that all private corporations, offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not report for work on the days designated by law as Muslim holidays.

On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides: Article 128. Visitorial and enforcement power. -

(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of the inspection. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

In the case before us, Regional Director Macaraya acted as the duly authorized representative of the Secretary of Labor and Employment and it was within his power to issue the compliance order to SMC. In addition, the Court agrees with the Solicitor General that the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim employees. Indeed, petitioner merely contends that its non-Muslim employees are not entitled to Muslim holiday pay. Hence, the issue could be resolved even without documentary proofs. In any case, there was no indication that Regional Director Macaraya failed to consider any documentary proof presented by SMC in the course of the inspection.

Anent the allegation that petitioner was not accorded due process, the court finds that SMC was furnished a copy of the inspection order and it was received by and explained to its Personnel Officer. Further, a series of summary hearings were conducted by DOLE on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not claim that it was not given an opportunity to defend itself.

Garcy Kate D. Go LLB2 EH306 Page 149

Tan vs. Lagrama G.R. No. 151228; August 15, 2002

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998.

On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get out.")

Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. It declared that the dismissal illegal and order the payment of monetary benefits. Tan appealed to the NLRC and reversing the decision of the Labor Arbiter.

Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits provided by law.

Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without due process.

In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work.

Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that the relationship between the employer and employee has been so strained that the latter's reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate.

This is of course in addition to the payment of bac kwages which, in accordance with the ruling in Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any deduction or qualification.

Garcy Kate D. Go LLB2 EH306 Page 150

The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work.

Garcy Kate D. Go LLB2 EH306 Page 151

Lambo vs. NLRC G.R. No. 111042; October 26, 1999

Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees. After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims. On appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay.

Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.

Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law.

Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished.

Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised employees.

In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship.

As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter applied the rule in the Mercury Drug case, according to which the recovery of back

Garcy Kate D. Go LLB2 EH306 Page 152 wages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess. The Labor Arbiter correctly ordered private respondents to give separation pay.

Considerable time has elapsed since petitioners’ dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year. The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis.

Garcy Kate D. Go LLB2 EH306 Page 153

R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. However, he was transferred to the petitioner R & E Transport, Inc. upon cessation of La Mallorca’s business operations. In January 1995, he got sick and was forced to apply for partial disability with the SSS, which was then granted. Upon recovery, he reported back to work in September 1998 but was no longer allowed on account of his old age. Latag asked the petitioner, through its administrative officer for his retirement pay pursuant to Republic Act 7641 but he was ignored. Latag filed a case for payment of his retirement pay before the NLRC.

Upon Pedro Latag’s death on April 30, 1999, he was substituted by his wife, the respondent Avelina Latag. Labor Arbiter rendered a decision in favour of Latag. Petitioner filed the quitclaim and motion to dismiss where the Labor Arbiter issued an order for Writ of Execution. Petitioners interposed an appeal before NLRC. Appeal was dismissed for failure to post a cash or surety bond, as mandated by law.

Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.

Ruling: The Supreme Court ruled that the respondent is entitled to retirement benefits despite of the waiver of quitclaims.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000. Hence, it is clear that the late Pedro M. Latag is entitled to retirement benefits.

Garcy Kate D. Go LLB2 EH306 Page 154

Asian Transmission vs. CA, 425 SCRA 478 [2004]

Facts: The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday].

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan.

Despite the explanatory bulletin, petitioner, Asian Transmission Corporation, opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.

The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union (BATLU), and held that Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is determined by a legal formula which is not changed by the fact that there are two holidays falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday.

In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator.

Issue: Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on the same day.

Ruling: The Court dismissed the petition and ruled that petitioners should pay its employees “200% and not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday.”

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay."

The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law.

Garcy Kate D. Go LLB2 EH306 Page 155

Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, 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 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.

Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.

On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter decided that the complaint be dismissed where the respondent must pay to the complainant

Issue: Whether or not respondent is entitled to service incentive leave.

Ruling: The respondent is entitled to service incentive leave.

The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof;

A careful examination of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel."

The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."

Garcy Kate D. Go LLB2 EH306 Page 156

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 the general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is field personnel?

According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association 10 which states that:

As a general rule, field personnel are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee.

At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee's performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the employer. Respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly, respondent is entitled to the grant of service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay."

Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.

Garcy Kate D. Go LLB2 EH306 Page 157

San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005

Facts: On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9, 2001, petitioner informed respondent that her probationary employment will be severed at the close of the business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioner’s premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of monetary benefits.

Issue: Whether or not respondent is a regular employee of petitioner.

Ruling: Affirmative. In termination cases, like the present controversy, the burden of proving the circumstances that would justify the employee’s dismissal rests with the employer. The best proof that petitioner should have presented to prove the probationary status of respondent is her employment contract. None, having been presented, the continuous employment of respondent as an account specialist for almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary reliever or a probationary employee.

And while it is true that by way of exception, the period of probationary employment may exceed six months when the parties so agree, such as when the same is established by company policy, or when it is required by the nature of the work, none of these exceptional circumstance were proven in the present case. Hence, respondent whose employment exceeded six months is undoubtedly a regular employee of petitioner.

Moreover, even assuming that the employment of respondent from April 7, 2000 to September 3, 2000, is only temporary, and that the reckoning period of her probationary employment is September 4, 2000, she should still be declared a regular employee because by the time she was dismissed on March 12, 2001, her alleged probationary employment already exceeded six months, i.e., six months and eight days to be precise. A worker was found to be a regular employee notwithstanding the presentation by the employer of a Payroll Authority indicating that said employee was hired on probation, since it was shown that he was terminated four days after the 6th month of his purported probationary employment.

Neither will petitioner’s belated claim that respondent became a probationary employee starting October 1, 2000 work against respondent. As earlier stated, the payroll authorities indicating that respondent’s probationary status became effective as of such date are of scant evidentiary value since it does not show the conformity of respondent. At any rate, in the interpretation of employment contracts, whether oral or written, all doubts must be resolved in favor of labor.

Hence, the contract of employment in the instant case, which appears to be an oral agreement since no written form was presented by petitioner, should be construed as one vesting respondent with a regular status and security of tenure.

Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

The determination that the employee’s services are no longer necessary or sustainable and, therefore, properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor

Garcy Kate D. Go LLB2 EH306 Page 158

Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees.

The following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and a memorandum of the company both to the effect that there is a need to redeploy its regular employees and terminate the employment of temporary employees, in view of an excess in manpower. These documents, however, do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to support a conclusion.

Moreover, the lingering doubt as to the existence of redundancy or of petitioner’s so called “restructuring, realignment or reorganization” which resulted in the dismissal of not only probationary employees but also of regular employees, is highlighted by the non-presentation by petitioner of the required notice to the DOLE and to the separated employees. If there was indeed a valid redundancy effected by petitioner, these notices and the proof of payment of separation pay to the dismissed regular employees should have been offered to establish that there was excess manpower in petitioner’s GMA-KAG caused by a decline in the sales volume. In balancing the interest between labor and capital, the prudent recourse in termination cases is to safeguard the prized security of tenure of employees and to require employers to present the best evidence obtainable, especially so because in most cases, the documents or proof needed to resolve the validity of the termination, are in the possession of employers. A contrary ruling would encourage employers to prevent the regularization of an employee by simply invoking a feigned or unsubstantiated redundancy program.

Granting that petitioner was able to substantiate the validity of its reorganization or restructuring, it nevertheless, failed to effect a fair and reasonable criterion in dismissing respondent. The criteria in implementing a redundancy are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.

It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its sales unit was the employment status of the employee. However, in the implementation thereof, petitioner erroneously classified respondent as a probationary employee, resulting in the dismissal of the latter. Verily, the absence of criteria and the erroneous implementation of the criterion selected, both render invalid the redundancy because both have the ultimate effect of illegally dismissing an employee.

Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to payment of full back wages, computed from the time her compensation was actually withheld from her on March 13, 2001, up to her actual reinstatement. As a regular employee of petitioner from the date of her employment on April 17, 2000, she is likewise entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed from such date also up to her actual reinstatement.

Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by the month, irrespective of the number of working days therein, shall be presumed to be paid for all the days in the month whether worked or not.

Garcy Kate D. Go LLB2 EH306 Page 159

Anent attorney’s fees, in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary award by way of attorney’s fees is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of attorney’s fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly, as in the instant controversy.

Garcy Kate D. Go LLB2 EH306 Page 160

Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006

Facts: Sometime in June 1999, Petitioner Charlito Peñaranda 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, Peñaranda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC.

After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit supporting documents.

Peñaranda alleges that he was employed by respondent Banganga on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. he alleges that his services were terminated without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claimed for payment of damages and attorney's fees having been forced to litigate the present complaint.

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 allege that complainant's 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. And due to the insistence of herein complainant he was paid his separation benefits.

Consequently, when respondent BPC partially reopened in January 2001, Peñaranda failed to reapply.

The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature because he was still employed by BPC. Petitioner’s money claims for illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay.

Issue: Whether or not Peñaranda is a regular, common employee entitled to monetary benefits under Art. 82 of the Labor Code and is entitled to the payment of overtime pay and other monetary benefits.

Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.

The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and member of the managerial staff are not entitled to the provisions of law on labor standards.

The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of the employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work

Garcy Kate D. Go LLB2 EH306 Page 161

along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above."

The petitioner’s work involves: 1. To supply the required and continuous steam to all consuming units at minimum cost. 2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories. 3. To evaluate performance of machinery and manpower. 4. To follow-up supply of waste and other materials for fuel. 5. To train new employees for effective and safety white working. 6. Recommend parts and suppliers purchases. acEHSI 7. To recommend personnel actions such as: promotion, or disciplinary action. 8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit. 9. Implement Chemical Dosing. 10. Perform other task as required by the superior from time to time." 34

The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. The term foreman implies that he was the representative of management over the workers and the operation of the department. Petitioner's evidence also showed that he was the supervisor of the steam plant. His classification as supervisors is further evident from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees who were paid on a monthly basis; the others were paid only on a daily basis.

Garcy Kate D. Go LLB2 EH306 Page 162

Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.

Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.

Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper that the employees were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees' salaries gains significance.

This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law — and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees.

It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days.

In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the computation of their monthly salaries.

Garcy Kate D. Go LLB2 EH306 Page 163

Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533 [1998]

Facts: Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping Services, Inc., herein petitioner, as a restaurant waiter on board the M/S Black Watch , a luxury cruise ship liner. His employment is pursuant to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997.

On October 18, 1996, respondent, on board the cruise ship, left Manila for Heathrow, England. About four months into his employment, or on February 15, 1997, responded reported to work an hour and a half (1 ½) late. Due to the incident, respondent was issued a warning- termination form by the master of the cruise ship, Thor Fleten on February 17, 1997, who likewise conducted an inquisitorial hearing to investigate the incident on March 8, 1997.

Thereafter, on March 9, 1997, respondent was dismissed from service on the strength of an unsigned and undated notice of dismissal. Attached to the dismissal notice is the alleged minutes or records of the investigation and hearing.

On March 24, 1997, respondent filed a complaint for illegal dismissal and other monetary claims. He claims that he was underpaid in the amount of US$110.00 per month for a period of five (5) months, since he was only paid US$300.00 per month, instead of US$410.00 per month, which was stipulated in his contract. Aside from underpayment, he alleged that US$20.00 per month was also deducted from his salary by petitioner for union dues.

Issue: In the computation of the award, should the “guaranteed overtime” pay per month be included as part of his salary?

Ruling: There is no factual or legal basis in the inclusion of his "guaranteed overtime" pay into his monthly salary computation for the entire unexpired period of his contract.

The Court ruled in Cagampan v. National Labor Relations Commission, that although an overseas employment contract may guarantee the right to overtime pay, entitlement to such benefit must first be established, otherwise the same cannot be allowed.

Petitioner’s contention that there is no factual or legal basis for the inclusion of said amount since respondent‘s repatriation is well-taken.

Garcy Kate D. Go LLB2 EH306 Page 164

PNCC Skyway Traffic Management and Security Division Workers Organization, GR No. 171231, Feb. 17, 2010

Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of the laws of the Philippines. On November 15, 2002, petitioner and respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses for security license provisions.

A memorandum was passed by the respondents scheduling the leaves of the laborers. Petitioner objected to the implementation of this memorandum and contended that their union members have the preference in scheduling their vacation leave. On the other hand, respondent argued that Article VIII, Section 1 (b) gives the management the final say regarding the vacation leave schedule of its employees. Respondent may take into consideration the employees' preferred schedule, but the same is not controlling.

Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its employees.

Ruling: Yes. The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from that language alone. Stated differently, where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a different sense.

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. The preference requested by the employees is not controlling because respondent retains its power and prerogative to consider or to ignore said request. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the law between the parties.

Garcy Kate D. Go LLB2 EH306 Page 165

Radio Mindanao Network, Inc. vs. Ybarola

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983, respectively, by RMN. They eventually became account managers, soliciting advertisements and servicing various clients of RMN.

The respondents’ services were terminated as a result of RMN’s reorganization/restructuring; they were given their separation pay – P 631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims, including attorney’s fees. They indicated that their monthly salary rates were P 60,000.00 for Ybarola and P 40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of the full benefits due them; while they admitted that they signed release documents, they did so due to dire necessity.

The petitioners denied liability, contending that the amounts the respondents received represented a fair and reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they executed freely and voluntarily. They belied the respondents’ claimed salary rates, alleging that they each received a monthly salary of P 9,177.00, as shown by the payrolls.

The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of additional separation pay to the respondents – P 490,066.00 for Ybarola and P 429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside the labor arbiter’s decision and dismissed the complaint for lack of merit. It ruled that the withholding tax certificate cannot be the basis of the computation of the respondents’ separation pay as the tax document included the respondents’ cost-of-living allowance and commissions; as a general rule, commissions cannot be included in the base figure for the computation of the separation pay because they have to be earned by actual market transactions attributable to the respondents From the NLRC, the respondents sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor arbiter’s separation pay award, rejecting the NLRC’s ruling that the respondents’ commissions are not included in the computation of their separation pay. It pointed out that in the present case, the respondents earned their commissions through actual market transactions attributable to them; these commissions, therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for being against public policy, citing two reasons: (1) the terms of the settlement are unconscionable; the separation pay the respondents received was deficient by at least P 400,000.00 for each of them; and (2) the absence of voluntariness when the respondents signed the document, it was their dire circumstances and inability to support their families that finally drove them to accept the amount the petitioners offered. Significantly, they dallied and it took them three months to sign the release/quitclaim affidavits.

Issue:Whether or not the release/quitclaim affidavits are invalid for being against public policy.

Garcy Kate D. Go LLB2 EH306 Page 166

Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for termination due to reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of the amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the document, it was their dire circumstances and inability to support their families that finally drove them to accept the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim instrument, but were eventually forced to sign given their circumstances. To be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the respondent’s length of service – 25 years for Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.

Garcy Kate D. Go LLB2 EH306 Page 167

Villuga vs. NLRC

Facts: Petitioner Elias Villuga was employed as cutter in the Broad Street Tailoring owned by privaterespondent Rodolfo Zapanta. He was paid a fixed monthly salary of P840.00 and a monthly transportation allowance of P40.00. In addition, Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the shop's manager and assistant manager would be absent. The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task. Petitioners did not fill up any time record since they did not observe regular or fixed hours of work.

From February 17 to 22, 1978, Villuga failed to report for work allegedly due to illness. For not properly notifying his employer, he was considered to have abandoned his work. Villuga claimed that he was refused admittance when he reported for work after his absence, allegedly due to his active participation in the union organized by private respondent's tailors. He further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service incentive leave pay and 13th month pay. Petitioners Abistado, Mendoza, Brizuela and Oro also claimed that they were dismissed from their employment because they joined the Philippine Social Security Labor Union (PSSLU). The other petitioners claimed that they stopped working because private respondents gave them few pieces of work to do after learning of their membership with PSSLU.

The Labor Arbiter rendered a decision ordering the dismissal of the complaint for unfair labor practices, illegal dismissal and other money claims except petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980. The NLRC affirmed the questioned decision.

Issue: Whether an employer-employee relationship exists and whether such employment is managerial in character or that of a rank and file employee are primordial considerations before extending labor benefits.

Ruling: Under Rule I, Section 2(c), Book III of the Implementing Rules of the Labor Code, to be a member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary duty consists of the performance of work directly related to management policies; (2) that he customarily and regularly exercises discretion and independent judgment in the performance of his functions; (3) that he regularly and directly assists in the management of the establishment; and (4) that he does not devote twenty per cent of his time to work other than those described above.

Garcy Kate D. Go LLB2 EH306 Page 168

CJC Trading vs. NLRC G.R. No. 115884; July 20, 1995

Facts: Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner since 1983 and 1978 as truck drivers and were paid on a "per trip or task basis." They filed separate complaints on against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos for illegal dismissal and non-payment of premium pay for holiday and rest day, service incentive leave pay and thirteenth month pay. These cases were consolidated.

On 22 July 1993, a decision was rendered by the Labor Arbiter dismissing the complaints and were not entitled to the labor standards benefits claimed by them because they were paid on a "per trip or per task basis.

On appeal, NLRC affirmed in toto the decision of the Labor Arbiter.

Issue: Whether or not the respondents are entitled to the benefits provided by law.

Ruling: The employees are granted to retirement benefits. An employee who voluntarily resigns is not entitled to separation pay unless otherwise stipulated in an employment contract or collective bargaining agreement, or sanctioned by established employer practice or policy. The Labor Code is devoid of any provision which grants separation pay to employees who voluntarily resign. Neither was there anything in the record that shows that, in the instant case, there is a collective bargaining agreement or any other agreement or established company policy concerning the payment of separation pay to employees who resign.

Considering that private respondents were close to the age of sixty (60) at the time they stopped working for petitioner and that they had been in the employ of petitioner for several years, the Court, considers that this could be deemed to be in effect a prayer for the grant of retirement benefits.

The pertinent law is Article 287 of the Labor Code, as amended by R.A. No. 7641, which reads: Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

R.A. No. 7641 may be given effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant was in compliance with the requirements for eligibility under the statute for such retirement benefits. It appears that private respondents did not qualify for the benefits of R.A. No. 7641 under the terms of this law itself. Since the record does not show any retirement plan or collective bargaining agreement providing for retirement benefits to petitioner's employees, the applicable retirement benefits to petitioner's employees, the applicable retirement age is the optional retirement age of sixty (60) years according to Article 287, which would qualify the

Garcy Kate D. Go LLB2 EH306 Page 169 retiree to retirement benefits equivalent to one-half (1/2) month's salary for every year of service. Unfortunately, at the time private respondent stopped working for petitioner, they had not yet reached the age of sixty (60) years. The Court stresses that there is nothing to prevent petitioners from voluntarily giving private respondents some financial assistance on an ex gratia basis.

Garcy Kate D. Go LLB2 EH306 Page 170

Pantranco North Express, Inc., vs. National Labor Relations Commission And Urbano Suñiga

Facts: Urbano Suñiga was hired by Pantranco North Express Inc. in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association-PTGWO. He continued in petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the aforenamed union. Private respondent received P49,300.00 as retirement pay.

On February 15, 1990, private respondent filed a complaint for illegal dismissal against petitioner with the Sub-Regional Arbitration Branch of the respondent Commission in Dagupan City. The complaint was consolidated with two other cases of illegal dismissal having similar facts and issues, filed by other employees, non-union members.

Collective Bargaining Agreement between petitioner company and the union states:

"Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the COMPANY, whichever comes first, and the employee shall be compulsory retired and paid the retirement benefits herein provided.

After hearings were held and position papers submitted, on March 26, 1990, Labor Arbiter Olairez rendered his decision that the three complainants illegally and unjustly dismissed and ordered the respondent to reinstate them to their former or substantially equivalent positions without loss of seniority rights with full backwages and other benefits with a total of P31,618.12 plus additional backwages and other benefits but not to exceed 3 years and the corresponding attorney's fees. The amounts already received by complainants shall be considered as advanced payment of their retirement pay which shall be deducted when they shall actually retire or (be) separated from the service. The order of reinstatement is immediately executory even pending appeal. Petitioner appealed to public respondent, which issued the questioned Resolution affirming the labor arbiter's decision in toto. Hence, this petition.

Issues: (1) The National Labor Relations Commission gravely abused its discretion in holding that the Labor Arbiter has jurisdiction over the case. (2) The National Labor Relations Commission gravely abused its discretion in affirming the Labor Arbiter's decision that private respondent Urbano Zuñiga (sic) was illegally dismissed."

Ruling: The petition is meritorious thus warranting reversal of the questioned Resolution.

Jurisdiction of Labor Arbiter

Article 261 of the Labor Code provides that violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of the Article, gross violations of a Collective Bargaining agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement."

Garcy Kate D. Go LLB2 EH306 Page 171

The complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217 has been conferred to the Labor Arbiters. The interpretation of the CBA or enforcement of the company policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL, or who committed offenses contrary to the personnel polices can no longer file a case of illegal dismissal because the discharge is premised on the interpretation or enforcement of the company polices.

Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It adduced arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time attacks the jurisdiction of the tribunal. The Court agrees with the public respondent's affirmance of the arbiter's decision in respect of the question of jurisdiction.

In Sanyo Philippines Workers Union — PSSLU vs. Cañizares, the petitioner, the court ruled:

Only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators.In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private respondents. No grievance between them exists which could be brought to a grievance machinery. The dispute has to be settled before an impartial body. The grievance machinery with members designated by the union and the company cannot be expected to be impartial against the dismissed employees. Due process demands that the dismissed workers’ grievances be ventilated before an impartial body. Since there has already been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter."

Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and petitioner company because both have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the compulsory retirement. Thus, the case is properly denominated as a "termination dispute" which comes under the jurisdiction of labor arbiters. Therefore, public respondent did not commit a grave abuse of discretion in upholding the jurisdiction of the labor arbiter over this case.

Private Respondent's Compulsory Retirement Is Not Illegal Dismissal

"Retirement. -- In the absence of any collective bargaining agreement or other applicable agreement concerning terms and condition of employment which provides for retirement at an older age, an employee may be retired upon reaching the age of sixty (60) years."

Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee to reap the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise — at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer. As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on be put to productive and profitable uses by way of income-generating investments, thereby affording a more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early retirement provisions. And the same cannot be considered a diminution of employment benefits.

Garcy Kate D. Go LLB2 EH306 Page 172

A CBA incorporates the agreement reached after negotiations between employer and bargaining agent with respect to terms and conditions of employment. A CBA is not an ordinary contract. It is a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, it is not merely contractual in nature but impressed with public interest, thus it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.

Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to be beneficial to the employees-union members, including herein private respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision on compulsory retirement was applied to his case.

Incidentally, The Retirement Pay Law," said statute sheds light on the present discussion when it amended Art. 287 of the Labor Code worded that "Any employee may be retired upon reaching the retirement age establish in the collective bargaining agreement or other applicable employment contract."

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment may retire."

The provision makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA. Public respondent committed a grave abuse of discretion in affirming the decision of the labor arbiter. The compulsory retirement of private respondent effected in accordance with the CBA is legal and binding.

Garcy Kate D. Go LLB2 EH306 Page 173

R&E Transport , Inc., And Honorio Enriquez, vs. Avelina Latag (February 13, 2004) G.R. 155214

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored.

On December 21, 1998, Latag filed a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag.

Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.

Ruling: YES, the respondent is entitled to retirement benefits despite of the waiver of quitclaims.

The Supreme Court upheld that the CA committed no error when it ruled that the Quitclaim and Waiver was invalid and could not bar respondent Latag from demanding the benefits legally due her husband despite the former having signed the document. This is not to say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides:

“Art. 287. Retirement. — xxx xxx xxx In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. xxx xxx xxx”

The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income.

Garcy Kate D. Go LLB2 EH306 Page 174

Rufina Patis Factory v. Alusitain

Facts: In March 1948, respondent Alusitain was hired as a laborer at the Rufina Patis Factory owned and operated by petitioner Lucas. On February 19, 1991, respondent, then 63 years of age, tendered his letter of resignation, and also executed a duly notarized affidavit of separation from employment and submitted the same to the Pensions Department of the SSS. Meanwhile, R.A. 7641 took effect in January 1993 providing, among others, that “In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.”

In 1995, respondent, claiming that he retired from the company on January 31, 1995, having reached the age of 65 and due to poor health, demanded from petitioner the payment of his retirement benefits in the amount of P86,710.00, which petitioner refused to pay. Respondent filed a complaint before the NLRC against petitioners for non-payment of retirement benefits. Petitioners maintained that respondent resigned from the company in 1991. On the other hand, respondent maintained that he continued working for petitioners until January 1995, the date of actual retirement, due to illness and old age, and that he merely accomplished the documents in compliance with the requirements of the SSS in order to avail of his retirement benefits. The Labor Arbiter upheld respondent’s position. The Court of Appeals upheld the NLRC decision. Petitioners assert that the appellate court erred in applying retroactively R.A. 7641 as said law does not expressly provide for such retroactive application and to do so would defeat the clear intent of Congress. Hence, this petition.

Issue: Whether or not respondent is entitled to his claim for retirement benefits.

Ruling: No. R.A. 7641 is a social legislation and may be given retroactive effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility under the statute for such retirement benefits. It is thus clear that in order for respondent to claim retirement benefits from petitioner, he has to prove that he was its employee at the time R.A. 7641 took effect. In the case at bar, it was incumbent on respondent to prove that he retired on January 31, 1995 and not on February 20, 1991 as indicated on his letter of resignation. Respondent failed to prove that he was an employee of petitioner at the time R.A. 7641 took effect. Thus, his claim for retirement benefits must be disallowed.

Garcy Kate D. Go LLB2 EH306 Page 175

Sta. Catalina College v. NLRC; G.R. No. 144483; November 19, 2003

Facts: Hilaria was hired as an elementary school teacher at the Sta. Catalina College (petitioner school) in San Antonio, Biñan, Laguna. In 1970, she applied for and was granted a one year leave of absence without pay on account of the illness of her mother. After the expiration in 1971 of her leave of absence, she had not been heard from by petitioner school.

In the meantime, she was employed as a teacher at the San Pedro Parochial School during school year 1980-1981 and at the Liceo de San Pedro, Biñan, Laguna during school year 1981- 1982.

In 1982, she applied anew at petitioner school which hired her with a monthly salary of Php 6,567.95.

On March 22, 1997, during the 51st Commencement Exercises of petitioner school, Hilaria was awarded a Plaque of Appreciation for thirty years of service and Php 12,000.00 as gratuity pay. On May 31, 1997, Hilaria reached the compulsory retirement age of 65. Retiring pursuant to Article 287 of the Labor Code, as amended by Republic Act 7641, petitioner school pegged her retirement benefits at Php 59,038.35, computed on the basis of fifteen years of service from 1982 to 1997. Her service from 1955 to 1970 was excluded in the computation, petitioner school having asserted that she had, in 1971, abandoned her employment.

From the Php 59,038.35 retirement benefits was deducted the amount of Php 28,853.09 representing reimbursement of the employer’s contribution to her retirement benefits under the Private Education Retirement Annuity Association (PERAA) which Hilaria had already received.

Issue: Whether or not the separation pay should be computed based on the length of continuous service or merely years of service not being continuous.

Ruling: Hilaria was considered a new employee when she rejoined petitioner school upon re- applying in 1982, her retirement benefits should thus be computed only on the basis of her years of service from 1982 to 1997. The Court is not unmindful of Hilaria’s rendition of a total of thirty years of teaching in petitioner school and should be accorded ample support in her twilight years. Petitioner school in fact acknowledges her dedicated service to its students. She can, however, only be awarded with what she is rightfully entitled to under the law.

Garcy Kate D. Go LLB2 EH306 Page 176

Honda Philippines vs. Samahan ng Malayang Manggagawa sa Honda G.R. No. 145561, June 15, 2005

Facts: Honda Phils, Inc (company) and Samahan ng Malayang Manggagawa sa Honda (union) started renegotiations of their CBA. When there was a bargaining deadlock, the union filed a notice of strike. The company likewise filed a notice of lockout. SOLE assumed jurisdiction and ordered both parties to desist from their strike and lockout.

However, the union subsequently filed a second notice of strike onthe ground of unfair labor practice, alleging that the company illegally contracted out work to the detriment of the workers. The union went on strike. SOLE assumed jurisdiction and certified the case to NLRC for compulsory arbitration. The striking employees were ordered to return to work and management accepted them back.

Honda then issued a memorandum announcing its new computationof the 13th and 14th month pay whereby the 31-day strike shall be considered unworked days for the purpose of computing said benefits. The amount equivalent to 1/12 of the employees’ basic salary shall be deducted from the bonuses (because they did not work for 1 month). Furthermore, Honda wanted a pro-rata payment of the 13th month pay.

The union opposed said computation because it was contrary to the Sections 3 and 6 in their current CBA which mandates that “the company shall maintain the present practice in the implementation of the 13th month pay” and that the 14th month pay shall be computed in the same way as the former.

The Bureau of Working Conditions (BWC) sided with the company. But the issue was unresolved by the grievance machinery, so it wassubmitted for voluntary arbitration. The Voluntary Arbiter invalidated Honda’s computation and ordered the computation of the benefits based on the full month basic pay.

CA affirmed, hence this petition.

Issues: (1) Whether or not there is ambiguity in the CBA provisions concerning the 13th and 14th month pay (2) Whether or not the proposed computation of Honda deducting 1/12 of the employee’s basic salary from the 13th and 14th month pay and its pro-rata payment are valid

Ruling: (1) YES. A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. The parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient as long as they are not contrary to law, morals, good customs, public order or public policy. Where the CBA is clear and unambiguous, it becomes the law between the parties.

However, there are times when the CBA provisions may become contentious. In this case, Honda wanted to implement a pro-ratedcomputation based on the “no work, no pay” rule. Honda argues that the phrase “present practice” in the CBA refers to the manner of payment of the bonuses (50% in May and 50% in December). The union, on the other hand, insists that the CBA provisions necessarily relate to the computation of the benefits.

As the voluntary arbitrator has correctly observed, there is ambiguity in the assailed CBA provisions because they did not categorically state whether the computation of the 13th and

Garcy Kate D. Go LLB2 EH306 Page 177

14th month pay would be based on a one full month’s basic salary of the employees, or pro- rated based on the compensation actually received.

(2) NO. The ambiguity in the CBA provisions was correctly resolved by the arbitrator by relying on Article 1702 of the Civil Code, which provides that “in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer.” CA is also correct in ruling that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker.

PD 851 or the 13th Month Pay Law was issued to protect the level of wages of workers from worldwide inflation. Under the IRR of said law, the minimum 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year.The Court has interpreted “basic salary” to mean, NOT the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year.

The IRR also provide for a pro-ration of this benefit ONLY in cases of resignation or separation from work. In the present case, there being no resignation/separation, the computation of the 13th month pay should not be pro-rated but should be given in full.

Moreover, it has not been proven that Honda has been implementing pro-rating of the 13th month pay before the present case. It is not a company practice. In fact, there was an implicit acceptance that prior to the strike, a full month basic pay computation was the “present practice” intended in the CBA. It was the second strike that prompted the company to adopt the pro-rata computation.

Garcy Kate D. Go LLB2 EH306 Page 178

Jaculbe vs. Silliman University G.R. No. 156934; March 16, 2007

Facts: Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse. In a letter in December 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement plan for its employees which provided that its members could be automatically retired “upon reaching the age of 65 or after 35 years of uninterrupted service to the university.” Respondent required certain documents in connection with petitioner’s impending retirement.

A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing “company policy.”

On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for “termination of service with preliminary injunction and/or restraining order.” On November 18, 1993, respondent compulsorily retired petitioner. The labor arbiter rendered a decision finding respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full back wages. On appeal, the NLRC reversed the labor arbiter’s decision and dismissed the complaint. the CA affirmed the NLRC.

Issue: Whether or not the respondent’s retirement plan imposing automatic retirement after 35 years of service contravenes the security of tenure clause in the 1987 Constitution and the Labor Code.

Ruling: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years.

The rules and regulations of the plan show that participation therein was not voluntary at all. Rule III of the plan, on membership, stated:

SECTION 1 – MEMBERSHIP, All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that those who have retired from the University, even if rehired, are no longer eligible for membership in the Plan. A member who continues to serve the University cannot withdraw from the Plan. SECTION 2 – EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is hired on a full-time basis by the University. SECTION 3 – TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employee’s contract by the University, or retirement from the University.

Meanwhile, Rule IV, on contributions, stated:

The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff.

Garcy Kate D. Go LLB2 EH306 Page 179

A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay should pay his contributions to the Plan. However, a member, who has been on leave without pay should pay his contributions based on his salary plus the University’s contributions while on leave or the full amount within one month immediately after the date of his reinstatement. Provided, further that if a member has no sufficient source of income while on leave may pay within six months after his reinstatement.

It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word “shall” ineluctably pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on leave).

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former. The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance.

An employer is free to impose a retirement age less than 65 for as long as it has the employees’ consent. Stated conversely, employees are free to accept the employer’s offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented by the employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal.

Garcy Kate D. Go LLB2 EH306 Page 180

Intercontinental Broadcasting Corp. vs. Panganiban G.R. No. 151407, Februarry 6, 2007

Facts: Ireneo Panganiban (respondent) was employed as Assistant General Manager of the Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988.

On April 12, 1989, respondent filed a civil case with the RTC of Quezon City, Branch 93 against the members of the Board of Administrators (BOA) of petitioner alleging, among others, non- payment of his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent’s claim was a labor money claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari with the CA which granted Santiago’s petition for lack of jurisdiction and set aside the RTC’s Orders.

Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and damages. The Labor Arbiter (LA) ordered respondent’s reinstatement with full backwages, and the payment of his unpaid commission, damages and attorney’s fees. Petitioner appealed to the NLRC but due to petitioner’s failure to post a bond, the appeal was dismissed. The decision was deemed final and executory.

Issue: WON respondent’s claim for unpaid commissions has already prescribed.

Ruling: Yes. Respondent’s claim had already prescribed as of September 1991. In addition, the claims of private respondent for reinstatement, backwages and benefits in conjunction with his employment from 1986 to 1988 have prescribed.

The applicable law in this case is Article 291 of the Labor Code which provides that “all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.”

The term “money claims” covers all money claims arising from an employer-employee relation the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.

On this point, the Court ruled that although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. Hence, while the filing of Civil Case could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA due to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly the same position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of Civil Case respondent’s cause of action had already prescribed on September 2, 1991, three years after his cessation of employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

Garcy Kate D. Go LLB2 EH306 Page 181

Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225

Facts: Three cases were consolidated involving petitioner Letran Calamba Faculty and Employees Association and Colegio de San Juan de Letran, Calamba, for money claims and a petition to declare the subject strike illegal filed by respondent.

On July 28, 1999, the NLRC promulgated its Decision dismissing both appeals. Petitioner filed a Motion for Reconsideration but the same was denied by the NLRC in its Resolution dated June 21, 2000.Petitioner then filed a special civil action for certiorari with the CA assailing the above- mentioned NLRC Decision and Resolution.

On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition. Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, 2002. Citing Agustilo v. Court of Appeals, petitioner contends that in a special civil action for certiorari brought before the CA, the appellate court can review the factual findings and the legal conclusions of the NLRC.

Petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence, failed to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming the Decision of the NLRC.

Issue: WON the Court of Appeals erred in holding that the factual findings of the NLRC cannot be reviewed in certiorari proceedings.

Ruling: Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.

Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below. In a petition for review on certiorari, this Court’s jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous. Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality. They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record. We find none of these exceptions in the present case.

In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, especially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.

Garcy Kate D. Go LLB2 EH306 Page 182

Reyes vs. NLRC et al. G.R. No. 160233; August 8, 2007

Facts: Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12, 1977. He was eventually appointed as unit manager of Sales Department- South Mindanao District, a position he held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation of his separation pay. Insisting that his retirement benefits and 13th month pay must be based on the average monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner refused to accept the check issued by private respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC for retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial assistance, service incentive leave pay, damages and attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned by salesmen form part of their basic salary. Private respondent counters that petitioner knew that the overriding commission is not included in the basic salary because it had not been considered as such for a long time in the computation of the 13th month pay, leave commissions, absences and tardiness.

Issue: Whether or not the average monthly sales commission of thirty one thousand eight hundred forty six and 97/100 (Php31,846.97) should be included in the computation of his retirement benefits and 13th month pay.

Ruling: This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-determined percentage of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing the 13th month pay. The salesmen's commission are not overtime payments, nor profit-sharing payments nor any other fringe benefit but a portion of the salary structure which represents an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman.

Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term basic salary because these were paid to the medical representatives and rank-and-file employees as productivity bonuses, which are generally tied to the productivity, or capacity for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or necessary relation to the amount of work actually done by each individual employee. Further, commissions paid by the Boie-Takeda Company to its medical representatives could not have been sales commissions in the same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all.

In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for its payment, which indubitably are factual in nature for they will require a re-examination and calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computation of his retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract… In the absence of a retirement plan or agreement providing for retirement benefits of

Garcy Kate D. Go LLB2 EH306 Page 183 employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing statements, they are properly excluded in computing retirement pay. However, sales commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in determining the retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale of article at all. Therefore, any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. Accordingly, the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions are additional pay that does not form part of the basic salary, applies to the present case. Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but merely supervised the salesmen under his control, the disputed commissions were not regularly received by him. Only when the salesmen were able to collect from the sale transactions can petitioner receive the commissions. Conversely, if no collections were made by the salesmen, then petitioner would receive no commissions at all. In fine, the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually performed. The collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in the form of a commission. Hence, petition is denied.

Garcy Kate D. Go LLB2 EH306 Page 184

Arco Metal Products vs. Samahan ng Manggagawa sa Arco-Metal-NAFLU G.R. No. 170734; May 14, 2008

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration.

Issue: Whether or not the prorated payment of the benefits constitute a violation under Art. 100 of the Labor Code.

Ruling: SC ruled in favor of the respondents. The voluntary grant of the benefits has been an established company practice. It has been a company practice which grants full benefits to its employees regardless of the length of service rendered.

There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The clear wording of the provisions does not allow any other interpretation. Anent the 13th month pay and bonus, we agree with the findings of Labor Arbiter Mangabat that the CBA provisions did not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total compensation which an employee receives for the whole calendar year. The bonus is also equivalent to the amount of the 13th month pay given, or in proportion to the actual service rendered by an employee within the year.

Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare,” and “to afford labor full protection.” Said mandate in turn is the basis of Article 4 of the Labor Code which states that “all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor.” Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in Davao Fruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employer’s act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn. Meanwhile in Davao Integrated Port Stevedoring Services v. Abarquez, the Court ordered the payment of the cash equivalent of the unenjoyed sick leave benefits to its intermittent workers after finding that said workers had received these benefits for almost four years until the grant was stopped due to a different interpretation of the CBA provisions. We held that the employer cannot unilaterally withdraw the existing privilege of commutation or conversion to cash given to said workers, and as also noted that the employer had in fact granted and paid said cash equivalent of the unenjoyed portion of the sick leave benefits to some intermittent workers.

Garcy Kate D. Go LLB2 EH306 Page 185

Universal Robina Sugar Milling Corp., vs Caballeda [G.R. 156644. July 28, 2008]

Facts: Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23, 1997 while Alejandro Cadalin worked for URSUMCO as crane operation from 1976 up to June 15, 1997.

John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company policy on Compulsory Retirement. All employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered retired on May 31, 1991. Subsequently, on December 9, 1992, Republic Act No. 7641 was enacted into law and it took effect on January 7, 1993, amending Article 287 of the Labor Code.

Agripino and Alejandro having reached the age of 60, were allegedly forced to retire by URSUMCO. They both accepted their retirement benefits. Later on, Agripino filed a complaint for illegal dismissal because his compulsory retirement was in violation of the provisions of RA 7641 and, was in effect, a form of illegal dismissal.

Issues:

(1) Whether RA 7641 can be given retroactive effect? (2) Whether or not Agripino Caballeda and Alejandro Cadalin voluntarily retired from the service?

Ruling: The issue of retroactivity has long been settled in the case of Enriquez Security Services, Inc. vs. Cabotaje.

RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial wellbeing of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started.

This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute.

When respondents were compulsorily retired from the service, RA 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. The age of retirement is primarily determined by the existing agreement between the employer and the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years.

Garcy Kate D. Go LLB2 EH306 Page 186

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee.

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits therefrom does not amount to estoppel.

In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. In this case, petitioners failed to establish all the foregoing requisites.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement benefit. In Becton Dickinson Phils., Inc. v. National Labor Relations Commission, we held:

There is no nexus between intelligence, or even the position which the employee held in the company when it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a release and quitclaim. The employee is confronted with the same dilemma of whether signing a release and quitclaim and accept what the company offers them, or refusing to sign and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be entitled to based on company practice and policy or by law.

Absent any convincing proof of voluntariness in the submission of the documentary requirements and the execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same pressure. Respondents vigorously pursued this case all the way up to the Supreme Court. Without doubt, this is a manifestation that respondents had no intention of relinquishing their employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired. Respondents did not voluntarily retire but were forced to retire, tantamount to illegal dismissal.

Garcy Kate D. Go LLB2 EH306 Page 187

Lourdes Cercado vs Uniprom Inc. G.R. NO. 188154 October 13, 2010

Fact: Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22 years since December 15, 1978. When respondent came up with a retirement plan, sometime in 1980 and then amended in 2001, which provides that any employee with a minimum of 20 years of service, regardless of age, may be retired at the option of the employer. In December 2000, UNIPROM implemented a company-wide retirement program, including herein petitioner. She was offered an early retirement package amounting to P171, 982.90 but Cercado rejected the offer. UNIPROM exercised its option under the retirement plan and decided to retire petitioner effective February 15, 2001 so she was no longer given any work assignment after the said date. This prompted the petitioner to file a complaint for illegal dismissal before the Labor Arbiter, alleging that UNIPROM did not have abona fide retirement plan, and even if there was, she didn’t consent thereto. Respondent averred that Cercado was automatically covered by the retirement plan when she agreed to the company’s rules and regulations, and that her retirement was an exercise of management prerogative.

Issues: 1. Whether or not UNIPROM has a bona fide retirement plan 2. Whether or not petitioner was validly retired pursuant thereto

Ruline: Petition is meritorious.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. 1. Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as amended by R.A 7641, pegs the age for compulsory retirement at 65 years old, while the minimum age for optional retirement is set at 60 years. However, an employer is free to impose a retirement age earlier than the foregoing mandates. This has been upheld in numerous cases as a valid exercise of management prerogative. In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22 years, pursuant to the company’s retirement plan, which provides that employees who have rendered at least 20 years of service can be retired at the option of the copany. Respondent’s retirement plan can be expediently stamped with validity and justified under the all encompassing phrase “management prerogative”. 2. No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that a retirement plan giving the employer the option to retire its employees below below the ages provided by law must be assented to and accepted by the latter, otherwise its adhesive imposition will amount to a deprivation of property without due process. In decided cases, the retirement plans were either embodied in the CBA, or established after consultations and negotiations with the emplyees’ bargaining representative. The cnsent of the employees to be retired even before the statutory retirement age of 65 years was thus clear and unequivocal. Acceptance by the employees of an early retirement age must be explicit, voluntary, free and uncompelled.

WhHEREFORE, petition is granted.

Garcy Kate D. Go LLB2 EH306 Page 188

Radio Mindanao Network, Inc. And Eric S. Canoy, vs. Domingo Z. Ybarola, Jr. And Alfonso E. Rivera, Jr., [G.R. No. 198662. September 12, 2012.]

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983, respectively, by Radio Mindanao Network (RMN). They eventually became account managers, soliciting advertisements and servicing various clients of RMN. On September 15, 2002, the respondents' services were terminated as a result of RMN's reorganization/restructuring; they were given their separation pay — P631,250.00 for Ybarola, and P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims, including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for Ybarola and P40,000.00 for Rivera.

Issue: Whether the amounts the respondents received represented a fair and reasonable settlement of their claims

Ruling: The petitioners insist that the respondents' commissions were not part of their salaries, because they failed to present proof that they earned the commission due to actual market transactions attributable to them. They submit that the commissions are profit-sharing payments which do not form part of their salaries. We are not convinced. If these commissions had been really profit-sharing bonuses to the respondents, they should have received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and P586,998.50 commissions, respectively, in 2002. The variance in amounts the respondents received as commissions supports the CA's finding that the salary structure of the respondents was such that they only received a minimal amount as guaranteed wage; a greater part of their income was derived from the commissions they get from soliciting advertisements; these advertisements are the "products" they sell. As the CA aptly noted, this kind of salary structure does not detract from the character of the commissions being part of the salary or wage paid to the employees for services rendered to the company, as the Court held in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding the "proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and Ybarola and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years of service with the company; he was not shortchanged and no essential unfairness took place. In this case, as the CA noted, the separation pay the respondents each received was deficient by at least P400,000.00; thus, they were given only half of the amount they were legally entitled to. To be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the respondents' length of service — 25 years for Ybarola and 19 years for Rivera. The CA was correct when it opined that the respondents were in dire straits when they executed the release/quitclaim affidavits. Without jobs and with families to support, they dallied in executing the quitclaim instrument, but were eventually forced to sign given their circumstances.

Garcy Kate D. Go LLB2 EH306 Page 189

Eleazar S. Padillo, Vs. Rural Bank Of Nabunturan, Inc. And Mark S. Oropeza G.R. No. 199338. January 21, 2013

Facts: On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems which arose sometime in 2003, the Bank took out retirement/insurance plans with Philippine American Life and General Insurance Company (Philam Life) for all its employees in anticipation of its possible closure and the concomitant severance of its personnel. In this regard, the Bank procured Philam Plan Certificate of Full Payment No. 88204, Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for a benefit amount of P100,000.00 and which was set to mature on July 11, 2009. .During the latter part of 2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to effectively pursue his work. On September 10, 2007, he wrote a letter addressed to respondent Oropeza, the president of the bank, expressing his intention to avail of an early retirement package. Despite several follow-ups, his request remained unheeded. On October 3, 2007, Padillo was separated from employment due to his poor and failing health as reflected in a Certification dated December 4, 2007 issued by the Bank. Not having received his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid retirement benefits.

Ruling: The Labor Code provision on termination on the ground of disease under Article 297 does not apply in this case, considering that it was the petitioner and not the Bank who severed the employment relations. It was Padillo who voluntarily retired and that he was not terminated by the Bank.

Under article 300 of the labor code, in the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure requirements are cumulative and non-compliance with one negates the employee's entitlement to the retirement benefits under Article 300 of the Labor Code.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract between the parties which set out the terms and condition for the retirement of employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the Bank. In the absence of any applicable contract or any evolved company policy, Padillo should have met the age and tenure requirements set forth under Article 300 of the Labor Code to be entitled to the retirement benefits provided therein. Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement — as he served for twenty-nine (29) years — he, however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan, petitioners' claim for retirement benefits must be denied.

Garcy Kate D. Go LLB2 EH306 Page 190

T/SGP Larkins vs. NLRC G.R. No. 92432; February 23, 1995

Facts: Petitioner was a member of the United States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga. On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the dormitories with the De Guzman Custodial Services. The employees thereof, including private respondents, were allowed to continue working for 3 AGS. It was left to the new contractor, the JAC Maintenance Services owned by Joselito Cunanan, to decide whether it would retain their services. Joselito Cunanan, however, chose to bring in his own workers. As a result, the workers of the De Guzman Custodial Services were requested to surrender their base passes to Lt. Col. Frankhauser or to petitioner.

It is petitioner’s contention that the questioned resolutions are null and void because respondent Labor Arbiter did not acquire jurisdiction to entertain and decide the case. Petitioner alleges that she never received nor was served, any summons or copies of the original and amended complaints, and therefore the Labor Arbiter had no jurisdiction over her person under Article XIV of the R.P. ? U.S. Military Bases Agreement.

Issue: WON the Labor Arbiter acquires jurisdiction over the respondent.

Ruling: The “Agreement Between the Republic of the Philippines and the United States of America Concerning Military Bases,” otherwise known as the R.P. ? U.S. Military Bases Agreement, governed the rights, duties, authority, and the exercise thereof by Philippine and American nationals inside the U.S. military bases in the country.

Article XIV thereof, governing the procedure for service of summons on persons inside U.S. military bases, provides that:

. . . [N]o process, civil or criminal, shall be served within any base except with the permission of the commanding officer of such base; but should the commanding officer refuse to grant such permission he shall forthwith take the necessary steps . . . . to serve such process, as the case may be, and to provide the attendance of the server of such process before the appropriate court in the Philippines or procure such server to make the necessary affidavit or declaration to prove such service as the case may require.

Summonses and other processes issued by Philippine courts and administrative agencies for United States Armed Forces personnel within any U.S. base in the Philippines could be served therein only with the permission of the Base Commander. If he withholds giving his permission, he should instead designate another person to serve the process, and obtain the server’s affidavit for filing with the appropriate court.

Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col. Frankhauser and not the Base Commander (Rollo, p. 11).

Respondents do not dispute petitioner’s claim that no summons was ever issued and served on her. They contend, however, that they sent notices of the hearings to her (Rollo, pp. 12-13).

Notices of hearing are not summonses. The provisions and prevailing jurisprudence in Civil Procedure may be applied by analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served with summons (cf. Vda. de Macoy v. Court of Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co., Inc. v. Intermediate Appellate Court, 149 SCRA 193 [1987]). In the absence of service of summons or a valid waiver thereof, the

Garcy Kate D. Go LLB2 EH306 Page 191 hearings and judgment rendered by the Labor Arbiter are null and void (cf. Vda. de Macoy v. Court of Appeals, supra.)

Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the said body. This, however, does not constitute a waiver of the lack of summons and a voluntary submission of her person to the jurisdiction of the Labor Arbiter. (De los Santos v. Montera, 221 SCRA 15 [1993]).

Be that as it may, on the assumption that petitioner validly waived service of summons on her, still the case could not prosper. There is no allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner were being sued in their personal capacities for tortious acts (United States of America v. Guinto, 182 SCRA 644 [1990]). However, private respondents named 3 AGS as one of the respondents in their complaint (Rollo, p. 10).

Under the “Agreement Between the Government of the Republic of the Philippines and the Government of the United States of America Relating to the Employment of Philippine Nationals in the United States Military Bases in the Philippines” otherwise known as the Base Labor Agreement of May 27, 1968, any dispute or disagreement between the United States Armed Forces and Filipino employees should be settled under grievance or labor relations procedures established therein (Art. II) or by the arbitration process provided in the Romualdez-Bosworth Memorandum of Agreement dated September 5, 1985. If no agreement was reached or if the grievance procedure failed, the dispute was appealable by either party to a Joint Labor Committee established in Article III of the Base Labor Agreement.

Unquestionably therefore, no jurisdiction was ever acquired by the Labor Arbiter over the case and the person of petitioner and the judgment rendered is null and void (Filmerco Commercial Co. v. Intermediate Appellate Court, supra.; Sy v. Navarro, 81 SCRA 458 [1978]). The petition for certiorari is GRANTED.

Garcy Kate D. Go LLB2 EH306 Page 192

UERM Memorial Medical Center vs NLRC (G.R. No. 110419, March 3, 1997)

Facts: On December 14, 1987, RA 6640 took effect mandating a 10-peso increase on the prevailing daily minimum wage (DMW) resulting to a 95-peso difference in the salaries of rank- and-file employees (union members) and faculty members (non-union). On July 1, 1989, RA 6727 took effect again increasing the DMW by 25 pesos resulting in a difference of P237.42 between the salaries of the 2 employee groups. In September 1987, petitioners increased the hiring rate to P188.00 per month. On 12 April 1988, Policy Instruction No. 54 was issued by the then Secretary of Labor Franklin Drilon providing that the personnel in subject hospitals and clinics are entitled to a full weekly wage of seven days if they have completed the 40-hour/5- day workweek in any given workweek.

Consequently, a complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortion and the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54.

Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion and directed petitioner to pay P17,082,448.56 as salary differentials and P2,000.00 each as exemplary damages. Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650.

The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal.

The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissed petitioners' appeal. Petitioners' MR was also denied by the NLRC in a resolution dated 7 June 1993.

Issue: WON in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond — cash or surety — as enumerated in Article 223 of the Labor Code.

Ruling: The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides:

"In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC we ruled:

"x x x that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing requirement of the law should be given a liberal interpretation."

Garcy Kate D. Go LLB2 EH306 Page 193

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission we held:

"The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed."

We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive merit and not on strict technical rules. In the case at bar, the judgment involved is more than P17 million and its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial authorities. We are also confident that the real property bond posted by the petitioners sufficiently protects the interests of private respondents should they finally prevail. It is not disputed that the real property offered by petitioners is worth P102,345,650. The judgment in favor of private respondents is only a little more than P17 million.

Case remanded to NLRC for continuation of proceedings.

Garcy Kate D. Go LLB2 EH306 Page 194

PHIL TRANCO SERVICES v. NLRC G.R. No. 124100, April 1, 1998

Facts: Nieva was employed as a driver by petitioner assigned to the Legaspi City-Pasay City route. Nieva sideswiped an owner-type jeep and a criminal complaint was filed against him. Philtranco posted a bail bond for Nieva. After having been suspended for thirty days, he tried to report to work but was told to wait until his case was settled. The case was finally settled, he again reported to work but was requested to file a new application as he was no longer considered an employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989.

Nieva filed a complaint for illegal dismissal and demanded for Thirteenth-Month Pay with the NLRC’s National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismiss on the ground of improper venue, stating that the complaint should have been lodged with the NLRC’s Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was hired, assigned, and based in Legaspi City.

Issue: Whether or not NLRC’s NCR Arbitration Branch in Manila was the proper venue for the filing of Nieva’s complaint for illegal dismissal?

Ruling: Yes, the NLRC’s NCR Arbitration Branch was the proper venue for the filing of the complaint. The question of venue essentially pertains to the trial and relates more to the convenience of the parties rather than upon the substance and merits of the case. Provisions on venue are intended to assure convenience for the plaintiff and his witnesses and to promote the ends of justice. In fact, Section 1 (a), Rule IV of the New Rules of Procedure of the NLRC, cited by Philtranco in support of its contention that venue of the illegal dismissal case filed by Nieva is improperly laid, speaks of the complainant/petitioner's workplace, evidently showing that the rule is intended for the exclusive benefit of the worker. This being the case, the worker may waive said benefit. Furthermore, the aforesaid Section has been declared by this Court to be merely permissive. Moreover, Nieva, as a driver of Philtranco, was assigned to the Legazpi City-Pasay City route. Sulpicio Lines, Inc. vs. NLRC is exactly in point. In said case, we held that: "Section 1, Rule IV of the 1990 NLRC Rules additionally provides that, for purposes of venue, workplace shall be understood as the place or locality where the employer is regularly assigned when the cause of action arose." From the foregoing, it is obvious that the filing of the complaint with the National Capital Region Arbitration Branch was proper, Manila being considered as part of Nieva's workplace by reason of his plying the Legazpi City-Pasay City route.

Garcy Kate D. Go LLB2 EH306 Page 195

St. Martin Funeral Homes vs. NLRC, G.R. No. 130866, September 16, 1998

Facts: Respondent Aricayos filed a complaint for illegal dismissal to the labor arbiter. There being no employer-employee relationship between the two, petition was dismissed for lack of jurisdiction. Arcayos appealed to NLRC contending errors of the labor arbiter.

Issue: Whether or not the Supreme Court has jurisdiction over NLRC appeals?

Ruling: First established in 1972, decisions of NLRC were declared to be appealable to the Secretary of labor and, ultimately to the President. But under the present state law, there is no provision for appeals from NLRC decisions. The court held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though not right of review is given by statute, that the purpose of jurisdiction review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that is part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust jurisdictions.

Subsequently under RA 7902, effective March 1995, the mode for judicial review over NLRC decisions in that of a petition for Certiorari under Rule 65. The same confuses by declaring that the CA has no appellate jurisdiction over decisions falling within the appellate jurisdiction of SC, including the NLRC decisions.

Therefore, all references in the amended Section 9 of BP 129 to supposed appeals from NLRC to SC are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. All such petitions should henceforth be initially filed in the doctrine on the hierarchy of courts as appropriate forum for the relief desired.

Case remanded to CA.

Garcy Kate D. Go LLB2 EH306 Page 196

Ludo & Luym Corp. vs. Soarnido G.R. No. 140960, January 20, 2003

Facts: LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by LUDO. These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees of LUDO every time the latter needed additional manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of the rank-and-file employees. Respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of which vary according to the length of service rendered by the availing employee.

Thereafter, the union requested LUDO to include in its members period of service the time during which they rendered arrastre services to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration. Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-only contractor of petitioner.

The Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator. Petitioner contends that the appellate court erred when it upheld the award of benefits which were beyond the terms of submission agreement and that the arbitrator must confine its adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in excess of jurisdiction.

Issue: WON the appellate court gravely erred when it upheld the award of benefits which were beyond the terms of submission agreement.

Ruling: Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of disputes.13 The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus: In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonable assume that his powers extended beyond giving a yes- or-no answer and included the power to reinstate him with or without back pay.

Garcy Kate D. Go LLB2 EH306 Page 197

HANJIN ENGINEERING & CONSTRUCTION v. CA GR No. 165910

Facts: On October 18, 1991 and August 21, 1992, Hanjin and the Philippine Government, through the National Irrigation Administration (NIA), executed contracts for the construction of the Malinao Dam at Pilar, Bohol, with a projected completion period of 1,050 calendar days, including main canal and lateral projects for 750 days. From August 1995 to August 1996, Hanjin contracted the services of 712 carpenters, masons, truck drivers, helpers, laborers, heavy equipment operators, leadmen, engineers, steelmen, mechanics, electricians and others.

In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against Hanjin and Nam Hyun Kim, the officer-in-charge of the project (herein petitioners), before the National Labor Relations Commission (NLRC). The complainants averred that they were regular employees of Hanjin and that they were separated from employment without any lawful or just cause. Only 521 of the complainants affixed their signatures in the complaints.

Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation Project.

On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428 complainants, granting separation pay and attorney’s fees to each of them. According to the Labor Arbiter, the complainants were regular employees of petitioner Hanjin, and their claims for underpayment, holiday pay, premium pay for holiday and rest day, 13th month pay, and service incentive leave would be computed after sufficient data were made available. Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor Arbiter’s ruling on January 28, 2000.

Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct clarificatory hearings). On July 20, 2001, the NLRC issued a Resolution partially granting petitioners’ motion. Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA. On March 18, 2004, the CA dismissed the petition and affirmed the NLRC’s ruling that the dismissed employees (respondents) were regular employees. The CA stressed that petitioners failed to refute the claim of the respondents that they were regular employees. Petitioners moved to reconsider the decision, which the CA denied.

Issue: WON respondents regular employees entitled to their moneys.

Ruling: The CA, for its part, affirmed the findings of the Labor Arbiter and the NLRC, and held that respondents were regular employees of petitioner Hanjin:

In the instant case, petitioners belatedly submitted copies of “Appointment(s) as Contract Worker(s)” allegedly signed by private respondents at the time they commenced work, and which provided for an employment of six (6) months only, a period applicable for probationary employment. While it may be allowed that in the instant case the workers were initially hired for specific projects or undertakings for a period of six (6) months or less, the repeated re-hiring and the continuing need for their services over a long span of time (from 1991 to 1995) have undeniably made them regular employees. Thus, we held that where the employment of project employees is extended long after the supposed “appointments” has been finished, the employees are removed from the scope of project employees and considered regular employees. How can one properly explain private respondents’ continuous employment from 1991 to 1996 when their appointment was for a measly period of six months? It is clear, therefore, that as aptly established by the NLRC, these piecemeal “appointments” have been imposed to preclude the acquisition of tenurial security. While length of time may not be a

Garcy Kate D. Go LLB2 EH306 Page 198 controlling test for project employment, it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual business or trade of the employer.

Furthermore, it is noteworthy to emphasize that these “appointments” were submitted only as attachments to petitioners’ motion for reconsideration. As borne out by the records and even mentioned in the decision of the Labor Arbiter, petitioners were already required during the initial hearings before the Labor Arbiter to “submit additional documents in their possession necessary to support their case.” Instead of complying, petitioners still had to wait for the adverse decision of the NLRC before they submitted the same. Likewise, in the NLRC’s assailed decision, petitioners’ failure to present these “appointments” were adverted to, thus, the NLRC ruled that “nowhere in the records can the said contracts be found.” Despite sufficient time, from the time they were required by the Labor Arbiter to present additional evidence up to the time the appeal was resolved by the NLRC, petitioners were not able to present said employment contracts. Petitioners’ hesitation to submit the same is well-founded. It is a well- settled rule that when the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact, and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would operate to his prejudice, and support the case of his adversary.

Moreover, it is required under Policy Instruction No. 20, Series of 1993, that in case of project employees, the termination of their employment in the particular project or undertaking must be reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within thirty (30) days following the date of his separation from work. In Ochoco v. National Labor Relations Commission, the failure of the employer to report to the nearest employment office the termination of employment of workers everytime it completed a project was considered by this Court as proof that the dismissed employees were not project employees but regular employees. On this requirement, petitioners were silent, until the Decision of the NLRC reminded them. To prove that petitioners allegedly complied with said requirement, they again belatedly submitted machine copies of reports allegedly made to the DOLE of Bohol. To explain away their failure to produce certified true copies of the same, petitioners allege that the NLRC should have given evidentiary weight to the machine copies which are for all legal intents and purposes already public records in the custody of the DOLE duly recorded in a public office. The same argument can be taken against herein petitioners in that, for all the time it took them to produce said machine copies, it would have been more prudent for them to have it certified by the DOLE in Bohol. Under the Rules of Evidence, and as stated by petitioners, the original document need not be produced when the same is a public record in the custody of a public office or is recorded in a public office. Thus, proof of such documents may be made by a duly authenticated copy of the original document or record. It is essential, furthermore, that the copies be made in the manner provided by the rules and that all requirements in connection therewith be complied with before such copy be properly admissible in evidence. Considering that the documents submitted by petitioners are mere machine copies, the NLRC cannot be compelled to give them evidentiary weight.

The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents were not project employees, and in sustaining respondents’ claim of illegal dismissal due to petitioners’ failure to adduce contrary evidence. Well-settled is the rule that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but at times even finality if such findings are supported by substantial evidence. Such findings of facts can only be set aside upon showing of grave abuse of discretion, fraud or error of law,none of which have been shown in this case.

Garcy Kate D. Go LLB2 EH306 Page 199

Phil. Journalistic Inc., vs NLRC G.R. 166421 September 5, 2006

Facts: In NLRCs Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was adjudged liable in the total amount of P6,447,008.57 for illegally dismissing 31 complainants- employees and that there was no basis for the implementation of petitioner's retrenchment program. Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss of seniority rights and benefits; 17 of them who were previously retrenched were agreed to be given full and complete payment of their respective monetary claims, while 14 others would be paid their monetary claims minus what they received by way of separation pay.

The compromise agreement was submitted to the NLRC for approval. All the employees mentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. They likewise signed the Joint Manifesto and Declaration of Mutual Support and Cooperation which had also been submitted for the consideration of the labor tribunal. The NLRC forthwith issued another Resolution on July 25, 2002, which among others declared that the compromise agreement was approved and NCMB-NCR-NS-03-087-00 was deemed closed and terminated.

In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order dated September 16, 2002, the DOLE Secretary certified the case to the Commission for compulsory arbitration. The case was docketed as NCMB-NCR- NS-07-251-02. In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were not illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment program illegal did not attain finality as "it had been academically mooted by the compromise agreement entered into between both parties on July 9, 2001." The Union assailed the ruling of the NLRC before the CA via petition for certiorari under Rule 65. In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely abused its discretion in ruling for PJI. The compromise agreement referred only to the award given by the NLRC to the complainants in the said case, that is, the obligation of the employer to the complainants.

Issue: WON the petitioners petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure is a proper remedy in this case.

Ruling: At the outset, we note that this case was brought before us via petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure. The proper remedy, however, was to file a petition under Rule 45. It must be stressed that certiorari under Rule 65 is "a remedy narrow in scope and inflexible in character. It is not a general utility tool in the legal workshop." Moreover, the special civil action for certiorari will lie only when a court has acted without or in excess of jurisdiction or with grave abuse of discretion.

Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45. Such move is in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice. As the instant petition was filed within the prescribed fifteen-day period, and in view of the substantial issues raised, the Court resolves to give due course to the petition and treat the same as a petition for review on certiorari.

Garcy Kate D. Go LLB2 EH306 Page 200

Balagtas Multi-purpose Coop. v. CA

Facts: Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito- Herrero, as part time manager in its office. Subsequently, Josefina made known of her intention to take a leave of absence. Her proposal was immediately approved. However, after the lapse of her leave of absence, Josefina did not report for work anymore. Later on, she filed her resignation.

Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She also prayed for reinstatement and paid backwages as well as moral damages.

The Labor Arbiter rendered judgment in favor of complainant and against respondents and ordered the latter to pay the former 13th month pay, backwages and separation pay. Aggrieved, herein petitioners appealed the decision to NLRC but failed to post either a cash or surety bond as required by Article 223 of the Labor Code. They filed a manifestation and motion instead, stating, that under Republic Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from the decision of the inferior court. NLRC ordered respondents to post a cash or surety bond in the amount of P218,000.00, within 10 inextendible days from receipt of the Order, failure of which shall constitute a waiver and non-perfection of the appeal. Balagtas appealed to CA, which dismissed the petition holding that the exemption from putting up a bond by a cooperative applies to cases decided by inferior courts only.

Issues: (1) WON cooperatives are exempted from filing a cash or surety bond required to perfect an employer’s appeal under Section 223 of Presidential Decree No. 442 (the Labor Code); (2) WON a certification issued by the Cooperative Development Authority constitutes substantial compliance with the requirement for the posting of a bond.

Ruling: (1) No. Petitioners argue that there are certain benefits and privileges expressly granted to cooperative under the Cooperative Code. It invoked the provision on Article 62 regarding the exemption from payment of an appeal bond, to wit: (7)All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond.

However, it is only one among a number of such privileges which appear under the article entitled “Tax and Other Exemptions” of the code. The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety. Exceptions are to be strictly but reasonably construed; they extend only so far as their language warrants, and all doubts should be resolved in favor of the general provision rather than the exceptions.

(2) No. Article 119 of the Cooperative Code itself expressly embodies the legislative intention to extend the coverage of labor statutes to cooperatives. For this reason, petitioners must comply with the requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to

Garcy Kate D. Go LLB2 EH306 Page 201

appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party.

In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the employee under the judgment if the latter is subsequently affirmed.

Therefore, no error can be ascribed to the CA for holding that the phrase “inferior courts” appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to “quasi-judicial agencies” and that, petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 202

St. Martin Funeral Homes vs NLRC (2006) G.R. 142351

Facts: On September 16, 1998, the Supreme Court rendered the landmark decision in G.R. No. 130866, holding for the first time that all petitions for certiorari under Rule 65 assailing the decisions of the NLRC should henceforth be filed with the CA, thus all references in the amended section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.

Thus, the petition was remanded to the CA and redocketed as CA-G.R. SP No. 49183. Subsequently, the CA rendered the assailed September 30, 1999 Decision, dismissing petitioner's appeal for lack of merit with the finding that respondent NLRC did not commit grave abuse of discretion, in its pronouncement that the Labor Arbiter did not make any finding on the alleged employer-employee relationship between the parties, reasoning this way:

Actually the Labor Arbiter did not determine whether there is an employer-employee relation between the parties because according to him, such issue should be resolved by the regular court pursuant to the ruling of the Supreme Court in De la Salle University vs. NLRC (135 SCRA 674, 677 (1988)).

For its part, respondent NLRC, is remanding the case to the Labor Arbiter, reminded the latter that he is authorized by the NLRC Rules to determine, in an appropriate proceeding the existence of an employer-employee relationship.

Issue: WON the Labor Arbiter made a determination of the presence of an employer-employee relationship.

Ruling: At the outset, it is clear that the issue submitted for resolution is a question of fact which is proscribed by the rule disallowing factual issues in appeal by certiorari to the Supreme Court under Rule 45. This is explicit in Rule 45, Section 1 that petitions of this nature "shall raise only questions of law which must be distinctly set forth." Petitioner St. Martin would like the Court to examine the pleadings and documentary evidence extant on the records of the Labor Arbiter to determine if said official indeed made a finding on the existence of the alleged employer-employee nexus between the parties based on the facts contained in said pleadings and evidence. Evidently this issue is embraced by the circumscription.

Even if we would like to relax the rule and allow the examination of the documentary evidence as an exception to the general rule, we are precluded by the abject failure of petitioner to attach to the petition important and material portions of the records as would support the petition prescribed by Rule 45, Section 4. St. Martin asks us to find out if the Labor Arbiter was correct in concluding that respondent Aricayos was not in its employ; but committed the blunder of not attaching to the petition even the Decision of the Labor Arbiter sought to be reviewed, the NLRC Decision, the position papers and memoranda of the parties filed with the Labor Arbiter, the affidavits of petitioner's employees, and other pieces of evidence that we can consider in resolving the factual issue on employment. Without these vital documents, petitioner cannot be given the relief prayed for.

Garcy Kate D. Go LLB2 EH306 Page 203

DOLE Phils. vs. Esteva, G.R. No. 161115, November 30, 2006

Facts: Petitioner is a corporation duly recognized and existing in accordance with Philippine laws, engaged principally in the production and processing of pineapple for the export market. Its plantation is located in Polomolok, South Cotabato .

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines , and duly –registered with the Cooperative Development Authority (CDA) on 6 January 1993. Members of CAMPCO live in communities surrounding petitioner’s plantation and are relatives of petitioner’s employees.

On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service Contract referred to petitioner as “the Company,” while CAMPCO was “the Contractor.” The said contract was good for six months.

Pursuant to the contract, CAMPCO members rendered services to petitioner. The parties apparently extended or renewed the same for the succeeding years without executing another written contract.

However, due to investigations and reliable information, the Regional Director of DOLE exercised his visitorial and enforcement power and found out that CAMPCO is engaged in labor- only contracting together with two other “cooperatives”.

The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code. –(pertaining to Labor-only contracting… 1. no substantial capital; 2. work is directly related to the principal business of the principal b. in such case, the one who alleges as contractor is deemed an agent of the principal while the latter will latter is considered the indirect employer for purposes of enforcement of the labor rights.)

Before the NLRC, respondents contended that they have been working more than one year too petitioner. While some of the respondents were still working for petitioner, others were put on “stay home status” on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. They, then, filed a case before the NLRC for illegal dismissal, regularization, wage differentials, damages and attorney’s fees.

Respondents argued that they should be considered regular employees of petitioner given that: 1. they were performing jobs that were usually necessary and desirable in the usual business of petitioner; 2. petitioner exercised control over respondents, not only as to the results, but also as to the manner by which they performed their assigned tasks; and 3. CAMPCO, a labor-only contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of tenure and those placed on “stay home status” for more than six months had been constructively and illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and attorney’s fees.

NLRC affirmed the Labor Arbiter’s decision. CA also affirmed.

Issues: Whether the lower courts were correct in ruling that Petitioner is the employer of respondents and that CAMPCO be considered merely as agent of the company

Ruling: In summary, this Court finds that CAMPCO was a labor-only contractor and, thus, petitioner is the real employer of the respondents, with CAMPCO acting only as the agent or intermediary of petitioner. Due to the nature of their work and length of their service, respondents should be considered as regular employees of petitioner. Petitioner constructively

Garcy Kate D. Go LLB2 EH306 Page 204 dismissed a number of the respondents by placing them on "stay home status" for over six months, and was therefore guilty of illegal dismissal. Petitioner must accord respondents the status of regular employees, and reinstate the respondents who it constructively and illegally dismissed, to their previous positions, without loss of seniority rights and other benefits, and pay these respondents’ backwages from the date of filing of the Complaint with the NLRC on 19 December 1996 up to actual reinstatement.

CRITERIA TO ESTABLISH THE EXISTENCE OF AN INDEPENDENT AND PERMISSIBLE CONTRACTOR RELATIONSHIP generally established by the following criteria: whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises tools, appliances, materials and labor; and the mode, manner and terms of payment

SEVERAL FACTORS ARE PRESENT IN THE CASE TO ESTABLISH A LABOR- ONLY CONTRACTING ARRANGEMENT BY BETWEEN THE MANAGEMENT AND CAMPCO

While there is present in the relationship of petitioner and CAMPCO some factors suggestive of an independent contractor relationship (i.e., CAMPCO chose who among its members should be sent to work for petitioner; petitioner paid CAMPCO the wages of the members, plus a percentage thereof as administrative charge; CAMPCO paid the wages of the members who rendered service to petitioner), many other factors are present which would indicate a labor- only contracting arrangement between petitioner and CAMPCO.

First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years following its establishment. In 1993, when CAMPCO was established and the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered substantial. It only managed to increase its capitalization and assets in the succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE officials as labor-only contracting.

Second, CAMPCO did not carry out an independent business from petitioner. It was precisely established to render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these were mainly used for administrative purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering services to the petitioner belonged to the latter.

Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for permissible job contracting that the contractor undertakes the contract work on his account, under his own responsibility, according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions and pass the training provided by petitioner’s personnel. It was petitioner who determined and prepared the work assignments of the CAMPCO members. CAMPCO members worked within

Garcy Kate D. Go LLB2 EH306 Page 205 petitioner’s plantation and processing plants alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a labor-only contractorship.

Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only, CAMPCO clearly conducted itself as a labor-only contractor.

Lastly, CAMPCO members, including respondents, performed activities directly related to the principal business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly related, but were very vital to petitioner’s business of production and processing of pineapple products for export.

The findings enumerated in the preceding paragraphs only support what DOLE Regional Director Parel and DOLE Undersecretary Trajano had long before conclusively established, that CAMPCO was a mere labor-only contractor

EMPLOYER- EMPLOYEE RELATIONSHIP EXIST BETWEEN THE PETITIONER AND THE RESPONDENT WITH THE DECLARATION THAT CAMPCO WAS ENGAGED IN THE PROHIBITED ACTS OF LABOR- ONLY CONTRACTING

The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting, then consequently, an employer-employee relationship is deemed to exist between petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner

RESPONDENTS ARE CONSIDERED REGULAR EMPLOYEES FOR THEY PERFORMED ACTIVITIES THAT ARE NECESSARY OR DESIRABLE TO THE USUAL BUSINESS OF THE PETITIONER

Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of their employment. In consideration of all the attendant circumstances in this case, this Court concludes that respondents are regular employees of petitioner.

In the instant Petition, petitioner is engaged in the manufacture and production of pineapple products for export. Respondents rendered services as processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions they performed alongside regular employees of the petitioner. There is no doubt that the activities performed by respondents are necessary or desirable to the usual business of petitioner.

Petitioner likewise want this Court to believe that respondents’ employment was dependent on the peaks in operation, work backlogs, absenteeism, and excessive leaves. However, bearing in mind that respondents all claimed to have worked for petitioner for over a year, a claim which petitioner failed to rebut, then respondent’s continued employment clearly demonstrates the continuing necessity and indispensability of respondents’ employment to the business of petitioner.

Garcy Kate D. Go LLB2 EH306 Page 206

THE COMPANY’S ACT OF PLACING SOME OF THE RESPONDENTS ON "STAY HOME STATUS" AND NOT GIVING THEM WORK ASSIGNMENTS FOR MORE THAN SIX MONTHS WERE ALREADY TANTAMOUNT TO CONSTRUCTIVE AND ILLEGAL DISMISSAL

Respondents, as regular employees of petitioner, are entitled to security of tenure. They could only be removed based on just and authorized causes as provided for in the Labor Code, as amended, and after they are accorded procedural due process. Therefore, petitioner’s acts of placing some of the respondents on "stay home status" and not giving them work assignments for more than six months were already tantamount to constructive and illegal dismissal

Garcy Kate D. Go LLB2 EH306 Page 207

Intercontinental Broadcasting Corp. vs. Panganiban G.R. No. 151407, Februarry 6, 2007

Facts: Ireneo Panganiban (respondent) was employed as Assistant General Manager of the Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988.

On April 12, 1989, respondent filed a civil case with the RTC of Quezon City, Branch 93 against the members of the Board of Administrators (BOA) of petitioner alleging, among others, non- payment of his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent’s claim was a labor money claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari with the CA which granted Santiago’s petition for lack of jurisdiction and set aside the RTC’s Orders.

Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and damages. The Labor Arbiter (LA) ordered respondent’s reinstatement with full backwages, and the payment of his unpaid commission, damages and attorney’s fees. Petitioner appealed to the NLRC but due to petitioner’s failure to post a bond, the appeal was dismissed. The decision was deemed final and executory.

Issue: WON respondent’s claim for unpaid commissions has already prescribed.

Ruling: Yes. Respondent’s claim had already prescribed as of September 1991. In addition, the claims of private respondent for reinstatement, backwages and benefits in conjunction with his employment from 1986 to 1988 have prescribed.

The applicable law in this case is Article 291 of the Labor Code which provides that “all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.”

The term “money claims” covers all money claims arising from an employer-employee relation the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.

On this point, the Court ruled that although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. Hence, while the filing of Civil Case could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA due to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly the same position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of Civil Case respondent’s cause of action had already prescribed on September 2, 1991, three years after his cessation of employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

Garcy Kate D. Go LLB2 EH306 Page 208

Far East Agricultural Supply, Inc. Vs. Jimmy Lebatique And The Honorable Court Of Appeals G.R. No. 162813 February 12, 2007

Facts: On March 4, 1996, Far East hired Jimmy Lebatique as truck driver to animal feeds to the company’s clients. He had a daily wage of P223.50. On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches, Quezon City. That same day Lebatique was suspended apparently for illegal use of company vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the company premises.

On January 26, 2000, Lebatique sought the assistance of DOLE Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also told Alexander (general manager) that Manuel (Alexander’s brother) had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job.

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime pay.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held that there was no dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique was a field personnel, hence, not entitled to overtime pay and service incentive leave pay. Lebatique sought reconsideration but was denied.

The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job. It also found that Lebatique was not a field personnel and therefore entitled to payment of overtime pay, service incentive leave pay, and 13th month pay.

Issues 1) WON Lebatique was illegally dismissed 2) WON Lebatique was a field personnel, not entitled to overtime pay

Ruling: 1) YES. It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause. In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was merely suspended for one day but he abandoned his work thereafter. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship.

When Lebatique was verbally told by Alexander Uy, the company’s General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is clear also from the sequence of the events leading to Lebatique’s dismissal that it was Lebatique’s complaint for nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to overtime pay.

2) NO. Lebatique is not a field personnel. Article 82 of the Labor Code is decisive on the question of who are referred to by the term "field personnel”

Garcy Kate D. Go LLB2 EH306 Page 209

"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

The definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the employer.

Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the client’s premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. Lebatique, therefore, is a regular employee whose tasks are usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to regular employees of Far East, including overtime pay and service incentive leave pay.

Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years before the filing of the complaint.

Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in management’s control to determine the correct overtime pay due Lebatique.

Garcy Kate D. Go LLB2 EH306 Page 210

Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225

Facts: Three cases were consolidated involving petitioner Letran Calamba Faculty and Employees Association and Colegio de San Juan de Letran, Calamba, for money claims and a petition to declare the subject strike illegal filed by respondent.

On July 28, 1999, the NLRC promulgated its Decision dismissing both appeals. Petitioner filed a Motion for Reconsideration but the same was denied by the NLRC in its Resolution dated June 21, 2000.Petitioner then filed a special civil action for certiorari with the CA assailing the above- mentioned NLRC Decision and Resolution.

On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition. Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, 2002. Citing Agustilo v. Court of Appeals, petitioner contends that in a special civil action for certiorari brought before the CA, the appellate court can review the factual findings and the legal conclusions of the NLRC.

Petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence, failed to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming the Decision of the NLRC.

Issue: WON the Court of Appeals erred in holding that the factual findings of the NLRC cannot be reviewed in certiorari proceedings.

Ruling: Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.

Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below. In a petition for review on certiorari, this Court’s jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous. Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality. They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record. We find none of these exceptions in the present case.

In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.

Garcy Kate D. Go LLB2 EH306 Page 211

Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460

Facts: Petitioner MTO is a government owned and controlled corporation which entered into a Management and Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the operation of the Light Rail Transit (LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr. was sued in his official capacity as then Undersecretary of the Department of Transportation and Communications and Chairman of the Board of Directors of petitioner MTO. Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for the following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary damages; and (4) attorney's fees.

On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents. Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006, the NLRC dismissed petitioners' appeal for non-perfection since it failed to post the required bond. Without filing a Motion for Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition for Certiorari with the Court of Appeals assailing the same. On 24 August 2006, the Court of Appeals issued a Resolution dismissing the Petition.

Issue: WON petitioner can directly file the extraordinary remedy of certiorari without filing first a motion for reconsideration with the NLRC.

Ruling: Petitioners' failure to file a motion for reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the appellate court as fatally defective.

It must be primarily established that petitioners contravened the procedural rule for the extraordinary remedy of certiorari. The rule is, for the writ to issue, it must be shown that there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law.

The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition for certiorari. Its purpose is to grant an opportunity for the court to correct any actual or perceived error attributed to it by the re-examination of the legal and factual circumstances of the case. The rationale of the rule rests upon the presumption that the court or administrative body which issued the assailed order or resolution may amend the same, if given the chance to correct its mistake or error.

We have held that the "plain," "speedy," and "adequate remedy" referred to in Section 1, Rule 65 of the Rules of Court is a motion for reconsideration of the questioned Order or Resolution. As we consistently held in numerous cases, a motion for reconsideration is indispensable for it affords the NLRC an opportunity to rectify errors or mistakes it might have committed before resort to the courts can be had.

In the case at bar, petitioners directly went to the Court of Appeals on certiorari without filing a motion for reconsideration with the NLRC. The motion for reconsideration would have aptly furnished a plain, speedy, and adequate remedy. As a rule, the Court of Appeals, in the exercise of its original jurisdiction, will not take cognizance of a petition for certiorari under Rule 65, unless the lower court has been given the opportunity to correct the error imputed to it. The Court of Appeals correctly ruled that petitioners' failure to file a motion for reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the appellate court as fatally defective.

We agree in the Court of Appeals' finding that petitioners' case does not fall under any of the recognized exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue raised is purely of law; (2) when public interest is involved; (3) in case of urgency; or when the questions raised are the same as those that have already been squarely argued and

Garcy Kate D. Go LLB2 EH306 Page 212 exhaustively passed upon by the lower court. As the Court of Appeals reasoned, the issue before the NLRC is both factual and legal at the same time, involving as it does the requirements of the property bond for the perfection of the appeal, as well as the finding that petitioners failed to perfect the same. Evidently, the burden is on petitioners seeking exception to the rule to show sufficient justification for dispensing with the requirement.

Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own omission of the filing of the required motion for reconsideration.

Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of Appeals, and proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at the conclusion that the NLRC did not err in denying petitioners' appeal for its failure to file a bond in accordance with the Rules of Procedure of the NLRC.

Garcy Kate D. Go LLB2 EH306 Page 213

J.K. Mercado & Sons Agricultural Enterprises, Inc., vs. Sto. Tomas, G.R. No. 158084, August 29, 2008

Facts: On December 3, 1993, the RTWPB of Region IX issued Wage Order No. 3 granting a Cost of Living Allowance to covered workers. J.K. Mercado & Sons Agricultural Enterprises, Inc., petitioner, filed for an exemption from the coverage of such order. Said application was denied by the regional wage board for lack of merit.

Despite denial of such application, private respondents were still not given benefits due them from said wage order. Private respondents filed a Writ of Execution and Writ of Garnishment seeking for its enforcement. Petitioner filed a motion to Quash the Writ of Execution arguing that the rights of the respondents already prescribed as per stated in Article 291 of the Labor Code regarding any issue concerning a wage order.

Ruling of the Regional Director: The Motion to Quash was denied and held that unpaid benefits have not prescribed and that the private respondents need not file a claim to be entitled thereto. Petitioner filed a Notice of Appeal alleging that the Regional Director abused his discretion in issuing the writ of execution in the absence of any motion filed by private respondents. Appeal was then denied which prompted the petiotioner to file a Motion for Reconsideration. Ruling of the Court of Appeals: The Motion for Reconsideration was also denied due to lack of merit. Hence, present petition.

Issues: 1. Whether or not the Honorable Court of Appeals committed an error in holding that Article 291 of the Labor Code is not applicable to recovery of benefits under the subject Wage Order No. RTWPB-XI-03, which entitled respondents to a cost of living allowance (COLA). 2. Whether or not the Court of Appeals committed an error in holding that the cost of living allowance (COLA) granted by Wage Order No. RTWPB-XI-03 can be enforced without the appropriate case having been filed by herein private respondents within the three (3) year prescriptive period. 3. Whether or not the claim of the private respondents for cost of living allowance (COLA) pursuant to Wage Order No. RTWPB-XI-03 has already prescribed because of the failure of the respondents to make the appropriate claim within the three (3) year prescriptive period provided by Article 291 of the Labor Code, as amended.

Ruling: The Court sees no error on the part of the Court of Appeals. Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year prescriptive period to file them.

On the other hand, respondent employees’ money claims in this case had been reduced to a judgment, in the form of a Wage Order, which has become final and executory. The prescription applicable, therefore, is not the general one that applies to money claims, but the specific one applying to judgments. Thus, the right to enforce the judgment, having been exercised within five years, has not yet prescribed.

Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered in her favor, she has five years to ask for execution of the judgment, counted from its finality. This is consistent with the rule on statutory construction that a general provision should yield to a specific one and with the mandate of social justice that doubts should be resolved in favor of labor.

WHEREFORE, the petition is DENIED.

Garcy Kate D. Go LLB2 EH306 Page 214

J. Phil. Marine Inc. vs. NLRC G.R. No. 168339, October 10, 2008

Facts: The herein respondent, was a cook aboard vessels plying overseas, filed before the National Labor Relations Commission (NLRC) a pro-forma complaint against petitioners for unpaid money claims, moral and exemplary damages, and attorney’s fees and thereafter filed two amended pro forma complaints praying for the award of overtime pay, vacation leave pay, sick leave pay, and disability/medical benefits, he having, by his claim, contracted enlargement of the heart and severe thyroid enlargement in the discharge of his duties as cook which rendered him disabled.

Labor Arbiter Fe Superiaso-Cellan dismissed respondent’s complaint for lack of merit but the NLRC reversed the Labor Arbiter’s decision and awarded US$50,000.00 disability benefit to respondent. The Court of Appeals dismissed petitioners’ petition for, inter alia, failure to attach to the petition all material documents, and for defective verification and certification. Petitioners’ Motion for Reconsideration of the appellate court’s Resolution was denied; hence, they filed the present Petition for Review on Certiorari.

During the pendency of the case, against the advice of his counsel, entered into a compromise agreement with petitioners, he thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor Arbiter. Petitioners filed before this Court a Manifestation dated May 7, 2007 informing that, inter alia, they and respondent had forged an amicable settlement.

Respondent’s counsel also filed before this Court, purportedly on behalf of respondent, a Comment on the present petition. The parties having forged a compromise agreement as respondent in fact has executed a Quitclaim and Release, the Court dismisses the petition.

Issue: WON the compromise agreement/deed of quit claim entered by the parties is valid?

Ruling: Article 227 of the Labor Code provides:

Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

In Olaybar v. NLRC , the Court, recognizing the conclusiveness of compromise settlements as a means to end labor disputes, held that Article 2037 of the Civil Code, which provides that “*a+ compromise has upon the parties the effect and authority of res judicata,” applies suppletorily to labor cases even if the compromise is not judicially approved.

That respondent was not assisted by his counsel when he entered into the compromise does not render it null and void. Eurotech Hair Systems, Inc. v. Go so enlightens: A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to be deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to respondent’s contention, the employee’s counsel need not be present at the time of the signing of the compromise agreement. It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed and sworn to before the Labor Arbiter. Petition DISMISSED

Garcy Kate D. Go LLB2 EH306 Page 215

Sy vs. ALC Industries, G.R. No. 168339, October 10, 2008

Facts: Ma. Gregorietta Leila C. Sy (Sy) was hired by ALC Industries, Inc.(ALCII) as a supervisor in its purchasing office. She was thereafter assigned to ALCII's construction project in Davao City as business manager and supervisor of the Administrative Division from May 1997 to April 15, 1999. Sy filed a complaint before the labor arbiter alleging that ALCII refused to pay her salary beginning August 1998 and allowances beginning June 1998. Despite several notices and warnings, ALCII did not file a position paper to controvert Sy's claims.

The labor arbiter ordered ALCII and/or Dexter Ceriales to pay petitioner P282,560 representing her unpaid salary and allowance. ALCII filed an appeal with the NLRC without posting any cash or surety bond. NLRC dismissed respondents' appeal. Thereafter ALCII filed a motion for reconsideration which was also denied by NLRC. ALCII questioned the NLRC's denial of their motion for clarification and reconsideration in the CA via a petition for certiorari. The CA set aside the resolutions of the NLRC and the decision of the labor arbiter. Sy filed a Rule 45 petition in the Supreme Court questioning the CA decision and resolution on the ground that the decision of the labor arbiter had become final and executory.

Issues: (1) Can the employer file an appeal with the NLRC without posting a cash bond? (2) Did the CA acquire jurisdiction over the labor case?

Rulings: (1) Article 223. Appeal. — Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten calendar days from receipt of such decisions, awards, or orders… In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. As the right to appeal is merely a statutory privilege, it must be exercised only in the manner and in accordance with the provisions of the law. Otherwise, the right to appeal is lost.

Liberal construction of the NLRC rules is allowed only in meritorious cases, where there is substantial compliance with the NLRC Rules of Procedure or where the party involved demonstrates a willingness to abide by the rules by posting a partial bond. Failure to post an appeal bond during the reglementary period was directly violative of Article 223 of the Labor Code.

The payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to the NLRC. The lawmakers intended to make the posting of a cash or surety bond by the employer the exclusive means by which an employer's appeal may be perfected. It is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers' appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employee's just and lawful claims.

(2) The filing of a joint undertaking/declaration, filed way beyond the ten-day reglementary period for perfecting an appeal and as a substitute for the cash or surety bond, did not operate to validate the lost appeal. The decision of the labor arbiter therefore became final and executory for failure of respondents to perfect their appeal within the reglementary period. Clearly, the CA no longer had jurisdiction to entertain respondents' appeal from the labor arbiter's decision.

Garcy Kate D. Go LLB2 EH306 Page 216

PCI Travel Corp vs NLRC GR no. 154379

Facts: Sometime in 1994, respondent PCI Travel Employees Union filed a Complaint for unfair labor practice against petitioner PCI Travel Corporation. It claimed that petitioner had been filling up positions left by regular rank-and-file with contractual employees, but were performing work which were usually necessary and desirable in the usual business or trade of the petitioner. Respondent prayed that the Labor Arbiter order the petitioner to pay the “contractual employees” the differentials between the wages/benefits of regular employees and the actual wages/benefits paid to them from the first day of their employment, plus moral and exemplary damages, and attorney’s fees of not less than P300,000.00 per employee.

Petitioner manifested that while it was ready and willing to prove that said employees were provided by independent legitimate contractors and that it was not engaged in labor-only contracting in a position paper yet to be submitted, petitioner prayed that the Labor Arbiter first resolve the issues raised in their motion to dismiss.

Labor Arbiter rendered a decision on the merits dated October 16, 1998, in favor of the respondent.

Appeal, the NLRC affirmed with modification the decision of the Labor Arbiter deleting the awards of damages for lack of sufficient basis.

Appeal, the CA issued the assailed Resolution dismissing the petition outright for petitioner’s failure to attach copies of pleadings and documents relevant and pertinent to the petition. More importantly, the verification and certification of non-forum shopping was signed by Elizabeth Legarda, President of the petitioner-corporation, without submitting any proof that she was duly authorized to sign for, and bind the petitioner-corporation in these proceedings.

Issue: Whether or not the president of the PCI Travel was not an authorized representative of the petitioner to sign the verification and certification against forum shopping, without need of a board resolution.

Ruling: It must be borne in mind that Sec. 23, in relation to Sec. 25, of the Corporation Code, clearly enunciates that all corporate powers are exercised, all business conducted, and all properties controlled by the board of directors. A corporation has a separate and distinct personality from its directors and officers and can only exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate officer cannot solely exercise any corporate power pertaining to the corporation without authority from the board of directors. This has been our constant holding in cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification and certification against forum shopping. The SC has held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.

With this issue settled, that the President of the corporation can sign the verification and certification without need of a board resolution, there thus exists a compelling reason for the reinstatement of the petition before the Court of Appeals.

Garcy Kate D. Go LLB2 EH306 Page 217

Lopez vs. Q.C. Sports Club, G.R. No. 164032, January 19, 2009

Facts: Claiming that it is a registered independent labor organization and the incumbent collective bargaining agent of Quezon City Sports Club (QCSC), the Kasapiang Manggagawa sa Quezon City Sports Club (union) filed a complaint for unfair labor practice against QCSC on 12 November 1997.

The Union averred that it was ordered to submit a new information sheet. It immediately wrote a letter addressed to the general manager, Angel Sadang, to inquire about the information sheet, only to be insulted by the latter. The members of the union were not paid their salaries on 30 June 1997. A board member, Antonio Chua allegedly harassed one of the employees and told him not to join the strike and even promised a promotion. On 4 July 1997, the union wrote a letter to the management for the release of the members’ salaries for the period 16-30 June 1997, implementation of Wage Order No. 5, and granting of wage increases mandated by the Collective Bargaining Agreement (CBA). When its letter went unanswered, the union filed a notice of strike on 10 July 1997 for violation of Article 248 (a)(c)(e) of the Labor Code, nonpayment of overtime pay, refusal to hear its grievances, and malicious refusal to comply with the economic provisions of the CBA. After conducting a strike vote, it staged a strike on 12 August 1997. On 16 August 1997, the QCSC placed some of its employees under temporary lay-off status due to redundancy. It appears that on 22 December 1997, QCSC also filed a petition for cancellation of registration against the union.

The Labor Arbiter (Lustria) found QCSC guilty of unfair labor practice. QCSC appealed from the labor arbiter’s decision. It also filed a motion for reduction of the appeal bond to P4,000,000.00. The NLRC ordered the posting of an additional P6,000,000.00) .QCSC filed a supplement to its appeal, citing a decision (Dinopol decision) dated 9 October 1998 of Labor Arbiter Ernesto Dinopol declaring the strike of the union illegal. The dispositive portion reads:

WHEREFORE, in view of the Union’s having violated the no-strike-no-lockout provision of the Collective Bargaining Agreement, the strike it staged on August 12, 1998 is hereby declared illegal and consequently, pursuant to Article 264 of the Labor Code, the individual respondents, namely: RONILO C. LEE, EDUARDO V. SANTIA, CECILLE C. PANGAN, ROMEO M. MORGA, GENARO C. BANDO AND ALEX J. SANTIAGO, who admitted in paragraph 1 of their position paper that they are officers/members of the complaining Union are hereby declared to have lost their employment status.

Meanwhile, the National Labor Relations Commission (NLRC) rendered a decision granting the appeal and reversing the Lustria decision. It ratiocinated:

Be that as it may, We are of the view that the Decision in NLRC CASE NO. 00-09- 0663-97 must perforce prevail over the appealed Decision and the latter to yield to it. It must remain undisturbed following the established doctrine on primacy and finality of decision. It bears stressing at this juncture, at the risk of being repetitious, that in NLRC Case No. 00-09-0663-97 the employment status of herein individual complainants was already declared lost or forfeited as of August 12, 1998, the day the illegal strike was staged. From then on, they ceased to be employees of respondent Sports Club. The forfeiture of their employment status carries with it the extinction of their right to demand for and be entitled to the economic benefits accorded them by law and the existing CBA. For, such right is premised on the fact of employment.

Garcy Kate D. Go LLB2 EH306 Page 218

The other complainants (petitioners) meanwhile filed a motion for reconsideration which was denied by the NLRC. They filed a petition for certiorari under Rule 65 before the Court of Appeals but was denied.

Issues: 1. Do the simultaneous filing of the motion to reduce the appeal bond and posting of the reduced amount of bond within the reglementary period for appeal constitute substantial compliance with Article 223 of the Labor Code? 2. Whether the NLRC erred in declaring them to have lost their employment contrary to the Dinopol decision which only affected a few of the employees who were union members.

Ruling: First issue: Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond.

Thus, the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance with the requirement renders the decision of the labor arbiter final and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s appeal. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.

However, Section 6 of the New Rules of Procedure of the NLRC also mandates, among others, that no motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. Hence, the NLRC has the full discretion to grant or deny the motion to reduce the amount of the appeal bond.

In the case of Nicol v. Footjoy Industrial Corporation ruled that the bond requirement on appeals involving monetary awards had been and could be relaxed in meritorious cases such as: (1) there was substantial compliance with the Rules; (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. Applying these jurisprudential guidelines, we find and hold that the NLRC did not err in reducing the amount of the appeal bond and considering the appeal as having been filed within the reglementary period.

The posting of the amount of P4,000,000.00 simultaneously with the filing of the motion to reduce the bond to that amount, as well as the filing of the memorandum of appeal, all within the reglementary period, altogether constitute substantial compliance with the Rules.

Second issue: We rule in favor of petitioners.

The assailed Dinopol decision involves a complaint for illegal strike filed by QCSC on the ground of a “no-strike no lockout” provision in the CBA. The challenged decision was rendered in accordance with law and is supported by factual evidence on record. In the notice of strike, the union did not state in particular the acts which allegedly constitute unfair labor practice. Moreover, by virtue of the “no-strike no lockout” provision in the CBA, the union was

Garcy Kate D. Go LLB2 EH306 Page 219 prohibited from staging an economic strike, i.e., to force wage or other concessions from the employer which he is not required by law to grant. However, it should be noted that while the strike declared by the union was held illegal, only the union officers were declared as having lost their employment status. In effect, there was a ruling only with respect to some union members while the status of all others had remained disputed.

There is no conflict between the Dinopol and the Lustria decisions. While both rulings involve the same parties and same issues, there is a distinction between the remedies sought by the parties in these two cases. In the Dinopol decision, it was QCSC which filed a petition to declare the illegality of the 12 August 1997 strike by the union. The consequence of the declaration of an illegal strike is termination from employment, which the Labor Arbiter did so rule in said case. However, not all union members were terminated. In fact, only a few union officers were validly dismissed in accordance with Article 264 of the Labor Code. Corollarily, the other union members who had merely participated in the strike but had not committed any illegal acts were not dismissed from employment. Hence, the NLRC erred in declaring the employment status of all employees as having been lost or forfeited by virtue of the Dinopol decision.

On the other hand, the Lustria decision involved the unfair labor practices alleged by the union with particularity. In said case, Labor Arbiter Lustria sided with the Union and found QCSC guilty of such practices. As a consequence, the affected employees were granted backwages and separation pay. The grant of backwages and separation pay however was not premised on the declaration of the illegality of the strike but on the finding that these affected employees were constructively dismissed from work, as evidenced by the layoffs effected by the company.

Therefore, with respect to petitioners and union officers Alex J. Santiago, Ma. Cecilia Pangan, Ronilo E. Lee, and Genaro Bando, who apparently had been substituted by present petitioner Teresita Bando, the Dinopol decision declaring them as having lost their employment status still stands.

To recapitulate, the NLRC erred in setting aside the Lustria decision, as well as in deleting the award of backwages and separation pay, despite the finding that the affected employees had been constructively dismissed.

Based on the foregoing, the Lustria decision should be upheld and therefore reinstated except as regards the four petitioners.

Garcy Kate D. Go LLB2 EH306 Page 220

Lockheed Detective and Watchman Agency, Inc. vs. University Of The Philippines G.R. No. 185918, April 18, 2012

Facts: The petition is for review on certiorari under Rule 45. Petitioner Lockheed entered into a contract of security with the University of the Philippines. On 1998, several of the guards assigned to UP filed a complaint for unpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and attorney's fees.

The Labor Arbiter declared UP solidarily liable. The decision was appealed but sustained by the NLCR, albeit a few modifications. The parties motion to reconsider were likewise denied. On July 25, 2005, a Notice of Garnishment 10 was issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award of P12,142,522.69 (inclusive of execution fee). On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being subjected to garnishment at PNB are government/public funds. However, the execution of the garnishment was carried out. UP elevated their case to the court of appeals. On reconsideration, however, the CA issued the assailed Amended Decision. It held that without departing from its findings that the funds covered in the savings account sought to be garnished do not fall within the classification of public funds, it reconsiders the dismissal of the petition in light of the ruling in the case of National Electrification Administration v. Morales which mandates that all money claims against the government must first be filed with the Commission on Audit (COA).

Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case should not apply and that UP could be both sued and held liable. And that the quashal of garnishment sought was moot because it had already become fait accompli.

Issues: Whether or not the NEA Case applies and the funds be garnished directly bypassing the COA. Whether or not the previous garnishment and withdrawal of funds was fait accompli.

Ruling: YES. This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical personality separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must first be filed with the COA. (suability does not immediately mean liability).

NO. As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done since the funds of UP had already been garnished, since the garnishment was erroneously carried out and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred right after the withdrawal of the garnished funds from PNB.

Garcy Kate D. Go LLB2 EH306 Page 221

Portillo v. Rudolf Lietz

Facts: Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in any other gainful employment by himself or with any other company either directly or indirectly without written consent of Lietz Inc., otherwise Potillo will be liable for liquidated damages.

Upon his promotion, Potillo signed another letter agreement containing a “Goodwill Clause” stating that: “…on the termination of his employment and for a period of three (3) years thereafter, he shall not engage directly or indirectly as employee, manager, proprietor, or solicitor for himself or others in a similar or competitive business or the same character of work which he was employed by Lietz Inc. to do and perform. Should he breach this good will clause of this Contract, he shall pay Lietz Inc. as liquidated damages the amount of 100% of his gross compensation over the last 12 months.”

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo declared that she intended to engage in businessa rice dealership, selling rice in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill Clause" in the last letter agreement she had signed.

Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc.

Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions were still being computed.

Subsequently, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-payment of 1 months salary, two (2) months commission, 13th month pay, plus moral, exemplary and actual damages and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should be offset against her liability to Lietz Inc. for liquidated damages for Portillos alleged breach of the "Goodwill Clause" in the employment contract when she became employed with Ed Keller Philippines, Limited.

Issue: 1. Who has jurisdiction over the present controversy? 2. Whether Portillos money claims for unpaid salaries may be offset against respondents claim for liquidated damages.

Ruling: 1. Jurisdiction belongs to the Civil Courts.

Petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime

Garcy Kate D. Go LLB2 EH306 Page 222

compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.

Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post- employment relations of the parties. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after the cessation of the employment relationship between the parties. In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the parties contract of employment as redress for respondents breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case, what with the reality that the stipulation refers to the postemployment relations of the parties.

2. No, it may not be.

Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which prohibits wage deductions except in three circumstances:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check- off has been recognized by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Garcy Kate D. Go LLB2 EH306 Page 223

Building Care Corp. / Leopard Security and Investigation Agency v. Macaraeg

Facts: Petitioners are in the business of providing security services to their clients.

They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any assignment.

Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond. Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and this compelled her to file the complaint for illegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post as requested by the client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job.

On May 13, 2009, the Labor Arbiter rendered a Decision dismissing the charge of illegal dismissal as wanting in merit but ordering the Respondents Leopard Security and Investigation Agency and Rupert Protacio to pay complainant a financial assistance in the amount of P5,000.00.

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed out of time, thereby declaring that the Labor Arbiter's Decision had become final and executory on June 16, 2009.

Upon elevating to the CA via a petition for certiorari, the court reversed and set aside the Decision of the NLRC and in lieu thereof, a new judgment is entered declaring petitioner to have been illegally dismissed.

Issue: Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time.

Ruling: Yes, it erred.

It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules, must remain as the exception to the well-settled principle that rules must be complied with for the orderly administration of justice.

The relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances.

The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse.

Although the CA justified such a reversal of the NLRC’s decision on the ground that the belated filing of respondent's appeal before the NLRC was the fault of respondent's former counsel, note, however, that neither respondent nor her former counsel gave any explanation or reason

Garcy Kate D. Go LLB2 EH306 Page 224 citing extraordinary circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss in following up her case with said lawyer. It is a basic rule that the negligence and mistakes of counsel bind the client.

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the case is also an essential part of public policy and the orderly administration of justice. Hence, such right is just as weighty or equally important as the right of the losing party to appeal or seek reconsideration within the prescribed period.25 When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment. They had the right to fully rely on the immutability of said Decision.

Garcy Kate D. Go LLB2 EH306 Page 225