LABOR LAW REVIEW

(LABOR STANDARDS CASE DIGESTS)

Arellano University School of Law

6:00-9:00 pm, Thursday

Submitted to: Atty. Dean Porfirio DG. Panganiban, Jr.

October 18, 2018

LIST OF CASES

Article 1-6: Labor in General

1. Maternity Children’s Hospital vs. Secretary of Labor

2. Calalang vs. Williams
3. People vs. Vera Reyes
4. People vs. Pomar
5. Phil. Association of Service Exporters Inc vs. Drilon
6. Cerezo vs. Atlantic Gulf and Pacific Co
7. Abella vs. NLRC
8. Euro-Linea, Phils. Inc, vs. NLRC
9. Manila Electric Company vs. NLRC
10. Sosito vs. Aguinaldo Development Corporation
11. Colgate Palmolive Philippines vs. Ople
12. Mendoza vs. Rural Bank of Lucban
13. Gelmart Industries Phils. Inc. vs. NLRC
14. Lagatic vs. NLRC
15. China Banking Corporation vs. Borromeo
16. Associated Watchmen and Security Union vs. Lanting
17. Pampanga Bus Company vs. Pambusco Employees
18. Gregorio Araneta Employees vs. Roldan
19. Phil. Steel Worker’s Union vs. CIR
20. Tiong King vs. CIR
21. Roldan vs. Cebu Portland Cament. Co
Article 5: Rules and Regulations

22. Rizal Empire Insurance Group vs. NLRC

23. Philippine Association of Service Exporters vs. Drilon
24. CBTC Employers Union vs. Clave
Article 6: Applicability

25. National Housing Corporation vs. Juco

26. National Service Corp vs. NLRC
27. Republic vs. CA
28. Luzon Development Bank vs . Association of Luzon
Development Bank et.al.
29. Social Security System Employees Association vs. CA
Article 7-11: Emancipation of Tenants

30. Association of Small Landowners of the Philippines vs.

Secretary of Agrarian Reform
31. Acuna vs. Arroyo
 32. Pabico vs. Juico
33 Maanay vs. Juico
. Alita vs. CA
34 Gonzales vs. CA
.
35
.
36. Luz farms vs. Secretary of Agrarian Report
Article 13: Recruitment and Placement

37. People vs. Panis

38. People vs. Goce
39. Darvin vs. CA and People of the Philippines

Article 19-24: Overseas Employment

40. Eastern Shipping Lines vs. POEA

41. Abdu Basar and Kathleen Saco
42. PHILSA International Placement vs. Secretary of Labor
43. Pacific Asia Overseas Shipping Corp. vs. NLRC
44. Millares and Lagda vs. NLRC
45. Tierra International Corporation vs. NLRC
46. Dilan vs. POEA Administrator
47. Vinta Maritime Co. vs. NLRC and Basconcillo
48. Marsaman Manning Agency vs. NLRC
49. Asian Center for Career and Employment Services vs. NLRC
and Ibno Mediales
50. Athena International Manpower services Inc. vs. Villanos
51. Eastern Shipping Lines vs. POEA
52. Inter Orient Maritime Enterprise Inc. vs. NLRC
53. Norse Management Corporation vs. National Seamen Board
54. NFD International Manning Agents vs. NLRC, et al.

Article 20: National Seamen Board

55. Phil.International Shipping Corporation vs. NLRC

56. Mc Kenzie vs. Cul
57. Virjen Shipping and Marine Services vs. NLRC
58. Suzara vs. Benipayo
59. Chavez vs. Bonto-Perez, Rayala, et al.
Article 25-39: Regulations of Recruitment and Placement Activities

60. Finman General Assurance vs. Inocencio

61. Eastern Assurance and Surety Corp. vs. Secretary of Labor
62. Salazar vs. Achacoso and Marquez
Article 34: Prohibited Practices

63. Soriano vs. offshore Shipping and Marketing corp.

64. Seagull Maritime Corp. vs. Balatongnan
 Article 35: Suspension and/or Cancellation of License Authority

65. Catan vs. NLRC

66. Royal Crowne International vs. NLRC
67. Facilities Management Corp. vs. De La Osa
Article 38: Illegal Recruitment

68. People of the Philippines vs. Bulu Chowdry

69. People of the Philippines vs. Cabais
70. People of the Philippines vs. Flores
71. People vs. Sagayado
72. People vs. Benzon Ong
73. People vs. Calonzo
74. People vs. Hernandez
75. People vs. F. Hernandez, K. Reichl and Y.G. de Reichl
76. People vs. tan Tiong Meng
77. People vs. Arabia and Tomas
78. People vs. Verano
79. People of the Philippines vs. Espanol
80. People of the Philippines vs. Roxas
81. People of the Philippines vs. Remullo
82. People of the Philippines vs. S. Angeles
Article 40: Employment of Non-Resident Aliens

83. Almodiel vs. NLRC, et al.

84. General Miling Corp. vs. Torres
85. Dee C. Chuan and sons vs. CIR
Article 57-72: Apprentices

86. Nitto Enterprises vs. NLRC and R. Capili

87. Filamer Christian Institute vs. Hon. Intermediate Appellate
Court
Article 82-95: Conditions of Employment

88. “Brotherhood” Labor Unity Movement of the Philippines vs.

Zamora
89. Tabas, et., al vs. California Manufacturing Co. et al.
90. Sevilla vs. CA
91. Continental Marble Corporation vs. NLRC
92. Encyclopedia Britannica Inc. vs. NLRC
93. Dy Keh Beng vs. International Labor and Marine Union
94. Zanotte Shoes vs. NLRC
95. Air Material wing Savings and Loan association inc. vs. NLRC
96. Hydro Resources Contractors Corp. vs Pagalilauan
97. Insular Assurance Co. vs. NLRC
98. Angelina Francisco vs. NLRC , Kasei Corp. etc
99. Opulencia Ice Plant vs. NLRC
 100. Domasig vs. NLRC
101. Equitable Banking Corporation vs. NLRC and R.L. Sadac
102. Zamudio vs. NLRC
103. Paguio vs. NLRC et.al.
104. Great Pacific Life Assurance Corp. vs. Judico
105. Feati University vs. Hon. Jose S. Bautista and Feati Faculty
Club
106. Citizens League of Free Workers et, al vs. Abbas
107. Villamaria vs. CA and Bustamante
108. Sy et.al vs. Hon. Court of Appeals and J. Sahot
109. Makati Haberdashery , Inc, vs., NLRC
110. Cauddanetaan Piece Workers Union vs. Undersecretary
Bienvenido Laguesma
111. Ruga et.al. vs. NLRC
112. A. Maraguinot and P.Enero vs. NLRC and Viva Films
113. Orlando Farm Growers vs. NLRC
Article 82: Excluded Employees

114. National Sugar Refineries Corp. vs. NLRC

115. Penaranda vs. Banganga Plywood Corp et.al.
116. Auto Bus Transport System Inc . vs. Bautista
117. Union of Filipino Employees vs. Vivar
118. San Miguel Brewery Inc. vs. Domestic Labor Organization
119. Abundio Cadiz vs. Philippine Sinter Corporation
119. Rosales vs. Tan Que
120. Adriano Quintos vs. D.D Transport Co., Inc.,
121. Lara vs. Del Rosario
Article 83: Hours of Work

123. Manila Terminal Co. Inc vs. CIR et.al

124. Interphil Laboratories Employees Union FFW, et al vs.
Interphil Laboratories

Article 84: Hours Worked

125. Pan American World Airways System vs. Pan American

Employees Association
126. Jose Gayona vs. Good Earth Emporium and Supermarket
127. University of Pangasinan Faculty Union vs. University of
Pangasinan
128. Luzon Stevedoring Co. Inc. vs. Luzon Marine Department
Union
129. Cagampan et. al vs.NLRC
130. National Development Company vs. CIR
131. FSime Darby Pilipinas Inc vs. NLRC
132. Mercury Drug Co Inc vs. Nardo Dayao et.al
 133. National Shipyards and Steele Corporation vs.
134. Bisig ng Manggagawa ng Philippine Refining Co. Inc
135. PNB vs. PNB Employees Assn
136. Pamapanga Sugar Development Co. vs. CIR

138. Cf: De Leon vs. Pampanga Sugar Development Co Inc

139. Sto. Domingo vs. Phil. Rock Products

Article 94: Holiday and Holiday Pays

140. Jose Rizal College vs. NLRC and NATOW

141. San Miguel Corp vs. CA et. al
142. Insular Bank of Asia and American Employees Union vs.
Hon. Amado G. Inciong
143. The Chartered Bank Employees Association vs. Hon. Blas
Ople
144. Obango vs. NLRC and Antique Electric Cooperative Inc.
145. Union of Filipro Employees vs.Benigno Vivar Jr NLRC and
Nestle Phils Inc
146. Wellington Investment and Manufacturing Corporation
vs.Cresenciano B.Trajano
147. Jose Rizal College vs. NLRC
148. Baltazar vs. San Miguel Brewery Inc
149. Davao Integrated Port Stevedoring Services vs. Abarquez
150. Kwok vs. Philippine Carpet Manufacturing Corp

Article 97: Wages and Salary

151. Songco et. al vs.NLRC

152. Ruga et. al vs.NLRC
153. State Marine Corporation and Royal Line vs. Cebu
Seamens Association Inc
154. Philippine Marine Corporation and Royal Line vs. Cebu
Seamen’s Association
155. International School Alliance of Educators vs. Hon.
Quimbinsing

Article 99-101: Minimum Wage

156. Atok Big Wedge Mining Co. Inc vs. Atok Big Wedge
Mutual Benefit Association
157. De Racho vs. Municipality of Iligan
158. Planas Commercial vs. NLRC, A. Ofialda et.al

Article 100: Elimination or Diminution of Benefits

 159. Davao Integrated Ports Stevedoring Services vs. Abarquez
160. Cebu Autobus Company vs.United Cebu Autobus Employees
Assn
161. Nestle Philippines vs. NLRC
162. R. Tiangco and V. Tiangco vs. Hon. Vicente Leogardo, Jr.
163. Globe Mackay Cable vs. NLRC
164. Samahan ng Manggagawa sa Topform Manufacturing vs.
NLRC
165. Pag-asa Steel Works vs.CA, et.al
166. Lexal Laboratories vs. Court of Industrial Relations et.al
167. National Sugar Refineries Corp. vs. NLRC
168. American Wire and Cable Daily Rated Employees Union vs
.American Wire and Cable Co and the Court of Appeals
169. Traders Royal Bank vs. NLRC
170. National Federation of Sugar Workers vs. Ovejera
171. Universal Corn Products vs. NLRC
172. Philippine Airlines vs.NLRC and Airline Pilots Assn. of the
Philippines
173. San Miguel Corporation vs. Inciong
174. Philippine Duplicators Inc vs. NLRC
175. Isalama Machine Works vs. NLRC et. al
176. Alliance of Government Workers et. al vs. Minister of
Labor and Employment
Article 101: Payment by Results
177. Tan vs. Lagrama
178. Lambo vs. NLRC
179. Makati Haberdashery vs. NLRC
180. Labor Congress of the Philippines vs. NLRC and
Empire Food Products
Article 102: Payment of Wages
181.Jimenez et. al. vs. NLRC and Juanatas
Article 106: Labor-Only Contracting
182. Neri vs. NLRC, Far East Bank and Trust Co
183. Manila Water Co. vs. Pena
184. San Miguel Corp vs. Aballa
185. Philippine Bank of Communication vs. NLRC
186. Tabas et. al. vs. California Manufacturing Company
187. Mafinco Trading Corporation vs. Ople, NLRC et.al.
188. Insular Life Insurance Co. Ltd. Vs. NLRC
189. Rhone-Poulenc Agrochemicals Philippines, Inc vs. NLRC
190. Escario et. al. vs. NLRC

191. Radio Communication of the Philippines Inc. vs. Secretary of

Labor
192. Apodaca vs. NLRC
193. Metropolitan Bank and Trust Compnany Employee vs. NLRC
 194. National Federation of Labor vs. NLRC
195. Manila Mandarin Employees Union vs. NLRC
Article 120-127: Wage Studies, Wage Agreements and Wage
Determination
196. Cagayan Sugar Milling Co. vs. Secretary of Labor et. al.
197. ECOP vs. NWPC

198. Meycauayan College vs. Drilon

199. St. Joseph College vs. St. Joseph College Worker’s
Association
200. COCOFED et.al vs. Hon. Cresenciano B. Trajano et.al.
201. Cebu Oxgygen and Acetelyn vs. Drilon
202. Odin Security Agency vs. Hon. Dionisio Dela Serna et.al
203. Urbanes etc. vs. Hon. Security of Labor
Article 130-138: Employment of Women

204. Zialcita vs. PAL

205. Gualberto vs. Marinduques Industrial Mining Corporation
Article 156-161: Health, Safety and Social Welfare Benefits

206. Philippine Global Communication Inc

207.
Article 166-184: Employees’ Compensation and State Insurance fund
208. Jose B. Sarmiento vs. Employees Compensation Commission
et. al.
209. Raro vs. Employees Compensation Commission
210. Belarmino vs. Employees Compensation Commission
211. Hinoguin vs. Employees Compensation Commission
212. GSIS vs. CA AND F. Alegre
213. Velariano vs. ECC and GSIS
214. Iloilo Dock and Engineering Corporation vs. WCC et.al
215. Alano vs.ECG
216. Lazo vs.Employees Compensation Commission
217. Menez vs. ECC
218. Mabuhay Shipping Service vs. nlrc
219. Interiorent Maritime Enterprises vs. Pineda
220. NAESS Shipping Philippines vs. NLRC
221. YSMAEL Maritime Corporation vs. Avelino

222. Vicente vs. ECC

223. Abaya vs. ECC
224. Ornilno vs. ECC
225. Vicente vs. ECC
226. GSIS vs. CA
Article 194 : Death Benefits
227. Canonizado vs. Almeda Lopez
228. Manzano vs ECC
 229. ECC vs. Sanico
230. Suanes vs. Workmen’s Compensation Commission

Article 280: Regular and Casual Employment

231. Philippine Federation of Credit Cooperatives, Inc v.NLRC

232. De Leon v. NLRC
233. Violeta v. NLRC
234. Romares v. NLRC
235. Phil Federation of Credit Cooperatives, Inc v. NLRC
236. Phil. Fruit and Vegetable Industries, Inc v.NLRC
237. De Leon v. NLRC
238. E. Ganzon, Inc v. NLRC
239. Hacienda Fatima v. National Federation of Sugarcane
Workers
240. Magante v. NLRC
241. Tacloban Sagkahan Rice etc. v. NLRC

242.Ecal v. NLRC
243.Kimberly etc. v. Drilon
244.Mercado v. NLRC
245. Datu and Co, Inc. v. NLRC
246.International Pharmaceutical, Inc. v. NLRC
247. Millares v. NLRC
Article 281: Probationary Employment

248. Labor Congress of the Phil. v. NLRC

249. Highway Copra Trades v.NLRC
250. San Miguel Corp v. NLRC
251. International Catholic Migration Commission v. NLRC
252. De la Cruz, Jr v.NLRC
253. Grand Motors Corp. v. MOLE
254. International Catholic Migration Commission v. NLRC
255. Phil. Federation of Credit Cooperatives , Inc v. NLRC
256. Escorpizo v.University of Baguio
257. Cebu Marine Beach Resort v. NLRC
258. Magcalas v. NLRC
258. Lao Construction v. NLRC
259. ALU-TUCP v.NLRC
260. Kiamco v. NLRC
261. Phil. Jai-Alai and Amusement Corp v. Clave
262. Sandoval Shipyards, Inc v. NLRC
263. Magante v. NLRC
265. Tucor Industries, Inc v. NLRC
266. Rada v. NLRC
267. Mamansag v. NLRC
 268. Uy v. NLRC
269. Phil. Airlines Inc, v. NLRC
270. Villa v. NLRC
271. Phil. Fruits and Vegetables Industries, Inc. v. NLRC
272. Imbuido v. NLRC
273. Maraguinot v. NLRC
274. A.M. Oreta and Co.,Inc v. NLRC
275. Southern Cotabato v.NLRC
276. Purefoods Corp. v. NLRC
277. Aguilar Corp. v. NLRC
278. Tabas v. California Manufacturing Co. Inc.
279. Phil Geothermal Inc v. NLRC
280. Mercado v. NLRC
281. International Pharmaceutical, Inc. v .NLRC
282. Cebu Engineering and Development Co. v. NLRC
283. Highway Copra Traders v. NLRC
284. Brent School v. Zamora
285. Cielo v. NLRC
286. International Pharmaceuticals, Inc. v.NLRC

287. St. Theresa’s School v. NLRC

288. Servidad v. NLRC

289. Purefoods Corp. v. NLRC

290. Phil. Tabacco etc v. NLRC
291. San Miguel Corp v. NLRC
292. Grand Motors Corp v. MOLE
293. Orient Express Placement Philippines v. NLRC
294. International Catholic Migration Commission v. NLRC
295. Bernardo v. NLRC
296. Escorpizo v. University of Baguio
297. A’ Prime Security Services Inc. v. NLRC
298. De La Cruz, Jr. v. NLRC
299. Mariwasa Manufacturing Inc. v. Leogardo
300. Phil. Federation of Credit Corporation, etc. v. NLRC
301. Escorpizo v. University of Baguio
302. St. Michael Academy v. NLRC
Article 282: Termination by Employer

303.International Catholic Migration Commission vs. NLRC

304. Orient Express Placement Philippines vs. NLRC
305. Manila Trading and Supply Co, Inc. v. Zulueta
306. Makati Haberdashery, Inc. v. NLRC
307. Ocean East Agency Corp v. NLRC
308. Arboleda v. NLRC
309. Samson v. NLRC
310. PNCC v. NLRC
311. Golden Thread Knitting Industrial Inc. v. NLRC
312. Austria v. NLRC
313. Philippine Aeolus Automotive United Corp v. NLRC
314. Naguit, Jr. v. NLRC
315. Cebu Filveneer Corp v. NLRC
316. Westin Phil. Plaza Hotel v. NLRC
317. Tierra International Production Corp. v. NLRC
318. Legahi v. NLRC
319. Vitarich Corp v. NLRC
320. Rosario v. Victory Rice Mill
320. PNOC-EDC v. Abella
321. National Sugar refineries Corp. v. NLRC
322. Judy Philippines Inc. v. NLRC
323. PLDT v. NLRC
324. Tres Reyes v. Maxim’s Tea House
325. Philippine Aeolus Automotive United Corp. v. NLRC
326. Cebu Filveneer Corp v. NLRC
327. Citibank N.A. v. Gatchalian
328. RDS Trucking v. NLRC
329. Paguio Transport Corp v. NLRC
330. Jardine Davies, Inc. v NLRC
331. Panday v. NLRC
332. Farrol v. Court of Appeals
333. Sulpicio Lines, Inc. v.Gulde
334. Santos v. San Miguel Corp.
335. Greenhills Products, Inc. v. NLRC
337. Vitarich v. NLRC
338. Cathedral School of Technology v. NLRC
339. International Rice Research Institute v. NLRC
340. Oania v. NLRC
341. Lim v.NLRC
342. Escobin v.NLRC
343. Metro Transit Corp. Inc. v. NLRC
344. Leonardo v.NLRC and Fuerte v. Aquino
345. Hacienda Dapdap v. NLRC
346. Premiere Development Bank v. NLRC
347. Phil. Airlines, Inc. v. NLRC
348. CMP Federal Security Agency, Inc. v. NLRC
349. Mendoza vs. NLRC
350. Batongbacal v. Associated Bank
351. Manila Electric Co. Inc. v. NLRC
352. Brent School v. Zamora
353. Romares v. NLRC
354. Santos v. NLRC
355. Chua-Qua v. Clave
356. Aparente Sr. v. NLRC
 357. Lacorte v. Inciong
358. Starlite etc. v. NLRC
359. Quiambao v. NLRC
360. San Miguel Corp v. NLRC
361. Westin Phil. Plaza Hotel v. NLRC
362. Phil. Wireless, Inc v. NLRC
363. Globe- Mackay Cable and Radio Corp. v. NLRC
364. Phil. Airlines v. NLRC
365. Kwikway Engineering Works v. NLRC
366. Wiltshire File Co., Inc. v. NLRC
367. Almodiel v. NLRC
368. Escareal v. NLRC
369. AG & P United Rank and File Assn v. NLRC
370. Caffco International Ltd v. Office MOLE
371. Sebuguero v. NLRC
372. Wiltshire File Co.., Inc. v. NLRC
373. Tierra International Construction Corp. v.NLRC
374. Guerrero v. NLRC
375. Tierra International Construction Corp. v. NLRC
376. Almodiel v. NLRC
377. Panlilio v. NLRC
378. Lopez Sugar Corporation v. Federation of Free Workers
379. Revidad v. NLRC
380. Balbalec v. NLRC
381. San Miguel Jeepney Service v. NLRC
382. Lopez Sugar Corporation v. Federation of Free Workers
383. Revidad v. NLRC
384. Catatista v. NLRC
385. Central Azucarera de la Carlota v. NLRC
386. Somerville Stainless Steel Corp. v. NLRC
387. Bago-Medellin Sugar Can Planters Assn., Inc. v. NLRC
Article 287: Retirement From Service

388. Habana v. NLRC

389. Azcor Manufacturing, Inc. v. NLRC
389. Metro Transit Organization, Inc. v. NLRC
390. Reyes v. CA
391. Wilt Hahn Enterprises v. Maghuyop
392. Cheniver Deco Print Technics Corporation v. NLRC
393. Admiral Realty Co., Inc. v. NLRC
395. Phil. Wireless Inc. v. NLRC
396. Pascua v. NLRC
397. Intertrod Maritime Inc. v. NLRC
398. Manila Broadcasting Co. v. NLRC
399. Valdez v. NLRC
 LABOR LAW REVIEW 1st Semester 2018-2019 [Labor Standards]

Labor Law in General

(Article 1-6)

Labor Law Defined

MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President,

Petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR,
REGION X, Respondents.
G.R. No. 78909, June 30, 1989
(En Banc)

DOCTRINE: Social justice legislation, to be truly meaningful and rewarding to our workers,
must not be hampered in its application by long-winded arbitration and litigation. Rights must
be asserted and benefits received with the least inconvenience. Labor laws are meant to
promote, not defeat, social justice.

FACTS: Petitioner is a semi-government hospital. Ten (10) employees of the petitioner

employed in different capacities/positions filed a complaint with the Office of the Regional
Director of Labor and Employment, Region X, for underpayment of their salaries and ECOLAS.
Based on inspection report and recommendation, the Regional Director then ordered the
petitioner to compensate the underpayment of wages and ECOLAs to all the petitioner's
employees.

The Petitioner elevated the matter to the Secretary of Labor which ordered for the re-
computation of underpayment. Unsatisfied, the petitioner elevated the matter to the Supreme
Court questioning the applicability of the award to all employees and not only those who signed
the complaint, including those who were no longer in the service of the hospital at the time the
complaints were filed. The petitioner is also questioning the jurisdiction of the Regional
Director over the case, and alleging that the original and exclusive jurisdiction over money
claims is properly lodged in the Labor Arbiter.

ISSUE: Whether or not the Regional Director had jurisdiction over the case and if so, the extent
of coverage of any award that should be forthcoming, arising from his visitorial and
enforcement powers under Article 128 of the Labor Code?

HELD: Yes.

Viewed in the light of Presidential Decree No. 850 and read in coordination with MOLE Policy
Instructions Nos. 6, 7 and 37, it is clear that it has always been the intention of our labor
authorities to provide our workers immediate access (when still feasible, as where an employer-
employee relationship still exists) to their rights and benefits, without being inconvenienced by
arbitration/litigation processes that prove to be not only nerve-wracking, but financially
burdensome in the long run.

Under the present rules, a Regional Director exercises both visitorial and enforcement power
over labor standards cases, and is therefore empowered to adjudicate money claims, provided
there still exists an employer-employee relationship, and the findings of the regional office is
not contested by the employer concerned. In the present case, petitioner admitted the charge of
underpayment of wages to workers still in its employ; in fact, it pleaded for time to raise funds
to satisfy its obligation. There was thus no contest against the findings of the labor inspectors.
MOLE Policy Instructions Nos. 6, (Distribution of Jurisdiction Over Labor Cases) and 37
(Assignment of Cases to Labor Arbiters) giving Regional Directors adjudicatory powers over

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 LABOR LAW REVIEW 1st Semester 2018-2019 [Labor Standards]

uncontested money claims discovered in the course of normal inspection, provided an

employer-employee relationship still exists, provide the basis for the jurisdiction of the
Regional Director.

The Regional Director correctly applied the award with respect to those employees who signed
the complaint, as well as those who did not sign the complaint, but were still connected with the
hospital at the time the complaint was filed. However, the enforcement power of the Regional
Director cannot legally be upheld in cases of separated employees. ACCORDINGLY, the
Supreme Court dismissed the petition as regards all persons still employed in the Hospital at
the time of the filing of the complaint, but granted as regards those employees no longer
employed at that time.

Submitted by: Aguilar, Cherry Kerr

Social Justice as the aim of Labor Laws

MAXIMO CALALANG, petitioner, vs. A. D. WILLIAMS, ET AL., respondents

[G.R. No. 47800. December 2, 1940.]
LAUREL, J:

DOCTRINE: Social justice is "neither communism, nor despotism, nor atomism, nor anarchy,"
but the humanization of laws and the equalization of social and economic forces by the State
so that justice in its rational and objectively secular conception may at least be approximated.

Social justice means the promotion of the welfare of all the people, the adoption by the
Government of measures calculated to insure economic stability of all the competent elements
of society, through the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers
underlying the existence of all governments on the time-honored principle of salus populi est
suprema lex.

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

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

FACTS: It is alleged in the petition that the National Traffic Commission, in its resolution of
July 17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of
Public Works and Communications that animal-drawn vehicles be prohibited from passing
along Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street, from
7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a
period of one year from the date of the opening of the Colgante Bridge to traffic; that as a
consequence of such enforcement, all animal-drawn vehicles are not allowed to pass and pick
up passengers.

The petitioner further contends that the rules and regulations promulgated by the respondents
pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference
with legitimate business or trade and abridge the right to personal liberty and freedom of

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 LABOR LAW REVIEW 1st Semester 2018-2019 [Labor Standards]

locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the exercise
of the paramount police power of the state.

ISSUE: Whether or not the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and
economic security of all the people?

HELD: NO.

The promotion of social justice, however, is to be achieved not through a mistaken sympathy
towards any given group. Social justice is "neither communism, nor despotism, nor atomism,
nor anarchy," but the humanization of laws and the equalization of social and economic forces
by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption
by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equilibrium in
the interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers
underlying the existence of all governments on the time-honored principle of salus populi est
suprema lex.

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

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

Police Power as the basis of Labor Laws

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
FRANCO VERA REYES, defendant-appellee.
G.R. No. L-45748, April 5, 1939
(EN BANC)

FACTS: The defendant was charged with a violation of Act No. 2549, as amended by Acts Nos.
3085 and 3958 The information alleged that from September 9 to October 28, 1936, and for the
some time after, the accused, in his capacity as president and general manager of the
Consolidated Mines, having engaged the services of Severa Velasco de Vera as stenographer, at
an agreed salary of P35 a month willfully and illegally refused to pay the salary of said
stenographer corresponding to the above-mentioned period of time, which was long due and
payable, in spite of her repeated demands.

The accused interposed a demurrer on the ground that the facts alleged in the information do
not constitute any offense, and that even if they did, the laws penalizing it are
unconstitutional.

After the hearing, the court sustained the demurrer, declaring unconstitutional the last part of
section 1 of Act No. 2549 as last amended by Act No. 3958, which considers as an offense the

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facts alleged in the information, for the reason that it violates the constitutional prohibition
against imprisonment for debt, and dismissed the case, with costs de officio.

In this appeal the Solicitor-General contends that the court erred in declaring Act No. 3958
unconstitutional.

ISSUE: Whether the said constitutional provision is unconstitutional.

HELD: No. The last part of section 1 considers as illegal the refusal of an employer to pay,
when he can do so, the salaries of his employees or laborers on the fifteenth or last day of every
month or on Saturday of every week, with only two days extension, and the nonpayment of the
salary within the periods specified is considered as a violation of the law.

The same Act exempts from criminal responsibility the employer who, having failed to pay the
salary, should prove satisfactorily that it was impossible to make such payment.

The court held that this provision is null because it violates the provision of section 1 (12),
Article III, of the Constitution, which provides that no person shall be imprisoned for debt.

We do not believe that this constitutional provision has been correctly applied in this case. A
close perusal of the last part of section 1 of Act No. 2549, as amended by section 1 of Act No.
3958, will show that its language refers only to the employer who, being able to make payment,
shall abstain or refuse to do so, without justification and to the prejudice of the laborer or
employee. An employer so circumstanced is not unlike a person who defrauds another, by
refusing to pay his just debt. In both cases the deceit or fraud is the essential element
constituting the offense. The first case is a violation of Act No. 3958, and the second isestafa
punished by the Revised Penal Code. In either case the offender cannot certainly invoke the
constitutional prohibition against imprisonment for debt.
Submitted by: Alarcon, Maria Teresa L.

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
JULIO POMAR, defendant-appellant.

DOCTRINE: The constitution or the law of the people of a state is the supreme law of the land.
The police of the state cannot be exercised in contravention of the inhibitions of the
constitution. Neither public sentiment, nor a desire to ameliorate the public morals of
the people of the state will justify the promulgation of a law which contravenes the express
provisions of the fundamental law of the people. Amendments to the constitution must first be
made.

FACTS: The defendant is the manager and person in charge of La Flor de la Isabel, a tobacco
factory pertaining to the La Compania General de Tobaos de Filipinas. An employee by the
name of Macaria Fajardo was granted a vacation leave by the defendant which began on July
16, 1923, by the reason of her pregnancy. Said manager failed and refused to pay Fajardo the
sum of ₱ 80.00 to which she was entitled as her regular wages corresponding to 30 days before
and 30 days after the delivery and confinement pursuant to Sec. 13 of Act No. 3071, which
took place on August 12, 1923 Fajardo filed a complaint against the defendant. The defendant
demurred, alleging that the facts therein contained did not constitute an offense. The demurrer
was overruled, whereupon the defendant answered and admitted at the trial all the allegations

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contained in the complaint, he contended that the provisions of Sec. 15 of Act. No. 3017 upon
which the complaint was based was illegal, unconstitutional, and void. The defendant was
found guilty of the allege offense described in the complaint and sentenced him to pay a fine of
₱ 50.00 or to suffer a subsidiary imprisonment in case of insolvency, and to pat the cost in
accordance with the provisions of Sec. 15 of said Act.

ISSUE: Whether or not the provisions of sections 13 and 15 of Act No. 3071 are unreasonable
and unlawful exercise of the police power of the state?

HELD: Yes

The provisions of said sections had not been adopted within the reasonable and lawful exercise
of the police power of the state, and were therefore unconstitutional and illegal. The statute
now under consideration is attacked upon the ground that it authorizes an unconstitutional
interference with the freedom of contract including within the guarantees of the due process
clause of the 5th Amendment. That the right to contract about one's affairs is a part of the
liberty of the individual protected by this clause is settled by the decision of this court, and is
no longer open to question. Within this liberty are contracts of employment of labor. In making
such contracts, generally speaking, the parties have an equal right to obtain from each other
the best terms they can as the result of private bargaining. Without further attempting to
define what are the peculiar subjects or limits of the police power, it may safely be affirmed,
that every law for the restraint and punishment of crimes, for the preservation of the public
peace, health, and morals, must come within this category. But the state, when providing by
legislation for the protection of the public health, the public morals, or the public safety, is
subject to and is controlled by the paramount authority of the constitution of the state, and
will not be permitted to violate rights secured or guaranteed by that instrument or interfere
with the execution of the powers and rights guaranteed to the people under their law — the
constitution.

It has been said that the particular statute before us is required in the interest of social justice
for whose end freedom of contract may lawfully be subjected to restraint. The liberty of the
individual to do as he pleases, even in innocent matters, is not absolute. That liberty must
frequently yield to the common good, and the line beyond which the power of interference may
not be pressed is neither definite nor unalterable, may be made to move, within limits not well
defined, with changing needs and circumstances.

Submitted by: Bacurio, Kenneth Bernard

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,

vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D.
ACHACOSO, as Administrator of the Philippine Overseas Employment Administration,
respondents.

DOCTRINE: Protection to labor does not signify the promotion of employment alone. What
concerns the Constitution more paramount is that such an employment be above all, decent,
just, and humane. It is bad enough that the country has to send its sons and daughters to
strange lands because it cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-bound to insure that our toiling expatriates have
adequate protection, personally and economically, while away from home. In this case, the
Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack of

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inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite
ban on deployment. Police Power is well-established in this jurisdiction. It has been defined as
the "state authority to enact legislation that may interfere with personal liberty or property in
order to promote the general welfare." As defined, it consists of (1) an imposition of restraint
upon liberty or property, (2) in order to foster the common good. It is not capable of an exact
definition but has been, purposely, veiled in general terms to underscore its all-comprehensive
embrace.

FACTS: The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a
firm "engaged principally in the recruitment of Filipino workers, male and female, for overseas
placement," challenges the Constitutional validity of Department Order No. 1, Series of 1988,
of the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING
THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the
measure is assailed for "discrimination against males or females;" that it "does not apply to all
Filipino workers but only to domestic helpers and females with similar skills;" and that it is
violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking
power, police power being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution,
providing for worker participation "in policy and decision-making processes affecting their
rights and benefits as may be provided by law." Department Order No. 1, it is contended, was
passed in the absence of prior consultations. It is claimed, finally, to be in violation of the
Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI
members face should the Order be further enforced.

ISSUE: whether or not Department Order No. 1 is in the nature of a police power measure and
considered valid under the Constitution.

HELD: Yes.

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
The consequence the deployment ban has on the right to travel does not impair the right. The
right to travel is subject, among other things, to the requirements of "public safety," "as may be
provided by law." Department Order No. 1 is a valid implementation of the Labor Code, in
particular, its basic policy to "afford protection to labor," pursuant to the respondent
Department of Labor's rule-making authority vested in it by the Labor Code. The petitioner
assumes that it is unreasonable simply because of its impact on the right to travel, but as we
have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid
exercise of legislative power. It is true that police power is the domain of the legislature, but it
does not mean that such an authority may not be lawfully delegated. As we have mentioned,
the Labor Code itself vests the Department of Labor and Employment with rulemaking powers
in the enforcement whereof.

The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and
decision-making processes affecting their rights and benefits" is not well-taken. The right
granted by this provision, again, must submit to the demands and necessities of the State's
power of regulation.
Submitted by: Balbarino, Cherry Anjell L.

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Significance of Foreign Decisions

CLARA CEREZO, plaintiff-appellant,

vs.
THE ATLANTIC GULF & PACIFIC COMPANY, defendant-appellant
G.R. No. L-10107, February 4, 1916
(EN BANC)

Doctrine:

Facts: Plaintiff's son, Jorge Ocumen, the deceased was an employee of the defendant as a day
laborer on the 8th of July, 1913, assisting in laying gas pipes on Calle Herran in the city of
Manila. The digging of the trench was completed both ways from the cross-trench in Calle Paz,
and the pipes were laid therein up to that point. Shortly after the deceased entered the trench
at the east end to answer a call of nature, the bank caved in, burying him to his neck in dirt,
where he died before he could be released. It has not been shown that the deceased had
received orders from the defendant to enter the trench at this point; nor that the trench had
been prepared by the defendant as a place to be used as a water-closet; nor that the defendant
acquiesced in the using of this place for these purposes. The trench at the place where the
accident occurred was between 3 and 4 feet deep. Nothing remained to be done there except to
refill the trench as soon as the pipes were connected. An action was filed by the plaintiff for
damages for the death of her son against the defendant.

Issue: Whether the plaintiff can recover for the death of her son under either Act No. 1874 or
the Civil Code.

Ruling: No.

It is manifest, therefore, that the purpose of the Employers' Liability Act was, at most, to
abolish certain defenses in certain specified cases, but in no manner to prejudice common law
right of employees or to interfere with the enforcement of any right that the Act itself did not
create. Such have been the holdings of the courts in England and the United States form the
very beginning.

Assuming that the excavation for the gas pipe is within the category of "ways, works, or
machinery connected with the used in the business of the defendant, " we are of the opinion
that recovery cannot be had under the Act for the reason that, as we have indicated, the
deceased was at a place where he had no right to be at the time he met his death. His work did
not call him there, nor is it shown that he was permitted there tacitly or otherwise. Under the
Anglo-American law the applicable to such a set of facts is that the master is not responsible,
under the Employers' Liability Act, for accidents to his employees when they are outside the
scope of their employment for purpose of their own.

Article 1105 of the Civil Code provides that:

No one shall be liable for events which could not be foreseen, or which having been
foreseen were inevitable, with the exception of the cases expressly mentioned in the law
of those in which the obligation so declares.

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The case under consideration does not fall within the exceptions mentioned in the above
quoted article. After providing a reasonably safe place in and about which the deceased was
required to work, the defendant's liability was then limited to those events which could have
been foreseen.

The cause of Ocumen's death was not the weight of the earth which fell upon him, but was due
to suffocation. He was sitting or squatting when the slide gave way. Had he been even half-
erect, it is highly probable that he would have escaped suffocation or even serious injury.
Hence, the accident was of a most unusual character. Experience and common sense
demonstrate that ordinarily no danger to employees is to be anticipated from such a trench as
that in question. The fact that the walls had maintained themselves for a week, without
indication of their giving way, strongly indicates that the necessity for bracing or shoring the
trench was remote. To require the company to guard against such an accident as the one in
question would virtually compel it to shore up every foot of the miles of trenches dug by it in
the city of Manila for the gas mains.

Submitted by: Gonzales, Van Angelo G.

Laborer‘s Welfare; Liberal Approach

Abella, petitioners
vs.
National Labor Relations Commission, respondents
No. L-71813. July 20, 1987

Doctrine: Doubts in implementation and interpretation of the provisions of the Labor Code
and their implementing regulations resolved in favor of labor.

FACTS: Petitioner Rosalina Perez Abella leased a farm land in Ponteverde, Negros Occidental,
known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, for
another ten (10) years. Afterwards, she opted to extend the lease contract for another ten (10)
years.

During the existence of the lease, she employed the herein private respondents. Respondent
Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo
in 1963. On the other hand, respondent Romeo Quitco started as a regular employee in 1968
and was promoted to Cabo in November of the same year.

Upon the expiration of her leasehold rights, petitioner dismissed respondents and turned over
the hacienda to the owners, who continued the management, cultivation and operation of the
farm.

Consequently, respondents filed a complaint against the petitioner at the Ministry of Labor and
Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement
with backwages.

Labor Arbiter:

It ruled that the dismissal is warranted by the cessation of business, but granted the
respondents separation pay.

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National Labor Relations Commission (NLRC):

It affirmed the decision and dismissed the appeal for lack of merit. Hence, the present petition.

ISSUE: Whether or not respondents are entitled to separation pay?

HELD: Yes.

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law
applicable in this case. Article 284 as amended refers to employment benefits to farm hands
who were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona.
That contract cannot have the effect of annulling subsequent legislation designed to protect the
interest of the working class.

The purpose of Article 284 as amended is obvious, the protection of the workers whose
employment is terminated because of the closure of establishment and reduction of personnel.
Without said law, employees like private respondents in the case at bar will lose the benefits to
which they are entitled for the thirty three years of service in the case of Dionele and fourteen
years in the case of Quitco. Although they were absorbed by the new management of the
hacienda, in the absence of any showing that the latter has assumed the responsibilities of the
former employer, they will be considered as new employees and the years of service behind
them would.

In any event, it is well-settled that in the implementation and interpretation of the provisions of
the Labor Code and its implementing regulations, the working man's welfare should be the
primordial and paramount consideration.

It is the kind of interpretation which gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states
that 'all doubts in the implementation and interpretation of the provisions of this Code
including its implementing rules and regulations shall be resolved in favor of labor."
Submitted by: Bayot, Kristine Valerie S.

EURO-LINEA, PHILS., INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JIMMY O. PASTORAL, respondents.
G.R. No. 78782, Dec. 1, 1987
FIRST DIVISION

DOCTRINE: The interpretation of the protection to labor and social justice provisions of the
constitution and the labor laws and rules and regulations implementing the constitutional
mandate, the Supreme Court has always adopted the liberal approach which favors the
exercise of labor rights.

FACTS: On August 17, 1983, petitioner hired Pastoral as shipping expediter on a probationary
basis for a period of six months ending February 18, 1984. However, prior to hiring by
petitioner, Pastoral had been employed by Fitscher Manufacturing Corporation also as
shipping expediter for more than one and a half years.

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On February 4, 1984, Pastoral received a memorandum dated January 31, 1984 terminating
his probationary employment effective also on February 4, 1984 in view of his failure to meet
the performance standards set by the company. Pastoral filed a complaint for illegal dismissal
against petitioner which the Labor Arbiter decided in his favor. Herein petitioner appealed the
decision to the NLRC, but was also dismissed. Hence, this petition.

ISSUE: Whether or not private respondent's dismissal was justifiable.

HELD: No.

Although a probationary or temporary employee has a limited tenure, he still enjoys the
constitutional protection of security of tenure. During his tenure of employment or before his
contract expires, he cannot be removed except for cause as provided for by law.

Petitioner not only failed to present sufficient evidence to substantiate the cause of private
respondent's dismissal, but likewise failed to cite particular acts or instances to show the
latter's poor performance.
Submitted by: Bodopol, Adolf Jr.

MANILA ELECTRIC COMPANY, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, and APOLINARIO M. SIGNO,
respondents.
G.R. No. 78763, July 12,1989
(FIRST DIVISION)

DOCTRINE: In carrying out and interpreting the Labor Code's provisions and its implementing
regulations, the workingman's welfare should be the primordial and paramount consideration.

FACTS: Private respondent was employed in petitioner company as supervisor-leadman from

January 1963 up to the time when his services were terminated on May 18, 1983. In 1981, a
certain Fernando de Lara filed an application with the petitioner company for electrical services
at his residence at Peñafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private
respondent, facilitated the processing of the said application as well as the required
documentation and in consideration thereof, received from de Lara the amount of P7,000.00..
However, It was established that the area where the residence of de Lara was located is not yet
within the serviceable point of the Petitioner company. In order to expedite the electrical
connections at de Lara's residence, certain employees of the company, including private
respondent, made it appear in the application that the sari-sari store at the corner of Marcos
Highway, is applicant de Lara's establishment, which, in reality is not owned by the latter. As a
result of this scheme, the electrical connections to de Lara's residence were installed and made
possible. However, de Lara was not billed for more than a year. Thus, this resulted to the
termination of private respondent‘s termination after the Petitioner Company conducted an
investigation on the matter. Therefore, private respondent filed a complaint for illegal dismissal,
unpaid wages, and separation pay. The Labor Arbiter ruled to reinstate private respondent and
was later on affirmed by the NLRC. Hence this petition.

ISSUE: Whether or not private respondent should be dismissed from petitioner company on
grounds of serious misconduct and loss of trust and confidence.

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HELD: NO.

The power to dismiss is the normal prerogative of the employer. An employer, generally, can
dismiss or lay-off an employee for just and authorized causes enumerated under Articles 282
and 283 of the Labor Code. However, the right of an employer to freely discharge his employees
is subject to regulation by the State, basically in the exercise of its paramount police power.
This is so because the preservation of the lives of the citizens is a basic duty of the State, more
vital than the preservation of corporate profits.

There is no question that herein respondent Signo is guilty of breach of trust and violation of
company rules, the penalty for which ranges from reprimand to dismissal depending on the
gravity of the offense. However, as earlier stated, the respondent Commission and the Labor
Arbiter found that dismissal should not be meted to respondent Signo considering his twenty
(20) years of service in the employ of petitioner, without any previous derogatory record, in
addition to the fact that petitioner company had awarded him in the past, two (2)
commendations for honesty. If ever the petitioner suffered losses resulting from the unlisted
electric consumption of de Lara, this was found to be the fault of petitioner's Power Sales
Division. We find no reason to disturb these findings. The Court has held time and again, in a
number of decisions, that notwithstanding the existence of a valid cause for dismissal, such as
breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too
severe a penalty if the latter has been employed for a considerable length of time in the service
of his employer. Further, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states
that "all doubts in the implementation and interpretation of the provisions of the Labor Code
including its implementing rules and regulations shall be resolved in favor of labor". Thus,
reinstatement of respondent Signo is proper in the instant case, but without the award of
backwages, considering the good faith of the employer in dismissing the respondent. Petition is
dismissed.
Submitted by: De Guzman, Joey Albert P.

Management Rights

MANUEL SOSITO, petitioner

vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent
G.R. No. L-48926, December 14, 1987
(First Division)

DOCTRINE: 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.

FACTS: Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging
company, and was in charge of logging importation. When he went on indefinite leave with the
consent of the company on January 16, 1976. On July 20, 1976, the private respondent,
through its president, announced a retrenchment program and offered separation pay to
employees in the active service as of June 30, 1976, who would tender their resignations not

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later than July 31, 1976. The petitioner decided to accept this offer and so submitted his
resignation on July 29, 1976, "to avail himself of the gratuity benefits" promised. However, his
resignation was not acted upon and he was never given the separation pay he expected. The
petitioner complained to the Department of Labor, where he was sustained by the labor arbiter.
On appeal to the National Labor Relations Commission, this decision was reversed and it was
held that the petitioner was not covered by the retrenchment program. Hence, this case.

ISSUE: Whether or not Manuel Sosito entitled to separation pay under the retrenchment
program.

HELD: NO.

It is clear from the memorandum that the offer of separation pay was extended only to those
who were in the active service of the company as of June 30, 1976. It is equally clear that the
petitioner was not eligible for the promised gratuity as he was not actually working with the
company as of the said date. Being on indefinite leave, he was not in the active service of the
private respondent although, if one were to be technical, he was still in its employ. Even so,
during the period of indefinite leave, he was not entitled to receive any salary or to enjoy any
other benefits available to those in the active service.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the
contrary, the record shows that he voluntarily sought the indefinite leave which the private
respondent granted. It is strange that the company should agree to such an open-ended
arrangement, which is obviously one-sided. The company would not be free to replace the
petitioner but the petitioner would have a right to resume his work as and when he saw fit.

Under the law then in force the private respondent could have validly reduced its work force
because of its financial reverses without the obligation to grant separation pay. This was
permitted under the original Article 272(a), of the Labor Code, which was in force at the time.
To its credit, however, the company voluntarily offered gratuities to those who would agree to
be phased out pursuant to the terms and conditions of its retrenchment program, in
recognition of their loyalty and to tide them over their own financial difficulties. The Court feels
that such compassionate measure deserves commendation and support but at the same time
rules that it should be available only to those who are qualified therefore. We hold that the
petitioner is not one of them.
Submitted by: Bonquin, Jezrael B.

COLGATE PALMOLIVE PHILIPPINES, Inc., petitioners,

vs.
HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION, respondents.
G.R. No. 73681 June 30, 1988
(Second Division)

DOCTRINE: Under the law, respondent Minister is duly mandated to equally protect and
respect not only the labor or workers' side but also the management and/or employers' side.
The law, in protecting the rights of the laborer, authorizes neither oppression nor self-
destruction of the employer.

FACTS: Union filed a Notice of Strike with the BLR on ground of unfair labor practice
consisting of alleged refusal to bargain, dismissal of union officers/members; and coercing
employees to retract their membership with the union and restraining non-union members
from joining the union.

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In its position paper, in a proceeding in the Ministry of Labor and Employment, petitioner
pointed out that: there is no basis for the charges; that there is substantial basis in the
company rules and regulations of the company for the dismissal of the three (3) salesmen, not
just because of their being the leaders of the union; that the union is not the certified agent of
the company salesmen; and that the majority of the salesmen are not in favor of the Notice of
Strike filed by the Union.

The Union on the other hand denied every allegation of the Petitioner and that it has a total
member of 87 regular salesmen out of 117 presently employed, when presented with set of
proposals for a CBA the company took an adversarial stance by secretly distributing a ―survey
sheet in union membership‖ to newly hired salesmen purposely avoiding regular salesmen who
are now members of the union.

The Respondent Minister rendered a decision finding no merit in the Union‘s ULP complaint.
The Minister also directly certified the respondent Union as the CBA for the sales force and
ordered the reinstatement of the three (3) salesmen on the ground that they are first time
offenders.

ISSUE/s:

(1) Whether or not the Minister is correct when it directly certified the Union on the basis of the
assertion that it enjoys the support of the majority of the sales force in petitioner's company.

(2) Whether or not the Minister is correct when it ordered the reinstatement of three (3)
salesmen.

HELD:

(1) NO. x x x The procedure for a representation case is outlined in Arts. 257-260 of the
Labor Code, in relation to the provisions on cancellation of a Union registration under Arts.
239-240 thereof, the main purpose of which is to aid in ascertaining majority representation.
The requirements under the law, specifically Secs. 2, 5, and 6 of Rule V, Book V, of the Rules
Implementing the Labor Code are all calculated to ensure that the certified bargaining
representative is the true choice of the employees against all contenders. The Constitutional
mandate that the State shall "assure the rights of the workers to self-organization, collective
bargaining, security of tenure and just and humane conditions of work," should be achieved
under a system of law such as the aforementioned provisions of the pertinent statutes. When
an overzealous official by-passes the law on the pretext of retaining a laudable objective, the
intendment or purpose of the law will lose its meaning as the law itself is disregarded. When
respondent Minister directly certified the Union, he in fact disregarded this procedure and its
legal requirements. There was therefore failure to determine with legal certainty whether the
Union indeed enjoyed majority representation. Contrary to the respondent Minister's
observation, the holding of a certification election at the proper time is not necessarily a mere
formality as there was a compelling legal reason not to directly and unilaterally certify a union
whose legitimacy is precisely the object of litigation in a pending cancellation case filed by
certain "concerned salesmen," who also claim majority status. Even in a case where a union
has filed a petition for certification elections, the mere fact that no opposition is made does not
warrant a direct certification. More so as in the case at bar, when the records of the suit show
that the required proof was not presented in an appropriate proceeding and that the basis of
the direct certification was the Union's mere allegation in its position paper that it has 87 out
of 117 regular salesmen. In other words, respondent Minister merely relied on the self-serving
assertion of the respondent Union that it enjoyed the support of the majority of the salesmen,
without subjecting such assertion to the test of competing claims.

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(2) NO. The order of the respondent Minister to reinstate the employees despite a clear
finding of guilt on their part is not in conformity with law. Reinstatement is simply
incompatible with a finding of guilt. Where the totality of the evidence was sufficient to warrant
the dismissal of the employees the law warrants their dismissal without making any distinction
between a first offender and a habitual delinquent. Under the law, respondent Minister is duly
mandated to equally protect and respect not only the labor or workers' side but also the
management and/or employers' side. The law, in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the employer. To order the reinstatement of the
erring employees namely, Mejia, Sayson and Reynante would in effect encourage unequal
protection of the laws as a managerial employee of petitioner company involved in the same
incident was already dismissed and was not ordered to be reinstated. As stated by Us in the
case of San Miguel Brewery vs. National Labor Union, "an employer cannot legally be compelled
to continue with the employment of a person who admittedly was guilty of misfeasance or
malfeasance towards his employer, and whose continuance in the service of the latter is
patently inimical to his interest."

Submitted by: Del Rosario, Eunice

Mendoza
vs.
Rural Bank of Lucban,
433 SCRA 756, G.R. No. 155421 July 7, 2004

DOCTRINE: Labor Law; Dismissals; Transfer; Labor laws discourage interference in employers‘
judgments concerning the conduct of their business.—Jurisprudence recognizes the exercise of
management prerogatives. For this reason, courts often decline to interfere in legitimate
business decisions of employers. Indeed, labor laws discourage interference in employers‘
judgments concerning the conduct of their business. The law must protect not only the welfare
of employees, but also the right of employers.
The right of employees to security of tenure does not give them vested rights to their positions
to the extent of depriving management of its prerogatives to change their assignments or to
transfer them; Managerial prerogatives, however, are subject to limitations provided by law,
collective bargaining agreements are general principles of fair play and justice.—In the pursuit
of its legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another—provided there is no demotion in
rank or diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. This privilege is inherent in the right of employers to control and manage their
enterprise effectively. The right of employees to security of tenure does not give them vested
rights to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. Managerial prerogatives, however, are subject to limitations
provided by law, collective bargaining agreements, and general principles of fair play and
justice.

FACTS: A Board Resolution was passed subjecting all the officers and employees to the
reshuffling of assignment. Among thos affected by this resolution was Elmer Mendoza,
petitioner, as Appraiser Clerk – Melarco Collection without changes in salary, allowances and
other benefits received by the concerned employees. Mendoza sent a letter expressing his
opinion ion the new ssignment, alleging that his present position, that as an Appraiser that will
be changed to Clerk-Merlaco Collection is a form of demotion without legal basis which
constitutes an unfair labor practice.

ISSUE: Whether or not the reshuffling of the employees was done in good faith

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HELD: YES.

The test for determining the validity of the transfer of employees was explained in Blue Dairy
Corporation v. NLRC as follows: ―[L]ike other rights, there are limits thereto. The managerial
prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing
in mind the basic elements of justice and fair play. Having the right should not be confused
with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by
the employer to rid himself of an undesirable worker. In particular, the employer must be able
to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.
Should the employer fail to overcome this burden of proof, the employee‘s transfer shall be
tantamount to constructive dismissal, which has been defined as a quitting because continued
employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion
in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear
discrimination, insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued employment.‖
Petitioner‘s transfer was made in pursuit of respondent‘s policy to ―familiarize bank employees
with the various phases of bank operations and further strengthen the existing internal control
system‖ of all officers and employees. We have previously held that employees may be
transferred—based on their qualifications, aptitudes and competencies—to positions in which
they can function with maximum benefit to the company. There appears no justification for
denying an employer the right to transfer employees to expand their competence and maximize
their full potential for the advancement of the establishment. Petitioner was not singled out;
other employees were also reassigned without their express consent.

Submitted by: Chen, Timothy

Right to ROI

GELMART INDUSTRIES PHILS., INC., petitioner,

vs.
THE HON. NATIONAL LABOR RELATIONS COMMISSION AND FELIX FRANCIS,
respondents.
G.R. No. 85668 August 10, 1989
FIRST DIVISION

DOCTRINE: The policy of the State, as embodied in the Constitution, to resolve all doubts in
favor of labor.
FACTS: Private respondent Felix Francis started working as an auto-mechanic for petitioner
Gelmart Industries Phils., Inc. (GELMART) sometime in 1971. As such, his work consisted of
the repair of engines and underchassis, as well as trouble shooting and overhauling of
company vehicles. He is likewise entrusted with some tools and spare parts in furtherance of
the work assigned to him.

On April 11, 1987, private respondent was caught by the security guards taking out of
GELMART's premises one (1) plastic container filled with about 16 ounces of "used' motor oil,
without the necessary gate pass to cover the same as required under GELMART's rules and
regulations. By reason thereof, petitioner, on April 13, 1987, was placed under preventive
suspension pending investigation for violation of company rules and regulations. Under the
said rules, theft and/or pilferage of company property merits an outright termination from
employment.

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After due investigation, or on May 20, 1987, private respondent was found guilty of theft of
company property. As a consequence, his services were severed.

Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a
decision dated February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private
respondent was illegally dismissed.

The ground relied upon by the labor arbiter in her decision is worth quoting hereunder, to wit:
The most important aspect that should be considered in interpreting this rule (referring to the
company's rules on theft and pilferages) is the deprivation of the company of property
belonging to it without any compensation. Hence, the property that must be stolen or pilfered
must be property which has value.

In the respondent company, ... the used oil is thrown away by the mechanics. ... In other
words, the taking by complainant of the subject 16 ounces of used oil did not deprive the
respondent company of anything. As it appears, the said used oil for as part of the waste that
should be thrown away and the respondent company had no use for the same, hence, the
respondent company was not deprived of any property ... and, therefore, and (sic) it is the
position of this Labor Arbiter that there was no stealing or pilferage to speak of

GELMART interposed an appeal with the NLRC. The NLRC affirmed with modification the
ruling of Labor Arbiter Diosana, as follows:

―We do not fully concur with the findings of the Labor Arbiter. Complainant-appellee's
suspension prior to termination had sufficient basis. We disagree with the conclusion that
complainant-appellee did not violate respondent-appellant's rule requiring a gate pass for
taking out company property as the used motor oil was not really in a sense ' property'
considering that it was plain waste and had no commercial value. ... Used motor oil is not plain
waste because it had its use to respondent-appellant's motor pool. ... Besides, it is not for
complainant-appellee to interpret the rule according to his own understanding. Respondent
appellant had the right to interpret the rule and ... to exact discipline ... in the light of its policy
to instill discipline on its 6,000 workforce.‖

―We find however, complainant-appellee's dismissal unwarranted. ... The penalty of preventive
suspension was sufficient punishment for the violation under the circumstances. ... 12
(Emphasis supplied)‖

Petitioner assails the NLRC decision on the ground that the same is contrary to existing
jurisprudence, particularly citing in support thereof Firestone Tire and Rubber Co. of the Phil.
vs. Lariosa 14 Petitioner contends that by virtue of this ruling they have the right to dismiss
private respondent from employment on the ground of breach of trust or loss of confidence
resulting from theft of company property.

ISSUE: WON petitioner have the right to dismiss private respondent from employment on the
ground of breach of trust or loss of confidence resulting from theft of company property.

HELD: No.

There is nothing in Firestone which categorically gives management an unhampered right in

terminating an employee's services. The, decision in Firestone specifically focuses only on the
legality of a dismissal by reason of acts of dishonesty in the handling of company property for
what was involved in that case is theft of sixteen flannel swabs which were supposed to be
used to clean certain machineries in the company. In fact, a careful review of the cases cited in
Firestone will readily reveal that the underlying reason behind sustaining the personam. of

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dismissal or outright termination is that, under the circumstances obtaining in those cases,
there exists ample reason to distrust the employees concerned.

Thus, in upholding the dismissal of a cashier found guilty of misappropriating corporate funds,
this Court, in Metro Drug," made, a distinction between managerial personnel and-in other
employees occupying positions of trust and-in confidence from ordinary employees. On the
other hand, in Dole Philippines, this Court spoke of the "nature of participation" which
renders one absolutely unworthy of the trust and-in confidence demanded by the position in
upholding the dismissal of employee found guilty of illegally selling for their philosophy benefit
two (2) drums of crude oil belonging to the company. Additionally, in Firestone, it clearly
appears that to retain the employee would "[i]n the long run, endanger the company's viability.
19

The, Court rules that these circumstances are not present in this instant case.

Contrary to the assertion of petitioner, the ruling in Firestone does not preclude the NLRC from
looking into the particular facts of the case to determine if there is ample reason to dismiss an
employee charged and subsequently found guilty of theft of company property. The, said
decision cannot be deemed as a limitation on the right of the State in the exercise of its
paramount police power to regulate or temper the prerogative of management to dismiss an
erring employee. Consequently, even when there exists some rules agreed upon between the
employer and-in the employee, it cannot preclude the State from inquiring on whether or not
its rigid application would work too harshly on the employee.

Considering that private respondent herein has no previous derogatory record in his fifteen (15)
years of service with petitioner GELMART the value of the property pilfered (16 ounces of used
motor oil) is very minimal, plus the fact that petitioner failed to reasonably establish that non-
dismissal of private respondent would work undue prejudice to the viability of their operation
or is patently inimical to the company's interest, it is more in consonance with the policy of the
State, as embodied in the Constitution, to resolve all doubts in favor of labor.

Submitted by: Escol, Hanzel Grace

Right to Prescribe Rules

ROMEO LAGATIC
VS.
NLRC
GR. NO. 121004, JANUARY 28, 1998
THIRD DIVISION

FACTS: Petitioner Romeo Lagatic an employee of Cityland, first as a probationary sales agent,
and later on as a marketing specialist. He was tasked with soliciting sales for the company,
with the corresponding duties of accepting call-ins, referrals, and making client calls and cold
calls. Cold calls refer to the practice of prospecting for clients through the telephone directory
and Cityland is requiring their employees to submit daily progress reports on the said task.
On October 22, 1991, Cityland issued a written reprimand to petitioner for his failure to
submit cold call reports for September 10, October 1 and 10, 1991. This notwithstanding,
petitioner again failed to submit cold call reports for September 2, 5, 8, 10, 11, 12, 15, 17, 18,
19, 20, 22, and 28, as well as for October 6, 8, 9, 10, 12, 13 and 14, 1992. Petitioner was
required to explain his inaction, with a warning that further non-compliance would result in
his termination from the company. In a reply dated October 18, 1992, petitioner claimed that

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the same was an honest omission brought about by his concentration on other aspects of his
job. Cityland found said excuse inadequate and, on November 9, 1992, suspended him for
three days, with a similar warning.

Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold
call reports for February 5, 6, 8, 10 and 12, 1993. He was verbally reminded to submit the
same and was even given up to February 17, 1993 to do so. Instead of complying with said
directive, petitioner, on February 16, 1993, wrote a note, TO HELL WITH COLD CALLS! WHO
CARES? and exhibited the same to his co-employees. To worsen matters, he left the same lying
on his desk where everyone could see it.
On February 23, 1993, petitioner received a memorandum requiring him to explain why
Cityland should not make good its previous warning for his failure to submit cold call reports,
as well as for issuing the written statement aforementioned. On February 24, 1993, he sent a
letter-reply alleging that his failure to submit cold call reports should not be deemed as gross
insubordination. He denied any knowledge of the damaging statement, TO HELL WITH COLD
CALLS!

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon
him on February 26, 1993. Aggrieved by such dismissal, petitioner filed a complaint against
Cityland for illegal dismissal, illegal deduction, underpayment, overtime and rest day pay,
damages and attorney‘s fees.

PRINCIPLE/S:
To constitute a valid dismissal from employment, two requisites must be met, namely: 1) the
employee must be afforded due process, and (2) the dismissal must be for a valid cause.
ISSUE/S:
1. Whether or not respondent NLRC gravely abused its discretion in not finding that petitioner
was illegally dismissed;
2. Whether or not respondent NLRC gravely abused its discretion in ruling that petitioner is not
entitled to salary differentials, back wages, separation pay, overtime pay, rest day pay, unpaid
commissions, moral and exemplary damages and attorney‘s fees.
HELD:

1. No. Petitioners failure to comply with Citylands policy of requiring cold call reports is clearly
willful, given the 28 instances of his failure to do so, despite a previous reprimand and
suspension. More than that, his written statement shows his open defiance and disobedience
to lawful rules and regulations of the company. Likewise, said company policy of requiring cold
calls and the concomitant reports thereon is clearly reasonable and lawful, sufficiently known
to petitioner, and in connection with the duties which he had been engaged to discharge. There
is, thus, just cause for his dismissal.

Petitioner was notified of the charges against him in a memorandum dated February 19, 1993,
which he received on February 23, 1993. He submitted a letter-reply thereto on February 24,
1993, wherein he asked that his failure to submit cold call reports be not interpreted as gross
insubordination. He was given notice of his termination on February 26, 1993. This chronology
of events clearly show that petitioner was served with the required written notices.
Petitioner had an opportunity to be heard as he submitted a letter-reply to the charge. He,
however, adduced no other evidence on his behalf. In fact, he admitted his failure to submit
cold call reports, praying that the same be not considered as gross insubordination. As held by
this Court in Bernardo vs. NLRC, there is no necessity for a formal hearing where an employee
admits responsibility for an alleged misconduct. As to the written statement, TO HELL WITH
COLD CALLS!, petitioner merely denied knowledge of the same. He failed to submit
controverting evidence thereon although the memorandum of February 19, 1993, clearly
charged that he had shown said statement to several sales personnel. Denials are weak forms
of defenses, particularly when they are not substantiated by clear and convincing evidence.

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Given the foregoing, we hold that petitioners constitutional right to due process has not been
violated.

2. No. There is no law which requires employers to pay commissions, and when they do so, as
stated in the letter-opinion of the Department of Labor and Employment dated February 19,
1993, there is no law which prescribes a method for computing commissions. The
determination of the amount of commissions is the result of collective bargaining negotiations,
individual employment contracts or established employer practice. Since the formula for the
computation of commissions was presented to and accepted by petitioner, such prescribed
formula is in order. As to the allegation that said formula diminishes the benefits being
received by petitioner whenever there is a wage increase, it must be noted that his
commissions are not meant to be in a fixed amount. In fact, there was no assurance that he
would receive any commission at all. Non-diminution of benefits, as applied here, merely
means that the company may not remove the privilege of sales personnel to earn a commission,
not that they are entitled to a fixed amount thereof.

To petitioner‘s claims for overtime pay, rest day pay and holiday premiums, Cityland maintains
that Saturday and Sunday call-ins were voluntary activities on the part of sales personnel who
wanted to realize more sales and thereby earn more commissions. It is their contention that
sales personnel were clamoring for the privilege to attend Saturday and Sunday call-ins, as
well as to entertain walk-in clients at project sites during weekends, that Cityland had to
stagger the schedule of sales employees to give everyone a chance to do so. But
simultaneously, Cityland claims that the same were optional because call-ins and walk-ins
were not scheduled every weekend.

As correctly pointed out by petitioner, said D. O. was misapplied in this case. The D. O.
involves the shortening of the workweek from six days to five days but with prolonged hours on
those five days. Under this scheme, non-payment of overtime premiums was allowed in
exchange for longer weekends for employees. In the instant case, petitioner‘s workweek was
never compressed. Instead, he claims payment for work over and above his normal 5 days of
work in a week. Applying by analogy the principle that overtime cannot be offset by undertime,
to allow off-setting would prejudice the worker. He would be deprived of the additional pay for
the rest day work he has rendered, and which is utilized to offset his equivalent time off on
regular workdays. To allow Cityland to do so would be to circumvent the law on payment of
premiums for rest day and holiday work.

Petitioner failed to show his entitlement to overtime and rest day pay due, to the lack of
sufficient evidence as to the number of days and hours when he rendered overtime and rest
day work. Entitlement to overtime pay must first be established by proof that said overtime
work was actually performed, before an employee may avail of said benefit. To support his
allegations, petitioner submitted in evidence minutes of meetings wherein he was assigned to
work on weekends and holidays at Citylands housing projects. Suffice it to say that said
minutes do not prove that petitioner actually worked on said dates. It is a basic rule in
evidence that each party must prove his affirmative allegations. This petitioner failed to do. He
explains his failure to submit more concrete evidence as being due to the decision rendered by
the labor arbiter without resolving his motion for the production and inspection of documents
in the control of Cityland. Petitioner conveniently forgets that on January 27, 1994, he agreed
to submit the case for decision based on the records available to the labor arbiter. This
amounted to an abandonment of above-said motion, which was then pending resolution.
Lastly, with the finding that petitioner‘s dismissal was for a just and valid cause, his claims for
moral and exemplary damages, as well as attorney‘s fees, must fail.

Submitted by: Elauria, J. Paulo Relunia

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CHINA BANKING CORPORATION, Petitioner,

vs.
MARIANO M. BORROMEO, Respondent.
G.R. No. 156515 October 19, 2004
(Second Division)

DOCTRINE: It is well recognized that company policies and regulations are, unless shown to
be grossly oppressive or contrary to law, generally binding and valid on the parties and must be
complied with until finally revised or amended unilaterally or preferably through negotiation or
by competent authority. Moreover, management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers pursuant to company rules and
regulations. With more reason should these truisms apply to the respondent, who, by reason of
his position, was required to act judiciously and to exercise his authority in harmony with
company policies.

FACTS: Respondent was the Branch Manager of the petitioner Bank branch. From 1989 to
1996, respondent received high satisfaction rating until he was promoted as Assistant Vice
President of the Mindanao area. However, prior to his last promotion and then unknown to the
petitioner Bank, the respondent, without authority from the Executive Committee or Board of
Directors, approved several DAUD/BP accommodations in favor of Joel Maniwan, with
Edmundo Ramos as surety. DAUD/BP is the acronym for checks Drawn Against Uncollected
Deposits/Bills Purchased. Such checks, which are not sufficiently funded by cash, are
generally not honored by banks. Under the petitioner Banks standard operating procedures,
DAUD/BP accommodations may be granted only by a bank officer upon express authority from
its Executive Committee or Board of Directors.

As a result, ten out-of-town checks were returned unpaid. Each of the returned checks was
stamped with the notation Payment Stopped/Account Closed.
Respondent wrote a Memorandum to the petitioner Banks senior management requesting for
the grant of loan to Maniwan. It was only then that the petitioner Bank came to know of the
DAUD/BP accommodations in favor of Maniwan. The petitioner Bank further learned that
these DAUD/BP accommodations exceeded the limit granted to clients, were granted without
proper prior approval and already past due.

The respondent, however, vehemently denied benefiting therefrom. In his Letter dated April 30,
1997, the respondent formally tendered his irrevocable resignation effective May 31, 1997.

In a Memorandum, the respondent was informed that his approval of the DAUD/BP
accommodations without authority violated the petitioner Banks Code of Ethics. As such, he
was directed to restitute 90% of the total loss incurred by the petitioner Bank. However, he was
again informed him that the management would withhold his separation pay, mid-year bonus
and profit sharing. Said amount would be released upon recovery of the sums demanded from
Maniwan.

Consequently, the respondent, made a demand for the payment of his separation pay and
other benefits. The petitioner Bank maintained its position to withhold the sum. Thus, the
respondent filed with NLRC, the complaint for payment of separation pay, mid-year bonus,
profit share and damages against the petitioner Bank.

The Labor Arbiter dismissed the respondents complaint ruling that he, an officer of the Bank,
had committed a serious infraction

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Aggrieved, the respondent appealed to the National Labor Relations Commission. However, the
NLRC, dismissed the appeal as it affirmed in toto the findings and conclusions of the Labor
Arbiter. Motion for Reconsideration was likewise denied.

On appeal, the CA found merit in the respondents contention that he was deprived of his right
to due process as no administrative investigation was conducted by it prior to its act of
withholding the respondents separation pay and other benefits. CA denied the petitioner‘s
motion for reconsideration. Hence, petition.

ISSUE: Whether the respondent pledged his benefits as guarantee for the losses the bank
incurred resulting from the unauthorized DAUD/BP accommodations in favor of Maniwan.

HELD: The petition is meritorious.

It is well recognized that company policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and valid on the parties and must be complied
with until finally revised or amended unilaterally or preferably through negotiation or by
competent authority. Moreover, management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers pursuant to company rules and
regulations. With more reason should these truisms apply to the respondent, who, by reason of
his position, was required to act judiciously and to exercise his authority in harmony with
company policies.

Contrary to the respondents contention that the petitioner Bank could not properly impose the
accessory penalty of restitution on him without imposing the principal penalty of Written
Reprimand/Suspension, the latters Code of Ethics expressly sanctions the imposition of
restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in
view of his voluntary separation from the petitioner Bank, the imposition of the penalty of
reprimand or suspension would be futile. The petitioner Bank was left with no other recourse
but to impose the ancillary penalty of restitution. It was certainly within the petitioner Banks
prerogative to impose on the respondent what it considered the appropriate penalty under the
circumstances pursuant to its company rules and regulations.

Significantly, the respondent is not wholly deprived of his separation benefits. As the Labor
Arbiter stressed in his decision, the separation benefits due the respondent were merely
withheld. The NLRC made the same conclusion and was even more explicit as it opined that
the respondent is entitled to the benefits he claimed in pursuance to the Collective Bargaining
Agreement but, in the meantime, such benefits shall be deposited with the bank by way of
pledge.

It bears stressing that the respondent was not just a rank and file employee. His position
carried authority for the exercise of independent judgment and discretion, characteristic of
sensitive posts in corporate hierarchy. As such, he was, as earlier intimated, required to act
judiciously and to exercise his authority in harmony with company policies.

On the other hand, the petitioner Banks business is essentially imbued with public interest
and owes great fidelity to the public it deals with. It is expected to exercise the highest degree of
diligence in the selection and supervision of their employees. As a corollary, and like all other
business enterprises, its prerogative to discipline its employees and to impose appropriate
penalties on erring workers pursuant to company rules and regulations must be respected. The
law, in protecting the rights of labor, authorized neither oppression nor self-destruction of an
employer company which itself is possessed of rights that must be entitled to recognition and
respect. WHEREFORE, the petition is GRANTED.
Submitted by: Gumtang, Lianne

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Right to Select Employees

PAMPANGA BUS COMPANY, INC., petitioner,

vs.
PAMBUSCO EMPLOYEES' UNION, INC, respondent.
G.R. No. 46739, September 23, 1939
(EN BANC)

DOCTRINE: The general right to make a contract in relation to one's business is an essential
part of the liberty of the citizens protected by the due-process clause of the Constitution. The
right of the laborer to sell his labor to such person as he may choose is, in its essence, the
same as the right of an employer to purchase labor from any person whom it chooses

FACTS: On May 31, 1939, the Court of Industrial Relations issued an order, directing the
petitioner herein, Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco
Employees' Union, Inc., new employees or laborers it may need to replace members of the
union who may be dismissed from the service of the company, with the proviso that, if the
union fails to provide employees possessing the necessary qualifications, the company may
employ any other persons it may desire.

ISSUE: Whether or not the employer may be compelled to recruit from the respondent union

HELD: No, it cannot be compelled.

We hold that the court has no authority to issue such compulsory order. The general right to
make a contract in relation to one's business is an essential part of the liberty of the citizens
protected by the due-process clause of the Constitution. The right of the laborer to sell his
labor to such person as he may choose is, in its essence, the same as the right of an employer
to purchase labor from any person whom it chooses. The employer and the employee have thus
an equality of right guaranteed by the Constitution. "If the employer can compel the employee
to work against the latter's will, this is servitude. If the employee can compel the employer to
give him work against the employer's will, this is oppression."
Submitted by: Gonzales, Van Angelo G.

Right to Transfer or Discharge Employees

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

vs.
ARSENIO C. ROLDAN, ET AL., Respondents.
97 Phil. 304, G.R. No. L-6846. July 20, 1955.

DOCTRINE: EMPLOYER AND EMPLOYEE; UNFAIR LABOR PRACTICE; LAY OFF;

RETRENCHMENT POLICY.—The laying off of employees due to the retrenchment policy
adopted by a company in order to reduce the overcapitalization and minimize expenses and as
a consequence the volume of business is considerably reduced particularly when it is not
aimed at the Union or any of its members for union or labor activities, is not an unfair labor
practice.

FACTS: Gregorio Araneta, Inc. adopted a retrenchment policy after refusal of Heacock and
Company to invest in their company to reduce overcapitalization. 17 employees were laid off in
the process as a result but one employee refused to receive the 1 month separation pay which

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all the others accepted the same. The policy was adopted by the board of directors of the
company before its employees union was formed and thus, it was never directed against them.
The Court of Industrial Relations ruled in favor of the company but later on modified by its en
banc court rendering the legality of the laying off of one employee who refused to accept the
separation pay.

ISSUE: Whether the termination of the employees is valid.

HELD: Yes.

We find no reason for disturbing the decision of the Court of Industrial Relations, en
banc. The laying off of the 17 employees was due to the retrenchment policy which the
Company had to adopt in order to reduce the overcapitalization and minimize expenses. The
volume of business was considerably reduced.

It should be noted that the retrenchment policy was adopted before even the organization of the
petitioning union. It was not, therefore, aimed at the Union or any of its members for union or
labor activities. It was not an unfair labor practice.
Submitted by: Gusi, Audrey Rose B.

PHILIPPINE STEEL METAL WORKERS’ UNION V. CIR

G.R. NO. L-2028 APRIL 28, 1949
REYES, J.

DOCTRINE: The right to reduce personnel should, of course, not be abused. It should not be
made a pretext for easing out laborers on account of their union activities. But neither should
it be denied when it shows that they are not discharging their duties in a manner consistent
with good discipline and the efficient operation of an industrial enterprise.

FACTS: This is a petition for certiorari to review an order of the Court of Industrial Relations
on the ground that the same was rendered in excess of jurisdiction and with grave abuse of
discretion. On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of
Labor Relations (BLR) on ground of unfair labor practice consisting of alleged refusal to
bargain, dismissal of union officers/members; and coercing employees to retract their
membership with the union and restraining non-union members from joining the union. The
said order was issued of said court involving an industrial dispute between the respondent
company (a corporation engaged in the manufacture of tin plates, aluminum sheets, etc.) and
its laborers some of whom belong to the Philippine Sheet Metal Workers' Union (CLO) and some
to the Liberal Labor Union. The dispute was over certain demands made upon the company by
the laborers, one of the demands, being for the recall of eleven workers who had been laid off.

Temporarily taken back on certain conditions pending final determination of the controversy,
these eleven workers were in the end ordered retained in the decision handed down by the
court on February 19, 1947.The petitioner tried to prove that the 11 laborers were laid off by
the respondent company due to their union activities. On February 10, 1947, that is, nine days
before the decision came down, filed a motion in the case, asking for authority to lay off at least
15 workers in its can department on the ground that the installation and operation of nine new

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labor-saving machines in said department had rendered the services of the said workers
unnecessary.

ISSUE: Whether or not the firing of the laborers due to their union activities is valid.

HELD: YES.

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

Submitted by: Jabal, Joel Malcolm D.

TIONG KING, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and THE NATIONAL
TAILOR'S ASSOCIATION, respondents.
G.R. No. L-3587 December 21, 1951
EN BANC

FACTS: Gaw Pun So, the previous owner of a tailor shop known as the Army Shirt Factory,
entered into a transfer agreement in January 1948 with Tiong King wherein the operation of
the shop will be taken over by the latter. The said transfer was put into writing and thus Tiong
King continued the business and put up a capital of P7,000 from February with the same
employees of Gaw Pun So. With such arrangement, Gaw Pun So, in a labor dispute against him
by the employees, asked court to implead Tiong King as respondent. Tiong King then entered
a separate agreement with National Tailors Association (NTA) wherein they agreed to have all
cases terminated against him and such agreement was duly approved by the CIR. On April 27,
1948, Tiong King filed a petition in the CIR to close the businessdue to losses resulting to veryy
little of the capital originally invested remained. However, presiding Judge Arsenio C. Roldan of
the CIR issued an order enjoining Tiong King not to close his factory and not to dismiss,
suspend or lay off any laborer or employee without previous authority of said court. A decision
made on January 13, 1949 by CIR was later rendered dismissing his petition and ordering him
to pay the salary of personel from his closure last May to the date of decision. The decision was
reversed in the motion for reconsideration, allowing Tiong to close his business but was later

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on reversed upon motion for reconsideration of NTA, wherein Judge Roldan reaffirmed their
first decision of prohibiting Tiong to close his business.

ISSUE #1: Whether or not Tiong is the owner or operator of Army Shirt Factory and had the
right to file the petition in the CIR to close the same?

ISSUE #2: Whether or not Tiong‘s may close down his business due to justifiable reasons?

HELD #1: YES

Upon this point, it is only sufficient to recall that the National Tailors Association entered into
a stipulation with Tiong King alone whereby they agreed that all cases against the former
owners of the business were terminated. That Tiong King was conceded to be the owner and
operator of the army shirt factory at the time his petition to close it was filed, is conclusively
borne out by the fact that Presiding Judge Roldan in his decision of January 13, 1949, ordered
Tiong King, and not Gaw Pun So, to pay the salaries and wages of the personnel.l It is
contended, however, that "If at all the court has approved of the agreement between the
National Tailors' Association and Mr. Tiong King it was because — 'this arrangement is a very
good solution to the present conflict as it is advantageous not only to the union but also the
management, and, is in consonance with the contract entered into between the management
and the new workers." This contention is followed with the remark that the approval of said
agreement did not include a finding that Tiong King was either the owner or the lessee of the
Army Shirt Factory. We are unable to agree. In entering into the agreement with the National
Tailors Association, Tiong King acted in his own behalf, regardless of the former owners of the
business. Indeed, it was covenanted that all the cases against the latter were deemed
terminated. Considerations of fair play and justice demand that Tiong King be given the full
legal effect of said agreement which before the sanction of the Court of Industrial Relations.

HELD #2: YES.

There being no question that Tiong King's capital invested in the Army Shirt Factory was
almost exhausted at the time of the filing of his petition to close it, said petition must necessity
be granted. It is admitted by all the Judges of the Court of Industrial Relations that an
employer may close his business, provided the same is done in good faith and is due beyond
his control. To rule otherwise, would be oppressive and inhuman.

Submitted by: Mamangon, Fatima C.

ROLDAN, Petitioner,
vs.
CEBU PORTLAND CEMENT CO. INC, Respondent.
G.R. No. 24276-R May 20, 1960

HELD: The hiring, firing, transfer, demotion and promotion of employees has been
tradi¬tionally identified as a management prero¬gative. This is a function associated with the
employer's inherent right to control and manage effectively its enterprise. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied. This
exercise finds support not only in actual management practice but has become a part of our
jurisprudence in labor relations law where, in a number of cases brought before the Supreme
Court, the highest tribunal ruled in one of these cases.
Submitted by: Lim, Anton Kristoffer M.

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Article 5: Rules and Regulations

RIZAL EMPIRE INSURANCE GROUP AND/OR SERGIO CORPUS, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TEODORICO L. RUIZ, as Labor Arbiter and
ROGELIO R. CORIA, respondents.
G.R. No. 73140, May 29, 1987
(Second Division)

DOCTRINE: Administrative regulations and policies enacted by administrative bodies to

interpret the law which they are entrusted to enforce, have the force of law, and are entitled to
great respect.

FACTS: In August, 1977, private respondent Rogelio R. Coria was hired by herein petitioner
Rizal Empire Insurance Group as a casual employee and was subsequently made a regular
employee.

On October 15, 1983, private respondent Rogelio R. Coria was dismissed from work, allegedly,
on the grounds of tardiness and unexcused absences. Accordingly, he filed a complaint with
the Ministry of Labor and Employment (MOLE), and in a Decision dated March 14, 1985, Labor
Arbiter Teodorico L. Ruiz reinstated him to his position with back wages. The record shows that
the employer (petitioner herein) received a copy of the decision of the Labor Arbiter on April 1,
1985. It filed a Motion for Extension of Time to File Memorandum of Appeal on April 11, 1985
and filed the Memorandum of Appeal on April 22, 1985. Pursuant to the "no extension policy"
of the National Labor Relations Commission, aforesaid motion for extension of time was denied
in its resolution dated November 15, 1985 and the appeal filed with the National Labor
Relations Commission (NLRC) was dismissed for having been filed out of time. Hence, the
instant petition.

ISSUE: Whether or not it is still within the jurisdiction of this Court to review.

HELD: No, the Court no longer has a jurisdiction to review the decision of the NLRC.

Rule VIII of the Revised Rules of the National Labor Relations Commission on appeal, provides:

SECTION 1. (a) Appeal. — Decision or orders of a labor Arbiter shall be final and executory unless
appealed to the Commission by any or both of the parties within ten (10) calendar days from
receipt of notice thereof.
xxx xxx xxx
SECTION 6. No extension of period. — No motion or request for extension of the period within
which to perfect an appeal shall be entertained.

Petitioners invoked the Rules of Court provision on liberal construction of the Rules in the
interest of substantial justice. It will be noted however, that the provision refers to the Rules of
Court. On the other hand, the Revised Rules of the National Labor Relations Commission are
clear and explicit and leave no room for interpretation.

Moreover, it is an elementary rule in administrative law that administrative regulations and

policies enacted by administrative bodies to interpret the law which they are entrusted to
enforce, have the force of law, and are entitled to great respect

Under the above-quoted provisions of the Revised NLRC Rules, the decision appealed from in
this case has become final and executory and can no longer be subject to appeal.

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Even on the merits, the ruling of the Labor Arbiter appears to be correct; the consistent
promotions in rank and salary of the private respondent indicate he must have been a highly
efficient worker, who should be retained despite occasional lapses in punctuality and
attendance. Perfection cannot after all be demanded.
Submitted by: Mayoralgo, Remy

Philippine Association of Service Exporters, Inc. vs. Drilon,

163 SCRA 386, No. L-81958 June 30, 1988

DOCTRINE: Constitutional Law; Labor Laws: Deployment Ban of Female Domestic Helper;
Concept of Police Power.—The concept of police power is well-established in this jurisdiction. It
has been defined as the "state authority to enact legislation that may interfere with personal
liberty or property in order to promote the general welfare." As defined, it consists of (1) an
imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not
capable of an exact definition but has been, purposely, veiled in general terms to underscore its
all-comprehensive embrace. "Its scope, ever-expanding to meet the exigencies of the times, even
to anticipate the future where it could be done, provides enough room for an efficient and
flexible response to conditions and circumstances thus assuring the greatest benefits."

FACTS: The petitioner, Philippine Association of Service Exporters, Inc., a firm "engaged
principally in the recruitment of Filipino workers, male and female, for overseas placement,"
challenges the constitutionality of Department Order No. 1, Series of 1988, of DOLE in the
character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT
OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS,".

PASEI contends that there has been an invalid exercise of the lawmaking power, police power
being legislative, and not executive, in character.

ISSUE: Whether or not the assailed administrative issuance is valid under the Constitution.

HELD: Yes. Police Power has been defined as the "state authority to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare." As defined,
it consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the
common good.

As a general rule, official acts enjoy a presumed validity. In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be
nullified. It is true that police power is the domain of the legislature, but it does not mean that
such an authority may not be lawfully delegated. The Labor Code itself vests the DOLE with
rulemaking powers in the enforcement whereof.

This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of
Government regulation. The interest of the State is to provide a decent living to its citizens.

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CBTC EMPLOYEES UNION, petitioner,

vs.
THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant, and
COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES, respondents.
G.R. No. L-49582 January 7, 1986
FIRST DIVISION

DOCTRINE: An administrative interpretation which diminishes the benefits of labor more than
what the statute delimits or withholds is obviously ultra vires.

FACTS: Petitioner Commercial Bank and Trust Company Employees' Union lodged a complaint
against private respondent bank (Comtrust) for non-payment of the holiday pay benefits
provided for under Article 95 of the Labor Code in relation to Rule X, Book III of the Rules and
Regulations Implementing the Labor Code. The issue presented was: "Whether the permanent
employees of the Bank within the collective bargaining unit paid on a monthly basis are
entitled to holiday pay effective November 1, 1974, pursuant to Article 95 (now Article 94) of
the Labor Code, as amended and Rule X (now Rule IV), Book III of the Rules and Regulations
Implementing the Labor Code. The Labor Arbiter ruled that all the monthly-paid employees of
the Bank as governed by their Collective Bargaining Agreement, are entitled to the holiday pay
benefits as provided for in Article 94 of the labor Code and as implemented by Rule IV, Book III,
of the corresponding implementing Rules, except for any day or any longer period designated
by law or holding a general election or referendum.

The following day, the Department of Labor released Policy Instructions No. 9 which states that
if the monthly paid employee is receiving not less than P 240, the maximum monthly minimum
wage, and his monthly pay is uniform from January to December, he is presumed to be already
paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary
on account of holidays in months where they occur, then he is still entitled to the ten (10) paid
legal holidays. The respondents then appealed to the National Labor Relations Commission
(NLRC), contending that the Arbitrator demonstrated gross incompetence and/or grave abuse
of discretion when he entirely premised the award on the Chartered Bank case and failed to
apply Policy Instructions No. 9.

The case reached the CA and the Acting Secretary of Labor reversed the NLRC decision. On the
principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions No. 9, applied
the same retrospectively.

ISSUE: Was the acting Secretary correct?

HELD: No.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, this Court's
Second Division, speaking through former Justice Makasiar, expressed the view and declared
that the section and interpretative bulletin are null and void, having been promulgated by the
then Secretary of Labor in excess of his rule-making authority. It was pointed out, inter alia,
that in the guise of clarifying the provisions on holiday pay, said rule and policy instructions in
effect amended the law by enlarging the scope of the exclusions. The then Secretary of Labor
went as far as to categorically state that the benefit is principally intended for daily paid
employees whereas the law clearly states that every worker shall be paid their regular holiday
pay-which is incompatible with the mandatory directive, in Article 4 of the Labor Code, that "all
doubts in the implementation and interpretation of the provisions of Labor Code, including its
implementing rules and regulations, shall be resolved in favor of labor." Thus, there was no
basis at all to deprive the union members of their right to holiday pay.

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In the case of The Chartered Bank Employees Association vs. Hon. Ople, the Court reiterated
that the questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's
Policy Instruction No. 9 add another excluded group, namely, 'employees who are uniformly
paid by the month'. While the additional exclusion is only in the form of a presumption that all
monthly paid employees have already been paid holiday pay, it constitutes a taking away or a
deprivation which must be in the law if it is to be valid. An administrative interpretation which
diminishes the benefits of labor more than what the statute delimits or withholds is obviously
ultra vires.
Submitted by: Nacilla, Nica Jenine O.

Article 6: Applicability
Government Corporations

NATIONAL HOUSING CORPORATION, petitioner,

vs.
BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS COMMISSION, respondents
G.R. No. L-64313, January 17, 1985
(EN BANC)

DOCTRINE: The Constitution provides for the organization or regulation of private

corporations only by "general law", expressly excluding government-owned or controlled
corporations, it follows that whenever the Constitution mentions government-owned or
controlled corporations, it must refer to those created by special law. P.D. No. 868 which
repeals all charters, laws, decrees, rules, and provisions exempting any branch, agency,
subdivision, or instrumentality of the government, including government- owned or controlled
corporations from the civil service law and rules is also cited to show that corporations not
governed by special charters or laws are not to be brought within civil service coverage.

FACTS: Private respondent (Benjamin C. Juco) was a project engineer of the National Housing
Corporation (NHC) from November 16, 1970 to May 14, 1975. For having been implicated in a
crime of theft and/or malversation of public funds involving 214 pieces of scrap G.I. pipes
owned by the corporation. Juco's services were terminated by (NHC) effective as of the close of
working hours on May 14, 1975.

Private respondent filed a complaint for illegal dismissal against petitioner (NHC) with Regional
Office No. 4, Department of Labor (now Ministry of Labor and Employment). He professed
innocence of the criminal acts imputed against him contending "that he was dismissed based
on purely fabricated charges purposely to harass him because he stood as a witness in the
theft case filed against certain high officials of NHC. NHC also filed its position paper alleging
that the Regional Office Branch IV, Manila, NLRC, "is without authority to entertain the case
for lack of jurisdiction, considering that the NHC is a government owned and controlled
corporation.

ISSUE: Whether or not the employees of the National Housing Corporation (NHC) covered by
the Labor Code.

HELD: No.

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The fact that "private" corporations owned or controlled by the government may be created by
special charter does not mean that such corporations not created by special law are not
covered by the civil service. Nor does the decree repealing all charters and special laws granting
exemption from the civil service law imply that government corporations not created by special
law are exempt from civil service coverage. These charters and statutes are the only laws
granting such exemption and, therefore, they are the only ones which could be repealed. There
was no similar exempting provision in the general law which called for repeal. And finally, the
fact that the Constitutional Convention discussed only corporations created by special law or
charter cannot be an argument to exclude petitioner NHC from civil service coverage. As stated
in the cited speech delivered during the convention sessions of March 9, 1972, all government
corporations then in existence were organized under special laws or charters. The convention
delegates could not possibly discuss government-owned or controlled corporations which were
still non-existent or about whose existence they were unaware.

The NHC is a one hundred percent (100%) government-owned corporation organized in

accordance with Executive Order No. 399, the Uniform Charter of Government Corporations,
dated January 5, 1951. Its shares of stock are owned by the Government Service Insurance
System the Social Security System, the Development Bank of the Philippines, the National
Investment and Development Corporation, and the People's Homesite and Housing
Corporation. Pursuant to Letter of Instruction No. 118, the capital stock of NHC was increased
from P100 million to P250 million with the five government institutions above mentioned
subscribing in equal proportion to the increased capital stock. The NHC has never had any
private stockholders. The government has been the only stockholder from its creation to the
present.
Submitted by: Ocampo, Rhonald S.

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,

vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO,
respondents.
G.R. No. L-69870 November 29, 1988

DOCTRINE: The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations with
original charter. By implication, Labor Code applies to government-owned or controlled
corporations which are organized as subsidiaries of government-owned or controlled
corporations under the general corporation law.

FACTS: Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a
domestic corporation which provides security guards as well as messengerial, janitorial and
other similar manpower services to the Philippine National Bank (PNB) and its agencies. She
was first employed with NASECO as a lady guard on 18 July 1975. Through the years, she was
promoted to Clerk Typist, then Personnel Clerk until she became Chief of Property and
Records, on 10 March 1980. She was charged with an administrative case for non-compliance
with a company memo issued by her superior and for her disrespect to the latter in the present

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of her co-workers. NASECO's Committee on Personnel recommended Credo's termination, with

forfeiture of benefits. Hence, Credo filed a complaint for illegal dismissal. The Labor Arbiter
dismissed Credo‘s complaint and directed NASECO to pay her separation pay. Both appealed to
NLRC to which rendered a decision ordering NASECO to reinstate Credo and pay her
backwages but not granting Credo‘s claim for attorney‘s fees, moral and exemplary damages.
Hence, this appeal. NASECO contends that the NLRC has no jurisdiction to order Credo's
reinstatement. NASECO claims that, as a government corporation (by virtue of its being a
subsidiary of the National Investment and Development Corporation (NIDC), a subsidiary
wholly owned by the Philippine National Bank (PNB), which in turn is a government owned
corporation), the terms and conditions of employment of its employees are governed by the Civil
Service Law, rules and regulations.

ISSUE: Whether or not the Labor Code may apply to an illegal dismissal case between a
government owned and/or controlled corporation and its employee

HELD: Yes. On the premise that it is the 1987 Constitution that governs the instant case
because it is the Constitution in place at the time of decision thereof, the NLRC has jurisdiction
to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of
the PNB, the NASECO is a government-owned or controlled corporation without original
charter. The ruling in NCH vs. NLRC is not applied since it was governed by the 1973
Constitution. The Court ordered to: 1) reinstate Eugenia C. Credo to her former position at the
time of her termination, or if such reinstatement is not possible, to place her in a substantially
equivalent position, with three (3) years backwages, from 1 December 1983, without
qualification or deduction, and without loss of seniority rights and other privileges appertaining
thereto, and 2) pay Eugenia C. Credo P5, 000.00 for moral damages and P5, 000.00 for
attorney's fees.

If reinstatement in any event is no longer possible because of supervening events, NASECO is

ordered to pay Eugenia C. Credo, in addition to her backwages and damages as above
described, separation pay equivalent to one-half month's salary for every year of service, to be
computed on her monthly salary at the time of her termination on 1 December 1983.
Submitted by: Quevedo, Arrah Svetlana T.

Non-applicability to Government Agencies

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS DEVELOPMENT

COMMITTEE
Vs.
THE HON. COURT OF APPEALS and THE NATIONAL PARKS DEVELOPMENT
SUPERVISORY ASSOCIATION & THEIR MEMBERS,
G.R. No. 87676 December 20, 1989
FIRST DIVISION

FACTS: Petitioner National Parks Development Committee was originally created in 1963
under Executive Order No. 30, as the Executive Committee for the development of Quezon
Memorial, Luneta and other national parks. The Committee was registered with the SEC as a
non-stock and non-profit corporation. Due to failure to comply with SEC requirements NPDC
was attached to the Ministry of Tourism. Pursuant thereto, Civil Service Commission notified
NPDC that all appointments and other personnel actions shall be submitted to the former. The
Rizal Park Supervisory Employees Association was organized, and it affiliated with the Trade
Union of the Philippines and Allied Service (TUPAS, for brevity) under Certificate No. 1206.
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However, NPDC entered into a separate CBA with NPDCEA (TUPAS Local Chapter No. 967),
and NPDCSA (TUPAS Chapter No. 1206) for a period of two (2) years. Pursuant thereto, these
unions staged a strike alleging unfair labor practices by NPDC.

ISSUE: Whether or not government employees are governed by the labor code.

HELD: NO.

Since NPDC is a government agency, its employees are covered by civil service rules and
regulations (Sec. 2, Article IX, 1987 Constitution). Its employees are civil service employees
(Sec. 14, Executive Order No. 180).

While NPDC employees are allowed under the 1987 Constitution to organize and join unions of
their choice, there is as yet no law permitting them to strike. In case of a labor dispute between
the employees and the government, Section 15 of Executive Order No. 180 dated June 1, 1987
provides that the Public Sector Labor- Management Council, not the Department of Labor and
Employment, shall hear the dispute.
Submitted by: Paeste, Sonny Lybenson

Luzon Development Bank vs. Association of Luzon Development Bank Employees, 249
SCRA 162, G.R. No. 120319 October 6, 1995

DOCTRINE: B.P. 129; Jurisdiction; Appeals; The voluntary arbitrator performs a state function
pursuant to a governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term ―instrumentality‖ in
Sec. 9 of B.P. 129.—The voluntary arbitrator no less performs a state function pursuant
to a
governmental power delegated to him under the provisions therefor in the Labor Code and he
falls,therefore, within the contemplation of the term ―instrumentality‖ in the aforequoted Sec 9
of B.P. 129. The fact that his functions and powers are provided for in the Labor Code does not
place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as
contemplated therein. It will be noted that, although the Employees Compensation Commission
is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present
Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its
decisions to the Court of Appeals under the foregoing rationalization, and this was later
adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.

FACTS: From a submission agreement of the Luzon Development Bank (LDB) and the
Association of Luzon Development Bank Employees (ALDBE) arose an arbitration case to
resolve the following issue:―Whether or not the company has violated the Collective Bargaining
Agreement provision and theMemorandum of Agreement dated April 1994, on promotion.‖
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE‘s Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its
Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of
May 23, 1995 no Position Paper had been filed by LDB. On May 24, 1995, without LDB‘s
Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:
―WHEREFORE, finding is hereby made that the Bank has not adhered to

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the Collective Bargaining Agreement provision nor the Memorandum of Agreement on

promotion.‖ Hence, this petition for certiorari and prohibition seeking to set aside the decision
of the Voluntary Arbitrator and to prohibit her from enforcing the same.

ISSUE: Whether a Voluntary Arbitrator is an ―instrumentality‖ as defined under Sec. 9 of BP

129

RULING: An ―instrumentality‖ is anything used as a means or agency. Thus, the terms

governmental ―agency‖ or ―instrumentality‖ are synonymous in the sense that either of them is
a means by which a government acts, or by which a certain government act or function
is performed. The word ―instrumentality,‖ with respect to a state, contemplates an authority
to which the state delegates governmental power for the performance of a state function. An
individual person, like an administrator or executor, is a judicial instrumentality in the settling
of an estate, in the same manner that a sub-agent appointed by a bankruptcy court is an
instrumentality of the court, and a trustee in bankruptcy of a defunct corporation is an
instrumentality of the state. The voluntary arbitrator no less performs a state function
pursuant to a governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term ―instrumentality‖ in
the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in
the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-
judicial instrumentality as contemplated therein. It will be noted that, although the Employees‘
Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is
the forerunner of the present Revised Administrative Circular No. 1-95, laid down the
procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P.
129. A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T. BAYLON,

RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO
ARANETA, PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO,
RTC, BRANCH 98, QUEZON CITY, respondents.
G.R. No. 85279
July 28, 1989

DOCTRINE: A reading of the proceedings of the Constitutional Commission that drafted the
1987 Constitution would show that in recognizing the right of government employees to
organize, the commissioners intended to limit the right to the formation of unions or
associations only, without including the right to strike.

FACTS: On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a
complaint for damages with a prayer for a writ of preliminary injunction against petitioners,
alleging that on June 9, 1987, the officers and members of SSSEA staged an illegal strike and
baricaded the entrances to the SSS Building, preventing non-striking employees from reporting
for work and SSS members from transacting business with the SSS; that the strike was
reported to the Public Sector Labor - Management Council, which ordered the strikers to return

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to work; that the strikers refused to return to work; and that the SSS suffered damages as a
result of the strike. The complaint prayed that a writ of preliminary injunction be issued to
enjoin the strike and that the strikers be ordered to return to work; that the defendants
(petitioners herein) be ordered to pay damages; and that the strike be declared illegal.

It appears that the SSSEA went on strike after the SSS failed to act on the union's demands,
which included: implementation of the provisions of the old SSS-SSSEA collective bargaining
agreement (CBA) on check-off of union dues; payment of accrued overtime pay, night
differential pay and holiday pay; conversion of temporary or contractual employees with six (6)
months or more of service into regular and permanent employees and their entitlement to the
same salaries, allowances and benefits given to other regular employees of the SSS; and
payment of the children's allowance of P30.00, and after the SSS deducted certain amounts
from the salaries of the employees and allegedly committed acts of discrimination and unfair
labor practices.

ISSUE: Whether or not employees of the Social Security System (SSS) have the right to strike.

HELD: The 1987 Constitution, in the Article on Social Justice and Human Rights, provides
that the State "shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law" [Art. XIII, Sec. 31].

Resort to the intent of the framers of the organic law becomes helpful in understanding the
meaning of these provisions. A reading of the proceedings of the Constitutional Commission
that drafted the 1987 Constitution would show that in recognizing the right of government
employees to organize, the commissioners intended to limit the right to the formation of unions
or associations only, without including the right to strike.

Considering that under the 1987 Constitution "the civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government, including government-owned
or controlled corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O.
No. 180 where the employees in the civil service are denominated as "government employees"]
and that the SSS is one such government-controlled corporation with an original charter,
having been created under R.A. No. 1161, its employees are part of the civil service [NASECO v.
NLRC, G.R. Nos. 69870 & 70295, November 24,1988] and are covered by the Civil Service
Commission's memorandum prohibiting strikes. This being the case, the strike staged by the
employees of the SSS was illegal.
Submitted by: Regalado, Dustin

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Emancipation of Tenants
(Article 7-11)

Department of Agrarian Reform

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES INC., Petitioner

Vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, Respondent
R. No. 78742, July 14, 1989
(EN BANC)
FACTS: There are four consolidated petition in this case. On July 17, 1987, President Corazon
C. Aquino issued E.O. No. 228, declaring full land ownership in favor of the beneficiaries of
P.D. No. 27 and providing for the valuation of still unvalued lands covered by the decree as well
as the manner of their payment. This was followed on July 22, 1987 by Presidential
Proclamation No. 131, instituting a comprehensive agrarian reform program (CARP), and E.O.
No. 229, providing the mechanics for its implementation.

R. A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988 was
signed by President Aquino on June 10, 1988. This law, while considerably changing the
earlier mentioned enactments, nevertheless gives them suppletory effect insofar as they are not
inconsistent with its provisions.

G.R. No. 79777

Subjects of this petition are a 9-hectare riceland worked by four tenants and owned by
petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and
owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of these
lands by E.O. No. 228 as qualified farmers under P.D. No. 27. The petitioners are questioning
P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of powers, due
process, equal protection and the constitutional limitation that no private property shall be
taken for public use without just compensation. They contend that President Aquino usurped
legislative power when she promulgated E.O. No. 228. The said measure is invalid also for
violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention limits
for small landowners.

G.R. No. 79310

The petitioners herein are landowners and sugar planters in the Victorias Mill District,
Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization
composed of 1,400 planter-members. This petition seeks to prohibit the implementation of
Proc. No. 131 and E.O. No. 229. The petitioners claim that the power to provide for a
Comprehensive Agrarian Reform Program as decreed by the Constitution belongs to Congress
and not the President.At that, even assuming that the interim legislative power of the President
was properly exercised, Proc. No. 131 and E.O. No. 229 would still have to be annulled for
violating the constitutional provisions on just compensation, due process, and equal
protection. They also argue that under Section 2 of Proc. No. 131 which provides: Agrarian
Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated
cost of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced

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from the receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of
ill-gotten wealth received through the Presidential Commission on Good Government and such
other sources as government may deem appropriate.

G.R. No. 79744

The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of
due process and the requirement for just compensation, placed his landholding under the
coverage of Operation Land Transfer. Certificates of Land Transfer were subsequently issued to
the private respondents, who then refused payment of lease rentals to him.

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of
rice and corn lands not exceeding seven hectares as long as they are cultivating or intend to
cultivate the same. Their respective lands do not exceed the statutory limit but are occupied by
tenants who are actually cultivating such lands.

ISSUE: (1) Whether or not Proc. No. 131 and E.O. No. 229 should be invalidated because they
do not provide for retention limits as required by Article XIII, Section 4 of the Constitution.

(2) Whether or not there is a violation of Equal Protection clause.

(3) Whether or not the fixing of just compensation by administrative authorities is in violation
of judicial prerogatives.

(4) Whether or not payment of just compensation must only be in terms of money.

(5) Whether or not landowners are divested of their property even before actual payment to
them in full of just compensation

HELD: (1) No. R.A. No. 6657 or the Comprehensive Agrarian Reform Program (CARP) does
provide for such limits now in Section 6 of the law, which in fact is one of its most controversial
provisions. This section declares:

Retention Limits. — Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-sized farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm; Provided, That landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained
by them thereunder, further, That original homestead grantees or direct compulsory heirs who
still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead.

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(2) No. Classification has been defined as the grouping of persons or things similar to each
other in certain particulars and different from each other in these same particulars. To be
valid, it must conform to the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it must not be limited to
existing conditions only; and (4) it must apply equally to all the members of the class. The
Court finds that all these requisites have been met by the measures here challenged as
arbitrary and discriminatory. Equal protection simply means that all persons or things
similarly situated must be treated alike both as to the rights conferred and the liabilities
imposed. The petitioners have not shown that they belong to a different class and entitled to a
different treatment.

(3) No. To be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any other branch or official of the
government. EPZA v. Dulay resolved a challenge to several decrees promulgated by President
Marcos providing that the just compensation for property under expropriation should be either
the assessment of the property by the government or the sworn valuation thereof by the owner,
whichever was lower. A reading of the aforecited Section 16(d) will readily show that it does not
suffer from the arbitrariness that rendered the challenged decrees constitutionally
objectionable. Although the proceedings are described as summary, the landowner and other
interested parties are nevertheless allowed an opportunity to submit evidence on the real value
of the property. But more importantly, the determination of the just compensation by the DAR
is not by any means final and conclusive upon the landowner or any other interested party, for
Section 16(f) clearly provides: Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just compensation. The
determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said
determination in the exercise of what is admittedly a judicial function.

(4) No. Just compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. It has been repeatedly stressed by this Court that the measure is
not the taker's gain but the owner's loss. The word "just" is used to intensify the meaning of the
word "compensation" to convey the idea that the equivalent to be rendered for the property to
be taken shall be real, substantial, full, ample.

As held in Republic of the Philippines v. Castellvi, there is compensable taking when the
following conditions concur: (1) the expropriator must enter a private property; (2) the entry
must be for more than a momentary period; (3) the entry must be under warrant or color of
legal authority; (4) the property must be devoted to public use or otherwise informally
appropriated or injuriously affected; and (5) the utilization of the property for public use must
be in such a way as to oust the owner and deprive him of beneficial enjoyment of the property.
All these requisites are envisioned in the measures before us.

The traditional medium for the payment of just compensation is money and no other. And so,
conformably, has just compensation been paid in the past solely in that medium. However, we
do not deal here with the traditional excercise of the power of eminent domain. This is not an
ordinary expropriation where only a specific property of relatively limited area is sought to be
taken by the State from its owner for a specific and perhaps local purpose. What we deal with
here is a revolutionary kind of expropriation. Such a program will involve not mere millions of

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pesos. The cost will be tremendous. Considering the vast areas of land subject to expropriation
under the laws before us, we estimate that hundreds of billions of pesos will be needed, far
more indeed than the amount of P50 billion initially appropriated, which is already staggering
as it is by our present standards. Such amount is in fact not even fully available at this time.

We assume that the framers of the Constitution were aware of this difficulty when they called
for agrarian reform as a top priority project of the government. It is a part of this assumption
that when they envisioned the expropriation that would be needed, they also intended that the
just compensation would have to be paid not in the orthodox way but a less conventional if
more practical method. There can be no doubt that they were aware of the financial limitations
of the government and had no illusions that there would be enough money to pay in cash and
in full for the lands they wanted to be distributed among the farmers. We may therefore
assume that their intention was to allow such manner of payment as is now provided for by the
CARP Law, particularly the payment of the balance (if the owner cannot be paid fully with
money), or indeed of the entire amount of the just compensation, with other things of value.
The Court hereby declares that the content and manner of the just compensation provided for
in the afore- quoted Section 18 of the CARP Law is not violative of the Constitution.

(5) No. The CARP Law, for its part, conditions the transfer of possession and ownership of the
land to the government on receipt by the landowner of the corresponding payment or the
deposit by the DAR of the compensation in cash or LBP bonds with an accessible bank. Until
then, title also remains with the landowner. No outright change of ownership is contemplated
either. Hence, the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.

Submitted by: Sarmiento, Majesca M.

ARSENIO AL. ACUNA et al., petitioners,

vs.
JOKER ARROYO et al., respondents.
G.R. No. 79310 July 14, 1989
(En Banc)

DOCTRINE: Classification has been defined as the grouping of persons or things similar to
each other in certain particulars and different from each other in these same particulars. 31 To
be valid, it must conform to the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3) it must not be limited to
existing conditions only; and (4) it must apply equally to all the members of the class. The
Court finds that all these requisites have been met by the measures here challenged as
arbitrary and discriminatory.

FACTS: R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had been
enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by P.D. No. 27, which was
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promulgated on October 21, 1972, along with martial law, to provide for the compulsory
acquisition of private lands for distribution among tenant-farmers and to specify maximum
retention limits for landowners.

Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive
public hearings, on the improvement of the interests of farmers. The result, after almost a year
of spirited debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, which President Aquino signed on June 10, 1988. This law,
while considerably changing the earlier mentioned enactments, nevertheless gives them
suppletory effect insofar as they are not inconsistent with its provisions.

The petitioners herein are landowners and sugar planters in Victorias, Negros Occidental. Co-
petitioner Planters' Committee, Inc. is an organization composed of 1,400 planter-members.
This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No. 229.

The petitioners argue that in the issuance of the two measures, no effort was made to make a
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas
that can justify the application of the CARP to them. To the extent that the sugar planters have
been lumped in the same legislation with other farmers, although they are a separate group
with problems exclusively their own, their right to equal protection has been violated.

ISSUE: Whether or not equal protection clause is violated

HELD: Equal protection clause is not violated

Classification has been defined as the grouping of persons or things similar to each other in
certain particulars and different from each other in these same particulars. 31 To be valid, it
must conform to the following requirements: (1) it must be based on substantial distinctions;
(2) it must be germane to the purposes of the law; (3) it must not be limited to existing
conditions only; and (4) it must apply equally to all the members of the class. The Court finds
that all these requisites have been met by the measures here challenged as arbitrary and
discriminatory.

Equal protection simply means that all persons or things similarly situated must be treated
alike both as to the rights conferred and the liabilities imposed. The petitioners have not shown
that they belong to a different class and entitled to a different treatment. The argument that
not only landowners but also owners of other properties must be made to share the burden of
implementing land reform must be rejected. There is a substantial distinction between these
two classes of owners that is clearly visible except to those who will not see.

Submitted by: Sison, Aldous Francis P.

Inocentes Pabico
vs.
Hon. Philip E. Juico

G.R. No. 79744, July 14, 1989

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DOCTRINE: The court declares that the content of the just compensation provided in Section
18 of the CARP Law is not violative of the constitution. The court joins the people in
anticipation of a positive outcome from the agrarian reform act after the deprivations of
peasant masses during all these decades. The invalidation of the said section will result in the
nullification of the entire program which will result in destroying the hopes of every farmer as
they approach the resurrection of the spectre of discontent and dissent in the restless
countryside. This absolutely is not the intention of the Constitution.

FACTS: On Sept. 3, 1986, the petitioner protested the erroneous inclusion of his small
landholding under Operation Land Transfer and asked for the recall and cancellation of the
Certificate of Land Transfer ubder the name of the private respondent. Earlier, the petitioner
alleges that the then Secretary of Agrarian Reform placed his landholding under the coverage of
Operation Land Transfer which is a violation of due process for just compensation. The petition
was denied without hearing on December 24, 1986. Then the petitioner files a Motion for
Reconsideration which was not acted upon when E.O. Nos. 228 and 229 were issued. These
orders rendered his motion moot and academic which directly tolled the transfer he was
seeking. Now, petitioner reiterates his rights to due process and retention of his small parcels
of rice holding as guaranteed under Section 4, Article XIII of the constitution have been
violated. He further argued that he was denied of just compensation for his land.

ISSUE: Whether or not the transferring of title before the land is fully paid is a violation of due
process of law.

HELD: No. The Supreme Court explained that it is true that P.D. No. 27 expressly ordered the
emancipation of tenant-farmer as October 21, 1972 and declared that he shall "be deemed the
owner" of a portion of land consisting of a family sized farm except that "no title to the land
owned by him was to be actually issued to him unless and until he had become a full-fledged
member of a duly recognized farmers' cooperative." It was understood, however, that full
payment of the just compensation also had to be made first, conformably to the constitutional
requirement. E.O. No. 228 categorically stated in its Section 1 that all qualified farmer-
beneficiaries are now deemed full owners as of October 21, 1972 of the land they acquired by
virtue of Presidential Decree No. 27, it was obviously referring to lands already validly acquired
under the said decree, after proof of full-fledged membership in the farmers' cooperatives and
full payment of just compensation. Hence, it was also perfectly proper for the Order to also
provide in its Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary
after October 21, 1972 (pending transfer of ownership after full payment of just compensation),
shall be considered as advance payment for the land." The CARP Law, for its part, conditions
the transfer of possession and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the DAR of the compensation in
cash or LBP bonds with an accessible bank. Until then, title also remains with the landowner.
No outright change of ownership is contemplated either.
Submitted by: Siquian, Celine

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NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,

vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES, respondents.
G.R. No. 79777 July 14, 1989
En Banc

DOCTRINE: The argument that not only landowners but also owners of other properties must
be made to share the burden of implementing land reform must be rejected. There is a
substantial distinction between these two classes of owners that is clearly visible except to
those who will not see. There is no need to elaborate on this matter. In any event, the Congress
is allowed a wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion is abused to
the detriment of the Bill of Rights.

FACTS: The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds
inter alia of separation of powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No.
228. The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution,
for failure to provide for retention limits for small landowners. Moreover, it does not conform to
Article VI, Section 25(4) and the other requisites of a valid appropriation.

The equal protection clause is also violated because the order places the burden of solving the
agrarian problems on the owners only of agricultural lands. No similar obligation is imposed on
the owners of other properties. The petitioners also maintain that in declaring the beneficiaries
under P.D. No. 27 to be the owners of the lands occupied by them, E.O. No. 228 ignored
judicial prerogatives and so violated due process. Worse, the measure would not solve the
agrarian problem because even the small farmers are deprived of their lands and the retention
rights guaranteed by the Constitution.

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the
earlier cases. The determination of just compensation by the executive authorities conformably
to the formula prescribed under the questioned order is at best initial or preliminary only. It
does not foreclose judicial intervention whenever sought or warranted. At any rate, the
challenge to the order is premature because no valuation of their property has as yet been
made by the Department of Agrarian Reform. The petitioners are also not proper parties
because the lands owned by them do not exceed the maximum retention limit of 7 hectares.

ISSUE: Whether or not there was a violation of the equal protection clause.

HELD: No. The Association had not shown any proof that they belong to a different class
exempt from the agrarian reform program. Under the law, classification has been defined as the
grouping of persons or things similar to each other in certain particulars and different from
each other in these same particulars. To be valid, it must conform to the following
requirements:
(1) it must be based on substantial distinctions; (2) it must be germane to the purposes of the
law; (3) it must not be limited to existing conditions only; and (4) it must apply equally to all
the members of the class.

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Equal protection simply means that all persons or things similarly situated must be treated
alike both as to the rights conferred and the liabilities imposed. The Association have not
shown that they belong to a different class and entitled to a different treatment. The argument
that not only landowners but also owners of other properties must be made to share the
burden of implementing land reform must be rejected. There is a substantial distinction
between these two classes of owners that is clearly visible except to those who will not see.
There is no need to elaborate on this matter. In any event, the Congress is allowed a wide
leeway in providing for a valid classification. Its decision is accorded recognition and respect by
the courts of justice except only where its discretion is abused to the detriment of the Bill of
Rights. In the contrary, it appears that Congress is right in classifying small landowners as
part of the agrarian reform program.
Submitted by: Tamayo, Jumen G.

GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO

RICALDE, VICENTE RICALDE and ROLANDO SALAMAR, petitioners
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M.
REYES and FE M. REYES, respondents.
G.R. No. 78517. February 27, 1989
(Second Division)

DOCTRINE: Presidential Decree No. 27 does not cover lands obtained through a homestead
patent.

FACTS: Private respondents' predecessors-in-interest acquired the subject parcel of lands

through homestead patent under the provisions of Commonwealth Act No. 141.
Private respondents herein are desirous of personally cultivating these lands, but
petitioners refuse to vacate, relying on the provisions of P.D. 27 and P.D. 316. On June
18, 1981, private respondents instituted a complaint for the declaration of P.D. 27 and all
other Decrees, Letters of Instructions and General Orders issued in connection therewith as
inapplicable to lands obtained through homestead law. The RTC dismissed the complaint
but on motion for reconsideration it declared that P.D. 27 is not applicable to homestead
lands. On appeal to the CA, the decision of the RTC was sustained.

ISSUE: whether or not lands obtained through homestead patent are covered by the Agrarian
Reform under P.D. 27

HELD: No. The Court agreed with the petitioners in saying that P.D. 27 decreeing the
emancipation of tenants from the bondage of the soil and transferring to them ownership of the
land they till is a sweeping social legislation, a remedial measure promulgated pursuant to the
social justice precepts of the Constitution. However, such contention cannot be invoked to
defeat the very purpose of the enactment of the Public Land Act or Commonwealth Act No. 141.
Thus, "The Homestead Act has been enacted for the welfare and protection of the poor. The law
gives a needy citizen a piece of land where he may build a modest house for himself and family
and plant what is necessary for subsistence and for the satisfaction of life's other needs. The
right of the citizens to their homes and to the things necessary for their subsistence is as vital
as the right to life itself. They have a right to live with a certain degree of comfort as become

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human beings, and the State which looks after the welfare of the people's happiness is under a
duty to safeguard the satisfaction of this vital right."

It is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of 1988
or Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D. 27
to lands covered by homestead patents like those of the property in question, reading, "Section
6. Retention Limits . . . ". . . Provided further, That original homestead grantees or their direct
compulsory heirs who still own the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to cultivate said homestead."

Submitted by: Tanghal, Noelle Christine

Gonzales
vs.
Court of Appeals
G.R. No. 36213 June 29, 1989

DOCTRINE: Agrarian Relations; Tenancy; An agricultural leasehold cannot be established

on land which has ceased to be devoted to cultivation or farming because of its
conversion into a residential land.—There is no merit in the petitioners‘ argument that
inasmuch as residential and commercial lots may be considered ―agricultural‖ (Krivenko vs.
Register of Deeds, 79 Phil. 461) an agricultural tenancy can be established on land in a
residential subdivision. The Krivenko decision interpreting the constitutional prohibition
against transferring private agricultural land to individuals, corporations, or associations not
qualified to acquire or hold lands of the public domain, save in the case of hereditary
succession (Art. XIII, Sec. 5, 1935 Constitution; later Art. XIV, Sec. 14, 1973 Constitution; Art.
XII, Sec. 7, 1987 Constitution) has nothing to do with agricultural tenancy. An agricultural
leasehold cannot be established on land which has ceased to be devoted to cultivation or
fanning because of its conversion into a residential subdivision.

FACTS: The petitioners leased a lot in the subdivision on which they built their house, and, by
tolerance of the subdivision owner, they cultivated some vacant adjoining lots. The Court of
Agrarian Relations, as well as the Court of Appeals, ruled that "the plaintiffs are not de jure
agricultural tenants."

ISSUE: Whether an agricultural tenancy relationship can be created over land embraced in an
approved residential subdivision.

HELD: NO. There is no merit in the petitioners' argument that inasmuch as residential and
commercial lots may be considered "agricultural" (Krivenko vs. Register of Deeds, 79 Phil. 461)
an agricultural tenancy can be established on land in a residential subdivision. The Krivenko
decision interpreting the constitutional prohibition against transferring private agricultural
land to individuals, corporations, or associations not qualified to acquire or hold lands of the
public domain, save in the case of hereditary succession (Art. XIII Sec. 5, 1935 Constitution;
later Art. XIV, Sec. 14, 1973 Constitution; Art. XII, Sec. 7, 1987 Constitution) has nothing to do

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with agricultural tenancy. An agricultural leasehold cannot be established on land which has
ceased to be devoted to cultivation or farming because of its conversion into a residential
subdivision.

Petitioners may not invoke Section 36(l) of Republic Act No. 3844 which provides that "when
the lessor-owner fails to substantially carry out the conversion of his agricultural land into a
subdivision within one year after the dispossession of the lessee, the lessee shall be entitled to
reinstatement and damages," for the petitioners were not agricultural lessees or tenants of the
land before its conversion into a residential subdivision in 1955. Not having been dispossessed
by the conversion of the land into a residential subdivision, they may not claim a right to
reinstatement.
Submitted by: Villanueva, Emilio Jan D.

LUZ FARMS, Petitioner

vs.
THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM,
Respondent
G.R. No. 86889. December 4, 1990

DOCTRINE: Despite the inhibitions pressing upon the Court when confronted with
constitutional issues, it will not hesitate to declare a law or act invalid when it is convinced
that this must be done. Thus, where the legislature or the executive acts beyond the scope of
its constitutional powers, it becomes the duty of the judiciary to declare what the other
branches of the government had assumed to do, as void.

FACTS: Luz Farms, a corporation engaged in the livestock and poultry business and together
with others in the same business, allegedly stands to be adversely affected by the enforcement
of R.A. No. 6657, otherwise known as Comprehensive Agrarian Reform Law, as well as the
Guidelines and Procedures Implementing Production and Profit Sharing, to wit:

(a) Section 3 (b) which includes the "raising of livestock (and poultry)" in the definition of
"Agricultural, Agricultural Enterprise or Agricultural Activity";
(b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to
commercial, livestock, poultry and swine raising";
(c) Section 13 which calls upon petitioner to execute a production-sharing plan;
(d) Section 16 (d) and 17 which vest on the Department of Agrarian Reform the authority to
summarily determine the just compensation to be paid for lands covered by the
Comprehensive Agrarian Reform Law; and,
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13.

ISSUE: Whether or not aforesaid sections of the Comprehensive Agrarian Reform Law of 1988,
as well as the Implementing Rules and Guidelines promulgated in accordance therewith, are
unconstitutional

HELD: YES.

The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning
of the word "agricultural," clearly show that it was never the intention of the framers of the
Constitution to include livestock and poultry industry in the coverage of the constitutionally-
mandated agrarian reform program of the Government.

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The Committee adopted the definition of "agricultural land" as defined under Section 166 of
R.A. 3844, as laud devoted to any growth, including but not limited to crop lands, saltbeds,
fishponds, idle and abandoned land (Record, CONCOM, August 7, 1986, Vol. III, p. 11).

The intention of the Committee is to limit the application of the word "agriculture."
Commissioner Jamir proposed to insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and residential
properties because all of them fall under the general classification of the word "agricultural".
This proposal, however, was not considered because the Committee contemplated that
agricultural lands are limited to arable and suitable agricultural lands and therefore, do not
include commercial, industrial and residential lands (Record, CONCOM, August 7, 1986, Vol.
III, p. 30).

It is evident from the discussion that Section II of R.A. 6657 which includes "private
agricultural lands devoted to commercial livestock, poultry and swine raising" in the definition
of "commercial farms" is invalid, to the extent that the aforecited agro-industrial activities are
made to be covered by the agrarian reform program of the State. There is simply no reason to
include livestock and poultry lands in the coverage of agrarian reform.

Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of
R.A. 6657 directing "corporate farms" which include livestock and poultry raisers to execute
and implement "production-sharing plans" (pending final redistribution of their landholdings)
whereby they are called upon to distribute from three percent (3%) of their gross sales and ten
percent (10%) of their net profits to their workers as additional compensation is unreasonable
for being confiscatory, and therefore violative of due process.

Submitted by: Valdez, Suzette P.

Pre-Employment
(Article 12)

Recruitment and Placement

(Article 13)

Recruitment and Placement

People of the Philippines, APPELEE

vs
Hon. Domingo Panis and Serapio Abug, Respondents
G.R. Nos. L-58674-77 July 11, 1990
(En Banc)

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DOCTRINE: The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article
13(b) win constitute recruitment and placement even if only one prospective worker is involved.

FACTS: Four informations were filed on January 9, 1981, in the Court of First Instance of
Zambales and Olongapo City alleging that Serapio Abug, private respondent herein, "without
first securing a license from the Ministry of Labor as a holder of authority to operate a fee-
charging employment agency, did then and there wilfully, unlawfully and criminally operate a
private fee charging employment agency by charging fees and expenses (from) and promising
employment in Saudi Arabia" to four separate individuals named therein, in violation of Article
16 in relation to Article 39 of the Labor Code. 1

Abug filed a motion to quash on the ground that the information did not charge an offense
because he was accused of illegally recruiting only one person in each of the four informations.
Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only
"whenever two or more persons are in any manner promised or offered any employment for a
fee. "

ISSUE: Whether or not the private respondent is guilty of illegal recruitment.

HELD: Yes.

We fail to see why the proviso should speak only of an offer or promise of employment if the
purpose was to apply the requirement of two or more persons to all the acts mentioned in the
basic rule. For its part, the petitioner does not explain why dealings with two or more persons
are needed where the recruitment and placement consists of an offer or promise of employment
but not when it is done through "canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring (of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with
two or more persons to whom, in consideration of a fee, an offer or promise of employment is
made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers. "
Submitted by: Vardeleon, Crizedhen N.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY D. AGUSTIN,
accused-appellant.
G.R. No. 113161, August 29, 1995
(Second Division)

DOCTRINE : The act of collecting from each of the complainants payment for their respective
passports, training fees, placement fees, medical tests and other sundry expenses
unquestionably constitutes an act of recruitment within the meaning of the law.

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FACTS: on January 12, 1988, an information for illegal recruitment committed by a syndicate
and in large scale, punishable under Articles 38 and 39 of the Labor Code (Presidential Decree
No. 442) as amended by Section 1(b) of Presidential Decree No. 2018, was filed against spouses
Dan and Loma Goce and herein accused-appellant Nelly Agustin, alleging that in or about
during the period comprised between May 1986 and June 25, 1987, both dates inclusive in the
City of Manila, the accused conspired and represent themselves to have the capacity to recruit
Filipino workers for employment abroad.

According to one of the witnesses, Agustin, representing herself as the manager of the Clover
Placement Agency, showed him a job order as proof that he could readily be deployed for
overseas employment. Salado learned that he had to pay P5,000.00 as processing fee, which
amount he gave sometime in April or May of the same year. He was issued the corresponding
receipt. Also, Salado, accompanied by five other applicants who were his relatives, went to the
office of the placement agency at Nakpil Street, Ermita, Manila where he saw Agustin and met
the spouses Dan and Loma Goce, owners of the agency. He submitted his bio-data and learned
from Loma Goce that he had to give P12,000.00, instead of the original amount of P5,000.00
for the placement fee. Although surprised at the new and higher sum, they subsequently
agreed as long as there was an assurance that they could leave for abroad. Thereafter, a receipt
was issued in the name of the Clover Placement Agency showing that Salado and his aforesaid
co-applicants each paid P2,000.00, instead of the P5,000.00 which each of them actually paid.
Several months passed but Salado failed to leave for the promised overseas employment.

ISSUE: WON there is proof that Agustin offered or promised overseas employment to the
complainants.

HELD : YES

All four prosecution witnesses testified that it was Agustin whom they initially approached
regarding their plans of working overseas. It was from her that they learned about the fees they
had to pay, as well as the papers that they had to submit. It was after they had talked to her
that they met the accused spouses who owned the placement agency.

There is illegal recruitment when one gives the impression of having the ability to send a
worker abroad." It is undisputed that appellant gave complainants the distinct impression that
she had the power or ability to send people abroad for work such that the latter were convinced
to give her the money she demanded in order to be so employed.

It cannot be denied that Agustin received from complainants various sums for purpose of their
applications. Her act of collecting from each of the complainants payment for their respective
passports, training fees, placement fees, medical tests and other sundry expenses
unquestionably constitutes an act of recruitment within the meaning of the law.
Submitted by: Veloso, Jocelyn

IMELDA DARVIN, petitioner, vs. HON. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents
[G.R. No. 125044. July 13, 1998]
ROMERO, J:

DOCTRINE: To uphold the conviction of accused-appellant, two elements need to be shown: (1)
the person charged with the crime must have undertaken recruitment activities: and (2) the
said person does not have a license or authority to do so.

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FACTS: Imelda Darvin was convicted of simple illegal recruitment under the Labor Code by the
RTC. It stemmed from a complaint of one Macaria Toledo who was convinced by the petitioner
that she has the authority to recruit workers for abroad and can facilitate the necessary papers
in connection thereof. In view of this promise, Macaria gave her P150, 000.00 supposedly
intended for US Visa and air fare.

ISSUE: Whether or not Darvin is guilty of simple illegal recruitment.

RULING: YES.

Art. 13 of the Labor Code provides the definition of recruitment and placement as:
...b.) any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers and includes referrals, contract services, promising or advertising for employment
locally or abroad, whether for profit or not: Provided, that any reason person or entity which, in
any manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.

Art. 38 of the Labor Code provides:

a.)Any recruitment activities, including the prohibited practices enumerated under Article 43 of
the Labor Code, to be undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 of the Labor Code.

Applied to the present case, to uphold the conviction of accused-appellant, two elements need
to be shown: (1) the person charged with the crime must have undertaken recruitment
activities: and (2) the said person does not have a license or authority to do so.

In the case, the Court found no sufficient evidence to prove that accused-appellant offered a
job to private respondent. It is not clear that accused gave the impression that she was capable
of providing the private respondent work abroad. What is established, however, is that the
private respondent gave accused-appellant P150, 000.

By themselves, procuring a passport, airline tickets and foreign visa for another individual,
without more, can hardly qualify as recruitment activities. Aside from the testimony of private
respondent, there is nothing to show that appellant engaged in recruitment activities.

At best, the evidence proffered by the prosecution only goes so far as to create a suspicion that
appellant probably perpetrated the crime charged. But suspicion alone is insufficient, the
required quantum of evidence being proof beyond reasonable doubt. When the People‘s
evidence fail to indubitably prove the accused‘s authorship of the crime of which he stand
accused, then it is the Court‘s duty, and the accused‘s right, to proclaim his innocence.

Submitted by: Austria, Don Rodel A.

Overseas Employment
(Article 19-24)

POEA

Cases under the Jurisdiction of POEA

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EASTERN SHIPPING LINES, INC., Petitioner,

vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR
AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO,
Respondents.
G.R. No. 76633, October 18, 1988
(First Division)

DOCTRINE: The POEA is vested with original and exclusive jurisdiction over all cases,
including money claims, involving employee-employer relations arising out of or by virtue of
any law or contract involving Filipino contract workers, including seamen. It is also vested as
an administrative agency with two basic powers, the quasi-legislative and the quasi-judicial.

FACTS: Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accident in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order
No. 797 and Memorandum Circular No. 2 of the Philippine Overseas Employment
Administration (POEA). The petitioner, as owner of the vessel, argued that the complaint was
cognizable not by the POEA but by the Social Security System and should have been filed
against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after
considering the position papers of the parties ruled in favor of the complainant. The award
consisted of P180,000.00 as death benefits and P12,000.00 for burial expenses.

The petitioner immediately came to this Court, prompting the Solicitor General to move for
dismissal on the ground of non-exhaustion of administrative remedies. The decision is
challenged by the petitioner on the principal ground that the POEA had no jurisdiction over the
case as the husband was not an overseas worker. As such, his widow's claim should have been
filed with Social Security System, subject to appeal to the Employees Compensation
Commission.

ISSUE: Whether or not the POEA has jurisdiction over the case?

HELD: Yes.

The Philippine Overseas Employment Administration was created under Executive Order No.
797, promulgated on May 1, 1982, to promote and monitor the overseas employment of
Filipinos and to protect their rights. It replaced the National Seamen Board created earlier
under Article 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order, the
POEA is vested with "original and exclusive jurisdiction over all cases, including money claims,
involving employee-employer relations arising out of or by virtue of any law or contract
involving Filipino contract workers, including seamen." These cases, according to the 1985
Rules and Regulations on Overseas Employment issued by the POEA, include "claims for
death, disability and other benefits" arising out of such employment.

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is
defined as "employment of a worker outside the Philippines, including employment on board
vessels plying international waters, covered by a valid contract. A contract worker is described
as "any person working or who has worked overseas under a valid employment contract and
shall include seamen" or "any person working overseas or who has been employed by another
which may be a local employer, foreign employer, principal or partner under a valid
employment contract and shall include seamen." These definitions clearly apply to Vitaliano
Saco for it is not disputed that he died while under a contract of employment with the
petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed in a
foreign country.

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The Supreme Court dismissed the petition.

Submitted by: Aguilar, Cherry Kerr

Philsa International Placement and Services Corporation vs. Secretary of Labor and
Employment, 356 SCRA 174, G.R. No. 103144 April 4, 2001

DOCTRINE: Labor Law; Illegal Recruitment; Illegal Exaction; The question of whether a
certain person charged applicants with placement fees in excess of that allowed by law is
clearly a question of fact which is for the POEA, as trier of facts, to determine.—With respect
to the first ground, petitioner would want us to overturn the findings of the POEA,
subsequently affirmed by the Secretary of the Department of Labor and Employment, that it is
guilty of illegal exaction committed by collecting placement fees in excess of the amounts
allowed by law. This issue, however,
is a question of fact which cannot be raised in a petition for certiorari under Rule 65. As we
have previously held: ―It should be noted, in the first place, that the instant petition is a
special civil action for certiorari under Rule 65 of the Revised Rules of Court. An
extraordinary remedy, its use is available only and restrictively in truly exceptional cases
wherein the action of an inferior court, board or officer performing judicial or quasi-judicial
acts is challenged for being wholly void on grounds of jurisdiction.
The sole office of the writ of certiorari is the correction of errors of jurisdiction including the
commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does
not include correction of public respondent NLRC‘s evaluation of the evidence and factual
findings based thereon, which are generally accorded not only great respect but even
finality.‖ The question of whether or not petitioner charged private respondents placement fees
in excess of that allowed by law is clearly a question of fact which is for public respondent
POEA, as a trier of facts, to determine. As stated above, the settled rule is that the factual
findings of quasi-judicial agencies like the POEA, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect, but at
times even finality if such findings are supported by substantial evidence.

FACTS: Petitioner Philsa is a domestic corporation engaged in the recruitment of workers for
overseas employment. Private respondents, who were recruited by petitioner for employment in
Saudi Arabia, were required to pay placement fees for private respondent Rodrigo L. Mikin and
for private respondents Vivencio A. de Mesa and Cedric P. Leyson. After the execution of their
respective work contracts, private respondents left for Saudi Arabia. They then began work for
Al-Hejailan Consultants A/E, the foreign principal of petitioner. While in Saudi Arabia, private
respondents were allegedly made to sign a second contract which changed some of the
provisions of their original contract resulting in thereduction of
some of their benefits and privileges. Their foreign employer allegedly forced them to sign a
third contract which increased their work hours from 48 hours to 60 hours a week without any
corresponding increase in their basic monthly salary. When they refused to sign this third
contract, the services of private respondents were terminated by Al-Hejailan and they were
repatriated to the Philippines. Upon their arrival in the Philippines, private respondents
demanded from petitioner Philsa the return of their placement fees and for the payment of
their salaries for the unexpired portion of their contract. When petitioner refused, they filed
a case before the POEA against petitioner Philsa and its foreign principal, Al-Hejailan.

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ISSUE: Whether sanctions were validly imposed by the POEA.

HELD: Petitioner is correct in stating that the Decision of the NLRC has attained finality by
reason of the dismissal of the petition for certiorari assailing the same. However, the said NLRC
Decision dealt only with the money claims of private respondents arising from employer-
employee relations and illegal dismissal and as such, it is only for the payment of the said
money claims that petitioner is absolved.

The administrative sanctions, which are distinct and separate from the money claims of
private respondents, may still be properly imposed by the POEA. In fact, in the August 31,
1988 Decision of the POEA dealing with the money claims of private respondents, the POEA
Adjudication Office precisely declared that ―respondent‘s liability for said money claims is
without prejudice to and independent of its liabilities for the recruitment violations aspect of
the case which is the subject of a separate Order.‖ The NLRC Decision absolving petitioner
from paying private respondent de Mesa‘s claim for salary deduction based its ruling on a
finding that the said money claim was not raised in the complaint. While there may
be questions regarding such finding of the NLRC, the finality of the said NLRC Decision
prevents us from modifying or reviewing the same. But the fact that the claim for salary
deduction was not raised by private respondents in their complaint will not bar the POEA
fromholding petitioner liable for illegal deduction or withholding of salaries as a ground for the
suspension or cancellation of petitioner‘s license.

Cases not in the Jurisdiction of POEA

PACIFIC ASIA OVERSEAS SHIPPING CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and TEODORO RANCES, respondents.
G.R. No. 76595 May 6, 1988

DOCTRINE: The POEA has no jurisdiction to hear and decide a claim for enforcement of a
foreign judgment. Such a claim must be brought before the regular courts. The POEA is not a
court; it is an administrative agency exercising, inter alia, adjudicatory or quasi-judicial
functions.

FACTS: Sometime in March 1984, private respondent Teodoro Rances was engaged by
petitioner Pascor as Radio Operator of a vessel belonging to Pascor's foreign principal, the Gulf-
East Ship Management Limited. Four (4) months later, and after having been transferred from
one vessel to another four times for misbehaviour and inability to get along with officers and
crew members of each of the vessels, the foreign principal terminated the services of private
respondent Rances citing the latter's poor and incorrigible work attitude and incitement of
others to insubordination. X

Petitioner Pascor filed a complaint against private respondent with the Philippine Overseas
Employment Administration tion (POEA) for acts unbecoming a marine officer and for,
character assassination," which case was docketed as POEA Case No: M-84-09-848. Private
respondent denied the charges set out in the complaint and by way of counterclaim demanded
an amount of US$ 1,500.00 which a court in Dubai had, he contended, awarded in his favor
against petitioner's foreign principal. In due course, on 4 September 1985, the POEA found
private respondent liable for inciting another officer or seaman to insubordination and
challenging a superior officer to a fist fight and imposed six (6) months suspension for each
offense or a total of twelve (12) months suspension, with a warning that commission of the

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same or similar offense in the future would be met with a stiffer disciplinary sanction. The
POEA decision passed over sub silentio the counterclaim of private respondent. 2

On 10 October 1985, private respondent filed a complaint against petitioner, docketed as POEA
Case No: M-85-10-0814 and entitled "Teodoro Rances v. Pacific Asia Overseas Shipping
Corporation." In this complaint, he sought to carry out and enforce the same award obtained
by him in Dubai allegedly against Pascor's foreign principal which he had pleaded as a
counterclaim in POEA Case No: M-84-09-848. Private respondent claimed that be had filed an
action in the Dubai court for US$ 9,364.89, which claim was compromised by the parties for
US$ 5,500.00 plus "a return ticket to (private respondent's) country," with the proviso that "the
opponent" would pay "to the claimant" US$ 1,500.00 'in case the wife of the claimant Rantes
doesn't agree with the amount sent to [her] Private respondent further claimed that since his
wife did not "agree with" the amount given to her as 'an allotment for the 3-month period (of
April, May and June 1984), he was entitled to recover the additional US$ 1,500.00 "as
mandated under the Compromise Agreement which was the basis of the decision of the Dubai
Civil Court. 3 As evidence of this foreign award, private respondent submitted what purports to
be an "original copy (sic) of the decision" of the Dubai court written in Arabic script and
language, With a copy of an English translation by an unidentified translator and a copy of a
transmittal letter dated 23 September 1984 signed by one Mohd Bin Saleh "Honorary Consul
for Philippines." The full texts of the purported English translation of the Dubai award and of
the transmittal letter are set out in the margin.

ISSUE: WON the POEA had jurisdiction over cases for the enforcement of foreign judgments.

HELD: No.

An examination of the complaint and of the Manifestation and Motion filed by respondent
Rances in POEA Case No: M-85-08-14, shows that the cause of action pleaded by respondent
Rances was enforcement of the decision rendered by c. Dubai Court which purported to award
him, among other things, an additional amount of US$ 1,500.00 under certain circumstances.

It should be noted that respondent Rances submitted to the POEA only the Dubai Court
decision; he did not submit any copy of the 'Compromise Agreement' (assuming that to have
been reduced to writing) which he presumably believed to have been absorbed and superseded
by the Dubai decision.

That the cause of action set out in respondent Rances' complaint was enforcement of the Dubai
decision is further, indicated in the decision dated 14 April 1986 rendered by the POEA. This
decision provided in part as follows:

Complainant alleged that his original claim of US$ 9,364.89 for unpaid salaries, termination
pay and travel expenses was filed in Dubai. In a decision rendered by the Dubai Court, his
claim was compromised in the amount of US$ 5,500.00 plus return plane ticket. The amount
of US$ 1,500.00 will be paid to his wife if she does not agree with the amount sent to her. The
three (3) months unremitted allotments refers to the months of April, May and June 1984. As
evidenced by the Allotment Shp, respondent approved the authority given by complainant
stating that the amount of US$ 765.00 be remitted to his wife belong with the month of April
1984. The amount remitted to his wife for allotment cover the three (3) month period was only
P 13,393.45. The basis of complainant's claim is the reservation in the decision of the Dubai
Court which states that in case the wife of the claimant does not agree with the amount sent to
her, the opponent shall pay US$ l,500.00.

Clearly, therefore, respondent Rances' action was for enforcement of the Dubai decision to the
extent that such decision provided for payment of an additional amount of US$1,500.00 and
that respondent relied upon such decision.

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Petitioner argues vigorously that the POEA had no authority and jurisdiction to enforce the
judgment of a foreign court. Under Section 1, Rule 1, Book VI of the POEA Rules and
Regulations, it will be seen that the POEA has jurisdiction to decide all cases 'involving
employer employee relations arising out of or by virtue of any law or contract involving Filipino
workers for overseas employment, including seamen." Respondent Rances, however, relied not
upon the employer - employee relationship between himself and petitioner corporation and the
latter's foreign principal, but rather upon the judgment obtained by him from the Dubai Court
which had apparently already been partially satisfied by payment to respondent Rances of US$
5,500.00. The POEA has no jurisdiction to hear and decide a claim for enforcement of a foreign
judgment. Such a claim must be brought before the regular courts. The POEA is not a court; it
is an administrative agency exercising, inter alia, adjudicatory or quasi-judicial functions.
Neither the rules of procedure nor the rules of evidence which are mandatorily applicable in
proceedings before courts, are observed in proceedings before the POEA.

Even assuming (arguendo, merely) that the POEA has jurisdiction to recognize and enforce a
foreign judgment, still respondent Rances cannot rely upon the Dubai decision. The Dubai
decision was not properly proved before the POEA. The Dubai decision purports to be the
written act or record of an act of an official body or tribunal of a foreign country, and therefore
a public writing under Section 20 (a) of Rule 132 of the Revised Rules of Court. Sections 25 and
26 of Rules 132 prescribe the manner of proving a public of official record of a foreign country
in the following terms:

Sec. 25. Proof of public or official record. — An official record or an entry therein, when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the record, or by his deputy, and
accompanied. if the record is not kept in the Philippines, with a certificate that such officer has
the custody. If the office in which the record is kept is in a foreign country, the certificate
maybe be made by a secretary of embassy or litigation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of the Philippines stationed in the foreign
country in which the record is kept, and authenticated by the seal of his office.

Sec. 26. What attestation of copy must state. — Whenever a copy of a writing is attend
for the purpose of evidence, the attestation must state, in substance, that the copy is a correct
copy of the original, or a specific part thereof, as the case may be. The attestation must be
under the official seal of the attesting officer, if there be any, or if he be the clerk of a court
having a seal, under the seal of such court. (Emphasis supplied)

In the instant case, respondent Rances failed to submit any attestation issued by the proper
Dubai official having legal custody of the original of the decision of the Dubai Court that the
copy presented by said respondent is a faithful copy of the original decision, which attestation
must furthermore be authenticated by a Philippine Consular Officer having jurisdiction in
Dubai. The transmittal letter, dated 23 September 1984, signed by Mohd Bin Saleh, Honorary
Consul for Philippines' does not comply with the requirements of either the attestation under
Section 26 nor the authentication envisaged by Section 25.

There is another problem in respect of the admissibility in evidence of the Dubai decision. The
Dubai decision is accompanied by a document which purports to be an English translation of
that decision., but that translation is legally defective. Section 34 of Rule 132 of the Revised
Rules of Court requires that documents written in a non-official language hke Arabic) shall not
be admitted as evidence unless accompanied by a translation into English or Spanish or
Filipino. In Ahag v. Cabiling, Mr. Justice Moreland elaborated on the need for a translation of
a document written in a language other than an official language:

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... Moreover, when there is presented in evidence an exhibit written in any language other than
Spanish, if there is an appeal, that exhibit should be translated into Spanish by the official
interpreter of the court, or a translation should be agreed upon by the parties, and both
original and translation sent to this court. In the case before us, there is an untranslated
exhibit written in the Visayan language (Teng Giok Yan v. Hon. Court of Appeals, et al)

In the instant case, there is no showing of who effected the English translation of the Dubai
decision which respondent Rances submitted to the POEA. The English translation does not
purport to have been made by an official court interpreter of the Philippine Government nor of
the Dubai Government. Neither the Identity of the translator nor his competence in both the
Arabic and English languages has been shown. The English translation submitted by the
respondent is not sworn to as an accurate translation of the original decision in Arabic. Neither
has that translation been agreed upon by the parties as a true and faithful one.

The foregoing does not exhaust the difficulties presented by reliance upon the Dubai decision.
The Dubai Court decision, even on the basis of the English translation submitted by
respondent Rances, does not purport on its face to have been rendered against petitioner
Pascor nor against the foreign principal of petitioner. Respondent Rances simply assumed that
the decision was rendered against petitioner's foreign principal. The Dubai decision does not
Identify the parties to the litigation that was resolved by said decision. Accordingly, the Dubai
decision can scarcely be enforced against petitioner Pascor. Further, even if the Dubai decision
had on its face purported to be rendered against petitioner Pascor, we must note that petitioner
Pascor has expressly denied that jurisdiction had ever been acquired by the Dubai court over
the person of Pascor in accordance with the Rules of Procedure applicable before the Dubai
Court. Respondent Rances has not proved the contents of the Dubai Rules of Procedure
governing acquisition of jurisdiction over the person of a non-resident defendant.

Finally, if it be assumed (arguendo, once more) that the Dubai Court had indeed acquired
jurisdiction over the person of Pascor's foreign principal — Gulf East Ship Management Ltd. —
it still would not follow that Pascor would automatically be bound by the Dubai decision. The
statutory agency (or suretyship) of Pascor is limited in its reach to the contracts of employment
Pascor entered into on behalf of its principal with persons like respondent Rances. Such
statutory inability does not extend to liability for judgments secured against Gulf East Ship
Management Ltd., in suits brought against Gulf East outside Philippine territorial jurisdiction,
even though such a suit may involve a contract of employment with a Filipino seaman.
Submitted by: Escol, Hanzel Grace

Cases under the Jurisdiction of NLRC

DOUGLAS MILLARES and ROGELIO LAGDA, petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION, TRANS-GLOBAL MARITIME AGENCY, INC. and ESSO
INTERNATIONAL SHIPPING CO., LTD. respondents.

DOCTRINE: 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 service to be employee is seasonal in nature
and the employment is for the duration of the season. An employment shall be deemed to be

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casual if it is not covered by the art 280; provided that, any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists.

FACTS: Petitioner Douglas Millares was employed by private respondent ESSO International
Shipping Company LTD. (Esso International, for brevity) through its local manning agency,
private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on November
16, 1968 as a machinist. In 1975, he was promoted as Chief Engineer which position he
occupied until he opted to retire in 1989. He was then receiving a monthly salary of US
$1,939.00.

On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to
August 7, 1989. In a letter dated June 14, 1989, Michael J. Estaniel, President of private
respondent Trans-Global, approved the request for leave of absence. On June 21, 1989,
petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon International Co., (now
Esso International) through Michael J. Estaniel, informing him of his intention to avail of the
optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP) considering
that he had already rendered more than twenty (20) years of continuous service. On July 13,
1989 respondent Esso International, through W.J. Vrints, Employee Relations Manager, denied
petitioner Millares request for optional retirement on the following grounds, to wit: (1) he was
employed on a contractual basis; (2) his contract of enlistment (COE) did not provide for
retirement before the age of sixty (60) years; and (3) he did not comply with the requirement for
claiming benefits under the CEIP, i.e., to submit a written advice to the company of his
intention to terminate his employment within thirty (30) days from his last disembarkation
date.

On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from
August 9 to 24, 1989. On August 19, 1989, Roy C. Palomar, Crewing Manager, Ship Group A,
Trans-global, wrote petitioner Millares advising him that respondent Esso International has
corrected the deficiency in its manpower requirement specifically in the Chief Engineer rank by
promoting a First Assistant Engineer to this position as a result of (his) previous leave of
absence which expired last August 8, 1989. The adjustment in said rank was required in order
to meet manpower schedules as a result of (his) inability.
On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel
Administrator, advised petitioner Millares that in view of his absence without leave, which is
equivalent to abandonment of his position, he had been dropped from the roster of crew
members effective September 1, 1989.

On the other hand, petitioner Lagda was employed by private respondent Esso International as
wiper/oiler in June 1969. He was promoted as Chief Engineer in 1980, a position he continued
to occupy until his last COE expired on April 10, 1989. He was then receiving a monthly salary
of US$1,939.00.

On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to the
whole month of August 1989. On June 14, 1989, respondent Trans-Globals President, Michael
J. Estaniel, approved petitioner Lagdas leave of absence from June 22, 1989 to July 20, 1989
and advised him to report for re-assignment on July 21, 1989.

On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of
respondent Esso International, through respondent Trans-Globals President Michael J.
Estaniel, informing him of his intention to avail of the optional early retirement plan in view of
his twenty (20) years continuous service in the complaint.

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On July 13, 1989, respondent Trans-global denied petitioner Lagdas request for availment of
the optional early retirement scheme on the same grounds upon which petitioner Millares
request was denied.

On August 3, 1989, he requested for an extension of his leave of absence up to August 26,
1989 and the same was approved. However, on September 27, 1989, respondent Esso
International, through H. Regenboog, Personnel Administrator, advised petitioner Lagda that in
view of his unavailability for contractual sea service, he had been dropped from the roster of
crew members effective September 1, 1989.

On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as

POEA (M) 89-10-9671, for illegal dismissal and non-payment of employee benefits against
private respondents Esso International and Trans-Global, before the POEA.

ISSUE:
1. Whether or not the petitioners regular or contractual employees whose employments
are terminated every time their contracts of employment expire?

2. Whether or not petitioners are regular employees, were they dismissed without just
cause so as to be entitled to reinstatement and backwages, including payment of 100% of their
total credited contributions to the consecutive enlistment incentive plan.

HELD: From the foregoing cases, it is clear that seafarers are considered contractual
employees. They cannot be considered as regular employees under Article 280 of the Labor
Code. Their employment is governed by the contracts they sign every time they are rehired and
their employment is terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article 280 whose
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season. We need not depart from the rulings of the Court in the two aforementioned cases
which indeed constitute stare decisis with respect to the employment status of seafarers.
Article 280 of the Labor Code notwithstanding. There is, therefore, no reason to disturb the
POEA Administrators finding that complainants-appellants were hired on a contractual basis
and for a definite period. Their employment is thus governed by the contracts they sign each
time they are re-hired and is terminated at the expiration of the contract period.
Since petitioners termination of employment under the CEIP do not fall under Section III-A
(Retirement, Death and Disability) or Section III-B (Voluntary Termination), nor could they be
considered under the second paragraph of Section III-C, as earlier discussed; it follows that
their termination falls under the first paragraph of Section III-C for which they are entitled to
100% of the total amount credited to their accounts. The private respondents cannot now
renege on their commitment under the CEIP to reward deserving and loyal employees as the
petitioners in this case.

In taking cognizance of private respondents Second Motion for Reconsideration, the Court
hereby suspends the rules to make them conformable to law and justice and to subserve an
overriding public interest. IN VIEW OF THE FOREGOING, THE COURT Resolved to Partially
GRANT Private Respondents Second Motion for Reconsideration and Intervenor FAMES Motion
for Reconsideration in Intervention. The Decision of the National Labor Relations Commission
dated June 1, 1993 is hereby REINSTATED with MODIFICATION. The Private Respondents,
Trans-Global Maritime Agency, Inc. and Esso International Shipping Co.,Ltd. are hereby jointly
and severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited
contributions as provided under the Consecutive Enlistment Incentive Plan(CEIP).

Submitted by: Balbarino, Cherry Anjell L.

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TIERRA INTERNATIONAL CONSTRUCTION CORPORATION, PERINIJMONENCO, CHERRY

LYNN S. RICAFRENTE and KENNETH BUTT, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION,
MANUEL S. CRUZ, RAYMUNDO G. NEPA and ROLANDO F. CARINO, respondents.
G.R. No. 101825. April 2, 1996
SECOND DIVISION

DOCTRINE: LABOR LAW AND SOCIAL LEGISLATION; LABOR CODE; RIGHT OF EMPLOYER
TO REGULATE ALL ASPECTS OF EMPLOYMENT; SHOULD BE EXERCISED IN KEEPING WITH
GOOD FAITH. - The right of an employer to regulate all aspects of employment is recognized.
Let there be no doubt about this. This right, aptly called management prerogative, gives
employers the freedom to regulate, according to their discretion and best judgment, all aspects
of employment including work assignments, working methods, processes to be followed,
working regulations, transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of work. But the exercise of this right must be in keeping with
good faith and not be used as a pretext for defeating the rights of employees under the laws
and applicable contracts.

FACTS: Herein Private respondents Manuel S. Cruz, Raymundo G. Nepa and Rolando F. Cario
were recruited by petitioner Tierra International Construction Corporation to work as transit
mixer, truck driver, and batch plant operator, respectively, in a construction project at Diego
Garcia, British Indian Ocean Territory for a contract of 12 months but was dismissed from
work for allegedly not carrying out their supervisor‘s order and were repatriated to the
Philippines after almost 2 months since hire. Private respondents filed a complaint for illegal
dismissal with the POEA, claiming that, in violation of their contract of employment, they had
been required to perform work not related to the jobs for which they had been hired. POEA
dismissed the complaint saying that no evidence had been presented to support this allegation
but ordered herein petitioners to pay their salaries. Respondents appealed to the NLRC which
found that respondents were illegally dismissed. Petitioners filed a motion for reconsideration
but their motion was denied for lack of merit. Hence this petition.

ISSUE: Whether or not private respondents were dismissed because they had been required to
dig canals and haul construction materials and they refused to do so,

HELD: There is therefore basis for the finding of the NLRC that private respondents had been
required to dig canals, make excavations, and haul construction materials. It is not disputed
that to make them do this would be to require them to do work not connected to their
employment as transit mixer, truck driver and batch operator. They were therefore fully
justified in refusing to do the assignment.
The right of an employer to regulate all aspects of employment is recognized. Let there be no
doubt about this. This right, aptly called management prerogative, gives employers the freedom
to regulate, according to their discretion and best judgment, all aspects of employment,
including work assignments, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and

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recall of work. But the exercise of this right must be in keeping with good faith and not be used
as a pretext for defeating the rights of employees under the laws and applicable contracts.

Ditan, petitioner
vs.
POEA Administrator, respondents
G.R. No. 79560. December 3, 1990

DOCTRINE: Labor contracts must be interpreted liberally in favor of the worker.

FACTS: Andres E. Ditan was recruited by respondent Intraco Sales Corporation, through its
local agent, Asia World, the other respondent, to work in Angola as a welding supervisor. The
contract was for nine months, at a monthly salary of US$1,100.00 or US$275.00 weekly, and
contained the required standard stipulations for the protection of our overseas workers.

Arriving in Luanda, capital of Angola, the petitioner was assigned as an ordinary welder in the
INTRACO central maintenance shop from December 2 to 25, 1984. Meanwhile, he was
informed that would be transferred to Kafunfo, some 350 kilometers east of Luanda. This was
the place where, earlier that year, the rebels had attacked and kidnapped expatriate workers,
killing two Filipinos in the raid.

Naturally, Ditan was reluctant to go. However, he was assured by the INTRACO manager that
Kafunfo was safe and adequately protected by government troops; moreover, he was told he
would be sent home if he refused the new assignment. In the end, he relented and agreed.

On December 29, 1984, his fears were confirmed. The Unita rebels attacked the diamond
mining site where Ditan was working and took him and sixteen other Filipino hostages, along
with other foreign workers. It was only on March 16, 1985, that the hostages were finally
released after theintercession of their governments and the International Red Cross. Sixdays
later, Ditan and the other Filipino hostages were back in the Philippines.

The repatriated workers had been assured by INTRACO that they would be given priority in re-
employment abroad, and eventually eleven of them were taken back. Ditan having been
excluded, he filed a complaint against the respondents for breach of contract and various other
claims.

Specifically, he sought the amount of US$4,675.00, representing his salaries for the unexpired
17 weeks of his contract; US$25,000.00 as war risk bonus; US$2,196.50 as the value of his
lost belongings; US$1,100 for unpaid vacation leave; and moral and exemplary damages in the
sum of US$50,000.00, plus attorney‘s fees.

POEA: It dismissed all the claims.

NLRC: It affirmed in toto the decision of the POEA. Hence, this petition.

ISSUE:Whether or not the decision of the NLRC should be modified.

HELD: Yes.

The claims for breach of contract and war risk bonus deserve a little more reflection in view of
the peculiar circumstances of the present case.

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A strict interpretation of the cold facts before the court might support the position taken by the
respondents. However, the court is dealing here not with an ordinary transaction but with a
labor contract which deserves special treatment and a liberal interpretation in favor of the
worker. The Constitution mandates the protection of labor and the sympathetic concern of the
State for the working class conformably to the social justice policy. This is a command that the
court cannot disregard in the resolution of the case before it. The paramount duty of the Court
is to render justice through law. The law in this case allows two opposite interpretations, one
strictly in favor of the employers and the other liberally in favor of the worker. The choice is
obvious. The court find, considering the totality of the circumstances attending this case, that
the petitioner is entitled to relief.

Hence, petitioner is entitled to the salary corresponding to the 17 unserved weeks of his
employment contract, which was terminated by the private respondents despite his willingness
to work out the balance of his term.
Submitted by: Bayot, Kristine Valerie S.

VINTA MARITIME CO., INC. and ELKANO SHIP MANAGEMENT, INC., petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION and LEONIDES C. BASCONCILLO,
respondents.
G.R. No. 113911, January 23, 1998
(Third Division)

DOCTRINE: To justify an employee‘s dismissal, the employer has the burden of proving the
presence of just cause and due process. An illegally dismissed worker whose employment is for
a fixed period is entitled to payment of his salaries corresponding to the unexpired portion of
his contract.

FACTS: This case arose from a complaint for illegal dismissal by private respondent herein,
Leonides O. Basconcillo, against petitioner companies, Vinta Maritime Company, Incorporation
and the El Kano Ship Management Incorporated, before the POEA Adjudication Office. Private
respondent, a licensed Marine Engineer since 1970, was hired as Chief Engineer for M.V.
Boracay by the shipping company, Vinta Maritime Company, Incorporated, thru its accredited
manning agent, the Elkano Ship Management, Inc. The crew contract for his employment was
effective for a fixed duration of one (1) year. So on February 18, 1987, private respondent joined
the vessel at the port of Rotterdam, the Netherlands, and assumed his duties and
responsibilities as Chief Engineer. Barely three (3) months after boarding the vessel, private
respondent was informed by Captain Jose B. Orquinaza, the ships Master, that he was relieved
of his duties per recommendation of the Marine Superintendent, Mr. Peter Robinson, due to his
poor performance (Annex G, Petition). He was in effect terminated from the service. This came
after private respondent had a verbal altercation with Robinson, a British national, regarding
the discipline or lack thereof of the Filipino crew under private respondent‘s supervision. No
inquiry or investigation, however, regarding his supposed incompetence or negligence was ever
conducted; neither was private respondent furnished with a notice or memorandum regarding
the cause of his dismissal.

Private respondent was made to disembark at the port of Oslo, Norway, and immediately
repatriated to the country. Contrary to his perceived incompetence, private respondents
Seamens Book contained the following entries: Conduct - Very good; Ability - Very good;
Remarks - Highly Recommended.

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ISSUE: Whether or not Leonides Basconcillo was illegally dismissed.

HELD: YES.

Where there is no showing of a clear, valid, and legal cause for the termination of employment,
the law considers the matter a case of illegal dismissal. Verily, the burden is on the employer to
prove that the termination was for a valid or authorized cause.[25] For an employee‘s dismissal
to be valid, (1) the dismissal must be for a valid cause and (2) the employee must be afforded
due process.[26] Article 282 of the Labor Code lists the following causes for termination of
employment by the employer: (1) serious misconduct or willful disobedience of lawful orders in
connection with his or her work, (2) gross and habitual neglect of duties, (3) fraud or willful
breach of trust, (4) commission of a crime or an offense against the person of the employer or
his immediate family member or representative, and (5) analogous cases.

The absence of a valid cause for termination in this case is patent. Petitioners allege that
private respondent was dismissed because of his incompetence, enumerating incidents in proof
thereof. However, this is contradicted by private respondent‘s seaman‘s book which states that
his discharge was due to an emergency leave. Moreover, his alleged incompetence is belied by
the remarks made by petitioners in the same book that private respondent‘s services were
highly recommended and that his conduct and ability were rated very good. Petitioners‘
allegation that such remark and ratings were given to private respondent as an accommodation
for future employment fails to persuade. The Court cannot consent to such an accommodation,
even if the allegation were true, as it is a blatant misrepresentation. It cannot exculpate
petitioners based on such (mis)representation. When petitioners issued the accommodation,
they must have known its possible repercussions. They cannot be allowed to turn against their
representation.
Submitted by: Bonquin, Jezrael B.

R.A. 8042 Migrant Workers Act

MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS, respondents.
G.R. No. 127195, August 25, 1999
(SECOND DIVISION)

DOCTRINE: In legal hermeneutics that in interpreting a statute, care should be taken that
every part or word thereof be given effect since the law-making body is presumed to know the
meaning of the words employed in the statue and to have used them advisedly. Ut res magis
valeat quam pereat.

FACTS: Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local
manning agent of petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned
and operated by DIAMANTIDES, for a contract period of ten (10) months with a monthly salary
of US$600.00, evidenced by a contract between the parties. Cajeras started work but less than
two (2) months later, he was repatriated to the Philippines allegedly by mutual consent.

Thereafter, private respondent Cajeras filed a complaint for illegal dismissal against petitioners
with the NLRC National Capital Region Arbitration Branch alleging primarily that he was
dismissed illegally. Cajeras alleged that he was assigned not only as Chief Cook Steward but
also as assistant cook and messman in addition to performing various inventory and
requisition jobs. Because of his additional assignments he began to feel sick just a little over a

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month on the job constraining him to request for medical attention. MARSAMAN and
DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal.

The Labor Arbiter, resolved the dispute in favor of private respondent Cajeras declaring the
repatriation and dismissal of complaint Wilfredo T. Cajeras as illegal and ordering respondents
Marsaman Manning Agency, Inc. and Diamantides Maritime, Inc. to jointly and severally pay
complainant. Upon appeal, the NLRC affirmed the appealed findings and conclusions of the
Labor Arbiter. Petitioners' motion for reconsideration was denied by the NLRC. Hence, this
petition.

ISSUE: Whether or not the NLRC committed grave abuse of discretion in ordering a monetary
award beyond the maximum of three (3) months salary for every year of service set by RA 8042.

HELD: NO.

The rule has always been that an illegally dismissed worker whose employment is for a fixed
period is entitled to payment of his salaries corresponding to the unexpired portion of his
employment. However, RA 8042 otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995 took effect, Sec. 10 of which provides: Sec. 10. In case of termination of
overseas employment without just, valid or authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of his placement fee with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired portion of the employment
contract or for three (3) months for every year of the unexpired term whichever is less. We
agree with petitioners that Sec. 10, RA 8042, applies in the case of private respondent and to
all overseas contract workers dismissed on or after its effectivity on 15 July 1995 in the same
way that Sec. 34, RA 6715, is made applicable to locally employed workers dismissed on or
after 21 March 1989. However, we cannot subscribe to the view that private respondent is
entitled to three (3) months salary only. A plain reading of Sec. 10 clearly reveals that the
choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether
his salaries for the unexpired portion of his employment contract or three (3) months salary for
every year of the unexpired term, whichever is less, comes into play only when the employment
contract concerned has a term of at least one (1) year or more. This is evident from the words
for every year of the unexpired term which follows the words salaries x x x for three months. To
follow petitioners thinking that private respondent is entitled to three (3) months salary only
simply because it is the lesser amount is to completely disregard and overlook some words
used in the statute while giving effect to some. This is contrary to the well-established rule in
legal hermeneutics that in interpreting a statute, care should be taken that every part or word
thereof be given effect since the law-making body is presumed to know the meaning of the
words employed in the statue and to have used them advisedly. Ut res magis valeat quam
pereat. Thus the questioned Decision and Resolution dated 16 September 1996 and 12
November 1996, respectively, of public respondent National Labor Relations Commission are
AFFIRMED.

Asian Center for Career and Employment System and Services, Inc. (ACCESS) vs. NLRC,
297 SCRA 727, G.R. No. 131656 October 12, 1998

DOCTRINE: Remedial Law; Actions; Jurisdiction; As a rule, jurisdiction is determined by the

law at the time of the commencement of the action; RA 8042 which took effect in July 1995
applies to the case at bar.—As a rule, jurisdiction is determined by the law at the time of the
commencement of the action. In the case at bar, private respondent‘s cause of action did not
accrue on the date of his employment or on February 28, 1995. His cause of action arose only

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from the time he was illegally dismissed by petitioner from service in June 1996, after his
vacation leave expired. It is thus clear that R.A. 8042 which took effect a year earlier in July
1995 applies to the case at bar.

FACTS: Petitioner hired respondent IBNO MEDIALES to work as a mason in Jeddah, Saudi
Arabia with a monthly salary of 1,200 Saudi Riyals (SR). The term of his contract was two (2)
years, from February 28, 1995 until February 28, 1997. On May 26, 1996, respondent applied
with petitioner for vacation leave with pay and was granted. While en route to the Philippines,
his co-workers informed him that he has been dismissed. Respondent filed a complaint with
the labor arbiter for illegal dismissal. And if found guilty, to pay the unexpired portion of the
respondent‘s contract which is 1,200 multiplied by 8 months representing the unexpired
portion.Petitioner appealed to the NLRC but the latter affirmed the decision of labor arbiter but
modified the appealed decision by deleting the order of refund of excessive placement fee for
lack of jurisdiction. Petitioner moved for reconsideration with respect to the labor arbiter‘s
award by invoking Section 10 RA 8042 that a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less that is why it should be three years should be used for the unexpired portion. NLRC
denied the motion. Hence, this petition for certiorari.

ISSUE: Whether the monetary awards granted by the NLRC to private respondent is correct.

HELD: In the case at bar, private respondents cause of action did not accrue on the date of his
date of his employment or on February 28, 1995. His cause of action arose only from the-time
he was illegally dismissed by petitioner from service in June 1996, after his vacation leave
expired. It is thus clear that R.A. 8042 which took effect a year earlier in July 1995 applies to
the case at bar. Under Section 10 of R.A. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less. In the case at bar, the unexpired portion of private respondents employment contract is
eight (8) months. Private respondent should therefore be paid his basic salary corresponding to
three (3) months or a total of SR3,600. The Court finds that the labor arbiter‘s award of a
higher amount in the dispositive portion was clearly an error for there is nothing in the text of
the decision which support the award of said higher amount. We reiterate that the correct
award to private respondent for the unexpired portion of his employment contract is SR3,600.
Submitted by: Chen, Timothy

ATHENNA INTERNATIONAL MANPOWER SERVICES, INC., Petitioners,

vs.
NONITO VILLANOS, Respondents.
G.R. No. 151303. April 15, 2005
(First Division)

DOCTRINE: An employee voluntarily resigns when he finds himself in a situation where he

believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus,
he has no other choice but to disassociate himself from his employment.

FACTS: Respondent applied to work overseas thru petitioner and was alleged assessed
₱94,000 placement fee by petitioner. As he had only ₱30,000 to pay, petitioner agreed that the
remaining balance of ₱64,000 shall be paid through salary deductions upon his deployment.
Respondent‘s Contract of Employment with a certain Wei Yu Hsien arrived which states that he

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was to work as caretaker for one year, ten months and twenty-eight days. When he flew to
Taiwan, Respondent alleged that he was assigned to a mechanical shop, owned by Hsien, as a
hydraulic installer/repairer for car lifters, instead of the job for which he was hired. He did not,
however, complain because he needed money to pay for the debts he incurred back home.

Barely a month after his placement, he was terminated by Hsien. Upon his arrival in the
Philippines, he immediately went to petitioner‘s office and confronted its representative about
the assignment given to him and demanded that he be reimbursed the ₱30,000 he paid as
downpayment. Instead of returning the said amount, petitioner gave him a summary of
expenses amounting to ₱30,493, which it allegedly incurred for his deployment abroad.
Respondent filed a complaint against petitioner for illegal dismissal, violation of contract, and
recovery of unpaid salaries and other benefits before the NLRC.

Labor Arbiter rendered a Decision holding petitioner and Wei Yu Hsien solidarily liable for the
wages representing the unserved portion of the employment contract, the amount unlawfully
deducted from respondent‘s monthly wage, moral damages, exemplary damages and attorney‘s
fees. For the remittance of illegal placement fee in the amount of ₱99,110, petitioner was held
solely liable. x x x

ISSUE: Whether or not the respondent voluntarily resigned from his employment and not
illegally dismissed.

Whether or not, assuming that the respondent was illegally dismissed, it was proper for the CA
to affirm in toto the monetary awards in the Decision of the Labor Arbiter (award of his
supposed salaries for the entire unexpired portion of his employment contract and the award of
"remittance of placement fee")

HELD: NO. An employee voluntarily resigns when he finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus,
he has no other choice but to disassociate himself from his employment.

Records show that upon his repatriation from Taiwan, respondent immediately went to
petitioner‘s office and confronted its representative, Lorenza Ching, about the assignment given
to him which was contrary to the agreed position of caretaker, for which he specifically applied.
He demanded that he be reimbursed the ₱30,000 he paid as downpayment. When refused, he
lodged a complaint with the POEA. He also immediately filed a complaint for illegal dismissal
before Labor Arbiter Cresencio R. Iniego, upon his arrival in his hometown, indicating that
respondent did not voluntarily resign, but was forced to resign, which was tantamount to a
dismissal. Petitioner did not refute respondent‘s contentions regarding these incidents. Further,
it failed to prove the legality of the dismissal, despite the fact that the burden of proof lies on
the employment and recruitment agency. Thus, the presumption stands to the effect that
respondent was illegally dismissed by his employer.

Even assuming respondent was a mere probationary employee as claimed by petitioner,

respondent could only be terminated for a pertinent and just cause, such as when he fails to
qualify as a regular employee in accordance with reasonable standards of employment made
known to him by his employer at the time of his engagement. Here, it appears that the
petitioner failed to prove that, at the time of respondent‘s engagement, the employer‘s
reasonable standards for the job were made known to respondent. Moreover, in this case,
respondent was assigned to a job different from the one he applied and was hired for.

NO. The amounts has been partially modified by the Supreme Court. Pertinent to this
issue is Section 10 of Rep. Act No. 8042

SEC. 10. Money Claims. - . . .

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In case of termination of overseas employment without just, valid or authorized cause as

defined by law or contract, the worker shall be entitled to the full reimbursement of his
placement fee with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.

Thus, for the computation of the lump-sum salary due an illegally dismissed overseas
employee, there are two clauses as points of reckoning: first is the cumulative salary for the
unexpired portion of his employment; and the other is the grant of three months salary for
every year of the unexpired term, whichever is lesser.

Since respondent was dismissed after only one month of service, the unexpired portion of his
contract is admittedly one year, nine months and twenty-eight days. But the applicable clause
is not the first but the second: three months salary for every year of the unexpired term, as the
lesser amount, hence it is what is due the respondent.

Note that the fraction of nine months and twenty-eight days is considered as one whole year
following the Labor Code. x x x

Under the aforequoted provision, an illegally dismissed overseas worker is also entitled to the
full reimbursement of his placement fee with interest at twelve percent (12%) per annum.

We note that while respondent was assessed ₱94,000 in placement fee, he paid only ₱30,000
on the agreement that the balance of ₱64,000 would be paid on a monthly salary deduction
upon his deployment. Hence, we cannot grant respondent reimbursement of the entire
assessed amount of ₱94,000. He is only entitled to the reimbursement of the amount of
placement fee he actually paid, which is the ₱30,000 he gave as downpayment plus interest at
twelve percent (12%) per annum.
Submitted by: Del Rosario, Eunice

Death and Other Benefits, Basis of Compensation

EASTERN SHIPPING LINES, INC. VS

PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA)
G.R. NO. 76633 OCTOBER 18, 1988
FIRST DIVISION

DOCTRINE: Under the 1985 Rules and Regulations on Overseas Employment, overseas
employment is defined as "employment of a worker outside the Philippines, including
employment on board vessels plying international waters, covered by a valid contract. A
contract worker is described as "any person working or who has worked overseas under a valid
employment contract and shall include seamen‖ or "any person working overseas or who has
been employed by another which may be a local employer, foreign employer, principal or
partner under a valid employment contract and shall include seamen." These definitions clearly
apply to Vitaliano Saco for it is not disputed that he died while under a contract of employment

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with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed
in a foreign country.

FACTS: Vitaliano Saco, Chief Officer of the M/V Eastern Polaris was killed in an accident in
Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797
and Memorandum Circular No. 2 of the POEA. The award consisted of P180,000.00 as death
benefits and P12,000.00 for burial expenses. The decision is challenged by the petitioner on the
principal ground that the POEA had no jurisdiction over the case as the husband was not an
overseas worker.
ISSUE/S:
1. Whether or not there is a valid delegation of legislative power
2. Whether or not POEA had no authority to promulgate the said regulation

HELD:

1. Yes. There are two accepted tests to determine whether or not there is a valid delegation of
legislative power, viz, the completeness test and the sufficient standard test. Under the first
test, the law must be complete in all its terms and conditions when it leaves the legislature
such that when it reaches the delegate the only thing he will have to do is enforce it. Under the
sufficient standard test, there must be adequate guidelines or stations in the law to map out
the boundaries of the delegate's authority and prevent the delegation from running riot.
The principle of non-delegation of powers is applicable to all the three major powers of the
Government but is especially important in the case of the legislative power because of the many
instances when its delegation is permitted. The occasions are rare when executive or judicial
powers have to be delegated by the authorities to which they legally certain. In the case of the
legislative power, however, such occasions have become more and more frequent, if not
necessary. This had led to the observation that the delegation of legislative power has become
the rule and its non-delegation the exception.
2. No. The authority to issue the said regulation is clearly provided in Section 4(a) of Executive
Order No. 797, reading as follows that ―The governing Board of the Administration (POEA), as
hereunder provided shall promulgate the necessary rules and regulations to govern the
exercise of the adjudicatory functions of the Administration (POEA). ―

Submitted by: Elauria, J. Paulo Relunia

INTERORIENT MARITIME ENTERPRISES, INC., FIRCROFT SHIPPING CORPORATION and

TIMES SURETY & INSURANCE CO., INC.
vs.
NATIONAL LABOR RELATIONS COMMISSION and CONSTANCIA PINEDA
G.R. No. 115497. September 16, 1996

DOCTRINE: The obligations and liabilities of the herein petitioners do not end upon the
expiration of the contracted period as petitioners are duty bound to repatriate the seaman to
the point of hire to effectively terminate the contract of employment

FACTS: The proceedings below originated as a claim for death compensation benefits filed by
Constancia Pineda as heir of her deceased son, seaman Jeremias Pineda, against Interorient
Maritime Enterprises, Inc. and its foreign principal, Fircroft Shipping Corporation and the
Times Surety and Insurance Co., Inc. The following facts were found by the POEA
Administrator:

Deceased seaman, Jeremias Pineda was contracted to work as Oiler on board the vessel, MV
Amazonia, owned and operated by its foreign principal, Fircroft Shipping Corporation for a

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period of nine (9) months with additional three (3) months upon mutual consent of both parties
with a monthly basic salary of US$276.00 plus fixed overtime rate of US$83.00 and a leave pay
of 2 1/2 days per month; that on October 2, 1989, he met his death when he was shot by a
Thai Policeman in Bangkok, Thailand; that considering that the deceased seaman was
suffering from mental disorders aggravated by threats on his life by his fellow seamen, the Ship
Captain should not have allowed him to travel alone.

The agency averred that deceased seaman signed a contract of employment as Oiler for a
period of nine (9) months with additional three (3) months upon mutual consent of both parties
with a monthly salary of US$276.00, fixed overtime rate of US$83.00; that on December 21,
1988, deceased seaman joined the vessel MV Amazonia and proceeded to discharge his duties
as Oiler; that on September 28, 1989, he finished his contract and was discharged from the
port of Dubai for repatriation to Manila; that his flight schedule from Dubai to the Philippines
necessitated a stopover at Bangkok, Thailand, and during said stopover he disembarked on his
own free will and failed to join the connecting flight to Hongkong with final destination to
Manila; that on October 5, 1990, it received a fax transmission from the Department of Foreign
Affairs to the effect that Jeremias Pineda was shot by a Thai Officer on duty on October 2, 1989
at around 4:00 P.M.; that the police report submitted to the Philippine Embassy in Bangkok
confirmed that it was Pineda who approached and tried to stab the police sergeant with a knife
and that therefore he was forced to pull out his gun and shot Pineda; that they are not liable to
pay any death/burial benefits pursuant to the provisions of Par. 6, Section C, Part II, POEA
Standard Format of Employment which state(s) that no compensation shall be payable in
respect of any injury, (in)capacity, disability or death resulting from a willful (sic) act on his
own life by the seaman; that the deceased seaman died due to his own wilfull (sic) act in
attacking a policeman in Bangkok who shot him in self-defense.

ISSUES: Whether the petitioners can be held liable for the death of seaman Jeremias Pineda.

HELD: YES.

Par. 6, Section C, Part II of the POEAs Standard Format Contract of Employment for Seamen
states that:

No compensation shall be payable in respect of any injury, incapacity, disability or death

resulting from a (deliberate or) willful act on his own life by the seaman(,) provided, however,
that the employer can prove that such injury, incapacity, disability or death is directly
attributable to the seaman.

However in this case, the deceased suffered from mental disorder at the time of his
repatriation means that he must have been deprived of the full use of his reason, and that
thereby, his will must have been impaired, at the very least. Thus, his attack on the policeman
can in no wise characterized as a deliberate, willful or voluntary act on his part. As such, the
aforequoted provision of the Standard Format Contract of Employment exempting the employer
from liability should not apply.

Secondly, and apart from that, we also agree that in light of the deceased mental condition,
petitioners should have observed some precautionary measures and should not have allowed
said seaman to travel home alone, and their failure to do so rendered them liable for the death
of Pineda. Indeed, the obligations and liabilities of the (herein petitioners) do not end upon the
expiration of the contracted period as (petitioners are) duty bound to repatriate the seaman to
the point of hire to effectively terminate the contract of employment.

The responsibility of the foreign employer to see to it that Pineda was duly repatriated to the
point of hiring subsisted. Section 4, Rule VIII of the Rules and Regulations Governing Overseas
Employment clearly provides for the duration of the mandatory personal accident and life
insurance covering accidental death, dismemberment and disability of overseas workers:

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Section 4. Duration of Insurance Coverage. -- The minimum coverage shall take effect upon
payment of the premium and shall be extended worldwide, on and off the job, for the duration
of the workers contract plus sixty (60) calendar days after termination of the contract of
employment; provided that in no case shall the duration of the insurance coverage be less than
one year.
Submitted by: Escol, Hanzel Grace

NORSE MANAGEMENT CO., petitioners,

vs.
NATIONAL SEAMEN BOARD , respondents.
G.R. No. L-54204, September 30, 1982
(FIRST DIVISION)

DOCTRINE: Article 20, Labor Code of the Philippines, provides that the National Seamen
Board has original and exclusive jurisdiction over all matters or cases including money claims,
involving employer-employee relations, arising out of or by virtue of any law or contracts
involving Filipino seamen for overseas employment. Thus, it is safe to assume that the Board is
familiar with pertinent Singapore maritime laws relative to workmen's compensation. Moreover,
the Board may apply the rule on judicial notice and, "in administrative proceedings, the
technical rules of procedure — particularly of evidence — applied in judicial trials, do not
strictly apply."

FACTS: Restituta Abordo filed a complaint with the National Seamen Board for "death
compensation benefits, accrued leave pay and time-off allowances, funeral expenses, attorney's
fees and other benefits and reliefs available in connection with the death of Napoleon B. Abordo
his husband. She alleged that the amount of compensation due her from the respondent
should be based on the law where the vessel is registered which is Singapore. Respondent
contend that the law of Singapore should not be applied in this case because the National
Seamen Board cannot take judicial notice of the Workmen's Insurance Law of Singapore. The
Ministry of Labor and Employment ruled in favor of the petitioner and subsequently the
Ministry of Labor affirmed the decision hence recourse by the respondent to the High Court

ISSUE: Whether or not the National Seamen Board take judicial notice of the law of Singapore

HELD: Yes, the National Seamen Board may take judicial notice of the law of SingaporeIn the
ruling of the Ministry of Labor ―For well-settled also is the rule that administrative and quasi-
judicial bodies are not bound strictly by technical rules. It has always been the policy of this
Board, as enunciated in a long line of cases, that in cases of valid claims for benefits on
account of injury or death while in the course of employment, the law of the country in which
the vessel is registered shall be considered. We see no reason to deviate from this well-
considered policy. Certainly not on technical grounds as movants herein would like us to.‖

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In the aforementioned "Employment Agreement" between petitioners and the late Napoleon B.
Abordo, it is clear that compensation shall be paid under Philippine Law or the law of registry
of petitioners' vessel, whichever is greater. Since private respondent Restituta C. Abordo was
offered P30,000.00 only by the petitioners, Singapore law was properly applied in this case.The
"Employment Agreement" is attached to the Supplemental Complaint of Restituta C. Abordo
and, therefore, it forms part thereof. As it is familiar with Singapore Law, the National Seamen
Board is justified in taking judicial notice of and in applying that law.

Article 20, Labor Code of the Philippines, provides that the National Seamen Board has original
and exclusive jurisdiction over all matters or cases including money claims, involving
employer-employee relations, arising out of or by virtue of any law or contracts involving
Filipino seamen for overseas employment. Thus, it is safe to assume that the Board is familiar
with pertinent Singapore maritime laws relative to workmen's compensation. Moreover, the
Board may apply the rule on judicial notice and, "in administrative proceedings, the technical
rules of procedure — particularly of evidence — applied in judicial trials, do not strictly apply."

Submitted by: Gonzales, Van Angelo G.

NFD INTERNATIONAL MANNING AGENTS and BARBER INTERNATIONAL A/S, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and NELIA MISADA, for herself and in
behalf of her minor children CAESAR and ALPHA JOY, all surnamed MISADA and
HIMAYA ENVIDIADO, for herself and in behalf of her minor children HENREA, HAZEL,
and HENDRICK, all surnamed ENVIDIADO, respondents.
G.R. No. 116629. January 16, 1998
(Second Division)
DOCTRINE: The death of a seaman during the term of his employment makes the employer
liable to the former's heirs for death compensation benefits. The POEA Standard Employment
Contract fixes the amount at U.S.$50,000.00 and an additional amount of U.S.$7,000.00 for
each child, not exceeding four, under twenty-one years of age. The employer becomes liable
once it is established that the seaman died during the effectivity of his employment contract.
This rule, however, is not absolute. The employer may be exempt from liability if he can
successfully prove that the seaman's death was caused by an injury directly attributable to his
deliberate or willful act.

FACTS: Petitioner is a domestic manning corporation, engaged the services of Misada and
Envidiado to work for petitioner Barber International A/S (Barber), a Norwegian shipping
company. Misada and Envidiado were hired as second and third officers, respectively, on board
the vessel M/V Pan Victoria. They were to travel from Sweden to South Korea for a period of ten
months from January 1991 to November 1991.On July 1991, both private respondents Nelia
Misada and Himaya Envidiado received notice that their husbands died on June 28, 1991
while on board the M/V Pan Victoria.

As heirs of the deceased seamen filed for death compensation benefits under the POEA
Standard Contract of Employment and the Norwegian National Insurance Scheme (NIS) for
Filipino Officers. Their claims were denied by petitioners.In their Answer, petitioners claimed
that private respondents are not entitled to death benefits on the ground that the seamen's
deaths were due to their own willful act. They alleged that the deceased were among three (3)
Filipino seamen who implanted fragments of reindeer horn in their respective sexual organs on
or about June 18, 1991; that due to the lack of sanitary conditions at the time and place of
implantation, all three seamen suffered "severe tetanus" and "massive viral infections;" that

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Misada and Envidiado died within days of the other; that the third seaman, Arturo Fajardo,
narrowly missed death only because the vessel was at port in Penang, Malaysia at the time the
tetanus became critical.The POEA Administrator dismissed the case for lack of merit.Hence
this petition.

ISSUE:Whether respondent Commission gravely erred in finding that the deaths of the two
seamen, Eduardo Misada and Enrico Envidiado, did not come as a result of their willful and
deliberate act.

HELD: Part II, Section C, No. 1, Paragraph 1 of the POEA "Standard Employment Contract
Governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels" provides
that:

"1. In case of death of the seaman during the term of this Contract, the employer shall pay his
beneficiaries the Philippine Currency equivalent to the amount of U.S.$50,000.00 and an
additional amount of U.S.$7,000.00 to each child under the age of twenty-one (21) but not
exceeding four children at the exchange rate prevailing during the time of payment.

x x x."

Part II, Section C, No. 6 of the same Standard Employment Contract also provides:

"6. No compensation shall be payable in respect of any injury, incapacity, disability or death
resulting from a willful act on his own life by the seaman, provided, however, that the employer
can prove that such injury, incapacity, disability or death is directly attributable to him."The
death of a seaman during the term of his employment makes the employer liable to the
former's heirs for death compensation benefits. The POEA Standard Employment Contract fixes
the amount at U.S.$50,000.00 and an additional amount of U.S.$7,000.00 for each child, not
exceeding four, under twenty-one years of age. The employer becomes liable once it is
established that the seaman died during the effectivity of his employment contract. This rule,
however, is not absolute. The employer may be exempt from liability if he can successfully
prove that the seaman's death was caused by an injury directly attributable to his deliberate or
willful act.
In the instant case, petitioners claim that the deaths of the two seamen came as a result of
their self-inflicted injuries. The testimonies of the officers are insufficient to prove the fact that
Misada's and Envidiado's deaths were caused by self-inflicted injuries. The testimonies were
given by people who merely observed and narrated the circumstances surrounding the deaths
of the two seamen and the illness of Fajardo. Fajardo himself did not submit any testimony
regarding the implantation. The testimonies of the officers are, at best, hearsay. Moreover, the
officers did not have the competence to make a medical finding as to the actual cause of the
deaths. No autopsy report was presented to corroborate their testimonies. On the contrary,
Eduardo Misada was medically diagnosed to have died of "acute laryngo-trachea bronchitis
with pneumonia probably due to viral cause." This was declared in his "Cause of Death Form"
after his dead body was examined.

Enrico Envidiado was not issued a "Cause of Death Form." While still alive, he was examined in
Galle, Sri Lanka by Consultant Physician Chandima de Mel who found a wound in his penis
and diagnosed his illness as "severe tetanus." His "Certificate for Removal of A Dead Body"
stated that Envidiado died of "viral myocarditis-- natural causes."

The "Certificate for Removal of a Dead Body" and "Certificate of Embalming" are not proofs of
the real cause of death. Their probative value is confined only to the fact of death. These
documentary evidence, however, did not at all indicate that Envidiado died of tetanus as
previously diagnosed by Dr. de Mel. And despite Dr. de Mel's allegedly correct diagnosis,
Envidiado died a few days later.As correctly found by respondent Commission, petitioners'

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evidence insufficiently proves the fact that the deaths of the two seamen were caused by their
own willful and deliberate act. And even if the seamen implanted fragments of reindeer horn in
their sex organs, the evidence does not substantially prove that they contracted tetanus as a
result of the unsanitary surgical procedures they performed on their bodies. Neither does the
evidence show that the tetanus was the direct cause of their deaths. IN VIEW WHEREOF, the
petition is dismissed.
Submitted by: Gumtang, Lianne

Overseas Compensation Benefits in Dollars

PHILIPPINE INTERNATIONAL SHIPPING CORPORATION VS. NLRC
G.R. No. L-63535 May 27, 1985
ALAMPAY, J.

DOCTRINE: The fixing of the award in dollars based on the parties‘ employment contract does
not violate Republic Act No. 529 which makes it unlawful to require payment of domestic
obligations in foreign currency.

FACTS: The case at bar stems from a claim for disability compensation benefits and
hospitalization expenses under employment contract, filed by private respondent herein,
Brigido Samson, against the petitioner before the National Seaman's Board (NSB).On April 2,
1981, a decision was rendered on by the Executive Director of the NSB, ordering petitioner
herein to pay US $3,800 for disability compensation benefits. Petitioner argued that there was
already a previous payment to satisfy such claims for a total of 18,000 Php.

ISSUE: Whether or not there was error in ordering payment of award for damages in dollars.

HELD: While it is true that Republic Act No. 529 makes it unlawful to require payment of
domestic obligations in foreign currency, this particular statute is not applicable to the case at
bar. A careful reading of the decision rendered by the Executive Director of the NSB dated April
2,1981 and which led to the Writ of Execution protested to by petitioner, will readily disclose
that the award to the private respondent does not compel payment in dollar currency but in
fact expressly allows payment of "its equivalent in Philippine currency." Moreover, as pointed
out by public respondent, without any subsequent controversies interposed by petitioner, the
fixing of the award in dollars was based on the parties employment contract, stipulating wages
and benefits in dollars since private respondent was engaged as an overseas seaman on board
petitioner's foreign vessel.

Submitted by: Jabal, Joel Malcolm D.

McKenzie v. Cui, G.R. No. 48831, Feb. 6, 1989

Cannot be found.

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Article 20: National Seamen Board

VIR-JEN SHIPPING AND MARINE SERVICES, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO BISULA RUBEN ARROZA JUAN
GACUTNO LEONILO ATOK, NILO CRUZ, ALVARO ANDRADA, NEMESIO ADUG SIMPLICIO
BAUTISTA, ROMEO ACOSTA, and JOSE ENCABO Respondents.
G.R. No. L-58011 & L-58012, November 18, 1983
EN BANC

FACTS: Seamen entered into contracts of employment with the Company (VIR-JEN SHIPPING),
engaging to work on board M/T 'Jannu' for 12 months. After the Seamen boarded their vessel,
the master of the vessel received a cable from the Company advising him that the vessel might
be directed to call at ITF-controlled ports (International Transport Workers Federation). Officers
and crew were not agreeable; that they were not interested in ITF membership if not actually
paid with ITF rate. Company sought authority from the NSB (National Seamen Board) to cancel
the contracts of employment of the Seamen, claiming that its principals had terminated their
manning agreement because of the actuations of the Seamen. The request was granted by the
NSB. Upon arrival in Japan, they were asked to disembark from the vessel, their contracts
were terminated, and they were repatriated to Manila. Respondents filed a complaint for illegal
dismissal with the NSB. The NSB rendered a decision declaring that the seamen breached their
employment contracts when they demanded over and above their contracted rates. The
dismissal of the seamen was declared legal and the seamen were ordered suspended. The
seamen appealed the decision to the NLRC which reversed the decision of the NSB. Vir-jen
Shipping filed the present petition. Petitioners contended that if the respondent seamen are
sustained by this Court, we would in effect "kill the hen that lays the golden egg."

ISSUE: Whether or not NLRC erred in reversing the decision of NSB.

HELD: NO.

Filipino seamen are admittedly as competent and reliable as seamen from any other country in
the world. Otherwise, there would not be so many of them in the vessels sailing in every ocean
and sea on this globe. It is competence and reliability, not cheap labor that makes our seamen
so greatly in demand. Filipino seamen have never demanded the same high salaries as seamen
from the United States, the United Kingdom, Japan and other developed nations. But certainly
they are entitled to government protection when they ask for fair and decent treatment by their
employers and when they exercise the right to petition for improved terms of employment,
especially when they feel that these are sub-standard or are capable of improvement according
to internationally accepted rules. In the domestic scene, there are marginal employers who
prepare two sets of payrolls for their employees one in keeping with minimum wages and the
other recording the sub-standard wages that the employees really receive. The reliable
employers, however, not only meet the minimums required by fair labor standards legislation
but even go way above the minimums while earning reasonable profits and prospering. The
same is true of international employment. There is no reason why this Court and the Ministry
of Labor and Employment or its agencies and commissions should come out with pro-
nouncements based on the standards and practices of unscrupulous or inefficient shipowners,
who claim they cannot survive without resorting to tricky and deceptive schemes, instead of
Government maintaining labor law and jurisprudence according to the practices of honorable,
competent, and law-abiding employers, domestic or foreign.

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

RESURRECCION SUZARA et. al, petitioners, vs.THE HON. JUDGE ALFREDO L. BENIPAYO
and MAGSAYSAY LINES, INC., respondents.
G.R. Nos. L-64781-99 August 15, 1989
EN BANC

FACTS: A group of Filipino seamen were declared by the defunct National Seamen Board (NSB)
guilty of breaching their employment contracts with the MAGSAYSAY LINES, INC., because
they demanded and staged an illegal strike and by means of threats, coercion and intimidation
compelled the owners of the vessel to enter into a ―Special Agreement‖ for the payment of wages
over and above their contracted rates. The agreement was made through the intervention and
assistance of a third party in Vancouver, the International Transport Worker's Federation (ITF)
without the approval of the NSB. The seamen alleged that they were made to sign an agreement
by an attorney from NSB when they landed in Japan stating that the Special Agreement
entered into in Vancouver for increase in wages were just entered into by the former as trustees
of said amounts for Magsaysay Lines, Inc. The Filipino seamen were ordered to reimburse the
total amount of US$91,348.44 or its equivalent in Philippine Currency representing the said
over-payments and to be suspended from the NSB registry for a period of three years. The
National Labor Relations Commission (NLRC) affirmed the decision of the NSB. However, said
seamen failed to return the overpayments upon demand of Magsaysay Lines,resulting to filing
of the latter estafa charges against the seamen.

ISSUE: Whether or not the petitioners are entitled to the amounts they received from the
Magsaysay Lines, Inc. representing additional wages as determined in the special agreement
entered into without the approval of NSB?

HELD: YES.

The bases used by the respondent NSB to support its decision do not prove that the petitioners
initiated a conspiracy with the ITF or deliberately sought its assistance in order to receive
higher wages. They only prove that when ITF acted in petitioners' behalf for an increase in
wages, the latter manifested their support. The petitioners admit that while they expressed
their conformity to and their sentiments for higher wages by means of placards, they,
nevertheless, continued working and going about their usual chores. In other words, all they
did was to exercise their freedom of speech in a most peaceful way.

Moreover, NSB-approved form contracts are not unalterable contracts that can have no room
for improvement during their effectivity or which ban any amendments during their term.For
one thing, the employer can always improve the working conditions without violating any law
or stipulation.

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We stated in the Vir-Jen case (supra) that:

The form contracts approved by the National Seamen Board are designed to
protect Filipino seamen not foreign shipowners who can take care of themselves.
The standard forms embody the basic minimums which must be incorporated as
parts of the employment contract. (Section 15, Rule V, Rules and Regulations
Implementing the Labor Code).lThey are not collective bargaining agreements or
immutable contracts which the parties cannot improve upon or modify in the
course of the agreed period of time. To state, therefore, that the affected seamen
cannot petition their employer for higher salaries during the 12 months duration
of the contract runs counter to estabhshed principles of labor legislation. The
National Labor Relations Commission, as the appellate tribunal from the
decisions of the National Seamen Board, correctly ruled that the seamen did not
violate their contracts to warrant their dismissal. (at page 589)

It is impractical for the NSB to require the petitioners, caught in the middle of a labor struggle
between the ITF and owners of ocean going vessels halfway around the world in Vancouver,
British Columbia to first secure the approval of the NSB in Manila before signing an agreement
which the employer was willing to sign. It is also totally unrealistic to expect the petitioners
while in Canada to exhibit the will and strength to oppose the ITF's demand for an increase
in their wages, assuming they were so minded.

It is noteworthy to emphasize that while the International Labor Organization (ILO) set the
minimum basic wage of able seamen at US$187.00 as early as October 1976, it was only in
1979 that the respondent NSB issued Memo Circular No. 45, enjoining all shipping companies
to adopt the said minimum basic wage. It was correct for the respondent NSB to state in its
decision that when the petitioners entered into separate contracts between 1977-1978, the
monthly minimum basic wage for able seamen ordered by NSB was still fixed at US$130.00.
However, it is not the fault of the petitioners that the NSB not only violated the Labor Code
which created it and the Rules and Regulations Implementing the Labor Code but also seeks to
punish the seamen for a shortcoming of NSB itself.

Article 21(c) of the Labor Code, when it created the NSB, mandated the Board to "(O)btain the
best possible terms and conditions of employment for seamen." It also mandated NSB to devise
a model contract employment which shall embody all the requirements of pertinent labor and
social legislations and the prevailing standards set by applicable ILO Conventions. As for the
basic miminum salary of seamen, it is provided under the Labor Code that it shall not be less
than the prevailing minimun rates established by the ILO or those prevailing in the country
whose flag the employing vessel carries, whichever is higher.

Here, it took three years for the NSB to implement requirements which, under the law, they
were obliged to follow and execute immediately. During those three years, the incident in
Vancouver happened. The terms and conditions agreed upon in Vancouver were well within
ILO rates even if they were above NSB standards at the time.
Submitted by: Mamangon, Fatima C.

Invalid Side Agreement

Chavez vs. Bonto-Perez, 242 SCRA 73, G.R. No. 109808 March 1, 1995

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DOCTRINE: Labor Law; Court holds that the managerial commission agreement executed by
petitioner to authorize her Japanese employer to deduct Two Hundred Fifty U.S. Dollars from
her monthly basic salary is void because it is against our existing laws, morals and public
policy.—Firstly, we hold that the managerial commission agreement executed by petitioner to
authorize her Japanese employer to deduct Two Hundred Fifty U.S. Dollars (US$250.00) from
her monthly basic salary is void because it is against our existing laws, morals and public
policy. It cannot supersede the standard employment contract of December 1, 1988 approved
by the POEA with the following stipulation appended thereto: ―It is understood that the terms
and conditions stated in this Employment Contract are in conformance with the Standard
Employment Contract for Entertainers prescribed by the POEA under Memorandum Circular
No. 2, Series of 1986. Any alterations or changes made in any part of this contract without
prior approval by the POEA shall be null and void‖; (Emphasis supplied.)

FACTS: Petitoner, an entertainment dancer, entered into a standard emplyment contracr for
overseas Filipino artists and entertainment with Planning Japan Co. Ltd., through its
Philippinen representative, private respondent, Centrum Placement and Promotions
Corporation. The contract had a duration of 2-6 months, and petitioner was to be paid a
monthly compensation of One Thousand Five Hundred Dollars. The POEA approved the
contract. Subsequently, petitioner executed a side aggreement with the Japanese employer
through her local manager, Jaz Talents Promotions, dedecuting the amount of 250.00 USD
from a contracted monthly salary of 750.00 USD as monthly commission for her manager
making her monthly salary only 500.00 USD. Petitioner left for Osaka, Japan where she
worked for 6 months. Upon arrival to the Philippines, she instituted the case at bench for
underpayment of wages praying for 6,000.00 USD, representing the unpaid portion of her basic
salary for 6 months. The complaint was dismissed. On appeal, the NLRC upheld the decision
stating that she is guilty for laches, and that the side agreement for the reduction of her salary
superseded, nullified and invalidated the prior employment contract she entered into. Hence,
this appeal.

ISSUE: Whether private respondent is liable for the claims of the petitioner.

HELD: Yes. The managerial commision agreement is void as it is violative of the provisions of
Rule II, Book V and Section 2(f), Rule I, Book VI of the 1991 Rules and Regulations Governing
Overseas Employment. Rule II, Book V provides: ―Section 1. Employment Standards. The
Administration shall determine, formulate and review employment standards in accordance
with the market development and welfare objectives of the overseas employment program and
the prevailing market conditions.‖ ―Sec. 2. Minimum Provisions for Contract. The following
shall be considered the minimum requirements for contracts of employment: a. Guaranteed
wages for regular working hours and overtime pay for services rendered beyond regular
working hours in accordance with the standards established by the Administration;‖ ―Sec. 3.
Standard Employment Contract. The administration shall undertake development and/or
periodic review of region, country and skills specific employment contracts for landbased
workers and conduct regular review of standard employment contracts (SEC) for seafarers.
These contracts shall provide for minimum employment standards herein enumerated under
Section 2, of this Rule and shall recognize the prevailing labor and social legislations at the site
of employment and international conventions. The SEC shall set the minimum terms and
conditions of employment. All employers and principals shall adopt the SEC in connection with
the hiring of workers without prejudice to their adoption of other terms and conditions of
employment over and above the minimum standards of the Administration.‖

Further, Section 2(f), Rule I, Book VI provides: ―Sec. 2. Grounds for suspension/cancellation of
license; f. Substituting or altering employment contracts and other documents approved and
verified by the Administration from the time of actual signing thereof by the parties up to and
including the period of expiration of the same without the Administration's approval.‖

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Regulations of Recruitment and Placement Activitites

(Article 25-39)

Cases under the Jurisdiction of the POEA

FINMAN GENERAL ASSURANCE CORP., petitioner,

vs.
WILLIAM INOCENCIO, ET AL. AND EDWIN CARDONES, THE ADMINISTRATOR,
PHILIPPINE OVERSEAS AND EMPLOYMENT ADMINISTRATION, THE SECRETARY OF
LABOR AND EMPLOYMENT, respondents.
GR No. 90273-75 November 15, 1985
(Third Division)
DOCTRINE: Cash and surety bonds are required by the POEA and its predecessor agencies
from recruitment and employment companies precisely as a means of ensuring prompt and
effective recourse against such companies when held liable for applicants or workers' claims.
Clearly that public policy will be effectively negated if POEA and the Department of Labor and
Employment were held powerless to compel a surety company to make good on its solidary
undertaking in the same quasi-judicial proceeding where the liability of the principal obligor,
the recruitment or employment agency, is determined and fixed and where the surety is given
reasonable opportunity to present any defenses it or the principal obligor may be entitled to set
up.

FACTS: Pan Pacific Overseas Recruiting Services, Inc. ("Pan Pacific") is a private, fee-charging,
recruitment and employment agency. In accordance with the requirements of Section 4, Rule II,
Book II of the Rules and Regulations of the Philippine Overseas Employment Administration
(POEA), Pan Pacific posted a surety bond issued by petitioner Finman General Assurance
Corporation ("Finman") and was granted a license to operate by the POEA.

Private respondents William Inocencio, Perfecto Palero, Jr., Edwin Cardones and one Edwin
Hernandez filed with the POEA separate complaints against Pan Pacific for violation of Articles
32 and 34 (a) of the Labor Code, as amended and for refund of placement fees paid to Pan
Pacific.

Acting on the complaints, the POEA Administrator motu proprio impleaded petitioner Finman
as party respondent in its capacity as surety for Pan Pacific. Separate summons were served
upon Finman and Pan Pacific. However, the return of the summons served on Pan Pacific at its
official address registered in the POEA records, showed that Pan Pacific had moved out
therefrom; no prior notice of transfer or change of address was furnished by Pan Pacific to the
POEA as required under POEA rules. The POEA considered that constructive service of the
complaints had been effected upon Pan Pacific and proceeded accordingly.

A hearing was held by the POEA and a decision was rendered in favor of the private
respondents. Finman went on appeal to the Secretary of Labor and the latter upheld the
decision of the POEA.

ISSUE: Whether or not the POEA has the authority to implead the petitioner in the proceeding
commenced by the private respondents.

HELD: Yes, the POEA has the authority to implead the petitioner.

The tenor and scope of petitioner Finman's obligations under the bond it issued are set out in
broad ranging terms by Section 4, Rule II, Book I of the POEA Rules and Regulations:
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Section 4. Payment of Fees and Posting of Bonds. — Upon approval of the application by the
Minister, the applicant shall pay an annual license fee of P6,000.00. It shall also post a cash
bond of P100,000.00 and a surety bond of P150,000.00 from a bonding company acceptable to
the Administration duly accredited by the Office of the Insurance Commission. The bonds shall
answer for all valid and legal claims arising from violations of the conditions for the grant and
use of the license or authority and contracts of employment. The bonds shall likewise guarantee
compliance with the provisions of the Labor Code and its implementing rules and regulations
relating to recruitment and placement, the rules of the Administration and relevant issuances of
the Ministry and all liabilities which the Administration may impose. The surety bonds shall
include the condition that notice of garnishment to the principal is notice to the
surety. 1 (Emphasis supplied).
While petitioner Finman has refrained from attaching a copy of the bond it had issued to its
Petition for Certiorari, there can be no question that the conditions of the Finman surety bond
Pan Pacific had posted with the POEA include the italicized portions of Section 4, Rule 11,
Book I quoted above. It is settled doctrine that the conditions of a bond specified and required
in the provisions of the statute or regulation providing for the submission of the bond, are
incorporated or built into all bonds tendered under that statute or regulation, even though not
there set out in printer's ink.

In the case at bar, the POEA held, and the Secretary of Labor affirmed, that Pan Pacific had
violated Article 32 and 34 of the Labor Code. There can, similarly, be no question that the
POEA Administrator and the Secretary of Labor are authorized to require Pan Pacific to refund
the placement fees it had charged private respondents without securing employment for them
and to impose the fine of P60,000.00 upon Pan Pacific.

If Pan Pacific is liable to private respondents for the refunds claimed by them and to the POEA
for the fine of P60,000.00, and if petitioner Finman is solidarily liable with Pan Pacific under
the operative terms of the bond, it must follow that Finman is liable both to the private
respondents and to the POEA. Petitioner Finman asserts, however, that the POEA had no
authority to implead it in the proceedings against Pan Pacific.

The Court held that to compel the POEA and private respondents the beneficiaries of Finman's
bond-to go to the Insurance Commissioner or to a regular court of law to enforce that bond,
would be to collide with the public policy which requires prompt resolution of claims against
private recruitment and placement agencies. Cash and surety bonds are required by the POEA
and its predecessor agencies from recruitment and employment companies precisely as a
means of ensuring prompt and effective recourse against such companies when held liable for
applicants or workers' claims. Clearly that public policy will be effectively negated if POEA and
the Department of Labor and Employment were held powerless to compel a surety company to
make good on its solidary undertaking in the same quasi-judicial proceeding where the liability
of the principal obligor, the recruitment or employment agency, is determined and fixed and
where the surety is given reasonable opportunity to present any defenses it or the principal
obligor may be entitled to set up. Petitioner surety whose liability to private respondents and
the POEA is neither more nor less than that of Pan Pacific, is not entitled to another or
different procedure for determination or fixing of that liability than that which Pan Pacific is
entitled and subject to.
Submitted by: Mayoralgo, Remy

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EASTERN ASSURANCE & SURETY CORPORATION, petitioner,

vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION,
ELVIRA VENTURA, ESTER TRANGUILLAN, et al., respondents.
G.R. No. L-79436-50, January 17, 1990
(FIRST DIVISION)

DOCTRINE: POEA has original and exclusive jurisdiction over all cases, including money
claims, involving employer-employee relations arising out of or by virtue of any law or contract
involving Filipino workers for overseas employment including seamen

FACTS: J&B Manpower is an overseas employment agency registered with the POEA and
Eastern Assurance was its surety beginning January1985. From 1983 to December 1985, J&B
recruited 33 persons but none of them were ever deployed. These 33 persons sued J&B and the
POEA as well as the Secretary of Labor ruled in favor of the 33 workers and ordered J&B to
refund them (with Eastern Assurance being solidarily liable). Eastern Assurance assailed the
ruling claiming that POEA and the Secretary of Labor have no jurisdiction over non-employees
(since the 33 were never employed, in short, no employer-employee relations).

ISSUE: Whether or not POEA have jurisdiction over the case.

HELD: Yes.

The Secretary of Labor gave the POEA "on its own initiative or upon filing of a complaint or
report or upon request for investigation by any aggrieved person, . . . (authority to) conduct the
necessary proceedings for the suspension or cancellation of the license or authority of any
agency or entity" for certain enumerated offenses including —

1) the imposition or acceptance, directly or indirectly, of any amount of money,

goods or services, or any fee or bond in excess of what is prescribed by the
Administration, and

2) any other violation of pertinent provisions of the Labor Code and other relevant
laws, rules and regulations.

The Administrator was also given the power to "order the dismissal of the case or the
suspension of the license or authority of the respondent agency or contractor or recommend to
the Minister the cancellation thereof."

Implicit in these powers is the award of appropriate relief to the victims of the offenses
committed by the respondent agency or contractor, specially the refund or reimbursement of
such fees as may have been fraudulently or otherwise illegally collected, or such money, goods
or services imposed and accepted in excess of what is licitly prescribed. It would be illogical
and absurd to limit the sanction on an offending recruitment agency or contractor to
suspension or cancellation of its license, without the concomitant obligation to repair the
injury caused to its victims. It would result either in rewarding unlawful acts, as it would leave
the victims without recourse, or in compelling the latter to litigate in another forum, giving rise
to that multiplicity of actions or proceedings which the law abhors.

Submitted by: Ocampo, Rhonald S.

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HORTENCIA SALAZAR, petitioner,

vs.
HON. TOMAS D. ACHACOSO, in his capacity as Administrator of the Philippine Overseas
Employment Administration, and FERDIE MARQUEZ, respondents.
G.R. No. 81510 March 14, 1990
EN BANC

FACTS: On October 21, 1987, Rosalie Tesoro filed with the Philippine Overseas Employment
Administration (POEA) charges against petitioner Hortencia Salaza. On November 3, 1987,
public respondent Atty. Ferdinand Marquez to whom said complaint was assigned, sent to the
petitioner a telegram asking him to appear before him. On the same day, having ascertained
that the petitioner had no license to operate a recruitment agency, public respondent
Administrator Tomas D. Achacoso issued Closure and Seizure Order No. 1205.On January 26,
1988, it was effected by the personnel of POEA together with two policemen. The residence of
the petitioner, when found out to be dance studio, was invaded and some of her personal
properties were seized. On February 2, 1988, the petitioner filed a suit for prohibition against
POEA.

ISSUE: In relation to prohibiting illegal recruitment, does the Secretary of Labor or the POEA
have issue warrants of arrest and seizure?

HELD: No, it is only a judge who may issue warrants of search and arrest.

The 1987 Philippine Constitution provides that, ―. . . no search warrant or warrant of arrest
shall issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or things to be seized‖.
The Secretary of Labor, not being a judge, may no longer issue search or arrest warrants.
Hence, the authorities must go through the judicial process. To that extent, it was declared by
the Court that Article 38, paragraph (c), of the Labor Code, is unconstitutional and of no force
and effect. For the guidance of the bench and the bar, the following principles were re-affirmed:

1. Under Article III, Section 2, of the l987 Constitution, it is only judges, and no
other, who may issue warrants of arrest and search:
2. The exception is in cases of deportation of illegal and undesirable aliens, whom
the President or the Commissioner of Immigration may order arrested, following a final order of
deportation, for the purpose of deportation.

Submitted by: Nacilla, Nica Jenine O.

Article 34: Prohibited Practices

NORBERTO SORIANO
vs.
OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT KNUTSEN O.A.S., and
NATIONAL LABOR RELATIONS COMMISSION (Second Division),Soriano vs. Offshore
Shipping and Marketing Corp.
G.R. No. 78409, Sept. 14, 1989
THIRD DIVISION

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FACTS: Petitioner Norberto Soriano, a licensed Second Marine Engineer, sought employment
and was hired by private respondent Knut Knutsen O.A.S. through its authorized shipping
agent in the Philippines, Offshore Shipping and Manning Corporation. As evidenced by the
Crew Agreement, petitioner was hired to work as Third Marine Engineer on board Knut
Provider" with a salary of US$800.00 a month on a conduction basis for a period of fifteen (15)
days. He admitted that the term of the contract was extended to six (6) months by mutual
agreement on the promise of the employer to the petitioner that he will be promoted to Second
Engineer. Thus, while it appears that petitioner joined the aforesaid vessel on July 23, 1985 he
signed off on November 27, 1985 due to the alleged failure of private respondent-employer to
fulfill its promise to promote petitioner to the position of Second Engineer and for the unilateral
decision to reduce petitioner's basic salary from US$800.00 to US$560.00. Petitioner was made
to shoulder his return airfare to Manila. Upon his return petitioner filed with the
Philippine Overseas Employment Administration(POEA for short), a complaint
against private respondent for payment of salary differential,overtime pay, unpaid
salary and refund of his return airfare and cash bondallegedly in the amount of
P20,000.00 contending therein that private respondent unilaterallyaltered the
employment contract by reducing his salary of US$800.00 per month to US$560.00,causing
him to request for his repatriation to the Philippines. POEA ruled that petitioner-complainant's
total monthly emolument isUS$800.00 inclusive of fixed overtime as shown and proved in the
Wage Scale submitted to the Accreditation Department of its Office which would therefore not
entitle petitioner to any salary differential; that the version of complainant that there was in
effect contract substitution has no grain of truth because although the Employment Contract
seems to have corrections on it, said corrections or alterations are in conformity with the Wage
Scale duly approved by the POEA; that the withholding of a certain amount due petitioner was
justified to answer for his repatriation expenses which repatriation was found to have been
requested by petitioner himself as shown in the entry in his Seaman's Book; and that petitioner
deposited a total amount of P15,000.00only instead of P20,000.00 cash bond. Dissatisfied,
both parties appealed the aforementioned decision of the POEA to the National Labor Relations
Commission. Complainant-petitioner's appeal was dismissed for lack of merit while
respondents' appeal was dismissed for having been filed out of time. Petitioner's motion for
reconsideration was likewise denied. Hence this recourse. Petitioner submits that public
respondent committed grave abuse of discretion and/or acted without or in excess of
jurisdiction by disregarding the alteration of the employment contract made by private
respondent. Petitioner claims that the alteration by private respondent of his salary and
overtime rate which is evidenced by the Crew Agreement and the exit pass constitutes a
violation of Article 34 of the Labor Code of the Philippines.

ISSUE: Whether or not the unilateral alteration of the contract is valid.

HELD: NO.

There is no dispute that an alteration of the employment contract without the approval of the
Department of Labor is a serious violation of law.

Specifically, the law provides:

Article 34 paragraph (i) of the Labor Code reads:

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Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or holder of
authority:

x xxx

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

In the case at bar, both the Labor Arbiter and the National Labor Relations Commission
correctly analyzed the questioned annotations as not constituting an alteration of the original
employment contract but only a clarification thereof which by no stretch of the imagination can
be considered a violation of the above-quoted law. Under similar circumstances, this Court
ruled that as a general proposition, exceptions from the coverage of a statute are strictly
construed. But such construction nevertheless must be at all times reasonable, sensible and
fair. Hence, to rule out from the exemption amendments set forth, although they did not
materially change the terms and conditions of the original letter of credit, was held to be
unreasonable and unjust, and not in accord with the declared purpose of the Margin Law.

The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both
parties. In the instant case, the alleged amendment served to clarify what was agreed upon by
the parties and approved by the Department of Labor. To rule otherwise would go beyond the
bounds of reason and justice.

Submitted by: Paeste, Sonny Lybenson

SEAGULL MARITIME CORP. AND PHILIMARE SHIPPING & EQUIPMENT SUPPLY,

petitioners
vs.
NERRY D. BALATONGAN, NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.
G.R. No. 82252 February 28, 1989

DOCTRINE: Under Art. 34, it shall be unlawful for any individual, entity, licensee, or holder of
authority to substitute or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and including the period of
expiration of the same without the approval of the Department of Labor.

FACTS: On November 2, 1982, a "crew Agreement" was entered into by private respondent
Nerry D. Balatongan and Philimare Shipping and Equipment Supply (hereinafter called
Philimare) whereby the latter employed the former as able seaman on board its vessel "Santa
Cruz" (renamed "Turtle Bay") with a monthly salary of US $ 300.00. Said agreement was
processed and approved by the
National Seaman's Board (NSB) on November 3, 1982.

While on board said vessel and parties entered into a supplementary contract of employment
on December 6, 1982 which provides among others: (1) The employer shall be obliged to insure
the employee during his engagement against death or permanent invalidity caused by accident
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on board up to US $ 40,000 - for death caused by accident and US $ 50,000 - for permanent
total disability caused by accident.

On October 6, 1983 Balatongan met an accident in the Suez Canal, Egypt as a result of which
he was hospitalized at the Suez Canal Authority Hospital. Later, he was repatriated to the
Philippines and was hospitalized at the Makati Medical Center from October 23, 1983 to March
27, 1984. On August 19, 1985 the medical certificate was issued describing his disability as
"permanent in nature." Balatongan demanded payment for his claim for total disability
insurance in the amount of US $ 50,000.00 as provided for in the contract of employment but
his claim was denied for having been submitted to the insurers beyond the designated period
for doing so. Thus, Balatongan filed on June 21, 1985 a complaint against Philimare and
Seagull Maritime Corporation in the Philippine Overseas Employment Administration (POEA)
for non-payment of his claim for permanent total disability with damages and attorney's fees.

After the parties submitted their respective position papers with the corresponding
documentary evidence, the officer-in-charge of the Workers Assistance and Adjudication Office
of the POEA rendered for respondents to pay complainant the amount of US $ 50,000.00
representing permanent total disability insurance and attorney's fees at 10% of the award.
Payment should be made to POEA within ten (10) days from receipt hereof at the prevailing rate
of exchange. POEA cannot however rule on damages, having no jurisdiction on the matter.
Seagull and Philimare appealed said decision to the National Labor Relations Commission
(NLRC) on June 4, 1986. Hence, Seagull and Philimare filed this petition for certiorari with a
prayer for the issuance of a temporary restraining order.

ISSUE: Whether or not the supplementary contract of employment entered into between
petitioners and respondent is a prohibited practice.

HELD: No. The supplementary contract of employment was entered into between petitioner and
private respondent to modify the original contract of employment. The reason why the law
requires that the POEA should approve and verify a contract under Article 34(i) of the Labor
Code is to insure that the employee shall not thereby be placed in a disadvantageous position
and that the same are within the minimum standards of the terms and conditions of such
employment contract set by the POEA. This is why a standard format for employment contracts
has been adopted by the Department of Labor. However, there is no prohibition against
stipulating in a contract more benefits to the employee than those required by law. Thus, in
this case wherein a "supplementary contract" was entered into affording greater benefits to the
employee than the previous one, and although the same was not submitted for the approval of
the POEA, the public respondents properly considered said contract to be valid and
enforceable.

The Court is also not a trier of facts and the findings of the public respondents are conclusive
in this proceeding. Public respondents found that petitioner Philimare and private respondent
entered into said supplementary contract of employment on December 6, 1982. Assuming for
the sake of argument that it was petitioners' principal which entered into said contract with
private respondent, nevertheless petitioner, as its manning agent in the Philippines, is jointly
responsible with its principal thereunder. There is no question that under the said
supplementary contract of employment, it is the duty of the employer, petitioners herein, to
insure the employee, during his engagement, against death and permanent invalidity caused
by accident on board up to $ 50,000.00. Consequently, it is also its concomitant obligation to
see to it that the claim against the insurance company is duly filed by private respondent or in
his behalf, and within the time provided for by the terms of the insurance contract.

Submitted by: Quevedo, Arrah Svetlana

T.

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Article 35: Suspension and/or Cancellation of License or Authority

MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION and FRANCISCO D. REYES, respondents.
G.R. No. 77279 April 15, 1988

DOCTRINE: A private employment agency may be sued jointly and solidarily with its foreign
principal for violations of the recruitment agreement and the contracts of employment.

FACTS: Petitioner, as agent of Ali and Fahd Shabokshi Group, a Saudi Arabian firm, recruited
private respondent to work in Saudi Arabia as a steel man. The term of the contract was for
one year, however the contract provided for its automatic renewal. The contract was
automatically renewed when private respondent was not repatriated by his Saudi employer but
instead was assigned to work as a crusher plant operator. While he was working as a crusher
plant operator, private respondent's right ankle was crushed under the machine he was
operating. after the expiration of the renewed term, private respondent returned to the
Philippines. His ankle was operated on at the Sta. Mesa Heights Medical Center for which he
incurred expenses. On September 9, 1983, he returned to Saudi Arabia to resume his work. On
May 15,1984, he was repatriated. Upon his return, he had his ankle treated for which he
incurred further expenses. On the basis of the provision in the employment contract that the
employer shall compensate the employee if he is injured or permanently disabled in the course
of employment, private respondent filed a claim, and POEA rendered judgment in his favor,
that the NLRC affirmed

ISSUE: WON NLRC gravely abused its discretion when it ruled that petitioner was liable to
private respondent for disability benefits since at the time he was injured his original
employment contract, which petitioner facilitated, had already expired.

HELD: NO. Private respondent‘s contract of employment cannot be said to have expired on
May14, 1982 as it was automatically renewed since no notice of its termination was given by
either or both of the parties at least a month before its expiration, as so provided in the
contract itself. Therefore, private respondent's injury was sustained during the lifetime of the
contract. Even if indeed petitioner and the Saudi principal had already severed their agency
agreement at the time private respondent was injured, petitioner may still be sued for a
violation of the employment contract because no notice of the agency agreement's termination
was given to the private respondent.
Submitted by: Regalado, Dustin

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Solidary Liability assumed by Recruitment Agent

ROYAL CROWN INTERNATIONALE, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSI0N and VIRGILIO P. NACIONALES, respondents.
G.R. No. 78085 October 16, 1989
(Third Division)

DOCTRINE: In applying for its license to operate a private employment agency for overseas
recruitment and placement, petitioner was required to submit, among others, a document or
verified undertaking whereby it assumed all responsibilities for the proper use of its license and
the implementation of the contracts of employment with the workers it recruited and deployed
for overseas employment. It was also required to file with the Bureau a formal appointment or
agency contract executed by the foreign-based employer in its favor to recruit and hire
personnel for the former, which contained a provision empowering it to sue and be sued jointly
and solidarily with the foreign principal for any of the violations of the recruitment agreement
and the contracts of employment.

FACTS: Petitioner Royal Crown Internationale seeks the nullification of a resolution of the
National Labor Relations Commission (NLRC) which affirmed a decision of the Philippine
Overseas Employment Administration (POEA) holding it liable to pay, jointly and severally with
Zamel-Turbag Engineering and Architectural Consultant (ZAMEL), private respondent Virgilio
P. Nacionales' salary and vacation pay corresponding to the unexpired portion of his
employment contract with ZAMEL.

In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private
respondent for employment with ZAMEL as an architectural draftsman in Saudi Arabia. On
May 25, 1983, a service agreement was executed by private respondent and ZAMEL for a
period of one (1) year commencing from the date of his arrival in Saudi Arabia. Private
respondent departed for Saudi Arabia on June 28,1983.

On February 13, 1984, ZAMEL terminated the employment of private respondent on the
ground that his performance was below par. For three (3) successive days thereafter, he was
detained at his quarters and was not allowed to report to work until his exit papers were ready.
On February 16, 1984, he was made to board a plane bound for the Philippines.

Private respondent then filed on April 23, 1984 a complaint for illegal termination against
petitioner and ZAMEL with the POEA, docketed as POEA Case No. (L) 84-04-401.

Based on a finding that petitioner and ZAMEL failed to establish that private respondent was
terminated for just and valid cause, the Workers' Assistance and Adjudication Office of the
POEA issued a decision dated June 23, 1986 in favor of the complainant and against
respondents, ordering the latter to pay, jointly and severally, the complainant.

The petitioner filed a motion for reconsideration to the NLRC and the latter affirmed the POEA
decision.

ISSUE: Whether or not petitioner as a private employment agency may be held jointly and
severally liable with the foreign-based employer for any claim which may arise in connection
with the implementation of the employment contracts of the employees recruited and deployed
abroad

HELD: Yes, petitioner is solidarily liable with ZAMEL.

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Petitioner conveniently overlooks the fact that it had voluntarily assumed solidary
liability under the various contractual undertakings it submitted to the Bureau of Employment
Services. In applying for its license to operate a private employment agency for overseas
recruitment and placement, petitioner was required to submit, among others, a document or
verified undertaking whereby it assumed all responsibilities for the proper use of its license and
the implementation of the contracts of employment with the workers it recruited and deployed
for overseas employment [Section 2(e), Rule V, Book 1, Rules to Implement the Labor Code
(1976)]. It was also required to file with the Bureau a formal appointment or agency contract
executed by the foreign-based employer in its favor to recruit and hire personnel for the former,
which contained a provision empowering it to sue and be sued jointly and solidarily with the
foreign principal for any of the violations of the recruitment agreement and the contracts of
employment [Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code
(1976)]. Petitioner was required as well to post such cash and surety bonds as determined by
the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules
and regulations, and terms and conditions of employment as appropriate [Section 1 of Pres.
Dec. 1412 (1978) amending Article 31 of the Labor Code].

These contractual undertakings constitute the legal basis for holding petitioner, and
other private employment or recruitment agencies, liable jointly and severally with its principal,
the foreign-based employer, for all claims filed by recruited workers which may arise in
connection with the implementation of the service agreements or employment contracts [See
Ambraque International Placement and Services v. NLRC, G.R. No. 77970, January 28, 1988,
157 SCRA 431; Catan v. NLRC, G.R. No. 77279, April 15, 1988, 160 SCRA 691; Alga Moher
International Placement Services v. Atienza, G.R. No. 74610, September 30, 1988].

Submitted by: Mayoralgo, Remy

Suability of a Foreign Corporation which hires Filipino Workers

FACILITIES MANAGEMENT CORPORATION, J. S. DREYER et al., petitioners,

vs.
LEONARDO DE LA ROSA et al., respondents.
G.R. No. L-38649 March 26, 1979
(First Division)

DOCTRINE: Indeed, if a foreign corporation, not engaged in business in the Philippines, is not
banned from seeking redress from courts in the Philippines, a fortiori, that same corporation
cannot claim exemption from being sued in Philippine courts for acts done against a person or
persons in the Philippines.

FACTS: Leonardo dela Osa sought his reinstatement. with full backwages, as well as the
recovery of his overtime compensation, swing shift and graveyard shift differentials.

Respondents interposed the following special defenses, namely: That respondents Facilities
Management Corporation and J. S. Dreyer are domiciled in Wake Island which is beyond the
territorial jurisdiction of the Philippine Government; that respondent J. V. Catuira, though an
employee of respondent corporation presently stationed in Manila, is without power and
authority of legal representation; and that the employment contract between petitioner and
respondent corporation carries -the approval of the Department of Labor of the Philippines.

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Subsequently, respondents filed a motion to dismiss the subject petition on the ground that
this Court has no Jurisdiction over the instant case.

ISSUE: Whether or not petitioner has been 'doing business in the Philippines' so that the
service of summons upon its agent in the Philippines vested the Court with jurisdiction.

HELD: From the facts of record, the petitioner may be considered as doing business In the
Philippines within the scope of Section 14, Rule 14 of the Rules of the Court.

Indeed, the petitioner, in compliance with Act 2486 as implemented by Department of Labor
Order No. IV dated May 20, 1968 had to appoint Jaime V. Catuira, 1322 A. Mabini, Ermita,
Manila as agent for FMC with authority to execute Employment Contracts and receive, in
behalf of that corporation, legal services from and be bound by processes of the Philippine
Courts of Justice, for as long as he remains an employee of FMC. It is a fact that when the
summons for the petitioner was served on Jaime V. Catuira he was still in the employ of the
FMC.

In his motion to dismiss petitioner admits that Mr. Catuira represented it in this country 'for
the purpose of making arrangements for the approval by the Department of Labor of the
employment of Filipinos who are recruited by the Company as its own employees for
assignment abroad.' In effect, Mr. Catuira was a on officer representing petitioner in the
Philippines.

If a foreign corporation, not engaged in business in the Philippines, is not banned from seeking
redress from courts in the Philippines, a fortiori, that same corporation cannot claim exemption
from being sued in Philippine courts for acts done against a person or persons in the
Philippines.
Submitted by: Sison, Aldous Francis P.
Article 38: Illegal Recruitment

PEOPLE OF THE PHILIPPINES, plaintiff-appellee

Vs.
BULU CHOWDURY, accused-appellant
G.R. No. 129577-80, February 15, 2000
(FIRST DIVISION)

DOCTRINE: The culpability of the employee therefore hinges on his knowledge of the offense
and his active participation in its commission. Where it is shown that the employee was merely
acting under the direction of his superiors and was unaware that his acts constituted a crime,
he may not be held criminally liable for an act done for and in behalf of his employer.

FACTS: In November 1995, Bulu Chowdury and Josephine Ong were charged before the
Regional Trial Court of Manila with the crime of illegal recruitment in large scale. They were
likewise charged with three counts of estafa committed against private complainants.The State
Prosecutor, however, later dismissed the estafa charges against Chowdury and filed an
amended information indicting only Ong for the offense.The prosecution presented four
witnesses: private complainants Aser Sasis, Estrella Calleja and Melvin Miranda, and Labor
Employment Officer Abbelyn Caguitla.

Sasis, Calleja and Miranda testified that they were all interviewed by Chowdury. Chowdury
informed them of the requirements.They also paid processing fee to Craftrade and all payments
were received by Ong for which they were issued receipts. However, after they submitted the
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necessary documents, Crafttrade failed to deployed them for employment abroad. Sasis, upon
verification with the POEA, he learned that Craftrade's license had already expired and has not
been renewed and that Chowdury, in his personal capacity, was not a licensed recruiter.
Calleja, on the other hand, went to the POEA where she discovered that Craftrade's license had
already expired. Sasis, Calleja and Miranda filed a complaint with the POEA against Chowdury
for illegal recruitment.

For his defense, Chowdury testified that he worked as interviewer at Craftrade from 1990 until
1994. His primary duty was to interview job applicants for abroad. As a mere employee, he only
followed the instructions given by his superiors. Chowdury admitted that he interviewed
private complainants on different dates.Their office secretary handed him their bio-data and
thereafter he led them to his room where he conducted the interview.

ISSUE: Whether accused-appellant knowingly and intentionally participated in the commission

of the crime Illegal Recruitment.

HELD: No. The elements of illegal recruitment in large scale are: (1) The accused undertook
any recruitment activity defined under Article 13 (b) or any prohibited practice enumerated
under Article 34 of the Labor Code; (2) He did not have the license or authority to lawfully
engage in the recruitment and placement of workers; and (3) He committed the same against
three or more persons, individually or as a group.The last paragraph of Section 6 of Republic
Act (RA) 8042 states who shall be held liable for the offense, thus: "The persons criminally
liable for the above offenses are the principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or direction of their business shall be liable."

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

Submitted by: Sarmiento, Majesca M.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
NELLIE CABAIS y GAMUELA, accused-appellant.
G.R. No. 129070. March 16, 2001
First Division

DOCTRINE: An employee of a company or corporation engaged in illegal recruitment may be

held liable as principal, together with his employer, if it is shown that he actively and
consciously participated in illegal recruitment.

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FACTS: accused Cabais talked to complainants several times persuading them to be contract
workers in South Korea. Convinced of the prospect of immediate employment abroad, the
complainants submitted application forms, bio-data, medical examination, NBI clearance, and
paid the placement fee. After complying with all the requirements, complainants were told to
wait for their deployment. They waited and repeatedly inquired about the status of their
applications. However, several months passed and they were not deployed as promised.

When they could wait no longer, complainants checked with the office of the Philippine
Overseas Employment Administration (POEA) in Baguio and learned that Harm Yong Ho, Nellie
Cabais and Anita Forneas were not licensed to recruit in Baguio or in any part of the Cordillera
Administrative Region. The three accused likewise did not possess the required provincial
authority.
Thus, complainants demanded the return of the money given. However, they never saw Anita
Forneas and Harm Yong Ho again. The money paid was not returned to complainants. They
their affidavit-complaints with the City Prosecutors Office of Baguio against the three accused.
For her part, accused Cabais denied all the charges against her. Accused Cabais denied
involvement in the recruitment of complainants, claiming that it was her boss who was doing
recruitment activities. She admitted, though, that she received payments from complainants,
but alleged that she was merely acting upon the instruction of Forneas and that she turned
over all the payments to her employer.

ISSUE: WON, accused is not liable for illegal recruitment considering that she was merely an
employee of Red Sea Employment Agency and did not actually recruit applicants.

HELD: No.

Accused is liable for illegal recruitment. The appeal lacks merit. The essential elements of
illegal recruitment committed in large scale are: (1) that the accused engaged in acts of
recruitment and placement of workers as defined under Article 13 (b) or in any prohibited
activities under Article 34 of the Labor Code; (2) that the accused had not complied with the
guidelines issued by the Secretary of Labor and Employment, particularly with respect to the
requirement to secure a license or an authority to recruit and deploy workers, either locally or
overseas; and (3) that the accused committed the unlawful acts against three (3) or more
persons, individually or as a group.
Accused-appellant contends that she was not involved in recruitment but was merely an
employee of a recruitment agency. An employee of a company or corporation engaged in illegal
recruitment may be held liable as principal, together with his employer, if it is shown that he
actively and consciously participated in illegal recruitment. Recruitment is any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or entity which, in any manner,
offers or promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement. In this case, evidence showed that accused-appellant was the one
who informed complainants of job prospects in Korea and the requirements for
deployment. She also received money from them as placement fees. All of the complainants
testified that they personally met accused-appellant and transacted with her

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regarding the overseas job placement offers. Complainants parted with their money, evidenced
by receipts signed by accused Cabais and accused Forneas. Thus, accused-appellant actively
participated in the recruitment of the complainants.
Submitted by: Tamayo, Jumen G.

People of the Philippines

vs.
Gonzales-Flores
356 SCRA 722, G.R. Nos. 138535-38 April 19, 2001

DOCTRINE: ―Recruitment and Placement,‖ Defined.— Art. 13(b) of the Labor Code defines
―recruitment and placement‖ as referring to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not. The same
article further states that any person or entity which, in any manner, offers or promises for a
fee employment to two or more persons shall be deemed engaged in recruitment and
placement. Under Art. 13 (b) of the Labor Code, recruitment includes ―referral,‖ which is
defined as the act of passing along or forwarding an applicant for employment after initial
interview of a selected applicant for employment to a selected employer, placement officer, or
bureau. In the present case at hand, accused-appellant did more than just make referrals. She
actively and directly enlisted complainants for supposed employment abroad, even promising
them jobs as seamen, and collected moneys from them.

FACTS: This case is about the accused, conspiring and confederating with other persons
whose true names and identities have not yet been ascertained, and helping one another,
alleged to have defrauded Felixberto C. Leongson, Sr., the complainant, by means of false
manifestations and fraudulent representation made to the latter to the effect that the above
had the power and capacity to recruit and employ complainant abroad. They required
documentary requirements and recruitment fees which was provided by the complainant. The
accused acted without license or authority from the Department of Labor, completely blinding
the complainant. Balora and Domingo called a meeting between Felixberto, Cloyd and Jojo.
They were told that Domingo was the chief engineer of the luxury ocean liner where they will be
embarking and repeated to them the salaries and benefits they will be receiving. Then accused-
appellant collected money in the amount of P35, 000 at Wendy‘s in Cubao, Quezon City on
August 12, 1994. No Receipt was issued. Another meeting superseded this with the
complainants‘ wives then another meeting transpired but this time it was only Domingo who
was there and collected an amount of P25, 000. Complainant persistently followed up his
application but was only told to patiently wait. No call ever came, hence, this case. Trial court
rendered its assailed decision in favor of the complainants.

ISSUE: Whether the accused-appellant is guilty of illegal recruitment in large scale.

HELD: Yes, the accused-appellant is guilty of illegal recruitment in large scale as was proved
beyond reasonable doubt. According to the Labor Code of the Philippines, the essential
elements of illegal recruitment in large scale are: 1. That the accused engages in acts of
recruitment and placement of workers as defined under Art. 13(b) or in any of the prohibited
activities under Art. 34 of the Labor Code; 2. That the accused has not complied with the

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guidelines issued by the Secretary of Labor and Employment, particularly with respect to the
securing of a license or an authority to recruit and deploy workers, either locally or overseas;
and 3. That the accused commits the unlawful acts against three or more persons, individually
or as a group. All the above-mentioned elements were committed by the accused. As verified by
the POEA, the accused had no license or authority to engage in any recruitment activity and
her statement that she herself is a victim of illegal recruitment and that she only told
complainants of job opportunities abroad are untenable. The accused-appellant sought out
complainants and falsely promised them employment abroad through misrepresentation. Her
companions, Domingo, Baloran and Mendoza, made her ploy believable. Thus, she is guilty of
illegal recruitment in large scale.

People of The Philippines

vs.
Sagaydo,
G.R. Nos. 124671-75 September 29, 2000

DOCTRINE: Labor Law; Criminal Law; Illegal Recruitment; Requisites; Words and Phrases;
Illegal recruitment has been defined to include the act of engaging in any of the activities
mentioned in Article 13 (b) of the Labor Code without the required license or authority from the
POEA, and it is deemed committed in large scale if committed against three (3) or more
persons, individually or as a group.—‖Illegal recruitment has been defined to include the act of
engaging in any of the activities mentioned in Article 13 (b) of the Labor Code without the
required license or authority from the POEA. Under the aforesaid provision, any of the following
activities would constitute recruitment and placement: canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, including referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not. Article 13
(b) further provides that any person or entity which, in any manner, offers or promises for a fee
employment to two (2) or more persons shall be deemed engaged in recruitment and
placement. Illegal recruitment is deemed committed in large scale if committed against three (3)
or more persons, individually or as a group.‖ This crime requires proof that the accused: (1)
engaged in the recruitment and placement of workers defined under Article 13 or in any of the
prohibited activities under Article 34 of the Labor Code; (2) does not have a license or authority
to lawfully engage in the recruitment and placement of workers; and (3) committed the
infraction against three or more persons, individually or as a group.‖

Estafa; A person who is convicted of illegal recruitment may, in addition, be convicted of estafa
under Art. 315 (2) (a) of the Revised Penal Code.—A person who is convicted of illegal
recruitment may, in addition, be convicted of estafa under Art. 315 (2) (a) of the Revised Penal
Code. There is no double jeopardy because illegal recruitment and estafa are distinct offenses.
Illegal recruitment is malum prohibitum, in which criminal intent is not necessary, whereas
estafa is malum in se in which criminal intent is necessary.

FACTS: Accused Linda Sagayado was convicted before the regional trial court of illegal
recruitment in large scale and fur charges of estafa. Complainants recounted that the accused
Sagayado proposed and encourage them for employment abroad in Korea. Complainants gave
their respective payments to the accused for the processing of their travel papers and passport.

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They were assured of their flight and of employment abroad. However, months have passed but
their flight never pushed through. They then inquired at the Baguio POEA office whether the
accused was a license recruiter to which they receive certification that the accused was not a
license recruiter. In her defense, the accused denied having recruited any of the private
complainants. She claimed that they came to her voluntarily after being informed that she was
able to send her three (3) sons to Korea. While accused admitted having received money from
complainants Gina Cleto and Naty Pita, she said she used their money to buy their plane
tickets. Gina and Naty were not able to leave because the Korean government imposed a visa
requirement beginning January, 1992. When asked why she was not able to return the money
of Gina and Naty, accused said that she returned the plane tickets to the Tour Master travel
Agency for refund but said agency did not make reimbursements.

ISSUE: Whether the accused is guilty of illegal recruitment in large scale.

HELD: Yes. Illegal recruitment is deemed committed in large scale if committed against three
or more person, individually or as a group. This crime requires proof that the accused: (1)
engaged in the recruitment and placement of workers defined under Article 13 or in any of the
prohibited activities under Article 34 of the Labor Code; (2) does not have a license or authority
to lawfully engage in the recruitment and placement of workers; and (3) committed the
infraction against three or more persons, individually or as a group.‖ All the requisites are
present in this case. The accused representations to the private complainants that she could
send them to Korea to work as factory workers, constituting a promise of employment which
amounted to recruitment as defined under Article 13(b) of the Labor Code. As against the
positive and categorical testimonies of the complainants, mere denial of accused cannot
prevail. As to the license requirement, the record showed that accused-appellant did not have
the authority to recruit for employment abroad as the certification issued by the POEA in
Baguio City.

Submitted by: Villanueva, Emilio Jan D.

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee

vs .
BENZON ONG y SATE alias "BENZ ONG," accused-appellant
G.R. No. 119594. January 18, 2000
(Second Division)

DOCTRINE: The presentation of the receipts acknowledging payments is not necessary for the
successful prosecution of accused-appellant. As long as the prosecution is able to establish
through credible testimonial evidence that the accused-appellant has engaged in illegal
recruitment, a conviction for the offense can very well be justified.

FACTS: The Regional Trial Court, Branch 5, Baguio City, found accused-appellant guilty of
illegal recruitment committed in large scale and seven (7) counts of estafa. In this appeal,
appellant claimed that when complainants filled out their respective bio-data, application forms
and other documents for employment in Taiwan, they knew that they were applying abroad
through the Steadfast Recruitment Agency. He contended that he merely suggested to them the
opportunity to work overseas but he never advertised himself as a recruiter. He also averred
that the elements of estafa had not been proven by the

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Prosecution, specifically, the requirement that complainants knew that he was not a licensed
recruiter.

ISSUE: Whether or not accused is liable for illegal recruitment in large scale and estafa

HELD: The Supreme Court affirmed the conviction of accused-appellant for illegal recruitment
in large scale. The Court ruled that even if accused-appellant did no more that "suggest" to the
complainants where they could apply for overseas employment, his act constituted "referral"
within the meaning of Article 13 (b) of the Labor Code. The testimonial and documentary
evidence in the record showed that accused-appellant did more than make referrals. The
evidence showed that he made misrepresentations to them concerning his authority to recruit
for overseas employment and collected various amounts from them for placement fees.

To prove illegal recruitment, it must be shown that the accused-appellant gave complainants
the distinct impression that he had the power or ability to send complainants abroad for work
such that the latter were convinced to part with their money in order to be employed. Accused-
appellant represented himself to complainants as one capable of deploying workers abroad and
even quoted the alleged salary rates of factory and construction workers in Taiwan. He advised
Bacasnot to accept a job as a factory worker it would be then easier for him to transfer jobs
once he got to Taiwan. Accused-appellant said his mother, who was based in Taiwan, could
help Bacasnot. Bacasnot paid accused-appellant an initial placement fee agreeing to pay the
balance through salary deductions once he was employed. Accused-appellant also promised
jobs to Eliw and the other complainants. He accompanied them to Manila so that they could be
interviewed and physically examined at the Steadfast Recruitment Agency with which accused-
appellant represented he was connected. These acts of accused-appellant created the distinct
impression on the eight complainants that he was a recruiter for overseas employment. There
is no question that he was neither licensed nor authorized to recruit workers for overseas
employment. Nor is there any question that he dealt with complainants. What he claims is that
he merely "suggested" to complainants to
apply at the Steadfast Recruitment Agency, which is a recruitment agency. Even if accused
appellant
did no more than "suggest" to complainants where they could apply for overseas employment,
his act constituted "referral" within the meaning of Art. 13(b) of the Labor Code. Indeed, the
testimonial and documentary evidence in the record shows that accused-appellant did more
than just make referrals. The evidence .shows that he made misrepresentations to them
concerning his authority to recruit for overseas employment and collected various amounts
from them for placement fees. Clearly, accused-appellant committed acts constitutive of large
scale illegal recruitment.

Accused-appellant denies that the signatures in the receipts of payments are his. To be sure,
the presentation of the receipts acknowledging payments is not necessary for the successful
prosecution of accused-appellant. As long as the prosecution is able to establish through
credible testimonial evidence that the accused-appellant has engaged in illegal recruitment, a
conviction for the offense can very well be justified.

Submitted by: Tanghal, Noelle Christine

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PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee

vs.
REYDANTE CALONZO Y AMBROSIO, Accused-Appellant
G.R. Nos. 115150-55. September 27, 1996

DOCTRINE: Illegal recruitment as specifically defined in Article 38 of the Labor Code: (a) any
recruitment activities, including the prohibited practices enumerated under Article 34 of this
Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal
and punishable under Article 39 of this Code; and, (b) committed by a syndicate or in large
scale shall be considered an offense involving economic sabotage and shall be penalized in
accordance with Article 39 thereof.

FACTS: Reydante Calonzo was charged and later convicted with Illegal Recruitment in Large
Scale and five (5) counts of Estafa by Bernardo Miranda, Danilo de los Reyes, Elmer
Clamor, Belarmino Torregrosa and Hazel de Paula.

On appeal, Calonzo claimed that the trial court erred in disregarding the testimony of POEA
employee Nenita Mercado categorically stating that their records indicated that the former
never processed complainants' applications for employment abroad. The POEA, including
Mercado, however, certified that Calonzo or his R. A. C. Business Agency was not licensed to
recruit workers for overseas employment.

ISSUE: Whether or not Calonzo was guilty of illegal recruitment in large scale and estafa

HELD: YES.

The Court stated Article 13, par. (b), of the Labor Code, which defines recruitment and
placement as ―any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not; Provided, that any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement.‖

The Court held that illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first
paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against
three (3) or more persons individually or as a group.

Illegal recruitment in large scale is committed when a person "(a) undertakes any recruitment
activity defined under Article 13(b) or any prohibited practice enumerated under Article 34 of
the Labor Code; (b) does not have a license or authority to lawfully engage in the recruitment
and placement of workers; and (c) commits the same against three or more
persons, individually or as a group."

The testimony of complainants evidently showed that Calonzo was engaged in recruitment
activities in large scales:

Firstly, he deluded complainants into believing that jobs awaited them in Italy by distinctly
impressing upon them that he had the facility to send them for work abroad. He even
showed them his passport to lend credence to his claim. To top it all, he brought them to

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Bangkok and not to Italy. Neither did he have any arrangements in Bangkok for the
transfer of his recruits to Italy.

Secondly, POEA likewise certified that neither Calonzo nor R. A. C. Business Agency was
licensed to recruit workers for employment abroad. Appellant admitted this fact himself.

Thirdly, appellant recruited five (5) workers thus making the crime illegal recruitment in
large scale constituting economic sabotage.

Submitted by: Valdez, Suzette P.

People of the Philippines, APPELEE

vs
Francisco Hernandez et al, APPELLANT
G.R. Nos. 141221-36. March 7, 2002
(First Division)

DOCTRINE: When the Labor Code speaks of illegal recruitment 'committed against three (3) or
more persons individually or as a group,' it must be understood as referring to the number of
complainants in each case who are complainants therein, otherwise, prosecutions for single
crimes of illegal recruitment can be cummulated to make out a case of large scale illegal
recruitment. In other words, a conviction for large scale illegal recruitment must be based on a
finding in each case of illegal recruitment of three or more persons whether individually or as a
group.

FACTS: In April 1993, eight (8) informations for syndicated and large scale illegal recruitment
and eight (8) informations for estafa were filed against accused-appellants, spouses Karl and
Yolanda Reichl, together with Francisco Hernandez. Only the Reichl spouses were tried and
convicted by the trial court as Francisco Hernandez remained at large.

The evidence for the prosecution consisted of the testimonies of private complainants; a
certification from the Philippine Overseas Employment Administration (POEA) that Francisco
Hernandez, Karl Reichl and Yolanda Gutierrez Reichl in their personal capacities were neither
licensed nor authorized by the POEA to recruit workers for overseas employment; the receipts
for the payment made by private complainants; and two documents signed by the Reichl
spouses where they admitted that they promised to secure Austrian tourist visas for private
complainants and that they would return all the expenses incurred by them if they are not able
to leave by March 24, 1993,and where Karl Reichl pledged to refund to private complainants
the total sum of P1,388,924.00 representing the amounts they paid for the processing of their
papers.

ISSUE: Whether or not the accused-appellants are guilty of illegal recruitment in large scale by
cummulating the individual informations filed by private complainants.

HELD: NO.

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We note that each information was filed by only one complainant. We agree with accused-
appellants that they could not be convicted for illegal recruitment committed in large scale
based on several informations filed by only one complainant.

This, however, does not serve to lower the penalty imposed upon accused-appellants. The
charge was not only for illegal recruitment committed in large scale but also for illegal
recruitment committed by a syndicate. Illegal recruitment is deemed committed by a syndicate
if carried out by a group of three (3) or more persons conspiring and/or confederating with one
another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under
the first paragraph of Article 38 of the Labor Code. It has been shown that Karl Reichl, Yolanda
Reichl and Francisco Hernandez conspired with each other in convincing private complainants
to apply for an overseas job and giving them the guaranty that they would be hired as domestic
helpers in Italy although they were not licensed to do so. Thus, we hold that accused-
appellants should be held liable for illegal recruitment committed by a syndicate which is also
punishable by life imprisonment and a fine of one hundred thousand pesos (P100,000.00)
under Article 39 of the Labor Code.

Submitted by: Vardeleon, Crizedhen N.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
FRANCISCO HERNANDEZ (at large), KARL REICHL, and YOLANDA GUTIERREZ DE
REICHL, accused, KARL REICHL and YOLANDA GUTIERREZ DE REICHL, accused-
appellants
G.R. No. 141221-36, March 7, 2002
(First Division)

DOCTRINE : There is illegal recruitment when one who does not possess the necessary
authority or license gives the impression of having the ability to send a worker abroad.

FACTS : They were Charge a syndicated and large scale illegal recruitment. In April 1993, eight
(8) informations for syndicated and large scale illegal recruitment and eight (8) informations for
estafa were filed against accused-appellants, spouses Karl and Yolanda Reichl, together with
Francisco Hernandez. Only the Reichl spouses were tried and convicted by the trial court as
Francisco Hernandez remained at large. Private Respondents‘ claims were based on the
following:
• Francisco Hernandez, Karl Reichl and Yolanda Gutierrez Reichl in their personal
capacities were neither licensed nor authorized by the POEA to recruit workers for
overseas employment
• documents signed by the Reichl spouses where they admitted that they promised to
secure Austrian tourist visas for private complainants and that they would return all
the expenses incurred by them if they are not able to leave;
• The Reichls promised to take care of all the papers and to secure a job (domestic helper)
for each of them abroad if they can pay of P150,000.00 for the processing of her papers
and travel documents.
• Each of the PR gave money in various installment plans but the departure was again
and again rescheduledon multiple dates and still did not push through.

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• They (Reichls) gave various excuses for their failure to depart, until finally the Reichls
told the applicants that Karl Reichl had so many business transactions in the
Philippines that they would not be able to send them abroad and that they would
refund their payment instead. The Reichls vowed to return the payment if they fail on
their promise.
All the private respondents (Narcisa Hernandez ,Melanie Bautista, Estela Manalo, Edwin
Coleng, Anicel Umahon, Analiza Perez and Maricel Matira, Charito Balmes) related similar
situations premised under the same facts.Karl Reichl denied any knowledge about Francisco
Hernandez's recruitment activities. He further denied that he promised private complainants
that he would give them overseas employment. As regards the document where Mr. Reichl
undertook to pay P1,388,924.00 to private complainants, he claimed that he signed said
document under duress. Francisco Hernandez allegedly told him that private complainants
would harm him and his family if he refused to sign it. He signed the document as he felt he
had no other option. Yolanda Gutierrez de Reichl corroborated the testimony of her husband
and denied the charges against her. RTC rendered a decision convicting accused-appellants of
one (1) count of illegal recruitment in large scale and six (6) counts of estafa.

ISSUE: whether or not the trial court erred in convicting accused-appellants of illegal
recruitment in large scale by cummulating the individual informations filed by private
complainants?

HELD : NO.

Article 38 of the Labor Code defines illegal recruitment as ―any recruitment activities,
including the prohibited practices enumerated under Article 34 of (the Labor Code), to be
undertaken by non-licensees or non-holders of authority.‖ The term ―recruitment and
placement‖ refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, including referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not, provided that any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement. The law imposes a higher penalty when the
illegal recruitment is committed by a syndicate or in large scale as they are considered an
offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring and/or confederating with one
another in carrying out any unlawful or illegal transaction, enterprise or scheme. It is deemed
committed in large scale if committed against three (3) or more persons individually or as a
group.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three

(3) or more persons conspiring and/or confederating with one another in carrying out any
unlawful or illegal transaction, enterprise or scheme defined under the first paragraph of
Article 38 of the Labor Code.—This, however, does not serve to lower the penalty imposed upon
accused-appellants. The charge was not only for illegal recruitment committed in large scale
but also for illegal recruitment committed by a syndicate. Illegal recruitment is deemed
committed by a syndicate if carried out by a group of three (3) or more persons conspiring
and/or confederating with one another in carrying out any unlawful or illegal transaction,
enterprise or scheme defined under the first paragraph of Article 38 of the Labor Code. It has
been shown that Karl Reichl, Yolanda Reichl and Francisco Hernandez conspired with each
other in convincing private complainants to apply for an overseas job and giving them the
guaranty that they would be hired as domestic helpers in Italy although they were not licensed
to do so. Thus, we hold that accused-appellants should be held liable for illegal recruitment
committed by a syndicate which is also punishable by life imprisonment and a fine of one
hundred thousand pesos (P100,000.00) under Article 39 of the Labor Code.

Submitted by: Veloso, Jocelyn

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PEOPLE OF THE PHILIPPINES, Plaintiff-appellee,

vs.
TAN TIONG MENG alias "TOMMY TAN", Accused-appellant.
G.R. No. 120835-40, April 10, 1997
(First Division)

DOCTRINE: The Court reiterated the rule that a person convicted for illegal recruitment under
the Labor Code can be convicted for violation of the Revised Penal Code provisions on estafa
provided the elements of the crime are present.

FACTS: Accused-appellant Tan Tiong Meng alias "Tommy Tan" was charged with Illegal
Recruitment in Large Scale and six (6) counts of estafa. In the present appeal, accused-
appellant would have the Court believe that he merely acted as a collector of money for the
principal recruiter Borja who made the representations that he (Tan) could give the applicants
jobs in Taiwan. He maintains that he merely received commissions from the transactions and
that the deceit was employed not by him but by Borja who introduced him as a job recruiter.

ISSUE: Whether or not Tan committed illegal recruitment and estafa?

HELD: Yes.

The Labor Code defines recruitment and placement as: ―Any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit
or not; Provided, that any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement.‖

It is clear that accused-appellant's acts of accepting placement fees from job applicants and
representing to said applicants that he could get them jobs in Taiwan constitute recruitment
and placement under the above provision of the Labor Code.

Accused-appellant's guilt of six (6) separate crimes of estafa has likewise been proven. The
argument that the deceit was employed by Jose Percival Borja and not by accused-appellant is
specious, even ridiculous. All the complainants agreed that it was accused-appellant Tan who
assured them of jobs in Taiwan. The assurances were made intentionally to deceive the would-
be job applicants to part with their money.

In People v. Romero, the elements of the crime of estafa were stated thus: a) that the accused
defrauded another by abuse of confidence or by means of deceit; and b) that damage or
prejudice capable of pecuniary estimation is caused to the offended party or third person. Both
elements have been proven in this case.

The Supreme Court affirmed the judgment appealed from finding accused-appellant Tan Tiong
Meng alias "Tommy Tan" guilty of illegal recruitment in large scale and six (6) counts of estafa.

Submitted by: Aguilar, Cherry Kerr

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THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. DIOSCORA M. ARABIA and

FRANCISCA L. TOMAS, accused-appellants
[G.R. Nos. 138431-36. September 12, 2001]
GONZAGA-REYES, J:

DOCTRINE: Large-scale illegal recruitment has the following essential elements:

(1) The accused undertook [a] recruitment activity defined under Article 13 (b) or any
prohibited practice under Art. 34 of the Labor Code.
(2) He did not have the license or the authority to lawfully engage in the recruitment and
placement of workers.
(3) He committed the same against three or more persons, individually or as a group.[8]

FACTS: In October 1992, private complainants Violeta de la Cruz, Remelyn Jacinto, Teresita
Lorenzo, Rolando Rustia and Noel de la Cruz were introduced by the latter‘s mother, private
complainant Pelagia de la Cruz, to appellant Dioscora Arabia, a recruiter of job applicants for a
factory in Taiwan.

Three (3) days later, appellants themselves went to the Dela Cruz residence where they
convinced private complainants to give the amount of P16, 000.00 each so that they could
leave for Taiwan by December 18, 1992. On November 6, 1992, each of the private
complainants, except Roland Rustia who gave P23, 000.00, gave P16,000.00 to Arabia at the
latter‘s residence and in the presence of Tomas. Arabia, however, did not issue any receipt
upon her assurance that she would not fool them.

Private complainants were told to prepare for their departure and that the P16, 000.00
placement fee would be reimbursed by their employer in Taiwan. Various requirements, such
as pictures, passports and bio-data, were submitted by private complainants.

On December 18, 1992, however, private complainants were not able to leave for Taiwan
because appellants told them that the person who was supposed to accompany them to Taiwan
did not arrive. The departure date was thus reset to January 16, 1993, but private
complainants were still unable to leave because of the same excuse that appellants gave.

Private complainants asked for the return of their money as they were no longer interested in
working abroad. They were informed by Arabias sister, however, that appellants were arrested
by the NBI and detained at the Quezon City Jail. Records also showed that appellants were
neither licensed nor authorized to recruit workers for overseas employment.

ISSUE: Whether or not the accused-appellants guilty of illegal recruitment in large scale.

HELD: YES.

There is no doubt as to accused-appellants guilt for all the essential elements of the crime of
Illegal Recruitment in Large Scale have been established beyond reasonable doubt. Accused-
appellants recruited at least four persons, giving them the impression that they had the
capability to send them to Taiwan for employment. They collected various amounts allegedly for
recruitment and placement fees without license or authority to do so.

It is settled that the fact that an accused in an illegal recruitment case did not issue the
receipts for amounts received from the complainants has no bearing on his culpability so long
as complainants show through their respective testimonies and affidavits that the accused was
involved in the prohibited recruitment. It has also been held that the Statute of Frauds and the
rules of evidence do not require the presentations of receipts in order to prove the existence of a

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recruitment agreement and the procurement of fees in illegal recruitment cases. The amounts
may consequently be proved by the testimony of witnesses.

Submitted by: Austria, Don Rodel A.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
ELENA VERANO Y ABANES, accused-appellant.
G.R. No. 90017-18, March 1, 1994
(First Division)

FACTS: Elena Verano was convicted of the Crime Illegal Recruitment In Large Scale as defined
under paragraph (b) of Article 38 in relation to Article 39 of the New Labor Code of the
Philippines with the corresponding penalty of life imprisonment, a fine of P100,000 and
payment of P10,000 and P7,150 plus interest of 12% per annum from the date of filing of
information on February 22, 1988 to the offended parties Arturo Espiel and Alfonso Abanes.

She was likewise convicted of ESTAFA and was sentenced to suffer an indeterminate sentence
of six(6) years of prcion correccional in its maximum period to nine (9) years of prision mayor
medium period, and also to pay Jose Daep P15,000 as actual damages plus interest of 12 %
per annum from the date of filing of the information.

However, in her argument as to the crime of illegal recruitment in large scale to the Supreme
Court, she alleges that she never represented herself having the capacity to contract workers
for overseas employment. She added that she merely introduced the complainants to a certain
Juliet Majestrado who was the one who claimed to have such capacity.

As to the crime of estafa, she alleged that although she issued receipts to the complainants,
she never profited from the money paid since all were given to and personally received by Juliet
Majestrado.

ISSUE: Whether or not Verano is liable for the crimes of illegal recruitment in large scale and
estafa.

HELD: Yes. In deciding the case, the Supreme Court the well-settled doctrine that findings of
fact made by the trial court are final and conclusive and CANNOT be reviewed on appeal.
Moreover, the abovementioned case does not fall within the recognized exceptions.

The Supreme Court maintained the factual findings of the trial court wherein Verano
persuaded Daep, Espiel and Abanes to accept as overseas salesmen in Bahrain, required them
to pay P10,000 each to cover processing expenses. Moreover, Verano even signed a contract of
employment with her as employer and Arturo as employee to further convince them of hher
capacity to send them abroad. However, Verano failed to fulfill said promises for three (3) times
which prompted the victims to lodge complaints.

Submitted by: Alarcon, Maria Teresa L.

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C.F. Sharp Crew Management, Inc. vs. Espanol, Jr., 533 SCRA 424, G.R. No. 155903
September 14, 2007

DOCTRINE: Illegal Recruitment; Definition of Recruitment and Placement; The conduct of

preparatory interviews is a recruitment activity.—Article 13(b) of the Labor Code defines
recruitment and placement as: any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad whether for profit or not: Provided, That any
person or entity which in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement. On the basis of this
definition—and contrary to what C.F. Sharp wants to portray—the conduct of preparatory
interviews is a recruitment activity.

It is the lack of the necessary license or authority, not the fact of payment, that renders the
recruitment activity of LCL unlawful.—The fact that C.F. Sharp did not receive any payment
during the interviews is of no moment. From the language of Article 13(b), the act of
recruitment may be ―for profit or not.‖ Notably, it is the lack of the necessary license or
authority, not the fact of payment, that renders the recruitment activity of LCL unlawful.

FACTS: LCL terminated the Crewing Agreement with PAPASHIP to take effect on December 31,
1996. It then appointed C.F. Sharp as crewing agent in the Philippines. C.F. Sharp requested
for accreditation as the new manning agency of LCL with the (POEA), but Rizal International
Shipping Services objected on the ground that its accreditation still existed and would only
expire on December 31, 1996. Pending approval of the accreditation, two (2) principals of LCL
arrived in the Philippines and conducted a series of interviews for seafarers at C.F. Sharp‘s
office. Rizal reported LCL‘s recruitment activities to the POEA on December 9, 1996, and
requested an ocular inspection of C.F. Sharp‘s premises. On December 17, 1996, POEA
representatives conducted an inspection and found the two (2) principals C.F. Sharp
interviewing and recruiting. The Inspection report signed by Corazon Aquino of the POEA and
countersigned by Mr. Reynaldo Banawis of C.F. Sharp was thereafter submitted to the POEA.
On January 2, 1997, Rizal filed a complaint for illegal recruitment, cancellation or revocation of
license, and blacklisting against LCL and C.F. Sharp with the POEA. For its part, C.F. Sharp
belittled the inspection report of the POEA inspection team claiming that it simply stated that
interviews and recruitment were undertaken, without reference to who were conducting the
interview and for what vessels. The POEA Administrator was not persuaded and found C.F.
Sharp liable for illegal recruitment and ordered suspended for a period of six (6) months or in
lieu thereof, it is ordered to pay a fine. C.F. Sharp elevated the Administrator‘s ruling to the
DOLE but it affirmed the decision. C.F. Sharp‘s motion for reconsideration having been denied
by the then Undersecretary, Jose M. Espanol, Jr., it elevated the case to the Supreme Court on
petition for certiorari But SC referred the petition to the CA. Which the CA denied, and also its
MR.

ISSUE: Whether C.F. Sharp is liable for illegal recruitment.

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HELD: Yes. Undoubtedly, in December 1996, LCL had no approved POEA license to recruit.
C.F. Sharp‘s accreditation as LCL‘s new manning agency was still pending approval at that
time. Yet Savva and Tjiakouris, along with C.F. Sharp, entertained applicants for LCL‘s vessels,
and conducted preparatory interviews. Article 13(b) of the Labor Code defines recruitment and
placement as: ―any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad whether for profit or not: Provided, That any person or entity
which in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement.‖

On the basis of this definition – and contrary to what C.F. Sharp wants to portray - the conduct
of preparatory interviews is a recruitment activity. The fact that C.F. Sharp did not receive any
payment during the interviews is of no moment. From the language of Article 13(b), the act of
recruitment may be "for profit or not." Notably, it is the lack of the necessary license or
authority, not the fact of payment, that renders the recruitment activity of LCL unlawful.

Submitted by: Bacurio, Kenneth Bernard

People of the Philippines vs. Roxas, G.R. NO. 140762, September 10, 2003

FACTS: Accused FC Roxas, doing business under the name and style of FC Roxas
Construction, with office address at Rm. 212 Manufacturers Building, Sta Cruz, Manila,
was a licensed private recruitment entity (Service contractor) whose authority was
issued on February 20, 1984 and expired on March 25, 1988. (A service contractor acts
as the employer of its recruits with respect to projects it contracted to service abroad).
As a service contractor, it is not allowed to charge, directly or indirectly, any fee from the
workers except the authorized documentation fee of P1,500. During the period of
January 1984 to july 1986, the accused FC Construtction Co. demanded and received
from its applicants, herein private complainants numbering about 22, various sums of
money ranging from P1,500 to P8,500 in excess of the limits set forth by law. The
complainants, furthermore, were not able to work abroad, were no able to issue travel
documents and despite efforts, were not refunded the money paid to and received by the
accused. The accused Roxas did not deny the receipts covering the different sums of
money paid by the private complainants. He reasoned out that the amount paid to and
received by him were for ―passporting and ticketing‖ of the private complainants.

ISSUE: Whether the accused is guilty of illegal recruitment.

HELD: The court found that the excuse of the accused to be highly unjustified and
definitely unconvincing. Besides the accused has jumped bail, and despite the issuance
of the warrant of arrest, he has not been apprehended. As a matter of fact, he was tried
in absentia. The fundamental rule that the plight of the accused is consistent with his

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guilt was made applicable to his case. Accused is thereby guilty in violation of Article 32
of Labor Code; Fees to be paid by workers. - Any person applying with a private fee-
charging employment agency for employment assistance shall not be charged any fee
until he has obtained employment through its efforts or has actually commenced
employment. Such fee shall be always covered with the appropriate receipt clearly
showing the amount paid. The Secretary of Labor shall promulgate a schedule of
allowable fees.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
NIMFA REMULLO, accused-appellant
G.R.Nos. 124443-46. June 6, 2002
(Second Division)

DOCTRINE: Without credible evidence proffered by the defense, bad faith or ulterior motive
could not be imputed on the part of the appellees in pointing to the accused as the illegal
recruiter who victimized them. When there is no showing that the principal witnesses for the
prosecution were actuated by improper motive, the presumption is that the witnesses were not
so actuated and their testimonies are thus entitled to full faith and credit.

FACTS: On March to May 1993, the accused , by fraudulent representation, enlisted and
recruited the complainants Cadacio, Quinsaat and Mejia for job abroad and collected fees,
without first securing license or authority from DOLE, thus committing illegal recruitment in
violation of the Labor Code. Upon her arraignment, appellant pleaded not guilty. Thus, trial
ensued. Private complainants testified on essentially same facts. They averred that appellant
told them that she was recruiting factory workers for Malaysia. Part of the fees collected were
paid in the appellant‘s house and in Jamila office. No receipts were issued.

On their scheduled departure date, immigration officer told them they lack the requirements
imposed by POEA. Consequently, their passports were cancelled and they were offloaded.
Meanwhile, Jamila and Co. denied having knowledge of their recruitment.
In appellant‘s defense, she denied having recruited the complainants and receiving money from
them. She alleged further, that she was a marketing consultant at Jamila office and only
helped them fill-up their bio-data. She explained that Steven Mah, the owner of Manifield
recruitment agency, was the one who received placement fees. Also, she claimed that Jamila
knew that complainants transacted business with Mah. RTC found appellant guilty sentencing
her life imprisonment. Hence, appeal.

ISSUE: Whether or not the RTC erred in finding that the appellant is guilty beyond reasonable
doubt of the crimes charged.

HELD: No.

The trial courts findings and conclusions are duly supported by the evidence on record, thus
there is no sufficient reason to disturb them. For illegal recruitment to prosper, the following
elements must concur: (1) the accused was engaged in recruitment activity defined under
Article 13 (b), or any prohibited practice under Article 34 of the Labor Code; (2) he or she lacks
the requisite license or authority to lawfully engage in the recruitment and placement of
workers; and (3) he or she committed such acts against three or more persons, individually or
as a group.

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Article 13 (b) of the Labor Code provides:(b) Recruitment and placement refers to any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contact services, promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed engaged in recruitment
and placement.

We are convinced that private complainants, the main witnesses for the prosecution, were
enticed by appellant to apply for jobs abroad. Appellant acted without license or lawful
authority to conduct recruitment of workers for overseas placement. The POEAs licensing
branch issued a certification stating that appellant, in her personal capacity, was not
authorized to engage in recruitment activities.

Appellants arguments fail to persuade us of her innocence. The defense of denial is intrinsically
weak, a self-serving negative evidence that cannot prevail over the testimony of credible
witnesses who testified on affirmative matters.In People vs. Hernandez, it was held that for
appellant to say that she was merely chosen as a scapegoat for appellees misfortune, having
failed to bring the alleged real recruiter to justice, does not appear well-founded. It is but a
hasty generalization of no probative significance. Without credible evidence proffered by the
defense, bad faith or ulterior motive could not be imputed on the part of the appellees in
pointing to the accused as the illegal recruiter who victimized them. When there is no showing
that the principal witnesses for the prosecution were actuated by improper motive, the
presumption is that the witnesses were not so actuated and their testimonies are thus entitled
to full faith and credit.Wherefore, RTC decision is affirmed.
Submitted by: Gumtang, Lianne

People of the Philippines, plaintiff-appellee

vs.
Angeles, accused-appellant
G.R. No. 132376. April 11, 2002

DOCTRINE: To prove illegal recruitment, it must be shown that the accused-appellant gave
complainants the distinct impression that he had the power or ability to send complainants
abroad for work such that the latter were convinced to part with their money in order to be
employed.

FACTS: Maria Tolosa Sardeña was working in Saudi Arabia when she received a call from her
sister, Priscilla Agoncillo, who was in Paris, France. Priscilla advised Maria to return to the
Philippines and await the arrival of her friend, accused-appellant Samina Angeles, who will
assist in processing her travel and employment documents to Paris, France. Heeding her
sister‘s advice, Maria immediately returned to the Philippines.

Marceliano Tolosa who at that time was in the Philippines likewise received instructions from
his sister Priscilla to meet accused-appellant who will also assist in the processing of his
documents for Paris, France.

Maria and Marceliano eventually met accused-appellant. During their meeting, accused-
appellant asked if they had the money required for the processing of their documents.
Thereafter, Maria gave P107,000.00 to accused-appellant at Expert Travel Agency.
Subsequently, she gave another P46,000.00 and US$1,500.00 as additional payments to
accused-appellant.

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On the other hand, Marceliano initially gave P100,000.00 to accused-appellant but he also
gave an additional P46,000.00 and US$1,500.00 to accused-appellant at the United Coconut
Planters Bank in Makati.

Meanwhile, Analyn Olpindo met accused-appellant in Belgium. At that time, Analyn was
working in Canada but she went to Belgium to visit her in-laws. After meeting accused-
appellant, Analyn Olpindo called up her sister, Precila Olpindo, in the Philippines and told her
to meet accused-appellant upon the latter‘s arrival in the Philippines because accused-
appellant can help process her documents for employment in Canada.

Precila Olpindo eventually met accused-appellant at the Expert Travel Agency. Accused-
appellant asked for the amount of $4,500.00, but Precila was only able to give $2,500.00.
Meanwhile, no evidence was adduced in relation to the complaint of Vilma Brina since she did
not testify in court.

Accused-appellant told Precila Olpindo and Vilma Brina that it was easier to complete the
processing of their papers if they start from Jakarta, Indonesia rather than from Manila. Thus,
Precila Olpindo, Vilma Brina and accused-appellant flew to Jakarta, Indonesia. However,
accused-appellant returned to the Philippines after two days, leaving behind Precila and Vilma.
They waited for accused-appellant in Jakarta but the latter never returned. Precila and Vilma
eventually came home to the Philippines. When she arrived in the Philippines, Precila tried to
get in touch with accused-appellant at the Expert Travel Agency, but she could not reach her.
Meanwhile, Maria and Marceliano Tolosa also began looking for accused-appellant after she
disappeared with their money. Elisa Campanianos of the Philippine Overseas Employment
Agency presented a certification to the effect that accused-appellant was not duly licensed to
recruit workers here and abroad.

Consequently, accused-appellant Samina Angeles y Calma was charged with four (4) counts of
estafa and one (1) count of illegal recruitment. The five (5) cases were consolidated and tried
jointly by the Regional Trial Court of Manila.

RTC: It found accused-appellant guilty of illegal recruitment and four (4) counts of estafa.
Hence, this appeal.

ISSUE: Whether or not accused-appellant can be lawfully convicted of illegal recruitment.

HELD: No.

lllegal recruitment is committed when two (2) elements concur: 1) that the offender has no valid
license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and 2) that the offender undertakes either any activity within the
meaning of recruitment and placement defined under Article 13(b), or any prohibited practices
enumerated under Article 34.

To prove illegal recruitment, it must be shown that the accused-appellant gave complainants
the distinct impression that he had the power or ability to send complainants abroad for work
such that the latter were convinced to part with their money in order to be employed. To be
engaged in the practice of recruitment and placement, it is plain that there must at least be a
promise or offer of an employment from the person posing as a recruiter whether locally or
abroad.

In the case at bar, a perusal of the records reveals that not one of the complainants testified
that accused-appellant lured them to part with their hard-earned money with promises of jobs
abroad. On the contrary, they were all consistent in saying that their relatives abroad were the
ones who contacted them and urged them to meet accused-appellant who would assist them in

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processing their travel documents. Accused-appellant did not have to make promises of
employment abroad as these were already done by complainants‘ relatives. Plainly, there is no
testimony that accused-appellant offered complainants jobs abroad. Hence, accused-appellant
Samina Angeles cannot be lawfully convicted of illegal recruitment.

Submitted by: Bayot, Kristine Valerie S.

Employment if Non-Resident Aliens

(Article 40)

Employment of Non-Resident Aliens

FARLE P. ALMODIEL, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), RAYTHEON PHILS.,
INC., respondents.
G.R. No. 100641 June 14, 1993
SECOND DIVISION
DOCTRINE: It is a well-settled rule that labor laws do not authorize interference with the
employer's judgment in the conduct of his business. The determination of the qualification and
fitness of workers for hiring and firing, promotion or reassignment are exclusive prerogatives of
management. The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor
in the different Divisions of the NLRC (nor in the courts) managerial authority. The employer is
free to determine, using his own discretion and business judgment, all elements of
employment, "from hiring to firing" except in cases of unlawful discrimination or those which
may be provided by law.

FACTS: Petitioner Farle P. Almodiel is a Certified Public Accountant who was hired in October
1987 as Cost Accounting Manager of respondent Raytheon Philippines, Inc. where his major
duties include: (1) plan, coordinate and carry out year and physical inventory; (2) formulate
and issue out hard copies of Standard Product costing and other cost/pricing analysis if
needed and required and (3) set up the written Cost Accounting System for the whole company.
Petitioner was assured by the Controller that should his position or department which was
apparently a one-man department with no staff becomes untenable or unable to deliver the
needed service due to manpower constraint, he would be given a three (3) year advance notice.

In the meantime, the standard cost accounting system was installed and used at the Raytheon
plants and subsidiaries worldwide and was likewise adopted and installed in the Philippine
operations. As a consequence, the services of a Cost Accounting Manager allegedly entailed
only the submission of periodic reports that would use computerized forms prescribed and
designed by the international head office of the Raytheon Company in California, USA. This
action prompted the abolition of his position on the ground of redundancy.

Petitioner filed a complaint for illegal dismissal to the Arbitration Branch of NLRC, where the
Arbiter rendered decision In his favor declaring that complainant‘s termination on the ground
of redundancy is highly irregular and without legal and factual basis. Raytheon appealed to the
NLRC which also set aside and modified the Labor Arbiter‘s ruling. Hence, this petition.

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ISSUES: 1. Whether or not bad faith, malice and irregularity crept in the abolition of
petitioner's position of Cost Accounting Manager on the ground of redundancy.

2. Whether or not NLRC committed grave abuse of discretion amounting to lack of or in excess
of jurisdiction in declaring as valid and justified the termination of petitioner on the ground
of redundancy.

HELD: No. Whether petitioner‘s functions as Cost Accounting Manager have been
dispensed with or merely absorbed by another is however immaterial. For even conceding that t
he functions of petitioner‘s position were merely transferred, no malice or bad faith can
beimputed from said act.

This Court said that redundancy, for purposes of our Labor Code, exists where the services of
an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. The characterization of an employee's services as no longer necessary or
sustainable, and therefore, properly terminable, was an exercise o f business judg ment on
the part o f the employer. The wisdom or soundness o f such characterization or
decision was not subject to discretionary review on the part of the
Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and m
alicious action is not shown.

2. No. There is no dispute that petitioner was duly advised, one (1) month before, of the
termination of his employment on the ground of redundancy in a written notice by his
immediate superior in January 27, 1989. He was issued a check representing separation pay
but in view of his refusal to acknowledge the notice and the check, they were sent to him thru
registered mail on January 30, 1989. The 8epartment of Labor and Employment was served a
copy of the notice of termination of petitioner in accordance with the pertinent provisions of the
Labor Code and the implementing rules.

Submitted by: Bodopol, Adolf Jr.

GENERAL MILLING CORPORATION and EARL TIMOTHY CONE, petitioners,

vs.
HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON.
BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary of Labor and
Employment, and BASKETBALL COACHES ASSOCIATION OF THE
PHILIPPINES, respondents.
G.R. No. 93666, April 22, 1991
(THIRD DIVISION)

DOCTRINE: Private parties cannot constitutionally contract away the otherwise applicable
provisions of law.

FACTS: The National Capital Region of the Department of Labor and Employment issued Alien
Employment Permit No. M-0689-3-535 in favor of petitioner Earl Timothy Cone, a United

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States citizen, as sports consultant and assistant coach for petitioner General Milling
Corporation ("GMC"). Petitioners GMC and Cone entered into a contract of employment
whereby the latter undertook to coach GMC's basketball team. Thereafter, the Board of Special
Inquiry of the Commission on Immigration and Deportation approved petitioner Cone's
application for a change of admission status from temporary visitor to pre-arranged employee.
Petitioner GMC requested renewal of petitioner Cone's alien employment permit, the DOLE
Regional Director, Luna Piezas, granted the request. However, Private respondent Basketball
Coaches Association of the Philippines ("BCAP") appealed the issuance of said alien
employment permit to the respondent Secretary of Labor who, later on, issued a decision
ordering cancellation of petitioner Cone's employment permit on the ground that there was no
showing that there is no person in the Philippines who is competent, able and willing to
perform the services required nor that the hiring of petitioner Cone would redound to the
national interest.Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental
Motions for Reconsideration but said Motions were denied. Hence this Petition for Certiorari.

ISSUE: Whether or not the Secretary of Labor acted with grave abuse of discretion in revoking
Cone‘s Alien Employment Permit?

HELD: NO.

The Court considers that petitioners have failed to show any grave abuse of discretion or any
act without or in excess of jurisdiction on the part of respondent Secretary of Labor in
rendering his decision revoking petitioner Cone's Alien Employment Permit. Petitioner GMC's
claim that hiring of a foreign coach is an employer's prerogative has no legal basis at all. Under
Article 40 of the Labor Code, an employer seeking employment of an alien must first obtain an
employment permit from the Department of Labor. Petitioner GMC's right to choose whom to
employ is, of course, limited by the statutory requirement of an alien employment permit.

Petitioners apparently suggest that the Secretary of Labor is not authorized to take into
account the question of whether or not employment of an alien applicant would "redound to
the national interest" because Article 40 does not explicitly refer to such assessment. This
argument (which seems impliedly to concede that the relationship of basketball coaching and
the national interest is tenuous and unreal) is not persuasive. In the first place, the second
paragraph of Article 40 says: "[t]he employment permit may be issued to a non-resident alien
or to the applicant employer after a determination of the non-availability of a person in the
Philippines who is competent, able and willing at the time of application to perform the services
for which the alien is desired." The permissive language employed in the Labor Code indicates
that the authority granted involves the exercise of discretion on the part of the issuing
authority.

The court finds petitioners' arguments on the above points of constitutional law too
insubstantial to require further consideration. Hence, Petition is dismissed for lack of merit.

Submitted by: De Guzman, Joey Albert P.

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DEE C. CHUAN & SONS, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS, CONGRESS OF LABOR ORGANIZATIONS (CLO),
KAISAHAN NG MGA MANGGAGAWA SA KAHOY SA PILIPINAS and JULIAN LUMANOG AND
HIS WORK-CONTRACT LABORERS, respondents.
G.R. No. L-2216, January 31, 1950
(En Banc)

DOCTRINE: An alien may question the constitutionality of a statute (or court order) only when
and so far as it is being, or is about to be, applied to his disadvantage.

FACTS: Dee C. Chuan & Sons, Inc. assails the validity of an order of the Court of Industrial
Relations. The order made upon petitioner's request for authority to hire" about twelve (12)
more laborers from time to time and on a temporary basis," contains the proviso that "the
majority of the laborers to be employed should be native." The petition was filed pending
settlement by the court of a labor dispute between the petitioner and Kaisahan Ng Mga
Manggagawa sa Kahoy sa Pilipinas. It is next said that "The Court of Industrial Relations
cannot intervene in questions of selection of employees and workers so as to impose
unconstitutional restrictions," and that "The restrictions of the number of aliens that nay be
employed in any business, occupation, trade or profession of any kind, is a denial of the equal
protection of the laws." Although the brief does not name the persons who are supposed to be
denied the equal protection of the laws, it is clearly to be inferred that aliens in general are in
petitioner's mind. Certainly, the order does not, directly or indirectly, immediately or remotely,
discriminate against the petitioner on account of race or citizenship. The order could have been
issued in a case in which the employer was a Filipino. As a matter of fact the petitioner insists
that 75 % of its shares of stock are held by Philippine citizens, a statement which is here
assumed to be correct.

ISSUE: Whether or not the order of the CIR was valid and constitutional.

HELD: YES.

The prospective employees whom the petitioner may contemplate employing have not come
forward to seek redress; their identity has not even been revealed. Clearly the petitioner has no
case in so far as it strives to protect the rights of others, much less others who are unknown
and undetermined. The petitioner is within its legitimate sphere of interest when it complains
that the appealed order restrains it in its liberty to engage the men it pleases. This complaint
merits a more detailed examination.

We cannot agree with the petitioner that the order constitutes an unlawful intrusion into the
sphere of legislation, by attempting to lay down a public policy of the state or to settle a
political question. In the first place, we believe, as we have already explained, that the court's
action falls within the legitimate scope of its jurisdiction. In the second place, the order does
not formulate a policy and is not political in character. It is not a permanent, all-embracing
regulation. It is a compromise and emergency measure applicable only in this case and
calculated to bridge a temporary gap and to adjust conflicting interests in an existing and
menacing controversy. The hiring of Chinese laborers by the petitioner was rightly considered
by the court likely to lead the parties away from the reconciliation which it was the function of
the court to effectuate.

As far as the petitioner is concerned, the requirement that majority of the laborers to be
employed should be Filipinos is certain not arbitrary, unreasonable or unjust. The petitioner's

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right to employ labor or to make contract with respect thereto is not unreasonably curtailed
and its interest is not jeopardized. We take it that the nationality of the additional laborers to
be taken in is immaterial to the petitioner. In its application for permission to employ twelve
temporary laborers it expressly says that these could be Filipinos or Chinese. On the face of
this statement, assuming the same to be sincere, the petitioner objection to the condition
imposed by the court would appear to be academic and a trifle.

Submitted by: Bonquin, Jezrael B.

Training and Employment of Special Workers

(Article 57)

Apprentices

NITTO ENTERPRISES, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents.
G.R. No. 114337 September 29, 1995
(First Division)

DOCTRINE: Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine quo non before an apprenticeship
agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously give
rise to an employer-apprentice relationship.

FACTS: Petitioner hired Respondent Capili as an apprentice machinist, molder and core maker
as evidenced by an apprenticeship agreement for a period of six (6) months with a daily wage
rate of P66.75 which was 75% of the applicable minimum wage. While working Capili who was
handling a piece of glass which he was working on, accidentally hit and injured the leg of an
office secretary who was treated at a nearby hospital. Later that same day, after office hours,
private respondent entered a workshop within the office premises which was not his work
station. There, he operated one of the power press machines without authority and in the
process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the
medication of private respondent.

The following day, Roberto Capili was asked to resign in a letter. Private respondent executed a
Quitclaim and Release in favor of petitioner.

Three days after, private respondent formally filed before the NLRC a complaint for illegal
dismissal and payment of other monetary benefits.

The Labor Arbiter rendered his decision finding the termination of private respondent as valid
and dismissing the money claim on the ground that private respondent who was hired as an
apprentice violated the terms of their agreement when he acted with gross negligence resulting
in the injury not only to himself but also to his fellow worker. Another ground is that private
respondent had shown that "he does not have the proper attitude in employment particularly
the handling of machines without authority and proper training.‖

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NLRC issued an order reversing the decision of the Labor Arbiter directing company to
reinstate complainant to his work last performed with back wages. The NLRC declared that
private respondent was a regular employee of petitioner.

ISSUE: Whether or not Respondent was an apprentice.

HELD: NO. The law is clear on this matter. Article 61 of the Labor Code provides:

Contents of apprenticeship agreement. — Apprenticeship agreements, including the main

rates of apprentices, shall conform to the rules issued by the Minister of Labor and
Employment. The period of apprenticeship shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal minimum wage, which in no case shall
start below 75% per cent of the applicable minimum wage, may be entered into only in
accordance with apprenticeship program duly approved by the Minister of Labor and
Employment. The Ministry shall develop standard model programs of apprenticeship.

Based on the evidence before us, petitioner did not comply with the requirements of the law. It
is mandated that apprenticeship agreements entered into by the employer and apprentice shall
be entered only in accordance with the apprenticeship program duly approved by the Minister
of Labor and Employment.

Prior approval by the Department of Labor and Employment of the proposed apprenticeship
program is, therefore, a condition sine quo non before an apprenticeship agreement can be
validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously give
rise to an employer-apprentice relationship.

Hence, since the apprenticeship agreement between petitioner and private respondent has no
force and effect in the absence of a valid apprenticeship program duly approved by the DOLE,
private respondent's assertion that he was hired not as an apprentice but as a delivery boy
("kargador" or "pahinante") deserves credence. He should rightly be considered as a regular
employee of petitioner as defined by Article 280 of the Labor Code:

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 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.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists. (Emphasis Supplied)

and pursuant to the constitutional mandate to "protect the rights of workers and promote
their welfare."
Submitted by: Del Rosario, Eunice

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Filamer Christian Institute vs. Court of Appeals, 190 SCRA 485, G.R. No. 75112 October
16, 1990

DOCTRINE: Torts; Quasi-Delict; Even assuming that an employer-employee relationship exists

between Filamer and Funtecha, still, Filamer cannot be made liable for the damages sustained
by the victim, considering that at the time of the accident, Funtecha was not acting within the
scope of his employment.—But even if we were to concede the status of an employee on
Funtecha, still the primary responsibility for his wrongdoing cannot be imputed to petitioner
Filamer for the plain reason that at the time of the accident, it has been satisfactorily shown
that Funtecha was not acting within the scope of his supposed employment. His duty was to
sweep the school passages for two hours every morning before his regular classes. Taking the
wheels of the Pinoy jeep from the authorized driver at 6:30 in the evening and then driving the
vehicle in a reckless manner resulting in multiple injuries to a third person were certainly not
within the ambit of his assigned tasks. In other words, at the time of the injury, Funtecha was
not engaged in the execution of the janitorial services for which he was employed, but for some
purpose of his own. It is but fair therefore that Funtecha should bear the full brunt of his
tortious negligence. Petitioner Filamer cannot be made liable for the damages he had caused.

FACTS: Daniel Futencha was a working student, a part-time janitor and a scholar of petitioner
Filamer. He was, in relation to the school, an employee even if he was assigned to clean the
school premises for only two (2) hours in the morning of each school day. Having a student
driver's license, Funtecha requested the driver, Allan Masa, and was allowed, to take over the
vehicle while the latter was on his way home one late afternoon. It is significant to note that the
place where Allan lives is also the house of his father, the school president, Agustin Masa.
Allan Masa turned over the vehicle to Funtecha only after driving down a road, a fast moving
truck with glaring lights nearly hit them so that they had to swerve to the right to avoid a
collision. Upon swerving, they heard a sound as if something had bumped against the vehicle,
but they did not stop to check. Actually, the Pinoy jeep swerved towards the pedestrian,
Potenciano Kapunan who was walking in his lane in the direction against vehicular traffic, and
hit him.

ISSUE: Whether the petitioner may be held liable with Futencha.

HELD: YES. In learning how to drive while taking the vehicle home in the direction of Allan's
house, Funtecha definitely was not having a joy ride. Funtecha was not driving for the purpose
of his enjoyment or for a "frolic of his own" but ultimately, for the service for which the jeep was
intended by the petitioner school.

Thus, Funtecha is an employee of petitioner Filamer. He need not have an official appointment
for a driver's position in order that the petitioner may be held responsible for his grossly
negligent act, it being sufficient that the act of driving at the time of the incident was for the
benefit of the petitioner. Hence, the fact that Funtecha was not the school driver or was not
acting within the scope of his janitorial duties does not relieve the petitioner of the burden of

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rebutting the presumption juris tantum that there was negligence on its part either in the
selection of a servant or employee, or in the supervision over him. The petitioner has failed to
show proof of its having exercised the required diligence of a good father of a family over its
employees.
Submitted by: Chen, Timothy

Conditions of Employment
(Article 82-95)

Employee-Employer Relationship

BROTHERHOOD' LABOR UNITY MOVEMENT OF PHILIPPINES

v.
RONALDO B. ZAMORA
GR No. L-48645, Jan 07, 1987

DOCTRINE: In determining the existence of an employer-employee relationship, the elements

that are generally considered are the following: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's
power to control the employee with respect to the means and methods by which the
work is to be accomplished.

FACTS: the petitioners are workers who have been employed at the San Miguel Parola Glass
Factory since 1961, averaging about seven (7) years of service at the time of their termination.
They worked as "cargadores" or "pahinantes" at the SMC Plant loading, unloading, piling or
palleting empty bottles and wooden shells to and from company trucks and warehouses. At
times, they accompanied the company trucks on their delivery routes.

The petitioners first reported for work to Superintendent-in-Charge Camahort. They were
issued gate passes signed by Camahort and were provided by the respondent company with the
tools, equipment and paraphernalia used in the loading, unloading, piling and hauling
operation.

Job orders emanated from Camahort. The orders are then transmitted to an assistant-officer-
in-charge. In turn, the assistant informs the warehousemen and checkers regarding the same.
The latter, thereafter, relays said orders to the capatazes or group leaders who then give orders
to the workers as to where, when and what to load, unload, pile, pallet or clean.

Work in the glass factory was neither regular nor continuous, depending wholly on the volume
of bottles manufactured to be loaded and unloaded, as well as the business activity of the
company. Work did not necessarily mean a full eight (8) hour day for the petitioners. However,
work, at times, exceeded the eight (8) hour day and necessitated work on Sundays and
holidays. For this, they were neither paid overtime nor compensation for work on Sundays and
holidays.

Petitioners were paid every ten (10) days on a piece rate basis, that is, according to the number
of cartons and wooden shells they were able to load, unload, or pile. The group leader notes
down the number or volume of work that each individual worker has accomplished. This is
then made the basis of a report or statement which is compared with the notes of the checker
and warehousemen as to whether or not they tally. Final approval of report is by officer-in-
charge Camahort. The pay check is given to the group leaders for encashment, distribution,
and payment to the petitioners in accordance with payrolls prepared by said leaders. From the

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total earnings of the group, the group leader gets a participation or share of ten (10%) percent
plus an additional amount from the earnings of each individual.

The petitioners worked exclusively at the SMC plant, never having been assigned to other
companies or departments of SMC plant, even when the volume of work was at its minimum.
When any of the glass furnaces suffered a breakdown, making a shutdown necessary, the
petitioners' work was temporarily suspended. Thereafter, the petitioners would return to work
at the glass plant.

Sometime in January, 1969, the petitioner workers numbering one hundred and forty (140)
organized and affiliated themselves with the petitioner union and engaged in union activities.
Believing themselves entitled to overtime and holiday pay, the petitioners pressed management,
airing other grievances such as being paid below the minimum wage law, in human treatment,
being forced to borrow at usurious rates of interest and to buy raffle tickets, coerced by
withholding their salaries, and salary deductions made without their consent. However, their
gripes and grievances were not heeded by the respondents.

On February 6, 1969, the petitioner union filed a notice of strike with the Bureau of Labor
Relations in connection with the dismissal of some of its members who were allegedly
castigated for their union membership and warned that should they persist in continuing with
their union activities they would be dismissed from their jobs.

On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter,
denied entrance to respondent company's glass factory despite their regularly reporting for
work. A complaint for illegal dismissal and unfair labor practice was filed by the petitioners, as
set forth in Section 4 (a), sub-sections (1) and (4) of Republic Act No. 875 and of illegal
dismissal. It was alleged that respondents ordered the individual complainants to disaffiliate
from the complainant union; and that management dismissed the individual complainants
when they insisted on their union membership.

"On their part, respondents moved for the dismissal of the complaint on the grounds that the
complainants are not and have never been employees of respondent company but employees of
the independent contractor; that respondent company has never had control over the means
and methods followed by the independent contractor who enjoyed full authority to hire and
control said employees; and that the individual complainants are barred by estoppel from
asserting that they are employees of respondent company.

ISSUE: Whether or not an employer-employee relationship exists between petitioners -

members of the "Brotherhood Labor Unit Movement of the Philippines" (BLUM) and respondent
San Miguel Corporation.

HELD: YES.

In determining the existence of an employer-employee relationship, the elements that are

generally considered are the following: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee with respect to the means and methods by which the work is to be
accomplished. It is the so-called "control test" that is the most important element.

Here, respondent asserts that the petitioners are employees of the Guaranteed Labor
Contractor, an independent labor contracting firm. However, the existence of an independent
contractor relationship is 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

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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. None of the
above criteria exists in the case at bar.

Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had
worked continuously and exclusively for the respondent company's shipping and warehousing
department. Considering the length of time that the petitioners have worked with the
respondent company, there is justification to conclude that they were engaged to
perform activities necessary or desirable in the usual business or trade of the
respondent, and the petitioners are, therefore regular employees.

As we have found in RJL Martinez Fishing Corporation v. National Labor Relations

Commission, (supra):"x x x [T]he employer-employee relationship between the parties herein is
not co-terminous with each loading and unloading job. As earlier shown, respondents are
engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under
this situation, respondents' activity of catching fish is a continuous process and could hardly be
considered as seasonal in nature. So that the activities performed by herein complainants, i.e.
unloading the catch of tuna fish from respondents' vessels and then loading the same to
refrigerated vans, are necessary or desirable in the business of respondents. This circumstance
makes the employment of complainants a regular one, in the sense that it does not depend on
any specific project or seasonable activity.

So is it with petitioners in the case at bar. In fact, despite past shutdowns of the glass plant
for repairs, the petitioners, thereafter, promptly returned to their jobs, never having been
replaced, or assigned elsewhere until the present controversy arose. The term of the
petitioners' employment appears indefinite. The Continuity and habituality of petitioners' work
bolsters their claim of employee status vis-a-vis respondent company.

Even under the assumption that a contract of employment had indeed been executed between
respondent SMC and the alleged labor contractor, respondent's case will, nevertheless, fail.

Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides:

"Job contracting. There is job contracting permissible under the Code if the following
conditions are met:"(1) The contractor carries on an independent business and
undertakes the contract work on his own 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; and"(2) The contractor has substantial capital or investment in the form
of tools, equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business."

We find that Guaranteed and Reliable Labor contractors have neither substantial capital nor
investment to qualify as an independent contractor under the law. The premises, tools,
equipment and paraphernalia used by the petitioners in their jobs are admittedly all supplied
by respondent company. It is only the manpower or labor force which the alleged contractors
supply, suggesting the existence of a "labor-only" contracting scheme prohibited by law . In
fact, even the alleged contractor's office, which consists of a space at respondent company's
warehouse, table, chair, typewriter and cabinet, are provided for by respondent SMC. It is
therefore clear that the alleged contractors have no capital outlay involved in the conduct of its
business, in the maintenance thereof or in the payment of its workers' salaries.

The payment of the workers' wages is a critical factor in determining the actuality of an
employer-employee relationship whether between respondent company and petitioners or
between the alleged independent contractor and petitioners. It is important to emphasize
that in a truly independent contractor-contractee relationship, the fees are paid directly

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to the manpower agency in lump sum without indicating or implying that the basis of
such lump sum is the salary per worker multiplied by the number of workers assigned to
the company. This is the rule in Social Security System v. Court of Appeals (39 SCRA
629, 635).

The alleged independent contractors in the case at bar were paid a lump sum representing only
the salaries the workers were entitled to, arrived at by adding the salaries of each worker which
depend on the volume of work they had accomplished individually. These are based on
payrolls, reports or statements prepared by the workers' group leader, warehousemen and
checkers, where they note down the number of cartons, wooden shells and bottles each worker
was able to load, unload, pile or pallet and see whether they tally. The amount paid by
respondent company to the alleged independent contractor considers no business expenses or
capital outlay of the latter. Nor is the profit or gain of the alleged contractor in the conduct of
its business provided for as an amount over and above the workers' wages. Instead, the
alleged contractor receives a percentage from the total earnings of all the workers plus an
additional amount corresponding to a percentage of the earnings of each individual worker,
which, perhaps, accounts for the petitioners' charge of unauthorized deductions from their
salaries by the respondents.

Anent the argument that the petitioners are not employees as they worked on piece basis,
"'[C]ircumstances must be construed to determine indeed if payment by the piece is just a
method of compensation and does not define the essence of the relation. Units of time ... and
units of work are in establishments like respondent (sic) just yardsticks whereby to determine
rate of compensation, to be applied whenever agreed upon. We cannot construe payment by
the piece where work is done in such an establishment so as to put the worker completely at
liberty to turn him out and take in another at pleasure.'"

Article 106 of the Labor Code provides the legal effect of a labor-only contracting scheme, to
wit:

"x x x the person or intermediary shall be considered merely as an agent 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."

Firmly establishing respondent SMC's role as employer is the control exercised by it over the
petitioners that is, control in the means and methods/manner by which petitioners are to
go about their work, as well as in disciplinary measures imposed by it.

Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to

the means and manner of performing the same is practically nil. For, how many ways are
there to load and unload bottles and wooden shells? The mere concern of both respondent
SMC and the alleged contractor is that the job of having the bottles and wooden shells brought
to and from the warehouse be done. More evident and pronounced is respondent company's
right to control in the discipline of petitioners. Documentary evidence presented by the
petitioners establish respondent SMC's right to impose disciplinary measures for violations or
infractions of its rules and regulations as well as its right to recommend transfers and
dismissals of the piece workers. The inter-office memoranda submitted in evidence prove the
company's control over the petitioners. That respondent SMC has the power to recommend
penalties or dismissal of the piece workers, even as to Abner Bungay who is alleged by SMC to
be a representative of the alleged labor contractor, is the strongest indication of respondent
company's right of control over the petitioners as direct employer. There is no evidence to show
that the alleged labor contractor had such right of control or much less had been there to
supervise or deal with the petitioners.
Submitted by: Escol, Hanzel Grace

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TABAS VS. CALIFORNIA MANUFACTURING COMPANY, INC.

G.R. NO. L-80680 JANUARY 26, 1989
SECOND DIVISION

DOCTRINE: There is 'labor-only' contracting where the person supplying workers to an

employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such
person are performing activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered merely as an agent 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.

That notwithstanding the absence of a direct employer-employee relationship between the

employer in whose favor work had been contracted out by a "labor-only" contractor, and the
employees, the former has the responsibility, together with the "labor-only" contractor, for any
valid labor claims, 16 by operation of law. The reason, so we held, is that the "labor-only"
contractor is considered "merely an agent of the employer,"17 and liability must be shouldered
by either one or shared by both.

FACTS: Petitioners filed a petition in the NLRC for reinstatement and payment of various
benefits against California Manufacturing Company. The respondent company then denied the
existence of an employer-employee relationship between the company and the petitioners.

Pursuant to a manpower supply agreement, it appears that the petitioners prior their
involvement with California Manufacturing Company were employees of Livi Manpower service,
an independent contractor, which assigned them to work as ―promotional merchandisers.‖ The
agreement provides that:

California ―has no control or supervisions whatsoever over [Livi‘s] workers with respect to how
they accomplish their work or perform [Californias] obligation‖ It was further expressly
stipulated that the assignment of workers to California shall be on a ―seasonal and contractual
basis‖; that ―[c]ost of living allowance and the 10 legal holidays will be charged directly to
[California] at cost ―; and that ―[p]ayroll for the preceding [sic] week [shall] be delivered by [Livi]
at [California‘s] premises.‖

ISSUE/S: Whether or not principal employer is liable.

HELD: Yes. The existence of an employer-employee relation cannot be made the subject of an
agreement.

Based on Article 106, ―labor-only‖ contractor is considered merely as an agent of the employer,
and the liability must be shouldered by either one or shared by both.

There is no doubt that in the case at bar, Livi performs ―manpower services‖, meaning to say, it
contracts out labor in favor of clients. We hold that it is one notwithstanding its vehement
claims to the contrary, and notwithstanding the provision of the contract that it is ―an
independent contractor.‖ The nature of one‘s business is not determined by self-serving
appellations one attaches thereto but by the tests provided by statute and prevailing case law.

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The bare fact that Livi maintains a separate line of business does not extinguish the equal fact
that it has provided California with workers to pursue the latter‘s own business. In this
connection, we do not agree that the petitioners had been made to perform activities ‗which are
not directly related to the general business of manufacturing,‖ California‘s purported ―principal
operation activity.‖ Livi, as a placement agency, had simply supplied California with the
manpower necessary to carry out its (California‘s) merchandising activities, using its
(California‘s) premises and equipment.
Submitted by: Elauria, J. Paulo Relunia

DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,

vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA, respondents-appellees.
G.R. No. L-41182-3, April 16, 1988
(Second Division)

DOCTRINE:There has been no uniform test to determine the evidence of an employer-employee

relation. In general, we have relied on the so-called right of control test, "where the person for
whom the services are performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end."

FACTS: Mrs. Segundina Noguera entered into a contract with Tourist World Service, Inc
(TWSI). TWSI leased the premises belonging to Noguera to use as a branch office. In the said
contract, Noguera held herself solidarily liable with TWSI for the prompt payment of the
monthly rental agreed on. The branch office was run by Sevilla. For any fare brought by any
airline, in on the efforts of Mrs. Sevilla, 3% shall be paid to TWSI and 4% was to go to Sevilla.
TWS have been informed that Sevilla was connected with a rival firm, the Philippine Travel
Bureau, and, since the branch office was anyhow losing, TWSI considered closing down its
office. This was firmed up by two resolutions of the board of directors. It further appears that
the contract for the use of the Branch Office premises was terminated. Since the appellees no
longer used it, the corporate secretary padlocked the premises. When neither the appellant
Sevilla nor any of her employees could enter the locked premises, a complaint wall filed against
the appellees with a prayer for the issuance of mandatory preliminary injunction. For apparent
lack of interest of the parties, the trial court ordered the dismissal of the case without
prejudice.

Noguera‘s motion for reconsideration was granted permitting her to present evidence in
support of her counterclaim. RTC held for the respondent on the premise that the respondent,
TWSI being the true lessee, it was within its prerogative to terminate the lease and padlock the
premises. It likewise found the petitioner, Sevilla, to be a mere employee of TWSI and as such,
she was bound by the acts of her employer. The respondent Court of Appeal affirmed.

ISSUE: Whether the relation between Sevilla and TWSI is of a mere employee or a joint venture.

HELD: The Court finds the resolution of the issue material, for if, the relation between the
parties was in the character of employer and employee, the courts would have been without
jurisdiction to try the case, labor disputes being the exclusive domain of the Bureau Of Labor
Relations, pursuant to statutes then in force. In this jurisdiction, there has been no uniform
test to determine the evidence of an employer-employee relation. In general, we have relied on
the so-called right of control test, "where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to be used in

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reaching such end." Subsequently, however, we have considered, in addition to the standard of
right-of control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, in determining the existence of an employer-employee
relationship.The records will show that the petitioner, Lina Sevilla, was not subject to control
by Tourist World Service, Inc., either as to the result of the enterprise or as to the means used
in connection therewith.

It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained
4% in commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an
employee then, who earns a fixed salary usually, she earned compensation in fluctuating
amounts depending on her booking successes.In rejecting Tourist World Service, Inc.'s
arguments however, we are not, as a consequence, accepting Lina Sevilla's own, that is, that
the parties had embarked on a joint venture or otherwise, a partnership. A joint venture,
including a partnership, presupposes generally a of standing between the joint co-venturers or
partners, in which each party has an equal proprietary interest in the capital or property
contributed and where each party exercises equal rights in the conduct of the business.
Furthermore, the parties did not hold themselves out as partners, and the building itself was
embellished with the electric sign "Tourist World Service, Inc. in lieu of a distinct partnership
name.It is the Court's considered opinion, that when the petitioner, agreed to (wo)man the
respondent‘s office, she must have done so pursuant to a contract of agency. It is the essence
of this contract that the agent renders services "in representation or on behalf of another. In
the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal,
Tourist World Service, Inc. As compensation, she received 4% of the proceeds in the concept of
commissions. We are convinced, considering the circumstances and from the respondent
Court's recital of facts, that the ties had contemplated a principal agent relationship, rather
than a joint managament or a partnership.
We rule therefore, that for its unwarranted revocation of the contract of agency, Tourist World
Service, Inc., should be sentenced to pay damages. WHEREFORE, the Decision by the
respondent Court of Appeals is hereby REVERSED and SET ASIDE.

Submitted by: Gumtang, Lianne

ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner

vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L.
DOGELIO and BENJAMIN LIMJOCO, respondents.
G.R. No. 87098. November 4, 1996

DOCTRINE: Labor Law; Employer-Employee Relationship; Control Test; Elements of

Employer-Employee Relationship.—In determining the existence of an employer-employee
relationship the following elements must be present: 1) selection and engagement of the
employee; 2)payment of wages; 3) power of dismissal; and 4) the power to control the
employee‘s conduct. Of the above, control of employee‘s conduct is commonly regarded as the
most crucial and determinativeindicator 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 to be
achieved, but also the manner and means to be used in reaching that end.

FACTS: Private respondent was a sales division manager of private petitioner and was in
charge of selling the latter‘s products through sales representatives. As compensation, private
respondent receive commissions from the products sold by his agents. After resigning from
office to pursue his private business, he filed a complaint against the petitioner, claiming for
non-payment of separation pay and other benefits.

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Petitioner alleged that complainant was not its employee but an independent dealer authorized
to promote and sell its products and in return, received commissions therefrom. Petitioner did
not have any salary and his income from petitioner was dependent on the volume of sales
accomplished. He had his own office, financed the business expense, and maintained his own
workforce. Thus petitioner argued that it had no control and supervision over the complainant
as to the manner and means he conducted his business operations.

The Labor Arbiter ruled that complainant was an employee of the petitioner company. Petioner
had control over the complainant since the latter was required to make periodic reports of his
sales activities to the company.

ISSUE: Whether or not there exists an employer-employee relationship.

HELD: There is no employee-employer relationship.

The four-tiered test

The court followed a four-step formula in determining the existence of an employer-employee

relationship. The following elements must be present:

1) selection and engagement of the employee;

2) payment of wages;

3) power of dismissal; and

4) the power to control the employees conduct.

Of the above, control of employees conduct 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 to be achieved, but
also the manner and means to be used in reaching that end.

Company has no control over the means and methods of Limjoco‘s conduct of work

The issuance of memoranda to Limjoco and to other division sales managers did not prove that
company had actual control over them. In accordance with business practice in entering into
dealership aggreements, the independent dealers kept their own office and staffs. The different
memoranda were merely guidelines to be imposed to the sales representatives and other staffs.
EB‘s requirement of submitting periodic reports was necessary to update the company of the
dealer‘s performance and business income. EB fixed the prices of the products for uniformity,
but nonetheless the dealers had free rein in the means and methods of conducting the
marketing operations. Also, Limjoco was free to to conduct his work and he was free to engage
in other means of livelihood. It was found that he was not exclusively working for EB.

Submitted by: Gusi, Audrey Rose B.

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CONTINENTAL MARBLE CORP., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, respondents
G.R. No. L-43825, May 9, 1988
(SECOND DIVISION)

DOCTRINE: Absent the power to control the employee with respect to the means and methods
by which his work was to be accomplished, there was no employer-employee relationship
between the parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito
Nasayao.

FACTS: Respondent was appointed plant manager of the petitioner corporation, with an alleged
compensation of P3,000.00, a month, or 25% of the monthly net income of the company,
whichever is greater, and when the company failed to pay his salary for the months of May,
June, and July 1974, he filed a complaint with the National Labor Relations Commission,
Branch IV, for the recovery of said unpaid varies. The case was submitted for voluntary
arbitration and judgment was in favor of respondent. It was appealed by the petitioners to the
NLRC but the case was dismissed on the ground that the decision appealed from is final,
unappealable and immediately executory. Hence recourse to the High Court.

ISSUE: Whether or not the private respondent Rodito Nasayao was employed as plant manager
of petitioner Continental Marble Corporation.

HELD: No, there was no employer-employee relationship.

As pointed out by the petitioners, it was illogical for them to hire the private respondent Rodito
Nasayao as plant manager with a monthly salary of P3,000.00, an amount which they could ill-
afford to pay, considering that the business was losing, at the time he was hired, and that they
were about to close shop in a few months' time. Besides, there is nothing in the record which
would support the claim of Rodito Nasayao that he was an employee of the petitioner
corporation. He was not included in the company payroll, nor in the list of company employees
furnished the Social Security System. In the instant case, it appears that the petitioners had
no control over the conduct of Rodito Nasayao in the performance of his work. Absent the
power to control the employee with respect to the means and methods by which his work was
to be accomplished, there was no employer-employee relationship between the parties. Hence,
there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.
Submitted by: Gonzales, Van Angelo G.

DY KEH BENG VS. INTERNATIONAL LABOR AND MARINE UNION ET., AL.
G.R NO. L-32245 MAY 25, 1979
DE CASTRO, J.

DOCTRINE: The control test calls merely for the existence of the right to control the manner of
doing the work, not the actual exercise of the right

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FACTS: A charge for ULP was filed against Dy Keh beng for discriminatory acts within the
meaning of RA 875, Section 4(a.1) and 4(a.2) by dismissing Carlos N. Solano and Ricardo Tudla
for their union activities. A case was filed in court and Dy Keh Beng contended that he did not
know Tudla and that Solano was not his employee because the latter came to the
establishment only when there was work which he did on pakiaw basis, each piece of work
being done under a separate contract. The CIR held that an Er-Ee relationship existed between
Dy Keh Beng and complainants Tudla and Solano, although Solano was admitted to have
worked on piece basis. Petitioner anchors his contention of the non-existence of employee-
employer relationship on the control test., arguing that there was no evidence to show that
petitioner had the right to direct the manner and method of respondent‘s work.

ISSUE: Whether or not there existed an employee-employee relation between petitioner Dy Keh
Beng and respondents Solano and Tudla.

HELD: YES.

According to the Hearing Examiner, the evidence tended to show that the two became
employees of Dy Keh Beng from 1953 and 1955, respectively, and that except in the event of
illness, their work with the establishment was continuous although their services were
compensated on piece basis. It should be borne in mind that the control test calls merely for
the existence of the right to control the manner of doing the work, not the actual exercise of the
right. Considering that the establishment of Dy Keh Beng is ―engaged in the manufacture of
baskets known as kaing, it is natural to expect that those working under Dy Keh Beng would
have to observe, among others, Dy‘s requirements of size and quality of the kaing.

Submitted by: Jabal, Joel Malcolm D.

ZANOTTE SHOES/LEONARDO LORENZO, petitioners, vs. NATIONAL LABOR RELATIONS

COMMISSION et.al, respondents.
G.R. No. 100665 February 13, 1995
THIRD DIVISION

FACTS: Workers of Zanotee Shoes filed a case of illegal dismissal with the Labor Arbiter
against Leonardo Lorenzo, owner of the same. The workers worked for a minimum of twelve
hours daily, including Sundays and holidays when needed and were paid on piece-work basis.
They later on asked Lorenzo to be made members of SSS which ―angered‖ the latter and that
when they further demanded an increase in their pay rates, they were prevented from entering
the work premises. AS for Lorenzo‘s defense, he contends that the business operations were
only seasonal, normally twice a year, one in June (coinciding with the opening of school
classes) and another in December (during the Christmas holidays), when heavy job orders
would come in. Thus, the workers were engaged on purely contractual basis and paid the rates
conformably with their respective agreements.

LA ruled in favor of workers finding the existence of emplyee-employer relationship and that
the workers are regular employees of Lorenzo and ordered payment of separation pay. On
appeal, NLRC affirmed LA‘s decision. Thus, a petition for certiorari was filed by lorenzo
assailing the decision of NLRC.

ISSUE#1: Whether or not there exists an emplyee-employer relationship between the workers
and Lorenzo?

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ISSUE#2: Whether or not the award of separation pay to the workers are proper?

HELD #1: Yes.

The work of private respondents is clearly related to, and in the pursuit of, the principal
business activity of petitioners. The indicia used for determining the existence of an employer-
employee relationship, all extant in the case at bench, include (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 result of the work to be done and to the
means and methods by which the work to be done and to the means and methods by which the
work is to be accomplished. The requirement, so herein posed as an issue, refers to the
existence of the right to control and not necessarily to the actual exercise of the right. In Dy
Keh Beng v.International Labor and Marine Union of the Philippines, et al., the Court has held:

It should be borne in mind that the control test calls merely for the existence of the
right to control the manner of doing the work, not the actual exercise of the right.
Considering the finding by the Hearing Examiner that the establishment of Dy Keh
Beng is "engaged in the manufacture of basket known as kaing," it is natural to
expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be
exercised by Dy's specifications. Parenthetically, since the work on the baskets is
done at Dy's establishments, it can be inferred that the proprietor Dy could easily
exercise control on the men he employed.

HELD#2: NO.

The fact of the matter is that Lorenzo have repeatedly indicated their willingness to accept
private respondents (workers) but the latter have steadfastly refused the offer. For being
without any clear legal basis, the award of separation pay must thus be set aside. There is
nothing, however, that prevents petitioners from voluntarily giving private respondents some
amounts on ex gratia basis.
Submitted by: Mamangon, Fatima C.

AIR MATERIAL WING SAVINGS AND LOAN ASSOCIATION, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, et al., Respondents.
G.R. No. 111870 June 30, 1994
FIRST DIVISION

FACTS: Respondent Salas was appointed "notarial and legal counsel" for petitioner Air Material
Wings Savings and Loan Association (AMWSLAI) in 1980. The appointment was renewed for
three years in 1987. On 1990, petitioner issued an order reminding Salas of the approaching
termination of his legal services under their contract. This prompted Salas to lodge a complaint
against AMWSLAI. AMWSLAI moved to dismiss for there was no employer-employee
relationship between it and Salas. Salas' claims were dismissed by the labor arbiter. On appeal,
the decision was affirmed in toto by the respondent Commission, prompting the petitioner to
seek relief in this Court.

ISSUE: Whether or not Salas can be considered an employee of the petitioner company?

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HELD: YES.

The elements of an employer-employee relationship are: (1) selection and engagement of the
employee; (2) payment of wages; (3) power of dismissal; and (4) employer's own power to control
employee's conduct.

The terms and conditions in contract entered into by the parties on January 23, 1987, clearly
show that Salas was an employee of the petitioner. His selection as the company counsel was
done by the board of directors in one of its regular meetings. The petitioner paid him a monthly
compensation/retainer's fee for his services. Though his appointment was for a fixed term of
three years, the petitioner reserved its power of dismissal for cause or as it might deem
necessary for its interest and protection. No less importantly, AMWSLAI also exercised its
power of control over Salas by defining his duties and functions as its legal counsel, to wit:
1. To act on all legal matters pertinent to his Office.
2. To seek remedies to effect collection of overdue accounts of members without prejudice to
initiating court action to protect the interest of the association.
3. To defend by all means all suit against the interest of the Association.

We hold, therefore, that the public respondent committed no grave abuse of discretion in ruling
that an employer-employee relationship existed between the petitioner and the private
respondent.
Submitted by: Lim, Anton Kristoffer M.

HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner,

vs.
LABOR ARBITER ADRIAN N. PAGALILAUAN and the NATIONAL LABOR RELATIONS
COMMISSION, public respondents, and ROGELIO A. ABAN, private respondent,
GR No. L-62909 April 18, 1989
(Third Division)

DOCTRINE: A lawyer, like any other professional, may very well be an employee of a private
corporation or even of the government. It is not unusual for a big corporation to hire a staff of
lawyers as its in-house counsel, pay them regular salaries, rank them in its table of
organization, and otherwise treat them like its other officers and employees. At the same time,
it may also contract with a law firm to act as outside counsel on a retainer basis.

FACTS: On October 24, 1978, petitioner corporation hired the private respondent Aban as its
"Legal Assistant." On September 4, 1980, Aban received a letter from the corporation
informing him that he would be considered terminated effective October 4, 1980 because of his
alleged failure to perform his duties well. On October 6, 1980, Aban filed a complaint against
the petitioner for illegal dismissal. The labor arbiter ruled that Aban was illegally dismissed.
This ruling was affirmed by the NLRC on appeal.

ISSUE: Whether or not there was an employer-employee relationship between the petitioner
corporation and Aban.

HELD: Yes, there was an employer-employee relationship.

A lawyer, like any other professional, may very well be an employee of a private corporation or
even of the government. It is not unusual for a big corporation to hire a staff of lawyers as its
in-house counsel, pay them regular salaries, rank them in its table of organization, and
otherwise treat them like its other officers and employees. At the same time, it may also

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contract with a law firm to act as outside counsel on a retainer basis. The two classes of
lawyers often work closely together but one group is made up of employees while the other is
not. A similar arrangement may exist as to doctors, nurses, dentists, public relations
practitioners, and other professionals.

In Tabas v California Marketing Co., the Court has consistently ruled that the determination of
whether or not there is an employer-employee relation depends upon four standards: (1) the
manner of selection and engagement of the putative employee; (2) the mode of payment of
wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a
power to control the putative employee's conduct. Of the four, the right-of-control test has been
held to be the decisive factor.

Aban was employed by the petitioner to be its Legal Assistant as evidenced by his appointment
paper. The petitioner paid him a basic salary plus living allowance. Thereafter, Aban was
dismissed on his alleged failure to perform his duties well.

Aban worked solely for the petitioner and dealt only with legal matters involving the said
corporation and its employees. He also assisted the Personnel Officer in processing
appointment papers of employees. This latter duty is not an act of a lawyer in the exercise of
his profession but rather a duty for the benefit of the corporation.

The above-mentioned facts show that the petitioner paid Aban's wages, exercised its power to
hire and fire the respondent employee and more important, exercised control over Aban by
defining the duties and functions of his work.

Submitted by: Mayoralgo, Remy

Insular Life Assurance Co., Ltd. vs. NLRC (4th Division), 287 SCRA 476, G.R. No. 119930
March 12, 1998

DOCTRINE: National Labor Relations Commission was correct in finding that private
respondent was an employee of petitioner, but this holds true only insofar as the
management contract is concerned.—Parenthetically, both petitioner and respondent NLRC
treated the agency contract and the management contract entered into between petitioner and
De los Reyes as contracts of agency. We however hold otherwise. Unquestionably there exist
major distinctions between the two agreements. While the first has the earmarks of an agency
contract, the second is far removed from the concept of agency in that provided therein are
conditionalities that indicate an employer-employee relationship. The NLRC therefore was
correct in finding that private respondent was an employee of petitioner, but this holds true
only insofar as the management contract is concerned. In view thereof, the Labor Arbiter has
jurisdiction over the case. It is axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in the management contract and
providing therein that the ―employee‖ is an independent contractor when the terms of the
agreement clearly show otherwise.—It is axiomatic that the existence of an employer-employee
relationship cannot be negated
by expressly repudiating it in the management contract and providing therein that the
―employee‖ is an independent contractor when the terms of the agreement clearly show
otherwise. For, the employment status of a person is defined and prescribed by law and not by
what the parties say it should be. In determining the status of the management contract,
the ―four-fold test‖ on employment earlier mentioned has to be applied.

FACTS: Petitioner reprises the stand it assumed below that it never had any employer-
employee relationship with private respondent, this being an express agreement between them
in the agency contracts, particularly reinforced by the stipulation therein de los Reyes was

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allowed discretion to devise ways and means to fulfill his obligations as agent and would be
paid commission fees based on his actual output. It further insists that the nature of this work
status as described in the contracts had already been squarely resolved by the Court in the
earlier case of Insular Life Assurance Co., Ltd. v. NLRC and Basiao, where the complainant
therein, Melecio Basiao, was similarly situated as respondent De losReyes in that he was
appointed first as an agent and then promoted as agency manager, and the contracts under
which he was appointed contained terms and conditions Identical to those of De los Reyes.
Petitioner concludes that since Basiao was declared by the Court to be an independent
contractor and not an employee of petitioner, there should be no reason why the status of De
los Reyes herein vis-vis petitioner should not be similarly determined.

ISSUE: Whether there exist an employer-employee relationship

HELD: Yes.

In Great Pacific Life Insurance Company v. NLRC, which is closer in application that Basiao to
this present controversy, we found that the relationships of the Ruiz brothers and Grepalife
were those of employer-employee. First, their work at the time of their dismissal as zone
supervisor and district manager was necessary and desirable to the usual business of the
insurance company. They were entrusted with supervisory, sales and other functions to guard
Grepalifes business interests and to bring in more clients to the company, and even with
administrative functions to ensure that all collections, reports and data are faithfully brought
to the company x x x x A cursory reading of their respective functions as enumerated in their
contracts reveals that the company practically dictates the manner by which their jobs are to
be carried out x x x x We need elaborate no further. Exclusivity of service, control of
assignments and removal of agents under private respondents unit, collection of premiums,
furnishing of company facilities and materials as well as capital described as Unit
Development Fund are but hallmarks of the management system in which herein private
respondent worked. This obtaining, there is no escaping the conclusion that private respondent
Pantaleon de los Reyes was an employee of herein petitioner.

ANGELINA FRANCISCO, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO
TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and
RAMON ESCUETA, Respondents.
G.R. No. 170087 August 31, 2006

DOCTRINE: In affording full protection to labor, this Court must ensure equal work
opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully
balance the fragile relationship between employees and employers, we are mindful of the fact
that the policy of the law is to apply the Labor Code to a greater number of employees. This
would enable employees to avail of the benefits accorded to them by law, in line with the
constitutional mandate giving maximum aid and protection to labor, promoting their welfare
and reaffirming it as a primary social economic force in furtherance of social justice and
national development.

FACTS: In 1995, Angelina Francisco was hired by Kasei Corporation 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 various permits and other
licenses for the initial operation of the company. Although she was designated as Corporate
Secretary, she was not entrusted with the corporate documents; neither did she attend any

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board meeting nor required to do so. In 1996, petitioner was designated as Acting Manager and
she was assigned to represent the company in all dealings with government agencies. For five
years, petitioner performed the duties of Acting Manager. In January 2001, she was replaced.
Thereafter, her salary was reduced and she was not given her mid-year bonus. When she
followed up the same on October 15, 2001, she was informed that she is no longer connected
with the company. Hence, she filed an action for constructive dismissal.

Private respondents averred that petitioner is not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of its technical consultants on accounting
matters and act concurrently as Corporate Secretary. As technical consultant, petitioner
performed her work at her own discretion without control and supervision of Kasei
Corporation. Further, she the company never interfered with her work except that from time to
time, the management would ask her opinion on matters relating to her profession. Her
designation as technical consultant depended solely upon the will of management. As such,
her consultancy may be terminated any time considering that her services were only temporary
in nature and dependent on the needs of the corporation.

ISSUE: Is the petitioner an employee of Kasei Corporation.

HELD: Yes.

The two-tiered test looks at: (1) the putative employer‘s power to control the employee with
respect to the means and methods by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship. This provides for a framework of
analysis, which would take into consideration the totality of circumstances surrounding the
true nature of the relationship between the parties. This is especially appropriate in this case
where there is no written agreement or terms of reference to base the relationship on; and due
to the complexity of the relationship based on the various positions and responsibilities given
to the worker over the period of the latter‘s employment.

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. By
applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporation‘s
Technical Consultant. She reported for work regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary,
with substantially the same job functions, that is, rendering accounting and tax services to the
company and performing functions necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses over an indefinite period of
engagement.

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. 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

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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.

Submitted by: Nacilla, Nica Jenine O.

OPULENCIA ICE PLANT AND STORAGE AND/OR DR. MELCHOR OPULENCIA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), LABOR ARBITER
NUMERIANO VILLENA AND MANUEL P. ESITA,
G.R. No. L-98368 December 15, 1993
(FIRST DIVISION)

DOCTRINE: No particular form of evidence is required to prove the existence of an employer-

employee relationship.

FACTS: In 1980, private respondent Manuel P. Esita was hired as compressor operator-
mechanic for the ice plants of petitioner Dr. Melchor Opulencia . Initially assigned at the ice
plant in Tanauan, Esita would work from seven o'clock in the morning to five o'clock in the
afternoon receiving a daily wage of P35.00.

In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing
overhauling, taking the place of compressor operator Lorenzo Eseta, who was relieved because
he was already old and weak. For less than a month, Esita helped in the construction-
remodeling of Dr. Opulencia's house.

In February 1989, for demanding the correct amount of wages due him, Esita was dismissed
from service. Consequently, he filed with Sub-Regional Arbitration in San Pablo City, a
complaint for illegal dismissal, underpayment, non- payment for overtime, legal holiday,
premium for holiday and rest day, 13th month, separation/retirement pay and allowances
against petitioners.

Petitioners deny that Esita is an employee. They claim that Esita could not have been employed
in 1980 because the Tanauan ice plant was not in operation due to low voltage of electricity
and that Esita was merely a helper/peon of one of the contractors they had engaged to do
major repairs and renovation of the Tanauan ice plant in 1986. Petitioners further allege that
when they had the Calamba ice plant repaired and expanded, Esita likewise rendered services
in a similar capacity, and thus admitting that he worked as a helper/peon in the repair or
remodeling of Dr. Opulencia's residence in Tanauan.

In December 1989, Labor Arbiter Villena rendered a decision finding the existence of an
employer-employee relationship between petitioners and Esita and accordingly directed them to
pay him separation pay, underpayment of wages, allowances, 13th month, holiday, premium
for holiday, and rest day pays. Almost a year after, NLRC affirmed the decision of Labor Arbiter
Villena but reduced the monetary award as it was not proven that Esita worked every day
including rest days and on the days before the legal holidays. In March 1991, petitioners'
motion for reconsideration was denied.

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ISSUE: Whether or not there was an employee-employer relationship between Opulencia and
Esita.

HELD: Yes.

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.
For, if only documentary evidence would be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as no employer would wish to come
out with any trace of the illegality he has authored considering that it should take much
weightier proof to invalidate a written instrument.

On the claim that Esita's construction work could not ripen into a regular employment in the
ice plant because the construction work was only temporary and unrelated to the ice-making
business, needless to say, the one month spent by Esita in construction is insignificant
compared to his nine-year service as compressor operator in determining the status of his
employment as such, and considering further that it was Dr. Opulencia who requested Esita to
work in the construction of his house.

In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops
to augment his income, there is no doubt that petitioners should be commended; however, in
view of the existence of an employer-employee relationship as found by public respondents, we
cannot treat humanitarian reasons as justification for emasculating or taking away the rights
and privileges of employees granted by law. Benevolence, it is said, does not operate as a
license to circumvent labor laws. If petitioners were genuinely altruistic in extending to their
employees privileges that are not even required by law, then there is no reason why they
should not be required to give their employees what they are entitled to receive.

Moreover, as found by public respondents, Esita was enjoying the same privileges granted to
the other employees of petitioners, so that in thus treating Esita, he cannot be considered any
less than a legitimate employee of petitioners.

Submitted by: Ocampo, Rhonald S.

EDDIE DOMASIG, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), CATA GARMENTS
CORPORATION and/or OTTO ONG and CATALINA CO., respondents.
G.R. No. 118101 September 16, 1996

DOCTRINE: Substantial evidence is sufficient as a basis for judgment on the existence of

employer-employee relationship.

FACTS: The complaint was instituted by Eddie Domasig against respondent Cata Garments
Corporation, a company engaged in garments business and its owner/manager Otto Ong and
Catalina Co for illegal dismissal, unpaid commission and other monetary claim[s]. Complainant
alleged that he started working with the respondent on July 6, 1986 as Salesman when the
company was still named Cato Garments Corporation; that three (3) years ago, because of a
complaint against respondent by its workers, its changed its name to Cata Garments

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Corporation; and that on August 29, 1992, he was dismissed when respondent learned that he
was being pirated by a rival corporation which offer he refused. Prior to his dismissal,
complainant alleged that he was receiving a salary of P1,500.00 a month plus commission. On
September 3, 1992 he filed the instant complaint. CATA claimed that he is not a regular
employee contending that he is a mere commission agent who receives a commission of P5.00
per piece of article sold at regular price and P2.50 per piece sold in bargain price; that in
addition to commission, complainant received a fixed allowance of P1,500.00 a month; that he
had no regular time schedule; and that the company come into existence only on September
17, 1991. Petitioner submitted his ID and cash vouchers reflecting salary payments. Labor
Arbiter ruled in favor of Domasig but NLRC reversed such ruling.

ISSUE: Whether or not there exist an employee-employer relationship

HELD: Yes.

The Court ruled that substantial evidence is sufficient as a basis for judgment on the existence
of employer-employee relationship. No particular form of evidence is required is required to
prove the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted. An identification card is usually provided
not only as a security measure but mainly to identify the holder thereof as a bona fide
employee of the firm that issues it. Together with the cash vouchers covering petitioner's
salaries for the months stated therein, we agree with the labor arbiter that these matters
constitute substantial evidence adequate to support a conclusion that petitioner was indeed an
employee of CATA.
Submitted by: Quevedo, Arrah Svetlana
T.

EQUITABLE BANKING CORPORATION, Chairman MANUEL L. MORALES, President &

Director GEORGE L. GO, Vice-Chairman & Director RICARDO J. ROMULO, Vice-Chairman
& Director JOHN C.B. GO, Director HERMINIO B. BANICO, Director FRANCISCO C. CHUA,
Director PETER GO PAILIAN, Director RICARDO C. LEONG, Director JULIUS T. LIMPE
and Director PEDRO A. ORTIZ
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, First Division, and RICARDO L.
SADAC
G.R. No. 102467 June 13, 1997
FIRST DIVISION

FACTS: Private respondent Sadac was appointed as the Vice-President for the Legal
Department of petitioner bank and was also designated as the bank's General Counsel. Nine
lawyers of the bank's Legal Department, who were all under private respondent, addressed a
"letter-petition" to the Chairman of the Board of Directors, accusing private respondent of
abusive conduct, inefficiency, mismanagement, ineffectiveness and indecisiveness.Private
respondent promptly responded and manifested an intention to file criminal, civil and
administrative charges against the nine lawyers. The Board of Directors of the bank exercised
their management prerogative and replaced Sadac due to loss of confidence. Sadac requested
for a formal investigation but it remained unheeded. Hence he filed a complaint for illegal

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dismissal with the NLRC. The NLRC ruled in favour of Sadac and ordered for reinstatement
and payment of back wages on the ground of the denial of the employee‘s right to due process.
On appeal, petitioner questioned the NLRC ruling and argued that Sadac was never its
employee hence not entitled to such reliefs.

ISSUE: Whether or not Sadac was an employee of petitioner.

HELD: YES.

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

considered: (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, with the control test
generally assuming primacy in the overall consideration. The power of control refers to the
existence of the power and not necessarily to the actual exercise thereof. It is not essential, in
other words, for the employer to actually supervise the performance of duties of the employee;
it is enough that the former has the right to wield the power.

The NLRC, in the instant case, based its finding that there existed an employer-employee
relationship between petitioner bank and private respondent on these factual settings:The
complainant was given an appointment as Vice President, Legal Department, effective August
1, 1981, with a monthly salary of P8,000.00, monthly allowance of P4,500.00, and the usual
two months Christmas bonus based on basic salary likewise enjoyed by the other officers of the
bank.Then, as part of the ongoing organization of the Legal Department, the position of General
Counsel of the bank was created and extended to the complainant. In addition to his duties as
Vice President of the bank, the complainant's duties and responsibilities were so defined as to
prove that he was a bank officer working under the supervision of the President and the Board
of Directors of the respondent bank.

It would virtually be foolhardy to so challenge the NLRC as having committed grave abuse of
discretion in coming up with its above findings. Just to the contrary, NLRC appears to have
been rather exhaustive in its examination of this particular question (existence or absence of
an employer-employee relationship between the parties). Substantial evidence, which is the
quantum of evidence required to establish a fact in cases before administrative and quasi-
judicial bodies, connotes merely that amount of relevant evidence which a reasonable mind
might accept to be adequate in justifying a conclusion.

Submitted by: Paeste, Sonny Lybenson

Zamudio vs NLRC GR No. 76723 March 25 1990

Cannot be found.

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EFREN P. PAGUIO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION,
ROBINA Y. GOKONGWEI, LIBERATO GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D.
GO and ALDA IGLESIA, respondents.
G.R. No. 147816. May 9, 2003

DOCTRINE: A regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those which
are undertaken for a specific project or are seasonal.

FACTS: Respondent Metromedia Times Corporation entered into an agreement with petitioner
Efren P. Paguio, appointing the latter to be an account executive of the firm. Petitioner was to
solicit advertisements for "The Manila Ti
consisting of a 15% commission on direct advertisements less withholding tax and a 10%
commission on agency advertisements based on gross revenues less agency commission and
the corresponding withholding tax plus a monthly allowance of P2,000.00 as long as he met
theP30,000.00-monthly quota. Also in the agreement that Petitioner is not an employee of
MTC. He was terminated hence he filed a complaint for illegal dismissal and argues that he is a
regular employee of the corporation.

ISSUE: Whether there is an employer-employee relationship.

HELD: YES.

Because Paguio is considered as a regular employee. He performed activities which were

necessary and desirable to the business of the employer, and that the same went on for more
than a year. Petitioner was an account executive in soliciting advertisements, clearly necessary
and desirable, for the survival and continued operation of the business of respondent
corporation. REGULAR EMPLOYEE is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those which
are undertaken for a specific project or are seasonal. A regular employment, whether it is one
or not, is aptly gauged from the concurrence, or the non-concurrence, of the following factors;
a) the manner of selection and engagement of the putative employee b) the mode of payment of
wages, c) the presence or absence of the power of dismissal; and d) the presence or absence of
the power to control the conduct of the putative employee or the power to control the employee
with respect to the means or methods by which his work is to be accomplished. The "control
test" assumes primacy in the overall consideration. Under this test, an employment relation
obtains where work is performed or services are rendered under the control and supervision of
the party contracting for the service, not only as to the result of the work but also as to the
manner and details of the performance desired.

An indicum of regular employment, rightly taken into account by the labor arbiter, was the
reservation by respondent Metromedia Times Corporation not only of the right to control the
results to be achieved but likewise the manner and the means used in reaching that end.
Metromedia Times Corporation exercised such control by requiring petitioner, among other

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things, to submit a daily sales activity report and also a monthly sales report as well. Various
solicitation letters would indeed show that Robina Gokongwei, company president, Alda Iglesia,
the advertising manager, and Frederick Go, the advertising director, directed and monitored
the sales activities of petitioner. Thus defined, a regular employee is one who is engaged to
perform activities which are necessary and desirable in the usual business or trade of the
employer as against those which are undertaken for a specific project or are seasonal. Even in
these latter cases, where such person has rendered at least one year of service, regardless of
the nature of the activity performed or of whether it is continuous or intermittent, the
employment is considered regular as long as the activity exists, it not being indispensable that
he be first issued a regular appointment or be formally declared as such before acquiring a
regular status.
Submitted by: Regalado, Dustin

GREAT PACIFIC LIFE ASSURANCE CORPORATION, Petitioner

Vs.
HONORATO JUDICO AND NATIONAL LABOR RELATIONS COMMISSION, Respondent
G.R. No. 73887, DECEMBER 21, 1989
(SECOND DIVISION)

DOCTRINE: The test therefore is whether the "employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but also as to the means
and methods by which the same is to be accomplished.

FACTS: Honorato Judico filed a complaint for illegal dismissal against Grepalife.Said complaint
prayed for award of money claims consisting of separation pay, unpaid salary and 13th month
pay, refund of cash bond, moral and exemplary damages and attorney's fees. Petitioner admits
private respondent Judico entered into an agreement of agency with petitioner Grepalife to
become a debit agent attached to the industrial life agency in Cebu City. Such admission is in
line with the findings of public respondent that as such debit agent, private respondent Judico
had definite work assignments including but not limited to collection of premiums from policy
holders and selling insurance to prospective clients. Sometime in September 1981,
complainant was promoted to the position of Zone Supervisor and was given additional
(supervisor's) allowance fixed at P110.00 per week. During the third week of November 1981,
he was reverted to his former position as debit agent but, for unknown reasons, not paid so-
called weekly sales reserve of at least P 200.00. Finally on June 28, 1982, complainant was
dismissed by way of termination of his agency contract.

Petitioner contends that Judico's compensation, in the form of commissions and bonuses, was
based on actual production, (insurance plans sold and premium collections).

ISSUE: Whether or not employer-employee relationship existed between petitioner and private
respondent.

HELD: YES.

In Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance company may have two
classes of agents who sell its insurance policies: (1) salaried employees who keep definite hours
and work under the control and supervision of the company; and (2) registered representatives

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who work on commission basis. The agents who belong to the second category are not required
to report for work at anytime, they do not have to devote their time exclusively to or work solely
for the company since the time and the effort they spend in their work depend entirely upon
their own will and initiative; they are not required to account for their time nor submit a report
of their activities; they shoulder their own selling expenses as well as transportation; and they
are paid their commission based on a certain percentage of their sales. One salient point in the
determination of employer-employee relationship which cannot be easily ignored is the fact that
the compensation that these agents on commission received is not paid by the insurance
company but by the investor (or the person insured). The test therefore is whether the
"employer" controls or has reserved the right to control the "employee" not only as to the result
of the work to be done but also as to the means and methods by which the same is to be
accomplished.

The record shows that petitioner Judico received a definite minimum amount per week as his
wage known as "sales reserve" wherein the failure to maintain the same would bring him back
to a beginner's employment with a fixed weekly wage of P 200.00 for thirteen weeks regardless
of production. He was assigned a definite place in the office to work on when he is not in the
field; and in addition to his canvassing work he was burdened with the job of collection. In
both cases he was required to make regular report to the company regarding these duties, and
for which an anemic performance would mean a dismissal. Conversely faithful and productive
service earned him a promotion to Zone Supervisor with additional supervisor's allowance, a
definite amount of P110.00 aside from the regular P 200.00 weekly "allowance". Furthermore,
his contract of services with petitioner is not for a piece of work nor for a definite period.
Undisputed facts show that he was controlled by petitioner insurance company not only as to
the kind of work; the amount of results, the kind of performance but also the power of
dismissal. Undoubtedly, private respondent, by nature of his position and work, had been a
regular employee of petitioner and is therefore entitled to the protection of the law and could
not just be terminated without valid and justifiable cause.
Submitted by: Sarmiento, Majesca M.

Citizens' League of Freeworkers

vs.
Abbas,
18 SCRA 71, No. L-21212 September 23, 1966

DOCTRINE: Driver under the boundary system is an employee; Jurisdiction of Industrial

Court.—A driver who operates under the boundary system is an "employee" of the owner of the
vehicle within the meaning of the law and, as a consequence, any labor dispute between them
falls under the jurisdiction of the Court of Industrial Relations. Thus, in the case at bar, upon
filing by petitioners of a complaint for unfair labor practice against the respondent-spouses,
owners and operators of auto calesas in Davao, with the Court of Industrial Relations, said
Court acquired complete and exclusive jurisdiction over the labor dispute and the least that
should have been done in Civil Case No. 3966 was either to dismiss it or suspend proceedings
therein until final resolution of the former.

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FACTS: A writ issued by the respondent judge that orders the Union and its members, who
were drivers of the private respondents in their auto-calesa business, to restrain from
interfering with its operation, from committing certain acts complained of in connection
therewith, and to recover damages was being assailed on the ground that there was no
employer-employee relationship. The Citizen's League of Freeworkers referred to as the Union
filed a Petition for certiorari with a prayer for the issuance of a writ of preliminary injunction to
set aside writ of preliminary injunction issued by the respondent Judge in Civil Case No. 3966
and restrain him from proceeding with the case, on the ground that the controversy involves a
labor dispute and is, therefore, within the exclusive jurisdiction of the Court of Industrial
Relations.

ISSUE: Whether there was an employer-employee relationship?

HELD: Yes.

The court held that the case falls squarely within our ruling in National Labor Union v.
Dinglasan, 52 O.G., No. 4, 1933, wherein this Court held that a driver of a jeep who operates
the same under the boundary system is considered an employee within the meaning of the law
and as such the case comes under the jurisdiction of the Court of Industrial Relations. In
holding that the employer-employee relationship existed between the owner of the jeepneys and
the drivers even if the latter worked under the boundary system, this Court said: "The only
features that would make the relationship of lessor and lessee between the respondent, owner
of the jeeps, and the drivers, members of the petitioner union, are the fact that he does not pay
them any fixed wage but their compensation is the excess of the total amount of fares earned
or collected by them ...and the fact that the gasoline burned by the jeeps is for the account of
the drivers. These two features are not, however, sufficient to withdraw the relationship
between them from that of employer-employee, because the estimated earnings for fares must
be over and above the amount they agreed to pay to the respondent for a ten-hour shift or ten-
hour a day operation of the jeeps. Not having any interest in the business because they did not
invest anything in the acquisition of the jeeps and did not participate in the management
thereof, their service as drivers of the jeeps being their only contribution to the business, the
relationship of lessor and lessee cannot be sustained."
Submitted by: Siquian, Celine

OSCAR VILLAMARIA, JR. Petitioner,

vs.
COURT OF APPEALS and JERRY V. BUSTAMANTE, Respondents
G.R. No. 165881, April 19, 2006
First Division

DOCTRINE: Under the boundary-hulog scheme, petitioner retained ownership of the jeepney
although its material possession was vested in respondent as its driver. In case respondent
failed to make his P550.00 daily installment payment for a week, the agreement would be of no
force and effect and respondent would have to return the jeepney to petitioner; the employer-
employee relationship would likewise be terminated unless petitioner would allow respondent

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to continue driving the jeepney on a boundary basis of P550.00 daily despite the termination of
their vendor-vendee relationship.

FACTS: Respondent became an operator and employed drivers on a "boundary basis." One of
those drivers was respondent Bustamante who drove the jeepney. Bustamante remitted
P450.00 a day to Villamaria as boundary and kept the residue of his daily earnings as
compensation for driving the vehicle. Villamaria verbally agreed to sell the jeepney to
Bustamante under the "boundary-hulog scheme," where Bustamante would remit to Villarama
P550.00 a day for a period of four years; Bustamante would then become the owner of the
vehicle and continue to drive the same under Villamaria‘s franchise. It was also agreed that
Bustamante would make a down payment of P10,000.00. Villamaria executed a contract
entitled "Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog"over the
passenger jeepney. The parties agreed that if Bustamante failed to pay the boundary-hulog for
three days, Villamaria Motors would hold on to the vehicle until Bustamante paid his arrears,
including a penalty of P50.00 a day; in case Bustamante failed to remit the daily boundary-
hulog for a period of one week, the Kasunduan would cease to have legal effect and
Bustamante would have to return the vehicle to Villamaria Motors.

Bustamante and other drivers who also had the same arrangement with Villamaria Motors
failed to pay their respective boundary-hulog. This prompted Villamaria to serve a "Paalala,"
reminding them that under the Kasunduan, failure to pay the daily boundary-hulog for one
week, would mean their respective jeepneys would be returned to him without any complaints.
He warned the drivers that the Kasunduan would henceforth be strictly enforced and urged
them to comply with their obligation to avoid litigation. On July 24, 2000, Villamaria took back
the jeepney driven by Bustamante and barred the latter from driving the vehicle.

Bustamante filed a Complaint for Illegal Dismissal against Villamaria and his wife
Teresita. Bustamante alleged that he was employed by Villamaria in July 1996 under the
boundary system, where he was required to remit P450.00 a day. Villamaria argued that
Bustamante was not illegally dismissed since the Kasunduan executed transformed the
employer-employee relationship into that of vendor-vendee. Hence, the spouses concluded,
there was no legal basis to hold them liable for illegal dismissal.

ISSUES: (1) Whether the existence of a boundary-hulog agreement negates the employer-
employee relationship between the vendor and vendee. (2) Whether the Labor Arbiter has
jurisdiction over a complaint for illegal dismissal in such case.

HELD: We resolve these issues in the affirmative.

Issue No. 1

We agree with the ruling of the CA that, under the boundary-hulog scheme incorporated in the
Kasunduan, a dual juridical relationship was created between petitioner and respondent: that
of employer-employee and vendor-vendee. The Kasunduan did not extinguish the employer-
employee relationship of the parties extant before the execution of said deed.

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As early as 1956, the Court ruled in National Labor Union v. Dinglasanthat the jeepney
owner/operator-driver relationship under the boundary system is that of employer-employee
and not lessor-lessee. This doctrine was affirmed, under similar factual settings, in Magboo v.
Bernardoand Lantaco, Sr. v. Llamas, and was analogously applied to govern the relationships
between auto-calesa owner/operator and driver, bus owner/operator and conductor, and taxi
owner/operator and driver.

The boundary system is a scheme by an owner/operator engaged in transporting passengers as

a common carrier to primarily govern the compensation of the driver, that is, the latter‘s daily
earnings are remitted to the owner/operator less the excess of the boundary which represents
the driver‘s compensation. Under this system, the owner/operator exercises control and
supervision over the driver. It is unlike in lease of chattels where the lessor loses complete
control over the chattel leased but the lessee is still ultimately responsible for the
consequences of its use. The management of the business is still in the hands of the
owner/operator, who, being the holder of the certificate of public convenience, must see to it
that the driver follows the route prescribed by the franchising and regulatory authority, and the
rules promulgated with regard to the business operations. The fact that the driver does not
receive fixed wages but only the excess of the "boundary" given to the owner/operator is not
sufficient to change the relationship between them. Indubitably, the driver performs activities
which are usually necessary or desirable in the usual business or trade of the owner/operator.

Under the Kasunduan, respondent was required to remit P550.00 daily to petitioner, an
amount which represented the boundary of petitioner as well as respondent‘s partial payment
(hulog) of the purchase price of the jeepney.

Under the Kasunduan, petitioner retained supervision and control over the conduct of the
respondent as driver of the jeepney.

Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although its
material possession was vested in respondent as its driver. In case respondent failed to make
his P550.00 daily installment payment for a week, the agreement would be of no force and
effect and respondent would have to return the jeepney to petitioner; the employer-employee
relationship would likewise be terminated unless petitioner would allow respondent to continue
driving the jeepney on a boundary basis of P550.00 daily despite the termination of their
vendor-vendee relationship.

The juridical relationship of employer-employee between petitioner and respondent was not
negated by the foregoing stipulation in the Kasunduan, considering that petitioner retained
control of respondent‘s conduct as driver of the vehicle. As correctly ruled by the CA:

The exercise of control by private respondent over petitioner‘s conduct in operating the jeepney
he was driving is inconsistent with private respondent‘s claim that he is, or was, not engaged in
the transportation business; that, even if petitioner was allowed to let some other person drive
the unit, it was not shown that he did so; that the existence of an employment relation is not
dependent on how the worker is paid but on the presence or absence of control over the means
and method of the work; that the amount earned in excess of the "boundary hulog" is
equivalent to wages; and that the fact that the power of dismissal was not mentioned in the
Kasunduan did not mean that private respondent never exercised such power, or could not
exercise such power.

Moreover, requiring petitioner to drive the unit for commercial use, or to wear an identification
card, or to don a decent attire, or to park the vehicle in Villamaria Motors garage, or to inform
Villamaria Motors about the fact that the unit would be going out to the province for two days

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of more, or to drive the unit carefully, etc. necessarily related to control over the means by
which the petitioner was to go about his work; that the ruling applicable here is not Singer
Sewing Machine but National Labor Union since the latter case involved jeepney
owners/operators and jeepney drivers, and that the fact that the "boundary" here represented
installment payment of the purchase price on the jeepney did not withdraw the relationship
from that of employer-employee, in view of the overt presence of supervision and control by the
employer.

Neither is such juridical relationship negated by petitioner‘s claim that the terms and
conditions in the Kasunduan relative to respondent‘s behavior and deportment as driver was
for his and respondent‘s benefit: to insure that respondent would be able to pay the requisite
daily installment of P550.00, and that the vehicle would still be in good condition despite the
lapse of four years. What is primordial is that petitioner retained control over the conduct of
the respondent as driver of the jeepney.

Indeed, petitioner, as the owner of the vehicle and the holder of the franchise, is entitled to
exercise supervision and control over the respondent, by seeing to it that the route provided in
his franchise, and the rules and regulations of the Land Transportation Regulatory Board are
duly complied with. Moreover, in a business establishment, an identification card is usually
provided not just as a security measure but to mainly identify the holder thereof as a bona fide
employee of the firm who issues it.57

As respondent‘s employer, it was the burden of petitioner to prove that respondent‘s

termination from employment was for a lawful or just cause, or, at the very least, that
respondent failed to make his daily remittances of P550.00 as boundary. However, petitioner
failed to do so. As correctly ruled by the appellate court:

It is basic of course that termination of employment must be effected in accordance with law.
The just and authorized causes for termination of employment are enumerated under Articles
282, 283 and 284 of the Labor Code.

Parenthetically, given the peculiarity of the situation of the parties here, the default in the
remittance of the boundary hulog for one week or longer may be considered an additional
cause for termination of employment. The reason is because the Kasunduan would be of no
force and effect in the event that the purchaser failed to remit the boundary hulog for one
week.

ISSUE No. 2

Article 217 of the Labor Code, as amended, vests on the Labor Arbiter exclusive original
jurisdiction only over the following:

x x x (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

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3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work, and other terms and conditions of
employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;

5. Cases arising from violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relationship, including those
of persons in domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective

bargaining agreements, and those arising from the interpretation or enforcement
of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may
be provided in said agreements.

In the foregoing cases, an employer-employee relationship is an indispensable jurisdictional

requisite. The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the Labor Code
is limited to disputes arising from an employer-employee relationship which can only be
resolved by reference to the Labor Code, other labor statutes or their collective bargaining
agreement. Not every dispute between an employer and employee involves matters that only the
Labor Arbiter and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial
powers. Actions between employers and employees where the employer-employee relationship
is merely incidental is within the exclusive original jurisdiction of the regular courts. When the
principal relief is to be granted under labor legislation or a collective bargaining agreement, the
case falls within the exclusive jurisdiction of the Labor Arbiter and the NLRC even though a
claim for damages might be asserted as an incident to such claim.
Submitted by: Tamayo, Jumen G.

VICENTE SY, TRINIDAD PAULINO, 6B'S TRUCKING CORPORATION,

and SBT TRUCKING CORPORATION, petitioners
vs.
HON. COURT OF APPEALS, and JAIME SAHOT, respondents
G.R. No. 142293. February 27, 2003
(Second Division)

DOCTRINE: Article 1767 of the Civil Code states that in a contract of partnership two or more
persons bind themselves to contribute money, property or industry to a common fund, with the
intention of dividing the profits among themselves.

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FACTS: Respondent Sahot started working as a truck helper for petitioners' family-owned
trucking business and later on became a truck driver of the same family business.
Subsequently, petitioners dismissed Sahot from work due to his absences as he was suffering
from various ailments. Sahot filed with the National Labor Relations Commission (NLRC) NCR
Arbitration Branch, a complaint for illegal dismissal. The NLRC, through the Labor Arbiter,
ruled that there was no illegal dismissal in Sahot's case. On appeal, the NLRC declared that
Sahot was an employee who did not abandon his job but his employment was terminated on
account of his illness. Petitioners assailed the decision of the NLRC before the Court of Appeals
(CA) which affirmed with modification the judgment of the NLRC. Hence, the instant petition.

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

HELD: Yes. The Court ruled that Sahot actually engaged in work as an employee. During the
entire course of his employment, he did not have the freedom to determine where he would go,
what he would do, and how he would do it. He merely followed instructions of petitioners and
was content to do so, as long as he was paid his wages. 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. Article 1767 of the Civil Code states that in a contract of partnership
two or more persons bind themselves to contribute money, property or industry to a common
fund, with the intention of dividing the profits among themselves. Not one of these
circumstances is present in this case. No written agreement exists to prove the partnership
between the parties. Private respondent did not contribute money, property or industry for the
purpose of engaging in the supposed business. There is no proof that he was receiving a share
in the profits as a matter of course, during the period when the trucking business was under
operation. Neither is there any proof that he had actively participated in the management,
administration and adoption of policies of the business.

Submitted by: Tanghal, Noelle Christine

Makati Haberdashery, Inc.

vs.
NLRC
G.R. Nos. 83380-81 November 15, 1989

DOCTRINE: Labor Relations; Employer-Employee Relationship; Four-Fold Test of Employer-

Employee Relationship; Control Test, Defined.—We have repeatedly held in countless decisions
that the test of employer-employee relationship is four-fold: (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. It is the so-called ―control test‖ that is the most important element.
This simply means the determination of whether the employer controls or has reserved the
right to control the employee not only as to the result of the work but also as to the means and
method by which the same is to be accomplished.
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FACTS: Individual complainants are working for Makati Haberdashery Inc as tailors,
seamstress, sewers, basters, and ―plantsadoras‖ and are paid on a piece-rate basis (except two
petitioners who are paid on a monthly basis). In addition, they are given a daily allowance of P
3.00 provided they report before 9:30 a.m.everyday. Work schedule: 9:30-6 or 7 p.m., Mondays
to Saturdays and even on Sundays and holidays during peak periods. The Sandigan ng
Manggagawang Pilipino filed a complaint for underpayment of the basic wages, underpayment
of living allowance, nonpayment of overtime work, nonpayment of holiday pay, and other
money claims. The Labor Arbiter rendered judgment in favor of complainants which the NLRC
affirmed but limited back wages to one year. Petitioner urged that the NLRC erred in
concluding that an employer-employee relationship existed between the petitioner and the
workers.

ISSUE: Whether there is employer – employee relationship.

HELD: Yes, there is employer – employee relationship. The Supreme Court have repeatedly
held in countless decisions that the test of employer-employee relationship is four-fold: (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. It is the socalled ―control test‖ that is the
most important element.This simply means the determination of whether the employer controls
or has reserved the right to control the employee not only as to the result of the work but also
as to the means and method by which the same is to be accomplished. The facts at bar
indubitably reveal that the most important requisite of control is present. As gleaned from the
operations of petitioner, when a customer enters into a contract with the haberdashery or its
proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or
―plantsadora‖ to take the customer‘s measurements, and to saw the pants, coat or shirt as
specified by the customer. Supervision is actively manifested in all these aspects—the manner
and quality of cutting, sewing and ironing.

Submitted by: Villanueva, Emilio Jan D.

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR.

in his capacity as union president, Petitioner
vs.
UNDERSECRETARY BIENVENIDO E. LAGUESMA and CORFARM GRAINS,
INC., Respondents
G.R. No. 113542. February 24, 1998

DOTRINE: An employer-employee relationship may be established by substantial evidence.

FACTS: Petitioner Caurdanetaan Piece Workers Union/Association (CPWU) has ninety-two (92)
members who worked as cargador on a piece rate basis at the warehouse and ricemills of
Private Respondent Corfarm at Umingan, Pangasinan from 1982. They loaded, unloaded and
piled sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks
for delivery to different places.

When private respondent denied some benefits to these cargadores, the latter organized
petitioner union. Upon learning of its formation, private respondent barred its members from

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working with them and replaced them with non-members of the union sometime in the middle
of 1992.

On appeal, petitioner CPWU prayed for the reversal of the order dismissing their prayer for
certification election.

ISSUES: Whether an employer-employee relationship between the CPWU members and

respondent Corfarm has been established by substantial evidence

HELD: YES.

Section 5, Rule 133 of the Rules of Court mandates that in cases filed before administrative or
quasi-judicial bodies, like the Department of Labor, a fact may be established by substantial
evidence, i.e. that amount of evidence which a reasonable mind might accept as adequate to
justify a conclusion. Also fundamental is the rule granting not only respect but even finality to
factual findings of the Department of Labor, if supported by substantial evidence. Such
findings are binding upon this Court, unless petitioner is able to show that the Secretary of
Labor (or the Undersecretary acting in his place) has arbitrarily disregarded or misapprehended
evidence before him to such an extent as to compel a contrary conclusion if such evidence were
properly appreciated. This is rooted in the principle that this Court is not a trier of facts, and
that the determinations made by administrative bodies on matters falling within their
respective fields of specialization or expertise are accorded respect. Also well-settled is the
doctrine that the existence of an employer-employee relationship is ultimately a question of fact
and that the findings thereon by the labor authorities shall be accorded not only respect but
even finality when supported by substantial evidence.

The Court ruled that no particular form of proof is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence may show the
relationship. If only documentary evidence would be required to demonstrate that relationship,
no scheming employer would ever be brought before the bar of justice.

Submitted by: Valdez, Suzette P.

ALIPIO R. RUGA ET AL, PETITIONERS

vs
NLRC AND DE GUZMAN FISHING ENTERPRISES, RESPONDENTS
G.R. No. L-72654-61 ,January 22, 1990
(Third Division)

DOCTRINE: In determining the existence of an employer-employee relationship, the elements

that are generally considered are the following (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee with respect to the means and methods by which the work is to be
accomplished.

FACTS: Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several
fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises
which is primarily engaged in the fishing business. They were paid in percentage commission
basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent, 13% of the proceeds
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of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed
during the fishing trip, otherwise, 10% of the total proceeds of the sale.

After some time, they were dismissed alleging that they sold some of their fish-catch at midsea
to the prejudice of private respondent. Consequently, they filed illegal dismissal case to the
DOLE Arbitration Branch. De Guzman said that there was no employer-employee relationship
between them; rather it was a joint venture. After the parties failed to reach an amicable
settlement, the Labor Arbiter heard the case and dismissed the cases filed by the petitioners on
finding that it was really a joint venture. NLRC affirmed.

ISSUE: Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman
II are employees of its owner-operator, De Guzman Fishing Enterprises.

HELD: Yes.

From the four (4) elements of employer-employee relationship, the Court has generally relied
on the so-called right-of-control test where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to be used in
reaching such end. According to the testimony of Alipio Ruga, they are under the control and
supervision of private respondent‘s operations manager. Matters dealing on the fixing of the
schedule of the fishing trip and the time to return to the fishing port were shown to be the
prerogative of private respondent. While performing the fishing operations, petitioners received
instructions via a single-side band radio from private respondent‘s operations manager who
called the patron/pilot in the morning

Petitioners,were directly hired by private respondent, through its general manager, Arsenio de
Guzman, and its operations manager, Conrado de Guzman and have been under the employ of
private respondent for a period of 8-15 years in various capacities.

While tenure or length of employment is not considered as the test of employment, nevertheless
the hiring of petitioners to perform work which is necessary or desirable in the usual business
or trade of private respondent for a period of 8-15 years since 1968 qualify them as regular
employees within the meaning of Article 281 of the Labor Code as they were indeed engaged to
perform activities usually necessary or desirable in the usual fishing business or occupation of
private respondent.
Submitted by: Vardeleon, Crizedhen N.

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding
Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner
VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents.
G.R. No. 120969, January 22, 1998
(First Division)

DOCTRINE : As labor-only contracting is prohibited, the law considers the person or entity
engaged in the same a mere agent or intermediary of the direct employer.

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FACTS: Maraguinot and Enero were separately hired by Vic Del Rosario under Viva Films as
part of the filming crew. Sometime in May 1992, sought the assistance of their supervisor to
facilitate their request that their salary be adjusted in accordance with the minimum wage law.
On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario would agree
to their request only if they sign a blank employment contract. Petitioners refused to sign such
document. After which, the Mr. Enero was forced to go on leave on the same month and
refused to take him back when he reported for work. Mr. Maraguinot on the other hand was
dropped from the payroll but was returned days after. He was again asked to sign a blank
employment contract but when he refused, he was terminated. Consequently, the petitioners
sued for illegal dismissal before the Labor Arbiter. The private respondents claim the following:
(a) that VIVA FILMS is the trade name of VIVA PRODUCTIONS, INC. and that it was primarily
engaged in the distribution & exhibition of movies- but not then making of movies; (b) That
they hire contractors called ―producers‖ who act as independent contractors as that of Vic Del
Rosario; and (c) As such, there is no employee-employer relation between petitioners and
private respondents. The Labor Arbiter held that the complainants are employees of the private
respondents. That the producers are not independent contractor but should be considered as
labor-only contractors and as such act as mere agent of the real employer. Thus, the said
employees are illegally dismissed. The private respondents appealed to the NLRC which
reversed the decision of the Labor Arbiter declaring that the complainants were project
employees due to the ff. reasons: (a) Complainants were hired for specific movie projects and
their employment was co-terminus with each movie project; (b)The work is dependent on the
availability of projects. As a result, the total working hours logged extremely varied; (c) The
extremely irregular working days and hours of complainants work explains the lump sum
payment for their service; and (d) The respondents alleged that the complainants are not
prohibited from working with other movie companies whenever they are not working for the
independent movie producers engaged by the respondents. A motion for reconsideration was
filed by the complainants but was denied by NLRC. In effect, they filed an instant petition
claiming that NLRC committed a grave abuse of discretion in: (a) Finding that petitioners were
project employees; (b) Ruling that petitioners were not illegally dismissed; and (c) Reversing the
decision of the Labor Arbiter. In the instant case, the petitioners allege that the NLRC acted in
total disregard of evidence material or decisive of the controversy.

ISSUE: Whether or not there exist an employee- employer relationship between the petitioners
and the private respondents.

HELD : YES.

There exist an employee- employer relationship between the petitioners and the private
respondents because of the ff. reasons that nowhere in the appointment slip does it appear
that it was the producer who hired the crew members. Moreover, it was VIVA‘s corporate name
appearing on heading of the slip. It can likewise be said that it was VIVA who paid for the
petitioners‘ salaries.
The employer-employee relationship between petitioners and VIVA can further be established
by the ―control test.‖ While four elements are usually considered in determining the existence
of an employment relationship, namely: (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 the same. These four elements are present here.
Since the producer and the crew members are employees of VIVA and that these employees‘
works deal with the making of movies. It can be said that VIVA is engaged of making movies
and not on the mere distribution of such. The producer is not a job contractor because of the
following reasons: (Sec. Rule VII, Book III of the Omnibus Rules Implementing the Labor Code.)

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a. A contractor carries on an independent business and undertakes the contract work on his
own 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. The said producer has a fix time
frame and budget to make the movies.

b. The contractor should have substantial capital and materials necessary to conduct his
business. The said producer, Del Rosario, does not have his own tools, equipment, machinery,
work premises and other materials to make motion pictures. Such materials were provided by
VIVA.

It can be said that the producers are labor-only contractors. Under Article 106 of the Labor
Code (reworded) where the contractor does not have the requisites as that of the job
contractors.
Submitted by: Veloso, Jocelyn

ORLANDO FARMS GROWERS ASSOCIATION/GLICERIO AÑOVER, Petitioner,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION),
ANTONIO PAQUIT, ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO,
REBECCA MOREN, MARCELINA HONTIVEROS, MARTIN ORDONO, TITO ORDONO, FE
ORDONO, ERNIE COLON, EUSTIQUIO GELDO, DANNY SAM, JOEL PIAMONTE, FEDERICO
PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN, JR. and
BERNARDO OPERIO, Respondents.
G.R. No. 129076 November 25, 1998
(Third Division)

DOCTRINE: The law does not require an employer to be registered before he may come within
the purview of the Labor Code, consistent with the established rule in statutory construction
that when the law does not distinguish, we should not distinguish. To do otherwise would
bring about a situation whereby employees are denied, not only redress of their grievances,
but, more importantly, the protection and benefits accorded to them by law if their employer
happens to be an unregistered association.

FACTS: Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Añover as its
President, is an association of landowners engaged in the production of export quality bananas
located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole purpose of dealing
collectively with Stanfilco on matters concerning technical services, canal maintenance,
irrigation and pest control, among others. Respondents, on the other hand, were hired as farm
workers by several member-landowners but; nonetheless, were made to perform functions as
packers and harvesters in the plantation of petitioner association. After respondents were
dismissed on various dates from January 8, 1993 to July 30, 1994, several complaints were
filed against petitioner for illegal dismissal and monetary benefits. The Labor Arbiter found
merit in the complaint. The National Labor Relations Commission (NLRC) affirmed the decision
of the Labor Arbiter, prompting the petitioner to elevate the matter to the Supreme Court.

ISSUE: Whether or not an unregistered association may be an employer independent of the

respective members it represents?

HELD: Yes.

The contention that petitioner, being an unregistered association and having been formed
solely to serve as an effective medium for dealing collectively with Stanfilco, does not exist in

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law and, therefore, cannot be considered an employer, is misleading. This assertion can easily
be dismissed by reference to Article 212 (e) of the Labor Code, as amended, which defines an
employer as any person acting in the interest of an employer, directly or indirectly. The Court
concludes that the law does not require an employer to be registered before he may come
within the purview of the Labor Code, consistent with the established rule in statutory
construction that when the law does not distinguish, we should not distinguish. To do
otherwise would bring about a situation whereby employees are denied, not only redress of
their grievances, but, more importantly, the protection and benefits accorded to them by law if
their employer happens to be an unregistered association.

In the instant case, the following circumstances which support the existence of employer-
employee relations cannot be denied. During the subsistence of the association, several
circulars and memoranda were issued concerning, among other things, absences without
formal request, loitering in the work area and disciplinary measures with which every worker is
enjoined to comply. Furthermore, the employees were issued identification cards which the
Court, in the case of Domasig v. NLRC, construed, not only as a security measure but mainly
to identify the holder as a bonafide employee of the firm. However, what makes the relationship
explicit is the power of the petitioner to enter into compromise agreements involving money
claims filed by three of its employees. If petitioner's disclaimer were to be believed, what benefit
would accrue to it in settling an employer-employee dispute to which it allegedly lay no claim?

The petition was dismissed and the decision of the National Labor Relations Commission was
affirmed by the High Court.

Submitted by: Aguilar, Cherry Kerr

Article 82: Excluded Employees

Managerial Employees

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents
[G.R. No. 101761. March 24, 1993]
REGALADO, J:

DOCTRINE: In determining whether an employee is within the terms of the statutes, the
criterion is the character of the work performed, rather than the title of the employee's position.

FACTS: National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully

owned and controlled by the Government, operates three (3) sugar refineries located at
Bukidnon, Iloilo and Batangas. Private respondent union represents the former supervisors of
the NASUREFCO Batangas Sugar Refinery.

In 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from
rank-and-file to department heads. For about ten years prior to the JE Program, the members
of respondent union were treated in the same manner as rank-and file employees. As such,
they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles
87, 93 and 94 of the Labor Code as amended.

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With the implementation of the JE Program, members of respondent union were re-classified
under levels S-5 to S-8 which are considered managerial staff for purposes of compensation
and benefits.

In June 1990, the members of herein respondent union filed a complainant with the executive
labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of
Article 100 of the Labor Code.

In 1991, the labor arbiter directed NASUREFCO for the payment of the benefits demanded by
the union. On appeal, National Labor Relations Commission (NLRC) affirmed the decision of
the labor arbiter on the ground that the members of respondent union are not managerial
employees, and, therefore, they are entitled to overtime, rest day and holiday pay.

ISSUE: Whether or not supervisory employees, as defined in Article 212 (m), Book V of the
Labor Code, should be considered as officers or members of the managerial staff under Article
82, Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay.

HELD: In determining whether an employee is within the terms of the statutes, the criterion is
the character of the work performed, rather than the title of the employee's position.

A cursory perusal of the Job Value Contribution Statements of the union members will readily
show that these supervisory employees are under the direct supervision of their respective
department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling communicating and in making decisions in attaining the
company's set goals and objectives. These supervisory employees are likewise responsible for
the effective and efficient operation of their respective departments.

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

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

Submitted by: Austria, Don Rodel A.

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CHARLITO PEÑARANDA, Petitioner,

vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents.
G.R. No. 159577, May 3, 2006
(FIRST DIVISION)

DOCTRINE: Managerial employees and members of the managerial staff are exempted from the
provisions of the Labor Code on labor standards.

FACTS: Charlito Penaranda was hired as an employee of Baganga Corporation with a monthly
salary of P5,000 as Foreman/Boiler Head/ Shift Engineer to take charge of the operations and
maintenance of its steam plant boiler. He alleges that he was illegally terminated and that his
termination was without due process and valid grounds. Furthermore, he was not paid his OT
pay, premium pay for working during holidays, and night shift differentials. So he filed an
action for illegal dismissal.

Hudson Chua, the General Manager of Baganga alleges that Penaranda‘s separation was done
pursuant to Art. 238 of the Labor Code. The company was on temporary closure due to repair
and general maintenance and it applied for clearance with the DOLE to shut down and dismiss
employees. He claims that due to the insistence of complainant, he was paid his separation
benefits. But when the company partially re-opened, Penaranda faild to re-apply. Chua also
alleges that since he is a managerial employee, he is not entitled to OT pay and if ever he
rendered services beyond the normal hours of work, there was no office order/authorization for
him to do so.

The Labor Arbiter ruled that there was no illegal dismissal and that Penaranda‘s complaint was
premature because he was still employed with Baganga. As regards the benefits, the Labor
Arbiter found petitioner entitled to OT pay, premium pay for working on rest days and
attorney‘s fees. On appeal, NLRC deleted the award of OT pay, premium pay and attorney‘s
fees. The CA dismissed Penaranda‘s Petition for Certiorari based on procedural failures.

ISSUE: Whether or not Penaranda is a regular employee entitled to monetary benefits under
Art. 82 of the Labor Code.

HELD: NO. Penaranda is part of the managerial staff which takes him out of the coverage of
labor standards. The Implementing Rules define members of a managerial staff as those with
the following 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
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."

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

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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.

Even Penaranda 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. His classification as supervisor 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.

Submitted by: Alarcon, Maria Teresa L.

Field Personnel

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner,

vs. ANTONIO BAUTISTA, respondent.
G.R. No. 156367, May 16,2005

DOCTRINE: 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.

FACTS: Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May 1995. He
was assigned to the Isabela-Manila route and he was paid by commission (7% of gross income
per travel for twice a month). On January 2000 while driving his bus he bumped another bus
owned by Auto Bus. He claimed it was accidental because he was so tired and had not slept for
more than 24 hours because Auto Bus required him to return to Isabela immediately after
arriving at Manila. Damages were computed and 30% or P75,551.50 of it was being charged to
Bautista. Bautista refused payment. Auto Bus terminated Bautista after due hearing as part of
Auto Bus‘ management prerogative. Bautista sued Auto Bus for Illegal Dismissal. The Labor
Arbiter Monroe Tabingan dismissed Bautista‘s petition but ruled that Bautista is entitled to
P78,1117.87 13th month pay payments and P13,788.05 for his unpaid service incentive leave
pay. The case was appealed before the NLRC. NLRC modified the LA‘s ruling. It deleted the
award for 13th Month pay. The CA affirmed the NLRC.

Auto Bus averred that Bautista is a commissioned employee and he is also a field
personnel hence he is not entitled to a service incentive leave. They invoke:Art. 95. RIGHT TO
SERVICE INCENTIVE LEAVE (a) Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days with pay.

ISSUE: Whether or not Bautista is a field personnel

HELD: No, he is not. Hence, he is entitled to the service incentive leave.

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According to Article 82 of the Labor Code, 'field personnel shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty.

As a general rule, field personnel are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty;
hence, they are paid specific amount for rendering specific service or performing specific work.
If required to be at specific places at specific times, employees including drivers cannot be said
to be field personnel despite the fact that they are performing work away from the principal
office of the employee.

Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus driver
and that is a specific place that he needs to be at work. There are inspectors hired by Auto Bus
to constantly check him. There are inspectors in bus stops who inspects the passengers, the
punched tickets, and the driver. Therefore he is definitely supervised though he is away from
the Auto Bus main office.
Submitted by: Bacurio, Kenneth Bernard

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,

vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTLÉ
PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.

DOCTRINE: Field personnel and other employees whose time and performance is unsupervised
by the employer . . . (Emphasis supplied) While contending that such rule added another
element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that
its affected members are not covered by the abovementioned rule. The petitioner asserts that
the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the
Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp.
53-55).

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did
not add another element to the Labor Code definition of field personnel. 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.

Facts: This labor dispute stems from the exclusion of sales personnel from the holiday pay
award and the change of the divisor in the computation of benefits from 251 to 261 days.

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On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling
on its rights and obligations respecting claims of its monthly paid employees for holiday pay in
the light of the Court's decision in Chartered Bank Employees Association v. Ople (138
SCRA 273 [1985]).

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

Issue: 1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be
changed from 251 to 261 days and whether or not the previous use of 251 as divisor resulted
in overpayment for overtime, night differential, vacation and sick leave pay.

Held: The respondent arbitrator's order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition on non-diminution of benefits
found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is
adjusted to 261 days, then the dividend, which represents the employee's annual salary,
should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the
grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure by 251
days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary
already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days,
the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of
overpayment of overtime and night differential pay and sick and vacation leave benefits, the
computation of which are all based on the daily rate, since the daily rate is still the same before
and after the grant of holiday pay. Submitted by: Balbarino, Cherry Anjell L.

SAN MIGUEL BREWERY INC., ETC., Petitioner

vs.
DEMOCRATIC LABOR ORGANIZATION, ET AL., Respondents.
G.R. No. L-18353. July 31, 1963.

DOCTRINE: LABOR LAWS; EIGHT-HOUR LABOR LAW; NO APPLICATION TO OUTSIDE OR

FIELD SALES PERSONNEL. — Where after the morning roll call the outside or field sales
personnel leave the plant of the company to go on their respective sales routes and they do not
have a daily time record but the sales routes are so planned that they can be completed within
8 hours at most, and they receive monthly salaries and sales commissions in variable
amounts, so that they are made to work beyond the required eight hours similar to piece work,
"pakiao", or commission basis regardless of the time employed, and the employees‘
participation depends on their industry, it is held that the Eight-Hour Labor Law has no

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application to said outside or field sales personnel and that they are not entitled to overtime
compensation.

2. ID.; ID.; NIGHT SALARY DIFFERENTIALS RETROACTIVE. — Watchmen who rendered night
duties once every three weeks continuously during the period of their employment should be
paid 25% Additional compensation for work from 6:00 to 12:00 p.m. 75% additional
compensation for work from 12:01 to 6:00 in the morning retroactive prior to date of demand
because a similar claim had been filed long before and had been the subject of negotiation
between the union and the company which culminated in a strike which fizzled out with the
understanding that such claim should be settled in court.

3. ID.; ID.; SUNDAYS AND HOLIDAYS PAY. — Watchmen who work on Sundays and holidays
are entitled to extra pay for work done during these days although they are paid on a monthly
basis and are given one day off. Section 4 of Commonwealth Act No. 444 expressly provides
that no employer may compel an employee to work during Sundays and legal holidays unless
he is paid an additional sum of his regular compensation. This proviso is mandatory,
regardless of the nature of the compensation. The only exception is with regard to public
utilities who perform some public service.

FACTS: The Democratic Labor Association filed a complaint against the San Miguel
Brewery,Inc., embodying 12 demands for the betterment of the conditions of employment of its
members. The company asked for the dismissal of the complaint. During the hearing, the
union manifested its desire to confine its claim to its demands for overtime, night-shift
differential pay, and attorney's fees, although it was allowed to present evidence on service
rendered during Sundays and holidays, or on its claim for additional separation pay and sick
and vacation leave compensation. The demands for the application of the Minimum Wage Law
to workers paid on "pakiao" basis, payment of accumulated vacation and sick
leave and attorney's fees, as well as the award of additional separation pay, were either
dismissed,denied, or set aside. Its motion for reconsideration having been denied by the
industrial court en banc,which affirmed the decision of the court a quo with few exceptions, the
San Miguel Brewery, Inc. interposed the present petition for review.

ISSUE: Whether or not the Eight- hour labor law applies to respondent workers.

HELD: No.

After the morning roll call, the employees leave the plant of the company to go on their
respective sales routes and they do not have a daily time record but the sales routes are so
planned that they can be completed within 8 hours at most, and they receive monthly salaries
and sales commission in variable amounts, so that they are made to work beyond the required
eight hours similar to piecework, "pakiao", or commission basis regardless of the time
employed, and the employees' participation depends on their industry, it is held that the Eight-
Hour Labor Law has no application to said outside or field sales personnel and that they are
not entitled to overtime pay. The Court is in the opinion that the Eight-Hour Labor Law only
has application where an employee or laborer is paid in a monthly or daily basis, or is paid a
monthly or daily compensation, in which case, if he is made to work beyond the requisite
period of 8 hours, he should be paid the additional compensation prescribed by law. This law
has no application when the employee or laborer is paid on a piece-work, "pakiao", or
commission basis, regardless of the time employed. The philosophy behind this exemption is
that his earnings are in the form of commission based on the gross receipts of the day.

Submitted by: Gusi, Audrey Rose B.

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Domestic Helper and Persons Rendering Personal Service

Abundio Cadiz et al vs Philippine Sinter Corporation NLRC Case 7-1729, July 3, 1979

Cannot be found.

Rosales v. Tan Que, G.R. No. 1973-R, Nov. 12, 1948

Cannot be found.

Workers Paid by Result

Adriano Quintos v. D.D. Transport Co., Inc., NLRC Case No. RB-IB 20941, May 31, 1979

Cannot be found.

MANUEL LARA, ET AL., plaintiffs-appellants,

vs.
PETRONILO DEL ROSARIO, JR., defendant-appellee.
G.R. No. L-6339, April 20, 1954
(En Banc)

DOCTRINE: EMPLOYER AND EMPLOYEE; WAGES; EMPLOYEE WITH NO FIXED

SALARY NOT ENTITLED TO EXTRA COMPENSATION FOR OVERTIME WORK.—
Where the plaintiffs as chauffeurs received no fixed salary, wages or remuneration but
receiving as compensation from their employer an uncertain and variable amount
depending upon the work done or the result of said work (piece work) irrespective of the
amount of time employed, they are not covered by the Eight-Hour Labor Law and are
not entitled to extra compensation should they work in excess of eight hours a day.

FACTS: Defendant Petronilo del Rosario, Jr., is the owner of Waval Taxi. He employed
among others three mechanics and 49 chauffeurs or drivers, the latter having worked
for periods ranging from 2 to 37 months. In September 4, 1950, del Rosario sold his 25
cabs to La Mallorca, resulting to the unemployment of the above-mentioned chauffeurs
because La Mallorca failed to continue them in their employment. They brought this
action against del Rosario to recover compensation for overtime work rendered beyond
eight hours and on Sundays and legal holidays, and one month salary (mesada) because
of the failure of their former employer to give them one month notice. The plaintiffs as
chauffeurs received no fixed compensation based on the hours or the period or time they
worked. They were paid in the commission basis, that is, each driver received 20 percent
of the gross return or earnings from the operation of his taxi cab.

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

HELD: The defendant being engaged in the taxi or transportation business which is
public utility, came under the exception provided by the Eight-hour labor law; and
because plaintiffs did not work on a salary basis, that is to say, they had no fixed or
regular salary or remuneration other than the 20 percent of their gross earnings their
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situation was therefore practically similar to piece workers and hence outside the ambit
of Article 302 of the Code of Commerce. Moreover, if the plaintiffs herein had no fixed
salary either by the day, week or the month, then computation of the monthly salary
(mesada) payable would be impossible. Article 302 of the Code of Commerce refers to
employees receiving a fixed salary.

Article 83: Hours of Work

MANILA TERMINAL COMPANY, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL
AID ASSOCIATION (MTRMAA), respondents.
G.R. No. L-4148, July 16, 1952
(En Banc)

DOCTRINE: The principle of estoppel and the laches cannot well be invoked against the
Association. In the first place, it would be contrary to the spirit of the Eight Hour Labor Law,
under which as already seen, the laborers cannot waive their right to extra compensation. In
the second place, the law principally obligates the employer to observe it, so much so that it
punishes the employer for its violation and leaves the employee or laborer free and blameless.
In the third place, the employee or laborer is in such a disadvantageous position as to be
naturally reluctant or even apprehensive in asserting any claim which may cause the employer
to devise a way for exercising his right to terminate the employment.

If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby
the employee or laborer, who cannot expressly renounce their right to extra compensation
under the Eight-Hour Labor Law, may be compelled to accomplish the same thing by mere
silence or lapse of time, thereby frustrating the purpose of law by indirection.

FACTS: Manila Terminal undertook the arrastre service in some of the piers in Manila's Port
Area. Manila Terminal hired some thirty men as watchmen on twelve-hour shifts at a
compensation of P3 per day for the day shift and P6 per day for the night shift. The watchmen
of the petitioner continued in the service with a number of substitutions and additions, their
salaries having been raised later on to P4 per day for the day shift and P6.25 per day for the
nightshift.

Association sent a repeated demand letters to the DOLE requesting that the matter of overtime
pay be investigated, but nothing was done by the Department. Subsequently, Petitioner
instituted the system of strict eight-hour shifts.

ISSUE: Whether or not the agreement under which its police force were paid certain specific
wages for twelve-hour shifts, included overtime compensation.
.
HELD: NO.

The important point stressed by the petitioner is that the contract between it and the
Association upon the commencement of the employment of its watchman was to the certain
rates of pay, including overtime compensation namely, P3 per day for the day shift and P6 per
day for night shift beginning September 1, 1945, and P4 per day shift and P6.25 per day for the
night shift since February, 1946. The record does not bear out these allegations. The petitioner
has relied merely on the facts that its watchmen had worked on twelve-hour shifts at specific
wages per day and that no complaint was made about the matter until, first on March 28, 1947
and, secondly, on April 29, 1947.

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In times of acute unemployment, the people, urged by the instinct of self-preservation, go from
place to place and from office to office in search for any employment, regardless of its terms
and conditions, their main concern in the first place being admission to some work. Specially
for positions requiring no special qualifications, applicants would be good as rejected if they
ever try to be inquisitive about the hours of work or the amount of salary, ever attempt to
dictate their terms. The petitioner's watchmen must have railroaded themselves into their
employment, so to speak, happy in the thought that they would then have an income on which
to subsist. But, at the same time, they found themselves required to work for twelve hours a
day. True, there was agreement to work, but can it fairly be supposed that they had the
freedom to bargain in any way, much less to insist in the observance of the Eight Hour Labor
Law?

As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct. 159; 6 CCH
Labor Cases, Par. 51, 147, "A contract of employment, which provides for a weekly wage for a
specified number of hours, sufficient to cover both the statutory minimum wage and overtime
compensation, if computed on the basis of the statutory minimum wage, and which makes no
provision for a fixed hourly rate or that the weekly wage includes overtime compensation, does
not meet the requirements of the Act."

Moreover, we note that after the petition had instituted the strict eight-hour shifts, no
reduction was made in the salaries which its watchmen received under the twelve hour
arrangement. Indeed, as admitted by the petitioner, "when the members or the respondent
union were placed on strict eight-hour shifts, the lowest salary of all the members of the
respondent union was P165 a month, or P5.50 daily, for both day and night shifts." Although it
may be argued that the salary for the night shift was somewhat lessened, the fact that the rate
for the day shift was increased in a sense tends to militate against the contention that the
salaries given during the twelve-hour shifts included overtime compensation.

Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for more
than 18 months, is not accurate, because the watchmen involved in this case did not enter the
service of the petitioner, at one time, on September 1, 1945. As Judge Lanting found, "only one
of them entered the service of the company on said date, very few during the rest of said
month, some during the rest of that year (1945) and in 1946, and very many in 1947, 1948
and 1949."

x x x The Association cannot be said to have impliedly waived the right to overtime
compensation, for the obvious reason that they could not have expressly waived it."

The principle of estoppel and the laches cannot well be invoked against the Association. In the
first place, it would be contrary to the spirit of the Eight Hour Labor Law, under which as
already seen, the laborers cannot waive their right to extra compensation. In the second place,
the law principally obligates the employer to observe it, so much so that it punishes the
employer for its violation and leaves the employee or laborer free and blameless. In the third
place, the employee or laborer is in such a disadvantageous position as to be naturally
reluctant or even apprehensive in asserting any claim which may cause the employer to devise
a way for exercising his right to terminate the employment.

If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby
the employee or laborer, who cannot expressly renounce their right to extra compensation
under the Eight-Hour Labor Law, may be compelled to accomplish the same thing by mere
silence or lapse of time, thereby frustrating the purpose of law by indirection.

Submitted by: Del Rosario, Eunice

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Interphil Laboratories Employees Union-FFW vs.Interphil Laboratories, Inc., 372 SCRA

658, G.R. No. 142824 December 19, 2001

DOCTRINE: Labor Law; Working Hours; Where the employees assented by practice to an
arrangement of a continuous 24-hour, two-shift work daily schedule in spite of the eight- hour
schedule provided for in their CBA, they cannot now be heard to claim that the overtime
boycott is justified because they were not obliged to work beyond eight hours.—It is evident
from the foregoing provision that the working hours may be changed, at the discretion of the
company, should such change be necessary for its operations, and that the employees shall
observe such rules as have been laid down by the company. In the case before us, Labor
Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily
schedule by reason of the nature of its business and the demands of its clients. It was
established that the employees adhered to the said work schedule since 1988. The employees
are deemed to have waived the eight-hour schedule since they followed, without any question
or complaint, the two-shift schedule while their CBA was still in force and even prior thereto.
The two-shift schedule effectively changed the working hours stipulated in the CBA. As the
employees assented by practice to this arrangement, they cannot now be heard to claim that
the overtime boycott is justified because they were not obliged to work beyond eight hours.

FACTS: Petitioner is the sole and exclusive bargaining agent of the rank-and-file employees of
Respondent. They had a CBA. Prior to the expiration of the CBA, respondent company was
approached by the petitioner, through its officers. The Union inquired about the stand of the
company regarding the duration of the CBA which was set to expire in a few months. Salazar
told the union officers that the matter could be best discussed during the formal negotiations
which would start soon. The Union approached Salazar again. Salazar declared that it would
still be premature to discuss the matter and that the company could not make a decision at the
moment. The next day, all the rank-and-file employees of the company refused to follow their
regular two-shift work schedule from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m.
The employees stopped working and left their workplace without sealing the containers and
securing the raw materials they were working on. The overtime boycott continued. In addition,
the employees started to engage in a work slowdown campaign during the time they were
working, thus substantially delaying the production of the company.

ISSUE: Whether the working hours of the employees can be changed at the discretion of the
company .

HELD: Yes. The parties stipulated: ―A normal workday shall consist of not more than eight (8)
hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The
schedule of shift work shall be maintained; however the company may change the prevailing
work time at its discretion, should such change be necessary in the operations of the
Company. All employees shall observe such rules as have been laid down by the company for
the purpose of effecting control over working hours.‖ Respondent company had to adopt a

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continuous 24-hour work daily schedule by reason of the nature of its business and the
demands of its clients. It was established that the employees adhered to the said work
schedule since 1988. The employees are deemed to have waived the eight-hour schedule since
they followed, without any question or complaint, the two-shift schedule while their CBA was
still in force and even prior thereto. The two-shift schedule effectively changed the working
hours stipulated in the CBA. As the employees assented by practice to this arrangement, they
cannot now be heard to claim that the overtime boycott is justified because they were not
obliged to work beyond eight hours. The "overtime boycott" or "work slowdown" by the
employees constituted a violation of their CBA, which prohibits the union or employee, during
the existence of the CBA, to stage a strike or engage in slowdown or interruption of work.

Article 84: Hours Worked

PAN AMERICAN WORLD AIRWAYS SYSTEM (PHILIPPINES), petitioner,

vs.
PAN AMERICAN EMPLOYEES ASSOCIATION, respondent.
G.R. No. L-16275 February 23, 1961

DOCTRINE: The meal hour will be considered as work hour when such meal hour was not one
of complete rest, wherein laborers had to be on ready call.

FACTS: Petitioner herein claims that the one-hour meal period should not be considered as
overtime work (after deducting 15 minutes), because the evidence showed that complainants
could rest completely, and were not in any manner under the control of the company during
that period. The court below found, on the contrary, that during the so called meal period, the
mechanics were required to stand by for emergency work; that if they happened not to be
available when called, they were reprimanded by the leadman; that as in fact it happened on
many occasions, the mechanics had been called from their meals or told to hurry Employees
Association up eating to perform work during this period. Far from being unsupported by
substantial evidence, the record clearly confirms the above factual findings of the Industrial
Court.

ISSUE: WON the one-hour meal period should be considered overtime work

HELD: YES.

The Industrial Court's order for permanent adoption of a straight 8-hour shift including the
meal period was but a consequence of its finding that the meal hour was not one of complete
rest, but was actually a work hour, since for its duration, the laborers had to be on ready call.
Of course, if the Company practices in this regard should be modified to afford the mechanics a
real rest during that hour (f. ex., by installing an entirely different emergency crew, or any
similar arrangement), then the modification of this part of the decision may be sought from the
Court below. As things now stand, we see no warrant for altering the decision.

Submitted by: Escol, Hanzel Grace

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Jose Gayona v. Good Earth Emporium and Supermarket, NLRC Case No. IV-13104-77,
April 5, 1979

Cannot be found.

UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner,

vs.
UNIVERSITY OF PANGASINAN And NATIONAL LABOR RELATIONS COMMISSION,
Respondents.
G.R. No. L-63122. February 20, 1984
(First Division)

DOCTRINE: "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE‘ CASE AT BAR. — Semestral
breaks are in the nature of work interruptions beyond the employees‘ control. The duration of
the semestral break varies from year to year dependent on a variety of circumstances affecting
at times only the private respondent but at other times all educational institutions in the
country. As such, these breaks cannot be considered as absences within the meaning of the
law for which deductions may be made from monthly allowances. The "No work, no pay"
principle does not apply in the instant case. The petitioner‘s members received their regular
salaries during this period. It is clear from the aforequoted provision of law that it contemplates
a "no work" situation where the employees voluntarily absent themselves. For this they cannot
be faulted nor can they be begrudged that which is due them under the law.

FACTS: Petitioner is a labor union composed of faculty members of the respondent University
of Pangasinan, an educational institution duly organized and existing by virtue of the laws of
the Philippines. The petitioner, through its President, Abad, filed a complaint against the
respondent with the Arbitration Branch of the NLRC. The complaint seeks: (a) the payment of
Emergency Cost of Living Allowances (ECOLA) for November 7 to December 5, 1981, a
semestral break; (b) salary increases from the sixty (60%) percent of the incremental proceeds
of increased tuition fees; and (c) payment of salaries for suspended extra loads.

In November and December, 1981, the petitioner‘s members were fully paid their regular
monthly salaries. However, during the semestral break, they were not paid their ECOLA. The
respondent claims that the teachers are not entitled thereto because the semestral break is not
an integral part of the school year and there being no actual services rendered by the teachers
during said period, the principle of "No work, no pay" applies.During the same school year, the
respondent was authorized by the Ministry of Education and Culture to collect 15% percent
increase of tuition fees. Petitioner‘s members demanded a salary increase effective the first
semester of said school year to be taken from the sixty (60%) percent incremental proceeds of
the increased tuition fees. Private respondent refused. While the complaint was pending in the
arbitration branch, the respondent granted an across-the-board salary increase of 5.86%.
Aside from their regular loads, some of petitioner‘s members were given extra loads to handle
during the same school year. Some of them had extra loads to teach on September 21, 1981,
but they were unable to teach as classes in all levels throughout the country were suspended,
although said days was proclaimed by the President of the Philippines as a working holiday.
Those with extra loads to teach on said day claimed they were not paid their salaries for those
loads, but the private respondent claims otherwise.Hence, petition for review on certiorari to
annul and to set aside the decision of respondent NLRC dismissing the appeal of petitioner in
NLRC Case No. RBI-47-82.

ISSUE:Whether or not petitioner‘s members are entitled to ecola during the semestral break
from november 7 to december 5, 1981 of the 1981-82 school year.

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HELD: It is beyond dispute that the petitioner‘s members are full-time employees receiving
their monthly salaries irrespective of the number of working days or teaching hours in a
month. However, they find themselves in a most peculiar situation whereby they are forced to
go on leave during semestral breaks. These semestral breaks are in the nature of work
interruptions beyond the employees‘ control. As such, these breaks cannot be considered as
absences within the meaning of the law for which deductions may be made from monthly
allowances. The "No work, no pay" principle does not apply in the instant case. The petitioner‘s
members received their regular salaries during this period. It is clear from the aforequoted
provision of law that it contemplates a "no work" situation where the employees voluntarily
absent themselves. Respondent‘s contention that "the fact of receiving a salary alone should
not be the basis of receiving ECOLA", is, likewise, without merit. Particular attention is brought
to the Implementing Rules and Regulations of Wage Order No. 1 to wit.

SECTION 5. Allowance for Unworked Days. —

"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their
daily living allowance when they are paid their basic wage."cralaw virtua1aw library

x x x
This provision, at once refutes the above contention. It is evident that the intention of the law is
to grant ECOLA upon the payment of basic wages. Hence, we have the principle of "No pay, no
ECOLA" the converse of which finds application in the case at bar. Petitioners cannot be
considered to be on leave without pay so as not to be entitled to ECOLA, for, as earlier stated,
the petitioners were paid their wages in full for the months of November and December of
1981, notwithstanding the intervening semestral break. This, in itself, is a tacit recognition of
the rather unusual state of affairs in which teachers find themselves. Although said to be on
forced leave, professors and teachers are, nevertheless, burdened with the task of working
during a period of time supposedly available for rest and private matters. There are papers to
correct, students to evaluate, deadlines to meet, and periods within which to submit grading
reports. Although they may be considered by the respondent to be on leave, the semestral
break could not be used effectively for the teacher‘s own purposes for the nature of a teacher‘s
job imposes upon him further duties which must be done during the said period of time.
Learning is a never ending process. Teachers and professors must keep abreast of
developments all the time. Teachers cannot also wait for the opening of the next semester to
begin their work. Arduous preparation is necessary for the delicate task of educating our
children. Teaching involves not only an application of skill and an imparting of knowledge, but
a responsibility which entails self dedication and sacrifice. The task of teaching ends not with
the perceptible efforts of the petitioner‘s members but goes beyond the classroom: a continuum
where only the visible labor is relieved by academic intermissions. It would be most unfair for
the private respondent to consider these teachers as employees on leave without pay to suit its
purposes and, yet, in the meantime, continue availing of their services as they prepare for the
next semester or complete all of the last semester‘s requirements. Furthermore, we may also by
analogy apply the principle enunciated in the Omnibus Rules Implementing the Labor Code to
wit:

Sec. 4. Principles in Determining Hours Worked. — The following general principles shall
govern in determining whether the time spent by an employee is considered hours worked for
purposes of this Rule:

x x x

"(d) The time during which an employee is inactive by reason of interruptions in his work
beyond his control shall be considered time either if the imminence of the resumption of work

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requires the employee‘s presence at the place of work or if the interval is too brief to be utilized
effectively and gainfully in the employee‘s own interest."

The petitioner‘s members in the case at bar, are exactly in such a situation. The
semestral break scheduled is an interruption beyond petitioner‘s control and it cannot be used
"effectively nor gainfully in the employee‘s interest‘. Thus, the semestral break may also be
considered as "hours worked." For this, the teachers are paid regular salaries and, for this,
they should be entitled to ECOLA. Not only do the teachers continue to work during this short
recess but much less do they cease to live for which the cost of living allowance is intended.
The legal principles of "No work, no pay; No pay, no ECOLA" must necessarily give way to the
purpose of the law to augment the income of employees to enable them to cope with the harsh
living conditions brought about by inflation; and to protect employees and their wages against
the ravages brought by these conditions. Significantly, it is the commitment of the State to
protect labor and to provide means by which the difficulties faced by the working force may
best be alleviated. To submit to the respondents‘ interpretation of the no work, no pay policy is
to defeat this noble purpose. The Constitution and the law mandate otherwise. WHEREFORE
the petition for certiorari is hereby GRANTED.
Submitted by: Gumtang, Lianne

LUZON STEVEDORING CO., INC., petitioner,

vs.
LUZON MARINE DEPARTMENT UNION, respondents.
G.R. No. L-9265. April 29, 1957.
(EN BANC)

DOCTRINE: A laborer need not leave the premises of the factory, shop or boat in order that his
period of rest shall not be counted, it being enough that he "cease to work", may rest
completely and leave or may leave at his will the spot where he actually stays while working, to
go somewhere else, whether within or outside the premises of said factory, shop or boat. If
these requisites are complied with, the period of such rest shall not be counted.

FACTS: On June 21, 1948, herein respondent Luzon Marine Department Union filed a petition
with the Court of Industrial Relations containing several demands against herein petitioner
Luzon Stevedoring Co., Inc., among which were the petition for full recognition of the right of
COLLECTIVE bargaining, close shop and check off. However, on July 18, 1948, while the case
was still pending with the CIR, said labor union declared a strike which was ruled down as
illegal by this Court in case G. R. No. L-2660, promulgated on May 30, 1950. In view of said
ruling, the Union filed a "Constancia" with the Court of Industrial Relations praying that the
remaining unresolved demands of the Union presented in their original petition, be granted.
The case was decided by the court in favor of the respondent. Hence recourse to the High Court
by the petitioner.

ISSUE: Whether or not the definition for "hours of work" as presently applied to dryland
laborers equally applicable to seamen? Or should a different criterion be applied by virtue of
the fact that the seamen‘s employment is completely different in nature as well as in condition
of work from that of a dryland laborer?

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

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

The requisites contained in this section are further implemented by contemporary regulations
issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules
and Regulations to Implement the Minimum Wage Law).

For the purposes of this case, we do not need to set for seamen a criterion different from that
applied to laborers on land, for under the provisions of the above quoted section, the only thing
to be done is to determine the meaning and scope of the term "working place" used therein. As
We understand this term, a laborer need not leave the premises of the factory, shop or boat in
order that his period of rest shall not be counted, it being enough that he "cease to work", may
rest completely and leave or may leave at his will the spot where he actually stays while
working, to go somewhere else, whether within or outside the premises of said factory, shop or
boat. If these requisites are complied with, the period of such rest shall not be counted. In the
case at bar we do not need to look into the nature of the work of claimant mariners to ascertain
the truth of petitioner‘s allegation that this kind of seamen have had enough free time.

Submitted by: Gonzales, Van Angelo G.

JULIO N. CAGAMPAN, SILVINO C. VICERA, JORGE C. DE CASTRO, JUANITO R. DE

JESUS, ARNOLD J. MIRANDA, MAXIMO O. ROSELLO & ANICETO L. BETANA, Petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, & ACE MARITIME AGENCIES, INC.,
Respondents.
G.R. Nos. 85122-24. March 22, 1991

DOCTRINE: LABOR STANDARDS; OVERTIME PAY; CRITERIA OF PAYMENT. — The correct

criterion in determining whether or not sailors are entitled to overtime pay is not, therefore,
whether they were on board and cannot leave ship beyond the regular eight working hours a
day, but whether they actually rendered service in excess of said number of hours. (National
Shipyards and Steel Corporation v. CIR, 3 SCRA 890)

FACTS: On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of
employment with the Golden Light Ocean Transport, Ltd., through its local agency, private
respondent ACE MARITIME AGENCIES, INC. Thereafter, petitioners collectively and/or
individually filed complaints for non-payment of overtime pay, vacation pay and terminal pay
against private respondent.

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On August 5, 1987, the Philippine Overseas Employment Administration (POEA) rendered a

Decision Dismissing petitioners' claim for terminal pay but granted their prayer for leave pay
and overtime pay. Private respondent appealed from the POEA's Decision to the NLRC. The
NLRC promulgated a Decision.

ISSUE: Whether or not petitioners are entitled to terminal and overtime pay.

HELD: No.

On the issue of whether or not petitioners should be entitled to terminal pay, We sustain the
finding of respondent NLRC that petitioners were actually paid more than the amounts fixed in
their employment contracts.

As regards the question of overtime pay, the NLRC cannot be faulted for disallowing the
payment of said pay because it merely straightened out the distorted interpretation asserted by
petitioners and defined the correct interpretation of the provision on overtime pay embodied in
the contract conformably with settled doctrines on the matter. Notably, the NLRC ruling on the
disallowance of overtime pay is ably supported by the fact that petitioners never produced any
proof of actual performance of overtime work.

Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay of
30% of the basic salary per month" embodied in their employment contract should be awarded
to them as part of a "package benefit." They have theorized that even without sufficient
evidence of actual rendition of overtime work, they would automatically be entitled to overtime
pay. Their theory is erroneous for being illogical and unrealistic. Their thinking even runs
counter to the intention behind the provision. The contract provision means that the fixed
overtime pay of 30% would be the basis for computing the overtime pay if and when overtime
work would be rendered. Simply, stated, the rendition of overtime work and the submission of
sufficient proof that said work was actually performed are conditions to be satisfied before a
seaman could be entitled to overtime pay which should be computed on the basis of 30% of the
basic monthly salary. In short, the contract provision guarantees the right to overtime pay but
the entitlement to such benefit must first be established. Realistically speaking, a seaman, by
the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work
schedule. For the employer to give him overtime pay for the extra hours when he might be
sleeping or attending to his personal chores or even just lulling away his time would be
extremely unfair and unreasonable.
Submitted by: Gusi, Audrey Rose B.

NATIONAL DEVELOPMENT COMPANY VS. CIR

G.R. NO. L-15422 NOVERNBER 30, 1962
REGALA, J.

DOCTRINE: The idle time that an employee may spend for resting and during which he may
leave the spot or place of work though not the premises of his employer, is not counted as
working time only where the work is broken or is not continuous.

FACTS: At the National Development Co., a government-owned and controlled corporation,

there were four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts
were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In
each shift, there was a one-hour mealtime period from:

(1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and;

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(2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.

The records disclose that although there was a one-hour mealtime, petitioner nevertheless
credited the workers with eight hours of work for each shift and paid them for the same
number of hours. However, since 1953, whenever workers in one shift were required to
continue working until the next shift, petitioner instead of crediting them with eight hours of
overtime work, has been paying them for six hours only, petitioner contends that the two hours
corresponding to the mealtime periods should not be included in computing compensation.

ISSUE: Whether or not the mealtime breaks should be considered working time

HELD: The CIR correctly concluded that work in petitioner company was continuous and
therefore the mealtime breaks should be counted as working time for purposes of overtime
compensation. Petitioner gives an eight-hour credit to its employees who work a single shift say
from 6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?
There is another reason why this appeal should dismissed and that is that there is no decision
by the CIR en banc from which petitioner can appeal to this Court. As already indicated above,
the records show that petitioner's motion for reconsideration of the order of March 19, 1959
was dismissed by the CIR en banc because of petitioner's failure to serve a copy of the same on
the union.
Submitted by: Jabal, Joel Malcolm D.

SIME DARBY PILIPINAS, INC. petitioner, vs. NLRC (2ND DIVISION) and SIME DARBY
SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.
G.R. No. 119205 April 15, 1998
FIRST DIVISION

FACTS: Sime Darby Pilipinas is engaged in the manufacture of automotive tires, tubes and
other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP) is an
association of monthly salaried employees of Sam Darby in its Marikina factory. Prior to the
present controversy, all company factory workers in Marikina including members of private
respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch
break. On 14 August 1992 petitioner issued a memorandum to all factory-based employees
advising all its monthly salaried employees in its Marikina Tire Plant a change in work
schedule effective 14 September 1992. ALU-TUCP filed on behalf of its members a complaint
with the Labor Arbiter for unfair labor practice. The LA dismissed the complaint on the ground
that the change in the work schedule and the elimination of the 30-minute paid lunch break of
the factory workers constituted a valid exercise of management prerogative and that the new
work schedule, break time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight (8) hours. NLRC
sustained the Labor Arbiter on appeal. On motion for reconsideration, NLRC reversed the
decision based on Sime Darby case of 1990 and held that the new work schedule deprived the
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employees of the benefits of a time-honored company practice of providing its employees a 30-
minute paid lunch break resulting in an unjust diminution of company privileges prohibited by
Art. 100 of the Labor Code, as amended. A petition for certiorair was filed by Sam Darby
alleging that public respondent committed grave abuse of discretion amounting to lack or
excess of jurisdiction.

ISSUE: Whether or not the the act of management in revising the work schedule of its
employees and discarding their paid lunch break constitutive of unfair labor practice?

HELD: NO.

The right to fix the work schedules of the employees rests principally on their employer. In the
instant case petitioner, as the employer, cites as reason for the adjustment the efficient
conduct of its business operations and its improved production.6 It rationalizes that while the
old work schedule included a 30-minute paid lunch break, the employees could be called upon
to do jobs during that period as they were "on call." Even if denominated as lunch break, this
period could very well be considered as working time because the factory employees were
required to work if necessary and were paid accordingly for working. With the new work
schedule, the employees are now given a one-hour lunch break without any interruption from
their employer. For a full one-hour undisturbed lunch break, the employees can freely and
effectively use this hour not only for eating but also for their rest and comfort which are
conducive to more efficiency and better performance in their work. Since the employees are no
longer required to work during this one-hour lunch break, there is no more need for them to be
compensated for this period. We agree with the Labor Arbiter that the new work schedule fully
complies with the daily work period of eight (8) hours without violating the Labor
Code.7 Besides, the new schedule applies to all employees in the factory similarly situated
whether they are union members or not.

Management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and discipline, dismissal and recall of workers.
Further, management retains the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. So long as such prerogative is exercised in good
faith for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, this
Court will uphold such exercise.
Submitted by: Mamangon, Fatima C.

MERCURY DRUG CO., INC., Petitioner,

vs.
NARDO DAYAO, ET AL., Respondents.
G.R. No. L-30452 September 30, 1982
SECOND DIVISION

FACTS: Petition filed by Dayao and 70 others against Mercury Drug Co., praying for the
payment of extra compensation on work done at night. Respondent submitted an answer which
alleged that no court has the power to set wages, rates of pay, hours of employment or other
conditions of employment to the extent of disregarding an agreement thereon between the

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respondent company and the petitioners, and of fixing night differential wages; that the
petitioners were fully paid for services rendered under the terms and conditions of the
individual contracts of employment. The Court hereby resolves that: 2. Respondent Mercury
Drug Company, Inc., is hereby ordered to pay the sixty-nine (69) petitioners: (b) additional sum
or premium equivalent to 25% of their respective basic or regular salaries for nighttime
services. Hence, this petition.

ISSUE: Whether or not respondents are entitled for nighttime work premiums although there is
a waiver of said claims in the employment contract and the total absence of evidence there on.

Held: NO.

"We believe petitioner to be in error. Its position collides with our ruling in the Naric case
[National Rice & Corn Corp. (NARIC) vs. NARIC Workers' Union, et al., G.R. No. L-12075, May
29, 1959] where we held:

"'While it is true that this Court made the above comment in the aforementioned case, it does
not intend to convey the idea that work done at night cannot also be an overtime work. The
comment only served to emphasize that the demand which the Shell Company made upon its
laborers is not merely overtime work but night work and so there was need to differentiate
night work from daytime work. In fact, the company contended that there was no law that
required the payment of additional compensation for night work unlike an overtime work which
is covered by Commonwealth Act No. 444 (Eight-Hour Labor Law). And this Court in that case
said that while there was no law actually requiring payment of additional compensation for
night work, the industrial court has the power to determine the wages that night workers
should receive under Commonwealth Act No. 103, and so it justified the additional
compensation in the Shell case for 'hygienic, medical, moral, cultural and sociological
reasons.'"

After the passage of Republic Act 875, this Court has not only upheld the industrial court's
assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers
Union (NLU) vs. City Automotive Co., et al., G.R. No. L-11655, April 29, 1959; Prisco vs. CIR, et
al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for work
rendered on Sundays and holidays and for night work [ Nassco vs. Almin , et al., G.R. No. L-
9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R.
No. L-8738, May 31, 1957] but has also supported such court's ruling that work performed at
night should be paid more than work done at daytime, and that if that work is done beyond the
worker's regular hours of duty, he should also be paid additional compensation for overtime
work. [ Naric vs. Naric Workers' Union, et al., G.R. No. L-12075, May 29, 1959, citing Shell Co.
vs. National Labor Union, 81 Phil. 315].

The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction over
additional compensation for work done at night by the respondents is without merit.

"There is no serious disagreement between the petitioners and respondent management on the
facts recited above. The variance in the evidence is only with respect to the money
claims. Witnesses for petitioners declared they worked on regular days and on every other
Sunday and also during all holidays; that for services rendered on Sundays and holidays they
were not paid for the first four (4) hours and what they only received was the overtime
compensation corresponding to the number of hours after or in excess of the first four after or
in excess of the first four hours; and that such payment is being indicated in the overtime pay
for work done in excess of eight hours on regular working days. It is also claimed that their
nighttime services could well be seen on their respective daily time records. xx Underlined
supplied) (p. 116, rollo)

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The respondent court's ruling on additional compensation for work done at night is, therefore,
not without evidence. Moreover, the petitioner-company did not deny that the private
respondents rendered nighttime work. In fact, no additional evidence was necessary to prove
that the private respondents were entitled to additional compensation for whether or not they
were entitled to the same is a question of law. The "waiver rule" is not applicable in the case at
bar. Additional compensation for nighttime work is founded on public policy, hence the same
cannot be waived. (Article 6, Civil Code).

Submitted by: Lim, Anton Kristoffer M.

NATIONAL SHIPYARDS AND STEEL CORPORATION, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and DOMINADOR MALONDRAS, respondents.
GR No. L-17068 December 30, 1961
(En Banc)

DOCTRINE: The correct criterion in determining whether or not sailors are entitled to
overtime pay is not, therefore, whether they were on board and can not leave ship beyond the
regular eight working hours a day, but whether they actually rendered service in excess of said
number of hours.

FACTS: The petitioner NASSCO, a government-owned and controlled corporation, is the owner
of several barges and tugboats used in the transportation of cargoes and personnel in
connection with its business of shipbuilding and repair. In order that its bargeman could
immediately be called to duty whenever their services are needed, they are required to stay in
their respective barges, for which reason they are given living quarters therein as well as
subsistence allowance of P1.50 per day during the time they are on board. However, upon prior
authority of their superior officers, they may leave their barges when said barges are idle.

On April 15, 1957, 39 crew members of petitioner's tugboat service, including therein
respondent Dominador Malondras, filed with the Industrial Court a complaint for the payment
of overtime compensation (Case No. 1059-V). In the course of the proceeding, the parties
entered into a stipulation of facts.

Pursuant to their stipulation, the Industrial Court, on November 22, 1957, issued an order
directing the court examiner to compute the overtime compensation due the claimants.

The court examiner submitted the reports on the computation of overtime for the periods
January 1 to December 31, 1957 and January 1, 1954 to December 31, 1956. However,
petitioner Malondras was not included as his records were not then available. Because of his
exclusion, he filed a petition asking for compensation and payment of his overtime work, which
the NASSCO opposed upon he argument that its records do not indicate the actual number of
working hours rendered by Malondra. Acting on the petition and opposition, the Industrial
Court ordered the examiner to examine the log books, daily time sheets, and other pertinent
records of the corporation for the purpose of determining and computing whatever overtime
service Malondras had rendered from January 1, 1954 to December 31, 1956.

On January 15, 1960, the chief examiner submitted a report crediting Malondras with a total
of 4,349 overtime hours from January 1, 1954 to December 31, 1956, at an average of five (5)
overtime hours a day. However, upon re-examination, an amended report was submitted giving
Malondras an average of 16 overtime hours a day, on the basis of his time sheets.

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ISSUE: Whether or not the time required from Malondras to stay in the boat constitutes
overtime.

RULING:No, the time when Malondras was require to stay on boat does not imply that he
should be paid overtime work.

Seamen are required to stay on board their vessels by the very nature of their duties, and it is
for this reason that, in addition to their regular compensation, they are given free living
quarters and subsistence allowances when required to be on board. It could not have been the
purpose of our law to require their employers to pay them overtime even when they are not
actually working; otherwise, every sailor on board a vessel would be entitled to overtime for
sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk,
after his regular tour of duty. The correct criterion in determining whether or not sailors are
entitled to overtime pay is not, therefore, whether they were on board and can not leave ship
beyond the regular eight working hours a day, but whether they actually rendered service in
excess of said number of hours.

The Court ruled to that effect in Luzon Stevedoring Co., Inc. vs. Luzon Marine Department
Union, et al., L-9265, April 29, 1957:

I.Is the definition for "hours of work" as presently applied to dryland laborers equally applicable
to seamen? Or should a different criterion be applied by virtue of the fact that the seaman's
employment is completely different in nature as well as in condition of work from that of a
dryland laborer?

xxx xxx xxx

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

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

The requisites contained in this section are further implemented by contemporary regulations
issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules and
Regulations to implement the Minimum Wage Law).

For the purposes of this case, we do not need to set for seamen a criterion different from that
applied to laborers on land, for under the provisions of the above quoted section, the only thing to
be done is to determine the meaning and scope of the term "working place" used therein. As we
understand this term, a laborer need not leave the premises of the factory shop or boat in order
that his period of rest shall not be counted, it being enough that he "cease to work", may rest
completely and leave or may leave at his will the spot where he actually stays while working, to
go somewhere else, whether within or outside the premises of said factory, shop or boat. If these
requisites are complied with, the period of such rest shall not be counted. (Emphasis supplied)

While Malondras' daily time sheets do not show his actual working hours, nevertheless,
petitioner has already admitted in the Stipulation of Facts in this case that Malondras and his
co-claimants did render service beyond eight (8) hours a day when so required by the
exigencies of the service; and in fact, Malondras was credited and already paid for five (5) hours
daily overtime work during the period from May 1 to December 31, 1957, under the examiner's
first report. Since Malondras has been at the same job since 1954, it can be reasonably
inferred that the overtime service he put in whenever he was required to be aboard his barge all
day from 1954 to 1957 would be more or less consistent. In truth, the other claimants who
served with Malondras under the same conditions and period have been finally paid for an

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overtime of 5 hours a day, and no substantial difference exists between their case and the
present one, which was not covered by the same award only because Malondras' time records
not found until later.
Submitted by: Mayoralgo, Remy

Bisig ng Manggagawa ng Philippine Refining Co., Inc. vs. Philippine Refining Co., Inc.,
G.R. No. L-27761, September 30, 1981

DOCTRINE: LABOR LAW; Words and Phrases; Agreements on overtime pay need not
always provide that the computation of overtime pay should be based on an employee‘s
―regular wage or salary,‖ i.e., regular base pay plus fringe benefits continuously
received. – This does not however mean that agreements concerning overtime
compensation should always provide for a computation based on the employee‘s regular
wage or salary‖ i.e., regular base pay plus fringe benefits regularly and continuously
received. For it is axiomatic that in multiplication, the product is directly related to the
multiplicand and the multiplier; consequently, the same product may be obtained
despite reduction of the multiplicand provided that the multiplier is correspondingly
increased. Conformably with the foregoing mathematical axioms, there is still
compliance with the above-stated ruling despite the fact that the overtime compensation
is based only on the employees‘ ―regular base pay‖ (the multiplicand) as long as the rate
of 25% (the multiplier) is increased by such amount as to produce a result (the product)
which is not less than the result to be obtained in computing 25% of the employee‘s
―regular wage or salary‖ (―regular base pay‖ plus fringe benefits regularly and
continuously received). In fine, the parties may agree for the payment of overtime
compensation in an amount to be determined by applying a formula other than the
statutory formula of ―regular wage or salary, plus at least twenty-five per centum
additional‖ provided that the result in applying the contractual formula is not less than
the result in applying said statutory formula.

FACTS: This is an appeal from the decision of the CFI Manila dated December 8,
1966,in Civil Case No. 65082, holding that Christmas bonus and other fringe benefits
are excluded in the computation of the overtime pay of the members of the appellant
union under Section 6, Article VI of the1965 collective bargaining agreement which
reads as follows: Overtime pay at the rate of regular base pay plus 50% thereof shag be
paid for all work performed in excess of eight hours on ordinary days within the work
week(that is to say, Monday to Friday).

ISSUE: Whether the term ―regular base pay‖ excludes moneys received by an employee
in different concepts, such as Christmas bonus and other fringe benefits.

HELD: Yes.

The phrase "regular base pay" is clear, unequivocal and requires no interpretation. It
means regular basic pay and necessarily excludes money received in different concepts
such as Christmas bonus and other fringe benefits. In this connection it is necessary to
remember that in the enforcement of previous collective bargaining agreements
containing the same provision of overtime pay at the rate of regular base pay plus 50@'c
thereof", the overtime compensation was invariably based only on the regular basic pay,
exclusive of Christmas bonus and other tinge benefits. Appellant union knew all the
while of such interpretation and precisely attempted to negotiate for a provision in the

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subject collective bargaining agreement that would include the Christmas bonus and
other fringe benefits in the computation of the overtime pay. Significantly, the appellee
company did not agree to change the phrase "regular base pay" as it could not consent
to the inclusion of the fringe benefits in the computation of the overtime pay. Hence, the
appellant union could not question the intended definition of the phrase but could only
claim that the same violated the Nawasa doctrine and insist that the phrase should be
redefined to conform to said doctrine.

In the case at bar, it is admitted that the contractual formula of "regular base pay plus
50% thereof" yields an overtime compensation which is higher than the result in
applying the statutory formula as elaborated in the Nawasa case. Consequently, its
validity is upheld and the parties are enjoined to accord due respect to it.

PHILIPPINE NATIONAL BANK, petitioner,

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

DOCTRINE: In the absence of any specific provision on the matter in a collective bargaining
agreement, what are decisive in determining the basis for the computation of overtime pay are
two very germane considerations, namely, (1) whether or not the additional pay is for extra
work done or service rendered and (2) whether or not the same is intended to be permanent
and regular, not contingent nor temporary and given only to remedy a situation which can
change any time.

FACTS: The dispute involves the Philippine National Bank Employees Association (PEMA) and
PNB where PEMA submits that they have repeatedly requested PNB that the cost of living
allowance and longevity pay be taken into account in the computation of overtime pay
pursuant to the promulagation of the decision in the prominent case National Waterworks and
Sewerage Authority vs. NAWASA Consolidated Unions as applied in the case Shell Oil Workers
Union vs. Shell Company of the Philippines where recomputation was made of the basic wage
by adding the money value of the fringe benefits enjoyed by them from whence the premium
rates agreed upon shall be computed in order to arrive at the correct computation of their
overtime compensation. PEMA contends that based on the jurisprudence, both should be
included in the computation of overtime pay as the court held there that wage is computed
exclusively on the basic wage without including the automatic increase of 25% corresponding
to the Sunday differential, inferring that both are within the coverage of wages as contemplated
in the case. PNB on the other hand questioned the application on the ruling contending
otherwise, stating that both the cost of living allowance and the longevity pay were not included
in the stiuplations agreed upon in the CBA.

ISSUE: Should cost of living allowance and longevity pay be included other than the hours
worked in the computation of overtime pay?

HELD: No.

Cost of living allowance and longevity pay should not be included in the computation of
overtime pay and the ruling in NAWASA case is not controlling in the case at bar.

1. Not agreed in the CBA.

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The court held that NAWASA‘s fact-situation was not applicable to this case because in the
former, the inclusion of fringe benefits to the daily wage for overtime pay was agreed by the
parties in the CBA. In the latter, PNB and PEMA did not agree to the same.

2. Cost of living allowance and longevity pay are contingent in nature.

The court ruled that in the absence of any specific provision on the matter in a collective
bargaining agreement, what are decisive in determining the basis for the computation of
overtime pay are two very germane considerations, namely, (1) whether or not the additional
pay is for extra work done or service rendered and (2) whether or not the same is intended to
be permanent and regular, not contingent nor temporary and given only to remedy a situation
which can change any time. The court ruled that what should govern in the relationship of PNB
and PEMA is Sections 3 and 4 of the CA no. 444 or the Eight-Hour Labor Act, to wit:

SEC. 3. Work may be performed beyond eight hours a day in case of actual or impending
emergencies caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other
disaster or calamity in order to prevent loss to life and property or imminent danger to public
safety; or in case of urgent work to be performed on the machines, equipment, or installations in
order to avoid a serious loss which the employer would otherwise suffer, or some other just cause
of a similar nature; but in all such cases the laborers and employees shall be entitled to receive
compensation for the overtime work performed at the same rate as their regular wages or salary,
plus at least twenty-five per centum additional.
In case of national emergency the Government is empowered to establish rules and regulations
for the operation of the plants and factories and to determine the wages to be paid the laborers.
xxx xxx xxx
SEC. 4. No person, firm, or corporation, business establishment or place or center of labor shall
compel an employee or laborer to work during Sundays and legal holidays, unless he is paid an
additional sum of at least twenty-five per centum of his regular remuneration: Provided, however,
that this prohibition shall not apply to public utilities performing some public service such as
supplying gas, electricity, power, water, or providing means of transportation or communication.
As Overtime Pay is actually the lengthening of hours developed to the interests of the employer
and the requirements of his enterprise. It follows that the wage or salary to be received must
likewise be increased, and more than that, a special additional amount must be added to serve
either as encouragement or inducement or to make up fop the things he loses which We have
already referred to. And on this score, it must always be borne in mind that wage is
indisputably intended as payment for work done or services rendered. COLA and Longetivity
pay are contingent in nature as they are not based on the work rendered by the employee but
rather on the living conditions thaat the employer may consider as just as to merit additional
assistance from the company. Nowhere did NAWASA refer to extra, temporary and contingent
compensation unrelated to work done or service rendered, which as explained earlier is the
very nature of cost-of- living allowance.
Submitted by: Nacilla, Nica Jenine O.

Quitclaim

PAMPANGA SUGAR DEVELOPMENT CO., INC., petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS ASSOCIATION, respondent
G.R. No. L-13987 June 29, 1982
(FIRST DIVISION)

DOCTRINE: While rights may be waived, the same must not be contrary to law, public order,
public policy, morals or good customs or prejudicial to a third person with a right recognized

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by law. A quitclaim whereby laborers agree to forego their benefits due from their employer is
null and void in its entirety.

Quitclaim agreements are contrary to public policy. Once a civil action is filed in court, the
cause of action may not be the subject of compromise unless the same is by leave of the court
concerned. Otherwise, this will render the entire judicial system irrelevant to the prejudice of
the national interest.

FACTS: The CIR held herein petitioner guilty of unfair labor practice acts as charged and
finding the same to have been committed, and thereby directing petitioner to cease and desist
from further committing the said unfair labor practice acts and directing petitioner to pay wage
differentials to certain workers and fringe benefits as would be found due and payable to them
and to readmitted seasonal and casual members of respondent union totalling 88 with the
exception of 7 workers.

The CIR denied petitioner's motion for reconsideration of aforesaid decision filed on December
14, 1972. Petitioner appealed the above decision and praying in its petition for the nullification
of said decision and motion for being contrary to law, and for the rendition of a new judgment
dismissing CIR decision.

This Court, denied the said petition for review for lack of merit. Petitioner then moved for
reconsideration of aforesaid denial which was denied for lack of merit. Said resolution denying
the motion for reconsideration thus became final and executory.

With the finality of the December 4, 1972 decision having been settled, respondent Union filed
with the CIR a motion for computation of final judgment and a petition for attorney's lien both
dated October 17, 1973. Further, it directed the computation of the wage and fringe benefits
differentials due the 28 individual workers who did not waive or quitclaim their rights
established by the decision of December 4, 1972 as well as the attorney's fees equivalent to
20% of the total wage and fringe benefits differentials due the fifty-three (53) individual workers
who executed agreements with the company waiving and quitclaiming their rights, benefits and
privileges under the aforesaid decision

ISSUE: Whether or not the quitclaim is null and void.

HELD: Yes.

A quitclaim whereby laborers agree to forego their benefits due from their employer is null and
void in its entirety -Needless to state, the foregoing provisions are contrary to law, It exempts
the petitioner from any legal liability. The above- quoted provision renders the quitclaim
agreements void ab initio in their entirety since they obligated the workers concerned to forego
their benefits, while at the same time, exempted the petitioner from any liability that it may
choose to reject. This runs counter to Article 22 of the New Civil Code which provides that no
one shall be unjustly enriched at the expense of another.

The petitioner acted with evident bad faith and malice. Petitioner secured the 53 quitclaim
agreements individually with the 53 sugar workers without the intervention of respondent's
lawyer who was representing them before the lower court. This subterfuge is tantamount to a
sabotage of the interest of respondent association. Needless to say, the means employed by
petitioner in dealing with the workers individually, instead of collectively through respondent

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and its counsel, violates good morals as they undermine the unity of respondent union and
fuels industrial disputes, contrary to the declared policy in the Industrial Peace Act.

The alleged quitclaim agreements are contrary to public policy. Once a civil action is filed in
court, the cause of action may not be the subject of compromise unless the same is by leave of
the court concerned. Otherwise, this will render the entire judicial system irrelevant to the
prejudice of the national interest. Parties to litigations cannot be allowed to trifle with the
judicial system by coming to court and later on agreeing to a compromise without the
knowledge and approval of the court. This converts the judiciary into a mere tool of party-
litigants who act according to their whims and caprices. This is more so when the court has
already rendered its decision on the issues submitted.
Submitted by: Ocampo, Rhonald S.

Article 87-88 Offset Overtime

NATIONAL WATERWORKS and SEWERAGE AUTHORITY, petitioner,

vs.
NWSA CONSOLIDATED UNIONS, ET AL., respondents.
G.R. No. L-18939 August 31, 1964

DOCTRINE: Undertime should be deducted from the accrued leave but pay the employee the
overtime to which he is entitled.

FACTS: Petitioner National Waterworks & Sewerage Authority is a government-owned and

controlled corporation created under Republic Act No. 1383, while respondent NWSA
Consolidated Unions are various labor organizations composed of laborers and employees of
the NAWASA. The other respondents are intervenors Jesus Centeno, et al., hereinafter referred
to as intervenors.

Acting on a certification of the President of the Philippines, the Court of Industrial Relations
conducted a hearing on December 5, 1957 on the controversy then existing between petitioner
and respondent unions which includes implementation of the 40-Hour Week Law (Republic Act
No. 1880); alleged violations of the collective bargaining agreement dated December 28, 1956
concerning "distress pay"; minimum wage of P5.25; promotional appointments and filling of
vacancies of newly created positions; additional compensation for night work; wage increases to
some laborers and employees; and strike duration pay. In addition, respondent unions raised
the issue of whether the 25% additional compensation for Sunday work should be included in
computing the daily wage and whether, in determining the daily wage of a monthly-salaried
employee, the salary should be divided by 30 days. The lower court ruled that NAWASA is an
agency not performing governmental functions and, therefore, is liable to pay additional
compensation for work on Sundays and legal holidays conformably to Commonwealth Act No.
444, known as the Eight-Hour Labor Law, even if said days should be within the staggered five
work days authorized by the President; the intervenors do not fall within the category of
"managerial employees" as contemplated in Republic Act 2377 and so are not exempt from the
coverage of the Eight-Hour Labor Law; the computation followed by NAWASA in computing
overtime compensation is contrary to Commonwealth Act 444; the undertime of a worker
should not be set-off against the worker in determining whether the latter has rendered service
in excess of eight hours for that day; in computing the daily wage of those employed on daily

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basis, the additional 25% compensation for Sunday work should be included. Its motion for
reconsideration having been denied, NAWASA filed the present petition for review.

ISSUE: In determining whether one has worked in excess of eight hours, whether the
undertime for that day should be set off.

HELD: A worker is entitled to overtime pay only for work in actual service beyond eight hours.
If a worker should incur in undertime during his regular daily work, should said undertime be
deducted in computing his overtime work? Petitioner sustains the affirmative while respondent
unions the negative, and respondent court decided the dispute in favor of the latter. Hence this
error.

There is merit in the decision of respondent court that the method used by petitioner in
offsetting the overtime with the undertime and at the same time charging said undertime to the
accrued leave of the employee is unfair, for under such method the employee is made to pay
twice for his undertime because his leave is reduced to that extent while he was made to pay
for it with work beyond the regular working hours. The proper method should be to deduct the
undertime from the accrued leave but pay the employee the overtime to which he is entitled.
This method also obviates the irregular schedule that would result if the overtime should be set
off against the undertime for that would place the schedule for working hours dependent on
the employee.

The method used by the NAWASA in off-setting the overtime with the undertime and at the
same time charging said undertime to the accrued leave is unfair.

Submitted by: Quevedo, Arrah Svetlana T.

Rodrigo Sto. Domingo vs. Phil Rock Products, NLRC Case No. RB 934-77

DOCTRINE: Where a worker incurs undertime hours during his regular daily work, said
undertime hours should not be offset against the overtime hours. If it were otherwise,
the unfairness would be evident from the fact that the undertime hours represent only
the employee‘s hourly rate of pay while the overtime hours reflect both the employee‘s
hourly rate of pay and the appropriate overtime premium such that, not being of equal
value, offsetting the undertime hours against the overtime hours would result in the
undue deprivation of the employees‘ overtime premium.

FACTS: (Not available)

ISSUE: Whether or not undertime can offset overtime in this case.

HELD: No. Where a worker incurs undertime hours during his regular daily work, said
undertime hours should not be offset against the overtime hours. If it were otherwise,
the unfairness would be evident from the fact that the undertime hours represent only
the employee‘s hourly rate of pay while the overtime hours reflect both the employee‘s
hourly rate of pay and the appropriate overtime premium such that, not being of equal
value, offsetting the undertime hours against the overtime hours would result in the
undue deprivation of the employees‘ overtime premium.

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The situation is even more unacceptable where the undertime hours are not only offset
against the overtime hours but are also charged against the accrued leave of the
employee, for under this method the employee is made to pay twice for his undertime
hours because his leave is reduced to that extent while he is made to pay for the
undertime hours with work beyond the regular working hours. The proper method
should be to deduct the undertime hours from the accrued leave but to pay the
employee the overtime compensation to which he is entitled. Where the employee has
exhausted his leave credits, his undertime hours may simply be deducted from his days‘
wage, but he should still be paid his overtime compensation for work in excess of eight
hours a day.

Article 91-93 Rest Days

FELIPE DE LEON, ET. AL., petitioners,
vs.
PAMPANGA SUGAR DEVELOPMENT COMPANY, INC., respondent.
G.R. No. L-26844, September 30, 1969
(EN BANC)

DOCTRINE: Work done on Sunday or legal holiday; How payment is computed. — For
work on Sundays and legal holidays, the employer must pay the employee (1) his regular
remuneration, or 100%, and (2) an additional sum of at least 25% of the regular remuneration,
which is called the "premium pay." In other words, the pay for Sundays and legal holidays is
125% of the pay for ordinary days, but only the excess of 25% is premium pay. With respect to
employees paid 011 a monthly basis, the first 100% (of the 125%), corresponding to the regular
remuneration, may or may not be included in the monthly salary- If it is, then the employee is
entitled to collect only the premium of 25%. If it is not, then the employee has a right to receive
the entire 125%.

FACTS: The 21 petitioners filed with the CIR a complaint seeking payment of premium or
differential pay in the total amount of P49, 581. 79, plus attorney‘s fees of P3000.00 and cost
of suit. Upon the finding that the petitioners were paid their monthly salaries plus 25%
additional compensation for work on Sundays and Holidays as provided by law and that work
on the said days is one of the terms and conditions of their employment as security guards, the
CIR Judge dismissed the case. A motion for reconsideration was filed and then the court en
banc affirmed the judge‘s order. Hence this appeal.

ISSUE: Whether or not the petitioners were entitled to premium or differential based on their
claim.

HELD: No.

For employees paid on a monthly basis, the first 100% (of the 125%) corresponding to the
regular remuneration may or may not be included in the monthly salary. If it is, then the
employee is entitled to collect only the premium of 25%. If it is not, then the employee has the
right to receive the entire 125%.

The regular remuneration of 100% is already included in the computation of monthly salaries.
And that there is a factual findings of the trial court, that the ―petitioners were paid their

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monthly salaries plus 25% additional compensation for work performed on Sundays and
holidays.‖ The findings of fact of the CIR are conclusive to the Court.

In computing the daily wage, each of the petitioners divided his monthly salary by 30, the
average number of days in a month, which includes Sundays and legal holidays. This is an
effective admission, or at least demonstrates awareness on the part of the petitioners, that their
monthly salaries covered work not only on ordinary days but also on Sundays and legal
holidays.
Submitted by: Ocampo, Rhonald S.

Article 94: Holiday and Holiday Pays

JOSE RIZAL COLLEGE, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.
G.R. No. L-65482 December 1, 1987
DOCTRINE: Regular holidays specified as such by law are known to both school and faculty
members as no class days;‖ certainly the latter do not expect payment for said unworked days,
and this was clearly in their minds when they entered into the teaching contracts.

FACTS: Petitioner is a non-stock, non-profit educational institution duly organized and

existing under the laws of the Philippines.

Private respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the
faculty and personnel of Jose Rizal College filed a complaint against the college for said alleged
non-payment of holiday pay from 1975 to 1977.

Labor Arbiter:

The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the
month uniformly in a school year, irrespective of the number of working days in a month,
without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and
are no longer entitled to separate payment for the said regular holidays;

The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled
to be paid the 10 unworked regular holidays according to the pertinent provisions of the Rules
and Regulations Implementing the Labor Code;

Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation
per student contract hour are not entitled to unworked regular holiday pay considering that
these regular holidays have been excluded in the programming of the student contact hours.

NLRC: Teaching personnel paid by the hour are entitled to holiday pay

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

HELD: No. The provisions in the Labor Code as to holiday pay do not apply in this case.

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

Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten
(10) workers; (b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate; … ― and in the
Implementing Rules and Regulations, Rule IV, Book III, which reads:

SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty
members of colleges and universities, may not be paid for the regular holidays during
semestral vacations. They shall, however, be paid for the regular holidays during Christmas
vacations. …

The aforementioned implementing rule is not justified by the provisions of the law which after
all is silent with respect to faculty members paid by the hour. Regular holidays specified as
such by law are known to both school and faculty members as no class days;‖ certainly the
latter do not expect payment for said unworked days, and this was clearly in their minds when
they entered into the teaching contracts.

On the other hand, both the law and the Implementing Rules governing holiday pay are silent
as to payment on Special Public Holidays.

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

SC Decision:

(a) exempting petitioner from paying hourly paid faculty members their pay for regular
holidays, whether the same be during the regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations;

(b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the hours
they are supposed to have taught, whether extensions of class days be ordered or not; in case
of extensions said faculty members shall likewise be paid their hourly rates should they teach
during said extensions.

Submitted by: Regalado, Dustin

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SAN MIGUEL CORPORATION, Petitioner

Vs.
HONORABLE COURT OF AAPPEALS, Respondent
G.R. No. 146775, JANUARY 30, 2002

DOCTRINE: Wages and other emoluments granted by law to the working man are determined
on the basis of the criteria laid down by laws and certainly not on the basis of the workers faith
or religion.

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. In the course of the inspection, it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of
the inspection result to SMC and it was received by and explained to its personnel officer Elena
dela Puerta. SMC contested the findings and DOLE conducted summary hearings. 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 but its appeal was dismissed for having been
filed late. The dismissal of the appeal for late filing was later on reconsidered in the order of 17
July 1998 after it was found that the appeal was filed within the reglementary period. However,
the appeal was still dismissed for lack of merit and the order of Director Macaraya was
affirmed.

ISSUE: Whether or not CA erred when they granted Muslim Holiday Pay to Non Muslim
employees of SMC- ILICOCO .

HELD: No. 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.The
foregoing provisions should be read in conjunction with Article 94 of the Labor Code. However,
there should be no distinction between Muslims and non-Muslims as regards payment of
benefits for Muslim holidays. The Court of Appeals did not err in sustaining Undersecretary
Espaol who stated:

Assuming arguendo that the respondents position is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays declared
by law as regular holidays. We must remind the respondent-appellant that wages and other
emoluments granted by law to the working man are determined on the basis of the criteria laid
down by laws and certainly not on the basis of the workers faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that x x x nothing herein
shall be construed to operate to the prejudice of a non-Muslim.

In addition, the 1999 Handbook on Workers Statutory Benefits, approved by then DOLE
Secretary Bienvenido E. Laguesma on 14 December 1999 categorically stated:

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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.

Submitted by: Sarmiento, Majesca M.

INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION, petitioner,

vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF
ASIA AND AMERICA, respondents.
G.R. No. L-52415 October 23, 1984
(Second Division)

DOCTRINE: Article 94 of the Labor Code, as amended by P.D. 850, provides that Every worker
shall be paid his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers. The coverage and scope of
exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82 thereof
which provides that it shall apply to employees in all establishments and undertakings,
whether for profit or not, but not to government employees, managerial employees, field
personnel members of the family of the employer who are dependent on him for support
domestic helpers, persons in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate regulations.

FACTS: On June 20, 1975, petitioner filed a complaint against the respondent bank for the
payment of holiday pay before the then Department of Labor, National Labor Relations
Commission, Regional Office No. IV in Manila. Conciliation having failed, and upon the request
of both parties, the case was certified for arbitration on July 7, 1975. The records disclosed
that employees of respondent bank were not paid their wages on unworked regular holidays as
mandated by the Code.

February 16, 1976, Ministry of Labor promulgated the rules and regulations for the
implementation of holidays with pay. The controversial section thereof states that Employees
who are uniformly paid by the month, irrespective of the number of working days therein, with
a salary of not less than the statutory or established minimum wage shall be presumed to be
paid for all days in the month whether worked or not.

On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now
Minister) interpreting the above-quoted rule, pertinent portions of which states that the ten
(10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In
the case of monthly, only those whose monthly salary did not yet include payment for the ten
(10) paid legal holidays are entitled to the benefit.

Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article
94 of the Labor Code and by Policy Instruction No. 9, stopped the payment of holiday pay to an
its employees.

ISSUE: Whether or not monthly paid employees are excluded from the benefits of holiday pay

HELD: It is clear that monthly paid employees are not excluded from the benefits of holiday
pay.

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Article 94 of the Labor Code, as amended by P.D. 850, provides that Every worker shall be paid
his regular daily wage during regular holidays, except in retail and service establishments
regularly employing less than ten (10) workers. The coverage and scope of exclusion of the
Labor Code's holiday pay provisions is spelled out under Article 82 thereof which provides that
it shall apply to employees in all establishments and undertakings, whether for profit or not,
but not to government employees, managerial employees, field personnel members of the family
of the employer who are dependent on him for support domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.

It is elementary in the rules of statutory construction that when the language of the law is clear
and unequivocal the law must be taken to mean exactly what it says. In the case at bar, the
provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and
explicit - it provides for both the coverage of and exclusion from the benefits. In Policy
Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay.
Submitted by: Sison, Aldous Francis P.

The Chartered Bank Employees Association

vs.
Hon. Blas Ople
G.R. No. L44717, August 28, 1985

DOCTRINE: Labor Law; Holiday Pay; Statutory Construction; An administrative interpretation

which diminishes the benefits of the labor more than what the statute delimits or withholds is
obviously ultra vires.—The questioned Section 2, Rule IV, Book III of the Integrated Rules and
the Secretary‘s Policy Instruction No. 9 add another excluded group, namely, ―employees who
are uniformly paid by the month.‖ While the additional exclusion is only in the form of a
presumption that all monthly paid employees have already been paid holiday pay, it constitutes
a taking away or a deprivation which must be in the law if it is to be valid. An administrative
interpretation which diminishes the benefits of labor more than what the statute delimits or
withholds is obviously ultra vires.

FACTS: This case started on May 20, 1975, wherein petitioner instituted a complaint with the
Ministry of Labor and Employment (MOLE) against private respondent Chartered Bank, for the
payment of ten (10) unworked legal holidays, as well as for premium and overtime differentials
for worked legal holidays from November 1, 1974. Both the arbitrator and the National Labor
Relations Commission (NLRC) ruled in favor of the petitioners ordering the respondent bank to
pay its monthly paid employees, holiday pay for the ten (10) legal holidays effective November
1, 1974 and to pay premium or overtime pay differentials to all employees who rendered work
during said legal holidays. On appeal, the Minister of Labor set aside the decision of the NLRC
and dismissed the petitioner's claim for lack of merit basing its decision on Section 2, Rule IV,
Book Ill of the Integrated Rules and Policy Instruction No. 9. Petitioners contends that the
respondent Minister of Labor‘s promulgation of Section 2, Rule IV, Book III of the Integrated
Rules and Policy Instruction No. 9 as guidelines for the interpretation of Articles 82 and 94 of
the Labor Code and in applying said guidelines to this case constitutes a grave abuse of his
discretion of his authority to promulgate rules and regulations to implement construe and

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clarify the Labor Code On the other hand, the private respondent contends that the questioned
guidelines did not deprive the petitioner's members of the benefits of holiday pay but merely
classified those monthly paid employees whose monthly salary already includes holiday pay
and those whose do not, and that the guidelines did not deprive the employees of holiday pay.

ISSUE: Whether or not the monthly salaries of the petitioner's members already include
holiday pay.

HELD: NO. The Court held that the issue in the case at bar, was the same issue raised and
resolved in the case of Insular Bank of Asia and America Employees' Union (IBAAEU) v.Inciong
(132 SCRA 663), which the Court ruled that Section 2, Rule IV, Book III of the Integrated Rules
and Policy Instruction No. 9, are contrary to the provisions of the Labor Code and, therefore,
invalid. Since the private respondent premises its action on the invalidated rule and policy
instruction, it is clear that the employees belonging to the petitioner association are entitled to
the payment of ten (10) legal holidays under Articles 82 and 94 of the Labor Code, aside from
their monthly salary. They are not among those excluded by law from the benefits of such
holiday pay.
Submitted by: Siquian, Celine

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

vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE,
INC., respondents.
G.R. No. 147420. June 10, 2004
First Division

DOCTRINE: The Labor Code is clear that monthly-paid employees are not excluded from the
benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the
then Secretary of Labor excludes monthly-paid employees from the said benefits by inserting,
under Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-paid
employees are presumed to be paid for all days in the month whether worked or not.

FACTS: Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday
to Friday and half of Saturday. After a routine inspection, the Regional Branch of the
Department of Labor and Employment (DOLE) found ANTECO liable for underpayment of the
monthly salaries of its employees. On 10 September 1989, the DOLE directed ANTECO to pay
its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay. Thus, on
various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC
Sub-Regional Branch VI, Iloilo City, praying for payment of wage differentials, damages and
attorney‘s feesThe 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 and it reversed the Labor Arbiters Decision. The
NLRC denied petitioners motion for reconsideration. Petitioners then elevated the case to this
Court through a petition for certiorari, which the Court dismissed for petitioners‘ failure to
comply with Section 11, Rule 13 of the Rules of Court. On petitioners‘ motion for
reconsideration, the Court on 13 January 1999 set aside the dismissal. Following the doctrine
in St. Martin Funeral Home v. NLRC the Court referred the case to the Court of Appeals. The
Court of Appeals issued a Resolution dismissing the petition for failure to comply with Section
3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege

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the specific instances where the NLRC abused its discretion. The appellate court denied
petitioners motion for reconsideration. Hence, this petition.

ISSUE: Whether petitioners are entitled to their money claim.

HELD: The petition has no merit.

On the right of the petitioners to wage differentials

Petitioners claim that the Court of Appeals gravely erred in denying their claim for wage
differentials. Petitioners base their claim on Section 2, Rule IV of Book III of the Omnibus Rules
Implementing the Labor Code. Petitioners argue that under this provision monthly-paid
employees are considered paid for all days of the month including un-worked days. Petitioners
assert that they should be paid for all the 365 days in a year. They argue that since in the
computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not paying them 61
days every year.

Petitioners claim is without basis

We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules
Implementing the Labor Code. In Insular Bank of Asia v. Inciong, we ruled as follows:

Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by
the Secretary (then Minister) of Labor are null and void since in the guise of clarifying the
Labor Codes provisions on holiday pay, they in effect amended them by enlarging the scope of
their exclusion.

The Labor Code is clear that monthly-paid employees are not excluded from the benefits of
holiday pay. However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly-paid employees from the said benefits by inserting, under
Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-paid
employees are presumed to be paid for all days in the month whether worked or not.

Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis,
petitioners claim for wage differentials must fail.

Even assuming that Section 2, Rule IV of Book III is valid, petitioners claim will still fail. The
basic rule in this jurisdiction is no work, no pay. The right to be paid for un-worked days is
generally limited to the ten legal holidays in a year.[15] Petitioners claim is based on a mistaken
notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days
beyond the ten legal holidays. In effect, petitioners demand that ANTECO should pay them on
Sundays, the un-worked half of Saturdays and other days that they do not work at
all. Petitioners line of reasoning is not only a violation of the no work, no pay principle, it also
gives rise to an invidious classification, a violation of the equal protection clause. Sustaining
petitioners argument will make monthly-paid employees a privileged class who are paid even if
they do not work.

The use of a divisor less than 365 days cannot make ANTECO automatically liable for
underpayment. The facts show that petitioners are required to work only from Monday to
Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of
365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287
days means that ANTECOs workers are deprived of their holiday pay for some or all of the ten
legal holidays. The 304 days divisor used by ANTECO is clearly above the minimum of 287
days.

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Finally, petitioners cite Chartered Bank Employees Association v. Ople as an analogous

situation. Petitioners have misread this case.

In Chartered Bank, the workers sought payment for un-worked legal holidays as a right
guaranteed by a valid law. In this case, petitioners seek payment of wages for un-worked non-
legal holidays citing as basis a void implementing rule. The circumstances are also markedly
different. In Chartered Bank, there was a collective bargaining agreement that prescribed the
divisor. No CBA exists in this case. In Chartered Bank, the employer was liable for
underpayment because the divisor it used was 251 days, a figure that clearly fails to account
for the ten legal holidays the law requires to be paid. Here, the divisor ANTECO uses is 304
days. This figure does not deprive petitioners of their right to be paid on legal holidays.

Submitted by: Tamayo, Jumen G.

UNION OF FILIPRO EMPLOYEES (UFE), petitioner

vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and
NESTLE PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents
G.R. No. 79256. January 20, 1992
(En Banc)

DOCTRINE: Field personnel are not entitled to holiday pay.

FACTS: Nestle Philippines (Nestle) filed with the National Labor Relations Commission (NLRC)a
petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of
its monthly paid employees for holiday pay. Both Nestle and the Union of Filipro Employees
(UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno
Vivar, Jr. (Vivar) as voluntary arbitrator. Consequently, Arbitrator Vivar rendered a decision
directing Nestle 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. Nestle filed a motion for clarification seeking the
limitation of the award to three years, the exclusion of salesmen, sales representatives, truck
drivers, merchandisers and medical representatives from the award of the holiday pay, and
deduction from the holiday pay award of overpayment for overtime, night differential, vacation
and sick leave benefits due to the use of 251 divisor. Petitioner UFE answered that the award
should be made effective from the date of effectivity of the Labor Code and that sales personnel
should be entitled to holiday pay since they are not field personnel, and that the use of 251 as
divisor is an established employee benefit which cannot be diminished. Vivar issued an order
declaring that the effectivity of the holiday pay award shall retroact from the date of effectivity
of the Labor Code. However, company's sales personnel are considered field personnel and, as
such, are not entitled to holiday pay .Likewise, with the grant of the 10 days' holiday pay, the
divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, and vacation and sick leave pay due to the use of 251 days as
divisor. Both Nestle and UFE filed their respective motions for partial reconsideration. Vivar
treated the two motions as appeals and forwarded the case to the NLRC which in return issued
a resolution remanding the case to the respondent arbitrator on the ground that it has no
jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the
Labor Code. In a letter from Vivar, however, he refused to take cognizance of the case reasoning
that he had no more jurisdiction to continue as arbitrator because he had resigned from
service.

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ISSUE: Whether or not sales personnel, who were considered as field personnel, are entitled to
holiday pay

HELD: No. sales personnel are not entitled to holiday pay as they fall under the definition of
field personnel under Article 82 of the Labor Code which 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.

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having
reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-
based. However, the Union maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel‘s working hours which can be determined with reasonable
certainty. However, the court does not agree. 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
Court fails to see how the company can monitor the number of actual hours spend in field
work by an employee through imposition of sanctions on absenteeism.

Submitted by: Tanghal, Noelle Christine

Wellington Investment and Manufacturing Corporation

vs.
Cresencio B. Trajano
G.R. No. 114698, July 3, 1995

DOCTRINE: Labor Law; Wages; Every worker should be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten
(10) workers.—Every worker should, according to the Labor Code, ―be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly employing
less than ten (10) workers;‖ this, of course, even if the worker does no work on these holidays.
The regular holidays include: ―New Year‘s Day, Maundy Thursday, Good Friday, the ninth of
April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth of December, and the day designated by law for holding a general election (or
national referendum or plebiscite).

FACTS: WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION was ordered by

the Regional Director to pay its employees compensation corresponding to four (4) extra
working days. The Regional Director ruled that when a regular holiday falls on a Sunday, an
extra or additional working day is created and the employer has the obligation to pay the
employees for the extra day except the last Sunday of August since the payment for the said
holiday is already included in the 314 factor. Undersecretary affirmed the challenged order of
the Regional Director, holding that "the divisor being used by the respondent (Wellington) does
not reliably reflect the actual working days in a year, " and consequently commanded
Wellington to pay its employees the "six additional working days resulting from regular
holidays falling on Sundays in 1988, 1989 and 1990." Wellington then instituted the special
civil action of certiorari at bar in an attempt to nullify the orders above mentioned.

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ISSUE: Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is

entitled to an additional pay aside from his usual holiday pay, whenever a regular holiday falls
on a Sunday.

HELD: No. What the law requires of employers opting to pay by the month is to assure that
"the monthly minimum wage shall not be less than the statutory minimum wage multiplied by
365 days divided by twelve," and to pay that salary "for all days in the month whether worked
or not," and "irrespective of the number of working days therein."18 That salary is due and
payable regardless of the declaration of any special holiday in the entire country or a particular
place therein, or any fortuitous cause precluding work on any particular day or days (such as
transportation strikes, riots, or typhoons or other natural calamities), or cause not imputable
to the worker. In Wellington's case, there seems to be no question that at the time of the
inspection conducted by the Labor Enforcement Officer on August 6, 1991, it was and had
been paying its employees "a salary of not less than the statutory or established minimum
wage," and that the monthly salary thus paid was "not . . . less than the statutory minimum
wage multiplied by 365 days divided by twelve," supra. There is, in other words, no issue that
to this extent, Wellington complied with the minimum norm laid down by law.

Submitted by: Villanueva, Emilio Jan D.

JOSE RIZAL COLLEGE, PETITIONERS

vs
NLRC AND NATIONAL ALLIANCE OF TEACHERS, RESPONDENTS
G.R. No. L-65482, December 1, 1987
(First Division)

DOCTRINE: Private school teachers, including faculty members of colleges and universities,
may not be paid for the regular holidays during semestral vacations. They shall, however, be
paid for the regular holidays during Christmas vacations. ... ( Section 8 of Implementing Rules
and Regulations, Rule IV, Book III of the Labor Code (Presidential Decree No. 442, as amended)

The provisions of the law which after all is silent with respect to faculty members paid by the
hour who because of their teaching contracts are obliged to work and consent to be paid only
for work actually done (except when an emergency or a fortuitous event or a national need calls
for the declaration of special holidays)

FACTS: Petitioner is a non-stock, non-profit educational institution duly organized and

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

Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private
respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty

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and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the
college for said alleged non-payment of holiday pay.

ISSUE: Whether or not teaching personnel paid per lecture hour are entitled to holiday pay.

HELD: No.

Regular holidays specified as such by law are known to both school and faculty members as no
class days;" certainly the latter do not expect payment for said unworked days, and this was
clearly in their minds when they entered into the teaching contracts.

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

Submitted by: Vardeleon, Crizedhen N.

Sick Leave

NICANOR M. BALTAZAR, plaintiff-appellee,

vs.
SAN MIGUEL BREWERY, INC., defendant-appellant.
G.R. No. L-23076, February 27, 1969
(En Banc)
DOCTRINE : It is settled in this jurisdiction that one not employed for a definite period is not
entitled to one-month notice or to one-month salary in lieu thereof if his dismissal was for
cause

FACTS: The petitioner is the salesman-in-charge of San Miguel Brewery, Inc. in Dagupan
warehouse with a monthly pay of P240.00, P5.00 per diemand a commission of P0.75 per case
sold. On October 9, 1956, 8 days after Baltazar was appointed as the salesman-in-charge, the
regular employees in Dagupan warehousewent on strike because of unjust treatment. Baltazar
was recalled to appellants Manila Office onthe 13th of October, 1956 upon theorder of his
superior and conduct an investigation. The investigationfound that the employees‘ grievances
were well founded. The next day, the strikers returned to their work voluntarily. On October
15, the petitioner was informed that he was not to return to Dagupan anymore but he still
reported to work at the main office from October 16 to November 2, 1956 waiting for
assignment. From November 3 to December 19 on the same year, he absented himself from
work without consent from his superiors and without advising them or anybody else of the
reason for his prolonged absence. He was dismissed from work because of petitioner‘s
unauthorized absence and if the company would consider its health, welfare and retirement
plan requiring sick leave, still the petitioner did inexcusable actions since sick leave, to be
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considered authorized and excusable, must be certified to by the company physician and the
appellant-company informed that Baltazar was dismissed effective November 30, 1956.
Baltazar initiated a complaintwhich the trial court ruled that Baltazar‘s dismissal was justified
but, however, ordering San Miguel Brewery Inc. to pay Baltazar one monthseparation pay, plus
the cash value of 6 months accumulated sick leave.

ISSUE : Whether or not the petitioner is entitled to one month separation pay and the cash
value of 6 months accumulated sick leave.

HELD : NO.

It is settled in this jurisdiction that one not employed for a definite period is not entitled to one-
month notice or to one-month salary in lieu thereof if his dismissal was for cause. Republic Act
No. 1052 is limited in its operation, to cases of employment without definite period. When the
employment is for a fixed duration, the employer may terminate it even before the expiration of
the stipulated period, should there be a substantial breach of his obligations by the employee;
in which event the latter is not ‗entitled to advance notice or separation pay. It would, patently,
be absurd to grant a right thereto to an employee guilty of the same breach of obligation, when
the employment is without a definite period, as if he were entitled to greater protection than
employees engaged for a fixed duration, x x x. It is doubtful whether Congress could validly
require the ‗employer to give the separation pay in question if the employment were terminated
due to the fault of the employee. Indeed, the imposition of said obligation, under such
conditions, would expose Republic Act No. 1052 to the charge that it would constitute an
unreasonable restraint upon the liberty of the employer, and a deprivation of his property
without due process of law.

ln connection with the question of whether or not appellee is entitled to the cash value of six
months accumulated sick leave, it appears that while under the last paragraph of Article 5 of
appellant‘s Rules and Regulations of the Health, Welfare and Retirement Plan, unused sick
leave may be accumulated up to a maximum of six months, the same is not commutable or
payable in cash upon the employee‘s option. The only meaning and import of said rule and
regulation is that if an employee does not choose to enjoy his yearly sick leave of thirty days, he
may accumulate such sick leave up to a maximum of six months and enjoy this six months
sick leave at the end of the sixth year but may not commute it to cash.

Submitted by: Veloso, Jocelyn

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V.

ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION
OF TRADE UNIONS (ATU-TUCP), respondents
[G.R. No. 102132. March 19, 1993]
ROMERO, J :

DOCTRINE: Sick leave benefits, like other economic benefits stipulated in the CBA such as
maternity leave and vacation leave benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would not be earned because an employee is
not working during the period of said leaves. They are non-contributory in nature, in the sense

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that the employees contribute nothing to the operation of the benefits. By their nature, upon
agreement of the parties, they are intended to alleviate the economic condition of the workers.

FACTS: Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private
respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file
workers of petitioner-company, entered into a collective bargaining agreement (CBA) on
October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with
pay benefits each year to its employees who have rendered at least one (1) year of service with
the company.

During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on
April 15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field
workers of petitioner who are members of the regular labor pool and the present regular extra
labor pool who had rendered at least 750 hours up to 1,500 hours were extended sick leave
with pay benefits. Any unenjoyed portion thereof at the end of the current year was converted
to cash and paid at the end of the said one-year period. The number of days of their sick leave
per year depends on the number of hours of service per calendar year in accordance with the
schedule provided in Section 3, Article VIII of the CBA.

The commutation of the unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash was, however, discontinued or withdrawn when
petitioner-company under a new assistant manager, Mr. Benjamin Marzo stopped the payment
of its cash equivalent on the ground that they are not entitled to the said benefits under
Sections 1 and 3 of the 1989 CBA.

The Union objected. The Union brought the matter for voluntary arbitration before the National
Conciliation and Mediation Board by way of complaint for enforcement of the CBA. The
voluntary arbitrator issued an Award in favor of the Union ruling that the regular intermittent
workers are entitled to commutation of their unenjoyed sick leave with pay benefits under
Sections 1 and 3 of the 1989 CBA.

ISSUE: Whether or not the employees are entitled to the commutation of their unenjoyed sick
leave.

HELD: A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers
to a contract executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect to wages,
hours of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement.

It is not disputed that both classes of workers are entitled to sick leave with pay benefits
provided they comply with the conditions set forth under Section 1 in relation to the last
paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must have
rendered at least one year of service with the company; and (2) the application must be
accompanied by a certification from a company-designated physician.

Public respondent correctly observed that the parties to the CBA clearly intended the same sick
leave privilege to be accorded the intermittent workers in the same way that they are both given
the same treatment with respect to vacation leaves - non-commutable and non-cumulative. If
they are treated equally with respect to vacation leave privilege, with more reason should they
be on par with each other with respect to sick leave privileges. 9 Besides, if the intention were
otherwise, during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA
that regular intermittent workers are not entitled to commutation of the unenjoyed portion of
their sick leave with pay benefits?

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Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the
unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October
16, 1985 until three (3) months from its renewal on April 15, 1989.

Well-settled is it that the said privilege of commutation or conversion to cash, being an existing
benefit, the petitioner-company may not unilaterally withdraw, or diminish such benefits. 10 It
is a fact that petitioner-company had, on several instances in the past, granted and paid the
cash equivalent of the unenjoyed portion of the sick leave benefits of some intermittent
workers. 11 Under the circumstances, these may be deemed to have ripened into company
practice or policy which cannot be peremptorily withdrawn.

Submitted by: Austria, Don Rodel A.

DONALD KWOK, Petitioners,

vs.
PHILIPPINE CARPET MANUFACTURING CORPORATION, Respondents.
G.R. No. 149252, April 28, 2005
(Second Division)

DOCTRINE: Contracts entered into by a corporate officer or obligations or prestations assumed

by such officer for and in behalf of such corporation are binding on the said corporation only if
such officer acted within the scope of his authority or if such officer exceeded the limits of his
authority, the corporation has ratified such contracts or obligations.

FACTS: In 1965, petitioner Donald Kwok and his father-in-law Patricio L. Lim, along with some
other stockholders, established a corporation, the respondent Philippine Carpet Manufacturing
Corporation (PCMC). The petitioner became its general manager, executive vice-president and
chief operations officer. Lim, on the other hand, was its president and chairman of the board of
directors. When the petitioner retired 36 years later he demanded the cash equivalent of what
he believed to be his accumulated vacation and sick leave credits during the entire length of his
service with the respondent corporation. However, the respondent corporation refused to
accede to the petitioner‘s demands, claiming that the latter was not entitled thereto.

The petitioner filed a complaint against the respondent corporation for the payment of his
accumulated vacation and sick leave credits before the NLRC. He claimed that Lim made a
verbal promise to give him unlimited sick leave and vacation leave benefits and its cash
conversion upon his retirement or resignation without the need for any application therefor.
The respondent corporation asserted that the chairman of its board of directors and its
president/vice-president had unlimited discretion in the use of their time, and had never been
required to file applications for vacation and sick leaves; as such, the said officers were not
entitled to vacation and sick leave benefits. It further averred that it had no policy to grant
vacation and sick leave credits to the petitioner.The Labor Arbiter ruled in favor of the
petitioner but this was reversed by the National Labor Relations Commission. The said reversal
was affirmed by the Court of Appeals, prompting the petitioner to elevate the matter to the
Supreme Court.

ISSUE: Whether or not the petitioner is entitled to vacation and sick leave benefits?

HELD: No.

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For a contract to be binding on the parties thereto, it need not be in writing unless the law
requires that such contract be in some form in order that it may be valid or enforceable or that
it be executed in a certain way, in which case that requirement is absolute and independent.
Indeed, corporate policies need not be in writing. Contracts entered into by a corporate officer
or obligations or prestations assumed by such officer for and in behalf of such corporation are
binding on the said corporation only if such officer acted within the scope of his authority or if
such officer exceeded the limits of his authority, the corporation has ratified such contracts or
obligations.

In the present case, the petitioner failed to prove his claim by substantial evidence. The
petitioner relied principally on his testimony to prove that Lim made a verbal promise to give
him vacation and sick leave credits, as well as the privilege of converting the same into cash
upon retirement. The Court agrees that those who belong to the upper corporate echelons
would have more privileges. However, the Court cannot presume the existence of such
privileges or benefits. The petitioner was burdened to prove not only the existence of such
benefits but also that he is entitled to the same, especially considering that such privileges are
not inherent to the positions occupied by the petitioner in the respondent corporation, son-in-
law of its president or not.

The petition was DENIED for lack of merit. Submitted by: Aguilar, Cherry Kerr

Wages and Salary

(Article 97)

Wages and Salary

JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR
ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.

DOCTRINE: Sales commissions are part of ―salary‖ or ―wage‖ in computing the separation pay.

FACTS: Private respondent F.E. Zuellig , Inc., filed with the Department of Labor an
application seeking clearance to terminate the services of petitioners Jose Songco, Romeo
Cipres, and Amancio Manuel allegedly on the ground of retrenchment due to financial losses.
This application was seasonably opposed by petitioners alleging that the company is not
suffering from any losses. They alleged further that they are being dismissed because of their
membership in the union. At the last hearing of the case, however, petitioners manifested that
they are no longer contesting their dismissal. The parties then agreed that the sole issue to be
resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales
force of Zuellig received monthly salaries of at least P40,000. In addition, they received
commissions for every sale they made.

The Labor Arbiter ordered the respondents to pay the complainants separation pay equivalent
to their one month salary (exclusive of commissions, allowances, etc.) for every year of service
that they have worked with the company.

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ISSUE: Whether or not earned sales commissions and allowances should be included in the
monthly salary of petitioners for the purpose of computation of their separation pay.

HELD: Yes.

Article 97(f) by itself is explicit that commission is included in the definition of the term "wage".
It has been repeatedly declared by the courts that where the law speaks in clear and
categorical language, there is no room for interpretation or construction; there is only room for
application.

"Salary," the etymology of which is the Latin word "salarium," is often used interchangeably
with "wage", the etymology of which is the Middle English word "wagen". Both words generally
refer to one and the same meaning, that is, a reward or recompense for services performed.
Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.).
Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is
included in the definition of "wage", the logical conclusion, therefore, is, in the computation of
the separation pay of petitioners, their salary base should include also their earned sales
commissions.

Commission is the recompense, compensation or reward of an agent, salesman, executor,

trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal. Since the commissions in the
present case were earned by actual market transactions attributable to petitioners, these
should be included in their separation pay. In the computation thereof, what should be taken
into account is the average commissions earned during their last year of employment.

Submitted by: Bacurio, Kenneth Bernard

ALIPIO R. RUGA, et. al., petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, respondents.
G.R. No. L-72654-61, January 22, 1990
(Third Division)

FACTS:Petitioners were the fishermencrew members of 7/B Sandyman II, one of several fishing
vessels owned and operated by private respondent De Guzman Fishing Enterprises which is
primarily engaged in the fishing business.They were paid in percentage commission basis in
cash by one Mrs. Pilar de Guzman, cashier of private respondent, 13% of the proceeds of the
sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the
fishing trip, otherwise, 10% of the total proceeds of the sale.

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After some time, they were dismissed alleging that they sold some of their fishcatch at midsea
to the prejudice of private respondent. Consequently, they filed illegal dismissal case to the
DOLE Arbitration Branch. De Guzman said that there was no employeremployee relationship
between them; rather it was a joint venture. After the parties failed to reach an amicable
settlement, the Labor Arbiter heard the case and dismissed the cases filed by the petitioners on
finding that it was really a joint venture. NLRC affirmed.

ISSUE:Whether or not the fishermencrew members of the trawl fishing vessel 7/B Sandyman II
are employees of its owneroperator, De Guzman Fishing Enterprises, and if so, whether or not
they were illegally dismissed from their employment.

HELD: Yes. From the four (4) elements of employeremployee relationship, the Court has
generally relied on the so-called right-of control test where the person for whom the services
are performed reserves a right to control not only the end to be achieved but also the means to
be used in reaching such end. According to the testimony of Alipio Ruga, they are under the
control and supervision of private respondent‘s operations manager. Matters dealing on the
fixing of the schedule of the fishing trip and the time to return to the fishing port were shown
to be the prerogative of private respondent. While performing the fishing operations, petitioners
received instructions via a single-side band radio from private respondent‘s operations
manager who called the patron/pilot in the morning.

Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private
respondent virtually resulting in their dismissal evidently contradicts private respondent‘s
theory of ―joint fishing venture‖ between the parties herein. A joint venture, including
partnership, presupposes generally a parity of standing between the joint co-venturers or
partners, in which each party has an equal proprietary interest in the capital or property
contributed and where each party exercises equal lights in the conduct of the business. It
would be inconsistent with the principle of parity of standing between the joint co-venturers as
regards the conduct of business, if private respondent would outrightly exclude petitioners
from the conduct of the business without first resorting to other measures consistent with the
nature of a joint venture undertaking, Instead of arbitrary unilateral action, private respondent
should have discussed with an open mind the advantages and disadvantages of petitioners‘
action with its joint co-venturers if indeed there is a ―joint fishing venture‖ between the parties.

Submitted by: Alarcon, Maria Teresa L.

Facilities Distinguished from Supplement

State Marine Corporation and Royal Line vs. Cebu Seamen’s Association, Inc.,
G.R. No. L-12444, February 28, 1963

DOCTRINE: Minimum Wage Law; Reductions from wages; Purpose; The criterion in
determining whether privilege is a supplement or a facility.—In determining whether a
benefit or privilege, is a supplement or a facility the criterion is not the kind of benefit or
item but its purpose. The benefit or privilege given to the employees which constitutes

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an extra remuneration above and over his basic or ordinary earning or wage is
supplement; and if it forms part of the employee‘s basic wage. It is facility. Therefore, no
deduction should be made from the wages of the members of a commercial ship for
meals freely given them by their employer not as part of their wages but as a necessary
matter in the maintenance of their health and efficiency, such benefit being in the
nature of a supplement.

FACTS: On September 12, 1952, the respondent union filed with the Court of Industrial
Relations (CIR), a petition (Case No. 740-V) against the States Marine Corporation, later
amended on May 4, 1953, by including as party respondent, the petitioner Royal Line,
Inc. The Union alleged that that after the Minimum Wage Law had taken effect, the
petitioners required their employees on board their vessels, to pay the sum of P.40 for
every meal, while the masters and officers were not required to pay their meals. The
petitioners‘ shipping companies, answering, averred that in enacting Rep. Act No. 602
(Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal,
furnished to employees should be deducted from the daily wages.

ISSUE: WON meals are deductable from wages.

HELD: It is argued that the food or meals given to the deck officers, marine engineers
and unlicensed crew members in question, were mere ―facilities‖ which should be
deducted from wages, and not ―supplements‖ which, according to said section 19,
should not be deducted from such wages, because it is provided therein: ―Nothing in
this Act shall deprive an employee of the right to such fair wage … or in reducing
supplements furnished on the date of enactment.‖ In the case of Atok-Big Wedge Assn.
v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined
as follows —

―Supplements‖, therefore, constitute extra remuneration or special privileges or benefits

given to or received by the laborers over and above their ordinary earnings or wages.
―Facilities‖, on the other hand, are items of expense necessary for the laborer‘s and his
family‘s existence and subsistence so that by express provision of law (Sec. 2[g]), they
form part of the wage and when furnished by the employer are deductible therefrom,
since if they are not so furnished, the laborer would spend and pay for them just the
same.

Facilities may be charged to or deducted from wages. Supplements, on the other hand,
may not be so charged. Thus, when meals are freely given to crew members of a vessel
while they were on the high seas, not as part of their wages but as a necessary matter in
the maintenance of the health and efficiency of the crew personnel during the voyage,
the deductions made therefrom for the meals should be returned to them, and the
operator of the coastwise vessels affected should continue giving the same benefit.
Petition dismissed.

G.R. No. 55159 December 22, 1989

PHILIPPINE AIRLINES, INC., petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION and ARMANDO DOLINA, respondents

DOCTRINE: Fair day's wage for a fair day's labor" which continues to govern the relation
between labor and capital and remains a basic factor in determining employees' wages.

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FACTS: Petitioner impugns in this petition for certiorari that part of the public respondent
National Labor Relations Commission's (NLRC) decision in NLRC Case No. RB-IV-9319-77
which ordered petitioner to restore private respondent Dolina to its payroll, and to pay his
salaries from 1 April 1979 "until this case is finally resolved" [Rollo, p. 33]. Petitioner contends
that public respondent NLRC gravely abused its discretion considering that in the same
decision public respondent affirmed the decision of the Labor Arbiter in toto granting
respondent's application for clearance to dismiss the private respondent.

Petitioner was a trainee to pal becomes an employee but at the middle of employment was
terminated by the Pal due to incompetency – petitioner file an illegal dismissal case to pal then
NLRC declared the decision of holding the payment salaries of petitioner until finality of the
case.

ISSUE: Whether or not NLRC decision to hold the salary of petitioner until the case has not
been resolved constitute a violation of excess of jurisdiction.

HELD: Considering the foregoing, the Court holds that respondent NLRC's order for the
continued payment of Dolina's salaries from "l April 1979 until the case is finally resolved" is
contrary to law and established jurisprudence and the NLRC acted in excess of its jurisdiction
in issuing the assailed order. In the recent case of Llora Motors, Inc. v. Drilon, G.R. No. 82895,
November 7, 1989 the Court held as an act without or in excess of jurisdiction the portion of
the Labor Arbiter's award, which required the employer to pay to its employee an amount
equivalent to a half month's pay for every year of service as retirement benefits, for being
without basis either in law or contract. Similarly, there is in this case an excess of jurisdiction
on the part of the NLRC in ordering the continued payment of Dolina's salaries "from 1 April
1979 until the case is finally resolved.
Submitted by: Balbarino, Cherry Anjell L.

Equal Pay for Equal Work

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON.

LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment;
HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and
Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of
International School-Manila; and INTERNATIONAL SCHOOL, INC., respondents.
[G.R. No. 128845. June 1, 2000]
FIRST DIVISION

DOCTRINE: The point is that employees should be given equal pay for work of equal value.

FACTS: When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members" of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the question of
whether foreign-hires should be included in the appropriate bargaining unit, eventually caused
a deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation
and Mediation Board to bring the parties to a compromise prompted the Department of Labor
and Employment (DOLE) to assume jurisdiction over the dispute. The DOLE Acting Secretary,
Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in
favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied

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petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks
relief in this Court.

ISSUE: WON the point-of-hire classification employed by the School is discriminatory to

Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.

HELD: Yes. In this case, we find the point-of-hire classification employed by respondent School
to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by foreign-hires
and local-hires. The practice of the School of according higher salaries to foreign-hires
contravenes public policy and, certainly, does not deserve the sympathy of this Court.

Submitted by: Bodopol, Adolf Jr.

Minimum Wage
(Article 99-100)

Minimum Wage

Atok-Big Wedge Mining Co., Inc., petitioner

vs.
Atok-Big Wedge Mutual Benefit Association, respondent
[No. L-5276. March 3, 1953]

DOCTRINE: A person's needs increase as his means increase. This is true not only as to food
but as to everything else—education, clothing, entertain ment, etc. The law guarantees the
laborer a fair and just wage. The minimum must be fair and just. The "minimum wage" can by
no means imply only the actual minimum. Some margin or leeway must be provided, over and
above the minimum, to take care of contingencies, such as increase of prices of commodities
and increase in wants, and to provide means for a desirable improvement in his mode of living.

FACTS: A demand was submitted to petitioner by respondent union through its officers for
various concessions, among which were (a) an increase of P0.50 in wages, (6) commutation of
sick and vacation leave if not enjoyed during the year, (c) various privileges, such as free
medical care, medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e) no
dismissal without prior just cause and with a prior investigation, etc.

Some of the demands, were granted by the petitioner, and the others were rejected, and so
hearings were held and evidence submitted on the latter.

Court of Industrial Relations (CIR):It rendered a decision, the most important provisions of
which were those fixing the minimum wage for the laborers at P3.20, declaring that additional
compensation representing efficiency bonus should not be included as part of the wage, and
making the award effective from September 4, 1950. It is against these portions of the decision
that this appeal is taken.Hence, this PETITION for review by certiorari.

ISSUE: Whether or not the minimum wage granted by the CIR to respondent union is
excessive.

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Whether or not bonus forms part of wages.

HELD: No.

A person's needs increase as his means increase. This is true not only as to food but as to
everything else—education, clothing, entertain ment, etc. The law guarantees the laborer a fair
and just wage. The minimum must be fair and just. The "minimum wage" can by no means
imply only the actual minimum. Some margin or leeway must be provided, over and above the
minimum, to take care of contingencies, such as increase of prices of commodities and
increase in wants, and to provide means for a desirable improvement in his mode of living.

Certainly, the amount of P0.22 a day (difference between P2.80 fixed and P2.58 actual) is not
excessive for this purpose. That the P3 minimum wage fixed in the law is still far below what is
considered a fair and just minimum is shown by the fact that this amount is only for the year
after the law takes effect, as thereafter the law fixes it at P4. Neither may it be correctly
contended that the demand for increase is due to an alleged pernicious practice. Frequent
demands for increase are indicative of a healthy spirit of wakefulness to the demands of a
progressing and an increasingly more expensive world.

Therefore, the court found no reason or ground for disturbing the finding contained in the
decision fixing the amount of P3.20 as the minimum wage.

No. Whether or not bonus forms part of wages depends upon the circumstances or conditions
for its payment. If it is an additional compensation which the employer promised and agreed to
give without any conditions imposed for its payment, such as success of business or greater
production or output, then it is part of the wage. But if it is paid only if profits are realized or a
certain amount of productivity achieved, it cannot be considered part of the wages.

In the case at bar, it is not payable to all but to laborers only. It is also paid on the basis of
actual production or actual work accomplished. If the desired goal of production is not
obtained, or the amount of actual work accomplished, the bonus does not accrue. It is evident
that under the circumstances it is paid only when the labor becomes more efficient or more
productive. It is only an inducement for efficiency, a prize therefore, not a part of the wage.

Submitted by: Bayot, Kristine Valerie S.

JUANA T. VDA. DE RACHO, plaintiff-appellee,

vs.
MUNICIPALITY OF ILAGAN, defendant-appellant.
G.R. No. L-23542, January 2, 1968
(En Banc)
DOCTRINE: Lack of funds of a municipality does not excuse it from paying the statutory
minimum wages to its employees, which, after all, is a mandatory statutory obligation of the
municipality.

FACTS: Plaintiff Juana T. Vda. de Racho and the decedent, Manuel Racho, were spouses and
had five minor children. The decedent was appointed as market cleaner in the Municipality of
Ilagan, Isabela. Decedent‘s salary was increased by virtue of a promotional appointment
extended to him by the Municipal Mayor. He tendered his resignation effective July 7, 1960. On

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October 5, 1960, decedent died intestate at Ilagan. Plaintiff then filed a claim for salary
differentials with the Regional Office of the Department of Labor which dropped the case later
for lack of jurisdiction. Court of First Instance of Isabela, in an action brought by plaintiff, in
her own behalf and as guardian ad litem of her minor children, ruled that defendant
Municipality of Ilagan must pay P1,766.00 to plaintiff representing the wage differentials and
adjusted terminal leave of the decedent from December 9, 1957 to May 23, 1960, based on the
monthly wage rate of P120.00 pursuant to the Minimum Wage Law. Defendant municipality
immediately appealed the case before the Supreme Court on the sole submission that its
shortage and lack of available funds and expected revenue validly exempted it from complying
with the Minimum Wage Law.

ISSUE: Whether or not Manuel Racho is entitled to receive the wage differentials.

HELD: YES.

The appeal must be dismissed. The lack of funds of a municipality does not excuse it from
paying the statutory minimum wages to its employees, which, after all, is a mandatory
statutory obligation of the municipality. To uphold such defense of lack of available funds
would render the Minimum Wage Law futile and defeat its purpose. This also disposes of the
implication appellant is trying to make that its duty to pay minimum wages is not a statutory
obligation which would command preference in the municipal budget and appropriation
ordinance.

To excuse the defendant municipality now would be to permit it to benefit from its non-
feasance. It would also make the effectivity of the law dependent upon the will and initiative of
said municipality without statutory sanction. Defendant's remedy, therefore, is not to seek an
excuse from implementing the law but, as the lower court suggested, to upgrade and improve
its tax collection machinery with a view towards realizing more revenues. Or, it could for the
present forego all non-essential expenditures.

Submitted by: Bonquin, Jezrael B.

C. PLANAS COMMERCIAL and/or MARCIAL COHU, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), ALFREDO OFIALDA,
DIOLETO MORENTE and RUDY ALLAUIGAN, Respondents.
G.R. No. 144619, November 11, 2005
(SECOND DIVISION)

DOCTRINE: He who invokes such an exemption has the burden of showing the basis for the
exemption.

FACTS: Petitioner Cohu, owner of C. Planas Commercial, is engaged in wholesale of plastic

products and fruits of different kinds; that private respondents were hired by petitioners as
helpers/laborers; that they were paid below the minimum wage law. Dioleto Morente, Rudy

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Allauigan and Alfredo Ofialda (private respondents) together with 5 others filed a complaint for
underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave pay
and premium pay for holiday and rest day and night shift differential against petitioners with
the Arbitration Branch of the NLRC. The Labor Arbiter ( LA) resolve in favor of the petitioners
but the NLRC modified the decision of the LA. The Motion for reconsideration by the petitioner
was denied. The Court of Appeals affirmed in toto the decision of the NLRC. Hence this Petition
for Review Certiorari.

ISSUE: Whether or not the petitioner company being a retail establishment principally
engaged in the sale of plastic products and fruits to the customers for personal use is exempted
from the application of the minimum wage law.

HELD: NO.

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 wherein for a retail/service establishment to be exempted from
the coverage of the minimum wage law, it must be shown that the establishment is regularly
employing not more than ten (10) workers and had applied for exemptions with and as
determined by the appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission. Petitioners main defense in controverting private
respondents claim for underpayment of wages is that they are exempted from the application of
the minimum wage law, thus the burden of proving such exemption rests on petitioners.
Petitioners had not shown any evidence to show that they had applied for such exemption and
if they had applied, the same was granted. Extant in the records is the fact that petitioners had
persistently raised the matter of their exemption from any liability for underpayment without
substantiating it by showing compliance with the aforecited provision of law. Their inability to
produce the payrolls from their files without any satisfactory explanation can be interpreted no
less as suppression of vital evidence adverse to PLANAS. Wherefore, petition is denied as to the
claim for such exemption.

Article 100: Elimination or Diminution of Benefits

Davao Integrated Port Stevedoring Services vs. Abarquez, G.R. No. 102132, March 19,
1993

DOCTRINE: Labor Law; Intermittent field workers who are members of a regular pool are
entitled to sick leave benefits under the CBA at bar.—After a careful examination of Section 1
in relation to Section 3, Article VIII of the 1989 CBA in light of the facts and circumstances
attendant in the instant case, we find and so hold that the last sentence of Section 1, Article
VIII of the 1989 CBA, invoked by petitioner-company does not bar the regular intermittent
workers from the privilege of commutation or conversion to cash of the unenjoyed portion of
their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as
used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave
with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to.
This fixed 15-day sick leave with pay benefit should be distinguished from the variable number
of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3
depending on the number of hours of service rendered to the company, including overtime
pursuant to the schedule provided therein. It is only fair and reasonable for petitioner-company
not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as

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the term "intermittent" implies, there is irregularity in their work-days. Reasonable and
practical interpretation must be placed on contractual provisions. Interpretatio fienda est ut res
magis valeat quam pereat. Such interpretation is to be adopted, that the thing may continue to
have efficacy rather than fail.

FACTS: Petitioner-company and respondent-union entered into a collective bargaining

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

ISSUE: Whether intermittent field workers who are members of a regular pool are entitled to
sick leave benefits under CBA.

HELD: Yes, intermittent field workers who are members of a regular pool are entitled to sick
leave benefits under CBA. After a careful examination of Section 1 in relation to Section 3,
Article VIII of the 1989 CBA in light of the facts and circumstances attendant in the instant
case, we find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA,
invoked by petitioner-company does not bar the regular intermittent workers from the privilege
of commutation or conversion to cash of the unenjoyed portion of their sick leave with pay
benefits, if qualified. For the phrase "herein sick leave privilege," as used in the last sentence of
Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which, as
mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day
sick leave with pay benefit should be distinguished from the variable number of days of sick
leave, not to exceed 15 days, extended to intermittent workers under Section 3 depending on
the number of hours of service rendered to the company, including overtime pursuant to the
schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate
a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term
"intermittent" implies, there is irregularity in their work-days. Reasonable and practical
interpretation must be placed on contractual provisions. Interpretatio fienda est ut res magis
valeat quam pereat. Such interpretation is to be adopted, that the thing may continue to have
efficacy rather than fail.
Submitted by: Chen, Timothy

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Food or Meal Allowance

Cebu Autobus Company vs. United Cebu Autobus Employees Association, G.R. No. L-
9742, Oct. 27, 1955

DOCTRINE: Where the company used to pay tis drivers and conductors, who were
assigned outside of the city limits, aside from their regular salary, a certain percentage
of their daily wage, as allowance for food, the company should continue granting said
privilege.

FACTS: The company used to pay to its drivers and conductors, who were assigned
outside of the City limits, aside from their regular salary, a certain percentage of their
daily wage, as allowance for food. Upon the effectivity of the Minimum Wage Law,
however, that privilege was stopped by the company. The order of CIR to the company to
continue granting this privilege, was upheld by this Court.

The shipping company argue that the furnishing of meals to the crew before the
effectivity of Rep. Act No. 602, is of no moment, because such circumstance was already
taken into consideration by Congress, when it stated that ―wage‖ includes the fair and
reasonable value of boards customarily furnished by the employer to the employees.

ISSUE: WON ―wage‖ includes the fair and reasonable value of boards customarily
furnished by the employer to the employees.

HELD: No. If We are to follow the theory of the herein petitioners, then a crew member,
who used to receive a monthly wage of P100.00, before August 4, 1951, with no
deduction for meals, after said date, would receive only P86.00 monthly (after deducting
the cost of his meals at P.40 per meal), which would be very much less than the
P122.00 monthly minimum wage, fixed in accordance with the Minimum Wage Law.
Instead of benefiting him, the law will adversely affect said crew member. Such
interpretation does not conform to the avowed intention of Congress in enacting the said
law.

Non-Contributory Retirement Plan

NESTLE PHILIPPINES VS. NLRC

G.R. NO. 91231

FACTS: UFE was certified as certified as the sole and exclusive bargaining agent for all regular
rank-and- file employees of Nestle Philippines. Cagayan de oro factory as well as its
Cebu/Davao Sales office. While the parties negotiating their CBA, the employees of Cabuyao
resorted to a ―slow down ―and ―walk-outs‖ prompting the petitioner to shut down the factory,
subsequently, the Sec. of Labor assumed jurisdiction and issued a return to work order, in
spite of the order, the unions truck without notice. The company retaliated by dismissing the
union officers and members of negotiating panel who participated in the illegal strike. UFE
declared a bargaining deadlock. Thereafter, the union filed a notice of strike and filed a case of
unfair labor practice against the company. After conciliation efforts the NCMB yielded negative
results, the dispute was certified to the NLRC by the Sec. of Labor.

The NLRC issued a resolution that the company shall continue implementing its retirement
Plan modified as follows;

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1. For 15 years of service or less- an amount equal to 100% of the employees‘ monthly salary
for every year of service;

2. For more than 15 but not less than 20 years in service – 125% of the employees‘ monthly
salary for every year of service

3. For 29 years or more – 150% of the employees‘ monthly salary for every year of service.

ISSUE: Whether or not the employees have not vested demandable right to a contributory
retirement plan.

HELD: The Supreme Court held that the employees have vested and demandable right over
existing benefits Voluntary granted to them by their employer. The employer may not
unilaterally withdraw, eliminate or diminish such benefits.

The NLRC correctly observed that the inclusion of the retirement plan in the CBA as part of the
package of economic benefit extended by the company to its employees to provide them a
measure of financial security after they shall have ceased to be employed in the company,
reward their loyalty, boost their morale and efficiency and promote industrial peace, gives
―consensual character‖ to the plan so that it may not be terminated or modified at the will by
either party.

The fact that the retirement plan is non-contributory, the employees contribute nothing to the
operation of the plan, does not make it a non-issue in the CBA. – Salary increases, rice
allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick and other Leaves with pay –
are non-contributory benefits. Since the retirement plan has been an integral part of the CBA.

The decision of the NLRC is not vitiated by abuse of discretion. The benefits and concessions
given to the employees were based on the NLRC‘s evaluation of the unions‘ demand, the
evidence adduced by the parties, the financial capacity of the company to grant such demands,
its long-term viability, the economic conditions prevailing in the country as they affect the
purchasing power of the employees as well as it concomitant effect on the other factors of
production, the recent trends in the industry to which it belongs.

Submitted by: Elauria, J. Paulo Relunia

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REYNALDO TIANGCO
v.
VICENTE LEOGARDO
GR No. 57636, May 16, 1983

DOCTRINE: "Section 12. Allowance of Daily-Paid & Part Time employees. Employees who are
paid on a daily basis shall be paid their allowances for the number of days they actually
worked in a week or month, on the basis of the scales provided in Section 7 hereof.

"In case of part-time employment, the allowances shall be paid in the amount proportionate to
the time worked by the employee, or higher. If employed by more than one employer, all
employers of such employee shall share proportionately in the payment of the allowance of the
employee."

Section 11 of the Rules implementing P.D. 1123, increasing the emergency allowance under
P.D. 525, also provides, as follows:

"Section 11. Allowances of full-time and part-time employees. Employees shall be paid in full
the monthly allowances on the basis of the scales provided in Section 3 hereof, regardless of
the number of their regular working days, if they incur no absence during the month. If they
incur absences, the amounts corresponding to their absences may be deducted from the
monthly allowance.

"In case of part-time employment, the allowance to be paid shall be proportionate to the time
worked by the employee. This requirement shall apply to any employee with more than one
employer."

FACTS: The petitioner, Reynaldo Tiangco, is a fishing operator who owns the Reynaldo Tiangco
Fishing Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from
Navotas, Rizal. His business is capitalized at P2,000,000.00, while the petitioner, Victoria
Tiangco, is a fish broker whose business is capitalized at P100,000.00.

On April 8, 1980, the private respondents filed a complaint against the petitioners with the
Ministry of Labor and Employment for non-payment of their legal holiday pay and service
incentive leave pay, as well as underpayment of their emergency cost of living allowances which
used to be paid in full irrespective of their working days, but which were reduced effective
February, 1980, in contravention of Article 100 of the new Labor Code which prohibits the
elimination or diminution of existing benefits.

As regards the claim for emergency allowance differentials, the petitioners admitted that they
discontinued their practice of paying their employees a fixed monthly allowance, and effective
February, 1980, they no longer paid allowances for non-working days. They argued, however,
that no law was violated as their refusal to pay allowances for non-working days is in
consonance with the principle of "no work, no allowance"; and that they could not pay private
respondents a fixed monthly allowance without risking the viability of their business.

On May 22, 1981, the respondent Deputy Minister of Labor and Employment modified the
order and directed the petitioners to restore and pay the individual respondents their fixed
monthly allowance from March, 1980 and to pay them the amount of P58,860.00, as
underpayment of their living allowance from May, 1977 to February 21, 1980.

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ISSUE: Whether or not the laborers' are entitled to claim for differentials in the emergency cost
of living allowance.

HELD: YES.

Indeed, the record shows that the private respondents work for the petitioners on a part-time
basis and their work average only four (4) days a week. It is not also disputed that the private
respondents work for more than one employer so that the private respondents should be paid
their living allowance only for the days they actually worked in a week or month and all the
employers of the employee shall share proportionately in the payment of the allowance of the
employee, in accordance with Section 12 of the Rules and Regulations implementing P.D. 525
which made mandatory the payment of emergency cost of living allowances to workers in the
private section.

However in this case, the petitioners had been paying the private respondents a fixed monthly
emergency allowance since November, 1976 up to February, 1980, as a matter of practice
and/or verbal agreement between the petitioners and the private respondents, the
discontinuance of the practice and/or agreement unilaterally by the petitioners contravened
the provisions of the Labor Code, particularly Article 100 thereof which prohibits the
elimination or diminution of existing benefits.

Section 15 of the Rules on P.D. 525 and Section 16 of the Rules on P.D. 1123 also prohibits the
diminution of any benefit granted to the employees under existing laws, agreements, and
voluntary employer practice. Section 15 of the Rules on P.D. 525 provides, as follows:

"Section 15. Relation to Agreement. Nothing herein shall prevent the employer and his
employees from entering into any agreement with terms more favorable to the employees than
those provided therein, or be construed to sanction the diminution of any benefit granted to the
employees under existing laws, agreements, and voluntary employer practice."

Section 16 of the Rules on P.D. 1123 similarly prohibits diminution of benefits. It provides, as
follows:
" Nothing herein shall prevent employers from granting allowances to their employees in excess
of those provided under the Decree and the Rules nor shall it be construed to countenance any
reduction of benefits already being enjoyed."

As such, petitioners Victoria Tiangco and Reynaldo Tiangco should be, as they are hereby,
ordered to PAY the private respondents differentials in their emergency cost of living allowance;
With modification as to amounts, taken into consideration, in computing the amount due each
worker, the fact that the private respondents are employed by two different individuals whose
businesses are divergent and capitalized at various amounts, contrary to the provisions of P.D.
525 and subsequent amendatory decrees, wherein the amount of the emergency cost of living
allowance to be paid to a worker is made to depend upon the capitalization of the business of
his employer or its total assets, whichever is higher, in accordance with Section 7 of the Rules
and Regulations implementing P.D. 525 .
Submitted by: Escol, Hanzel Grace

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Exceptions

GLOBE MACKAY CABLE AND RADIO CORPORATION, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, respondents.
G.R. No. 74156, June 29, 1988
(SECOND DIVISION)

DOCTRINE: The primordial consideration, therefore, for entitlement to COLA is that

basic wage is being paid. In other words, the payment of COLA is mandated only for the
days that the employees are paid their basic wage, even if said days are unworked. So
that, on the days that employees are not paid their basic wage, the payment of COLA is
not mandated.

FACTS: Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-
living allowance of non-agricultural workers in the private sector. Petitioner corporation
complied with the said Wage Order by paying its monthly-paid employees the mandated
P3.00 per day COLA. However, in computing said COLA, Petitioner Corporation
multiplied the P 3.00 daily COLA by 22 days, which is the number of working days in
the company.

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

After several grievance proceedings proved futile, the Union filed a complaint against
Petitioner. Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner. On
appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that
Petitioner Corporation was guilty of illegal deductions. Hence, this Petition, anchored on
the charge of grave abuse of discretion by the NLRC.

ISSUE: Whether or not the NLRC erred in its decision.

HELD: Yes, decision of NLRC must be reversed.

Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as
follows:

Section 5. Allowance for Unworked Days.

All covered employees shall be entitled to their daily living allowance during the days
that they are paid their basic wage, even if unworked. (Emphasis supplied)

The primordial consideration, therefore, for entitlement to COLA is that basic wage is
being paid. In other words, the payment of COLA is mandated only for the days that the
employees are paid their basic wage, even if said days are unworked. So that, on the
days that employees are not paid their basic wage, the payment of COLA is not
mandated.

Peculiar to this case, however, is the circumstance that pursuant to the Collective
Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union, the

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monthly basic pay is computed on the basis of five (5) days a week, or twenty two (22)
days a month. Under the peculiar circumstances obtaining, therefore, where the
company observes a 5-day work week, it will have to be held that the COLA should be
computed on the basis of twenty two (22) days, which is the period during which the
monthly-paid employees of Petitioner Corporation receive their basic wage. The CBA is
the law between the parties and, if not acceptable, can be the subject of future re-
negotiation.

Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in
1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984),
should not be construed as constitutive of voluntary employer practice, which cannot
now be unilaterally withdrawn by petitioner. To be considered as such, it should have
been practiced over a long period of time, and must be shown to have been consistent
and deliberate. Adequate proof is wanting in this respect.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for

erroneous application of the law. Payment may be said to have been made by reason of
a mistake in the construction or application of a "doubtful or difficult question of law."
Since it is a past error that is being corrected, no vested right may be said to have arisen
nor any diminution of benefit under Article 100 of the Labor Code3 may be said to have
resulted by virtue of the correction.

Submitted by: Gonzales, Van Angelo G.

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE

PHILIPPINES (SMTFM-UWP), its officers and members, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP FORM
MANUFACTURING PHIL., INC., respondents.
G.R. No. 113856. September 7, 1998
(Third Division)

DOCTRINE: The CBA is the law between the contracting parties the collective bargaining
representative and the employer-company. Compliance with a CBA is mandated by the
expressed policy to give protection to labor. In the same vein, CBA provisions should 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." This is founded on the dictum that a
CBA is not an ordinary contract but one impressed with public interest. It goes without saying,
however, that only provisions embodied in the CBA should be so interpreted and complied
with. Where a proposal raised by a contracting party does not find print in the CBA, It is not a
part thereof and the proponent has no claim whatsoever to its implementation.

FACTS: Petitioner SMTFM was the certified collective bargaining representative of all regular
rank and file employees of private respondent. At the collective bargaining negotiation held, the
parties agreed to discuss unresolved economic issues.

ARTICLE VII. Wages

xxx

Section 3. Union proposed that any future wage increase given by the government should be
implemented by the company across-the-board or non-conditional.

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Management requested the union to retain this provision since their sincerity was already
proven when the P25.00 wage increase was granted across-the-board. The union decided to
defer this provision.In their joint affidavit, the union insisted on the incorporation in the CBA of
the union proposal on automatic across-the-board wage increase.

On October 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00
per day in the salary of workers. This was followed by Wage Order No. 02 providing for a
P12.00 daily increase in salary.The union demanded that the increase be on an across-the-
board basis. Private respondent refused to accede to that demand. Instead, it implemented a
scheme of increases purportedly to avoid wage distortion.

The union, in its demand letter, reiterated that it had agreed to retain the old provision of CBA
on the strength of private respondents promise and assurance of an across-the-board salary
increase should the government mandate salary increases. Private respondent adamantly
maintained its position.

Consequently, the union filed a complaint with the NLRC alleging that private respondents act
constitutes an act of unfair labor practice.

Labor Arbiter rendered a decision dismissing the complaint for lack of merit.
Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed
Resolution dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought
reconsideration which, however, was denied by the NLRC. Hence, the instant petition for
certiorari.

ISSUE: (a) Whether or not private respondent committed an unfair labor practice in its refusal
to grant across-the-board wage increases in implementing Wage Orders Nos. 01 and 02. (b)
Whether or not there was a significant wage distortion of the wage structure in private
respondent as a result of the manner by which said wage orders were implemented.

HELD: With respect to the first issue, the argument is definitely untenable.If there was indeed
a promise or undertaking on the part of private respondent to obligate itself to grant an
automatic across-the-board wage increase, petitioner union should have requested or
demanded that such promise or undertaking be incorporated in the CBA. In fact, the Union
has the means under the law to compel the company to incorporate the specific economic
proposal in the CBA. It could have invoked Art 252 of the Labor Code defining the duty to
bargain which includes executing a contract incorporating such agreements if requested by
either party. However, Art 252 also states that the duty to bargain does not compel any party
to agree to a proposal or make any concession. Thus, the union may not validly claim that the
proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally
entered into with the company.

The CBA is the law between the contracting parties the collective bargaining representative and
the employer-company. Compliance with a CBA is mandated by the expressed policy to give
protection to labor. In the same vein, CBA provisions should 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." This is founded on the dictum that a CBA is not an ordinary contract but
one impressed with public interest. It goes without saying, however, that only provisions
embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a
contracting party does not find print in the CBA,it is not a part thereof and the proponent has
no claim whatsoever to its implementation.

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Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a

contract binding on the parties; but the failure to reach an agreement after negotiations
continued for a reasonable period does not establish a lack of good faith. The statutes invite
and contemplate a collective bargaining contract, but they do not compel one. The duty to
bargain does not include the obligation to reach an agreement. With the execution of the CBA,
bad faith bargaining can no longer be imputed upon any of the parties thereto. All provisions in
the CBA are supposed to have been jointly and voluntarily incorporated therein by the parties.
This is not a case where private respondent exhibited an indifferent attitude towards collective
bargaining because the negotiations were not the unilateral activity of petitioner union. The
CBA is proof enough that private respondent exerted reasonable effort at good faith
bargaining.Indeed, the adamant insistence on a bargaining position to the point where the
negotiations reach an impasse does not establish bad faith. Neither can bad faith be inferred
from a party‘s insistence on the inclusion of a particular substantive provision unless it
concerns trivial matters or is obviously intolerable.

On the second issue, whether or not a wage distortion exists is a question of fact. That is
within the jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative
agencies are accorded respect and even finality in this Court if they are supported by
substantial evidence.The NLRC Decision in this case unanimously ruled that no wage
distortions marred private respondents implementation of the wage orders.

We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It is
apropos to note, moreover, that petitioners contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondents employees are anchored
on its dubious position that private respondents promise to grant an across-the-board increase
in government-mandated salary benefits reflected in the Minutes of the negotiation is an
enforceable part of the CBA. WHEREFORE, the instant petition for certiorari is hereby
DISMISSED and the questioned Resolutions of the NLRC AFFIRMED.

Submitted by: Gumtang, Lianne

PAG-ASA STEEL WORKS, INC. VS. CA AND PAG-ASA STEEL WORKERS UNION
G.R. NO.166647 MARCH 31, 2006
CALLEJO, SR., J.

DOCTRINE: Wage Order No. NCR-08 clearly states that only those employees receiving salaries
below the prescribed minimum wage are entitled to the wage increase provided therein, and not
all employees across-the-board.

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.

FACTS: Petitioner Pag-Asa Steel Works, Inc. 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.
Regional Tripartite Wages and Productivity Board (RTWB) of NCR issued a wage order which
provided for a P 13.00 increase of the salaries receiving minimum wages. The Petitioner and
the union negotiated on the increase. Petitioner forwarded a letter to the union with the list of
adjustments involving rank and file employees. In September 1999, the petitioner and union
entered into an collective bargaining agreement where it provided wage adjustments namely

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P15, P25, P30 for three succeeding year. On the first year, the increase provided were followed
until Regional Tripartite Wages and Productivity Board (RTWB) issued another wage order
where it provided for a P25.50 per day increase in the salary of employees receiving the
minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the
P25.50 per day increase to all of its rank-and-file employees. On November 2000, Wage Order
No. NCR-08 was issued where it provided the increase of P26.50 per day. The union president
asked that the wage order be implemented where petitioner rejected the request claiming that
there was no wage distortion and it was not obliged to grant the wage increase. The union
submitted the matter for voluntary arbitration where it favored the position of the company and
dismissed the complaint. The matter was elevated to CA where it favored the respondents.
Hence, this petition.

ISSUE: Whether or not the company was obliged to grant the wage increase under Wage Order
No. NCR-08 as a matter of practice.

HELD: No. The Court favors the petitioner that wage increase shall not be granted by virtue of
CBA or matter of practice by the company. It is submitted that employers unless exempt 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. 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 Twenty-Six Pesos and Fifty
Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not
obliged to adjust the wages of the workers. The provision in the CBA that "Any Wage Order to
be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to
the wage increase adverted above" cannot be interpreted in support of an across-the-board
increase. If such were the intentions of this provision, then the company could have simply
accepted the original demand of the union for such across-the-board implementation, as set
forth in their original proposal. The fact that the company rejected this proposal can only mean
that it was never its intention to agree, to such across-the-board implementation. Wage Order
No. NCR-08 clearly states that only those employees receiving salaries below the prescribed
minimum wage are entitled to the wage increase provided therein, and not all employees
across-the-board as respondent Union would want petitioner to do. Considering therefore that
none of the members of respondent Union are receiving salaries below the P250.00 minimum
wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen into a
company practice that is demandable as a matter of right, the giving of the increase should not
be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on
the part of the employer. Hence, even if the company continuously grants a wage increase as
mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into
a company practice.
Submitted by: Jabal, Joel Malcolm D.

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LEXAL LABORATORIES and/or JOSE ANGELES, Manager, Petitioners,

vs.
NATIONAL CHEMICAL INDUSTRIES WORKERS UNION — PAFLU (Lexal Laboratories
Chapter) and THE COURT OF INDUSTRIAL RELATIONS, Respondents.
G.R. No. L-24632. October 26, 1968.

DOCTRINE: LABOR AND SOCIAL LEGISLATION; INDUSTRIAL PEACE ACT; PER DIEMS,
DEFINED. — Our attention has not been drawn to a rule of law or jurisprudence which holds
that per diems are integral parts of regular wages or salaries. Per diem, the dictionary
definition tells us, is "a daily allowance" given "for each day he [an officer or employee] was
away from his home base." It would seem to us that per diem is intended to cover the cost of
lodging and subsistence of officers and employees when the latter are on duty outside of their
permanent station.

ID.; ID.; ID.; PAYMENT OF PER DIEM NOT PROPER IN INSTANT CASE. — Lexal concedes that
whenever its employee, Guillermo Ponseca, was out of Manila, he was allowed a per diem of
P4.00 broken down as follows: P1.00 for breakfast; P1.00 for lunch; P1.00 for dinner; and
P1.00 for lodging. Ponseca — during the period of his dismissal — did not leave Manila.
Therefore, he spent nothing for meals and lodging outside of Manila. Because he spent nothing,
there is nothing to be reimbursed. Since per diems are in the nature of reimbursement,
Ponseca should not be entitled to per diems.

FACTS: This problem came about because of the implementation of the decision of the Court of
Industrial Relations (CIR) of June 29, 1963 1 directing petitioner Lexal Laboratories (Lexal) to
reinstate Guillermo Ponseca, a dismissed employee, to his former position "with full back wages
from the day of his dismissal up to the time he is actually reinstated without loss of his
seniority rights and of such other rights and privileges enjoyed by him prior to his lay-off."

CIR, confirming the report of its Chief Examiner and Economist, ruled in its order of February
16, 1965 that Ponseca was entitled to back wages from November 5, 1958 when he ceased
reporting for work, to November 24, 1963 a day prior to his reinstatement on November 25,
1963; and that for the number of days that he was supposed to be in Manila, he was to earn
P4.50 a day, and during the periods when he should have been in the provinces, P4.50 a day
plus a per diem of P4.00 or a total of P8.50 daily. This order was subsequently modified by
CIR‘s resolution of May 22, 1965 which directed the deduction of P5,000.00 previously paid
Ponseca under the judgment and P610.00 which Ponseca earned from other sources during his
layoff.

ISSUE: Whether or not per diems are included in backpay.

HELD: No.

CIR erred in including per diems in the back wages due and payable to Guillermo Ponseca.
Per diems‘ is intended to cover the cost of lodging and subsistence of officers and employees
when the latter are on duty outside of their permanent station. Therefore, Ponseca spent
nothing for meals and lodging outside of Manila. Because he spent nothing, there is nothing to
be reimbursed. Since per diems are in the nature of reimbursement, Ponseca should not be
entitled to per diems.
Submitted by: Gusi, Audrey Rose B.

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NATIONAL SUGAR REFINERIES CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU)
TUCP, respondents.
G.R. No. 101761. March 24, 1993.
SECOND DIVISION

FACTS: Respondent union represents the former supervisors of the Petitioner National Sugar
Refineries Corporation (NASUREFCO) Sugar Refinery. Petitioner implemented a Job Evaluation
(JE) Program affecting all employees to rationalize the duties and functions of all positions.
Prior to the JE Program, the respondent were treated in the same manner as rank-and-file
employees. As such, they used to be paid overtime, rest day and holiday pay. 2 years after the
implementation of the JE Program, respondent filed a complaint with the LA for non-payment
of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. LA
rendered a decision in favor of the union. NLRC affirmed the decision on the ground that the
respondents are not managerial employees therefore; they are entitled to overtime, rest day and
holiday pay. Hence, this petition. Petitioner NASUREFCO asseverating that NLRC committed a
grave abuse of discretion in refusing to recognize the fact that the respondents are members of
the managerial staff who are not entitled to overtime, rest day and holiday pay; and in making
petitioner assume the "double burden" of giving the benefits due to rank-and-file employees
together with those due to supervisors under the JE Program.

ISSUE: Whether or not the union members, as supervisory employees, are to be considered as
officers or members of the managerial Staff who are exempt from the coverage of Article 82 of
the Labor Code.

HELD: YES.
A cursory perusal of the Job Value Contribution Statements of the union members will readily
show that these supervisory employees are under the direct supervision of their respective
department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling, communicating and in making decisions in attaining the
company's set goals and objectives.
From the foregoing, it is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial staff,
as defined in Section 2, Rule I, Book III of the aforestated Rules to Implement the Labor Code,
viz.: (1) their primary duty consists of the performance of work directly related to management
policies of their employer; (2) they customarily and regularly exercise discretion and
independent judgment; (3) they regularly and directly assist the managerial employee whose
primary duty consists of the management of a department of the establishment in which they
are employed; (4) they execute, under general supervision, work along specialized or technical
lines requiring special training, experience, or knowledge; (5) they execute, under general
supervision, special assignments and tasks; and (6) they do not devote more than 20% of their
hours worked in a work-week to activities which are not directly and clearly related to the
performance of their work hereinbefore described.
Submitted by: Lim, Anton Kristoffer M.

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AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES

UNION, Petitioner,vs.AMERICAN WIRE AND CABLE CO., INC. and THE COURT OF
APPEALS, Respondents.
G.R. No. 155059. April 29, 2005
SECOND DIVISION

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 (Monthly-Rated Union) and the American Wire and Cable
Daily-Rated Employees Union (Daily-Rated Union). On 16 February 2001, an original action
was filed before the NCMB of the DOLE by the two unions for voluntary arbitration due to the
sudden and unilateral withdrewal and denial certain benefits and entitlements such as 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 which they have long enjoyed. The Voluntary Arbitrator Angel A.
Ancheta ruled that the Company is not guilty of violating Article 100 of the Labor Code. Motion
for reconsideration was also denied by the Arbiter. A special review for certioari and
consequently the motion for reconsideration, was filed in the Court of Appeals but the same
was denied. Hence, this instant special civil action for certiorari citing grave abuse of discretion
amounting to lack of jurisdiction.

ISSUE: Whether or not the company is guilty of violating Article 100 of the Labor Code due to
withdrawal of benefits/entitlements given to the members of petitioner union.

HELD: NO.

To solve the issue, it is critical that a determination must be first made on whether the
benefits/entitlements are in the nature of a bonus or not, and assuming they are so, whether
they are demandable and enforceable obligations. A bonus is an amount granted and paid to
an employee for his industry and loyalty which contributed to the success of the employer‘s
business and made possible the realization of profits. It is an act of generosity granted by an
enlightened employer to spur the employee to greater efforts for the success of the business
and realization of bigger profits. The granting of a bonus is a management prerogative,
something given in addition to what is ordinarily received by or strictly due the recipient. Thus,
a bonus is not a demandable and enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.

In the present case, it is obvious that the benefits/entitlements subjects of the instant case are
all bonuses which were given by the private respondent out of its generosity and munificence.
The additional 35% premium pay for work done during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with raffle, and the cash incentives given
together with the service awards are all in excess of what the law requires each employer to
give its employees. Since they are above what is strictly due to the members of petitioner-
union, the granting of the same was a management prerogative, which, whenever management
sees necessary, may be withdrawn, unless they have been made a part of the wage or salary or
compensation of the employees.For a bonus to be enforceable, it must have been promised by
the employer and expressly agreed upon by the parties, or it must have had a fixed amount
and had been a long and regular practice on the part of the employer.However, he
benefits/entitlements in question were never subjects of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreement (CBA). To hold
that an employer should be forced to distribute bonuses which it granted out of kindness is to
penalize him for his past generosity.

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Hence, it was found that the the additional 35% premium pay for work rendered during
selected days of the Holy Week and Christmas season, the holding of Christmas parties with its
incidental benefits, and the grant of cash incentive together with the service award are all
bonuses which are neither demandable nor enforceable obligations of the private respondent.

Submitted by: Mamangon, Fatima C.

L.G. Marcos et al., vs. NLRC and Insular Life Assurance Co., Ltd., G.R. No. 111744,
September 8, 1995

DOCTRINE: Labor Law; Words and Phrases; Bonus, Explained.—A bonus is not a gift or
gratuity, but is paid for some services or consideration and is in addition to what would
ordinarily be given. The term ―bonus‖ as used in employment contracts, also conveys an idea of
something which is gratuitous, or which may be claimed to be gratuitous, over and above the
prescribed wage which the employer agrees to pay.

FACTS: Petitioners herein have served respondent Insular for more than 20 years in multiples
of five (20-30 years). They were terminated due to redundancy and thus were given special
redundancy benefits. But they were denied their service awards which was set apart from the
redundancy fund. They were made to sign a quit claim, which they complied, but they still
submitted a letter of protest. They inquired from the DOLE-LS on the validity of the denial of
their service awards, to which DOLE decided in their favour. The service awards were part of
the Employee‘s Manual and was therefore company policies. The award was earned on the
anniversary date. Even if the employees were separated from service before the anniversary
date, they were still entitled to the material benefits of the award.

However, respondent still refused to pay this. On its 80th anniversary, the company approved
an anniversary equivalent of one-month salary to its employees. The petitioners alleged that
they were entitled to this. The LA ruled in petitioners‘ favour, but NLRC reversed this,
upholding the validity of the quitclaim they signed voluntarily.

ISSUE: Whether or not the quitclaim was invalid and if so, petitioners would be entitled to their
service award

HELD: Release and Quitclaim INVALID, petitioners were ENTITLED to the service awards. A
deed of release or quitclaim cannot bar an employee from demanding payment to which he is
entitled. Quitclaims are against public policy and are therefore null and void. The Court does
not believe that petitioners signed the Release and Quitclaim voluntarily, as the subsequent
submission of a letter of protest and the inquiry before the NLRC contradicted their willingness
to execute the quitclaim.

The special redundancy package could not have covered the service awards, and respondent‘s
actions estopped it from claiming such. Service awards are not bonuses. They are stated in the
Employees Manual, which is contractual in nature therefor the law between the parties. It is
company policy and has been in practice by the company.

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TRADERS ROYAL BANK, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION & TRADERS ROYAL BANK EMPLOYEES
UNION, respondents.
GR No. 88168 August 30, 1990
(First Division)

DOCTRINE: A bonus is "a gratuity or act of liberality of the giver which the recipient has no
right to demand as a matter of right". "It is something given in addition to what is ordinarily
received by or strictly due the recipient." The granting of a bonus is basically a management
prerogative which cannot be forced upon the employer "who may not be obliged to assume the
onerous burden of granting bonuses or other benefits aside from the employee's basic salaries
or wages".

FACTS: On November 18, 1986, the Union, through its president, filed a letter-complaint
against TRB with the Conciliation Division of the Bureau of Labor Relations. In its answer to
the union's complaint, TRB pointed out that the NLRC, not the Bureau of Labor Relations, had
jurisdiction over the money claims of the employees. The Secretary of Labor certified the
complaint to the NLRC for resolution of the following issues raised by the complainants.

In the meantime, the parties who had been negotiating for a collective bargaining agreement,
agreed on the terms of the CBA. Despite the terms of the CBA, however, the union insisted on
pursuing the case, arguing that the CBA would apply prospectively only to claims arising after
its effectivity.

Petitioner, on the other hand, insisted that it had paid the employees holiday pay. The practice
of giving them bonuses at year's end, would depend on how profitable the operation of the bank
had been. Generally, the bonus given was two (2) months basic mid-year and two (2) months
gross end-year.

On September 2, 1988, the NLRC rendered a decision in favor of the employees and ordered
TRB to pay for differential in the bonuses given to the employees.

ISSUE: Whether or not the NLRC committed a grave abuse of discretion when it ordered TRB to
pay mid-year/year-end bonus differential to its employees.

HELD: Yes, the NLRC committed a grave abuse of discretion when it ordered the petitioner to
pay the bonus differential to its employees.

A bonus is "a gratuity or act of liberality of the giver which the recipient has no right to demand
as a matter of right" (Aragon vs. Cebu Portland Cement Co., 61 O.G. 4597). "It is something
given in addition to what is ordinarily received by or strictly due the recipient." The granting of
a bonus is basically a management prerogative which cannot be forced upon the employer "who
may not be obliged to assume the onerous burden of granting bonuses or other benefits aside
from the employee's basic salaries or wages" . . . (Kamaya Point Hotel vs. National Labor
Relations Commission, Federation of Free Workers and Nemia Quiambao, G.R. No. 75289,
August 31, 1989).

It is clear from the above-cited rulings that the petitioner may not be obliged to pay bonuses to
its employees. The matter of giving them bonuses over and above their lawful salaries and
allowances is entirely dependent on the profits, if any, realized by the Bank from its operations
during the past year.

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Private respondent's contention, that the decrease in the midyear and year-end bonuses
constituted a diminution of the employees' salaries, is not correct, for bonuses are not part of
labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave
benefits, which are provided by the Labor Code.
Submitted by: Mayoralgo, Remy

Thirteenth Month Pay

NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner,
vs.
ETHELWOLDO R. OVEJERA, respondents
G.R. No. L-59743, May 31 1982
(EN BANC)

DOCTRINE: Employers already paying the equivalent of the 13th month pay to their
employees, such as Christmas bonuses, are under no legal obligation to pay an additional 13th
month pay prescribed under P.D. 851.

FACTS: National Federation of Sugar Workers (NFSW) the bargaining agent of CENTRAL
AZUCARERA DE LA CARLOTA (CAC) rank and file employees went to strike allegedly to compel
the payment of the 13th month pay under PD 851, in addition to the Christmas, milling and
amelioration bonuses being enjoyed by CAC workers.

To settle the strike, a compromise agreement was concluded between CAC and NFSW
stipulating that the parties agree to abide by the final decision of the Supreme Court in any
case involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay a
13th month pay separate and distinct from the bonuses already given.
After the Marcopper decision had become final, NFSW renewed its demand that CAC give the
13th month pay. CAC refused. A notice of strike was filed with the Ministry of Labor and
Employment and was subsequently commenced based on the non-payment of the 13th month
pay.

ISSUE: Whether or not CAC is obliged to give its workers a 13th month salary in addition to
Christmas, milling and amelioration bonuses stipulated in a collective bargaining agreement .

HELD: No.

The evident intention of the law, as revealed by the law itself, was to grant an additional
income in the form of a 13th month pay to employees not already receiving the same.
Otherwise put, the intention was to grant some relief — not to all workers — but only to the
unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever
name called.

To require employers (already giving their employees a 13th month salary or its equivalent) to
give a second 13th month pay would be unfair and productive of undesirable results. To the
employer who had acceded and is already bound to give bonuses to his employees, the
additional burden of a 13th month pay would amount to a penalty for his munificence or
liberality. The probable reaction of one so circumstance would be to withdraw the bonuses or
resist further voluntary grants for fear that if and when a law is passed giving the same
benefits, his prior concessions might not be given due credit; and this negative attitude would
have an adverse impact on the employees.
Submitted by: Ocampo, Rhonald S.

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G.R. No. L-60337 August 21, 1987

UNIVERSAL CORN PRODUCTS (A DIVISION OF UNIVERSAL ROBINA
CORPORATION), petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION
SECOND DIVISION

FACTS: In May 1972, the petitioner and the Universal Corn Products Workers Union entered
into a collective bargaining agreement in which it was provided, among other things, that the
company agrees to grant all regular workers a Christmas bonus equivalent to the regular wages
for seven (7) working days, effective December 1972. The CBA was made effective until June 1,
1974.

When the collective bargaining agreement expired, it was no longer renewed. However,
On June 1, 1979, the parties entered into an "addendum" stipulating certain wage increases
covering the years from 1974 to 1977. Simultaneously, they entered into a collective bargaining
agreement for the years from 1979 to 1981. Like the "addendum," the new collective bargaining
agreement did not refer to the "Christmas bonus" theretofore paid but dealt only with salary
adjustments.

According to the company, the grant of Christmas bonus was deliberately excluded in
the new agreements since in view of the enactment of Presidential Decree No. 851 on December
16, 1975, the company has already been paying its employees 13th-month pay.

For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978
inclusive, in accordance with the 1972 CBA, the union went to the labor arbiter for relief.

ISSUE: Does the payment of 13th month pay preclude the payment of further Christmas
bonus (seven-day bonus)?

HELD: No.

In deciding the case, the decision in United CMC Textile Workers Union v. Valenzuela,
speaking through Mr. Justice Edgardo Paras, held:
xxx xxx xxx
... If the Christmas bonus was included in the 13th month pay, then there
would be no need for having a specific provision on Christmas bonus in the
CBA. But it did not provide for a bonus in graduated amounts depending on the
length of service of the employee. The intention is clear therefore that the bonus
provided in the CBA was meant to be in addition to the legal requirement.
Moreover, why exclude the payment of the 1978 Christmas bonus and pay only
the 1979-1980 bonus. The classification of the company's workers in the CBA
according to their years of service supports the allegation that the reason for the
payment of bonus was to give bigger award to the senior employees-a purpose
which is not found by P.D. 851. A bonus under the CBA is an obligation created
by the contract between the management and workers while the 13th month pay
is mandated by the law (P. D. 851).
xxx xxx xxx Submitted by: Nacilla, Nica Jenine O.

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PHILIPPINE AIRLINES, INC. (PAL)

vs.
NATIONAL LABOR RELATIONS COMMISSION and AIRLINE PILOTS ASSOCIATION OF THE
PHILIPPINES (ALPAP)
G.R. No. 114280 July 26, 1996
THIRD DIVISION

FACTS: ALPAP filed its complaint on September, 1991, charging PAL of violating Presidential
Decree No. 851, its Implementing Rules and Regulations and Memorandum Order No. 28
issued by then President Corazon C. Aquino, for unlawfully refusing and failing to pay the
pilots their thirteenth month pay from 1988 to 1990. Aside from their accumulated thirteenth
month pay, ALPAP prayed for an award of P500,000.00 as moral damages and P100,000.00 as
exemplary damages to each of their pilots, plus attorney's fees equivalent to ten percent (10%)
of the total awards adjudged. Subsequently, however, ALPAP expanded the coverage of its claim
from 1986 to 1990 upon filing its position paper.
In answer to the complaint, PAL denied any liability to ALPAP and maintained that it was not
obliged to give its pilots a thirteenth month pay under P.D. 851 as it was already paying said
employees the equivalent of a thirteenth month pay in the form of a year-end bonus. PAL
invokes that under Section 2 of PD 851 and its Implementing Rules and Regulations,
"employers already paying their employees a 13th month pay or more in a calendar year or its
equivalent at the time of this issuance," are not covered by PD 851. Additionally, PAL contends
that there is no demandable obligation in the absence of any contractual stipulation or a legal
provision requiring it to give its pilots a thirteenth month pay as aside from a year-end bonus
that the latter are already receiving.

ISSUE: Whether or not petitioner is obligated to pay the 13th month pay.

HELD: YES.

Although P.D. 851 as amended by Memorandum Order No. 28 requires all employers to pay all
their rank and file employees a thirteenth month pay, the rule is subject to certain exceptions.
Excluded from the coverage are "employers already paying their employees a thirteenth month
pay or more in a calendar year or its equivalent at the time of the issuance of the law.
Construing the term "its equivalent", the same was defined as inclusive of "Christmas bonus,
mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less that
1/12th of the basic salary but shall not include cash and stock dividend, cost of living
allowances and all other allowances regularly enjoyed by the employee, as well as non-
monetary benefits. When an employer pays less than 1/12th of the employee's basic salary, the
employer shall pay the difference.

The Court found no merit in PAL's assertion. The inclusion of a provision for the continued
payment of the year-end bonus in the 1988-1991 CBA of ALPAP and PAL belies the latter
contention that the grant of the year-end bonus was intended to be credited as compliance
with the mandate to pay the pilots a thirteenth month pay. Memorandum Order No. 28 which
amended P.D. 851, requiring all employers to pay all rank and file employees, regardless of the
amount of their salaries, a thirteenth month pay, was issued on August 13, 1986. As early as
said date, PAL was therefore fully aware that it was legally obliged to grant all its rank and file
employees a thirteenth month pay. Thus, if PAL really intended to equate the year-end bonus
with the thirteenth month pay, then the same should have been expressly declared in their
1988-1991 CBA, or the provision on the year-end bonus should have been deleted because it

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would only be a mere superfluity. But as it is, the provision for the continued payment of a
year-end bonus was incorporated in the CBA without any qualification, from which the only
logical conclusion that could be derived is that PAL intended to give the members of ALPAP a
year-end bonus in addition to its obligation to grant a thirteenth month pay.

Submitted by: Paeste, Sonny Lybenson

FRAMANLIS FARMS, INC., ELOISA SYCIP and LINCOLN SYCIP, petitioners

vs.
HON. MINISTER OF LABOR, MANILA, PAFLU SEPTEMBER CONVENTION, ZOILO
ESTANISLAO, EMILIO ANITO, JAIME ARNEJO, CASIMIRO ARRABIS, RENATO BACONADOR
,VICENTE BACONADOR, ROMEO BACONADOR, ROGELIO BAYONITA ,RODOLFO BAYONITA,
ROGELIO BONDOCIO, NAPOLEON BONDOCIO, TEODORO BLANCAFLOR, PANFILO
BROÑOLA, ALFREDO DICHOSA, EDGARDO ENOPOSA, WILSON ENOPOSA, SANCHO
GALAGATE, GERARDO GALAGATE, NELITO GALLEGO, FRANCISCO INDORES, EDUARDO
LOZADA, JESUS LABRADOR, PANFILO LAORENTE, ROGELIO MITRA, FERNANDO MATTE,
EDUARDO MARONE, ROSELLER MARONE, IGLESERIO PANOGOT ,SILVERIO PANOGOT,
ARTURO PANOGOT ,ARMANDO SAGAYA ERNESTO TAGAMTAM, ROMEO GARCIA,
TEODORICO ATANGAN, LOURDES DE LA CRUZ, CLARITA DELORIA ,DANILO MENDOZA,
WILLIAM GONZALES, RAFAEL PADRANES, JUAN PADRANES, JUAN PANOGOT, MAGDALENA
PANOGOT, JOSE SAGAYA, PABLO TUNDAG, VIVENCIO NABAY, RAFAEL MARONE, RODOLFO
ENOPOSA, BALODOY ACADEMIA and GERARDO GALLEGO, respondents.
G.R. No. 72616-17 March 8, 1989

DOCTRINE: Cost of living allowances and all other allowances, year-end rewards for loyalty
and service may not be considered in lieu of 13th month pay.

FACTS: In April 1980, eighteen (18) employees of the petitioners filed against their employer,
and the other petitioners two labor standard cases which were docketed in the Regional Office
of the Ministry of Labor in Bacolod City alleging that in 1977 to 1979 they were not paid
emergency cost of living allowance (ECOLA) minimum wage, 13th month pay, holiday pay, and
service incentive leave pay.

In their answer to the amended complaint, petitioners alleged that the private respondents
were not regular workers on their hacienda but were migratory (sacadas) or pakyaw workers
who worked on-and-off and were hired seasonally, or only during the milling season, to do
piece-work on the farms, hence, they were not entitled to the benefits claimed by them. They
also alleged that under the decrees, the living allowance shall be paid on a monthly, not
percentage, basis depending on the total assets or authorized capital stock of the employer,
whichever is higher and applicable. They admitted that their total assets and authorized capital
stock exceeded P2 million. However, in 1977 they had applied for exemption under PDs 525
and 1123 but no ruling has been issued by the Ministry of Labor on their application.

The claims for holiday pay, service incentive leave pay, social amelioration bonus and
underpayment of minimum wage were not controverted. With respect to the complainants'
other claims, the petitioners submitted only random payrolls which showed that the women
workers were underpaid as they were receiving an average daily wage of P5.94 only, although
the male workers received P10 more or less, per day. The Minister of Labor directed Framanlis
for the payment of the deficiencies but the claims for 13th month pay for 1977 and emergency
living allowance under PD 1123 and 525 are held in abeyance due to the application for
exemption which is unacted up to the present.

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ISSUE: Whether or not the respondents are entitled to 13th month pay despite the fact that
they (petitioners) had substantially complied with the requirement by extending yearly bonuses
and other benefits in kind and in cash to the complainants

HELD: Yes. Petitioners admitted that they failed to pay their workers 13th month pay in 1978
and 1979. However, they argued that they substantially complied with the law by giving their
workers a yearly bonus and other non-monetary benefits amounting to not less than 1/12th of
their basic salary, in the form of:
1. a weekly subsidy of choice pork meat for only P9.00 per kilo and later increased to P11 per
kilo in March 1980, instead of the market price of P10 to P15 per kilo;
2. free choice pork meat in May and December of every year; and
3. free light or electricity.
4. all of which were allegedly "the equivalent" of the 13th month pay.

Unfortunately, under Section 3 of PD No. 851, such benefits in the form of food or free
electricity, assuming they were given, were not a proper substitute for the 13th month pay
required by law. PD 851 provides: The term 'its equivalent' as used in paragraph (c) hereof shall
include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses
amounting to not less than 1/12 of the basic salary but shall not include cash and stock
dividends, cost of living allowances and all other allowances regularly enjoyed by the employee,
as well as non-monetary benefits. Where an employer pays less than 1/12 of the employee's
basic salary, the employer shall pay the difference.

Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay.
Section 10 of the Rules and Regulations Implementing Presidential Decree No. 851 provides for
the prohibition against reduction or elimination of benefits- Nothing herein shall be construed
to authorize any employer to eliminate, or diminish in any way, supplements, or other
employee benefits or favorable practice being enjoyed by the employee at the time of
promulgation of this issuance.

Submitted by: Quevedo, Arrah Svetlana

T.

SAN MIGUEL CORPORATION (CAGAYAN COCA-COLA PLANT), petitioner, vs.

Hon. AMADO G. INCIONG, Deputy Minister of Labor and CAGAYAN COCA-COLA FREE
WORKERS UNION, respondents.
G.R. No. L-49774 February 24, 1981

DOCTRINE: The all-embracing phrase "earnings and other remunerations" which are deemed
not part of the basic salary includes within its meaning payments for sick, vacation, or
maternity leaves, premium for works performed on rest days and special holidays, pays for
regular holidays and night differentials. As such they are deemed not part of the basic salary
and shall not be considered in the computation of the 13th-month pay.

FACTS: This is a complaint on January 3, 1977 by Cagayan Coca-Cola Free Workers Union
against San Miguel Corporation (Cagayan Coca-cola Plant) for the alleged failure or refusal of
the latter to include in the computation of 13th-month pay such items as sick, vacation, or
maternity leaves, premium for work done on rest days and special holidays, including pay for
regular holidays and night differentials.

ISSUE: Whether PD 851 includes payments for sick, vacation, or maternity leaves, premium of
work done on rest days and special holidays, including pay for regular holidays, and night
differentials should be considered in the computation for the 13th month pay?

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HELD: NO. Additional compensation shall not be considered in the computation of the 13th
month pay. Citing certain provisions of the Labor Code of the Philippines specifically Art. 87 on
overtime work performed beyond 8 hours a day is paid as additional compensation equivalent
to a regular wage plus 25% hereof and Art. 93 on work performed on any special holidays as an
additional compensation of at least 30% of the regular wage of the employee, clearly, additional
compensation is categorically excluded from the definition of basic salary under the
Supplementary Rules and Regulations Implementing Presidential Decree 851.

Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is
even more emphatic in declaring that earnings and other remunerations which are not part of
the basic salary shall not be included in the computation of the 13th-month pay.

While doubt may have been created by the prior Rules and Regulations Implementing
Presidential Decree 851 which defines basic salary to include all remunerations or earnings
paid by an employer to an employee, this cloud is dissipated in the later and more controlling
Supplementary Rules and Regulations which categorically, exclude from the definition of basic
salary earnings and other remunerations paid by employer to an employee. A cursory perusal
of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion
is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the
seeming tendency of the former rules to include all remunerations and earnings within the
definition of basic salary.

The all-embracing phrase "earnings and other remunerations" which are deemed not part of
the basic salary includes within its meaning payments for sick, vacation, or maternity leaves,
premium for works performed on rest days and special holidays, pays for regular holidays and
night differentials. As such they are deemed not part of the basic salary and shall not be
considered in the computation of the 13th-month pay. If they were not so excluded, it is hard
to find any "earnings and other remunerations" expressly excluded in the computation of the
13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.

Submitted by: Regalado, Dustin

Philippine Duplicators, Inc. vs. NLRC, G.R. No. 110068, February 15, 1995

DOCTRINE: Labor Law; Sales Commission; Case at bar; Sales commissions form part of the
wage or salary of salesmen and are not in the nature of an allowance or additional fringe
benefit.—The term ―basic salary‖ used in P.D. No. 851 and Memorandum Order No. 28 is not to
be confused with the term ―fixed or guaranteed wage.‖ The term ―basic salary‖ is used to
distinguish wage or salary from ―fringe benefits‖ which are not integrated into ―basic salary‖ for
certain specific purposes. In San Miguel Corporation v. Inciong, the catch-all phrase
―allowances‖ and ―monetary benefits‖ which are deemed not considered or integrated as part of
―basic salary‖ was construed to refer to ―any and all additions which may be in the form of
allowances or ‗fringe‘ benefits.‖ These fringe benefits include payments for sick leave, vacation
leave or maternity leave; premium pay for work performed on rest day and special holidays;
premium pay for regular holidays and night differential pay; and cost of living allowances.
Sales commissions form part of the ―wage‖ or ―salary‖ of salesmen and are not in the nature of
an ―allowance‖ or ―additional fringe‖ benefit. Once more, we note that in the instant case, sales
commissions form the bulk of the salaries or wages of petitioner‘s salesmen.

FACTS: Petitioner is engaged in the distribution of copying machines and related consumables.
In petitioner's employ are salesmen who are paid a fixed or guaranteed salary plus

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commissions, which commissions are computed on the selling price of the duplicating
machines sold by the respective salesmen. Private respondent union, for and on behalf of its
member-salesmen, asked petitioner for payment of 13th month pay computed on the basis of
the salesmen's fixed or guaranteed wages plus commissions. Petitioner refused the union's
request, but stated it would respect an opinion from the MOLE. Acting upon a request for
opinion submitted by respondent union, Director Sanchez, the MOLE, rendered an opinion to
respondent union declaring applicable the provisions of Explanatory Bulletin No. 86-12, Item
No. 5 (a) wherein the salesmen are entitled to 13th month pay. However, petitioner still refuse
to grant the same. This prompted respondent union to file a complaint for the payment of 13th
month pay.

The Labor Arbiter ruled in favor of respondent union. Petitioner appealed to the NLRC statin
that it is not liable for the payment of 13th month pay due to the commissions received by the
salesmen. The NLRC affirmed the award of the LA, declaring that it was not vested with
authority to pass upon the validity of Explanatory Bulletin No. 86-12, which issuance by
Secretary Sanchez remain operative as a source of rights until declared invalid by the proper
authorities, i.e., the Supreme Court.

ISSUE: Whether or not sales commission is included in the coverage of basic salary for
purposes of computing 13th month pay

HELD: YES. In the instant case, there is no question that the sales commission earned by the
salesmen who close a sale of duplicating machines distributed by petitioner corporation,
constitute part of the compensation or remuneration paid to salesmen, and hence as part of
the "wage" or salary of petitioner's salesmen.

Considering the above circumstances, it was correctly held that the sales commissions were an
integral part of the basic salary structure of Philippine Duplicators' employees salesmen. These
commissions are not overtime payments, nor profit-sharing payments nor any other fringe
benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling
price of the goods sold by each salesman, were properly included in the term "basic salary" for
purposes of computing their 13th month pay.

Considering that petitioner has excluded from the computation of the 13th month pay the
sales commissions earned by its individual salesmen, we believe and so hold that petitioner
must be held liable to pay for the deficiency.

ISALAMA MACHINE WORKS CORPORATION, petitioner,

vs.
HON. LABOR RELATIONS COMMISSION, FIFTH DIVISION and ISALAMA MACHINE
WORKS CORPORATION LABOR UNION-WORKERS ALLIANCE TRADE UNION, respondents.
G.R. No. 100167 March 2, 1995
(Third Division)

DOCTRINE: Nonpayment of the thirteenth-month pay provided by the Decree and rules shall
be treated as money claims cases.

FACTS: On 21 December 1987, the corporation paid the workers the 13th month pay based on
the average number of days actually worked during the year. The union, through its president,
private respondent Henry Baygan, demanded that the 13th month pay should, instead, be
made on the basis of a full one month basic salary.

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On 05 January 1988, the union filed a notice of strike with the Department of Labor and
Employment alleging the commission of unfair labor practice and CBA violation by the
corporation. After several conferences, the NCMB succeeded in having the dispute amicably
settled except for the 13th month pay differential which remained in contention. The union
insisted that the failure of the corporation to implement fully the 13th month pay provision of
the CBA amounted to unfair labor practice. The corporation argued that the 13th month pay
was a mere money claim and therefore not a "strikeable issue." The case was ultimately
indorsed to the NLRC for compulsory arbitration.

ISSUE: Whether or not nonpayment of 13th month is a strikable issue

HELD: No. The Labor Code provides that it shall be unlawful for an employer to commit any of
the following unfair labor practice like to violate a collective bargaining agreement.

The CBA between the respondent and employees specifies that the company "agrees to grant
one (1) month basic salary to all employees-workers as Christmas bonus" in compliance with
Presidential Decree No. 851 but that a violation thereof will not constitute an unfair labor
practice by an employer.

However, Article 261 of the Labor Code states 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 this article, gross violations of Collective Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the other economic provisions of such agreement.

Section 9 of Rules and Regulations Implementing Presidential Decree No. 851, in fact,
specifically states that nonpayment of the thirteenth-month pay provided by the Decree and
rules shall be treated as money claims cases and shall be processed in accordance with the
Rules Implementing the Labor Code of the Philippines and the Rules of the National Labor
Relations Commission."
Submitted by: Sison, Aldous Francis P.

ALLIANCE OF GOVERNMENT WORKERS (AGW), Petitioner

Vs.
HONORABLE MINISTER OF LABOR AND EMPLOYMENT, Respondent
G.R. No. L-60403 , AUGUST 3, 1983
(EN BANC)

DOCTRINE: Personnel of government-owned or controlled corporations are now part of the civil
service. It would not be fair to allow them to engage in concerted activities to wring higher
salaries or fringe benefits from Government even as other civil service personnel. To say that
the words "all employers" in P.D. No. 851 includes the Government and all its agencies,
instrumentalities, and government-owned or controlled corporations would also result in
nightmarish budgetary problems.

FACTS: Petitioner Alliance of Government Workers (AGW) is a registered labor federation while
the other petitioners are its affiliate unions with members from among the employees of the
following offices, schools, or government owned or controlled corporations. On February 28,
1983, the Philippine Government Employees Association (PGEA) filed a motion to come in as an
additional petitioner. According to the petitioners, P.D. No. 851 requires all employers to pay
the 13th-month pay to their employees with one sole exception found in Section 2 which states
that "(E)mployers already paying their employees a 13th month pay or its equivalent are not
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covered by this Decree. " The petitioners contend that Section 3 of the Rules and Regulations
Implementing Presidential Decree No. 851 included other types of employers not exempted by
the decree. They state that nowhere in the decree is the secretary, now Minister of Labor and
Employment, authorized to exempt other types of employers from the requirement.
ISSUE: Whether or not the branches, agencies, subdivisions, and instrumentalities of the
Government, including government owned or controlled corporations included among the 4
"employers"" under Presidential Decree No. 851 which are required to pay an their employees
receiving a basic salary of not more than P1,000.00 a month, a thirteenth (13th) month pay not
later than December 24 of every year.

HELD: No. Under the present Constitution, government-owned or controlled corporations are
specifically mentioned as embraced by the civil service. (Section 1, Article XII-B, Constitution).
The inclusion of the clause "including every government owned or controlled corporation" in the
1973 amendments to the Constitution was a deliberate amendment for an express purpose.

Personnel of government-owned or controlled corporations are now part of the civil service. It
would not be fair to allow them to engage in concerted activities to wring higher salaries or
fringe benefits from Government even as other civil service personnel such as the hundreds of
thousands of public school teachers, soldiers, policemen, health personnel, and other
government workers are denied the right to engage in similar activities. To say that the words
"all employers" in P.D. No. 851 includes the Government and all its agencies, instrumentalities,
and government-owned or controlled corporations would also result in nightmarish budgetary
problems.

The very Labor Code, P.D. No. 442 as amended,, which governs the registration and provides
for the rights of legitimate labor organizations states:
ART. 277. Government employees.— The terms and conditions of employment of all
government employees, including employees of government-owned and controlled corporations,
shall be governed by the Civil Service Law, rules and regulations. Their salaries shall be
standardized by the National Assembly as provided for in the new constitution. However, there
shall be no reduction of existing wages, benefits, and other terms and conditions of
employment being enjoyed by them at the time of the adoption of this code.
Section 6, Article XII-B of the Constitution gives added reasons why the government employees
represented by the petitioners cannot expect treatment in matters of salaries different from
that extended to all others government personnel. The provision states:
SEC. 6. The National Assembly shall provide for the standardization of compensation of
government officials and employees, including those in government-owned or controlled
corporations, taking into account the nature of the responsibilities pertaining to, and the
qualifications required for the positions concerned.

It is the legislature or, in proper cases, the administrative heads of government and not the
collective bargaining process nor the concessions wrung by labor unions from management
that determine how much the workers in government-owned or controlled corporations may
receive in terms of salaries, 13th month pay, and other conditions or terms of employment.

There are government institutions which can afford to pay two weeks, three weeks, or even
13th-month salaries to their personnel from their budgetary appropriations. However, these
payments must be pursuant to law or regulation.

The Solicitor-General correctly points out that to interpret P.D. No. 851 as including
government employees would upset the compensation levels of government employees in
violation of those fixed according to P.D. No. 985.
Submitted by: Sarmiento, Majesca M.

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Article 101: Payment by Results

ROLANDO Y. TAN, petitioner,

vs.
LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF APPEALS, respondents.
G.R. No. 151228. August 15, 2002
Second Division

DOCTRINE: The Bureau of Working Conditions 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. NLRCand Mark Roche International v. NLRC,[ he is paid
a fixed amount for work done, regardless of the time he spent in accomplishing such work.

FACTS: 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. (Dont say anything further. I dont
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 Sub-Regional Arbitration Branch No. X of 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. Petitioner Tan denied that Lagrama was his employee. He
asserted that Lagrama was an independent contractor who did his work according to his
methods, while he (petitioner) was only interested in the result thereof. He cited the admission
of Lagrama during the conferences before the Labor Arbiter that he was paid on a fixed piece-
work basis, i.e., that he was paid for every painting turned out as ad billboard or mural for the
pictures shown in the three theaters, on the basis of a no mural/billboard drawn, no pay
policy. He submitted the affidavits of other cinema owners, an amusement park owner, and
those supervising the construction of a church to prove that the services of Lagrama were
contracted by them. He denied having dismissed Lagrama and alleged that it was the latter
who refused to paint for him after he was scolded for his habits.

ISSUES: Whether being a paid by result employee, an employer-employee relationship existed

between petitioner and private respondent

HELD: YES.

In determining whether there is an employer-employee relationship, we have applied a four-fold

test, to wit: (1) whether the alleged employer has the power of selection and engagement of
employees; (2) whether he has control of the employee with respect to the means and methods
by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether
the employee was paid wages. These elements of the employer-employee relationship are
present in this case.

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The Bureau of Working Conditions 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 and Mark Roche International v. NLRC, he is paid a fixed amount for
work done, regardless of the time he spent in accomplishing such work.

Submitted by: Tamayo, Jumen G.

Lambo
vs.
NLRC
G.R. No. 111042, October 26, 1999

DOCTRINE: Labor Law; Employer-Employee Relationship; There are two categories of

employees paid by results—(1) those whose time and performance are supervised by the
employer, and, (2) those whose time and performance are unsupervised.—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 where it is difficult to quantify. Petitioners belong
to the first category, i.e., supervised employees.

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

ISSUE: Are petitioners entitled to the monetary claims and benefits?

HELD: Yes. The Court finds merit in the contentions of the petitioners that they were illegally
dismissed and, therefore, should be entitled to all the monetary benefits that they are claiming

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for. Such decision is based on the following grounds: There is an existing employer-employee
relationship between the two parties because of the capacity of the private respondents to
control the employee‘s work conduct. It is established that the petitioners were required to
regularly report for work within the premises on the private-respondent‘s establishment at a
specific schedule for more than a year. Due to the establishment of the employer-employee
relationship, and that it was further seen that the employees were illegally dismissed, it is just
right to award them the said pays. Therefore, the Court decided in favor of the petitioners and
affirmed the Labor Arbiter‘s decision with the exception of including the attorney‘s fees in the
computation.
Submitted by: Siquian, Celine

Piece Rate Workers

Makati Haberdashery
vs.
NLRC
G.R. Nos. 83380-81, November 15, 1989

DOCTRINE: Labor Standards; Private respondents are not entitled to service incentive leave
pay and holiday pay because as piece-rate workers they fall under the exceptions set forth in
the implementing rules.—On the other hand, while private respondents are entitled to
Minimum Wage, COLA and 13th Month Pay, they are not entitled to service incentive leave pay
because as piece-rate workers being paid at a fixed amount for performing work irrespective of
time consumed in the performance thereof, they fall under one of the exceptions stated in
Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same reason
private respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing
Regulations, Book III, Labor Code

FACTS: This is a petition assailing the decision of NLRC affirming the decision of Labor Arbiter
finding Haberda guilty of illegal dismissal and ordering him to reinstate the dismissed workers
and in concluding that there is employer-employee relationship between workers and Haberda.

The complainants were working for Haberda as tailors, seamstress, sewers, basters and
plantsadoras. Paid on a piece-rate basis with allowance when they report for work before
9:30am everyday.(MON-SAT)

July 1984, the labor organization where the complainants are members filed a complaint for
underpayment of basic wage, living allowance, non-payment of overtime work, non-payment of
holiday pay, non-payment of service incentive pay ad other benefits under wage orders.

During the pendency, Haberda dismiss the workers for the alleged job acceptance from
another, which was denied by the workers and countered by filing a complaint for illegal
dismissal. Which was granted by NLRC.

ISSUE: Whether or not respomdemts workers are entitled to monetary claims despite the
finding that rhey are not entitled to minimum wage?

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HELD: Private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they
are not entitled to service incentive leave pay because as piece-rate workers being paid at a
fixed amount for performing work irrespective of time consumed in the performance thereof,
they fall under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations,
Book III, Labor Code. For the same reason private respondents cannot also claim holiday pay
(Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code).

Submitted by: Villanueva, Emilio Jan D.

LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of

its members, ANA MARIE OCAMPO, et al., petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its
Proprietor/President & Manager, MR. GONZALO KEHYENG and
MRS. EVELYN KEHYENG, respondents
G.R. No. 123938. May 21, 1998
(First Division)

DOCTRINE: Piece-rate workers may be considered as regular employees when their job is
necessary and desirable in the usual business of the employer, their employment is not
dependent on a specific season and considering the length of time of their employment.

FACTS: Petitioners herein were rank-and-file employees of respondent Empire Food Products.
Labor Congress of the Philippines, acting as the sole bargaining representative of the
employees, �led a complaint for several causes against private respondents. However, after the
submission by the parties of their respective position papers and presentation of testimonial
evidence, the Labor Arbiter absolved private respondents of the charges but directed them to
reinstate the individual complainants. On appeal, the NLRC vacated the decision and
remanded the case to the Labor Arbiter for further proceedings. Again, another Labor Arbiter
favored herein private respondents. On appeal, the NLRC this time affirmed the decision of the
Labor Arbiter. Their motion for reconsideration having been denied, petitioners filed this
petition for certiorari under Rule 65. Petitioners seek the reversal of the NLRC resolution
affirming the decision of the Labor Arbiter which dismissed their complaint for utter lack of
merit.

ISSUE: Whether the petitioners who are piece-rate workers are entitled to benefits

HELD: Yes. Three (3) factors led the Court to conclude that petitioners, although piece-rate
workers, were regular employees of private respondents. First, as to the nature of petitioners'
tasks, their job of repacking snack food was necessary or desirable in the usual business of
private respondents, who were engaged in the manufacture and selling of such food products;
second, petitioners worked for private respondents throughout the year, their employment not
having been dependent on a specific project or season; and third, the length of time that
petitioners worked for private respondents. Thus, while petitioners' mode of compensation was
on a "per piece basis," the status and nature of their employment was that of regular
employees. The Rules Implementing the Labor Code exclude certain employees from receiving
benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter
alia, "field personnel and other employees whose time and performance is unsupervised by the
employer, including those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of the time consumed in
the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this

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group. As mentioned earlier, not only did petitioners labor under the control of private
respondents as their employer, likewise did petitioners toil throughout the year with the
fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule
IV, Book III which we quote hereunder, piece workers are specifically mentioned as being
entitled to holiday pay. SEC. 8. Holiday pay of certain employees. — (b) Where a covered
employee is paid by results or output, such as payment on piece work, his holiday pay shall
not be less than his average daily earnings for the last seven (7) actual working days preceding
the regular holiday: Provided, however, that in no case shall the holiday pay be less than the
applicable statutory minimum wage rate. In addition, the Revised Guidelines on the
Implementation of the 13th Month Pay Law in view of the modifications to P.D. No. 851 by
Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those
exempted from paying 13th month pay, to wit: 2. EXEMPTED EMPLOYERS. — The following
employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely
commission, boundary or task basis, and those who are paid a fixed amount for performing
specific work, irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the employer shall grant the required 13th
month pay to such workers. The Revised Guidelines as well as the Rules and Regulations
identify those workers who fall under the piece-rate category as those who are paid a standard
amount for every piece or unit of work produced that is more or less regularly replicated,
without regard to the time spent in producing the same. As to overtime pay, the rules, however,
are different. According to Sec. 2(e), Rule I, Book III of the Implementing Rules, workers who
are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if
their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII,
Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in
accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private
respondents did not allege adherence to the standards set forth in Sec. 8 nor with the rates
prescribed by the Secretary of Labor. As such, petitioners are beyond the ambit of exempted
persons and are therefore entitled to overtime pay. Once more, the National Labor Relations
Commission would be in a better position to determine the exact amounts owed petitioners, if
any.

Submitted by: Tanghal, Noelle Christine

Payment of Wages
(Article 102)

Proof of Wage Payment

BERNARDO JIMENEZ and JOSE JIMENEZ, as Operators of JJs TRUCKING, Petitioners

vs.
NATIONAL LABOR RELATIONS COMMISSION, PEDRO JUANATAS and FREDELITO
JUANATAS, Respondents
G.R. No. 116960. April 2, 1996

DOCTRINE: As a general rule, one who pleads payment has the burden of proving it. Even
where the plaintiff must allege non-payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove non-payment. The debtor has
the burden of showing with legal certainty that the obligation has been discharged by payment.

FACTS: Private respondents Pedro and Fredelito Juanatas, father and son, were hired by
petitioner Bernardo Jimenez as driver, mechanic and helper, respectively, in his trucking firm,

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JJs Trucking. They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola
Bottling Company and paid on commission basis, initially fixed at 17% but later increased to
20% in 1988.

Petitioner JJs Trucking, however, failed to pay agreed wages/commissions, which was alleged
by private respondents Juanatas as a ploy to unjustly terminate them.

ISSUE: Whether or not wages/commissions were properly paid by petitioner JJs Trucking

HELD: NO.

The Court held that there was evident failure of petitioners JJ Trucking to present evidence
that full payment thereof has been made. It is a basic rule in evidence that each party must
prove his affirmative allegations. Since the burden of evidence lies with the party who asserts
an affirmative allegation, the plaintiff or complainant has to prove his affirmative allegation, in
the complaint and the defendant or respondent has to prove the affirmative allegations in his
affirmative defenses and counterclaim. Considering that petitioners herein assert that the
disputed commissions have been paid, they have the bounden duty to prove that fact.

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

The positive testimony of a creditor may be sufficient of itself to show non-payment, even when
met by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be
sufficient to show payment, but, where his testimony is contradicted by the other party or by a
disinterested witness, the issue may be determined against the debtor since he has the burden
of proof. The testimony of the debtor creating merely an inference of payment will not be
regarded as conclusive on that issue.

Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense
and in effect admitted the allegations of private respondents.

Submitted by: Valdez, Suzette P.

Article 106: Labor-Only Contracting

VIRGINIA G. NERI and JOSE CABELIN, PETITIONERS

vs
NLRC, FEBTC and BUILDING CARE CORPORATION, RESPONDENTs
G.R. Nos. 97008-09, July 23, 1993
(First Division)

DOCTRINE: There is "labor-only" contracting where: (a) the person supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others; and, (b) the workers recruited and placed by such
person are performing activities which are directly related to the principal business of the
employer.

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FACTS: Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired
by, respondent BCC, a corporation engaged in providing technical, maintenance, engineering,
housekeeping, security and other specific services to its clientele. They were assigned to work
in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980,
respectively, Neri a radio/telex operator and Cabelin as janitor, before being promoted to
messenger on 1 April 1989.

On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional
Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to
accept them as regular employees and for it to pay the differential between the wages being
paid them by BCC and those received by FEBTC employees with similar length of service.

On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit.1
Respondent BCC was considered an independent contractor because it proved it had
substantial capital. Thus, petitioners were held to be regular employees of BCC, not FEBTC.
The dismissal was appealed to NLRC which on 28 September 1990 affirmed the decision on
appeal.2 On 22 October 1990, NLRC denied reconsideration of its affirmance,3 prompting
petitioners to seek redress from this Court.

ISSUE: Whether or not the Building Care Corporations in engaged in labor-only contracting?

HELD: No.

Respondent BCC need not prove that it made investments in the form of tools, equipment,
machineries, work premises, among others, because it has established that it has sufficient
capitalization. The Labor Arbiter and the NLRC both determined that BCC had a capital stock
of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and
cannot be deemed engaged in "labor-only" contracting,

BCC cannot be considered a "labor-only" contractor because it has substantial capital. While
there may be no evidence that it has investment in the form of tools, equipment, machineries,
work premises, among others, it is enough that it has substantial capital, as was established
before the Labor Arbiter as well as the NLRC. In other words, the law does not require both
substantial capital and investment in the form of tools, equipment, machineries, etc. This is
clear from the use of the conjunction "or". If the intention was to require the contractor to prove
that he has both capital and the requisite investment, then the conjunction "and" should have
been used. But, having established that it has substantial capital, it was no longer necessary
for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-
only" contracting. There is even no need for it to refute petitioners' contention that the activities
they perform are directly related to the principal business of respondent bank.
Submitted by: Vardeleon, Crizedhen N.

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MANILA WATER COMPANY, INC., petitioner,

vs.
HERMINIO D. PENA, ESTEBAN B. BALDOZA, JORGE D. CANONIGO, JR., IKE S. DELFIN,
RIZALINO M. INTAL, REY T. MANLEGRO, JOHN L. MARTEJA, MARLON B. MORADA,
ALLAN D. ESPINA, EDUARDO ONG, AGNESIO D. QUEBRAL, EDMUNDO B. VICTA, VICTOR
C. ZAFARALLA, EDILBERTO C. PINGUL and FEDERICO M. RIVERA, respondents.
G.R. No. 158255, July 8, 2004
(First Division)

DOCTRINE : Labor-only contracting as defined in Section 5, Department Order No. 18-02,

Rules Implementing Articles 106-109 of the Labor Code refers to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform job, work or
service for a principal.

FACTS: Petitioner Manila Water Company, Inc. is one of the two private concessionaires
contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water
distribution system in the East Zone of Metro Manila. Under the Concession Agreement,
petitioner undertook to absorb former employees of the MWSS whose names and positions
were in the list furnished by the latter, while the employment of those not in the list was
terminated. Private respondents, being contractual collectors of the MWSS, were among the
121 employees not included in the list; nevertheless, petitioner engaged their services without
written contract for three months.

Before the end of the three-month contract, the 121 collectors incorporated the Association
Collectors Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the
Balara Branch. Subsequently, most of the 121 collectors were asked by the petitioner to
transfer to the First Classic Courier Services, a newly registered corporation. Only private
respondents remained with ACGI. Private respondents filed a complaint for illegal dismissal
and money claims against petitioner, contending that they were petitioner‘s employees as all
the methods and procedures of their collections were controlled by the latter.

Petitioner on the other hand asserts that private respondents were employees of ACGI, an
independent contractor. It maintained that it had no control and supervision over private
respondents‘ manner of performing their work except as to the results. Thus, petitioner did not
have an employer-employee relationship with the private respondents, but only a service
contractor-client relationship with ACGI.

ISSUE : Whether or not ACGI is an independent contractor.

HELD : NO.

Job contracting is permissible only if the following conditions are met: 1) the contractor carries
on an independent business and undertakes the contract work on his own 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; and 2) the contractor has substantial capital or investment in
the form of tools, equipment, machineries, work premises, and other materials which are
necessary in the conduct of the business.

―Labor-only contracting‖ as defined in Section 5, Department Order No. 18-02, Rules

Implementing Articles 106-109 of the Labor Code refers to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform job, work or
service for a principal, and any of the following elements is present: (i) The contractor or
subcontractor does not have substantial capital or investment which relates to the job, work or

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service to be performed and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the
principal; or (ii) The contractor does not exercise the right to control over the performance of
the work of the contractual employee.
Submitted by: Veloso, Jocelyn

SAN MIGUEL CORPORATION, petitioner

vs.
PROSPERO A. ABALLA, ET. AL, respondents.
G.R. No. 149011, June 28, 2005
(Third Division)

DOCTRINE: Same; Labor Only Contracting; Independent Contractors; The test to determine
the existence of independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his own methods and without being
subject to the control of the employer, except only as to the results of the work; In labor-only
contracting, the statute creates an employer-employee relationship for a comprehensive
purpose—to prevent a circumvention of labor laws.—The test to determine the existence of
independent contractorship is whether one claiming to be an independent contractor has
contracted to do the work according to his own methods and without being subject to the
control of the employer, except only as to the results of the work. In legitimate labor
contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to
ensure that the employees are paid their wages. The principal employer becomes jointly and
severally liable with the job contractor, only for the payment of the employees‘ wages whenever
the contractor fails to pay the same. Other than that, the principal employer is not responsible
for any claim made by the employees. In labor-only contracting, the statute creates an
employer-employee relationship for a comprehensive purpose: to prevent a circumvention of
labor laws. The contractor is considered merely an agent of the principal employer and the
latter is responsible to the employees of the labor-only contractor as if such employees had
been directly employed by the principal employer.

FACTS: Pursuant to the contract, Sunflower engaged private respondents to, as they did,
render services at SMC‘s Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The
contract was deemed renewed by the parties every month after its expiration on January 1,
1994 and private respondents continued to perform their tasks until September 11, 1995. In
July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch
No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for
recovery of all benefits and privileges enjoyed by SMC rank and file employees. NLRC ruled that
the third party respondent Sunflower was an independent contractor in light of its observation
that "[i]n all the activities of private respondents, they were under the actual direction, control
and supervision of third party respondent Sunflower, as well as the payment of wages, and
power of dismissal. On appeal, the decision of NLRC was reversed and set aside. The appellate
court reasoned that it is the extent to which the parties successfully realized this intent in the
light of the applicable law is the controlling factor in determining the real and actual
relationship between or among the parties and not the non-exclusive contract of service
between SMC and [Sunflower].

ISSUE: Whether the Sunflower was an independent contractor?

HELD: No. The Sunflower and the SMC do not qualify as independent contractors. The test to
determine the existence of independent contractorship is whether one claiming to be an
independent contractor has contracted to do the work according to his own methods and
without being subject to the control of the employer, except only as to the results of the work

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There is "labor-only" contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent 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. In the case at bar, [Sunflower] and the petitioners did not have substantial
capital or investment in the form of tools, equipment, implements, work premises, et cetera
necessary to actually perform the service under their own account, responsibility, and method.
The only "work premises" maintained by [Sunflower] was a small office within the confines of a
small "carinderia" or refreshment parlor owned by the mother of its chair, Roy Asong; the only
equipment it owned was a typewriter (rollo, pp. 525-525) and the only assets it provided SMC
were the bare bodies of its members, the petitioners herein (rollo, p. 523).

Submitted by: Aguilar, Cherry Kerr

PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. THE NATIONAL LABOR

RELATIONS COMMISSION, HONORABLE ARBITER TEODORICO L. DOGELIO and
RICARDO ORPIADA respondents
[G.R. No. L-66598. December 19, 1986]
FELICIANO, J.:

DOCTRINE: The employer is made by the statute responsible to the employees of the "labor
only" contractor as if such employees had been directly employed by the employer.

FACTS: Petitioner Philippine Bank of Communications and the Corporate Executive Search
Inc. (CESI) entered into a letter agreement dated January 1976 under which CES) undertook to
provide "Tempo[rary] Services" to petitioner Consisting of the "temporary services" of eleven (11)
messengers. The contract period is described as being "from January 1976—." Attached to the
letter agreement was a "List of Messengers assigned at Philippine Bank of Communications"
which list included, as item No. 5 thereof, the name of private respondent Ricardo Orpiada.
Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered
services to the bank, within the premises of the bank and alongside other people also rendering
services to the bank.

There was some question as to when Ricardo Orpiada commenced rendering services to the
bank. As noted above, the letter agreement was dated January 1976. However, the position
paper submitted by CESI to the National Labor Relations Commission (NLRC) stated that CES)
hired Ricardo Orpiada on 25 June 1975 as a Tempo Service employee, and assigned him to
work with the petitioner bank "as evidenced by the appointment memo issued to him on 25
June 1975.‖ Be that as it may, on or about October 1976, the petitioner requested CESI to
withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services" were
no longer needed." On 29 October 1976, Orpiada instituted a complaint in the Department of
Labor (now Ministry of Labor and Employment) against the petitioner for illegal dismissal and
failure to pay the 13th month pay provided for in Presidential Decree No. 851.

After investigation, the Office of the Regional Director, Regional Office No. IV of the Department
of Labor, issued an order dismissing Orpiada's complaint for failure of Mr. Orpiada to show the
existence of an employer-employee relationship between the bank and himself.

Despite the foregoing order, Orpiada succeeded in having his complaint certified for
compulsory arbitration. During the compulsory arbitration proceedings, CESI was brought into

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the picture as an additional respondent by the bank. Both the bank and CESI stoutly
maintained that CESI (and not the bank) was the employer of Orpiada.

On 12 September 1977, respondent Labor Arbiter Dogelio rendered a decision reinstating

complainant to the same or equivalent position with full back wages and to pay the latter's
13th month pay for the year 1976.

On 26 October 1977, the bank appealed the decision of the Labor Arbiter to the respondent
NLRC. More than six years later—the NLRC promulgated its decision affirming the award of the
Labor Arbiter except for the modification reducing the complainant's back wages to two (2)
years without qualification. Accordingly, on 2 April 1984, the bank filed the present petition for
certiorari with this Court seeking to annul and set aside the decision of respondent Labor
Arbiter Dogelio and the decision of the NLRC.

ISSUE: Whether or not respondent CESI, PBCom and Ricardo Orpiada were engaged in a labor
only contracting.

HELD: YES.

The Supreme Court ruled that CESI was engaged in "labor-only" contracting vis-a-vis the
petitioner bank and in respect of Ricardo Orpiada, and that consequently, the petitioner bank
is liable to Orpiada as if Orpiada had been directly employed not only by CESI but also by the
bank. It may well be that the bank may in turn proceed against CESI to obtain reimbursement
of, or some contribution to, the amounts which the bank will have to pay to Orpiada

A similar situation obtains where there is "labor only" contracting the "labor-only" contractor—
i.e. "the person or intermediary"—is considered "merely as an agent of the employer." The
employer is made by the statute responsible to the employees of the "labor only" contractor as
if such employees had been directly employed by the employer.

Submitted by: Austria, Don Rodel A.

DANILO B. TABAS, petitioners,

vs.
CALIFORNIA MANUFACTURING COMPANY, INC., respondents.
G.R. No. L-80680 January 26, 1989
(SECOND DIVISION)

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

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[California] at cost ―; and that ―[p]ayroll for the preceding [sic] week [shall] be delivered by [Livi]
at [California‘s] premises.‖

ISSUE: Whether or not principal employer is liable.

HELD: Yes. The existence of an employer-employee relation cannot be made the subject of an
agreement.

Based on Article 106, ―labor-only‖ contractor is considered merely as an agent of the employer,
and the liability must be shouldered by either one or shared by both.

There is no doubt that in the case at bar, Livi performs ―manpower services‖, meaning to say, it
contracts out labor in favor of clients. We hold that it is one notwithstanding its vehement
claims to the contrary, and notwithstanding the provision of the contract that it is ―an
independent contractor.‖ The nature of one‘s business is not determined by self-serving
appellations one attaches thereto but by the tests provided by statute and prevailing case law.

The bare fact that Livi maintains a separate line of business does not extinguish the equal fact
that it has provided California with workers to pursue the latter‘s own business. In this
connection, we do not agree that the petitioners had been made to perform activities ‗which are
not directly related to the general business of manufacturing,‖ California‘s purported ―principal
operation activity.‖ Livi, as a placement agency, had simply supplied California with the
manpower necessary to carry out its (California‘s) merchandising activities, using its
(California‘s) premises and equipment.

Submitted by: Alarcon, Maria Teresa L.

Independent Contractor

MAFINCO TRADING CORPORATION, petitioner,

vs.
THE HON. BLAS F. OPLE, in his capacity as Secretary of Labor, The NATIONAL LABOR
RELATIONS COMMISSION, RODRIGO REPOMANTA and REY MORALDE, respondents.

DOCTRINE: An independent contractor is "one who exercise independent employment and

contracts to do a piece of work according to his own methods and without being subject to
control of his employer as to the result of the work.

FACTS: Rodrigo Repomanta and Rey Moralde entered into peddling contracts with MAFINCO,
sole distributor of Cosmos softdrinks. One of the stipulations of the contracts was that either
party might terminate it upon five days prior notice to the other. In accordance with this
stipulation, MAFINCO terminated the aforesaid contracts, in view of which Moralde and
Repomanta, thru their union, filed a complaint with the National Labor Relations Commission
(NLRC). MAFINCO filed a motion to dismiss on the ground that the NLRC had no jurisdiction
because complainants were not its employees but were independent contractors. Referred to a
fact finder, the latter recommended dismissal of the complaint on the ground that
complainants were indeed not employees. By reason thereof, the NLRC dismissed the
complaint. The Secretary of Labor reversed the order of NLRC, holding that complainants were
employees of MAFINCO and therefore NLRC had jurisdiction. Hence the petition for certiorari
and prohibition to set aside the Secretary's decision and to enjoin the Secretary and NLRC from
proceeding with the case.

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ISSUE: Whether or not Repomanta and Moralde were employees of Mafinco under the peddling
contract
HELD: NO
Where, as in the case at bar, complainant formally entered into a peddling contract with
petitioner indicating the manner of selling the goods, whereby the petitioner provides the
peddler with delivery truck and bears the cost of gasoline and maintenance of the truck while
on the other hand the complainants employ the driver and helpers and take care of the latter's
compensation and social security contributions, the complainants are independent contractors
and not employees of petitioner.
Among the factors to be considered are whether the contractor is carrying on an independent
business; whether the work is part of the employer's general 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 the work to another; the power to terminate the relationship; the existence of a
contract for the performance of a specified piece of work; the control and supervision of the
work; the employer's powers and duties with respect to the hiring, firing, and payment of the
contractor's servants; the control of the premises; the duty to supply the premises, tools,
appliances, material and labor; and the mode, manner, and terms of payment.
The Supreme Court, holding that the complainants were independent businessmen, set aside
the order and resolution of the Secretary of Labor and affirmed the order of the NLRC
dismissing the case for lack of jurisdiction.

Submitted by: Bacurio, Kenneth Bernard

INSULAR LIFE ASSURANCE CO., LTD., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.

DOCTRINE: In determining the existence of employer-employee relationship, the following

elements are generally considered, namely: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employees' conduct — although the latter is the most important element.

FACTS: On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the
Company) and Melecio T. Basiao entered into a contract 1 by which:

1. Basiao was "authorized to solicit within the Philippines applications for

insurance policies and annuities in accordance with the existing rules and
regulations" of the Company;

2. he would receive "compensation, in the form of commissions ... as provided in

the Schedule of Commissions" of the contract to "constitute a part of the
consideration of ... (said) agreement;" and

3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as
all its circulars ... and those which may from time to time be promulgated by it,
..." were made part of said contract.

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The contract also contained, among others, provisions governing the relations of the parties,
the duties of the Agent, the acts prohibited to him, and the modes of termination of the
agreement, viz.:

RELATION WITH THE COMPANY. The Agent shall be free to exercise his own
judgment as to time, place and means of soliciting insurance. Nothing herein
contained shall therefore be construed to create the relationship of employee
and employer between the Agent and the Company. However, the Agent shall
observe and conform to all rules and regulations which the Company may from
time to time prescribe.

ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving,

directly or indirectly, rebates in any form, or from making any misrepresentation
or over-selling, and, in general, from doing or committing acts prohibited in the
Agent's Manual and in circulars of the Office of the Insurance Commissioner.

TERMINATION. The Company may terminate the contract at will, without any
previous notice to the Agent, for or on account of ... (explicitly specified causes).
...

Either party may terminate this contract by giving to the other notice in writing
to that effect. It shall become ipso facto cancelled if the Insurance Commissioner
should revoke a Certificate of Authority previously issued or should the Agent
fail to renew his existing Certificate of Authority upon its expiration. The Agent
shall not have any right to any commission on renewal of premiums that may be
paid after the termination of this agreement for any cause whatsoever, except
when the termination is due to disability or death in line of service. As to
commission corresponding to any balance of the first year's premiums remaining
unpaid at the termination of this agreement, the Agent shall be entitled to it if
the balance of the first year premium is paid, less actual cost of collection,
unless the termination is due to a violation of this contract, involving criminal
liability or breach of trust.

ASSIGNMENT. No Assignment of the Agency herein created or of commissions or

other compensations shall be valid without the prior consent in writing of the
Company. ...

Some four years later, in April 1972, the parties entered into another contract — an Agency
Manager's Contract — and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his
commitments under the first contract with the Company. 2

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a
reconsideration, Basiao sued the Company in a civil action and this, he was later to claim,
prompted the latter to terminate also his engagement under the first contract and to stop
payment of his commissions starting April 1, 1980. 3

Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and
its president. Without contesting the termination of the first contract, the complaint sought to
recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents
disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor and that the Company had no obligation
to him for unpaid commissions under the terms and conditions of his contract. 5

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ISSUE: Whether or not as Basiao asserts, he had become the Company's employee by virtue of
the contract invoked by him, thereby placing his claim for unpaid commissions within the
original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of
the Labor Code.

HELD: The Labor Arbiter's decision makes reference to Basiao's claim of having been
connected with the Company for twenty-five years. Whatever this is meant to imply, the
obvious reply would be that what is germane here is Basiao's status under the contract of July
2, 1968, not the length of his relationship with the Company.

The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose claim for
unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter
erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so,
as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for commissions on its merits.

Submitted by: Balbarino, Cherry Anjell L.

Rhone-Poulence Agrochemicals Philippines, Inc. vs. NLRC, G.R. Nos. 102633-35, January
19, 1993

DOCTRINE: Labor Law; There is no employer-employee relationship between Union

Carbid and the respondent janitors; Court finds sufficient basis from the records to
conclude that CSI is engaged in job contracting.—As to whether CSI is engaged in labor-
only contracting or in job contracting, applying the test prescribed by the Labor Code
and the implementing rules, we find sufficient basis from the records to conclude that
CSI is engaged in job contracting.

FACTS: In 1987, prior to the sale, Union Carbide entered into a contract with CSI for
the latter's supply of janitorial services. During the transition period, Union Carbide
continued to avail itself of CSI's janitorial services. Thus, petitioner Rhone-Poulenc
found itself sharing the Namayan plant with Union Carbide while the factory was being
serviced and maintained by janitors supplied by CSI.

Private respondent Paulino Roman, one of the janitors, was recalled by CSI on February
15, l988 for reassignment. However, Roman refused to acknowledge receipt of the recall
memorandum.

Union Carbide formally notified CSI of the termination of their janitorial service
agreement. In anticipation of the pull-out by Union Carbide, the Rhone-Poulenc started
screening proposals by prospective service contractors. Rhone-Poulenc likewise invited
CSI to submit to its Bidding Committee a cost quotation of its janitorial services.
However, another contractor, the Marilag Business and Industrial Services, Inc. passed
the bidding committee's standards and obtained the janitorial services contract. These

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janitors then filed separate complaints for illegal dismissal, payment of 13th month
salary, service leave and overtime pay against Union Carbide, Rhone-Poulenc and CSI.

Labor Arbiter Asuncion ruled that CSI is a legitimate service contractor and that Roman
and Orain were employees of CSI. Respondents Roman and Orain appealed the decision
to the NLRC. In a resolution dated March 13, 1991, the NLRC reversed the labor
arbiter's ruling, found that CSI was a mere agent of Union Carbide and Rhone-Poulenc
and held that Rhone-Poulenc was guilty of illegal dismissal.

ISSUE: Whether CSI is a labor-only contractor

HELD: No. The janitors drew their salaries from CSI and not from Union Carbide. CSI
exercised control over these janitors through Richard Barroga, also a CSI employee, who
gave orders and instructions to CSI janitors assigned to the Namayan plant. Moreover,
CSI had the power to assign its janitors to various clients and to pull out, as it had done
in a number of occasions, any of its janitors working at Union Carbide.

Escario, petitioners
vs.
National Labor Relations Commission, respondents
G.R. No. 124055. June 8, 2000

DOCTRINE: The Elements of labor-only contract are: (a) The person supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others; and (b) The workers recruited and placed by such
person are performing activities which are directly related to the principal business of the
employer.

On the other hand, there is a Permissible Job Contracting the following

conditions must concur: (a) The contractor carries on a distinct and independent business and
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 his work except as to the results thereof; and (b)
The contractor has substantial capital or investment in the form of tools, equipment,
machineries (sic), work premises, and other materials which are necessary in the conduct of
his business.

FACTS: Respondent California Marketing Co., Inc. (CMC) is a domestic corporation principally
engaged in the manufacturing of food products and distribution of such products to
wholesalers and retailers. Respondent Donna Louise Advertising and Marketing Associates,
Inc. (D.L. Admark) is a duly registered promotional firm. Petitioners worked as merchandisers
for the products of CMC. Their services were terminated on 16 March 1992.

Originally, petitioners filed a case against CMC before the Labor Arbiter for the regularization of
their employment status. During the pendency of the case before the Labor Arbiter, D.L.
Admark sent to petitioners notice of termination of their employment effective 16 March 1992.
Hence, their complaint was amended so as to include illegal dismissal as cause of action.

Labor Arbiter:It rendered a decision finding that petitioners are the employees of CMC as they
were engaged in activities that are necessary and desirable in the usual business or trade of
CMC.

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NLRC: It set aside the decision of the Labor Arbiter. It ruled that no employer-employee
relationship existed between the petitioners and CMC. It, likewise, held that D.L. Admark is a
legitimate independent contractor, hence, the employer of the petitioners. Finding no valid
grounds existed for the dismissal of the petitioners by D.L. Admark, it ordered their
reinstatement. Hence, this petition.

ISSUE: Whether or not petitioners are employees of CMC or D.L. Admark.

Whether or not D.L. Admark is a labor-only contractor or an independent contractor.
Whether or not the petitioners were illegally dismissed.

HELD: D.L. Admark is an independent contractor.

There is labor-only contracting when the contractor or subcontractor merely recruits, supplies
or places workers to perform a job, work or service for a principal. In contrast, there is
permissible job contracting when a principal agrees to put out or farm out with a contractor or
a subcontractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job or work or service is to be
performed or completed within or outside the premises of the principal.

Based on the foregoing criterion, the court finds that D.L. Admark is a legitimate independent
contractor. It reasoned that:

First, the SEC registration certificate of D.L. Admark states that it is a firm engaged in
promotional, advertising, marketing and merchandising activities.

Second, the service contract between CMC and D.L. Admark clearly provides that the
agreement is for the supply of sales promoting merchandising services rather than one of
manpower placement.

Third, D.L. Admark was actually engaged in several activities, such as advertising, publication,
promotions, marketing and merchandising. It had several merchandising contracts with
companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise
engaged in the publication business as evidenced by its magazine the ―Phenomenon.‖

And fourth, it had its own capital assets to carry out its promotion business. It then had
current assets amounting to P6 million and is therefore a highly capitalized venture. It had an
authorized capital stock of P500,000.00. It owned several motor vehicles and other tools,
materials and equipment to service its clients. It paid rentals of P30,020 for the office space it
occupied.

Petitioners are employees of D.L. Admark. Applying the four-fold test used in determining
employer-employee relationship, the status of D.L. Admark as the true employer of petitioners
is further established. The elements of this test are (1) the selection and engagement of
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee‘s conduct.As regards the first element, petitioners themselves admitted that they
were selected and hired by D.L. Admark. As to the second element, the NLRC noted that D.L.
Admark was able to present in evidence the payroll of petitioners, sample SSS contribution
forms filed and submitted by D.L. Admark to the SSS, and the application for employment by
R. de los Reyes, all tending to show that D.L. Admark was paying for the petitioners‘ salaries.
In contrast, petitioners did not submit an iota of evidence that it was CMC who paid for their
salaries. The fact that the agreement between CMC and D.L. Admark contains the billing rate
and cost breakdown of payment for core merchandisers and coordinators does not in any way
establish that it was CMC who was paying for their salaries. As correctly pointed out by both
CMC and the Office of the Solicitor General, such cost breakdown is a standard content of

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service contracts designed to insure that under the contract, employees of the job contractor
will receive benefits mandated by law.

Neither did the petitioners prove the existence of the third element. Again petitioners admitted
that it was D.L. Admark who terminated their employment.

To prove the fourth and most important element of control, petitioners presented the
memoranda of CMC‘s sales and promotions manager. The Labor Arbiter found that these
memos ―indubitably show that the complainants were under the supervision and control of the
CMC people.‖ However, as correctly pointed out by the NLRC, a careful scrutiny of the
documents adverted to, will reveal that nothing therein would remotely suggest that CMC was
supervising and controlling the work of the petitioners.

Yes. The court agrees with the findings of the NLRC that D.L. Admark ―admits having
dismissed the petitioners for allegedly disowning and rejecting them as their employer.‖
Undoubtedly, the reason given is not just cause to terminate petitioners. D.L. Admark‘s belated
claim that the petitioners were not terminated but simply did not report to work is not
supported by the evidence on record. Moreover, there is no showing that due process was
afforded the petitioners.

Submitted by: Bayot, Kristine Valerie S.

Prohibition Regarding Wages

(Article 119)

Wages Deduction

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., petitioner,

vs.
THE SECRETARY OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR OF THE
NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND EMPLOYMENT and UNITED
RCPI COMMUNICATIONS LABOR ASSOCIATION (URCPICLA)-FUR, respondents.
G.R. No. 77959 January 9, 1989
SECOND DIVISION

DOCTRINE: We agree that Article 222 of the Labor Code requiring an individual written
authorization as a prerequisite to wage deductions seeks to protect the employee against
unwarranted practices that would diminish his compensation without his knowledge and
consent. However, for all intents and purposes, the deductions required of the petitioner and
the employees do not run counter to the express mandate of the law since the same are not
unwarranted or without their knowledge and consent. Also, the deductions for the union
service fee in question are authorized by law and do not require individual check-off
authorizations.

FACTS: On May 4, 1981, petitioner, a domestic corporation engaged in the telecommunications

business, filed with the National Wages Council an application for exemption from the coverage
of Wage Order No. 1. The application was opposed by respondent URCPICLA-FUR, a labor
organization affiliated with the Federation of Unions of Rizal (FUR). On May 22, 1981, the
National Wages Council, through its Chairman, rendered a letter-decision disapproving said

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application and ordering the petitioner to pay its covered employees the mandatory living
allowance of P2.00 daily effective March 22, 1981.

Before the aforesaid case was elevated to this Court, respondent union filed a motion for the
issuance of a writ of execution, asserting therein its claim to 15% of the total backpay due to
all its members as "union service fee" for having successfully prosecuted the latter's claim for
payment of wages and for reimbursement of expenses incurred by FUR and prayed for the
segregation and remittance of said amount to FUR thru its National President. A "Motion for
Immediate Issuance of Writ of Execution", was filed by the private respondents reiterating its
claim for said union service fee but this time in an amount equivalent to 20% of the total
backpay due its members, to be remitted to the institution previously adverted to.

On September 24, 1985, petitioner filed its opposition to said motion, asserting, among others,
that "there is no legal basis for respondent Union to have the sum equivalent to 20% union
service fee deducted from the amount due to every recipient member". An alias writ of
execution was issued on September 26, 1985.

On October 24, 1985, without the knowledge and consent of respondent union, petitioner
entered into a compromise agreements with BMRCPI-NFL as the new bargaining agent of
oppositors RCPI employees. Thereupon, the parties filed a joint motion praying for the
dismissal of the decision of the National Wages Council claiming that it had already been
novated by the Compromise Agreement redefining the rights and obligations of the parties.

Respondent union countered by opposing the motion and alleging that one of the signatories
thereof BMRCPI-NFL is not a party in interest in the case but it was the respondent Union
which represented oppositors RCPI employees all the way from the NWC up to the Supreme
Court and claimed that the Compromise Agreement is irregular and invalid, apart from the fact
that there was nothing to compromise in the face of a final and executor decision.

NCR officer-in-charge Romeo A. Young found petitioner RCPI and its employees jointly and
severally liable for the payment of the 15% union service fee amounting to P427,845.60 to
private respondent URCPICLA-FUR and consequently ordered the garnishment of petitioner's
bank account to enforce said claim. It was his position that although the decision of the
National Wages Council did not categorically require payment of the 15% service fee directly to
URCPICLA-FUR it had acted as the counsel of record of petitioner's employees, hence said
payment could be authorized by applying suppletorily the provisions of Section 37, Rule 138 of
the Rules of Court on attorney's lien. Said order further noted that the transaction entered into
by petitioner in favor of BMRCPI-NFL in the guise of a compromise agreement, was made
without the consent of URCPICLA-FUR in clear defraudation of the latter's right to the 15%
union service fee justly due it.

Acting on petitioners "Omnibus Motion" seeking, among others, a reconsideration of said order
of May 7, 1986, which motion was treated as an appeal, respondent Secretary of Labor and
Employment issued an order on August 18, 1986 modifying the order appealed from by holding
petitioner solely liable to respondent union for 10% of the awarded amounts as attorney's fees.
Hence, this petition.

ISSUE: WON the public respondents acted with grave abuse of discretion amounting to lack of
jurisdiction in holding the petitioner solely liable for "union service fee' to respondent
URCPICLA-FUR.

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HELD: No. While it is true that the original decision of said Council; did not expressly provide
for payment of attorney's fees, that particular aspect or deficiency is deemed to have been
supplied, if not modified pro tanto, by the compromise agreement subsequently executed
between the parties. A cursory perusal of said agreement shows an unqualified admission by
petitioner that "from the aforesaid total amount due every employee, 10% thereof shall be
considered as attorney's fee, although, as hereinafter discussed, it sought to withhold it from
respondent union. Considering, however, that respondent union was categorically found by the
Labor Secretary to have been responsible for the successful prosecution of the case to its
ultimate conclusion in behalf of its member, employees of herein petitioner, its right to fees for
services rendered, or what it termed as "union service fee," is indubitable. The defaulting
employer or government agency remains liable for attorney‘s fees because it compelled the
complainant to employer the services of counsel by unjustly refusing to recognize the validity of
the claim.

The further pretension of petitioner that respondent union is not entitled to attorney's fee or
union service fee because it is not a member of the Bar is both untenable and in disregard of
the liberalized scheme and theory of representation for labor adopted in the Labor Code.

It is undisputed that oppositor was the counsel on record of the RCPI employees in their claim
for ECOLA under Wage Order No. 1 since the inception of the proceedings at the NWC up to
the SC. It had, therefore, had a valid claim for attorney‘s fees which it called union service fees.

Submitted by: Bodopol, Adolf Jr.

ERNESTO M. APODACA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS.,
INC., respondents.
G.R. No. 80039, April 18, 1989
(FIRST DIVISION)

DOCTRINE: The employer has no right to withhold payment of wages already earned under
Article 103 of the Labor Code.

FACTS: Petitioner was employed in respondent corporation. Respondent Jose M. Mirasol

persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00 per
share or a total of P150,000.00. He made an initial payment of P37,500.00. Then, petitioner
was appointed President and General Manager of the respondent corporation but later on
resigned.

Thereafter, petitioner instituted with the NLRC a complaint against private respondents for the
payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and
representation expenses and his bonus compensation for 1986. Petitioner and private
respondents submitted their position papers to the labor arbiter. Private respondents admitted
that there is due to petitioner the amount of P17,060.07 but this was applied to the unpaid
balance of his subscription in the amount of P95,439.93. Petitioner questioned the set-off
alleging that there was no call or notice for the payment of the unpaid subscription and that,
accordingly, the alleged obligation is not enforceable. The Labor Arbiter (LA) rendered decision
in favor of the petitioner. Upon appeal to the NLRC, the said decision by the LA was reversed.
Hence this petition for review.

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ISSUE: Whether or not NLRC can validly set it off against the wages and other benefits due
petitioner.

HELD: NO.

Private respondents have not presented a resolution of the board of directors of respondent
corporation calling for the payment of the unpaid subscriptions. It does not even appear that a
notice of such call has been sent to petitioner by the respondent corporation. Assuming further
that there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off
against the wages and other benefits due petitioner in the absence of the instances provided
under the Labor Code. Article 113 of the Labor Code allows such a deduction from the wages of
the employees by the employer, only in three instances: (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 checkoff 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.

Submitted by: De Guzman, Joey Albert P.

Wage Distortion

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO

V. BALINANG, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK
and TRUST COMPANY, respondents.
G.R. No. 102636, September 10, 1993
(Third Division)

DOCTRINE: Labor Law; National Labor Relations Commission; Wages; In mandating an

adjustment, the law did not require that there be an elimination or total abrogation of
quantitative wage or salary differences, a severe contraction thereof is enough.—The definition
of ―wage distortion,‖ aforequoted, shows that such distortion can so exist when, as a result of
an increase in the prescribed wage rate, an ―elimination or severe contraction of intentional
quantitative differences in wage or salary rates‖ would occur ―between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical bases of differentiation.‖ In
mandating an adjustment, the law did not require that there be an elimination or total
abrogation of quantitative wage or salary differences; a severe contraction thereof is enough. As
has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting
opinion, the contraction between personnel groupings comes close to eighty-three (83%), which
cannot, by any stretch of imagination, be considered less than severe.

FACTS: The bank entered into a collective bargaining agreement with the MBTCEU, granting a
monthly P900 wage increase. The MBTCEU had also bargained for the inclusion of
probationary employees in the list of employees who would benefit from the first P900 increase
but the bank had adamantly refused to accede thereto. Consequently, only regular employees
were given the increase to the exclusion of probationary employees. Pursuant to Sec. 4 (a) and
(d) of RA 6727, the bank gave the P25 increase per

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day, or P750 a month, to its probationary employees and to those who had been promoted to
regular or permanent status before 01 July 1989 but whose daily rate was P100 and below.
The bank refused to give the same increase to its regular employees who were receiving more
than P100 per day and recipients of the P900 CBA increase. In order to avert an impending
strike, the bank petitioned the Secretary of Labor to assume jurisdiction over the case or to
certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g) of
the Labor Code. The parties ultimately agreed to refer the issue for compulsory arbitration to
the NLRC. The Labor Arbiter concluded that quantitative difference in wage or salary rates
among groups is a logical basis of differentiation that deserves protection from any distorting
statutory wage increase.

ISSUE: Whether the implementation by the bank of RA 6727 created a distortion that would
require an adjustment under said law in the wages of the latter‘s other various groups of
employees.

HELD: YES. The term ―wage distortion‖ is clearly defined under the Rules Implementing
Republic Act 6727. The definition of ―wage distortion,‖ shows that such distortion can so exist
when, as a result of an increase in the prescribed wage rate, an ―elimination or severe
contraction of intentional quantitative differences in wage or salary rates‖ would occur
―between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.‖ In mandating an adjustment, the law did not require that there be an
elimination or total abrogation of quantitative wage or salary differences; a severe contraction
thereof is enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in
her dissenting opinion, the contraction between personnel groupings comes close to eighty
three (83%), which cannot, by any stretch of imagination, be considered less than severe. We
must approximate an acceptable quantitative difference between and among the CBA agreed
work levels. We, however, do not subscribe to the labor arbiter‘s exacting prescription in
correcting the wage distortion. Like the majority of the members of the NLRC, we are also of the
view that giving the employees an across-the-board increase of P750 may not be conducive to
the policy of encouraging ―employers to grant wage and allowance increases to their employees
higher than the minimum rates of increases prescribed by statute or administrative
regulation,‖ particularly in this case where both Republic Act 6727 and the CBA allow a credit
for voluntary compliance.

NATIONAL FEDERATION OF LABOR, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and FRANKLIN BAKER COMPANY OF THE
PHILIPPINES (DAVAO PLANT), respondents.
G.R. No. 103586 July 21, 1994
(Third Division)

DOCTRINE: It is important to note that the remedy contemplated in the Wage Orders, and now
in Article 124 of the Labor Code, for a wage distortion consisted of negotiations between
employer and employees for the rectification of the distortion by re-adjusting the wage rates of
the differing classes of employees. As a practical matter, this ordinarily meant a wage increase
for one or more of the affected classes of employees so that some gap or differential would be
re-established.

We consider, still further, that the "regularization" of the casual or non-regular employees on
21 June 1984 which was unilaterally effected by the Company (albeit upon the request of
petitioner NFL), in conjunction with the coming into effect of the increases in daily wage
stipulated in the CBA, had the effect of rendering the whole problem of wage distortion

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academic. The act of "regularization" eliminated the classification scheme in respect of which the
wage distortion had existed.

FACTS: Wage Orders Nos. 3, 4, 5 and 6 were promulgated by the then President Marcos. All
these Wage Orders increased the statutory minimum wages of workers with differing increases
being specified for agricultural plantation and non-agricultural workers. Before the effectivity of
Wage Order No. 3, the wage rates of regular employees and of casual (or non-regular)
employees of private respondent Franklin Baker Company ("Company") were such that there
was a positive differential between the two (2) in the amount of P4.56. Upon the effectivity of
Wage Order No. 5, grievance meetings were held by petitioner NFL and private respondent
Company addressing the impact which implementation of the various Wage Orders had on the
wage structure of the Company. Later on all the casual or non-regular employees of the
Company were "regularized," pursuant to the request of petitioner NFL.

On 1 July 1984, the effectivity date of the 1984 CBA between NFL and the Company, all
regular employees of the Company received an increase of P1.84 in their daily wage; the regular
daily wage of the regular employees thus became P35.84 as against P34.00 per day for non-
regular employees.

As a result of the implementation of Wage Order No. 6, casual employees received an increase
of their daily wage from P34.00 to P36.00. The Company then unilaterally granted an across-
the-board increase of P2.00 in the daily rate of all regular employees. Further, all regular
employees who were members of the collective bargaining unit got a raise of P1.76 in their
basic daily wage. Finally, the lowest paid regular employee had a basic daily rate of P64.64, or
P10.64 more than the statutory minimum wage paid to a non-regular employee.

Later on, Petitioner Union demanded rectification of the wage distortion.

ISSUE: Whether or not the wage distortion had ceased to exist, after 1 July 1984.

HELD: A statutory definition of "wage distortion" is now found in Article 124 of the Labor Code
as amended by Republic Act. No. 6727 (dated 9 June 1989) which reads as follows:

Article 124. Standards/Criteria for Minimum Wage Fixing — . . .

xxx xxx xxx
As used herein, a wage distortion shall mean a situation where an increase in
prescribed wage rates results in the elimination or severe contraction of intentional
quantitative differences in wage or salary rates between and among employee groups in
an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical bases of differentiation.
(Emphasis supplied)

From the above quoted material, it will be seen that the concept of wage distortion assumes
an existing grouping or classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected in a differing
wage rate for each of the existing classes of employees. The wage distortion anticipated in Wage
Orders Nos. 3, 4, 5 and 6 was a "distortion" (or "compression") which ensued from the impact
of those Wage Orders upon the different wage rates of the several classes of employees. Thus
distortion ensued where the result of implementation of one or another of the several Wage
Orders was the total elimination or the severe reduction of the differential or gap existing
between the wage rates of the differing classes of employees.

It is important to note that the remedy contemplated in the Wage Orders, and now in Article
124 of the Labor Code, for a wage distortion consisted of negotiations between employer and
employees for the rectification of the distortion by re-adjusting the wage rates of the differing

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classes of employees. As a practical matter, this ordinarily meant a wage increase for one or
more of the affected classes of employees so that some gap or differential would be re-
established. There was no legal requirement that the historical gap which existed before the
implementation of the Wage Orders be restored in precisely the same form or amount.

Applying the above concept to the case at bar, we note that there did exist a two-fold
classification of employees within the private respondent Company: regular employees on the
one hand and casual (or non-regular) employees on the other. As can be seen from the figures
referred to earlier, the differential between these two (2) classes of employees existing before
Wage Order No. 3 was reduced to zero upon the effectivity of Wage Order No. 5 on 16 June
1984. Obviously, distortion — consisting of complete elimination of the wage rate differential —
had occurred. It is equally clear, however, that fifteen (15) days later, on 1 July 1984, upon
effectivity of the wage increase stipulated in the collective bargaining agreement between the
parties, a gap or differential of P1.84 was re-created. This restored differential persisted after
the effectivity of Wage Order No. 6 on 1 November 1984. By operation of the same CBA, by 1
July 1985, the wage differential had grown to P3.60.

We believe and so hold that the re-establishment of a significant gap or differential between
regular employees and casual employees by operation of the CBA was more than substantial
compliance with the requirements of the several Wage Orders (and of Article 124 of the Labor
Code). That this re-establishment of a significant differential was the result of collective
bargaining negotiations, rather than of a special grievance procedure, is not a legal basis for
ignoring it. x x x

We consider, still further, that the "regularization" of the casual or non-regular employees on
21 June 1984 which was unilaterally effected by the Company (albeit upon the request of
petitioner NFL), in conjunction with the coming into effect of the increases in daily wage
stipulated in the CBA, had the effect of rendering the whole problem of wage distortion
academic. The act of "regularization" eliminated the classification scheme in respect of which the
wage distortion had existed.
Submitted by: Del Rosario, Eunice

Manila Mandarin Employees Union vs. NLRC, G.R. No. 108556, November 19, 1996

DOCTRINE:Wage Distortions; Prior to the effectivity on June 9, 1989 of Republic Act No. 6727,
the concept of ―wage distortion‖ was relatively obscure.—Coming now to the issue of wage
distortion, prior to the effectivity on June 9, 1989 of Republic Act No. 6727 which, among
others, amended Article 124 (Standards/Criteria for Minimum Wage Fixing) of the Labor Code,
the concept of ‗wage distortion‘ was relatively obscure. So it was observed by this Court in
National Federation of Labor vs. NLRC, a case involving the same subject Wage Orders.

FACTS: The Manila Mandarin Employees Union (‖UNION‖), as exclusive bargaining agent of the
rank- and-file employees of the Manila Mandarin Hotel, Inc. (―MANDARIN‖), filed with the NLRC
Arbitration Branch a complaint in its members' behalf to compel the Hotel to pay the salary
differentials of the individual employees concerned because of wage distortions in their salary
structure allegedly created by the upward revisions of the minimum wage pursuant to various

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Presidential Decrees and Wage Orders, and the failure of MANDARIN to implement the
corresponding increases in the basic salary rate of newly-hired employees.

The Labor Arbiter eventually ruled in favor of the UNION, holding that there were in fact wage
distortions entitling its members to salary adjustments.

The Labor Arbiter ruled that a wage distortion existed, and that "the only and logical way to
correct (it) in the salary structure of the employees of respondent Hotel is to apply the
corresponding increase made by way of revising upward the minimum wage or integration of
the ECOLA into the basic wage as embodied in the various Presidential Decrees and Wage
Orders, across-the-board, so that employees whose salaries are above the minimum set by law
but who have already been long in the service will not be discriminated against."

ISSUE: Whether or not there was wage distortion in the salaries of Mandarin‘s employees?

HELD: No, There is no wage distortion, The Court agrees that the claimed wage distortion was
actually a result of the UNION'S failure to appreciate various circumstances relating to the
employment of the thirteen employees. For instance, while some of these employees mentioned
by UNION Vice- President Arnulfo Castro occupied the same or similar positions, they were
hired by the Hotel on different dates and at different salaries.

Respondent Commission correctly concluded that these did not represent cases of wage
distortion contemplated by the law (Article 124, Labor Code, as amended), i.e., a "situation
where an increase in prescribed wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and among employees
groups in an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical basis of differentiation."

In fact, a comparative analysis of the wages of the Hotel's employees from 1978 to 1984 vis a
vis the minimum wages fixed by law for the period reveals that at no time during the said
period was there any underpayment of wages by the respondent Hotel. On the contrary, the
prevailing monthly salaries of the subject hotel employees appear to be over and above the
minimum amounts required under the applicable Presidential Decrees and Wage Orders.

Submitted by: Chen, Timothy

Wage Studies, Wage Agreements and Wage Determination

(Article 120-127)
Wage Fixing

CAGAYAN SUGAR MILLING COMPANY, petitioner,

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

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DOCTRINE: Article 123 of the Labor Code provides: Whenever conditions in the region so
warrant, the Regional Board shall investigate and study all pertinent facts, and, based on the
standards and criteria herein prescribed, shall proceed to determine whether a Wage Order
should be issued. Any such Wage Order shall take effect after fifteen (15) days from its
complete publication in at least one (1) newspaper of general circulation in the region.

"In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees' and employers' groups and other
interested parties.

FACTS: On November 16, 1993, Regional Wage Order No. RO2-02[1] was issued by the
Regional Tripartite Wage and Productivity Board, Regional Office No. II of the Department of
Labor and Employment (DOLE). It provided, inter alia, that: "Section 1. Upon effectivity of this
Wage Order, the statutory minimum wage rates applicable to workers and employees in the
private sector in Region II shall be increased as follows: x x x 1.2 P14.00 per day .... Cagayan x
x x"

On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office examined the
books of petitioner to determine its compliance with the wage order. They found that petitioner
violated the wage order as it did not implement an across the board increase in the salary of its
employees.

At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that
it complied with Wage Order No. RO2-02 as it paid the mandated increase in the minimum
wage.

In an Order dated December 16, 1994, public respondent Regional Director Ricardo S.
Martinez, Sr. ruled that petitioner violated Wage Order RO2-02 by failing to implement an
across the board increase in the salary of its employees. He ordered petitioner to pay the
deficiency in the salary of its employees in the total amount of P555,133.41.

On January 6, 1995, petitioner appealed to public respondent Labor Secretary Leonardo A.

Quisumbing. On the same date, the Regional Wage Board issued Wage Order No. RO2-02-A,[2]
amending the earlier wage order, thus: "Section 1. Section 1 of Wage Order No. RO2-02 shall
now read as, "Upon effectivity of this Wage Order, the workers and employees in the private
sector in Region 2 shall receive an across the board wage increase as follows: x x x 1.2 P14.00
per day .... Cagayan x x x. And "Section 2. This amendment is curative in nature and shall
retroact to the date of the effectivity of Wage Order No. RO2-02."

ISSUE: WON WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN
VIOLATION OF THE PROCEDURE PROVIDED BY LAW AND IN VIOLATION OF PETITIONER'S
RIGHT TO DUE PROCESS OF LAW.

HELD: YES.

Article 123 of the Labor Code provides: Whenever conditions in the region so warrant, the
Regional Board shall investigate and study all pertinent facts, and, based on the standards and
criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued.
Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at
least one (1) newspaper of general circulation in the region.

"In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees' and employers' groups and other
interested parties.

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In passing RO2-02-A without going through the process of public consultation and hearings,
the Regional Board deprived petitioner and other employers of due process as they were not
given the opportunity to ventilate their positions regarding the proposed wage increase. In
wage-fixing, factors such as fair return of capital invested, the need to induce industries to
invest in the countryside and the capacity of employers to pay are, among others, taken into
consideration. Hence, our legislators provide for the creation of Regional Tripartite Boards
composed of representatives from the government, the workers and the employers to determine
the appropriate wage rates per region to ensure that all sides are heard. For the same reason,
Article 123 of the Labor Code also provides that in the performance of their wage-determining
functions, the Regional Board shall conduct public hearings and consultations, giving notices
to interested parties. Moreover, it mandates that the Wage Order shall take effect only after
publication in a newspaper of general circulation in the region. It is a fundamental rule, borne
out of a sense of fairness, that the public is first notified of a law or wage order before it can be
held liable for violation thereof. In the case at bar, it is indisputable that there was no public
consultation or hearing conducted prior to the passage of RO2-02-A. Neither was it published
in a newspaper of general circulation as attested in the February 3, 1995 minutes of the
meeting of the Regional Wage Board that the non-publication was by consensus of all the
board members. Hence, RO2-02-A must be struck down for violation of Article 123 of the Labor
Code.
Submitted by: Escol, Hanzel Grace

ECP VS. NWPC

G.R. NO. 96169 SEPTEMBER 24, 1991
SECOND DIVISION

DOCTRINE: "Wage" paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract of employment
for work done or to be done, or for services rendered or to be rendered and includes the fair
and reasonably value, as determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee. "Fair and reasonable value"
shall not include any profit to the employer or to any person affiliated with the employer.

FACTS:Petitioners ECOP questioned the validity of the wage order issued by the RTWPB dated
October 23, 1990 pursuant to the authority granted by RA 6727. The wage order increased the
minimum wage by P17.00 daily in the National Capital Region.

The wage order is applied to all workers and employees in the private sector of an increase of P
17.00 including those who are paid above the statutory wage rate. ECOP appealed with the
NWPC but dismissed the petition.

The Solicitor General in its comment posits that the Board upon the issuance of the wage order
fixed minimum wages according to the salary method. Petitioners insist that the power of
RTWPB was delegated, through RA 6727, to grant minimum wage adjustments and in the
absence of authority, it can only adjust floor wages.

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

HELD: The Court agrees with the Solicitor General. It noted that there are two ways in the
determination of wage, these are floor wage method and salary ceiling method. The floor wage
method involves the fixing of determinate amount that would be added to the prevailing
statutory minimum wage while the salary ceiling method involves where the wage adjustment
is applied to employees receiving a certain denominated salary ceiling.

RA 6727 gave statutory standards for fixing the minimum wage.

ART. 124. Standards/Criteria for Minimum Wage Fixing — The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to
maintain the minimum standards of living necessary for the health, efficiency and general well-
being of the employees within the framework of the national economic and social development
program. In the determination of such regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:

(a) The demand for living wages;

(b) Wage adjustment vis-a-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(i) Effects of employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of economic and
social development."

The wage order was not acted in excess of board‘s authority. The law gave reasonable
limitations to the delegated power of the board.

Submitted by: Elauria, J. Paulo Relunia

Administration and Enforcement

(Article 128)

Subjects of Enforcement

Statutory Benefits are apart from Contractual Benefits

MEYCAUAYAN COLLEGE, petitioner,

vs.
HONORABLE FRANKLIN M. DRILON, in his capacity as Secretary of the Department of
Labor and Employment and MEYCAUAYAN COLLEGE FACULTY AND PERSONNEL
ASSOCIATION (MCFPA), respondents.
G.R. No. 81144 May 7, 1990
(Third Division)

DOCTRINE: Increments to the laborers' financial gratification, be they in the form of salary
increases or changes in the salary scale are aimed at one thing — improvement of the economic
predicament of the laborers. As such, they should be viewed in the light of the State's avowed
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policy to protect labor. Thus, having entered into an agreement with its employees, an
employer may not be allowed to renege on its obligation under a collective bargaining
agreement should, at the same time, the law grant the employees the same or better terms and
conditions of employment. Employee benefits derived from law are exclusive of benefits arrived
at through negotiation and agreement unless otherwise provided by the agreement itself or by
law.

FACTS: Petitioner is a private educational institution operating in Meycauayan, Bulacan Its

board of trustees recognized the Meycauayan College Faculty and Personnel Association as the
employees' union in the Meycauayan College. Prior to said recognition, petitioner and the
union, then headed by Mrs. Lim, entered into a collective bargaining agreement for 1983-1986.
During the lifetime of the collective bargaining agreement, the following were issued: (a) Wage
Order No. 3 - increasing the minimum daily living allowance in the private sector; (b) Wage
Order No. 4 - integrating as of said date the emergency cost of living allowances into the basic
pay of covered workers in the private sector; (c) Wage Order No. 5 - increasing the cost of living
allowance of workers in the private sector whose basic salary or wage is not more than P1,800
a month; and (d) Wage Order No. 6 - increasing the daily living allowances.

The union admits herein that its members were paid all these increases in pay mandated by
law. It appears, however, that new president of the union, Mrs. Villarico, unintentionally
discovered that Article IV thereof had not been implemented by the petitioner. Consequently,
the union filed with the DOLE, a notice of strike on the ground of unfair labor practice alleging
therein violation of the collective bargaining agreement.The Secretary of Labor assumed
jurisdiction over the labor dispute and instructed Regional Office No. III to hear and receive the
evidence of the parties and to submit a report thereon.
The Director of Regional Office No. III stated that the management had indeed complied with
the salary and allowance increases ordained by law. However, he observed that the college's
compliance with said increases in salary and allowance were "not an ipso facto compliance with
the collective bargaining agreement without violating the very aims and purpose of free
collective bargaining for better terms and conditions of employment." According to the Director,
the two should be distinguished from each other. Thus, while compliance with increases
provided by law was mandatory, compliance with the provisions of a collective bargaining
agreement was contractual and obligatory.Accordingly, the Director recommended that the
management of Meycauayan College be directed to immediately comply with the salary scale
provision of the collective bargaining agreement and "to pay all covered union members their
salary differential both during regular classes and summer vacations as well as the 13th month
differential pay.The Secretary of Labor agreed with the Director's findings. Its motion for
reconsideration having been denied, Meycauayan College filed the instant petition for certiorari.
The Court issued said temporary restraining order.

ISSUE: Whether increases in employees' salaries resulting from the implementation of

presidential decrees and wage orders, which are over and above the agreed salary scale
contracted for between the employer and the employees in a collective bargaining agreement,
preclude the employees from claiming the difference between their old salaries and those
provided for under said salary scale.

HELD:The petition has no merit. As correctly ruled by public respondent, a collective

bargaining agreement is a contractual obligation. It is distinct from an obligation imposed by
law. The terms and conditions of a collective bargaining contract constitute the law between
the parties. Beneficiaries thereof are therefore, by right, entitled to the fulfillment of the
obligation prescribed therein. Consequently, to deny binding force to the collective bargaining
agreement would place a premium on a refusal by a party thereto to comply with the terms of
the agreement. Such refusal would constitute an unfair labor practice.

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Moreover, compliance with a collective bargaining agreement is mandated by the expressed

policy to give protection to labor. Unless otherwise provided by law, said policy should be given
paramount consideration. Hence, inasmuch as the petitioner has failed to point to any
provision of law or even of the collective bargaining agreement itself to the effect that benefits
provided by the former encompass those provided by the latter, benefits derived from either the
law of a contract should be treated as distinct and separate from each other.

Increments to the laborers' financial gratification, be they in the form of salary increases or
changes in the salary scale are aimed at one thing — improvement of the economic
predicament of the laborers. As such, they should be viewed in the light of the State's avowed
policy to protect labor. Thus, having entered into an agreement with its employees, an
employer may not be allowed to renege on its obligation under a collective bargaining
agreement should, at the same time, the law grant the employees the same or better terms and
conditions of employment. Employee benefits derived from law are exclusive of benefits arrived
at through negotiation and agreement unless otherwise provided by the agreement itself or by
law.
Article 264(g), now Article 263(g) of the Labor Code is broad enough to give the Secretary of
Labor the power to take jurisdiction over what appears at first blush to be an ordinary money
claim. Claims for pay differentials may have that character but, as earlier stated, if they arise
out of a violation of a collective bargaining agreement, they assume the character of an unfair
labor practice and are, therefore, well within the ambit of the jurisdiction of the Secretary of
Labor to decide. WHEREFORE, the decision of the Secretary of Labor is hereby AFFIRMED.
Submitted by: Gumtang, Lianne

ST. JOSEPH COLLEGE, petitioner

vs.
ST. JOSEPH COLLEGE WORKERS ASSOCIATION, respondent
G.R. No. 155609, January 17, 2005
(THIRD DIVISION)

DOCTRINE: The law allows an increase in school tuition fees on the condition that 70 percent
of the increase shall go to the payment of personnel benefits. Plainly unsupported by the law
or jurisprudence is petitioners contention that the payment of such benefits should be based
not only on the rate of tuition fee increases, but also on other factors like the decrease in the
number of enrollees; the number of those exempt from paying the fees, like scholars; the
number of dropouts who, as such, do not pay the whole fees; and the bad debts incurred by
the school. The financial dilemma of petitioner may deserve sympathy and support, but its
remedy lies not in the judiciary but in the lawmaking body.

FACTS: Petitioner is a non-stock, non-profit Catholic educational institution while respondent

is a legitimate labor organization which is currently the official bargaining representative of all
employees of petitioner except the faculty and consultants of the Graduate School, managerial
employees and those who occupy confidential positions.

For the school year 2000-2001, petitioner increased its tuition fees for all its departments.
Thus, in accordance with Article VII, Section 1 of its CBA with respondent, which reads: Sec. 1.
Tuition Fee Increases. The SCHOOL shall allocate eighty-five percent (85%) of incremental
proceeds from every tuition fee increase solely and expressly for adjustments in employee
salaries and benefits, including those that will be legally mandated during the lifetime of this
CBA.

Petitioner provided respondent with the results of its computation with the request that it be
advised on how its members would like the school to implement the aforesaid increase,

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whether as part of their basic salary or as allowances. respondent presented to petitioner its
computations of the incremental proceeds which greatly differed from the amount stated by the
latter. Respondent refused to accept the results of petitioner computation.

In the Voluntary Arbitration, the judgment was in favor of the respondents. The case was
appealed to the Court of Appeals which the petitioner still disagreed with the decision. Hence
recourse to the High Court.

ISSUE: Whether or not the proper computation of the incremental proceeds from a tuition fee
increase be based on section 5 of R.A. 6728.

RULING: Yes. Section 5(2) of Republic Act 6728 allows a tuition fee increase only under the
condition that at least 70 percent pf the increase shall be disbursed as salaries, wages,
allowances and other benefits for teaching and non-teaching personnel. The law imposes this
requirement without exceptions or qualifications.

The law does not speak, directly or indirectly, of the contention of petitioner that in the event
that its total tuition income is lesser than that in the previous year, then the whole amount of
the increase in tuition fee, and not merely up to 30 percent as provided by law, may be used for
the improvement and modernization of infrastructure and for the payment of other costs of
operation.
Submitted by: Gonzales, Van Angelo G.

Cases on Enforcement

COCOFED ET. AL., VS. HON. CRESENCIANO B. TRAJANO

G.R. NO. 982767
FEBRUARY 15, 1995
ROMERO, J.

DOCTRINE: Findings of administrative agencies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but even
finality.

FACTS: Philippine Coconut Producers Federation operates petitioner COCOFED (Kalamansig),

a coconut plantation utilized as a demonstration farm for replanting and/or training area for
coconut farmers, located in Kalamansig, Sultan Kudarat. On November 15, 1988, a complaint
inspection was conducted by the Department of Labor and Employment, Region XII, Cotabato
City in response to complaints filed by two of petitioner's employees, Alex Edicto and Delia
Pahuwayan. The inspection revealed that petitioner was guilty of underpayment of wages,
emergency cost of living allowance (ECOLA) and 13th month pay. Accordingly, notice of
inspection results was issued: requiring petitioner to effect restitution or correction within five
(5) days from notice. Summary Petitioner submitted its position paper claiming that it should
be classified as an establishment with less than 30 employees and with a paid-up capital of
P500,000.00 or less as evidenced by the assessment of the municipal treasurer. Moreover,
complainants worked for less than eight hours, a minimum of four and maximum of six. A
three (3) year actual payrolls from March 1985 to February 1989 showing the daily actual
payment made by the respondent to involved workers are substantial evidence against the
mere memorandum issued by the respondents on the matter. Further, such payrolls submitted
by respondents are not mere summaries of daily efforts of workers but these are daily records
showing workers actual daily rate.
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ISSUE: Whether or not the petitioner was justified in paying an amount less than the statutory
minimum wage.

HELD: NO. Petitioner would have us overturn the factual finding of public respondents that its
employees are daily paid workers. This we are unable to do for the payrolls submitted by it
support the latters' position. Findings of administrative agencies which have acquired expertise
because their jurisdiction is confined to specific matters are generally accorded not only respect
but finality. Moreover, there is absolutely nothing in the records which show that petitioner's
employees worked for less than eight hours. Finally, there would have been no need for
petitioner to make an offer increasing the wage to P45.00 per day if complainants were indeed
piece rate workers, as it claimed and if their wages were not underpaid, as found by public
respondents. WHEREFORE, the petition is DISMISSED.

Submitted by: Jabal, Joel Malcolm D.

CEBU OXYGEN & ACETYLENE CO., INC. (COACO) petitioner, vs.

SECRETARY FRANKLIN M. DRILON OF DOLE et al, respondents
G.R. No. 82849 August 2, 1989
EN BANC

FACTS: COACO and the union of its rank and file employees, COAVEA entered into a CBA
covering the years 1986 to 1988 providing for salary increases. Said CBA contained the
following provision.

IT IS HEREBY EXPRESSLY AGREED AND UNDERSTOOD THAT THIS PAY INCREASE SHALL
BE CREDITED AS PAYMENT TO ANY MANDATED GOVERNMENT WAGE ADJUSTMENT OR
ALLOWANCE INCREASES WHICH MAY BE ISSUED BY WAY OF LEGISLATION, DECREE OR
PRESIDENT

IF THE WAGE ADJUSTMENT OF ALLOWANCE INCREASES DECREED BY LAW, LEGISLATION

OR PRESIDENTIAL EDICT IN ANY PARTICULAR YEAR SHALL BE HIGHER THAN THE
FOREGOING INCREASES IN THAT PARTICULAR YEAR, THEN THE COMPANY SHALL PAY
THE DIFFERENCE.

On December 14, 1987, RA 6640 was passed increasing the minimum wage. The Secretary of
Labor issued the pertinent rules implementing the provisions of Republic Act No. 6640. Section
8 thereof prohibits the employer from crediting anniversary wage increases negotiated under a
collective bargaining agreement against such wage increases mandated by RA 6640. An
inspection was done by DOLE and resulted to the finding that COACO violated RA 6640 for
failing to provide the minimum wage increase provided under the law. The Regional Director
issued and Order directing constitutes full compliance with RA 6640. However, the protest was
not entertained. Thus, a petition was filed by COACO assailing the validity of Section 8 on the
ground that it unduly expands the provisions of the said law.

ISSUE: Whether or not an Implementing Order of the Secretary of Labor and Employment
(DOLE) can provide for a prohibition not contemplated by the law it seeks to implement?

HELD: NO.

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As to the issue of the validity of Section 8 of the rules implementing Republic Act No. 6640,
which prohibits the employer from crediting the anniversary wage increases provided in
collective bargaining agreements, it is a fundamental rule that implementing rules cannot add
or detract from the provisions of law it is designed to implement. The provisions of Republic Act
No. 6640, do not prohibit the crediting of CBA anniversary wage increases for purposes of
compliance with Republic Act No. 6640. The implementing rules cannot provide for such a
prohibition not contemplated by the law. Administrative regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and
should be for the sole purpose of carrying into effect its general provisions. The law itself
cannot be expanded by such regulations. An administrative agency cannot amend an act of
Congress. Thus COACO's contention that the salary increases granted by it pursuant to the
existing CBA including anniversary wage increases should be considered in determining
compliance with the wage increase mandated by Republic Act No. 6640, is correct.

Submitted by: Mamangon, Fatima C.

ODIN SECURITY AGENCY, Petitioner,

vs.
HON. DIONISIO C. DE LA SERNA, Undersecretary, DOLE, HON. LUNA C. PIEZAS, RD
(DOLE), National Capital Region and SERGIO APILADO, ET AL., Respondents.
G.R. No. 87439 February 21, 1990
FIRST DIVISION

FACTS: A complaint was filed by respondent Apilado et al charging the petitioner Odin
Security with underpayment of wages, illegal deductions, etc. Petitioner contended that 48
guards threatened mass action against it. Mindful of its contractual obligations to its clients,
petitioner relieved and re-assigned the complaining guards to other posts in Manila. Those
relieved were ordered to report to the agency's main office for reassignment. Those who failed to
comply were placed on "AWOL" status. Petitioner claimed it complied with the Labor Code, in
support thereof, it submitted the "Quitclaim and Waiver" of the complainants. Later,
complainants repudiated their quitclaim and waiver. They alleged that management pressured
them to sign documents which they were not allowed to read and that if such waiver existed,
they did not have any intention of waiving their rights under the law. Piezas, RD, NCR, DOLE
issued an order directing respondent to pay complainants. The guards filed a MR which was
treated as an appeal by respondent Undersecretary De la Serna. The Undersecretary affirmed
the order of the RD. Petitioner filed a MR. Undersecretary modified his order. Hence, this
petition, the petitioner alleges that the Order of respondent Piezas (RD, DOLE) and the Orders
affirming and modifying by respondent De la Serna (Usec. DOLE) is without jurisdiction.

ISSUE: Whether or not Regional Director and Undersecretary of DOLE have jurisdiction over
violations of labor standards provisions of the Labor Code or other legislation.

HELD: YES.

The petition has no merit.

The jurisdiction of public respondents over the complaints is clear from a reading of Article
128(b) of the Labor Code, as amended by Executive Order No. 111, thus:

"(b) The provisions of Article 217 of this Code to the contrary notwithstanding and in cases
where the relationship of employer-employee still exists, the Minister of Labor and Employment

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or his duly authorized representatives shall have the power to order and administer, after due
notice and hearing, compliance with the labor standards provisions of this Code and other
labor legislation based on the findings of labor regulation officers or industrial safety engineers
made in the course of inspection, and to 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 regulation officer and raises issues which cannot be resolved without considering
evidentiary matters that are not verifiable in the normal course of inspection."

In Briad Agro Development Corp. vs. Hon. Dionisio De la Serna, G.R. No. 82805, June 29, 1989,
we clarified the amendment when we ruled, thus:

"To recapitulate, under EO 111, the Regional Directors, in representation of the Secretary of
Labor and notwithstanding the grant of exclusive original jurisdiction to Labor Arbiters by Article
217 of the Labor Code, as amended have power to hear cases involving violations of labor
standards provisions of the Labor Code or other legislation discovered in the course of normal
inspection, and order compliance therewith, provided that:

"1) the alleged violations of the employer involve persons who are still his employees, i.e., not
dismissed; and
"2) the employer does not contest the findings of the labor regulations officer or raise issues
which cannot be resolved without considering evidentiary matters that are not verifiable in the
normal course of inspection." (p. 9, Concurring Opinion, J.Narvasa.)
The ruling in Briad Agro was reiterated in Maternity Children's Hospital vs. Secretary of Labor,
G.R. No. 78909, June 30, 1989:

"x x x Under the present rules, a Regional Director exercises both visitorial and enforcement
power over labor standards cases, and is therefore empowered to adjudicate money claims,
provided there still exists an employer-employee relationship, and the findings of the regional
office is not contested by the employer concerned." (p. 5, Decision.)
Submitted by: Lim, Anton Kristoffer M.

PLACIDO O. URBANES, JR., doing business under the name & style of CATALINA
SECURITY AGENCY, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and SOCIAL SECURITY
SYSTEM, respondents.
GR No. 122791 February 19, 2003
(Third Division)

DOCTRINE: It is well settled in law and jurisprudence that where no employer-employee

relationship exists between the parties and no issue is involved which may be resolved by
reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is
the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not
seeking any relief under the Labor Code but seeks payment of a sum of money and damages on
account of petitioner's alleged breach of its obligation under their Guard Service Contract. The
action is within the realm of civil law hence jurisdiction over the case belongs to the regular
courts. While the resolution of the issue involves the application of labor laws, reference to the
labor code was only for the determination of the solidary liability of the petitioner to the
respondent where no employer-employee relation exists.

FACTS:Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina
Security Agency, entered into an agreement1 to provide security services to respondent Social
Security System (SSS). During the effectivity of the agreement, petitioner, by letter of May 16,

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1994,2 requested the SSS for the upward adjustment of their contract rate in view of Wage
Order No. NCR-03 which was issued by the Regional Tripartite Wages and Productivity Board-
NCR pursuant to Republic Act 6727 otherwise known as the Wage Rationalization Act.

After several letters sent to SSS that went unheeded, the petitioner pulled out his agency and
on June 29, 1994, petitioner filed a complaint with the DOLE-NCR against the SSS seeking the
implementation of Wage Order No. NCR-03. Finding for petitioner, the Regional Director of the
DOLE-NCR issued an Order on September 16, 1994 directing SSS to pay the petitioner wage
differentials. The SSS moved to reconsider the September 16, 1994 Order of the Regional
Director, praying that the computation be revised and the same was modified and reduced by
the Regional director in its order dated September 16, 1994.

SSS then appealed the decision to the Secretary of Labor setting aside the decision of the
Regional Director and the case was remanded for re-computation. The petitioner alleged that
the Secretary of Labor does not have jurisdiction to review appeals in complaints filed under
Article 129 of the Labor Code. On the other hand, the respondent SSS contends that Article
128, not Article 129, is applicable to the case.

ISSUE: Whether or not the NLRC has jurisdiction to solve cases involving the enforcement of
wage adjustment and other benefits.

HELD: No, the NLRC does not have the jurisdiction to resolve the issue in the case.

In the case of Lapanday v. Court of Appeals, the Court ruled:

We agree with the respondent that the RTC has jurisdiction over the subject matter of the
present case. It is well settled in law and jurisprudence that where no employer-employee
relationship exists between the parties and no issue is involved which may be resolved
by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private
respondent is not seeking any relief under the Labor Code but seeks payment of a sum of
money and damages on account of petitioner's alleged breach of its obligation under
their Guard Service Contract. The action is within the realm of civil law hence
jurisdiction over the case belongs to the regular courts. While the resolution of the issue
involves the application of labor laws, reference to the labor code was only for the
determination of the solidary liability of the petitioner to the respondent where no
employer-employee relation exists.

x x x (Emphasis and underscoring supplied).

In the case at bar, even if petitioner filed the complaint on his and also on behalf of the security
guards, the relief sought has to do with the enforcement of the contract between him and the
SSS which was deemed amended by virtue of Wage Order No. NCR-03. The controversy subject
of the case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil
courts. Submitted by: Mayoralgo, Remy

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Employment of Women
(Article 130-138)

Employment

Zialcita vs. PAL RO4-3-3398-76, February 20, 1977

FACTS: Zialcita is a steward of PAL. She was dismissed from work because she had
gotten married. PAL argued and cited its policy that stewardesses must be single. The
policy also states that subsequent marriage of a stewardess shall automatically
terminate employment.

Zialcita anchored on Article 136 of the Labor Code. PAL sought refuge from Article
132.

Article 132 provides, ―Facilities for women. The Secretary of Labor and Employment
shall establish standards that will ensure the safety and health of woman employees.
In appropriate cases, he shall, by regulations, require any employer to determine
appropriate minimum age and other standards for retirement or termination in special
occupations such as those of flight attendants and the like.‖ Article 136 provides,
―Stipulation against marriage. 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.‖

ISSUE: Whether or not, the employment dismissal of Zialcita was proper.

HELD: No, the employment dismissal was improper. First, during the time Zialcita
was terminated, no regulation had yet been issued by the Secretary of Labor to
implement Article 132. Second, even assuming that the Secretary of Labor had already
issued such a regulation and to the effect that stewardesses should remain single,
such would be in violation of Article 136 of the Labor Code.

Article 136‘s protection of women is broader and more powerful than the regulation
provided under Article 132.

Olympia Gualberto vs. Marinduque Mining Industrial Corporation, G.R. No. 52753-R,
June 28, 1978

FACTS: Olympia Gualberto, while still single, was employed in 1971 by defendant as company
dentist in its Surigao Nickel Project. When she married Roberto Gualberto, an electrical
engineer in the same project, the company informed her that they considered her resigned,
invoking a policy of the firm to consider, due to lack of facilities for women at Nonoc Island,
Surigao. They further claimed that plaintiff was employed in the project with the verbal
understanding that her services would be terminated when she gets married.

ISSUE: Whether or not an employer may terminate an employee by reason of marriage.

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HELD: NO. The pre-employment agreement is void. It is an example of discriminatory

chauvinism. Acts which deny equal employment opportunities to women simply because of
their sex are inherently odious and must be struck down. Throughout the records of the case
that the prohibition against marriage and the resignation letter on account of marriage were
only for women employees. Male employees were not enjoined from marriage.

Employment of Househelpers
(Article 141-152)

Article 143: Minimum Wage

APEX MINING COMPANY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO, respondents.
G.R. No. 94951 April 22, 1991
(FIRST DIVISION)

DOCTRINE: Laundrywoman in staffhouses of a company, not included in the definition of

domestic helpers; Laundrywoman not actually serving the family of the employer but working
in the staffhouses or within the premises of the business of the employer is a regular employee.

FACTS: Private respondent Sinclita Candida was employed by petitioner Apex Mining
Company, Inc. on May 18, 1973 to perform laundry services at its staff house located at
Masara, Maco, Davao del Norte. In the beginning, she was paid on a piece rate basis. However,
on January 17, 1982, she was paid on a monthly basis at P250.00 a month which was
ultimately increased to P575.00 a month.

While she was attending to her assigned task and she was hanging her laundry, she
accidentally slipped and hit her back on a stone. She reported the accident to her immediate
supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit. As a result of the
accident she was not able to continue with her work. She was permitted to go on leave for
medication. De la Rosa offered her the amount of P 2,000.00 which was eventually increased to
P5,000.00 to persuade her to quit her job, but she refused the offer and preferred to return to
work. Petitioner did not allow her to return to work and dismissed her on February 4, 1988.

On March 11, 1988, private respondent filed a request for assistance with the Department of
Labor and Employment. After the parties submitted their position papers as required by the
labor arbiter assigned to the case on August 24, 1988 the latter rendered a decision, ordering
the respondent, Apex Mining Company, Inc., to pay the complainant a total amount of
P55,161.42.

Not satisfied therewith, petitioner appealed to NLRC. NLRC dismissed the appeal for lack of
merit and affirmed the appealed decision. A subsequent motion for reconsideration was
likewise denied.Hence, the herein petition for review by certiorari, with the main thrust that
private respondent should be treated as a mere househelper or domestic servant and not as a
regular employee of petitioner.

ISSUE: Whether or not the househelper in the staff houses of an industrial company is a
domestic helper or a regular employee of the said firm.

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HELD: No.

The term "househelper" as used herein is synonymous to the term "domestic servant" and shall
refer to any person, whether male or female, who renders services in and about the employer's
home and which services are usually necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the
employer's family.

The foregoing definition covers family drivers, domestic servants, laundry women, yayas,
gardeners, houseboys and other similar househelps. Hence, the definition cannot be
interpreted to include househelp or laundrywomen working in staffhouses of a company, like
petitioner who attends to the needs of the company's guest and other persons availing of said
facilities.

The criteria is the personal comfort and enjoyment of the family of the employer in the home of
said employer. While it may be true that the nature of the work of a househelper, domestic
servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the
difference in their circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single proprietorship engaged in
business or industry or any other agricultural or similar pursuit, service is being rendered in
the staffhouses or within the premises of the business of the employer. In such instance, they
are employees of the company or employer in the business concerned entitled to the privileges
of a regular employee.
Submitted by: Ocampo, Rhonald S.

Healthy, Safety and Social Welfare Benefits

(Article 156-161)

Medical, Dental and Occupational Safety

PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner,

vs.
RICARDO DE VERA, respondent.
G.R. No. 157214 June 7, 2005

FACTS: Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged

in the business of communication services and allied activities, while respondent Ricardo De
Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its
employees. The turning point in the parties‘ relationship surfaced in December 1996 when
Philcom, thru a letter bearing on the subject boldly written as "TERMINATION –
RETAINERSHIP CONTRACT", informed De Vera of its decision to discontinue the latter‘s
"retainer‘s contract with the Company effective at the close of business hours of December 31,

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1996" because management has decided that it would be more practical to provide medical
services to its employees through accredited hospitals near the company premises.

On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor
Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as
its company physician since 1981 and was dismissed without due process. He averred that he
was designated as a "company physician on retainer basis" for reasons allegedly known only to
Philcom. He likewise professed that since he was not conversant with labor laws, he did not
give much attention to the designation as anyway he worked on a full-time basis and was paid
a basic monthly salary plus fringe benefits, like any other regular employees of Philcom. The
Labor Aribiter ruled that De Vera was an "independent contractor" and that he "was not
dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed
after December 31, 1996. On appeal, it was reversed by NLRC in finding that De Vera is
Philcom‘s "regular employee" and accordingly directed the company to reinstate him to his
former position without loss of seniority rights and privileges and with full backwages from the
date of his dismissal until actual reinstatement.

ISSUE: Whether or not de Vera is an employee of PhilCom or an independent contractor.

HELD: No. The appellate court‘s premise that regular employees are those who perform
activities which are desirable and necessary for the business of the employer is not
determinative in this case. For, we take it that 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. This set-up is precisely true in the case of an
independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor
Code, quoted by the appellate court, is not the yardstick for determining the existence of an
employment relationship. As it is, the provision merely distinguishes between two (2) kinds of
employees, i.e., regular and casual. De Vera also invoked Article 157 of the Labor Code, and
argued that he satisfied all the requirements thereunder. The provision relied upon reads:

ART. 157. Emergency medical and dental services. – It shall be the duty of every employer to
furnish his employees in any locality with free medical and dental attendance and facilities
consisting of:

(c) The services of a full-time physician, dentist and full-time registered nurse as well as
a dental clinic, and an infirmary or emergency hospital with one bed capacity for every
one hundred (100) employees when the number of employees exceeds three hundred
(300).

In cases of hazardous workplaces, no employer shall engage the services of a physician

or dentist who cannot stay in the premises of the establishment for at least two (2)
hours, in the case of those engaged on part-time basis, and not less than eight (8) hours
in the case of those employed on full-time basis. Where the undertaking is
nonhazardous in nature, the physician and dentist may be engaged on retained basis,
subject to such regulations as the Secretary of Labor may prescribe to insure immediate
availability of medical and dental treatment and attendance in case of emergency.

Had only respondent read carefully the very statutory provision invoked by him, he would have
noticed that in non-hazardous workplaces, the employer may engage the services of a
physician "on retained basis." As correctly observed by the petitioner, while it is true that the
provision requires employers to engage the services of medical practitioners in certain
establishments depending on the number of their employees, nothing is there in the law which
says that medical practitioners so engaged be actually hired as employees, adding that the law,

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as written, only requires the employer "to retain", not employ, a part-time physician who
needed to stay in the premises of the non-hazardous workplace for two (2) hours.

Respondent takes no issue on the fact that petitioner‘s business of telecommunications is not
hazardous in nature. As such, what applies here is the last paragraph of Article 157 which, to
stress, provides that the employer may engage the services of a physician and dentist "on
retained basis", subject to such regulations as the Secretary of Labor may prescribe. The
successive "retainership" agreements of the parties definitely hue to the very statutory
provision relied upon by respondent.

Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that
is free from doubt. Where the law is clear and unambiguous, it must be taken to mean exactly
what it says, and courts have no choice but to see to it that the mandate is obeyed. As it is,
Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous
establishments to engage "on retained basis" the service of a dentist or physician. Nowhere
does the law provide that the physician or dentist so engaged thereby becomes a regular
employee. The very phrase that they may be engaged "on retained basis", revolts against the
idea that this engagement gives rise to an employer-employee relationship.

With the recognition of the fact that petitioner consistently engaged the services of respondent
on a retainer basis, as shown by their various "retainership contracts", so can petitioner put an
end, with or without cause, to their retainership agreement as therein provided.

Submitted by: Quevedo, Arrah Svetlana

T.

Employees’ Compensation and State Insurance Fund

(Article 166-184)

JOSE B. SARMIENTO, petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE INSURANCE
SYSTEM (National Power Corporation)
G.R. No. L-65680 May 11, 1989
THIRD DIVISION

FACTS: The late Flordeliza Sarmiento was employed by the National Power Corporation in
Quezon City as accounting clerk in May 1974. At the time of her death on August 12, 1981 she
was manager of the budget division. The deceased‘s illness was a cancer known as ―differential
squarrous cell carcinoma‖, and sought treatment in various hospitals. And on August 12,
1981,she succumbed to cardiorespiratoryarrest due to parotid carcinoma, and she was 20
years old. Believing that the deceased‘s fatal illness having been contracted during her
employment was service-connected, Jose B. Sarmiento filed a claim for death benefits under
PD 626. On September 9, 1982, the GSIS, through its Medical Services Center, denied the
claim. It was pointed out that the illness of Flordeliza was not caused by employment and
employment conditions. Dissatisfied with the respondent‘s decision of denial, Jose Sarmiento
wrote a letter to the GSIS requesting that the records of the claim be elevated to the Employees‘
Compensation Commission for review pursuant to the law and the Amended Rules on
Employees‘ Compensation. The respondent Commission affirmed the GSIS‘ decision, it found

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that the deceased‘s death is not compensable because she did not contract nor suffer from the
same reason of her work but by reason of embryonic rests and epithelial growth.

ISSUE: Whether or not the deceased‘s illness under PD 626, compensable.

HELD: NO.

Under the present law, a compensable illness means any illness accepted as an occupational
disease and listed by the Employees' Compensation Commission, or any illness caused by
employment subject to proof by the employee that the risk of contracting the same is increased
by working conditions.

Applying the law to the present case, parotid carcinoma or cancer of the salivary glands is not
an occupational disease considering the deceased's employment as accounting clerk and later
as manager of the budget division. The petitioner must, therefore, prove that his wife's ailment
was caused by her employment or that her working conditions increased the risk of her
contracting the fatal illness.
Submitted by: Paeste, Sonny Lybenson

Raro vs. Employees Compensation Commission, G.R. No. 58445, April 27, 1989

DOCTRINE: Labor Law; Labor Standards; Disability Benefits; State Insurance Fund; A
claimant for disability benefits must prove that his illness was caused by employment
and the risk of contracting the same was increased by his working conditions.—–The
law, as it now stands requires the claimant to prove a positive thing—–that the illness
was caused by employment and the risk of contracting the disease is increased by the
working conditions. To say that since the proof is not available, therefore, the trust fund
has the obligation to pay is contrary to the legal requirement that proof must be
adduced. The existence of otherwise non-existent proof cannot be presumed.

FACTS: The petitioner states that she was in perfect health when employed as a clerk
by the Bureau of Mines and Geo-Sciences at its Daet, Camarines Norte regional office on
March 17, 1975. About four years later, she began suffering from severe and recurrent
headaches coupled with blurring of vision. Forced to take sick leaves every now and
then, she sought medical treatment in Manila. She was then a Mining Recorder in the
Bureau.

The petitioner was diagnosed at the Makati Medical Center to be suffering from brain
tumor. By that time, her memory, sense of time, vision, and reasoning power had been
lost.

A claim for disability benefits filed by her husband with the Government Service
Insurance System (GSIS) was denied. A motion for reconsideration was similarly denied.
An appeal to the Employees' Compensation Commission resulted in the Commission's
affirming the GSIS decision.

ISSUE: Whether brain tumor which causes are unknown but contracted during
employment is compensable under the present compensation laws.

HELD: The key argument of the petitioner is based on the fact that medical science
cannot, as yet, positively identify the causes of various types of cancer. It is a disease

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that strikes people in general. The nature of a person's employment appears to have no
relevance. Cancer can strike a lowly paid laborer or a highly paid executive or one who
works on land, in water, or in the bowels of the earth. It makes the difference whether
the victim is employed or unemployed, a white collar employee or a blue collar worker, a
housekeeper, an urban dweller or a resident of a rural area.

The law, as it now stands requires the claimant to prove a positive thing – the illness was
caused by employment and the risk of contracting the disease is increased by the
working conditions. To say that since the proof is not available, therefore, the trust fund
has the obligation to pay is contrary to the legal requirement that proof must be
adduced. The existence of otherwise non-existent proof cannot be presumed. The Court
has recognized the validity of the present law and has granted and rejected claims
according to its provisions. We find in it no infringement of the worker's constitutional
rights.

MANUEL BELARMINO, petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE
SYSTEM, respondents.
G.R. No. 90204 May 11, 1990

DOCTRINE: The right to compensation extends to disability due to disease supervening upon
and proximately and naturally resulting from a compensable injury (82 Am. Jur. 132). Where
the primary injury is shown to have arisen in the course of employment, every natural
consequence that flows from the injury likewise arises out of the employment, unless it is the
result of an independent intervening cause attributable to complainants own negligence or
misconduct.

FACTS: Oania Belarmino was a classroom teacher of the Department of Education Culture and
Sports assigned at the Burucan Elementary School in Dimasalang, Masbate for 11 years. On
January 14, 1982, Mrs. Belarmino who was in her 8th month of pregnancy, accidentally slipped
and fell on the classroom floor. She complained of abdominal pain and stomach cramps but
she continued reporting for work because there was much work to do. On January 25, 1982,
she went into labor and prematurely delivered a baby girl at home. Her abdominal pain
persisted even after delivery. When she was brought to the hospital, her physician informed her
that she was suffering from septicemia postpartum (severe bacterial infection) due to infected
lacerations of the vagina. After she was discharged from the hospital, she died three days
thereafter. The GSIS denied the claim on the ground that septicemia post partum, the cause of
death is an occupational disease and neither was there any showing that the ailment was
contracted by reason of her employment.

On appeal to the Employees Compensation Commission, latter also denied the claim affirming
the denial of the claim by GSIS.

ISSUE: Whether the cause death of Mrs. Belarmino is not work-related and therefore not
compensable?

HELD: NO. The death of Mrs. Belarmino from septicemia post partum is compensable because
an employment accident and the conditions of her employment contributed to its development.
The condition of the classroom floor caused Mrs. Belarmino to slip and fall and suffer injury as
a result. The fall precipitated the onset of recurrent abdominal pains which culminated in the
premature termination of her pregnancy with tragic consequences to her. Her fall on the

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classroom floor brought about her premature delivery which caused the development of
postpartum septicemia which resulted in death. Her fall therefore was that set in motion an
unbroken chain of events, leading to her demise. The right to compensation the proximate
cause (cause or event that sets all other events in motion) extends to disability due to disease
supervening upon and proximately and naturally resulting from a compensable injury. Where
the primary injury is shown to have arisen in the course of employment, every natural
consequence that flows from the injury likewise arises out of the employment, unless it is the
result of an independent intervening cause attributable to claimant‘s own negligence or
misconduct. Mrs. Belarmino‘s fall was the primary injury that arose in the course of her
employment as a classroom teacher, hence, all the medical consequences flowing from it: Her
recurrent abdominal pains, the premature delivery of her baby, her septicemia post partum
and death are compensable.

CIRIACO HINOGUIN, Petitioner

Vs.
EMPLOYEES’ COMPENSATION COMMISSION AND GSIS (AFP), Respondent
G.R. No. 84307 , APRIL 17, 1989
(THIRD DIVISION)

DOCTRINE: For the injury and the resulting disability or death to be compensable, the injury
must be the result of an employment accident satisfying all of the following grounds: (1) The
employee must have been injured at the place work requires him to be;(2) The employee must
have been performing his official functions; and (3) If the injury is sustained elsewhere, the
employee must have been executing an order for the employer.

FACTS: On 1 August 1985, Sgt. Hinoguin and two (2) members of his Detachment, Cpl.
Rogelio Clavo and Dft. Nicomedes Alibuyog, sought permission from Captain Frankie Z. Besas,
Commanding Officer of "A" Company to go on overnight pass to Aritao, Nueva Viscaya, "to
settle [an] important matter thereat." Captain Besas orally granted them permission to go to
Aritao and to take their issued firearms. Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog left
Carranglan, Nueva Ecija, about noon on 1 August 1985 and arrived in Aritao, Nueva Viscaya,
about 1:30 o'clock P.M. on the same day. They proceeded to the home of Dft. Alibuyog's
parents where they had lunch. About 4:00 o'clock P.M., the three (3) soldiers with a fourth
man, a civilian and relative of Dft. Alibuyog, had some gin and beer, finishing a bottle of gin
and two (2) large bottles of beer. Three hours later, at about 7:00 o'clock P.M., the soldiers left
the Alibuyog home to return to their Company Headquarters. They boarded a tricycle,
presumably a motor-driven one, Sgt. Hinoguin and Cpl. Clavo seating themselves in the tricycle
cab while Dft. Alibuyog occupied the seat behind the driver. Upon reaching the poblacion of
Aritao, Dft. Alibuyog dismounted, walked towards and in front of the tricycle cab, holding his
M-16 rifle in his right hand, not noticing that the rifle's safety lever was on semi automatic (and
not on "safety"). He accidentally touched the trigger, firing a single shot in the process and
hitting Sgt. Hinoguin, then still sitting in the cab, in the left lower abdomen. The Sergeant did
not apparently realize immediately that he had been hit; he took three (3) steps forward, cried
that he had been hit and fell to the ground.

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His companions rushed Sgt. Hinoguin to a hospital in Bayombong, Nueva Viscaya, for
treatment but he later on died. Death Certificate lists "septic shock" as immediate cause of
death, and "generalized septicemia of peritonitis" as antecedent cause, following his sustaining
a gunshot wound. An investigation conducted by H.Q., 14th Infantry Battalion on 11 August
1985 concluded that the shooting of Sgt. Hinoguin was "purely accidental in nature." Sometime
in March 1986, petitioner filed his claim for compensation benefits under P.D. No. 626 (as
amended), claiming that the death of his son was work-connected and therefore compensable.
This was denied by the GSIS on the ground that petitioner's son was not at his work place nor
performing his duty as a soldier of the Philippine Army at the time of his death.

ISSUE: Whether or not the death of Sgt. Lemick Hinoguin is compensable.

HELD: YES. Article 167 (k) of the Labor Code as amended defines a compensable "injury" quite
simply as "any harmful change in the human organism from any accident arising out of and in
the course of the employment." The Amended (Implementing) Rules have, however, elaborated
considerably on the simple and succinct statutory provision. Rule III, Section 1 (a) reads:
SECTION 1. Grounds. (a) For the injury and the resulting disability or death to be
compensable, the injury must be the result of an employment accident satisfying all of the
following grounds: (1) The employee must have been injured at the place work requires him to
be;(2) The employee must have been performing his official functions; and (3) If the injury is
sustained elsewhere, the employee must have been executing an order for the employer.

It may be noted in this connection that a soldier on active duty status is really on 24 hours a
day official duty status and is subject to military discipline and military law 24 hours a day. He
is subject to call and to the orders of his superior officers at all times, 7 days a week, except, of
course, when he is on vacation leave status (which Sgt. Hinoguin was not). Thus, we think that
the work-connected character of Sgt. Hinoguins injury and death was not effectively precluded
by the simple circumstance that he was on an overnight pass to go to the home of Dft.
Alibuyog, a soldier under his own command. Sgt. Hinoguin did not effectively cease performing
"official functions" because he was granted a pass. While going to a fellow soldier's home for a
few hours for a meal and some drinks was not a specific military duty, he was nonetheless in
the course of performance of official functions. Indeed, it appears to us that a soldier should be
presumed to be on official duty unless he is shown to have clearly and unequivocally put aside
that status or condition temporarily by, e.g., going on an approved vacation leave. Even
vacation leave may, it should be remembered, be preterminated by superior orders. We hold,
therefore, that the death of Sgt. Hinoguin that resulted from his being hit by an accidental
discharge of the M-16 of Dft. Alibuyog, in the circumstances of this case, arose out of and in
the course of his employment as a soldier on active duty status in the Armed Forces of the
Philippines and hence compensable.
Submitted by: Sarmiento, Majesca M.

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GSIS, petitioner,
vs.
HON. LABOR RELATIONS COMMISSION, FIFTH DIVISION and ISALAMA MACHINE
WORKS THE HONORABLE COURT OF APPEALS and FELONILA ALEGRE, respondents.
G.R. No. 128524 April 20, 1999
(Third Division)

DOCTRINE: The 24-hour duty doctrine, as applied to policemen and soldiers, serves more as
an after-the-fact validation of their acts to place them within the scope of the guidelines rather
than a blanket license to benefit them in all situations that may give rise to their deaths.

FACTS: The records disclose that private respondent Felonila Alegres deceased husband, SPO2
Florencio A. Alegre, was a police officer. On that fateful day of December 6, 1994, he was
driving his tricycle and ferrying passengers within the vicinity of Imelda Commercial Complex
when SPO4 Alejandro Tenorio, Jr., confronted him regarding his tour of duty. SPO2 Alegre
allegedly snubbed SPO4 Tenorio and even directed curse words upon the latter. A verbal tussle
then ensued between the two which led to the fatal shooting of the deceased police officer.

On account of her husbands death, private respondent seasonably filed a claim for death
benefits with GSIS. In its decision on August 7, 1995, the GSIS, however, denied the claim on
the ground that at the time of SPO2 Alegres death, he was performing a personal activity which
was not work-connected. Subsequent appeal to the ECC proved futile as said body.

ISSUE: Whether the death a moonlighting policeman‘s death be considered compensable

HELD: No. Under the pertinent guidelines of the ECC on compensability, it is provided that for
the injury and the resulting disability or death to be compensable, the injury must be the
result of an employment accident satisfying all of the following conditions: (1) The employee
must have been injured at the place where his work requires him to be; (2) The employee must
have been performing his official functions; and (3) If the injury is sustained elsewhere, the
employee must have been executing an order for the employer.

While the Court agrees that policemen, like soldiers, are at the beck and call of public duty as
peace officers and technically on duty round-the-clock, the same does not justify the grant of
compensation benefits for the death of SPO2 Alegre based on the facts disclosed by the records.

The matter SPO2 Alegre was attending to at the time he met his death, that of ferrying
passengers for a fee, was intrinsically private and unofficial in nature proceeding as it did from
no particular directive or permission of his superior officer. In the absence of such prior
authority as in the cases of Hinoguin and Nitura, or peacekeeping nature of the act attended to
by the policeman at the time he died even without the explicit permission or directive of a
superior officer, as in the case of P/Sgt. Alvaran, there is no justification for holding that SPO2
Alegre met the requisites set forth in the ECC guidelines. That he may be called upon at any
time to render police work as he is considered to be on a round-the-clock duty and was not on
an approved vacation leave will not change the conclusion arrived at considering that he was
not placed in a situation where he was required to exercise his authority and duty as a
policeman. In fact, he was refusing to render one pointing out that he already complied with
the duty detail. At any rate, the 24-hour duty doctrine, as applied to policemen and soldiers,
serves more as an after-the-fact validation of their acts to place them within the scope of the
guidelines rather than a blanket license to benefit them in all situations that may give rise to
their deaths.
Submitted by: Sison, Aldous Francis P.
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Valeriano
vs.
Employees Compensation Commission and GSIS
G.R. No. 136200, June 8, 2000

DOCTRINE: Employees‘ Compensation; The injury and the resulting disability sustained by
reason of employment are compensable regardless of the place where the injury occurred, if it
can be proven that at the time of the injury, the employee was acting within the purview of his
or her employment and performing an act reasonably necessary or incidental thereto.— For
injury to be compensable, the standard of ―work connection‖ must be substantially satisfied.
The injury and the resulting disability sustained by reason of employment are compensable
regardless of the place where the injury occurred, if it can be proven that at the time of the
injury, the employee was acting within the purview of his or her employment and performing
an act reasonably necessary or incidental thereto.

FACTS: This case is about the petitioner who is an employee of the San Juan Fire Station
when he suffered injuries due to a vehicle collision after he and his friends went to Bonanza
Restaurant. He then filed a claim for the collection of his benefits before the GSIS and ECC.
Thereafter, his claim was denied for the reason that he incurred his injuries not during the
performance of duty or by following lawful orders of superiors but on his own personal time.
Petitioner then sought an appeal before the CA but the same was denied on the ground that his
injuries were incurred on an activity not related to his work. Thus, petitioner elevated the case
before the Supreme Court.

ISSUE: Whether or not petitioner is entitled to receive compensability benefits by reason of the
injuries he suffered.

HELD: No, he is not entitled. In the words of the Supreme Court, disability benefits are granted
to an employee who sustains an injury or contracts a sickness resulting in temporary total,
permanent total, or permanent partial, disability. For the injury and the resulting disability to
be compensable, they must have necessarily resulted from an accident arising out of and in the
course of employment. The Court explained the phrase "arising out of and in the course of
employment" in this wise: "The two components of the coverage formula -- "arising out of" and
"in the course of employment" -- are said to be separate tests which must be independently
satisfied; however, it should not be forgotten that the basic concept of compensation coverage
is unitary, not dual, and is best expressed in the words, "work connection," because an
uncompromising insistence on an independent application of each of the two portions of the
test can, in certain cases, exclude clearly work-connected injuries. The words "arising out of"
refer to the origin or cause of the accident, and are descriptive of its character, while the words
"in the course of" refer to the time, place and circumstances under which the accident takes
place. "As a matter of general proposition, an injury or accident is said to arise "in the course of
employment" when it takes place within the period of the employment, at a place where the
employee may reasonably x x x be, and while he is fulfilling his duties or is engaged in doing
something incidental thereto. Petitioner Valeriano was not able to demonstrate solidly how his
job as a firetruck driver was related to the injuries he had suffered. That he sustained the

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injuries after pursuing a purely personal and social function -- having dinner with some friends
-- is clear from the records of the case.
Submitted by: Siquian, Celine

ILOILO DOCK & ENGINEERING CO., Petitioner, v. WORKMEN’S COMPENSATION

COMMISSION and IRENEA M. PABLO, for herself and in behalf of her minor children
EDWIN, EDGAR and EDNA, all surnamed PABLO, Respondents.
G.R. No. L-26341. November 27, 1968
EN BANC

DOCTRINE: Injuries sustained by an employee in an "access area" which may be treated as

part of the employer‘s premises, compensable.

FACTS: Pablo, who was employed as a mechanic of the IDECO, while walking on his way home, was
shot to death in front of, and about 20 meters away from, the main IDECO gate, on a private road commonly
called the IDECO road. The slayer, Martin Cordero, was not heard to say anything before or after the killing. The
motive for the crime was and still is unknown as Cordero was himself killed before he could be tried for Pablo's
death. At the time of the killing, Pablo's companion was Rodolfo Galopez, another employee, who,
like Pablo, had finished overtime work at 5:00 p.m. and was going home. From the main IDECO gate to the
spot where Pablo was killed, there were four "carinderias" on the left side of the road and two
"carinderias" and a residential house on the right side. The entire length of the road is nowhere stated in the
record. According to the IDECO, the Commission erred (1) in holding that Pablo's death occurred in the course
of employment and in presuming that it arose out of the employment; (2) in applying the
"proximity rule;" and (3) in holding that Pablo's death was an accident within the purview of the Workmen's
Compensation Act.

ISSUE: Whether the injuries are "in the course of" and not "out of" the employment.

HELD: YES. The general rule in workmen‘s compensation law known as the "going & coming
rule," simply stated, is that "in the absence of special circumstances, an employee injured in,
going to, or coming from his place of work is excluded from the benefits of workmen‘s
compensation acts." 7 This rule, however, admits of four well recognized exceptions, to wit: (1)
where the employee is proceeding to or from his work on the premises of his employer; (2)
where the employee is about to enter or about to leave the premises of his employer by way of
the exclusive or customary means of ingress and egress; (3) where the employee is charged,
while on his way to or from his place of employment or at his home, or during his employment,
with some duty or special errand connected with his employment; and (4) where the employer,
as an incident of the employment, provides the means of transportation to and from the place
of employment.

In resumé:

hanrob1es virtual 1aw library

1. Workmen‘s compensation is granted if the injuries result from an accident which arise out of

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and in the course of employment.

2. Both the "arising" factor and the "course" factor must be present. If one factor is weak and
the other is strong, the injury is compensable, but not where both factors are weak. Ultimately,
the question is whether the accident is work-connected.

3. In a proceeding for the enforcement of a claim, the same is presumed to come within the
provisions of the Workmen‘s Compensation Act. But a preliminary link must first be shown to
exist between the injury and the employment. Thus if the injury occurred in the course of
employment, it is presumed to have arisen out of the employment.

4. The "course" factor applies to time, place and circumstances. This factor is present if the
injury takes place within the period of employment, at a place where the employee may be, and
while he is fulfilling his duties or is engaged in doing something incidental thereto.

5. The rule is that an injury sustained while the employee goes to or comes from his place of
work, is not of employment.

6. The exception to the rule is an injury sustained off the employee‘s premises, but while in
close proximity thereto and while using a customary means of ingress and egress. The reason
for extending the scope of "course of employment" to off-premises injuries is that there is a
causal connection between the work and the hazard.

7. An "assault" may be considered an "accident" within the meaning of the Workmen‘s

Compensation Act. The employment may either increase risk of assault because of its nature or
be the subject-matter of a dispute leading to the assault.

From these milestones, we now proceed to take our bearings in the case at bar, having in mind
always that no cover-all formula can be spelled out with specificity, that the particular facts
and circumstances of each case must be inquired into, and that in any perceptive inquiry, the
question as to where the line should be drawn beyond which the liability of the employer
cannot continue has been held to be usually one of fact.

We shall first dwell on the question of ownership of the private road where Pablo was killed. In
granting compensation, that Commission said that "the road where the deceased was shot was
of private ownership, was called the IDECO road, and led straight to the main IDECO gate,
thus raising the reasonable assumption that it belonged" to the IDECO. The Commission
reasoned out that "even if the ownership of the road were open to question, there was no doubt
that its private character was obviously exploited by the respondent for the purpose of its own
business to such an extent as to make it to all intents and purposes an extension of its
premises," so that "the shooting of the deceased may be considered to have taken place on the
premises, and therefore within the employment," and that "while respondent allowed its name
to be used in connection with the private road for the ingress and egress of the employees it did
not apparently take the necessary precaution to make it safe for its employees by employing
security guards." virtua1aw library

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But the IDECO denies ownership of the road. In its memorandum filed with the Regional
Office, IDECO averred that Pablo‘s death did not originate from his work as to time, place and
circumstances. This, in effect, is a denial of ownership of the road. The decision of the Regional
Office does not state that the road belongs to the IDECO. All that it says is that Pablo was shot
"barely two minutes after he was dismissed from work and while walking along the IDECO road
about twenty (20) meters from the gate." In its motion for reconsideration and/or review," the
IDECO emphasized that "the place where the incident happened was a public road, not less
than (20) meters away from the main gate of the compound, and therefore not proximate to or
in the immediate vicinity of the place of work." Again, the ownership of the road was implicitly
denied. And in its "motion for reconsideration and/or appeal to the Commission en banc," the
IDECO alleged outright that the "road where the incident took place, although of private
ownership, does not belong to IDECO. There is absolutely no evidence on record that shows
IDECO owns the road." If the road were owned by the IDECO, there would have been no
question that the assault arose "in the course of employment." 23 But if it did indeed own the
road, then the IDECO would have fenced it, and placed its main gate at the other end of the
road where it meets the public highway.

But while the IDECO does not own the private road, it cannot be denied that it was using the
same as the principal means of ingress and egress. The private road leads directly to its main
gate. 24 Its right to use the road must then perforce proceed from either an easement of right
of way or a lease. Its right, therefore, is either a legal one or a contractual one. In either case
the IDECO should logically and properly be charged with security control of the road. The
IDECO owned its employees a safe passage to its premises. In compliance with such duty, the
IDECO should have seen to it not only the road was properly paved and did not have holes or
ditches, but should also have instituted measures for the proper policing of the immediate
area. The point where Pablo was shot was barely twenty meters away from the main IDECO
gate, certainly nearer than a stone‘s throw therefrom. The spot is immediately proximate to the
IDECO‘s premises. Considering this fact, and the further facts that Pablo has just finished
overtime work at the time, and was killed barely two minutes after dismissal from work, the
Ampil case is squarely applicable here. We may say, as we did in Ampil, that the place where
the employee was injured being "immediately proximate to his place of work, the accident in
question must be deemed to have occurred within the zone of his employment and therefore
arose out of and in the course thereof." Our principal question is whether the injury was
sustained in the course of employment. We find that it was, and so conclude that the assault
arose out of the employment, even though the said assault is unexplained.

That part of the road where Pablo was killed is in very close proximity to the employer‘s
premises. It is an "access area" "so clearly related to the employee‘s premises as to be fairly
treated as a part of the employer‘s premises." That portion of the road bears "so intimate a
relation" to the company‘s premises. It is the chief means of entering the IDEGO premises,
either for the public or for its employees. The IDEGO uses it, if extensively in pursuit of its
business. It has rights of passage over the road, either legal, if by virtue of easement, or
contractual, if by reason of lease. Pablo was using the road as a means of access to his work
solely because he was an employee. For this reason, the IDEGO was under obligation to keep

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the place safe for its employees. Safe, that is, against dangers that the employees might
encounter therein, one of these dangers being assault by third persons. Having failed to take
the proper security measures over the said area which it controls, the IDEGO is liable for the
injuries suffered by Pablo resulting in his death.
Submitted by: Tamayo, Jumen G.

GENEROSO ALANO, petitioner

vs.
EMPLOYEES' COMPENSATION COMMISSION, respondent
G.R. No. L-48594. March 16, 1988
(First Division)

DOCTRINE: A claim is compensable when an employee is accidentally injured at a point

reasonably proximate to the place at work, while he is going to and from his work; such injury
is deemed to have arisen out of and in the course of his employment

FACTS: Dedicacion de Vera, a government employee during her lifetime, worked as

principal of Salinap Community School in San Carlos City, Pangasinan. Her tour of duty was
from 7:30 a.m. to 5:30p.m. On November 29, 1976, at 7:00 A.M., while she was waiting for a
ride at Plaza Jaycee inSan Carlos City on her way to the school, she was bumped and run over
by a speeding Toyota mini-bus which resulted in her instantaneous death. She is survived by
her four sons and a daughter. On June 27, 1977, Generoso C. Alano, brother of the deceased,
filed the instant claim for income benefit with the GSIS for and in behalf of the decedent's
children. The claim was, however, denied on the same date on the ground that the "injury upon
which compensation is being claimed is not an employment accident satisfying all the
conditions prescribed by law." On July 19, 1977 appellant requested for a reconsideration of
the system's decision, but the same was denied and the records of the case were elevated to
this Commission for review.

ISSUE: Whether or not the death of Dedicacion de Vera can be compensable.

HELD: The petitioner alleges that the deceased's accident has "arisen out of or in the course of
her employment." The respondent Commission reiterates its views and contends that the
present provision of law on employment injury is different from that provided in the old
Workmen's Compensation Act (Act 3428) and is "categorical in that the injury must have been
sustained at work while at the workplace, or elsewhere while executing an order from the
employer." We rule in favor of the petitioner. It is not disputed that the deceased died while
going to her place of work. She was at the place where, as the petitioner puts it, her job
necessarily required her to be if she was to reach her place of work on time. There was nothing
private or personal about the school principal's being at the place of the accident. She was
there because her employment required her to be there. As to the Government Service
Insurance System's manifestation, we hold that it is not fatal to this case that it was not
impleaded as a party respondent. As early as the case of La O v. Employees' Compensation
Commission, (97 SCRA 782) up to Cabanero v. Employees' Compensation Commission (111
SCRA 413) and recently, Clemente v. Government Service Insurance System (G.R. No. L-47521,
August 31, 1987), this Court has ruled that the Government Service Insurance System is a
proper party in employees' compensation cases as the ultimate implementing agency of the
Employees' Compensation Commission. We held in the aforecited cases that "the law and the
rules refer to the said System in all aspects of employee compensation including enforcement of
decisions (Article 182 of Implementing Rules)." Submitted by: Tanghal, Noelle Christine

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Lazo
vs.
Employees Compensation Commission
G.R. No. 78617, June 18, 1990

DOCTRINE: Workmen‘s Compensation; Labor Law; Central Bank security guard, who was
granted permission to leave his post so he could bring home a sack of rice and who met an
accident along the way, is entitled to workmen‘s compensation under P.D. 626.—In the case at
bar, it can be seen that petitioner left his station at the Central Bank several hours after his
regular time off, because the reliever did not arrive, and so petitioners was asked to go on
overtime. After permission to leave was given, he went home. There is no evidence on record
that petitioner deviated from his usual, regular homeward route or that interruptions occurred
in the journey. While the presumption of compensability and theory of aggravation under the
Workmen‘s Compensation Act (under which the Baldebrin case was decided) may have been
abandoned under the New Labor Code, it is significant that the liberality of the law in general
in favor of the workingman still subsists. As agent charged by the law to implement social
justice guaranteed and secured by the Constitution, the Employees Compensation Commission
should adopt a liberal attitude in favor of the employee in deciding claims for compensability,
especially where there is some basis in the facts for inferring a work connection to the accident.

FACTS: Salvador Lazo, a security guard of Central Bank was involved in a vehicular accident
when the jeepney he rode on turned turtle due to slippery road, in which he sustained injuries.
He claimed for disability benefits under Presidential Decree No. 626, as amended, but it was
denied by GSIS on the ground that the condition for compensability had not been satisfied,
which was affirmed by the ECC.

ISSUE: Whether or not Lazo is entitled to his disability benefits.

HELD: Yes. In the case at bar, it can be seen that petitioner left his station at the Central Bank
several hours after his regular time off, because the reliever did not arrive, and so petitioner
was asked to go on overtime. After permission to leave was given, he went home. There is no
evidence on record that petitioner deviated from his usual, regular homeward route or that
interruptions occurred in the journey.

While the presumption of compensability and theory of aggravation under the Workmen's
Compensation Act (under which the Baldebrin case was decided) may have been abandoned
under the New Labor Code, it is significant that the liberality of the law in general in favor of
the workingman still subsists. As agent charged by the law to implement social justice
guaranteed and secured by the Constitution, the Employees Compensation Commission should
adopt a liberal attitude in favor of the employee in deciding claims for compensability,
especially where there is some basis in the facts for inferring a work connection to the accident.

This kind of interpretation gives meaning and substance to the compassionate spirit of the law
as embodied in Article 4 of the New Labor Code which states that 'all doubts in the
implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor.'

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The policy then is to extend the applicability of the decree (PD 626) to as many employees who
can avail of the benefits thereunder. This is in consonance with the avowed policy of the State
to give maximum aid and protection to labor.

There is no reason, in principle, why employees should not be protected for a reasonable period
of time prior to or after working hours and for a reasonable distance before reaching or after
leaving the employer's premises.

Submitted by: Villanueva, Emilio Jan D.

GLORIA D. MENEZ, Petitioner

vs.
EMPLOYEES' COMPENSATION COMMISSION, GOVERNMENT SERVICE INSURANCE
SYSTEM (DEPARTMENT OF EDUCATION & CULTURE), Respondents
G.R. No. L-48488. April 25, 1980

DOCTRINE: An illness, to be compensable, must either be: (a) definitely accepted as an

occupational disease; or, (b) caused by employment subject to proof by the employee that the
risk of contracting the same is increased by working conditions.

FACTS: Petitioner Gloria D. Menez was employed by the Department of Education & Culture
as a school teacher. She retired on August 31, 1975 under the disability retirement plan at the
age of 54 years after 32 years of teaching, due to rheumatoid arthritis and pneumonitis. Before
her retirement, she was assigned at Raja Soliman High School in Tondo-Binondo, Manila near
a dirty creek.

She filed a claim for disability benefits under Presidential Decree (P.D.) No. 626, as amended,
with respondent Government Service Insurance System, but the latter denied said claim on the
ground that petitioner's ailments, rheumatoid arthritis and pneumonitis, are not occupational
diseases taking into consideration the nature of her particular work, which was later affirmed
by the Employees' Compensation Commission.

On appeal, petitioner Menez maintains that her ailments arose in the course of employment
and were aggravated by the condition and nature of her work.

ISSUE: Whether or not petitioner Menez‘ ailments are occupational diseases and may be
subject of claim for disability benefits under P.D. 626, as amended

HELD: YES.

Article 167 (1) of the new Labor Code provides that ―sickness‖ means any illness definitely
accepted as an occupational disease listed by the Commission, or any illness caused by
employment subject to proof by the employee that the risk of contracting the same is increased
by working conditions.

Rule 111, Section 1 (b) of the Amended Rules on Employees' Compensation thus provides that
―for the sickness and the resulting disability or death to be compensable, the sickness must be
the result of an occupational disease listed under Annex 'A' of these Rules with the conditions
set therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is
increased by working conditions.‖

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Rule III, Section 1 (c) of said Rules states that ―only inquiry or sickness that occurred on or
after January 1, 1975 and the resulting disability or death shall be compensable under these
Rules.‖

An occupational disease is one "which results from the nature of the employment, and by
nature is meant conditions to which all employees of a class are subject and which produce the
disease as a natural incident of a particular occupation, and attach to that occupation a hazard
which distinguishes it from the usual run of occupations and is in excess of the hazard attending
the employment in general" (Goldberg vs. 954 Mancy Corp., 12 N. E. 2d 311).

To be occupational, the disease must be one "due wholly to causes and conditions which
are normal and constantly present and characteristic of the particular occupation; that is, those
things which science and industry have not yet learned how to eliminate. Every worker in every
plant of the same industry is alike constantly exposed to the danger of contracting a particular
occupational disease" (Seattle Can Co. vs. Dept. of Labor, 265, p. 741).

An occupational disease is one which develops as a result of hazards peculiar to certain

occupations, due to toxic substances (as in the organic solvents industry), radiation (as in
television repairmen), repeated mechanical injury, emotional strain, etc. (Schmidts Attorneys'
Dictionary of Medicine, p. 561).

From the foregoing definitions of occupational diseases or ailments, rheumatoid arthritis and
pneumonitis can be considered as such occupational diseases. In her work, petitioner Menez
also has to contend with the natural elements, like the inclement weather – heavy rains,
typhoons – as well as dust – and disease-ridden surroundings peculiar to an insanitary slum
area.

These unwholesome conditions are ―normal and consistently present in‖ or are the ―hazards
peculiar to‖ the occupation of a public high school teacher. It is therefore evident that
rheumatoid arthritis and pneumonitis are the ―natural incidents‖ of petitioner's occupation as
such public high school teacher.

Indisputably, petitioner contracted pneumonitis and/or bronchiectasis with hemoptysis and

rheumatoid arthritis on January 27, 1975 after being drenched and the consequent ―chilling
during the course of employment which are permanent and recurring in nature and work-
connected.‖ Undoubtedly, petitioner's ailments thus become compensable under the New Labor
Code since under Rule 111, Section 1 (c) of its Implementing Rules, ―only sickness or injury
which occurred on or after January 1, 1975 and the resulting disability or death shall be
compensable under these Rules.‖

Furthermore, judicial notice should be taken of the fact that our country is in a typhoon belt
and that yearly we experience torrential rains and storms. Needless to say, in her daily rides
from Quezon City to Binondo and back, she had to go through the ordeal of perspiring and
getting wet from downpours or heavy rains, thus making her susceptible to contracting her
ailments. Moreover, petitioner was always in contact with 250 students who might have been
carriers of contagious respiratory diseases like flu and colds and who were themselves
inadequately nourished, residing as they do in a depressed and congested area. And adding to
the unhygienic working atmosphere was her malnutrition or undernourishment. More often
than not, a teacher who has no other source of income takes to – aside from the poor man's
staple diet of tuyo, daing and rice – legumes like mongo, vegetables and fruits with edible seeds
which contain much uric and.

Acute arthritis is inflammation of a joint marked by pain, swelling, heat and redness; the result
of rheumatism or gout (p. 56, The Simplified Medical Dictionary for Lawyers). Gout is a disease

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characterized by painful inflammation of the joints, in excessive amount of uric acid in the blood
Poor man's gout is caused by hard work, poor food and exposure (p. 268, supra). It may thus be
seen that uric acid eventually causes arthritis, aside from excessive mental and physical
stresses to which teachers are subject of reason of their duties.

Consequently, this Court finds petitioner to have substantially shown that the risk of
contracting her ailments had been increased by unfavorable working conditions.

Employees‘ Compensation Commission

MABUHAY SHIPPING SERVICES, INC. AND SKIPPERS MARITIME CO., LTD.,

PETITIONERS
vs
NLRC, CECILIA SENTINA, RESPONDENTS
G.R. No. 9416 ,January 21, 1991
(First Division)

DOCTRINE: Article 172 of the Labor Code, the compensation for workers covered by the
Employees Compensation and State Insurance Fund are subject to the limitations on liability.

Art. 172. Limitations of liability. — The State Insurance Fund shall be liable for the
compensation to the employee or his dependents except when the disability or death was
occasioned by the employee's intoxication, willful intent to injure or kill himself or another,
notorious negligence, or otherwise provided under this Title.

FACTS: Romulo Sentina was hired as a 4th Engineer by petitioner Mabuhay Shipping Services,
Inc. (MSSI) for and in behalf of co-petitioner, Skippers Maritime Co., Ltd. to work aboard the
M/V Harmony I for a period of one year.

On January 16, 1988 at about 3 p.m., while the vessel was docked alongside Drapetona Pier,
Piraeus, Greece, Sentina arrived aboard the ship from shore leave visibly drunk. He went to the
messhall and took a fire axe and challenged those eating therein. He was pacified by his
shipmates who led him to his cabin. However, later he went out of his cabin and proceeded to
the messhall. He became violent. He smashed and threw a cup towards the head of an oiler
Emmanuel Ero, who was then eating. Ero touched his head and noticed blood. This infuriated
Ero which led to a fight between the two. After the shipmates broke the fight, Sentina was
taken to the hospital where he passed away on January 17, 1988.1 Ero was arrested by the
Greek authorities and was jailed in Piraeus.

ISSUE: Whether or not the employer is liable for death benefits of the seaman in this case.

HELD: No.

The mere death of the seaman during the term of his employment does not automatically give
rise to compensation. The circumstances which led to the death as well as the provisions of the
contract, and the right and obligation of the employer and seaman must be taken into
consideration, in consonance with the due process and equal protection clauses of the
Constitution. There are limitations to the liability to pay death benefits.

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When the death of the seaman resulted from a deliberate or willful act on his own life, and it is
directly attributable to the seaman, such death is not compensable. No doubt a case of suicide
is covered by this provision.

By the same token, when as in this case the seaman, in a state of intoxication, ran amuck, or
committed an unlawful aggression against another, inflicting injury on the latter, so that in his
own defense the latter fought back and in the process killed the seaman, the circumstances of
the death of the seaman could be categorized as a deliberate and willful act on his own life
directly attributable to him. First he challenged everyone to a fight with an axe. Thereafter, he
returned to the messhall picked up and broke a cup and hurled it at an oiler Ero who suffered
injury. Thus provoked, the oiler fought back The death of seaman Sentina is attributable to his
unlawful aggression and thus is not compensable.
Submitted by: Vardeleon, Crizedhen N.

INTERORIENT MARITIME ENTERPRISES, INC., FIRCROFT SHIPPING CORPORATION and

TIMES SURETY & INSURANCE CO., INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and CONSTANCIA PINEDA, respondents.
G.R. No. 115497, September 16, 1996
(Third Division)

DOCTRINE : Claims of overseas workers against their foreign employers should not be
subjected to the rules of evidence and procedure that courts usually apply to other
complainants who have more facility in obtaining the required evidence to prove their
demands.

FACTS : Deceased seaman, Jeremias Pineda was contracted to work as Oiler on board the
vessels, "MV Amazonia", owned and operated by its foreign principal, Fircroft Shipping
Corporation for a period of nine (8) months with additional three (3) months upon
mutualconsent of both parties. On September 28, 1989, he finished his contract and was
discharged from the port of Dubai for repatriation to Manila his flight schedule from Dubai to
the Philippines necessitated a stopover at Bangkok, Thailand, and during said stopover he
disembarked on and failed to join the connecting flight to Hongkong with final destination to
Manila. Jeremias Pineda was shot by a Thai Officer on duty on October 2, 1989 at around 4:00
P.M. According to the Thai police, Pineda approached and tried to stab the policesergeant with
a knife and that therefore he was forced to pull out his gun and shot Pineda. The heirs of
Pineda filed a claim for death benefits against herein petitioners. The POEA Administrator
rendered his decision holding petitioners liable for death compensation benefits and burial
expenses. Petitioners appealed the POEA decision to the public respondent. In a decision dated
March 30, 1994, public respondent upheld the POEA. This recourse to this Court by way of a
special civil action for certiorari.

ISSUE : Whether or not the heirs of Pineda can claim death benefits and compensation against
the employer.

HELD : YES. We have held that claims of overseas workers against their foreign employers
should not be subjected to the rules of evidence and procedure that courts usually apply to
other complainants who have more facility in obtaining the required evidence to prove their
demands. Section 5, Rule 133 of the Rules of Court provides that in cases filed before
administrative or quasi-judicial bodies (like the POEA), a fact may be deemed established if it is
supported by substantial evidence, i.e., that amount of evidence which a reasonable mind
might accept as adequate to justify a conclusion.

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The circumstances prior to and surrounding his death, however, provide substantial evidence
of the existence of such mental defect or disorder. Such mental disorder became evident when
he failed to join his connecting flight to Hongkong, having during said stopover wandered out of
the Bangkok airport‘s immigration area on his own. We can perceive no sane and sufficient
reason for a Pinoy overseas contract worker or seaman to want to while away his time in a
foreign land, when he is presumably unfamiliar with its native tongue, with nothing to do and
no source of income, and after having been absent from kith and kin, hearth and home for
almost an entire year. Nor can we find any plausible reason for him to be wielding a knife and
scaring away passersby, and even taking a stab at an armed policeman, unless he is no longer
in full possession of his sanity. To our mind, these circumstances are sufficient in themselves
to produce a firm conviction that the deceased seaman in this case was no longer in full control
of his senses when he left his work. To reiterate, in this case, no more than substantial
evidence is required.

The POEA Administrator ruled, and this Court agrees, that since Pineda attacked the Thai
policeman when he was no longer in complete control of his mental faculties, the aforequoted
provision of the Standard Format Contract of Employment exempting the employer from
liability should not apply in the instant case. Firstly, the fact that the deceased suffered from
mental disorder at the time of his repatriation means that he must have been deprived of the
full use of his reason, and that thereby, his will must have been impaired, at the very least.
Thus, his attack on the policeman can in no wise be characterized as a deliberate, willful or
voluntary act on his part.

We so agree that in light of the deceased‘s mental condition, petitioners ―should have observed
some precautionary measures and should not have allowed said seaman to travel home alone,‖
and their failure to do so rendered them liable for the death of Pineda. Indeed, ―the obligations
and liabilities of the (herein petitioners) do not end upon the expiration of the contracted period
as (petitioners are) duty bound to repatriate the seaman to the point of hire to effectively
terminate the contract of employment.

The foreign employer may not have been obligated by its contract to provide a companion for a
returning employee, but it cannot deny that it was expressly tasked by its agreement to assure
the safe return of said worker. The uncaring attitude displayed by petitioners who, knowing
fully well that its employee had been suffering from some mental disorder, nevertheless still
allowed him to travel home alone, is appalling to say the least. Such attitude harks back to
another time when the landed gentry practically owned the serfs, and disposed of them when
the latter had grown old, sick or otherwise lost their usefulness.
Submitted by: Veloso, Jocelyn

NAESS SHIPPING PHILIPPINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION and ZENAIDA R. DUBLIN, respondents
[G.R. No. 73441. September 4, 1987]
NARVASA, J:

DOCTRINE: In granting death benefits, the cause of death is immaterial. When an employee
took his own life (commit suicide), it is not a valid ground to deny the death benefit of the said
employee.

FACTS: On the night of September 3, 1983, while the vessel M/V DYVI PACIFIC was plying the
seas enroute from Santos, Brazil to Port Said, Egypt, Pablo Dublin the vessel's chief steward,
fatally stabbed the second cook, Rodolfo Fernandez, during a quarrel, then ran to the deck
from which he jumped or fell overboard. An alarm was immediately raised, and the vessel

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turned to comb the surrounding area for Dublin. After some time his floating body was briefly
sighted, but it disappeared from view even as preparations to retrieve it were being made, and
was never seen again although the search went on through the night and was called off only at
6:00 o'clock the next morning.

Under a Special Agreement in the employment contract, between the International Workers
Federation (ITF) and NAESS Shipping, NAESS is bound to pay cash benefits for loss of life the
of workers enrolled therein.

For the death of Dublin his widow Zenaida, by whom he had one child, Ivy, born January 22,
1971, collected the amount of P75,000.00 under Clause A of the ITF Collective Bargaining
Agreement. 3 She also filed with the Philippine Overseas Employment Administration (POEA) a
complaint against NAESS 4 for payment of death benefits to US$74,512.00 under both
paragraph 17 of the cited Special Agreement and what she claimed to be the also applicable
Singapore Workmens' Compensation Ordinance.

The POEA rendered judgment for the complainant, holding Dublin's death compensable under
said Special Agreement and ordering NAESS to pay complainant and her child compensation
benefits totalling US$31,962.00 and her attorneys of record fees amounting to US$3,196.00,
the equivalents of said sums in Philippine pesos at prevailing rates of exchange.
NAESS filed a motion for reconsideration but was dismissed by the NLRC for lack of merit, with
an express affirmance of the POEA decision. Hence, this appeal.

ISSUE: Whether or not the POEA and the NLRC acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in adjudging that death by suicide is compensable.

HELD: It makes no difference whether Dublin intentionally took his own life, or he killed
himself in a moment of temporary aberration triggered by remorse over the killing of the second
cook, or he accidentally fell overboard while trying to flee from imagined pursuit, which last
possibility cannot be ruled out considering the state of the evidence.

There is no question that NAESS freely bound itself to a contract which on its face makes it
unqualifiedly liable to pay compensation benefits for Dublin's death while in its service,
regardless of whether or not it intended to make itself the insurer, in the legal sense, of
Dublin's life. No law or rule has been cited which would make it illegal for an employer to
assume such obligation in favor of his or its employee in their contract of employment.

Thus, contract, ... which are the private laws of the contracting parties, should be fulfilled
according to the literal sense of their stipulations, if their terms are clear and leave no room for
doubt as to the intention of the contracting parties, for contracts are obligatory, no matter what
their form may be, whenever the essential requisites for their validity are present.

To compel payment of death benefits in this case would amount not only to rewarding the act
of murder or homicide, but also inequitably to placing on NAESS the twin burdens of
compensating both the killer and his victim, who allegedly had also been employed under a
contract with a similar death benefits clause. This argument, in confusing the legal
implications and effects of two distinct and independent agreements, carries within itself the
seeds of its own refutation. On Dublin's part, entitlement to death benefits resulted from his
death while serving out his contract of employment; it was not a consequence of his killing of
the second cook, Rodolfo Fernandez. If the latter's death is also compensable, that is due to the
solitary fact of his death while covered by a similar contract, not precisely to the fact that he
met death at the hands of Dublin That both deaths may be related by cause and effect and
NAESS is the single obligor liable for compensation in both cases must, insofar as the factual
and legal bases of such liability is concerned, be regarded as purely accidental circumstances.

Submitted by: Austria, Don Rodel A.

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YSMAEL MARITIME CORPORATION, petitioner,

vs.
HON. CELSO AVELINO, in his capacity as Presiding Judge of Branch XIII, Court of First
Instance of Cebu and SPOUSES FELIX C. LIM and CONSTANCIA GEVEIA respondents.
G.R. No. L-43674, June 30, 1987
(En Banc)

DOCTRINE: The employee or his heirs have a choice of availing themselves of the benefits
under the Workmen's Compensation Act (WCA) or of suing in the regular courts under the Civil
Code for higher damages from the employer by reason of his negligence. But once the election
has been exercised, the employee or his heirs are no longer free to opt for the other remedy.

FACTS: Rolando G. Lim, single, a licensed second mate, was on board the vessel M/S Rajah,
owned by petitioner Ysmael Maritime Corporation, when the same ran ground and sank near
Sabtan Island, Batanes. Rolando perished as a result of that incident. Claiming that Rolando's
untimely death at the age of twenty- five was due to the negligence of petitioner, his parents,
respondents Felix Lim and Consorcia Geveia, sued petitioner in the Court of First Instance on
January 28, 1972 for damages.

In its answer, petitioner-defendant alleged by way of affirmative defense that respondent-

plaintiffs had received P4,160 from petitioner and had signed release papers discharging
petitioner from any liability arising from the death of their son, and that most significantly, the
respondents had already been compensated by the Workmen's Compensation Commission
[NCC] for the same incident, for which reason they are now precluded from seeking other
remedies against the same employer under the Civil Code.

ISSUE: Whether or not availment of the compensation remedy under the WCA, and now under
the Labor Code, for work-connected death or injuries sustained by an employee bars another
action for other remedies available under the Civil Code?

HELD: Yes.

In the case of Floresca vs. Philex Mining Company, it was upheld that the action is selective and
the employee or his heirs have a choice of availing themselves of the benefits under the WCA or
of suing in the regular courts under the Civil Code for higher damages from the employer by
reason of his negligence. But once the election has been exercised, the employee or his heirs
are no longer free to opt for the other remedy. In other words, the employee cannot pursue both
actions simultaneously.

Therefore, respondent Lim spouses cannot be allowed to maintain their present action to
recover additional damages against petitioner under the Civil Code.

Submitted by: Aguilar, Cherry Kerr

Disability Benefits
(Article 191-193)

Disability Defined
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DOMINGO VICENTE, petitioner,

vs.
EMPLOYEES’ COMPENSATION COMMISSION, respondent.
G.R. No. 85024, January 23, 1991
(EN BANC)

FACTS: Domingo Vicente was formerly employed as a nursing attendant at the Veterans
Memorial Medical Center in Quezon City. At the age of forty-five, and after having rendered
more than twenty-five years of government service, he applied for optional retirement under the
provisions of Section 12(c) of Republic Act No. 1616, giving as reason therefore his inability to
continue working as a result of his physical disability. The petitioner likewise filed with the
Government Service Insurance System (GSIS) an application for ―income benefits claim for
payment‖ under Presidential Decree (PD) No. 626, as amended. Both applications were
accompanied by the necessary supporting papers, among them being a ―Physician‘s
Certification‖ issued by the petitioner‘s attending doctor. The petitioner‘s application for income
benefits claim payment was granted but only for permanent partial disability (PPD)
compensation or for a period of nineteen months

ISSUE: Whether or not the petitioner suffers from permanent total disability.

HELD: YES. The decision of the respondent Employees‘ Compensation Commission (ECC) was
set aside.

Employee's disability under the Labor Code is classified into three distinct categories: (a)
temporary total disability; (b) permanent total disability; and (c) permanent partial disability.

Here, there is no question that the petitioner is not under "temporary total disability" as
defined by law. The respondent Commission's decision classifying the petitioner's disability as
"permanent partial" attests, albeit indirectly, to this fact. Our focus therefore, as stated earlier,
is only in resolving out whether the petitioner suffers from "permanent total disability" as he
claims, or from "permanent partial disability" as the respondent Commission would have us
believe.

The petitioner‘s permanent total disability is established beyond doubt by several factors and
circumstances. Noteworthy is the fact that from all available indications, it appears that the
petitioner‘s application for optional retirement on the basis of his ailments had been approved.
Considering that the petitioner was only 45 years old when he retired and still entitled, under
good behavior, to 20 more years in service, the approval of his optional retirement application
proves that he was no longer fit to continue in his employment. For optional retirement is
allowed only upon proof that the employee-applicant is already physically incapacitated to
render sound and efficient service.

The sympathy of law on social security is towards its beneficiaries and the law by its own
terms, requires a construction of utmost liberality in its favor.

Submitted by: Alarcon, Maria Teresa L.

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EVARISTO ABAYA, JR., petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION, respondent.

DOCTRINE: Permanent total disability does not mean a state of absolute helplessness, but
means disablement of an employee to earn wages in the same kind of work, or a work of similar
nature, that he was trained for or accustomed to perform, or any kind of work which a person
of his mentality and attainment could do.

FACTS: After serving the government in various capacities for 38-1/2 years, Evaristo Abaya,
Jr. retired as a principal teacher at the age of 60 on October 15, 1975. Thereafter, pursuant
to PD No. 626, he applied with the Government Service Insurance System for medical services,
appliance and supplies and permanent total disability benefits. The basis of his application was
his claimed service-connected ailment, initially diagnosed as cardio-vascular disease and
aggravating later for cerebral encephalopathy secondary to hypertension.
On June 3, 1976, the GSIS rejected his application on the ground that his ailment was not an
occupational disease. Upon appeal to the Employees' Compensation Commission, the case was
on April 19, 1978, remanded to the GSIS for reception of additional evidence showing that the
applicant's illness was work-connected. On June 17, 1979, the GSIS delivered to the petitioner
a check in the amount of P1,218.25, representing his permanent partial disability benefits for
the period from October 15, 1975, to March 1976.

ISSUE: Whether or not the petitioner's ailment is permanent total disability

HELD: Yes
Permanent total disability does not mean a state of absolute helplessness, but means
disablement of an employee to earn wages in the same kind of work, or a work of similar
nature, that he was trained for or accustomed to perform, or any kind of work which a person
of his mentality and attainment could do. That permanent total disability means disablement
of an employee to earn wages in the same kind of work, or work of a similar nature that he was
trained for, or accustomed to perform, or any other kind of work which a person of his
mentality and attainment could do. Further, permanent total disability means an incapacity to
perform gainful work which is expected to be permanent. This status does not require a
condition of complete helplessness. Nor is it affected by the performance of occasional odd jobs.
Permanent partial disability, on the other hand, is defined as a disability if as a result of the
injury or sickness the employee suffers a permanent partial loss of the use of any part of his
body.
It is important to consider that the petitioner opted to retire when he was only 60 years of age
although he was entitled to continue during good behavior for five more years. This fact, it is
urged, should indicate that he was no longer able to cope with his work because of his illness.
When an employee is forced to ask for retirement ahead of schedule, not because of old age,
but primarily of his weakened bodily condition due to illness contracted in the course of her
employment, he should be given compensation for his inability to work during the remaining
days before his scheduled retirement.

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We hold, therefore, that the petitioner is entitled to permanent total compensation benefits.

Submitted by: Bacurio, Kenneth Bernard

Article 192 -193: Permanent Disability Benefits

Orlino v. ECC, G.R No. L85015, 29 March, 1990

DOCTRINE: a person is considered permanently and totally disabled to work when he was
incapacitated or disabled to perform any substantial amount of labor in the line of work he was
formerly engaged or any other kind of work to which he could be assigned.

FACTS: Evidences prevented by complainant has proven that complainant was not able to
resume work since November 8, 1985 when he was mauled by unidentified persons in the
vessel of the respondent where he was working in Yokohama, Japan. It is undisputed, however,
that when complainant was discharged in Japan, he was confirmed to be suffering from
epilepsy as a result of his mauling. This fact was confirmed by Dr. Charles Harn of St. Luke's
Hospital who treated complainant upon his arrival in the Philippines. Although complainant
was found to be fit to resume work on February 3, 1986 and complainant was diagnosed to be
afflicted with schizophreniform disorder on September 25, 1986, POEA has no factual basis
when it ruled that epilepsy does not cause Schizophreniform Disorder.

We agree with the complainant that the finding of epilepsy does not obviate its development
into schizophreniform disorder, which is a permanent total disability. We take into
consideration the letter of Dr. Rene Gigato Seyan, the psychiatrist who treated the
complainant, who presented a medical opinion on epilepsy and schizophreniform disorder and
we quote some pertinent portions.

"According to the book Synopsis of Psychiatry 5th edition by Harold J. Kaplan,

M.D. and Benjamin J. Saddock, M.D. pages 209-212 in its topic about epilepsy
clearly states that psychiatric problems are common in patients with epilepsy
and so constitute an important mental health problem. . . .

You also asked whether epilepsy maybe produced by a variety of pathologic

states and introxications such as head trauma, brain tumor, cerebrovascular
accidents, intro cravial infections, uremia, hypoglycernia, hypocalcemia and
overhydration. If the patient suffers head trauma secondary to mauling, then it
could be the possible cause of his epilepsy. . . ."

ISSUE: Whether or not a person is considered permanently and totally disabled to work when
he was incapacitated or disabled to perform any substantial amount of labor in the line of work

HELD: Evidences on record will show therefore that complainant was mauled during his
course of employment which resulted into epilepsy and later developed into Schizophreniform
Disorder, which is considered total permanent disability. Under his contract of employment,
complainant is entitled to receive the insurance benefits of U.S. $30,000.00. In disability
compensation, it is not the injury which is compensated, but rather it is the incapacity to work

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resulting in the impairment of one's earning capacity. (Orlino v. Employees Commission et. al.
G.R 85015, 29 March 90 En Banc Minute Resolutions, Martinez.)
Submitted by: Balbarino, Cherry Anjell L.

Government Service Insurance System, petitioner

vs.
Court of Appeals, respondents
G.R. No. 117572. January 29, 1998

DOCTRINE: A person‘s disability may not manifest fully at one precise moment in time but
rather over a period of time. Disability should not be understood more on its medical
significance but on the loss of earning capacity. Permanent total disability means disablement
of an employee to earn wages in the same kind of work, or work of a similar nature that she
was trained for or accustomed to perform, or any kind of work which a person of her mentality
and attainment could do.

FACTS: Respondent started working as an emergency employee of the National Housing

Authority (NHA) in 1952. She then rose from the ranks until she was promoted to Chief Paying
Cashier in 1984.

Medical records disclose that on December 17, 1989, respondent suddenly experienced chills,
followed by loss of consciousness. She was brought to a hospital. Later on, she was diagnosed
to be suffering from Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm. After
undergoing craniotomy, she was finally discharged from the hospital on January 20, 1990.
Despite her operation, private respondent could not perform her duties as efficiently as she had
done prior to her illness. This forced her to retire early from the government service on March
1, 1990 at the age of sixtytwo (62) years. Consequently, respondent filed a claim for disability
benefits with the GSIS for the above-described ailment.

GSIS: Accordingly, the GSIS granted her temporary total disability (TTD) benefits for the period
starting from December 17, 1989 to January 31, 1990 and subsequently, permanent partial
disability (PPD) benefits for nine months starting on March 2, 1990.

However, respondent requested the GSIS through a letter for the conversion of the
classification of her disability benefits from permanent partial disability (PPD) to permanent
total disability (PTD). Unfortunately, it was denied by the GSIS in a letter on the ground that
the GSIS Medical Evaluation and Underwriting Department which evaluated her claim found
no basis to alter its findings. She was informed that the results of the physical examination
conducted on her did not satisfy the criteria for permanent total disability. Moreover, she was
told that the pension granted to her was the maximum benefit due her under the Rating
Schedule established by the ECC. Undaunted, respondent filed a petition for review with the
Court of Appeals.

CA: It promulgated a decision favorable to the respondent. Hence, this petition for review on
certiorari by GSIS.

ISSUE: Whether or not respondent is entitled to conversion of her benefits from permanent
partial disability to permanent total disability.

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HELD: Yes.

A person‘s disability may not manifest fully at one precise moment in time but rather over a
period of time. It is possible that an injury which at first was considered to be temporary may
later on become permanent or one who suffers a partial disability becomes totally and
permanently disabled from the same cause.

In the same vein, the Court has ruled that ―disability should not be understood more on its
medical significance but on the loss of earning capacity. Private respondent‘s persistent illness
indeed forced her to retire early which, in turn, resulted in her unemployment, and loss of
earning capacity.

Judicial precedents likewise show that disability isintimately related to one‘s earning capacity.
It has been a consistent pronouncement of this Court that ―permanent total disability means
disablement of an employee to earn wages in the same kind of work, or work of a similar
nature that she was trained for or accustomed to perform, or any kind of work which a person
of her mentality and attainment could do. It does not mean state of absolute helplessness, but
inability to do substantially all material acts necessary to prosecution of an occupation for
remuneration or profit in substantially customary and usual manner.‖

The Court has construed permanent total disability as the lack of ability to follow continuously
some substantially gainful occupation without serious discomfort or pain and without material
injury or danger to life. It is, therefore, clear from established jurisprudence that the loss of
one‘s earning capacity determines the disability compensation one is entitled to.

It is also important to note that private respondent was constrained to retire at the age of 62
years because of her impaired physical condition. This, again, is another indication that her
disability is permanent and total. As held by this Court, ―the fact of an employee‘s disability is
placed beyond question with the approval of the employee‘s optional retirement, for such is
authorized only when the employee is ‗physically incapable to render sound and efficient
service.‖

In the case at bar, the denial of the claim for permanent total disability benefit of private
respondent who, for 38 long years during her prime had rendered her best service with an
unblemished record and who was compelled to retire on account of her worsening condition,
would indeed subvert the salutary intentions of the law in favor of the worker. The Court,
therefore, affirms the decision of the respondent Court of Appeals decreeing conversion of
private respondent‘s disability from permanent partial disability to permanent total disability.

Submitted by: Bayot, Kristine Valerie S.

Death Benefits
(Article 194)

Canonizado vs. Almeda-Lopez, G.R. No. L-13005, September 30, 1960

DOCTRINE: The law expressly provides for the properties to be exempt from attachment
and execution; courts cannot provide for other exemptions. The writ of execution issued

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should therefore be enforced first against conjugal properties about the nature of which
there is no dispute between petitioner and her husband, excepting only such as are
exempt from execution by law. Should said conjugal properties be not sufficient to pay
the alimony in arrears, the writ shall be enforced against the paraphernal properties of
Canonizado.

FACTS: Petitioner Bernarda Canonizado and her husband Cesar Canonizado live
together until the latter left the conjugal home, their only child, Christina Beatriz, 13
years of age, remained with her mother, petitioner sued Cesar for support in the CFI
(Juvenille and Domestic Relations Court) and later on filed a motion for alimony
pendent lite (temporary alimony while action for separation or divorce is pending) Cesar
opposed on the grounds that he had to leave the conjugal home because of petitioner‘s
insufferable conduct and claims that the petitioner was engaged in a gainful occupation
as an employee of Central Bank. CFI rules that petitioner was not personally entitled to
support from her husband, instead ordering the latter to pay by way of his contribution
for the support of their child a monthly sum of one hundred pesos (P100), but failed to
deliver. Cesar filed a motion praying that the support due be charged against the value
of the conjugal assets in petitioner‘s possession except for the Cadillac which was used
by Cesar in his profession. Respondent judge issued an order directing the sheriff to levy
only on the conjugal properties in plaintiff‘s possession and not include defendant‘s car.
Petition for certiorari for the annulment or modification of the decision rendered by the
respondent judge was filed before the Court.

ISSUE: Whether the petitioner may claim support for their child and whether or not the
Cadillac, which is a conjugal property be exempted from execution.

HELD: The law expressly provides for the properties to be exempt from attachment and
execution; courts cannot provide for other exemptions. The writ of execution should
therefore been forced first against conjugal properties about the nature of which there is
no dispute between petitioner and her husband, if the conjugal properties are not
sufficient to pay the alimony, it shall be enforced against the exclusive properties of
Cesar. In connection with the duty of a spouse to support the other, the essential thing
is not that the spouse asking for support is actual engaged or may engaged in a gainful
occupation, but whether or not said spouse is in need of support from the other for her
subsistence. Alimony pendent lite was granted.

CONSORCIA F. MANUZON, petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE
(Mindanao State University MSU, Marawi City), respondents.
G.R. No. 88573, June 25, 1990
(FIRST DIVISION)
DOCTRINE: Any doubt as to social legislation the proper interpretation must be resolved in
favor of the employee whose rights must be protected.

FACTS: Petitioner thru a letter requested the GSIS for a continued pension considering that
her husband died of a lingering illness which was found to be work connected by the GSIS and
that her husband became paralyzed while in service. Her husband was granted monthly
pension, but it stopped in 1985. She was granted additional pension up to January of 1988
only. The GSIS denied petitioner's requeststating in a letter that no additional benefit could be
paid in view of the fact that her husband's death due to Myocardial Infraction was evaluated
not compensable having occurred 4-½ years after his retirement from the service.

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The case was appealed to the Employees' Compensation Commission (ECC). The Commission
affirmed the decision of the GSIS and dismissed the case. Hence, Petitioner now claims that a
proper interpretation of Article 194(b) of Presidential Decree No. 626 will entitle her dead
husband to death benefits in favor of primary beneficiaries.

ISSUE: Whether or not an employee petitioner‘s deceased‘ husband is entitled to death benefits
under Article 194(b) of Presidential Decree No. 626, as amended.

HELD: YES.

The court agrees with the interpretation of the Solicitor General that generally speaking, the
term "covered employee" refers to an employee who at the time of his death is still an employee
covered by the GSIS. Further, the court cannot ignore the implementing Rules and Regulations
of the Employees Compensation Commission that to be entitled to death benefits, the employee
need not be an actual employee of the public or private sector at the time of his death; he can
be a retired employee whose retirement was brought about by permanent disability. It further
agrees that a permanent and totally disabled employee who is receiving pension cannot work.
He was compelled to retire from the service because of disability that was work-oriented.
Permanent total disability means an incapacity to perform gainful work which is expected to be
permanent. The covered employee referred to in Section 194(b) Presidential Decree No. 626, as
amended, includes an employee who has retired from work because of permanent and total
disability and who subsequently dies. Article 194(b) applies to a retired person as contemplated
in Art. 194(d) which allows for funeral benefits upon the death of a covered employee or
permanently totally disabled pensioner. The court interpret this social legislation in favor of the
employee. Any doubt as to its proper interpretation must be resolved in favor of the employee
whose rights must be protected.

The cause of his compulsory retirement due to paralysis arising from cardio vascular accident
is closely related to the cause of his death, which was also a cardio vascular attack or
myocardial infraction. That heart disease developed when he was still working as a professor. It
caused his paralysis and his total permanent disability. The disease was work-oriented
because of the nature of his employment as a professor. The same disease eventually caused
his death, contrary to the conclusion of both the GSIS and the Employees Compensation
Commission. The Court holds that the heirs of Mr. Manuzon are entitled to the benefits they
are claiming. Wherefore, the decisions of the Government Service Insurance System and the
Employees Compensation Commission are reversed.
Submitted by: De Guzman, Joey Albert P.

Provisions Common to Income Benefits

(Article 195-204)

EMPLOYEES COMPENSATION COMMISSION (SOCIAL SECURITY SYSTEM), petitioner,

vs.
EDMUND SANICO, respondent.
G.R. No. 134028, December 17, 1999
(First Division)

DOCTRINE: In disability compensation, it is not the injury which is compensated, but rather it
is the incapacity to work resulting in the impairment of ones earning capacity.

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FACTS: Private respondent was a former employee of John Gotamco and Sons. He worked in
said company as wood filer from 1986 until he was separated from employment on 31
December 1991 due to his illness. His medical evaluation report, dated 31 September 1991,
showed that he was suffering from pulmonary tuberculosis (PTB). Subsequent chest x-rays
taken diagnostically confirmed his illness. Private respondent filed with the Social Security
System (SSS) a claim for compensation benefits. SSS denied private respondents claim on the
ground of prescription. The SSS ruled that under Article 201 of the Labor Code, a claim for
compensation shall be given due course only when the same is filed with the System three (3)
years for the time the cause of action accrued. In private respondents case, the SSS reckoned
the three-year prescriptive period on 21 September 1991 when his PTB first became manifest.
When he filed his claim on 9 November 1994, the claim had allegedly already prescribed. On
appeal, petitioner affirmed the decision of the SSS. Private respondent then elevated the case to
the CA, which reversed petitioner‘s decision and granted private respondents claim for
compensation benefits. In ruling that private respondents claim was filed well within the
prescriptive period under the law, the CA reconciled Article 201 of the Labor Code with Article
1144(2) of the Civil Code. Under the latter provision of law, an action upon an obligation
created by law must be filed within ten (10) years from the time the cause of action accrues.
Thus, while private respondents illness became manifest in September 1991, the filing of his
compensation claim on 9 November 1994 was within, even long before, the prescriptive period.

ISSUE: Whether or not private respondents claim for compensation benefit had already
prescribed when he filed his claim on 9 November 1994.

HELD: NO.

The Court has consistently ruled that disability should not be understood more on its medical
significance but on the loss of earning capacity. Permanent total disability means disablement
of an employee to earn wages in the same kind of work, or work of similar nature that [he] was
trained for or accustomed to perform, or any kind of work which a person of [his] mentality and
attainment could do. It does not mean absolute helplessness.

Petitioner thus seriously erred when it affirmed the decision of the SSS denying private
respondents claim on the ground of prescription. In determining whether or not private
respondents claim was filed within the three-year prescriptive period under Article 201 of the
Labor Code, petitioner and the SSS reckoned the accrual of private respondents cause of action
on 31 September 1991, when his PTB became known. This is erroneous.

As an official agent charged by law to implement social justice guaranteed and secured by the
Constitution, the ECC should adopt a liberal attitude in favor of the employee in deciding
claims for compensability especially where there is some basis in the facts for inferring a work
connection with the incident. This kind of interpretation gives meaning and substance to the
compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states
that all doubts in the implementation and interpretation of the provisions of the Labor Code
including its implementing rules and regulations should be resolved in favor of labor.

Submitted by: Bonquin, Jezrael B.

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ROSARIO VDA. DE SUANES, Petitioner,

v.
THE WORKMEN’S COMPENSATION COMMISSION and THE REPUBLIC OF THE
PHILIPPINES (Bureau of Public Highways), Respondents.
G.R. No. 42808. January 31, 1989.
(Third Division)

DOCTRINE: The ordinary rule is that the statutory right to compensation under the
Workmen‘s Compensation Act prescribes in ten (10) years counted from the time of accrual of
the claim, x x x While this original claim designated the wrong employer, we believe that, given
the insistent demands of substantial justice in this case, such original claim should be
regarded, as we hereby so regard it, as having effectively tolled the running of the prescriptive
period. x x x Under the principle of nunc pro tunc, we do not believe that this failure to act
earlier on the part on the Court itself may be allowed to prejudice the petitioner.

x x x It is well settled that, under the Workmen‘s Compensation Act, petitioner is accordingly
relieved of the burden of proving causation between the illness and the employment in view of
the legal presumption that said illness arose out of the decedent‘s employment. The burden of
proving non-compensability of the cause of death is shifted to the employer. x x x

FACTS: Artemio A. Suanes was a government employee for most of his life. When he died, the
certificate of death attributed Artemio‘s demise to "Cardio-respiratory Arrest due to
Cerebrovascular Accident."

Petitioner, as surviving spouse of Artemio Suanes, filed with the Workmen‘s Compensation Unit
(WCU), Department of Labor, a claim for compensation under the applicable provisions of the
Workmen‘s Compensation Act. In this claim, the decedent‘s illness was described as "Internal
Hemorrhage due to Hypertension‖. Petitioner‘s claim was referred by the WCU to the BPH
which, however, controverted the claim of petitioner. BPH asserted that there was" [l]ack of
causative relation of the illness alleged in [petitioner‘s] claim with the nature of the decedent‘s
employment" and that petitioner had failed to comply with the requirements of Section 24, Act
No. 3428, as amended, regarding the giving of notice and subsequent filing of claim.

BPH, further, asked the WCU Regional Office to dismiss petitioner‘s claim upon the ground
that claim had been filed against the wrong party, Artemio‘s employer at the time of his death
being the Provincial Engineer‘s Office of the Provincial Government of Batangas, rather than
the BPH. Referee of the WCU dismissed petitioner‘s claim "for lack of interest," "claimant
having failed to appear for the scheduled hearing despite notice." Petitioner moved to set aside
the order of dismissal, denying that she had lost interest in the prosecution of her claim.

Nine years later the Supreme Court issued a Resolution which resolved to consider the
Provincial Engineer of Batangas as IMPLEADED party respondent, to direct the Clerk of Court
to FURNISH him with a copy of the Petition for Review and to REQUIRE him to file a comment
thereon within ten (10) days from receipt.

ISSUE:

(1) Whether or not petitioner‘s claim against his office has already prescribed given that claim
had been originally filed against "the Republic of the Philippines (Bureau of Public
Highways)" and not against the Office of the Provincial Engineer of Batangas Province, the
employer of Artemio Suanes at the time of his death.

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(2) Whether or not the claim of the petitioner for compensation should be granted given that
the petitioner was not able to convince the lower tribunal that she is entitled to the
compensation.

HELD:

(1) NO. The ordinary rule is that the statutory right to compensation under the Workmen‘s
Compensation Act prescribes in ten (10) years counted from the time of accrual of the
claim, in this case from the time of the death of Artemio Suanes. Artemio Suanes died, as
noted earlier, on 21 June 1973; the court impleaded the Office of the Provincial Engineer of
Batangas Province on 29 February 1985, i.e., about twelve (12) years later. We do not,
however, believe that petitioner‘s claim may be so cavalierly defeated, given the
circumstances of this case. In the first place, petitioner‘s original claim was filed, again as
already noted, on 5, March 1975. While this original claim designated the wrong employer,
we believe that, given the insistent demands of substantial justice in this case, such
original claim should be regarded, as we hereby so regard it, as having effectively tolled the
running of the prescriptive period. We note that the petitioner lost no time in filing her
Petition for Review with this Court on 15 March 1976 when her claim was denied by the
respondent Commission on 13 December 1975. This Court was able formally to rectify the
erroneous designation of the respondent BPH only after almost nine (9) years from filing of
the Petition for Review. Under the principle of nunc pro tunc, we do not believe that this
failure to act earlier on the part on the Court itself may be allowed to prejudice the
petitioner. The defense of prescription must, therefore, be rejected.

(2) YES. x x x there is no dispute about the fact that Artemio‘s ailment supervened in the
course of his employment either with the BPH or the Office of the Batangas Provincial
Engineer. It is well settled that, under the Workmen‘s Compensation Act, petitioner is
accordingly relieved of the burden of proving causation between the illness and the
employment in view of the legal presumption that said illness arose out of the decedent‘s
employment. The burden of proving non-compensability of the cause of death is shifted to
the employer. Respondent Batangas Provincial Engineer had failed to discharge this
burden. Indeed, none of the respondents even attempted to present any evidence to rebut
the presumption of compensability; all of them chose to rely upon the formal defenses
discussed above. But those defenses do not constitute evidence to overthrow the statutory
presumption. In legal effect, no evidence was introduced by the respondents to offset that
legal presumption. The Court, therefore, is left with no alternative but to rule in favor of
petitioner‘s claim.
Submitted by: Del Rosario, Eunice

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