Labor Case Digests, Fglsjgjakfsagf

University of San Carlos - College of Law
Midterm Case Digests

Atty. Jefferson M. Marquez
Compiled by: Ma. Cecelia Timbal LlB-2 Rm 402
Labor Standards
University of San Carlos – College of Law Labor Standards Midterm Case Digests
Contents
PASEI vs Torres (1992) G.R. 101279 .............................................................................................................. 6
San Juan de Dios Hospital vs NLRC (1997) G.R. 126383................................................................................ 7
Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225 ...................................... 8
Asuncion vs NLRC (2001) G.R. 129329 .......................................................................................................... 9
Singer Sewing Machine vs NLRC () 193 SCRA 271....................................................................................... 11
Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948........................................ 12
Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098 ............................................................... 13
Carungcong vs NLRC, Sun Life Assurance Co. of Canada (1997) G.R. 118086 ............................................ 14
Ramos vs Court of Appeals () 380 SCRA 467 ............................................................................................... 15
Sonza vs ABS-CBN (2004) G.R. 138051 ....................................................................................................... 16
Lazaro vs Social Security Commission (2004) G.R. 138254 ......................................................................... 18
ABS-CBN vs Nazareno (2006) G.R. 164156 ................................................................................................. 19
Francisco vs NLRC (2006) 500 SCRA 690 ..................................................................................................... 21
Nogales et al., vs Capitol Medical Center (2006) G.R. 142625 ................................................................... 23
Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881 .................................................................... 25
Calamba Medical Center vs NLRC (2008) G.R. 176484 ............................................................................... 26
Ollendorff vs Abrahamson (1918) G.R. 13228 ............................................................................................ 28
Del Castillo vs Richmond (1924) G.R. L-21127 ............................................................................................ 30
Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 ........................................................... 31
Duncan Asso. Of Detailman-PTGWO vs Glaxo Wellcome Phils., (2004) G.R. 162994 ................................ 31
Star Paper Corp., vs Simbol (2006) G.R. 164774 ......................................................................................... 33
Rivera vs Solidbank (2006) G.R. 163269 ..................................................................................................... 34
Yrasuegui vs Philippine Airlines (2008) G.R. 168081 .................................................................................. 34
Ilaw at Buklod Manggagawa vs NLRC (1991) 198 SCRA 586 ....................................................................... 36
Employers Confederation of the Phils vs NWPC (1991) 201 SCRA 759 ...................................................... 38
Mabeza vs NLRC () 271 SCRA 670 ............................................................................................................... 40
Joy Brothers Inc., vs NWPC (1997) 273 SCRA 622....................................................................................... 42
Prubankers Association vs Prudential Bank (1999) 302 SCRA 74 ............................................................... 43
Millares et al., vs NLRC () 305 SCRA 501 ..................................................................................................... 45
International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13........................................ 47
Bankard Employees Union vs NLRC (2004) G.R. 140689 ............................................................................ 49
2 Ma. Cecelia Timbal LlB – 2 Rm 402

Odango vs NLRC (2005) G.R. 147420 .......................................................................................................... 51

C. Planas Commercial vs NLRC (2005) G.R. 144619 .................................................................................... 52
EJR Crafts Corp., vs CA (2006) ..................................................................................................................... 53
Pag – Asa Steel Works vs CA (2006) G.R. 166647 ....................................................................................... 54
Equitable PCI Bank vs Sadac (2006) G.R. 164772........................................................................................ 55
Metropolitan Bank vs NWPC (2007) G.R. 144322 ...................................................................................... 56
Rajah Humabon Hotel vs Trajano (1993) G.R. 100222-23 .......................................................................... 59
Guico vs Sec of Labor (1998) G.R. 131750 .................................................................................................. 60
EJR Crafts Corp., vs Court of Appeals (2006) G.R. 154101 .......................................................................... 61
Ex – Bataan Veterans Security Agency vs Sec of Labor (2007) G.R. 152396............................................... 62
Catholic Vicariate Baguio City vs Hon. Sto. Tomas (2008) G.R.167334 ...................................................... 63
Sapio vs Undaloc Construction (2008) G.R. 155034 ................................................................................... 65
Hon. Secretary of Labor vs Panay Veterans Security and Investigation Agency (2008) G.R. 167708 ........ 66
People’s Broadcasting vs Secretary of DOLE (2009) G.R. 179652............................................................... 68
Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries – Dusit Hotel
Nikko Chapter (2009) G.R. 181972 ............................................................................................................. 70
Gaa vs Court of Appeals (1985) 140 SCRA 304 ........................................................................................... 74
Nestle Phils Inc., vs NLRC (1991) 193 SCRA 504.......................................................................................... 75
Five J Taxi vs NLRC (1992) 235 SCRA 556 .................................................................................................... 77
Manila Electric Co vs Sec of Labor (1999) G.R. 127598 .............................................................................. 79
Philippine Veterans Bank vs NLRC (1999) G.R. 130439 .............................................................................. 80
Philippine Appliance Corp., vs Court of Appeals (2004) G.R. 149434 ......................................................... 82
Special Steel Products vs Villareal (2004) G.R. 143304 ............................................................................... 83
Agabon vs NLRC (2004) G.R. 158693 .......................................................................................................... 85
American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R. 155059............................ 86
Honda Philippines Inc., vs Samahang Manggagawa sa Honda (2005) G.R. 145561 ................................... 87
Producers Bank vs NLRC () 335 SCRA 506 ................................................................................................... 88
Jardin vs NLRC (2000) G.R. 119268 ............................................................................................................. 89
Manila Jockey Club Employees Labor Union vs Manila Jockey Club (2007) G.R. 167601 .......................... 90
San Miguel Corp., vs Layoc Jr. Et al., (2007) G.R. 149640 ........................................................................... 91
San Miguel Corp vs Pontillas (2008) G.R. 155178 ....................................................................................... 92

Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal – NAFLU (2008)
G.R. 170734 ................................................................................................................................................. 93
Genesis Transport Service et al., vs UMM Genesis Transport (2010) G.R. 182114 .................................... 94
Congson vs NLRC (1995) 243 SCRA 260 ...................................................................................................... 95
North Davao Mining vs NLRC (1996) 254 SCRA 721 ................................................................................... 97
San Juan de Dios Hospital vs NLRC (1997) 282 SCRA 316 ........................................................................... 99
Sime Darby Pilipinas Inc., vs NLRC (1998) 289 SCRA 86 ............................................................................ 101
Philippine Airlines vs NLRC (1999) 302 SCRA 582 ..................................................................................... 102
Linton Commercial Co., vs Hellera (2007) G.R. 163147 ............................................................................ 104
Bisig Manggagawa sa Tryco vs NLRC (2008) G.R. 151309......................................................................... 106
Union Filipro Employees vs Vivar (1992) 205 SCRA 203 ........................................................................... 107
National Sugar Refinery Corp vs NLRC (1993) 220 SCRA 452 ................................................................... 109
Salazar vs NLRC (1996) 256 SCRA 273 ....................................................................................................... 112
Labor Congress of the Philippines vs NLRC (1998) G.R. 123938 ............................................................... 113
Mercidar Fishing Corp., vs NLRC (1998) G.R. 112574 ............................................................................... 115
San Miguel Corp., vs Court of Appeals (2002) G.R. 146775 ...................................................................... 116
Tan vs Lagarama (2002) G.R. 151228........................................................................................................ 118
Lambo vs NLRC (1999) 317 SCRA 420 ....................................................................................................... 119
R&E Transport vs Latag (2004) G.R. 155214 ............................................................................................. 120
Asian Transmission vs Court of Appeals (2004) 425 SCRA 478 ................................................................. 120
Autobus Transport System vs Bautista (2005) G.R. 156364 ..................................................................... 122
San Miguel Corp., vs Del Rosario (2005) G.R. 168194 .............................................................................. 124
Penaranda vs Baganga Plywood Corp (2006) G.R. 159577 ....................................................................... 126
House of Sara Lee vs Rey (2006) G.R. 149013 .......................................................................................... 128
Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union – ALU (2007) G.R. 157775 ............... 130
San Miguel Corp., et al., vs Layoc, Jr., et al., (2007) G.R. 149640 ............................................................. 132
Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195........................................................................ 133
PNCC Skyway Traffic Management & Security Division Workers Organization vs PNCC Skyway Corp.,
(2010) G.R. 171231 ................................................................................................................................... 134
Pantranco North Express vs NLRC (1996) 259 SCRA 161 .......................................................................... 136
R&E Transport vs Latag (2004) G.R. 155214 ............................................................................................. 138
Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542 .................................................................................. 139

Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561 ..................... 141
Jaculbe vs Siliman University (2007) G.R. 156934 .................................................................................... 142
Intercontinental Broadcasting Corp., vs Amarilla (2006) G.R. 162775 ..................................................... 144
Reyes vs NLRC (2007) G.R. 160233 ........................................................................................................... 148
Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225 .................................. 150
Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R. 142399 ................................ 151
Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal – NAFLU (2008)
G.R. 170734 ............................................................................................................................................... 152
Universal Sugar Milling Corp., vs Caballeda (2009) G.R. 156644 .............................................................. 153
T/Sgt. Larkins vs NLRC (1995) G.R. 92432 ................................................................................................. 155
UERM Memorial Medical Center vs NLRC (1997) G.R. 1104419 .............................................................. 157
Philtranco Services vs NLRC (1998) G.R. 124100 ...................................................................................... 159
St. Martin Funeral Homes vs NLRC (1998) G.R. 130866 ........................................................................... 160
Ludo & Luym Corp., vs Saornido (2003) G.R. 140690 ............................................................................... 161
Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (2006) G.R. 165910 .......................... 164
Phil. Journalistic Inc., vs NLRC (2006) G.R. 166421 ................................................................................... 168
Balagtas Multi-Purpose Coop vs Court of Appeals (2006) G.R. 159268 ................................................... 169
St. Martin Funeral Homes vs NLRC (2006) G.R. 142351 ........................................................................... 171
DOLE Phils. vs Esteva (2006) G.R. 161115................................................................................................. 172
Intercontinental Broadcasting Corp., vs Panganiban (2007) G.R. 151407................................................ 174
Far East Agricultural Supply vs Lebatigue (2007) G.R. 162813 ................................................................. 176
Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225 ..................................... 177
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460.......................................... 178

PASEI vs Torres (1992) G.R. 101279

Facts:

PASIE is the largest national organization of private employment and recruitment agencies duly licensed and
authorized by the POEA, to engage in the business of obtaining overseas employment for Filipino land-based
workers, including domestic helpers.
On June 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed
in Hong Kong, DOLE Secretary Ruben Torres issued Department Order No. 16, Series of 1991, temporarily
suspending the recruitment by private employment agencies of "Filipino domestic helpers going to Hong
Kong". The DOLE itself, through the POEA took over the business of deploying such Hong Kong-bound workers.
Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, providing
GUIDELINES on the Government processing and deployment of Filipino domestic helpers to Hong Kong and the
accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic helpers.
Pursuant to the previous issuances, the POEA Administrator also issued Memorandum Circular No. 37, Series
of 1991, on the processing of employment contracts of domestic workers for Hong Kong.
Issues:
1. WON respondents acted with grave abuse of discretion and/or in excess of their rule-making authority
in issuing said circulars?
2. WON that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable,
unfair and oppressive?
Held: They are in accordance but legally invalid, defective and unenforceable for lack of power publication and
filing in the Office of the National Administrative Register as required in Art 2 of CC, Art 5 of the Labor Code
and Sec 3(1) and 4, Chap 2, Book VII of the Administrative Code of 1987.
1. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate recruitment
and placement activities. On the other hand, the scope of the regulatory authority of the POEA, which
was created by Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas
Employment Development Board, the National Seamen Board, and the overseas employment
functions of the Bureau of Employment Services, is broad and far-ranging as provided by Articles 15,
17 and 20 of the Labor Code.
2. The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not
unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing complexity
of the modern society" (Solid Homes, Inc. vs. Payawal). More and more administrative bodies are
necessary to help in the regulation of society's ramified activities. It is noteworthy that the assailed
circulars do not prohibit the petitioner from engaging in the recruitment and deployment of Filipino
landbased workers for overseas employment. The power to "restrict and regulate conferred by Article
36 of the Labor Code involves a grant of police power. The questioned circulars are therefore a valid
exercise of the police power as delegated to the executive branch of Government.
San Juan de Dios Hospital vs NLRC (1997) G.R. 126383

Facts:

Petitioners, rank-and-file employees and members of San Juan de Dios Hospital Employees Association sent a
4 page letter requesting and pleading for the expeditious implementation and payment by the respondent
Hospital of the ’40 HOURS/5-DAY WORKWEEK’ with compensable weekly two (2) days off provided for by
Republic Act 5901 as clarified for enforcement by the Secretary of Labor’s Policy Instructions No. 54 dated April
12, 1988.” Respondent hospital failed to give a favourable response; thus, petitioners filed a complaint
regarding their “claims for statutory benefits under the above-cited law and policy issuance”. The Labor Arbiter
dismissed the complaint which was also confirmed by NLRC, hence the petition under Rule 65 of the Rules of
Court.
Issue: WON Policy Instructions No. 54 issued by then Labor Secretary Franklin Drilon is valid?
Held: It is invalid.
The Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as “An
Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel”, but
reliance to this RA is misplaced since it has long been repealed with the passage of the Labor Code. Accordingly,
only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic
provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter’s validity may
be gauged.
What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for
health personnel, and (2) where the exigencies of service require that health personnel work for six days or
forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty
percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary
of Labor’s assertion that “personnel in subject hospitals and clinics are entitled to a full weekly wage for seven
(7) days if they have completed the 40-hour/5-day workweek in any given workweek”.
Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau of
Labor Standards which implement Republic Act No. 5901. Pertinent portions of the implementing rules
provided in Sections 1,7, and 15 of the said Act.
If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section 15 of
the implementing rules grants additional compensation equivalent to the regular rate plus at least twenty-five
percent thereof for work performed on Sunday to health personnel, or an “additional straight-time pay which
must be equivalent at least to the regular rate” “[f]or work performed in excess of forty hours a week
xxx. Policy Instructions No. 54 to our mind unduly extended the statute. The Secretary of Labor moreover
erred in invoking the “spirit and intent” of Republic Act No. 5901 and Article 83 of the Labor Code for it is an
elementary rule of statutory construction that when the language of the law is clear and unequivocal, the law
must be taken to mean exactly what it says.
Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225

Facts:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against Colegio de San
Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. The
Labor Arbiter (LA) handling the consolidated cases, denied and dismissed the respective complaints.
Issue: WON the pay of the faculty members for teaching overloads should be included as basis in the
computation of their 13th month pay?
Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are deemed not part of
the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of Instruction No. 174; b)
profit sharing payments; c) all allowances and monetary benefits which are not considered or integrated as
part of the regular basic salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor
Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary
and in the computation of the 13th-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary
includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on
rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not
part of the basic salary and shall not be considered in the computation of the 13th-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional compensation other
than and added to the regular wage or basic salary, for reason of which such is categorically excluded from the
definition of basic salary under the Supplementary Rules and Regulations Implementing PD 851.
In the same manner that payment for overtime work and work performed during special holidays is considered
as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload
pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary,
because it is being paid for additional work performed in excess of the regular teaching load.
Asuncion vs NLRC (2001) G.R. 129329
Facts:

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

Singer Sewing Machine vs NLRC () 193 SCRA 271
Facts:

Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive
bargaining agent of all collectors of Singer Sewing Machine. The company opposed the petition mainly because
the union members are not employees but independent contractors as evidenced by the collection agency
agreement which they signed.
Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election
which was affirmed by Sec. Drilon. The company files the present petition on the determination of the
relationship. The union insist that the provisions of the Collection Agreement belie the company’s position that
the union members are independent contractors.
Issue: WON there exists an employer-employee relationship between the parties.
Held: Respondents are not employees of the company.
The present case calls for the application of the control test, which if not satisfied, would lead to the conclusion
that no employee-employer relationship exists. If the union members are not employees, no right to organize
for the purpose of bargaining or as a bargaining agent cannot be recognized.
The following elements are generally considered in the determination of the relationship: the selection and
engagement of the employee, payment of wages, power of dismissal and the power to control the employee’s
conduct which is the most important element.
The nature of the relationship between a company and its collecting agents depends on the circumstances of
each particular relationship. Not all collecting agents are employees and neither are all collecting agents
independent contractors. The agreement confirms the status of the collecting agents as independent
contractor. The requirement that collection agents utilize only receipt forms and report forms issued by the
company and that reports shall be submitted at least once a week is not necessarily an indication of control
over the means by which the job collection is to be performed. Even if report requirements are to be called
control measures, any control is only with respect to the end result of the collection since the requirements
regulate the things to be done after the performance of the collection job or the rendition of service.
The plain language of the agreement reveals that the designation as collection agent does not create an
employment relationship and that the applicant is to be considered at all times as an independent contractor.
The court finds that since private respondents are not employees of the company, they are not entitled to the
constitutional right to form or join a labor organization for the purposes of collective bargaining. There is no
constitutional and legal basis for their union to be granted their petition for direct certification.
Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948
Facts:

Respondents were caddies and employees of Manila Golf & Country Club who originally filed a petition with
the Social Security Commission (SSC) for coverage and availment of benefits under the Social Security Act. They
alleged that although the petitioners were employees of the Manila Golf and Country Club, a domestic
corporation, the latter had not registered them as such with the SSS.
In the case before the SSC, the respondent Club alleged that the petitioners, caddies by occupation, were
allowed into the Club premises to render services as such to the individual members and guests playing the
Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not
subject to the direction and control of the Club as regards the manner in which they performed their work; and
hence, they were not the Club's employees.
Issue: WON there exist an employer-employee relationship between the cadies and the Golf Club?
Held: No existence of employer-employee relationship.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the
privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in.
For all that is made to appear, they work for the club to which they attach themselves on sufferance but, on
the other hand, also without having to observe any working hours, free to leave anytime they please, to stay
away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline
may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in
any case even absent any breach of the rules, and without violating any right to work on their part. All these
considerations clash frontally with the concept of employment.
The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as
still another indication of the latter's status as employees. It seems to the Court, however, that the intendment
of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the
caddies' work and compensation that an employer would possess. Court agree that the group rotation system
so-called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy
who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last
number for the day.
Moreover, as pointed out by petitioner which was never refuted that: has no means of compelling the presence
of a caddy. A caddy is not required to exercise his occupation in the premises of petitioner. He may work with
any other golf club or he may seek employment a caddy or otherwise with any entity or individual without
restriction by petitioner.
Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098
Facts:

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica and
was in charge of selling petitioner’s products through some sales representatives. As compensation, private
respondent received commissions from the products sold by his agents. He was also allowed to use petitioner’s
name, goodwill and logo. It was, however, agreed upon that office expenses would be deducted from private
respondent’s commissions. Petitioner would also be informed about appointments, promotions, and transfers
of employees in private respondent’s district.
On June 1974, Limjoco resigned from office to pursue his private business. He then filed a complaint against
petitioner Encyclopaedia Britannica with DOLE, claiming for non-payment of separation pay and other benefits,
and also illegal deduction from his sales commissions.
Petitioner alleged that Limjoco was not its employee but an independent dealer authorized to promote and
sell its products and in return, received commissions there from. Limjoco did not have any salary and his income
from the company was dependent on the volume of sales accomplished. He also had his own separate office,
financed the business expenses, and maintained his own workforce. The salaries of his secretary, utility man,
and sales representatives were chargeable to his commissions. Thus, petitioner argued that it had no control
and supervision over the complainant as to the manner and means he conducted his business operations,
moreover, the latter did not even report to the office of the petitioner and did not observe fixed office hours
Issue: WON there exist an employer-employee relationship and necessarily entitles Limjoco of his claims?
Held: Private respondent was merely an agent or an independent dealer of the petitioner.
In ascertaining whether the relationship is that of employer-employee or one of independent contractor, each
case must be determined by its own facts and all features of the relationship are to be considered.
Respondent was free to conduct his work and he was free to engage in other means of livelihood. At the time
he was connected with the petitioner company, private respondent was also a director and later the president
of the Farmers’ Rural Bank. Had he been an employee of the company, he could not be employed elsewhere
and he would be required to devote full time for petitioner. If private respondent was indeed an employee, it
was rather unusual for him to wait for more than a year from his separation from work before he decided to
file his claims. As he pointed out in his resignation letter, Limjoco was aware of “conflict with other interests
which xxx have increasingly required my personal attention”. At the very least, it would indicate that petitioner
has no effective control over the personal activities of Limjoco, who as admitted by the latter had other
“conflict of interest” requiring his personal attention.
As pointed out “the element of control is absent; where a person who works for another does so more or less
at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated
according to the result of his efforts and not the amount thereof.”
Carungcong vs NLRC, Sun Life Assurance Co. of Canada (1997) G.R. 118086
Facts:

Susan Carungcong began as an agent of Sun Life in 1974, she signed an “Agent’s Agreement” and was
designated to solicit applications for insurance and annuity services. The contract set out in detail the terms
and conditions — particularly those concerning the commissions payable to her — under which her relationship
with the company would be governed. Five years later, said contract was superseded by 2 new agreements:
first, is the "Career Agent's (or Unit Manager's) Agreement," dealt with such matters as the agent's
commissions, his obligations, limitations on his authority, and termination of the agreement by death, or by
written notice "with or without cause." It declared that the "Agent shall be an independent contractor and
none of the terms of agreement shall be construed as creating an employer-employee relationship; second,
was titled, "MANAGER'S Supplementary Agreement." Making explicit reference to the first agreement "which
became effective on the 1st day of July, 1979" said second contract — explicitly described as a "further
agreement" — contained provisions regarding remuneration (overriding commissions in accordance with a
fixed schedule), limitation of authority, and termination of the agreement inter alia by written notice "without
cause."
Subsequently, Carungcong and Sun Life executed another Agreement - by which the former was named New
Business Manager with the function generally "to manage a New Business Office established by her and to
obtain applications for life insurance policies and other products offered by or distributed through Sun Life and
to perform such other duties in connection therewith as Sun Life may require from time to time." This latest
Agreement stressed that the "New Business Manager in performance of his duties defined herein, shall be
considered an independent contractor and not . . an employee of Sun Life," and that "under no circumstance
shall the New Business Manager and/or his employees be considered employees of Sun Life."
After receiving reports of anomalies in relation thereto from unit managers and agents by the company’s VP,
the Manager of Sun Life's Internal Audit Department, commenced an inquiry into the special fund availments
of Carungcong and other New Business Managers which later prompted the petitioner’s termination. She then
instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commission
where she succeeded in obtaining a favorable judgment finding that there existed an employer-employee
relationship between her and Sun Life; ruled that she had been illegally dismissed, thus entitled to
reinstatement without loss of seniority rights and other benefits.
Issue: WON there existed an employer-employee relationship between Caruncong and Sunlife?
Held: Carungcong was an independent contractor and not an employee of Sun Life.
The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly provided that said
agreements were terminable by either party by written notice with or without cause.
Noteworthy is that this last agreement, it was emphasized, like the "Career Agent's (or Unit Manager's)
Agreement" first signed by her, that in the performance of her duties defined herein. Carungcong would be
considered an independent contractor and not . . an employee of Sun Life," and that "(u)nder no circumstance
shall the New Business Manager and/or his employees be considered employees of Sun Life."
Ramos vs Court of Appeals () 380 SCRA 467
Facts:

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

In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and Development Corp for a radio
and television program. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the
first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on
the 10th and 25th days of the month.
On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent event concerning
his programs and career, and that the said violation of the company has breached the agreement, thus, the
notice of rescission of Agreement was sent.
At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for non-payment of
salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan (ESOP) which was opposed by ABS-CBN on the ground
there was no employer-employee relationship existed between the parties.
Issue: WON Sonza was an employee or independent contractor?
Held: There was no employer-employee relationship that existed, but that of an independent contractor.
Case law has consistently held that the elements of an employer-employee relationship are:
(a) The selection and engagement of the employee - ABS-CBN engaged SONZA’s services to co-host its
television and radio programs because of SONZA’s peculiar skills, talent and celebrity status. The specific
selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship.
(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees
going to MJMDC. All the talent fees and benefits paid to SONZA were the result of negotiations that led
to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to
stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay" which the law automatically
incorporates into every employer-employee contract.
(c) The power of dismissal - For violation of any provision of the Agreement, either party may terminate
their relationship. During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long
as "AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement." Even
if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained
obligated to pay SONZA’s talent fees during the life of the Agreement.
(d) The employer’s power to control the employee on the means and methods by which the work is
accomplished - The control test is the most important test. This test is based on the extent of control the
hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely
the worker is deemed an employee. The converse holds true as well – the less control the hirer exercises,
the more likely the worker is considered an independent contractor.
First, ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-CBN did
not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How
SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control.
SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend
only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN
could not dictate the contents of SONZA’s script. However, the Agreement prohibited SONZA from
criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on
what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.

Second, The Agreement stipulates that SONZA shall abide with the rules and standards of performance
"covering talents" of ABS-CBN. The Agreement does not require SONZA to comply with the rules and
standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA
under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code
applies to broadcasters, not to employees of radio and television stations. Broadcasters are not
necessarily employees of radio and television stations. Clearly, the rules and standards of performance
referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN.
Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread
and accepted practice in the entertainment industry. This practice is not designed to control the means
and methods of work of the talent, but simply to protect the investment of the broadcast station. The
broadcast station normally spends substantial amounts of money, time and effort "in building up its
talents as well as the programs they appear in and thus expects that said talents remain exclusive with
the station for a commensurate period of time." Normally, a much higher fee is paid to talents who agree
to work exclusively for a particular radio or television station. In short, the huge talent fees partially
compensates for exclusivity.
Lazaro vs Social Security Commission (2004) G.R. 138254
Facts:

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

ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’
identification cards and were required to work for a minimum of eight hours a day, including Sundays and
holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily
operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist,
anchor program interview, etc; and f) Record, log clerical reports, man based control radio.
Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be
effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to recognize
PAs as part of the bargaining unit, respondents were not included to the CBA.
Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio operations would be
handled by the studio technician. There was a revision of the schedule and assignments and that respondent
Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.
On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment
of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13 th Month Pay with
Damages against the petitioner before the NLRC.
Issue: WON the respondents are regular employees?
Held: Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to
all regular employees.
Where a person has rendered at least one year of service, regardless of the nature of the activity performed,
or where the work is continuous or intermittent, the employment is considered regular as long as the activity
exists. The reason being that a customary appointment is not indispensable before one may be formally
declared as having attained regular status. Article 280 of the Labor Code provides:
REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.
Any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed
regular with respect to the activity performed and while such activity actually exists. The fact that respondents
received pre-agreed “talent fees” instead of salaries, that they did not observe the required office hours, and
that they were permitted to join other productions during their free time are not conclusive of the nature of
their employment. They are regular employees who perform several different duties under the control and
direction of ABS-CBN executives and supervisors.
There are two kinds of regular employees under the law: (1) those engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who
have rendered at least one year of service, whether continuous or broken, with respect to the activities in
which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the activities
performed in relation to the particular trade or business taking into account all the circumstances, and in some
cases the length of time of its performance and its continued existence.
The employer-employee relationship between petitioner and respondents has been proven by the ff:
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity
status was required from them because they were merely hired through petitioner’s personnel
department just like any ordinary employee.
Second. The so-called “talent fees” of respondents correspond to wages given as a result of an
employer-employee relationship. Respondents did not have the power to bargain for huge talent fees,
a circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and
when the worker, relative to the employer, does not furnish an independent business or professional service,
such work is a regular employment of such employee and not an independent contractor.
Francisco vs NLRC (2006) 500 SCRA 690
Facts:

Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated as accountant
and corporate secretary and was assigned to handle all the accounting needs of the company. She was also
designated as Liason Officer to the City of Manila to secure permits for the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees
and perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager.
Kasei Corporation reduced her salary to P2,500 per month which was until September. She asked for her salary
but was informed that she was no longer connected to the company. She did not anymore report to work
since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while CA
reversed it.
Issue: WON there was an employer-employee relationship.
Held: Petitioner is an employee of Kasei Corporation.
The court held that in this jurisdiction, there has been no uniform test to determine the existence of an
employer-employee relation. Generally, courts have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing
economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help
in determining the existence of an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative 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.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic conditions
prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee
in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship
based on an analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the circumstances
of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of
the 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. It is
therefore apparent that petitioner is economically dependent on respondent corporation for her continued
employment in the latter’s line of business.

There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was
selected and engaged by the company for compensation, and is economically dependent upon respondent for
her continued employment in that line of business. Her main job function involved accounting and tax services
rendered to Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent
Corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More
importantly, Respondent Corporation had the power to control petitioner with the means and methods by
which the work is to be accomplished.
Nogales et al., vs Capitol Medical Center (2006) G.R. 142625
Facts:

Corazon was under the exclusive care of Dr Oscar Estrada beginning the fourth month of her pregnancy. While
on her last trimester of pregnancy, Dr Estrada noted an increase of her blood pressure and development of leg
edema indicating preeclampsia which is a dangerous complication of pregnancy.
Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Spouses Nogales
to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to the
Capitol Medical Center. Eventually, Corazon died after giving birth to the child, which prompted the petitioners
to file a complaint for damages against CMC, Dr. Estrada and other physicians and a certain nurse for Corazon’s
death. Petitioners mainly contended that defendant physicians and CMC personnel were negligent in the
treatment and management of Corazon's condition. Petitioners charged CMC with negligence in the selection
and supervision of defendant physicians and hospital staff.
Issue: WON CMC is vicariously liable for the negligence of Dr. Estrada?
Held: CMC is vicariously liable.
In Ramos v. Court of Appeals, Court had the occasion to determine the relationship between a hospital and a
consultant or visiting physician and the liability of such hospital for that physician's negligence:
While "consultants" are not, technically employees, a point which respondent hospital asserts in denying
all responsibility for the patient's condition, the control exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of
the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining.
Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical
negligence cases, an employer-employee relationship in effect exists between hospitals and their attending
and visiting physicians.
While the Court in Ramos did not expound on the control test, such test essentially determines whether an
employment relationship exists between a physician and a hospital based on the exercise of control over the
physician as to details. Specifically, the employer (or the hospital) must have the right to control both the
means and the details of the process by which the employee (or the physician) is to accomplish his task
In the present case, the Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's
treatment and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she
was under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during
her delivery, it was Dr. Estrada, assisted by Dr. Villaflor, who attended to Corazon. There was no showing that
CMC had a part in diagnosing Corazon's condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact
alone did not make him an employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon
was about to give birth, which CMC considered an emergency. Considering these circumstances, Dr. Estrada is
not an employee of CMC, but an independent contractor.
In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however,
an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the
hospital. This exception is also known as the "doctrine of apparent authority." In Gilbert v. Sycamore Municipal
Hospital, the Illinois Supreme Court explained the doctrine of apparent authority in this wise:
Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent contractor,
unless the patient knows, or should have known, that the physician is an independent contractor. The
elements of the action have been set out as follows:

"For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the
hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual
who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the agent
create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and
acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent,
consistent with ordinary care and prudence."
The element of "holding out" on the part of the hospital does not require an express representation
by the hospital that the person alleged to be negligent is an employee. Rather, the element is satisfied
if the hospital holds itself out as a provider of emergency room care without informing the patient that
the care is provided by independent contractors.
The doctrine of apparent authority essentially involves two factors to determine the liability of an independent-
contractor physician.
The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether
the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was
alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not make
express representations to the patient that the treating physician is an employee of the hospital; rather a
representation may be general and implied. In the instant case, CMC impliedly held out Dr. Estrada as a
member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby
leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now
repudiate such authority.
The second factor focuses on the patient's reliance. It is sometimes characterized as an inquiry on whether
the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and
prudence.
The records show that the Spouses Nogales relied upon a perceived employment relationship with CMC in
accepting Dr. Estrada's services. Rogelio testified that he and his wife specifically chose Dr. Estrada to handle
Corazon's delivery not only because of their friend's recommendation, but more importantly because of Dr.
Estrada's "connection with a reputable hospital, the [CMC]." In other words, Dr. Estrada's relationship with
CMC played a significant role in the Spouses Nogales' decision in accepting Dr. Estrada's services as the
obstetrician-gynecologist for Corazon's delivery. Moreover, as earlier stated, there is no showing that before
and during Corazon's confinement at CMC, the Spouses Nogales knew or should have known that Dr. Estrada
was not an employee of CMC.
Even simple negligence is not subject to blanket release in favor of establishments like hospitals but may only
mitigate liability depending on the circumstances. When a person needing urgent medical attention rushes to
a hospital, he cannot bargain on equal footing with the hospital on the terms of admission and operation. Such
a person is literally at the mercy of the hospital. There can be no clearer example of a contract of adhesion
than one arising from such a dire situation. Thus, the release forms of CMC cannot relieve CMC from liability
for the negligent medical treatment of Corazon.
Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881
Facts:

Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a
Retainer Agreement for a period of 1 year with a monthly salary of Three Thousand Eight Hundred (P3,800.00).
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on
December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform
his functions as company doctor to Coca-Cola until he received a letter from petitioner company concluding
their retainership agreement effective 30 days from receipt thereof.
Petitioner was already making inquiries regarding his status with the company. First, he wrote a letter
addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership, Philippine
College of Occupational Medicine. In response, Dr. Sy wrote a letter to the Personnel Officer of Coca-Cola
Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician,
having served the company continuously for four (4) years. He likewise stated that respondent must receive all
the benefits and privileges of an employee under Article 157 (b) of the Labor Code.
Issue: WON there exists an employer-employee relationship between Coca-Cola and Dr. Climaco?
Held: No employer-employee relationship exists between the parties.
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the
four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee’s conduct, or the so-called "control test," considered
to be the most important element.
The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over the
performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan,
which contains the respondent’s objectives, duties and obligations, does not tell respondent "how to conduct
his physical examination, how to immunize, or how to diagnose and treat his patients, employees of Coca-Cola,
in each case."
The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but
did not control the means and methods by which respondent performed his assigned tasks. It is precisely
because the company lacks the power of control that the contract provides that respondent shall be directly
responsible to the employee concerned and their dependents for any injury, harm or damage caused through
professional negligence, incompetence or other valid causes of action.
Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at respondent
company’s premises, he is not at all further required to just sit around in the premises and wait for an
emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact,
complainant maintains his own private clinic attending to his private practice in the city, where he services his
patients, bills them accordingly -- and if it is an employee of respondent company who is attended to by him
for special treatment that needs hospitalization or operation, this is subject to a special billing. More often than
not, an employee is required to stay in the employer’s workplace or proximately close thereto that he cannot
utilize his time effectively and gainfully for his own purpose.
Calamba Medical Center vs NLRC (2008) G.R. 176484
Facts:

Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr.
Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week on
twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also resident
physicians were also given a percentage share out of fees charged for out-patient treatments, operating room
assistance and discharge billings, in addition to their fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by petitioner's medical
director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow
employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha was
not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for
illegal suspension and Dr. Merceditha for illegal dismissal.
Issue: WON there exists an employer-employee relationship between petitioner and the spouses-
respondents?
Held: Drs. Lanzanas are declared employee by the petitioner hospital.
Under the "control test," an employment relationship exists between a physician and a hospital if the hospital
controls both the means and the details of the process by which the physician is to accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency
room, the operating room, or any department or ward for that matter, respondents' work is monitored through
its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its
medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential
for the employer to actually supervise the performance of duties of the employee, it being enough that it has
the right to wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment tie
between them and petitioner as this merely mirrors additional form or another form of compensation or
incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor
Code.
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of which
cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and
offenses against persons, property and the hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents,
namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms which reflect their
status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled respondents
in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under
the SSS Law is premised on the existence of an employer-employee relationship, except in cases of compulsory
coverage of the self-employed.

Ollendorff vs Abrahamson (1918) G.R. 13228

Facts:
An agreement was entered into by Ollendorff and Abrahamson whereby theformer agreed to employ
Abrahamson and the latter bound himself to work for him for a period of 2yrs with a salary of P50 per week.
Included in the agreement is a prohibition of Abrahamson from engaging in a similar or competitive business
to anywhere within the Philippine Islands for a period of five years. The duties performed by the defendant
were such to make it necessary for him to be generally knowledgeable of Ollendorff’s business, moreover, he
had been engaged in similar work for several years even before his employment of the plaintiff’s embroidery
business.
After some months from his departure for the US, Abrahamson returned to Manila and is now a manager of
the Philippine Underwear Co. This corporation, unlike Ollendorff’s, does not maintain a factory in Phil. Islands
but send material and embroidery designs from New York to its local representative here who employs Filipino
needle workers to embroider the designs and make up the garments in their homes. The only difference
between plaintiff's business and that of the firm by which the defendant is employed, is the method of doing
the finishing work -- the manufacture of the embroidered material into finished garments. Plaintiff commenced
an action to prevent by injunction, any further breach of that part of defendant's contract of employment by
which he agreed that he would not "enter into or engage himself directly or indirectly . . . in a similar or
competitive business to that of (plaintiff) anywhere within the Philippine Islands for a period of five years . . ."
from the date of the agreement.
Issue: WON the part of the agreement restraining the defendant from engaging into similar business of the
plaintiff is void?
Held: The contract was not void as constituting an unreasonable restraint of trade.
The rule in this jurisdiction is that the obligations created by contracts have the force of law between the
contracting parties and must be enforce in accordance with their tenor. (Civil Code, art 1091.) The only
limitation upon the freedom of contractual agreement is that the pacts established shall not be contrary to
"law, morals or public order." (Civil Code, Art. 1255.)
Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that the validity of restraints upon
trade or employment is to be determined by the intrinsinc reasonableness of restriction in each case, rather
than by any fixed rule, and that such restrictions may be upheld when not contrary to afford a fair and
reasonable protection to the party in whose favor it is imposed.
Examining the contract here in question from this stand point, it does not seem so with respect to an employee
whose duties are such as of necessity to give him an insight into the general scope and details of his employers
business. A business enterprise may and often does depend for its success upon the owner's relations with
other dealers, his skill in establishing favorable connections, his methods of buying and selling -- a multitude of
details, none vital if considered alone, but which in the aggregate constitute the sum total of the advantages
which the result of the experience or individual aptitude and ability of the man or men by whom the business
has been built up. Failure or success may depend upon the possession of these intangible but all important
assets, and it is natural that their possessor should seek to keep them from falling into the hands of his
competitors. It is with this object in view that such restrictions as that now under consideration are written
into contracts of employment. Their purpose is the protection of the employer, and if they do not go beyond
what is reasonably necessary to effectuate this purpose they should be upheld.

Del Castillo vs Richmond (1924) G.R. L-21127
Facts:
Shannon Richmond and Alfonso del Castillo entered into a “Contract of Rendering Services”, whereby del
Castillo agrees to enter the employ of Richmond as a pharmacist with a monthly remuneration of P125 each
month.
Paragraph 3 of the said contract read as follows:

3. That in consideration of the fact that the said Alfonso del Castillo has just graduated as a pharmacist and
up to the present time has not been employed in the capacity of a pharmacist and in consideration of this
employment and the monthly salary mentioned in this contract, the said Alfonso del Castillo also agrees
not to open, nor own nor have any interest directly or indirectly in any other drugstore either in his own
name or in the name of another; nor have any connection with or be employed by any other drugstore
situated within a radius of our miles from the district of Legaspi, municipality and Province of Albay, while
the said Shannon Richmond or his heirs may own or have open a drugstore, or have an interest in any other
one within the limits of the districts of Legaspi, Albay, and Daraga of the municipality of Albay, Province of
Albay.
The plaintiff alleges that the provisions and conditions contained in the third paragraph of said contract
constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to public policy, and
are unnecessary in order to constitute a just and reasonable protection to the defendant; and asked that the
same be declared null and void and of no effect.
Issue: WON the provisions and conditions contained in the 3rd paragraph of said contract constitute an illegal
and unreasonable restriction upon plaintiffs’ liberty to contract?
Held: The contract the annulment of which is sought by the plaintiff is neither oppressive to him, nor
unreasonably necessary to protect the defendant's business, nor prejudicial to the public interest.
The law concerning contracts which tend to restrain business or trade has gone through a long series of changes
from time to time with the changing conditions of trade and commerce. With trifling exceptions, said changes
have been a continuous development of a general rule. Later, the rule became well established that if the
restraint was limited to "a certain time" and within "a certain place," such contracts were valid and not "against
the benefit of the state." Later cases, and we think the rule is now well established, have held that a contract
in restraint of trade is valid providing there is a limitation upon either time or place. A contract, however, which
restrains a man from entering into a business or trade without either a limitation as to time or place, will be
held invalid.
If the contract is reasonably necessary to protect the interest of the parties, it will be upheld.
(Ollendorff vs. Abrahamson, 38 Phil., 585.)
In that case we held that a contract by which an employee agrees to refrain for a given length of time, after
the expiration of the term of his employment, from engaging in a business, competitive with that of his
employer, is not void as being in restraint of trade if the restraint imposed is not greater than that which is
necessary to afford a reasonable protection. In all cases like the present, the question is whether, under the
particular circumstances of the case and the nature of the particular contract involved in it, the contract is, or
is not, unreasonable

Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978
Facts:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone
Company (hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company funds
as grounds to terminate the services of an employee. That employee, herein private respondent Grace de
Guzman, contrarily argues that what really motivated PT&T to terminate her services was her having
contracted marriage during her employment, which is prohibited by petitioner in its company policies. She
thus claims that she was discriminated against in gross violation of law, such a proscription by an employer
being outlawed by Article 136 of the Labor Code.
Issue: WON the policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage is valid?
Held: Petitioner’s policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers
by our labor laws and by no less than the Constitution.
The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social
and political life, provides a gamut of protective provisions. Acknowledged as paramount in the due process
scheme is the constitutional guarantee of protection to labor and security of tenure. Thus, an employer is
required, as a condition sine qua non prior to severance of the employment ties of an individual under his
employ, to convincingly establish, through substantial evidence, the existence of a valid and just cause in
dispensing with the services of such employee, one’s labor being regarded as constitutionally protected
property. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by
petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:
“ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman shall not get married, or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of
marriage.”
In the case at bar, it can easily be seen from the memorandum sent to private respondent by the branch
supervisor of the company, with the reminder, that “you’re fully aware that the company is not accepting
married women employee (sic), as it was verbally instructed to you.” Again, in the termination notice sent to
her by the same branch supervisor, private respondent was made to understand that her severance from the
service was not only by reason of her concealment of her married status but, over and on top of that, was her
violation of the company’s policy against marriage (“and even told you that married women employees are not
applicable [sic] or accepted in our company.”
Petitioner’s policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a
woman to be free from any kind of stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose
her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence,
while it is true that the parties to a contract may establish any agreements, terms, and conditions that they
may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public
policy. Carried to its logical consequences, it may even be said that petitioner’s policy against legitimate marital
bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.
Duncan Asso. Of Detailman-PTGWO vs Glaxo Wellcome Phils., (2004) G.R. 162994

Facts:
Petitioner Pedro Tecson was hired by respondent Glaxo as medical representative, after Tecson had undergone
training and orientation. Thereafter, Tecson signed a contract of employment which stipulates, among others,
that he agrees to study and abide by existing company rules; to disclose to management any existing or future
relationship by consanguinity or affinity with co-employees or employees of competing drug companies and
should management find that such relationship poses a possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management
of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing
drug companies.
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra, a competitor of
Glaxo. She was Astra’s Branch Coordinator in Albay and supervised the district managers and medical
representatives of her company and prepared marketing strategies for Astra in that area. The two married
even with the several reminders given by the District Manager to Tecson. In January 1999, Tecson’s superiors
informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson’s superiors reminded him
that he and Bettsy should decide which one of them would resign from their jobs, although they told him that
they wanted to retain him as much as possible because he was performing his job well. This situation eventually
led to his constructive dismissal.
Issue: WON Glaxo’s policy prohibiting its employees from marrying an employee of a competitor company
is valid?
Held: Glaxo’s policy prohibiting an employee from having a relationship with an employee of a competitor
company is a valid exercise of management prerogative.
Tecson’s contract of employment with Glaxo being questioned, stipulates that Tescon agrees to abide by the
existing company rules of Glaxo, and to study and become acquainted with such policies. In this regard, the
Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest. No
reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy prohibiting an
employee from having a relationship with an employee of a competitor company is a valid exercise of
management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon
Glaxo’s employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain access to its secrets and
procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life
to the constitutional policy on social justice and the protection of labor, it does not mean that every labor
dispute will be decided in favor of the workers. The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play.

Star Paper Corp., vs Simbol (2006) G.R. 164774
Facts:
Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the company,
whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married,
one of them should resign pursuant to a company policy to which Simbol complied.
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly
relationship during the course of their employment and then decided to get married, one of them should
resign to preserve the policy stated above.
Issue: WON the policy of the employer banning spouses from working in the same company violates the rights
of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative?
Held: Petitioners’ sole contention that "the company did not just want to have two or more of its employees
related between the third degree by affinity and/or consanguinity" is lame.
Article 136 of the Labor Code which provides:
It shall be unlawful for an employer to require as a condition of employment or continuation of employment

that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married
a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate
or otherwise prejudice a woman employee merely by reason of her marriage.
The requirement that a company policy must be reasonable under the circumstances to qualify as a valid
exercise of management prerogative. It is significant to note that in the case at bar, respondents were hired
after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners
failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental to its business operations. e. The policy is premised
on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule
without valid justification, the employer can create policies based on an unproven presumption of a perceived
danger at the expense of an employee’s right to security of tenure.
The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate
effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it
is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free
from arbitrary discrimination based upon stereotypes of married persons working together in one company.

Rivera vs Solidbank (2006) G.R. 163269
Facts:
Rivera had been working for the Solidbank since 1977. In Dec 1994, deciding to devote his time and attention
to his poultry business in Cavite, Rivera applied for retirement. Subsequently, Solidbank required Rivera to sign
an undated Release, Waiver and Quitclaim, Rivera acknowledged receipt of the net proceeds of his separation
and retirement benefits and promised that "[he] would not, at any time, in any manner whatsoever, directly
or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or
subsidiary companies, their stockholders, officers, directors, agents or employees, and their successors-in-
interest and will not disclose any information concerning the business of Solidbank, its manner or operation,
its plans, processes, or data of any kind."
On May 1995, the Equitable employed Rivera as Manager of its Credit Investigation and Appraisal Division of
its Consumers’ Banking Group. Upon discovering this, Solidbank First Vice-President for HRD Celia Villarosa
wrote a letter informing Rivera that he had violated the Undertaking. She likewise demanded the return of all
the monetary benefits he received in consideration of the SRP within five (5) days from receipt; otherwise,
appropriate legal action would be taken against him, when Rivera refused, Solidbank filed complaint.
Issue: WON the one year employment ban imposed by Solidbank upon Rivera is null and void for being
unreasonable and oppressive and for constituting restraint of trade?
Held: The post-retirement competitive employment ban is unreasonable because it has no geographical limits.
Article 1306 of the NCC provides that the contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs,
public order or public policy. On the face of the Undertaking, the post-retirement competitive employment
ban is unreasonable because it has no geographical limits; respondent is barred from accepting any kind of
employment in any competitive bank within the proscribed period. Although the period of one year may
appear reasonable, the matter of whether the restriction is reasonable or unreasonable cannot be ascertained
with finality solely from the terms and conditions of the Undertaking, or even in tandem with the Release,
Waiver and Quitclaim.
Employer is burdened to establish that a restrictive covenant barring an employee from accepting a
competitive employment after retirement or resignation is not an unreasonable or oppressive, or in undue or
unreasonable restraint of trade, thus, unenforceable for being repugnant to public policy. As the Court stated
in Ferrazzini v. Gsell, cases involving contracts in restraint of trade are to be judged according to their
circumstances, to wit: x x x There are two principal grounds on which the doctrine is founded that a contract in
restraint of trade is void as against public policy. One is, the injury to the public by being deprived of the restricted
party’s industry; and the other is, the injury to the party himself by being precluded from pursuing his occupation,
and thus being prevented from supporting himself and his family.
In cases where an employee assails a contract containing a provision prohibiting him or her from accepting
competitive employment as against public policy, the employer has to adduce evidence to prove that the
restriction is reasonable and not greater than necessary to protect the employer’s legitimate business
interests. The restraint may not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts
to earn a livelihood and must be reasonable in light of sound public policy.
Yrasuegui vs Philippine Airlines (2008) G.R. 168081

Facts:
Petitioner Yrasuegui, an international flight steward of Philippine Airlines Inc. (PAL) was dismissed because of
his failure to adhere to the weight standards of the airline company.
In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL before the Labor Arbiter
(LA). Te Labor Arbiter ruled that the petitioner was illegally dismissed. It also issued a writ of execution directing
the reinstatement of the petitioner without loss of seniority and other benefits, and also the payment of
backwages. Respondent PAL appealed to the NLRC which affirmed the LA’s decision. Respondent PAL appealed
to the Court of Appeals. CA reversed the NLRC case.
Issue: Whether the dismissal of the petitioner valid.
Held: The Court upheld the legality of the petitioner’s dismissal.
Separation pay, however, should be awarded in favor of the employee as an act of social justice or based on
equity. This is so because his dismissal is not serious misconduct. Neither is it reflective of his moral character.
The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous
cause under Article 282 (e) of the Labor ode. His obesity may not be unintended, but is nonetheless voluntary.
“Voluntariness basically means that the just cause is solely attributable to the employee without any external
force influencing or controlling his actions. This element runs through all just causes under Art. 282, whether
they be in nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is
considered voluntary although it lacks the element of intent found in Art. 282 (a), (c), and (d).
Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin
unless the employer can show that sex, religion, or national origin is an actual qualification for performing the
job. The qualification is called a bona fide occupational qualification (BFOQ). In the United States, there are a
few federal and many state job discrimination laws that contain an exception allowing an employer to engage
in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to
the normal operation of a business or enterprise.

Ilaw at Buklod Manggagawa vs NLRC (1991) 198 SCRA 586
Facts:
The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of San Miguel
Corporation, more or less, working at the various plants, offices, and warehouses located at the National
Capital Region presented to the company a "demand" for correction of the significant distortion in the
workers' wages.

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

Employers Confederation of the Phils vs NWPC (1991) 201 SCRA 759

Facts:
ECOP questioned the validity of the wage order issued by the RTWPB dated October 23, 1990 pursuant to the
authority granted by RA 6727. The wage order increased the minimum wage by P17.00 daily in the National
Capital Region.
The wage order is applied to all workers and employees in the private sector of an increase of P 17.00 including
those who are paid above the statutory wage rate. ECOP appealed with the NWPC but dismissed the petition.

The Solicitor General in its comment posits that the Board upon the issuance of the wage order fixed minimum
wages according to the salary method. Petitioners insist that the power of RTWPB was delegated, through RA
6727, to grant minimum wage adjustments and in the absence of authority, it can only adjust floor wages.
Issue: WON the wage order issues by RTWPB dated October 23, 1990 is valid.
Held: Wage order is valid.
The Court agrees with the Solicitor General. It noted that there are two ways in the determination of wage,
these are floor wage method and salary ceiling method. The floor wage method involves the fixing of
determinate amount that would be added to the prevailing statutory minimum wage while the salary ceiling
method involves where the wage adjustment is applied to employees receiving a certain denominated salary
ceiling.
RA 6727 gave statutory standards for fixing the minimum wage.
ART. 124. Standards/Criteria for Minimum Wage Fixing — The regional minimum wages to be established
by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum
standards of living necessary for the health, efficiency and general 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.

Mabeza vs NLRC () 271 SCRA 670

Facts:
Petitioner Norma Mabeza contends that on the first week of May 1991, she and her co-employees at the Hotel
Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's
compliance with minimum wage and other labor standard provisions of law. Petitioner signed the affidavit but
refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed
by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the
Department of Labor and Employment in Baguio City.

The affidavit was drawn by management for the sole purpose of refuting findings of the Labor Inspector of
DOLE apparently adverse to the private respondent. After she refused to proceed to the City Prosecutor's
Office, petitioner states that she was ordered by the hotel management to turn over the keys to her living
quarters and to remove her belongings from the hotel premises. According to her, respondent strongly chided
her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. She thereafter reluctantly
filed a leave of absence from her job which was denied by management. When she attempted to return to
work on May 1991, the hotel's cashier informed her that she should not report to work and, instead, continue
with her unofficial leave of absence.
Consequently, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal
before the Arbitration Branch of the National Labor Relations Commission — CAR Baguio City. In addition to
her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service
incentive leave pay, 13th month pay, night differential and other benefits.
Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter
that petitioner surreptitiously left her job without notice to the management and that she actually abandoned
her work. He maintained that there was no basis for the money claims for underpayment and other benefits
as these were paid in the form of facilities to petitioner and the hotel's other employees.
Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its assailed Resolution
affirming the Labor Arbiter's decision.
Issue: WON the employer’s exerted pressure, in the form of restraint, interference or coercion, against his
employee's right to institute concerted action for better terms and conditions of employment constitutes
unfair labor practice.
Held: The Court ruled that there was unfair labor practice.
Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed
labor standards provisions of law when he might have not, together with the act of terminating or coercing
those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act
clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through
concerted action. For refusing to cooperate with the private respondent's scheme, petitioner was obviously
held up as an example to all of the hotel's employees, that they could only cause trouble to management at
great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of
charges against her was the warning that they would not only be deprived of their means of livelihood, but
also possibly, their personal liberty.
Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be
deducted without the employer complying first with certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the value from the employee's wages. First, proof must be
shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities
must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and
reasonable value. These requirements were not met in the instant case.
More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer
is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging)

but the purpose. Considering that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel,
such as the private respondent's hotel.
Joy Brothers Inc., vs NWPC (1997) 273 SCRA 622

Facts:
Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector workers and
employees in the National Capital Region receiving one hundred fifty-four pesos (P154.00) and below daily,
was approved November 29, 1993.
On February 1994, petitioner applied for exemption from said wage order on the ground that it was a
distressed establishment. The RTWPB denied petitioner's application for exemption after holding that the
corporation accumulated profits amounting to P38,381.80 for the period under review. Petitioner's motion

for reconsideration was likewise denied by the Wages and Productivity Board on January 5, 1995. On appeal
to the National Wages and Productivity Commission, petitioner was again denied relief.
More specifically, petitioner contends that the interim period to be reckoned with is from January 1, 1993 to
December 15, 1993 and not merely up to September 30, 1993 as held by respondent Commission. Significantly,
the period up to December 31, 1993 will reflect losses in petitioner corporation's books, but not if the covered
interim period is only up to September 30, 1993.
Issue: WON petitioner Corporation falls within the exemption for distressed establishments.
Held: The petitioner company is not entitled to exemption of the wage order since it is not a distressed
establishment.
Under Section 5 of Wage Order No. NCR-03, distressed firms may be exempted from the provisions of the
Order upon application with and due determination of the Board. NWPC Guidelines No. 01, Series of 1992,
providing for the Revised Guidelines on Exemption indicate the criteria to qualify for exemption as follows:
For Distressed Establishments: In the case of a stock corporation, partnership, single proprietorship, non-stock,
non-profit organization or cooperative engaged in a business activity or charging fees for its services —When
accumulated losses for the last 2 full accounting periods and interim period, if any, immediately preceding the
effectivity of the Order have impaired by at least 25 percent the: Paid-up capital at the end of the last full
accounting period preceding the effectivity of the Order, in the case of corporations: Total invested capital at
the beginning of the last full accounting period preceding the effectivity of the Order in the case of partnerships
and single proprietorships. Establishments operating for less than two (2) years may be granted exemption
when accumulated losses for said period have impaired by at least 25% the paid-up capital or total invested
capital, as the case may be."
Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that exemption from
compliance with the wage increase may be granted to distressed establishments whose paid-up capital has
been impaired by at least twenty-five percent (25%) or which registers capital deficiency or negative net worth.
The Guidelines expressly require interim quarterly financial statements for the period immediately preceding
December 16, 1993. The last two full accounting periods here are 1991 and 1992, for which years petitioner
incurred net profits of P53,607.00 and P60,188.00, respectively.
Prubankers Association vs Prudential Bank (1999) 302 SCRA 74
Facts:
The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to
workers in the private sector who had rendered service for at least three (3) months before its effectivity, and
for the same period thereafter, in the following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in
the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas in the Bicol Region.
On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the integration of the
COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established
an increase in the minimum wage rates for all workers and employees in the private sector as follows: by Ten

Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of
Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo,
Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of P17.50 to its employees at its Naga
Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into
the basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches
covered by Wage Order No. RB VII-03.
On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor Management
Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary
structure upon the implementation of the said wage orders. It demanded in the Labor Management Committee
meetings that the petitioner extend the application of the wage orders to its employees outside Regions V and
VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates
of petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties
agreed to submit the matter to voluntary arbitration.
Issue: WON a wage distortion resulted from respondent's implementation of the Wage Orders.
Held: The court ruled that there is no wage distortion since the wage order implementation covers all the
branches of the bank.
The hierarchy of positions was still preserved. The levels of different pay classes was not eliminated. The
statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act
No. 6727, which reads: Standards/Criteria for Minimum Wage Fixing — . . ."As used herein, a wage distortion
shall mean a situation where an increase in prescribed wage results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation."
Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate
of a higher one; (3)The elimination of the distinction between the two levels and (4) The existence of the
distortion in the same region of the country.
A disparity in wages between employees holding similar positions but in different regions does not constitute
wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the disparity of their
corresponding wages and other emoluments that are sought to be preserved by the concept of wage
distortion.

Millares et al., vs NLRC () 305 SCRA 501
Facts:
Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section
Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper
Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.
In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive
government regulations on logging and the economic crisis. To avert further losses, it undertook a
retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation
pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the

allowances they allegedly regularly received on a monthly basis during their employment should have been
included in the computation thereof they lodged a complaint for separation pay differentials.
Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code,
being necessary and indispensable for their existence and subsistence.
Held: The allowances are not part of the wages of the employees.
Wage is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method
of calculating the same, which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered and includes the fair
and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee.
When an employer customarily furnishes his employee board, lodging or other facilities, the fair and
reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage."
Customary is founded on long-established and constant practice connoting regularity. The receipt of an
allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because
the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the
Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although
it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III,
of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the
benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the
benefit of the employer or necessary to the conduct of the employer's business.
In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue
Audit Memo Order No. 1-87 pertinently provides —3.2… transportation, representation or entertainment
expenses shall not constitute taxable compensation if: (a) It is for necessary travelling and representation or
entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the
employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in
accordance with the specific requirements of substantiation for such category or expense.Board and lodging
allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute
income to the latter except if such allowances or benefits are furnished to the employee for the convenience
of the employer and as necessary incident to proper performance of his duties in which case such benefits or
allowances do not constitute taxable income.
The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor
Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and
other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not
represent such fair and reasonable value as determined by the proper authority simply because the
Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu
of actual provisions for housing and transportation needs whereas the Bislig allowance was given in
consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion
is that subject allowances did not form part of petitioners' wages.

International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13

Facts:
International School, Inc., pursuant to PD 732, is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue
carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to employ its own teaching and management personnel selected by it either locally or
abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws
and regulations attending their employment, except laws that have been or will be enacted for the protection
of employees.

The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1)
foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should
be classified as a foreign-hire or a local hire: (a) What is one's domicile? (b) Where is one's home economy? (c)
To which country does one owe economic allegiance? (d) Was the individual hired abroad specifically to work
in the School and was the School responsible for bringing that individual to the Philippines? Should the answer
to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he
or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate
twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant
economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited
tenure. The compensation scheme is simply the School's adaptive measure to remain competitive on an
international level in terms of attracting competent professionals in the field of international education.
Issue: WON local hire teachers shall enjoy same salary as foreign hire teachers where they perform the same
work.
Held: Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof,
provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just
and favorable conditions of work, which ensure, in particular: ( a) Remuneration which provides all workers, as
a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any
kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with
equal pay for equal work; The foregoing provisions impregnably institutionalize in this jurisdiction the long
honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to the
School.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of
foreign-hires. The Court finds this argument a little inconsiderate. If an employer accords employees the same
position and rank, the presumption is that these employees perform equal work. If the employer pays one
employee less than the rest, it is not for that employee to explain why he receives less or why the others receive
more. The employer has discriminated against that employee; it is for the employer to explain why the
employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires
perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and
responsibilities, which they perform under similar working conditions.

Bankard Employees Union vs NLRC (2004) G.R. 140689

Facts:
Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On May 1993, its
Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the purpose of making
its hiring rate competitive in the industry’s labor market. The New Salary Scale increased the hiring rates of
new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine
hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were
also adjusted to reach such rates under their levels.
This made Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the
regular rank and file employees of Bankard, to request for the increase in the salary of its old, regular

employees. Bankard insisted that there was no obligation on the part of the management to grant to all its
employees the same increase in an across-the-board manner.
Petioner filed a notice of strike. The strike was averted when the dispute was certified by the Secretary of Labor
and Employment for compulsory arbitration. NLRC finding no wage distortion dismissed the case for lack of
merit. Petitioner’s motion for reconsideration of the dismissal of the case was denied.
Issue: Whether the unilateral adoption by an employer of an upgraded salary resulted in wage distortion within
the contemplation of Article 124 of the Labor Code.
Held: There exists a wage distortion but the Court will not interfere in the management prerogative of the
petitioner.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article 124 of
the Labor Code), the term "wage distortion" was explicitly defined as... a situation where an increase in
prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation.
In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four elements of
wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant
change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and (4) The existence of the distortion in the
same region of the country.
Normally, a company has a wage structure or method of determining the wages of its employees. In a problem
dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of
employees that establishes distinctions among them on some relevant or legitimate bases. Involved in the
classification of employees are various factors such as the degrees of responsibility, the skills and knowledge
required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each of
the existing classes of employees reflects this classification.
Put differently, the entry of new employees to the company ipso facto places them under any of the levels
mentioned in the new salary scale which private respondent adopted retroactive to April 1, 1993. While
seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases
where the nature of their work differs.
Moreover, for purposes of determining the existence of wage distortion, employees cannot create their own
independent classification and use it as a basis to demand an across-the-board increase in salary.
The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage
adjustments, then the language of the law should have been broad, not restrictive as it is currently phrased:
Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of any prescribed wage
increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage
structure within an establishment, the employer and the union shall negotiate to correct the distortions.
Any dispute arising from the wage distortions shall be resolved through the grievance procedure under
their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.

Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE
STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of
minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the distinctions embodied in the
wage structure based on skills, length of service, or other logical bases of differentiation will be preserved.
If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral
increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the
hands of the employer would be completely tied even in cases where an increase in wages of a particular group
is justified due to a re-evaluation of the high productivity of a particular group, or as in the present case, the
need to increase the competitiveness of Bankard’s hiring rate. An employer would be discouraged from
adjusting the salary rates of a particular group of employees for fear that it would result to a demand by all
employees for a similar increase, especially if the financial conditions of the business cannot address an across-
the-board increase.
Wage distortion is a factual and economic condition that may be brought about by different causes. The mere
factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a
law or other source of obligation which requires its rectification.
Odango vs NLRC (2005) G.R. 147420
Facts:
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of
Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment found
ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the DOLE
directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay.
On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC praying for
payment of wage differentials, damages and attorney’s fees.

On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage
differentials amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECO appealed the Decision to the
NLRC where it reversed the Labor Arbiter’s Decision. The NLRC denied petitioners’ motion for reconsideration.
Petitioners then elevated the case to CA where it dismissed the petition for failure to comply with Section 3,
Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific
instances where the NLRC abused its discretion. The appellate court denied petitioners’ motion for
reconsideration.
Issue: Whether or not the petitioners are entitled to money claims.
Held: Petitioners are not entitled to money claims or wage differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions
No. 9 issued by the Secretary of Labor which was declared null and void since in the guise of clarifying the Labor
Code’s provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this jurisdiction
is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal holidays in a
year. Petitioners’ claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to
be paid for un-worked days beyond the ten legal holidays. Petitioners’ line of reasoning is not only a violation
of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal
protection clause.
C. Planas Commercial vs NLRC (2005) G.R. 144619
Facts:
In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages,
non payment of overtime pay, holiday pay, service incentive leave pay, and premium pay for rest day and
holiday and night shift differential against petitioners in the Arbitration Branch of NLRC. It alleged that Cohu is
engaged in the business of wholesale of plastic products and fruits of different kinds with more than 24
employees. Respondents were hired on January 1990, May 1990 and July 19991 as laborers and were paid
below the minimum wage for the past 3 years. They were required to work for more than 8 hours a day and

never enjoyed the minimum benefits. Petitioners filed their comment stating that the respondents were their
helpers.
The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with the NLRC
where it granted the money claims. Petitioners appealed with the CA but it was denied. It said that the company
having claimed of exemption of the coverage of the minimum wage shall have the burden of proof to the claim.
Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic
products and fruits to the customers for personal use, thus exempted from the application of the minimum
wage law; that it merely leases and occupies a stall in the Divisoria Market and the level of its business activity
requires and sustains only less than ten employees at a time. Petitioners contend that private respondents
were paid over and above the minimum wage required for a retail establishment, thus the Labor Arbiter is
correct in ruling that private respondents’ claim for underpayment has no factual and legal basis. Petitioners
claim that since private respondents alleged that petitioners employed 24 workers, it was incumbent upon
them to prove such allegation which private respondents failed to do.
Issue: WON petitioner is exempted from the application of minimum wage law.
Held: Petitioners have not successfully shown that they had applied for the exemption.
R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all
workers and employees in the private sector. Section 4 of the Act provides for exemption from the coverage,
thus: Sec. 4. (c) Exempted from the provisions of this Act are household or domestic helpers and persons
employed in the personal service of another, including family drivers. Also, retail/service establishments
regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon
application with and as determined by the appropriate Regional Board in accordance with the applicable rules
and regulations issued by the Commission. Whenever an application for exemption has been duly filed with
the appropriate Regional Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to
the effectivity of this Act.
EJR Crafts Corp., vs CA (2006)

Facts:
In 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay, overtime pay,
non-payment of 13th month pay and service incentive leave pay against petitioner before the Regional Office,
NCR of the Department of Labor and Employment (DOLE). Acting on the complaint, Regional Director issued
an inspection authority to Senior Labor Enforcement Officer.
On August 1997, an inspection was conducted on the premises of petitioner’s offices wherein the following
violations of labor standards law were discovered, to wit: non-presentation of employment records (payrolls
and daily time records); underpayment of wages, regular holiday pay, and overtime pay; and non-payment of

13th month pay and service incentive leave pay. On the same day, the Notice of Inspection Result was received
by and explained to the manager of petitioner corporation Mr. Jae Kwan Lee, with the corresponding directive
that necessary restitution be effected within five days from said receipt.
As no restitution was made, the Regional Office thereafter conducted summary investigations. However,
despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Petitioner failed to
question the findings of the Labor Inspector received by and explained to the corporation’s manager. Petitioner
then filed a Motion for Reconsideration of said Order arguing that the Regional Director has no jurisdiction
over the case as private respondents were allegedly no longer connected with petitioner corporation at the
time of the filing of the complaint and when the inspection was conducted, and that private respondents’
claims are within the exclusive and original jurisdiction of the Labor Arbiters.
Issue: WON the Regional Director has jurisdiction over the claims of the private respondents.
Held: Regional Director has jurisdiction to hear and decide the instant case.
The Court favors the respondents in the money claims against the petitioner company. It is admitted that for
the Regional Director to exercise the power to order compliance, or the so-called "enforcement power" under
Article 128(b) of P.D. No. 442 as amended, it is necessary that the employer-employee relationship still exists.
In support of its contention that it is the Labor Arbiter and not the Regional Director who has jurisdiction over
the claims of herein private respondents, petitioner contends that at the time the complaint was filed, the
private respondents were no longer its employees. Considering thus that there still exists an employer-
employee relationship between petitioner and private respondents and that the case involves violations of
labor standard provisions of the Labor Code, we agree with the Undersecretary of Labor and the appellate
court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article
128(b) of the Labor Code which states:
Art. 128. Visitorial and Enforcement Power. –(b) Notwithstanding the provisions of Articles 129 and 217 of
this Code to the contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of this Code and other labor legislation
based on the findings of labor employment and enforcement officers or industrial safety engineers made
in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of inspection.
Pag – Asa Steel Works vs CA (2006) G.R. 166647
Facts:
Petitioner is engaged in the manufacture of steel bars and wire rods while Pag-Asa Steel Workers Union is the
duly authorized bargaining agent of the rank-and-file employees.
RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum
wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a letter to the union
with the list of adjustments involving rank and file employees. In September 1999, the petitioner and union
entered into an collective bargaining agreement where it provided wage adjustments namely P15, P25, P30 for

three succeeding year. On the first year, the increase provided were followed until RTWPB issued another wage
order where it provided for a P25.50 per day increase in the salary of employees receiving the minimum wage
and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its
rank-and-file employees.
On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per day. The
union president asked that the wage order be implemented where petitioner rejected the request claiming
that there was no wage distortion and it was not obliged to grant the wage increase. The union submitted the
matter for voluntary arbitration where it favored the position of the company and dismissed the complaint.
The matter was elevated to CA where it favored the respondents.
Issue: WON the company was obliged to grant the wage increase under the Wage Order as a matter of practice.
Held: Company is not obliged to grant the wage increase.
It is submitted that employers unless exempt are mandated to implement the said wage order but limited to
those entitled thereto. A perusal of the record shows that the lowest paid employee before the
implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 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. Wage Order No. NCR-08 clearly states that only those employees receiving
salaries below the prescribed minimum wage are entitled to the wage increase provided therein, and not all
employees across-the-board as respondent Union would want petitioner to do. Considering therefore that
none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner
is not obliged to grant the wage increase to them. Moreover, to ripen into a company practice that is
demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or
contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the
company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA, the same
would not automatically ripen into a company practice.
Equitable PCI Bank vs Sadac (2006) G.R. 164772
Facts:
Ricardo Sadac was appointed VP of the Legal Department of petitioner Bank effective August 1981, and
subsequently General Counsel thereof on December 1981. On June 1989, nine lawyers of petitioner Bank’s
Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent Sadac of
abusive conduct and ultimately, petitioned for a change in leadership of the department. On the ground of lack
of confidence in Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent
Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record.
In reaction thereto, Sadac requested for a full hearing and formal investigation but the same remained

unheeded. On November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against
petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the
complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on August 1989, Sadac was
removed from his office
Labor Arbiter rendered decision that Sadac’s termination was illegal and entitled to reinstatement and
payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for execution of
judgment where it gave its computation which amounted to P 6.03 M representing his back wages and the
increases he should have received during the time he was illegally dismissed. The Bank opposed to Sadac’s
computation. The Labor Arbiter favor Sadac’s computation. NLRC, upon appeal by the bank, reversed the
decision. CA reversed the decision of NLRC.
Issue: WON the computation of back wages shall include the general increases.
Held: Respondent Sadac cannot take exception by arguing that jurisprudence speaks only of wage and not
salary, and therefore, the rule is inapplicable to him. It is respondent Sadac’s stance that he was not paid at
the wage rate nor was he engaged in some form of manual or physical labor as he was hired as Vice President
of petitioner Bank. He cites Gaa v. Court of Appeals where the Court distinguished between wage and salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the purpose of Article 1708
of the Civil Code which mandates that, "[t]he laborer’s wage shall not be subject to execution or attachment,
except for debts incurred for food, shelter, clothing and medical attendance." In labor law, however, the
distinction appears to be merely semantics. Paramount and Evangelista may have involved wage earners, but
the petitioner in Espejo was a General Manager with a monthly salary of P9,000.00 plus privileges. That wage
and salary are synonymous has been settled in Songco v. National Labor Relations Commission. We said:
Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry
in another man’s business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of
the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed,
there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous
(Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S.839, 841, 89
App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used
interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words
generally refer to one and the same meaning, that is, a reward or recompense for services performed.
Likewise, "pay" is the synonym of "wages" and "salary" (Black’s Law Dictionary, 5th Ed). x x x (Italics
supplied.)
Metropolitan Bank vs NWPC (2007) G.R. 144322
Facts:
On October 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan
(RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act,
issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all
employees/workers in the private sector throughout Region II, regardless of the status of employment are
granted an across-the-board increase of P15.00 daily.

The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on
January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per Section 13 of the Wage
Order, any party aggrieved by the Wage Order may file an appeal with the National Wages and Productivity
Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order.
Banker’s Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage of the wage
order since the members bank are paying more than the regular wage. NWPC replied that the member banks
are covered by the wage order and does not fall with the exemptible categories. In another letter inquiry,
Metrobank asked for the interpretation of the applicability of the wage order. NWPC referred it to RTWPB.
RTWPB in return clarified that establishments in Region 2 are
Issue: WON the wage order is void thus it has no legal effect and the RTWPB acted in excess of its jurisdiction.
Held: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more
than the minimum wage rate; and pursuant to the separability clause of the Wage Order, Section 1 is declared
valid with respect to employees earning the prevailing minimum wage rate.
The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. - The Commission
shall have the following powers and functions: (d) To review regional wage levels set by the Regional Tripartite
Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national
development plans; (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards
to determine whether these are consistent with national development plans; (g) To exercise technical and
administrative supervision over the Regional Tripartite Wages and Productivity Boards.
R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to promote
productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers
and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance
employment generation in the countryside through industrial dispersal; and to allow business and industry
reasonable returns on investment, expansion and growth.
In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to prescribe rules and
guidelines for the determination of appropriate minimum wage and productivity measures at the regional,
provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage rates
applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders,
subject to the guidelines issued by the NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage
orders which set the daily minimum wage rates, based on the standards or criteria set by Article 124 of the
Labor Code.
The Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method and the
"salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added
to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage
adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words,
workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method"
or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to
which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of
P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending

the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate,
without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional
benefits not contemplated by R.A. No. 6727.

Rajah Humabon Hotel vs Trajano (1993) G.R. 100222-23
Facts:
Subsequent to the initial pleading filed by respondent-employees before the regional director of DOLE for
redress in regard to underpaid wages and non-payment of benefits, petitioners were instructed to allow the
inspection of the employment records of respondents on April 4, 1989. However, no inspection could be done
on that date on account of the picket staged by other workers. At the re-scheduled examination after closure
of petitioners' business on April 16, 1989, instead of presenting the payrolls and daily time records of private
respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director
has no jurisdiction over the case because the employer-employee relationship had been served as a result of
the closure of petitioners' business, apart from the fact that each of the claims of private respondents exceeded

the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or the New Labor Relations Law.
Issue: Who between the Regional Director of DOLE and the Labor Arbiter has jurisdictional competence over
the complaint of private respondents?
Held: Regional Director had no jurisdiction over the case.
Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the Labor Code
gives concurrent jurisdiction to both the Secretary of Labor (or the various regional directors) and the labor
arbiters over money claims among the other cases mentioned by Article 217 of the Labor Code. This provision
merely confirms/reiterates the enforcement/adjudication authority of the Regional Director over uncontested
money claims in cases where an employer-employee relationship still exists.
However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven days
after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were amended,
there is no doubt that the regional directors can try money claims only if the following requisites concur: (1)
the claim is presented by an employee or person employed in domestic or household service, or househelper
under the code; (2) the claimant, no longer being employed, does not seek reinstatement; and (3) the
aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00).
Thus, the power to hear and decide employees' claims arising from employer-employee relations, exceeding
P5,000.00 for each employee should be left to the Labor Arbiter as the exclusive repository of the power to
hear and decide such claims.
In the instant case, a simple examination of the labor arbiter's impugned order dated September 25, 1989
readily shows that the aggregate claims of each of the twenty-five employees of petitioner are above the
amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over
the case. Hence, the petition is granted and the public respondent is directed to refer the workers' money
claims to the appropriate Labor Arbiter for proper disposition.
Guico vs Sec of Labor (1998) G.R. 131750
Facts:
The case started when the Office of the Regional Director, Department of Labor and Employment (DOLE),
Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting for an
investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor standards laws.
Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly
authorized representative under Article 128 of the Labor Code, as amended, inspections were conducted at
Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following violations involving
twenty-one (21) employees who are copier operators: (1) underpayment of wages; (2) underpayment of 13th
month pay; and (3) no service incentive leave with pay.

Issue: WON the Regional Director has jurisdiction over the labor standards case.
Held: Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as amended.
We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed out, this Court's
ruling in Servando — that the visitorial power of the Secretary of Labor to order and enforce compliance with
labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be
applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code, viz:
Art. 128 (b) — Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in
cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue compliance orders to give effect to the
labor standards provisions of the Code and other labor legislation based on the findings of the labor
employment and enforcement officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority
for the enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this
article may be appealed to the latter. In case said order involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the
monetary award in the order appealed from. (Emphasis supplied.)
The records of the House of Representatives show that Congressmen Alberto S. Veloso and Eriberto V. Loreto
sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared that "this bill seeks
to do away with the jurisdictional limitations imposed through said ruling (referring to Servando) and to finally
settle any lingering doubts on the visitorial and enforcement powers of the Secretary of Labor and
Employment."Petitioner's reliance on Servando is thus untenable.
EJR Crafts Corp., vs Court of Appeals (2006) G.R. 154101
Facts:
Sometime in 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay,
overtime pay, nonpayment of 13th month pay and service incentive leave pay against petitioner before the
Regional Office, NCR of the DOLE. Acting on the complaint, an inspection was conducted on the premises of
petitioner’s offices on August 22, 1997 wherein violations of labor standards law were discovered. Petitioner
argued that the Regional Director has no jurisdiction over the case as private respondents were allegedly no
longer connected with petitioner corporation at the time of the filing of the complaint and when the inspection
was conducted, and that private respondents’ claims are within the exclusive and original jurisdiction of the
Labor Arbiters.

Issue: WON public respondent Regional Director has jurisdiction over the case.
Held: The Regional Director has jurisdiction over the case.
As found by both Undersecretary of Labor and the Court of Appeals, the said quitclaim and release forms are
unreliable and do not correspond to other documents on record which would prove that private respondents
were working for the petitioner up to August 1997.
Considering thus that there still exists an employer-employee relationship between petitioner and private
respondents and that the case involves violations of labor standard provisions of the Labor Code, this Court
rules with the Undersecretary of Labor and the appellate court that the Regional Director has jurisdiction to
hear and decide the instant case in conformity with Article 128(b) of the Labor Code which states that:
“Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to the labor standards provisions
of this Code and other labor legislation based on the findings of labor employment and enforcement officers
or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the labor employment and enforcement officer
and raises issues supported by documentary proofs which were not considered in the course of inspection.”
Ex – Bataan Veterans Security Agency vs Sec of Labor (2007) G.R. 152396
Facts:
Ex-Bataan Veterans Security Agency, Inc. is in the business of providing security services while private
respondents are EBVSAI's employees assigned to the National Power Corporation at Ambuklao Hydro Electric
Plant, Bokod, Benguet (Ambuklao Plant). On 20 February 1996, private respondents led by Alexander Pocding
(Pocding) instituted a complaint for underpayment of wages against EBVSAI before the Regional Office of the
Department of Labor and Employment (DOLE). On 7 March 1996, the Regional Office conducted a complaint
inspection at the Ambuklao Plant where some violations were noted.
Issue: WON the Regional Director has jurisdiction over the money claims.
Held: The Regional Director has jurisdiction over the claim.

Art. 128 Visitorial and enforcement power. --- x x x
(b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to [the labor
standards provisions of this Code and other] labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or
his duly authorized representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection. x x x x
The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code.
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where we sustained the
jurisdiction of the DOLE Regional Director and held that "the visitorial and enforcement powers of the DOLE
Regional Director to order and enforce compliance with labor standard laws can be exercised even where
the individual claim exceedsP5,000."
However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code,
then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In
order to divest the Regional Director or his representatives of jurisdiction, the following elements must be
present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters
are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the notice of inspection results.
In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents
even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b)
of the Labor Code and the case does not fall under the exception clause.
Catholic Vicariate Baguio City vs Hon. Sto. Tomas (2008) G.R.167334
Facts:
Petitioner contracted KUNHWA to construct the retaining wall of the Baguio Cathedral. KUNWHA, in turn,
subcontracted CEREBA Builders (CEREBA) to do the formworks of the church. The contract between KUNWHA
and CEREBA lasted up to the completion of the project or on 8 September 2000, KUNWHA failed to pay CEREBA.
Consequently, the latter failed to pay its employees.
Agbucay, along with 81 other employees, lodged a complaint against CEREBA, KUNWHA and petitioner before
the DOLE-CAR Regional Office for nonpayment of wages, special and legal holiday premium pay. An inspection
of the premises resulted in the discovery of violations of labor standards law, such as nonpayment of wages
and holiday pay from 28 June 2000 to 5 September 2000, non-presentation of employment records, and
others. Petitioner, KUNWHA and CEREBA were given five (5) days from receipt of the notice of inspection
results to rectify its violations. Despite the notice, the parties failed to comply. A hearing was set wherein
CEREBA manifested its willingness to pay the affected employees on the condition that KUNWHA would pay

its obligation to CEREBA. Petitioner meanwhile manifested that the retention fee due to KUNWHA was
sufficient to pay the deficiencies due the affected employees.
On March 2001, the DOLE-CAR Regional Director issued an Order holding CEREBA, KUNWHA and petitioner
jointly and severally liable to the 82 affected workers in the amount ofP1,029,952.80 or P12,560.40 for each
employee. During the pendency of its motion for reconsideration, KUNWHA voluntarily settled the deficiencies
due the 23 affected workers amounting to P84,544.00
The Regional Director dismissed the complaint by reason of the said settlement. He also advised the other
employees to ventilate their claims in an appropriate forum considering that no employer-employee
relationship exists between the parties.
Issue: Whether the Secretary of Labor acquired jurisdiction over the appeal considering that this case falls
within the exception stated in Article 128(b) of the Labor Code.
Held: Secretary of Labor acquired jurisdiction over the appeal and petitioner is barred by estoppel from raising
the issue of jurisdiction.
In resolving this jurisdictional issue, the Secretary of Labor relied on the limitations set forth in Article 128(b) of
the Labor Code and ruled, thus:
It is worthy to note that as regards the power granted to Regional Director by Article 128 of the Labor Code,
as amended, only two (2) limitations are set forth: first, where the employer contests the findings of the
labor regulations officer, and raises issues which cannot be resolved without considering evidentiary
matters that are not verifiable in the normal course of inspection, and second, where the employer-
employee relationship no longer exists.
x x x Both of the above-stated limitations are wanting in this case. Records show that, when this case was
filed on August 29, 2000, complainants were still employed with the respondent CEREBA working for
KUNWHA’s project with the Vicariate. There was no proof that the subcontracting agreement between
KUNWHA LUZON CONSTRUCTION and CEREBA Builders was terminated as of July 2000. The letters showing
the poor performance of CEREBA Builders cannot be considered as a notice of termination of the
Subcontracting Agreement for the same do not state so.x x x
Succinctly put, since no written notice was served to respondent CEREBA Builders terminating the
Subcontracting Agreement, the employer-employee relationship between KUNWHA and complainants
existed until the completion of the subcontracting agreement on September 18, 2000. Considering this,
when the complainants filed this case on August 29, 2000, the Regional Director validly acquired jurisdiction
over the case. And, jurisdiction once acquired is not lost upon the instance of the parties but continues until
the case is terminated.x x x
It is also equally important to note that, during the initial hearing of this case at the Regional Office, the
respondents failed to contest the findings of the Labor Employment and Enforcement Officer. The
respondents failed to present employment records and any evidence to controvert the findings despite the
reasonable period of time afforded them. It was only when respondent KUNWHA filed its Motion for
Reconsideration from the Order dated March 12, 2001 of the Regional Director that it submitted documents
which the Vicariate now alleged to be not verifiable in the summary nature of the labor inspection
Moreover, the issue of jurisdiction is clearly intertwined with the existence of employer-employee relationship.
It is undisputed that the existence of an employer-employee relationship is ultimately a question of fact.

Assuming arguendo the absence of an employer-employee relationship between the parties, the Secretary of
Labor, invoking Odin Security Agency v. De la Serna, correctly declared that petitioner is now estopped from
questioning the jurisdiction of the Regional Director when it actively participated in the proceedings held
therein. In said case, petitioner also submitted to the jurisdiction of the Regional Director by taking part in the
hearings before him and by submitting a position paper. Similarly, it was only when the order of the Regional
Director was modified did petitioner question the former’s jurisdiction to hear and decide the case.
Sapio vs Undaloc Construction (2008) G.R. 155034

Facts:
The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo
Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent
Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business
in Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was
terminated on the ground that the project he was assigned to was already finished, he being allegedly a project
employee. But petitioner asserted that he was a regular employee having been engaged to perform works
which are "usually necessary or desirable" in respondents' business.
Issue: WON the Appellate court erred in failing to dismiss respondent's petition for certiorari brought before
it on the ground that respondents failed to attach certified true copies of the NLRC's decision and resolution
denying the motion for reconsideration.
Held: Appellate Court was right.

In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining and/or Preliminary
Injunction filed with the Court of Appeals on 22 November 2001, petitioner did not raise this procedural issue.
Neither did he do so when he moved for reconsideration of the 8 May 2002 Decision of the Court of Appeals.
It is only now before this Court that petitioner proffered the same. This belated submission spells doom for
petitioner. More fundamentally, an examination of the Court of Appeals rollo belies petitioner as it confirms
that the alleged missing documents were in fact attached to the petition.
To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2
September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. These
payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00.
Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll,
being entries in the course of business, enjoy the presumption of regularity under Rule 130, Section 43 of the
Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims rests on the
employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the employee
and it is incumbent upon him to adduce clear and convincing evidence in support of his claim. Unfortunately,
petitioner's bare assertions of fraud do not suffice to overcome the disputable presumption of regularity.
Hon. Secretary of Labor vs Panay Veterans Security and Investigation Agency (2008) G.R. 167708
Facts:
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay Veteran’s Security
and Investigation Agency, Inc. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa,
Laguna until FII terminated its contract with respondent security agency. They were not given new assignments
and their benefits (including 13th month pay, overtime pay and holiday pay as well as wage differentials due to
underpayment of wages) were withheld by respondent security agency. In consequence, they filed a complaint
for violation of labor standards in the regional office of the (DOLE-NCR). The latter conducted an inspection of
the respondent security agency. During such inspection, respondent was not able to present its payroll as well
as the daily time records submitted by the petitioners. Hence, with such violation, DOLE inspector issued a
notice of inspection and concomitantly explained to the respondents that they have to comply with labor
standards by paying the claims of the petitioners or otherwise, they can question the notice to the DOLE-NCR
within 5 days. Since respondents did not do either of the aforementioned things, the Regional Director of DOLE-
NCR adopted the findings of the inspector. Respondents moved for reconsideration but it was denied.
Respondents filed an appeal (with motion to reduce cash or surety bond) to the SOLE. The SOLE found that
respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the

monetary award. Thus, the appeal was dismissed and the DOLE-NCR Regional Director’s order was declared
final and executory. The SOLE denied reconsideration. Respondents appealed to the Court of Appeals.
Issues: WON there was a perfected appeal; whether motion to reduce appeal bond allowed in appeals to the
Secretary of Labor.
Held: 1.) Respondents failed to perfect their appeal in the manner prescribed by the Labor Code. The rule is
that, to perfect an appeal of the Regional Director’s order involving a monetary award in cases which concern
the visitorial and enforcement powers of the Secretary of Labor and Employment, the appeal must be filed and
the cash or surety bond equivalent to the monetary award must be posted within ten calendar days from
receipt of the order. Failure either to file the appeal or post the bond within the prescribed period renders the
order final and executory. The legislative intent to make the bond an indispensable requisite for the perfection
of an appeal by the employer is underscored by the provision that “an appeal by the employer may be
perfected only upon the posting of a cash or surety bond.” The word “only” makes it clear that the lawmakers
intended the posting of a cash or surety bond by the employer to be the exclusive means by which an
employer’s appeal may be perfected
2.) No. The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and
Employment. In the exercise of their respective jurisdictions, each agency is governed by its own rules of
procedure. In other words, the rules of procedure of the NLRC are different from (and do not apply in) cases
cognizable by the Secretary of Labor and Employment. Unlike the New Rules of Procedure of the NLRC,]no
provision in the Rules on the Disposition of Labor Standards Cases governs the filing of a motion for the
reduction of the amount of the bond. However, on matters that are not covered by the Rules on the Disposition
of Labor Standards Cases, the suppletory application of the Rules of Court is authorized. In other words, the
Rules on the Disposition of Labor Standards Cases does not sanction the suppletory resort to the rules of
procedure of the NLRC. By ruling that the rules of procedure of the NLRC should be applied suppletorily to
respondents’ appeal to the Secretary of Labor of Employment, the CA effectively amended the Rules on the
Disposition of Labor Standards Cases. In the process, it encroached on the rule-making power of the Secretary
of Labor and Employment.
National Mines and Workers Union vs Marcopper Mining Corp (2008) G.R. 174641
Facts:
On April 1996, the Department of Environment and Natural Resources (DENR) ordered the indefinite
suspension of MARCOPPER’s operations for causing damage to the environment of
the Province of Marinduque by spilling the company’s mine waste or tailings from an old underground
impounding area into the Boac River, in violation of its Environmental Compliance Certificate (ECC).
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. On April
10, 1996, it filed a complaint with the Regional Arbitration Branch No. IV of the NLRC against MARCOPPER for
nonpayment of wages, separation pay, damages, and attorney’s fees; the case is hereinafter referred to as
the“environmental incident case.” NAMAWU claimed that due to the indefinite suspension of MARCOPPER’s
operations, its members were not paid the wages due them for six months (from April 12, 1996 to October 12,
1996) under Rule X, Book III, Section 3(b) of the Implementing Rules and Regulations of the Labor Code.[8] It
further claimed that its members are also entitled to be paid their separation pay pursuant to their collective

bargaining agreement with MARCOPPER and pursuant to Book IV, Rule I, 4(b) of the Labor Code’s implementing
rules.
MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual employees
– the real parties-in-interest – to file the complaint; and that the complaint should be dismissed for lack of
certification of non-forum shopping, for the pendency of another action between the same parties, and for
lack of factual and legal basis.
MARCOPPER appealed the decision to the NLRC. In this appeal, it also moved that it be allowed not to post
an appeal bond for 615 NAMAWU members – former MARCOPPER employees who had been dismissed
effective March 7, 1995 due to an earlier illegal strike. MARCOPPER, however, posted the required bond for
three non-striking employees, namely: Apollo V. Saet, Rogelio Regencia and Jose Romasanta.
Issue: Whether CA erred in ruling that there was no need for MARCOPPER to post an appeal bond.
Held: The CA was correct in reversing the dismissal of MARCOPPER’s appeal for failure to file an appeal bond.
The employment of the NAMAWU officers and members had been declared terminated on March 7, 1995 as
a result of their failure to return to work after their strike of February 27, 1995. Thereafter, the illegal strike
litigation commenced, resulting in a decision by the NLRC on November 11, 1996 declaring the strike illegal.
In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to claim in its
April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with respect to the
NAMAWU members who were no longer company employees. The CA decision decreeing the termination of
employment of those involved in the illegal strike case had already been issued at that time. We subsequently
ruled on the same issue during the time the environmental incident case was pending before the NLRC. Thus,
when the NLRC dismissed MARCOPPER’s appeal for failure to file the requisite appeal bond corresponding to
the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a
settled matter that the NLRC was in no position to disregard.
People’s Broadcasting vs Secretary of DOLE (2009) G.R. 179652
Facts:
Jandeleon Juezan filed a complaint against People’s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) for
illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest
day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and
Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII,Cebu City.
On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In
the Inspection Report Form, the Labor Inspector wrote under the heading “Findings/Recommendations” “non-
diminution of benefits” and “Note: Respondent deny employer-employee relationship with the complainant-
see Notice of Inspection results.”

Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was
effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to
submit their respective position papers.
In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled
that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting
to P203, 726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave
credence to the documents offered by respondent without examining the originals, but at the same time he
missed or failed to consider petitioner’s evidence. Petitioner’s motion for reconsideration was denied.[ On
appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship.
In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that
petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit.
Petitioner maintained that there is no employer-employee relationship had ever existed between it and
respondent because it was the drama directors and producers who paid, supervised and disciplined
respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been
considered by the labor arbiter because respondent’s claim exceeded P5,000.00.
Issue: Whether the Secretary of Labor has the power to determine the existence of an employer-employee
relationship.
Held: Secretary of Labor has the power to determine the existence of an employer-employee relationship.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship
has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation
especially, the existence of an employer-employee relationship is a matter which is not easily determinable
from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from
a mere ocular examination. The intricacies and implications of an employer-employee relationship demand
that the level of scrutiny should be far above the cursory and the
mechanical. While documents, particularly documents found in the employer’s office are the primary
source materials, what may prove decisive are factors related to the history of the employer’s business
operations, its current state as well as accepted contemporary practices in the industry. More often than not,
the question of employer-employee relationship becomes a battle of evidence, the determination of which
should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that
is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such prerogatival
determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed,
such determination is merely preliminary, incidental and collateral to the DOLE’s primary function of
enforcing labor standards provisions. The determination of the existence of employer-employee
relationship is still primarily lodged with the NLRC. This is the meaning of the clause “in cases where the
relationship of employer-employee still exists” in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must be
resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-
employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the

power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale

underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and
the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body,
which is the NRLC, rather than an administrative official of the executive branch of the government. If the
Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the
dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was
granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the
Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the
actual existence of an employer-employee relationship affects the complexion of the putative findings that the
Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor
Code from the employer as opposed to non-employees. Among these differentiated rights are those accorded
by the “labor standards” provisions of the Labor Code, which the Secretary of Labor is mandated to
enforce. If there is no employer-employee relationship in the first place, the duty of the employer to adhere
to those labor standards with respect to the non-employees is questionable.
At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE
from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the
powers under Article 128 (b) over petitioner if another person with better-grounded claim of
employment than that which respondent had. Respondent, especially if he were an employee, could have
very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could ill-
afford to disclaim an employment relationship with all of the people under its aegis.
The most important consideration for the allowance of the instant petition is the opportunity for the Court
not only to set the demarcation between the NLRC’s jurisdiction and the DOLE’s prerogative but also the
procedure when the case involves the fundamental challenge on the DOLE’s prerogative based on lack of
employer-employee relationship. As exhaustively discussed here, the DOLE’s prerogative hinges on the
existence of employer-employee relationship, the issue is which is at the very heart of this case. And the
evidence clearly indicates private respondent has never been petitioner’s employee.
Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries – Dusit Hotel Nikko
Chapter (2009) G.R. 181972
Facts:
Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National
Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and
workers of all private sectors, identified as follows in Section 1 thereof:
Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the
National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED
NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of THIRTY PESOS (P30.00)
per day payable in two tranches as follows:
Amount of ECOLA Effectivity
P15.00 5 November 2001
P15.00 1 February 2002
On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit
Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to Director Alex

Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region (DOLE-NCR),
reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory
arbitration before the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the
Union and Dusit Hotel; and requesting immediate assistance on this matter. On 24 May 2002, Rasing sent Dir.
Maraan another letter following-up his previous request for assistance.
Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to
conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first Inspection, the report showed that
Dusit Hotel is exempt from complying with WO no. 9. Due to the Second request for inspection, DOLE
representative conducted another round of inspection and the Labor Standards Officer noted the following in
her inspection report:
* Non-presentation of records/payrolls
* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter,
there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09->
ECOLA covering the periods from Nov. 5/01 to present.
Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or
correction of the noted violations within five days from receipt of the Notice, and to submit any question on
the findings of the labor inspector within the same period, otherwise, an order of compliance would be issued.
The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel Manager Rogelio Santos.
In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No. 000215-02 — the
compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and
the Union — granting the hotel employees the following wage increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month

On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR, through
Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees the total amount of
P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity,
pursuant to Section 12 of Republic Act No. 6727, 11 as amended by Republic Act No. 8188.
Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002, arguing that
the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and the
Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001, already
rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel employees
ordered by the NLRC Decision of 9 October 2002, along with the hotel employees' share in the service charges,
the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would already be receiving
salaries beyond the coverage of WO No.
Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27 December
2002, setting aside its earlier Order dated 22 October 2002 for being moot and academic, in consideration of

the NLRC Decision dated 9 October 2002; and dismissing the complaint of the Union against Dusit Hotel, for
non-compliance with WO No. 9, for lack of merit.
Issues: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the
increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latter's Decision dated 9
October 2002. Whether Dusit Hotel is liable for the double indemnity for violation of the wage order.
Held: The Court rules in the negative.
It must be noted that the hotel employees have a right to their share in the service charges collected by Dusit
Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:
Article 96. Service charges. — All service charges collected by hotels, restaurants and similar establishments
shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent
(15%) for management. The share of employees shall be equally distributed among them. In case the service
charge is abolished, the share of the covered employees shall be considered integrated in their wages.
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and
management their respective shares in the service charges collected, the hotel cannot claim that payment
thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9.
Undoubtedly, the hotel employees' right to their shares in the service charges collected by Dusit Hotel is distinct
and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of
the other.
The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2 (m) of DOLE
Department Order No. 10, Series of 1998, 30 the Notice of Inspection Result "shall specify the violations
discovered, if any, together with the officer's recommendation and computation of the unpaid benefits due
each worker with an advice that the employer shall be liable for double indemnity in case of refusal or failure
to correct the violation within five calendar days from receipt of notice". A careful review of the Notice of
Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said
Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations
within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given
period would already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the
opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double
indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan, already issued its Order directing Dusit
Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA
under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as
amended by Republic Act No. 8188.
Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered position
as against capital, it is equally mindful of the protection that the law accords to capital. While the Constitution
is committed to the policy of social justice and the protection of 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.


Gaa vs Court of Appeals (1985) 140 SCRA 304

Facts:
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building
at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator.

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

Facts:
Four CBAs separately covering the petitioner's employees in its Alabang/Cabuyao factories; Makati
Administration Office. (Both Alabang/Cabuyao factories and Makati office were represented by the
respondent, Union of Filipro Employees [UFE]);Cagayan de Oro Factory represented by WATU; and Cebu/Davao

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

services, vacation, sick & other leaves with pay — are non-contributory benefits. Since the retirement plan has
been an integral part of the CBA since 1972, the Union's demand to increase the benefits due the employees
under said plan, is a valid CBA issue.
The petitioner's contention, that employees have no vested or demandable right to a non-contributory
retirement plan, has no merit for employees do have a vested and demandable right over existing benefits
voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish
such benefits.
Five J Taxi vs NLRC (1992) 235 SCRA 556

Facts:
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi drivers and,
as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the daily boundary of

P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned taxi, they were also required to pay P20.00
for car washing, and to further make a P15.00 deposit to answer for any deficiency in their boundary, for every
actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already failed to report
for work for unknown reasons. Petitioners learned that he was working for Mine of Gold Taxi Company. With
respect to Sabsalon, while driving a taxicab of petitioners on September 1983, he was held up by his armed
passenger who took all his money and thereafter stabbed him. He was hospitalized and after his discharge, he
went to this home province to recuperate.
In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms and conditions
as when he was first employed, but his working schedule was made on an alternative basis where he drove
only every other day. However, on several occasions, he failed to report for work during his schedule. On
September 22, 1991, Sabsalon failed to remit his boundary of P700.00 for the previous day. Also, he abandoned
his taxicab in Makati without fuel refill worth P300.00. Despite repeated requests of petitioners for him to
report for work, he adamantly refused. Afterwards it was revealed that he was driving a taxi for Bulaklak
Company.
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits for 2 years,
but herein petitioners told him that not a single centavo was left of his deposits as these were not even enough
to cover the amount spent for the repairs of the taxi he was driving. This was allegedly the practice adopted by
petitioners to recoup the expenses incurred in the repair of their taxicab units. When Maldigan insisted on the
refund of his deposit, petitioners terminated his services. Sabsalon, on his part, claimed that his termination
from employment was effected when he refused to pay for the washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the manila Arbitration Office of the National
Labor Relations Commission charging petitioners with illegal dismissal and illegal deductions.
Issue: WON the deductions made were illegal and if illegal, considered a prohibition regarding wages.
Held: The Court declares that the deposits made, amounts to the prohibition provided by law. The deposits
made were illegal and the respondents must be refunded.
Article 114 of the Labor Code provides as follows:
Deposits for loss or damage. — No employer shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment
supplied by the employer, except when the employer is engaged in such trades, occupations or business
where the practice of making deposits is a recognized one, or is necessary or desirable as determined by
the Secretary of Labor in appropriate rules and regulations.
It can be deduced that the said article provides the rule on deposits for loss or damage to tools, materials or
equipments supplied by the employer. Clearly, the same does not apply to or permit deposits to defray any
deficiency which the taxi driver may incur in the remittance of his boundary.
On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent the issue of
illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is
incumbent upon the driver to restore the unit he has given to the same clean condition when he took it out,

and as claimed by the respondents (petitioners in the present case), complainant(s) (private respondents
herein) were made to shoulder the expenses for washing, the amount doled out was paid directly to the person
who washed the unit, thus we find nothing illegal in this practice, much more (sic) to consider the amount paid
by the driver as illegal deduction in the context of the law."
Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments they made.
It will be noted that there was nothing to prevent private respondents from cleaning the taxi units themselves,
if they wanted to save their P20.00. Also, as the Solicitor General correctly noted, car washing after a tour of
duty is a practice in the taxi industry, and is, in fact, dictated by fair play.
Manila Electric Co vs Sec of Labor (1999) G.R. 127598

Facts:
MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On September
7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing

1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years starting from
December 1, 1995 to November 30, 1997. MERALCO signified its willingness to re-negotiate through its letter
dated October 17, 1995 and formed a CBA negotiating panel for the purpose. On November 10, 1995, MEWA
submitted its proposal to MERALCO, which, in turn, presented a counter-proposal. Thereafter, collective
bargaining negotiations proceeded. However, despite the series of meetings between the negotiating panels
of MERALCO and MEWA, the parties failed to arrive at “terms and conditions acceptable to both of them.”
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National
Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was
docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices. The
NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement.
MERALCO filed a petition to let the Secretary of DOLE to assume jurisdiction over the case which was granted.
Issue: Whether the members of MEWA are entitled to benefits given as bonuses, being negotiated in the CBA.
Held: The members of MEWA are entitled to the benefits although in the form of benefits which is a subject of
the negotiation of CBA.
As a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless be granted on equitable
consideration as when the giving of such bonus has been the company’s long and regular practice. To be
considered a “regular practice,” the giving of the bonus should have been done over a long period of time, and
must be shown to have been consistent and deliberate.
The ruling in National Sugar Refineries Corporation vs. NLRC: “The test or rationale of this rule on long practice
requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well
that said employees are not covered by the law requiring payment thereof.”
In this case, the record shows the MERALCO, aside from complying with the regular 13th month bonus, has
further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988. While
the special bonuses differed in amount and bore different titles, it can not be denied that these were given
voluntarily and continuously on or about Christmas time.
The considerable length of time MERALCO has been giving the special grants to its employees indicates a
unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not required
by law.
Indeed, a company practice favorable to the employees has been established and the payments made by
MERALCO pursuant thereto ripened into benefits enjoyed by the employees. Consequently, the giving of the
special bonus can no longer be withdrawn by the company as this would amount to a diminution of the
employee’s existing benefits.
Philippine Veterans Bank vs NLRC (1999) G.R. 130439

Facts:
In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko
Sentral). Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees,

including private respondent Dr. Jose Teodorico V. Molina, were terminated from work and given their
respective separation pay and other benefits. To assist in the liquidation, some of petitioner’s former
employees were rehired, among them Molina, whose re-employment commenced on 15 June 1985. On 11
May 1991, MOLINA filed a complaint against members of the liquidation team. The complaint demanded the
implementation of Wage Orders Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral
damages and attorney’s fees in the amount of P300,000.
Meanwhile, W.O. 1 took effect on November 1990, prescribing a P17-increase in the daily wage of employees
whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2 became mandated a P12-increase
in the daily wage of employees whose monthly salary did not exceed P4,319.16. Molina claimed that his salary
should have been adjusted in compliance with said wage orders. The liquidation team countered that MOLINA
was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60.
Labor Arbiter rejected the 26.16 factor used by the liquidators in computing the daily wage of MOLINA,
adopting instead the factor of “365 days.” Consequently, they were ordered to pay Molina the wage
differentials due him under W.O. 1 and W.O. 2. On appeal, the NLRC sustained the labor arbiter’s ruling after
concluding that Molina was a regular employee of petitioner with a basic monthly salary of P3,754.60 at the
time of his dismissal on 31 January 1992. He was, therefore, entitled to the wage increases mandated by the
aforesaid wage orders.
Issue: Whether Molina is entitled to wage increase computation that used the 365 days factor.
Held: Molina is entitled to the wage increase computation using the 365 days as factor.
The documents attached show that the Bank has been consistently using the factor of 365 days in computing
your equivalent monthly salary prior to its being placed under receivership by the Central Bank. This is evident
in the wage and allowance increases granted under previous Presidential Decrees and Wage Orders, which
were given by the Bank on monthly basis, i.e., where the rest days are unworked but paid. This is also indicated
in the appointment and service records of bank personnel who started out as daily paid employees and were
eventually promoted as permanent employees with fixed monthly salaries. However, when R.A. 6640 went
into force, the Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was the
practice/policy long before the effectivity of the Act. And when R.A 6727 took effect, the Bank reverted to the
old practice/policy of using factor 365 days in computing your equivalent monthly rate salary.
May we add that the old practice of the bank in using factor 365 days in a year in determining equivalent
monthly salary cannot unilaterally be changed by your employer without the consent of the employees, such
practice being now a part of the terms and conditions of your employment. An employment agreement,
whether written or unwritten, is a bilateral contract and as such either party thereto cannot change or amend
the terms thereof without the consent of the other party thereto.
It is clear that respondent is entitled to the wage increase under R.A. 6440 computed on the basis of 365 paid
days and to the corresponding salary differentials as a result of the application of this factor. Evidently, the
use of the 365 factor is binding and conclusive, forming as it did part of the employment contract. To abandon
such policy and revert to its old practice of using the 26.16 factor would be a diminution of a labor benefit,
which is prohibited by the Labor Code. It cannot be doubted that the 365 factor favors petitioner’s employees
because it results in a higher determination of their monthly salary.

Philippine Appliance Corp., vs Court of Appeals (2004) G.R. 149434
Facts:
During the collective bargaining negotiations between petitioner and respondent union in 1997, petitioner

offered the amount of P4, 000.00 to each employee as an “early conclusion bonus”. Petitioner claims that this
bonus was promised as a unilateral incentive for the speeding up of negotiations between the parties and to
encourage respondent union to exert their best efforts to conclude a CBA. Upon conclusion of the CBA
negotiations, petitioner accordingly gave this early signing bonus.
In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to negotiate a new
CBA. Petitioner and respondent union began their negotiations. On October 22, 1999, after eleven meetings,
respondent union expressed dissatisfaction at the outcome of the negotiations and declared a deadlock. A few
days later, on October 26, 1999, respondent union filed a Notice of Strike with the NCMB, Region IV in Calamba,
Laguna, due to the bargaining deadlock.
The conciliation meetings started with eighteen unresolved items between petitioner and respondent union.
At the meeting, respondent union accepted petitioner’s proposals on fourteen items, leaving the following
items unresolved: wages, rice subsidy, signing, and retroactive bonus.
Petitioner and respondent union failed to arrive at an agreement concerning these four remaining items. On
January 2000, respondent union went on strike at the petitioner’s plant. The strike lasted for eleven days and
resulted in the stoppage of manufacturing operations as well as losses for petitioner, which constrained it to
file a petition before the Department of Labor and Employment. Labor Secretary assumed jurisdiction over the
dispute and, on January 2000, ordered the striking workers to return to work within twenty-four hours from
notice and directed petitioner to accept back the said employees. It rendered decision fixing the amount of
wage increase and directed to conclude a CBA to include the items granted in the conference. Petitioner
contested on the awarding of signing bonus.
Issue: Whether the signing bonus is covered under the maintenance of existing benefits.
Held: The payment of signing bonus is not covered under the existing benefits.
The Court has consistently ruled that a bonus is not a demandable and enforceable obligation. True, it may
nevertheless be granted on equitable considerations as when the giving of such bonus has been the company’s
long and regular practice.
To be considered a “regular practice,” however, the giving of the bonus should have been done over a long
period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on
long practice requires an indubitable showing that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by the law requiring payment thereof.
Respondent does not contest the fact that petitioner initially offered a signing bonus only during the previous
CBA negotiation. Previous to that, there is no evidence on record that petitioner ever offered the same or that
the parties included a signing bonus among the items to be resolved in the CBA negotiation. Hence, the giving
of such bonus cannot be deemed as an established practice considering that the same was given only once,
that is, during the 1997 CBA negotiation.
Special Steel Products vs Villareal (2004) G.R. 143304
Facts:

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

Agabon vs NLRC (2004) G.R. 158693
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing
ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum
board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for
abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28, 1999,
the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay
the monetary claims.
Issue: WON respondent’s dismissal is illegal and if not, entitles them benefits.
Held: The dismissal is legal and entitles them of payment of benefits.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of separation pay. When the termination
of employment is declared illegal, reinstatement and full back wages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his
separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was
observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the
dismissal is for just or authorized cause but due process was not observed.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process. The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice requirements and instead argued
that sending notices to the last known addresses would have been useless because they did not reside there
anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employee’s last known address. Thus, it should be held liable for non-
compliance with the procedural requirements of due process.
The Court ruled that respondent is liable for petitioners’ holiday pay, service incentive leave pay and 13th month
pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional income
in the form of the 13th month pay to employees not already receiving the same so as “to further protect the
level of real wages from the ravages of world-wide inflation.” Clearly, as additional income, the 13th month pay
is included in the definition of wage under Article 97(f) of the Labor Code.

American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R. 155059
Facts:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are
two unions in this company, the American Wire and Cable Monthly-Rated Employees Union and the American
Wire and Cable Daily-Rated Employees Union.
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment by the two unions for voluntary arbitration. They alleged that the private respondent, without
valid cause, suddenly and unilaterally withdrew and denied certain benefits and entitlements which they have
long enjoyed. These are Service Award, 35% premium pay of an employee’s basic pay for the work rendered
during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29, Christmas Party and
Promotional Increase.
Issue: WON the respondent company violated Article 100 of the Labor Code.
Held: The company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. – Nothing in this Book shall be

construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed
at the time of promulgation of this Code.
The certain benefits and entitlements are considered bonuses. A bonus can only be enforceable and
demandable if it has ripened into a company practice. It must also be expressly agreed by the employer and
employee or it must be on a fixed amount.
The assailed benefits were never subjects of any agreement between the union and the company. It was never
incorporated in the CBA. Since all these benefits are in the form of bonuses, it is neither enforceable nor
demandable.

Honda Philippines Inc., vs Samahang Manggagawa sa Honda (2005) G.R. 145561

Facts:
The case stems from the collective bargaining agreement between Honda and the respondent union that it
granted the computation of 14th month pay as the same as 13th month pay. Honda continues the practice of
granting financial assistance covered every December each year of not less than 100% of the basic salary. In
the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union
filed a notice of strike on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking
employees were ordered to return to work and management to accept them back under the same terms prior
to the strike staged. Honda issued a memorandum of the new computation of the 13th month and 14th month
pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for
purpose of computing the said benefits. The amount equivalent to ½ of the employees’ basic salary shall be
deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda
shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary
arbitration where it ruled that the company’s implementation of the pro-rated computation is invalid.
Issue: WON the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid
and lawful.
Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was
the first time they implemented such practice.
The payment of the 13th month pay in full month payment by Honda has become an established practice. The
length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary
act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code.
The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall
constitute a violation of Article 100 of the Labor Code.

Producers Bank vs NLRC () 335 SCRA 506
Facts:
Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a conservator for
the purpose of protecting its assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11)
regarding the retirement plan and pertaining to uniform allowance, the acting conservator of the petition
expressed objection resulting an impasse between the petitioner bank and respondent union. The deadlock
continued for at least six months. The private respondent, to resolve the issue filed a case against petitioner
for unfair labor practice and flagrant violation of the CBA.
The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the implementation of the
CBA.
Issue: WON the employees who have retired have no personality to file an action since there is no longer an
employer-employee relationship.
Held: Employees who have retired still have the personality to file a complaint.
Retirement results from a voluntary agreement between the employer and the employee whereby the latter
after reaching a certain age agrees to sever his employment with the former. The very essence of retirement
is the termination of employer-employee relationship.
Retirement of the employee does not in itself affect his employment status especially when it involves all rights
and benefits due to him, since these must be protected as though there had been no interruption of service. It
must be borne in mind that the retirement scheme was part of the employment package and the benefits to
be derived therefrom constituted as it were a continuing consideration of services rendered as well as an
effective inducement foe remaining with the corporation. It is intended to help the employee enjoy the
remaining years of his life.
When the retired employees were requesting that their retirement benefits be granted, they were not pleading
for generosity but merely demanding that their rights, embodied in the CBA, be recognized. When an employee
has retired but his benefits under the law or CBA have not yet been given, he still retains, for the purpose of
prosecuting his claims, the status of an employee entitled to the protection of the Labor Code, one of which is
the protection of the labor union.

Jardin vs NLRC (2000) G.R. 119268
Facts:
Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in
the operation of "Goodman Taxi." Petitioners used to drive private respondent’s taxicabs every other day on a
24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average
of P400.00 daily.
Nevertheless, private respondent admittedly regularly deducts from petitioners’ daily earnings the amount of
P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided
to form a labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs
when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were
singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners
filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal
and illegal deduction of washing fees. In a dated August 31, 1992, the labor arbiter dismissed said complaint
for lack of merit.
Issue: WON the deduction for the washing of taxi units is illegal.
Held: The deduction made for the car wash is not illegal.
In Five J Taxi vs. NLRC, the court views that it is not illegal in the context of the law. We note that after a tour
of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he
took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by
fair play. Hence, the drivers are not entitled to reimbursement of washing charges.

Manila Jockey Club Employees Labor Union vs Manila Jockey Club (2007) G.R. 167601
Facts:
Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club, Inc., a
corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective
Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The CBA governed the economic
rights and obligations of respondent’s regular monthly paid rank-and-file employees. In the CBA, the parties
agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work
week of Monday to Saturday.
On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20, 1999, the
hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are
held, that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to 5:00 p.m.
schedule for non-race days.
On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA retaining
Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict arising therefrom shall
be referred to a voluntary arbitrator for resolution. Subsequently, before a panel of voluntary arbitrators of
the National Conciliation and Mediation Board (NCMB), petitioner questioned the above office memorandum
as violative of the prohibition against non-diminution of wages and benefits guaranteed under Section 1,
Article IV, of the CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to
5:00 p.m. Petitioner claimed that as a result of the memorandum, the employees are precluded from
rendering their usual overtime work from 5:00 p.m. to 9:00 p.m.
The NCMB’s panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld respondent's
prerogative to change the work schedule of regular monthly-paid employees under Section 2, Article XI, of the
CBA. Petitioner moved for reconsideration but the panel denied the motion.
Issue: WON the respondent violated the non-diminution of benefits under Article 100 of the Labor Code.
Held: The respondent did not violate the principle of non-diminution of benefits.
The provision of the CBA also grants respondent the prerogative to relieve employees from duty because of
lack of work. Petitioner’s argument, therefore, that the change in work schedule violates Article 100 of the
Labor Code because it resulted in the diminution of the benefit enjoyed by regular monthly-paid employees of
rendering overtime work with pay, is untenable.
Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but merely provides
that "all work performed in excess of seven (7) hours work schedule and on days not included within the work
week shall be considered overtime and paid as such."
Respondent was not obliged to allow all its employees to render overtime work everyday for the whole
year, but only those employees whose services were needed after their regular working hours and
only upon the instructions of management. The overtime pay was not given to each employee
consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus,
overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on
prohibition against elimination or diminution of benefits.

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

Facts:
Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel Corporation.
They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on
different dates until such time that they were promoted as supervising security guards. From the
commencement of their employment, the private respondents were required to punch their time cards for
purposes of determining the time they would come in and out of the company's work place. Corollary, the
private respondents were availing the benefits for overtime, holiday and night premium duty through time
card punching. However, in the early 1990's, the San Miguel Corporation embarked on a Decentralization
Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more efficient and
effective management of their respective operations.
As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation implemented on
January 1, 1993 a "no time card policy" whereby the Supervisory I and II composing of the supervising security
guards of the Beer Division were no longer required to punch their time cards. Consequently, on January 16,
1993, without prior consultation with the private respondents, the time cards were ordered confiscated and
the latter were no longer allowed to render overtime work. However, in lieu of the overtime pay and the
premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected by the "No
Time Card Policy" were given a 10% across-the-board increase on their basic pay while the supervisors who
were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from P2,000.00
to P2,500.00 a month. Hence, this complaint filed for unfair labor practice, violation of Article 100 of the Labor
Code of the Philippines, and violation of the equal protection clause and due process of law in relation to
paragraphs 6 and 8 of Article 32 of the New Civil Code of the Philippines.
Issue: Whether the circumstances in the present case constitute an exception to the rule that supervisory
employees are not entitled to overtime pay.
Held: Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest
periods shall not apply to managerial employees
The other provisions in the Title include normal hours of work (Article 83), hours worked (Article 84), meal
periods (Article 85), night shift differential (Article 86), overtime work (Article 87), undertime not offset by
overtime (Article 88), emergency overtime work (Article 89), and computation of additional compensation
(Article 90). It is thus clear that, generally, managerial employees such as respondents are not entitled to
overtime pay for services rendered in excess of eight hours a day. Respondents failed to show that the
circumstances of the present case constitute an exception to this general rule.
Aside from their allegations, respondents were not able to present anything to prove that petitioners were
obliged to permit respondents to render overtime work and give them the corresponding overtime pay. Even
if petitioners did not institute a "no time card policy," respondents could not demand overtime pay from
petitioners if respondents did not render overtime work. The requirement of rendering additional service
differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits
do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the
definition of benefits under Article 100 of the Labor Code.

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

Facts:
On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily
wage company guard. In 1984, respondent became a monthly-paid employee which entitled him to yearly
increases in salary. On 19 October 1993, respondent filed an action for recovery of damages due to
discrimination under Article 100 of the Labor Code of the Philippines (Labor Code), as amended, as well as for
recovery of salary differential and backwages, against petitioner. Respondent questioned the rate of salary
increase given him by petitioner.
On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioner’s Vice President and VisMin Operations
Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde
Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. Respondent
continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and
that he did not receive any written order from Capt. Fortich, his immediate superior.
In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation.In a
letter dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company
rules and regulations, particularly for Insubordination or Willful Disobedience in Carrying Out Reasonable
Instructions of his superior.
Issue: WON respondent’s dismissal from employment is legal.
Held: Respondent was dismissed for a just cause.
An employer may terminate an employment for serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in connection with his work. Willful disobedience
requires the concurrence of two elements: (1) the employee’s assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.
The records show that respondent was not singled out for the transfer. Respondent’s transfer was the effect
of the integration of the functions of the Mandaue Brewery – Materials Management and the Physical
Distribution group into a unified logistics organization, the VisMin Logistics Operations.
Moreover, the employer exercises the prerogative to transfer an employee for valid reasons and according to
the requirements of its business, provided the transfer does not result in demotion in rank or diminution of
the employee’s salary, benefits, and other privileges. In this case, we found that the order of transfer was
reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics
Operations. Respondent was properly informed of the transfer but he refused to receive the notices on the
pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that
petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a
diminution of his salary, benefits, and other privileges. Respondent’s persistent refusal to obey petitioner’s
lawful order amounts to wilful disobedience under Article 282 of the Labor Code.

Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal – NAFLU (2008) G.R.
170734
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union
of petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13 th month pay,
bonus, and leave encashment of three union members in amounts proportional to the service they actually
rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme,
claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7)
employees who had not served for the full 12 months. According to respondent, the prorated payment violates
the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before
the National Conciliation and Mediation Board (NCMB).
Issue: WON the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service
rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of
the said benefits constitute diminution of benefits under Article 100 of the Labor Code.
Held: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued
or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of
workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of
Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily
given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated
Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th
month pay those items that were expressly excluded by the law, we held that the act which was favorable to
the employees though not conforming to law had thus ripened into a practice and could not be withdrawn,
reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the
employer’s act of including non-basic benefits in the computation of the 13th month pay was a voluntary act
and had ripened into a company practice which cannot be peremptorily withdrawn.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless of the length of service rendered. True, there
were only a total of seven employees who benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6)
years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by
merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group
head.

Genesis Transport Service et al., vs UMM Genesis Transport (2010) G.R. 182114
Facts:
Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on commission basis at 9% of the
gross revenue per trip. He, after due notice and hearing, terminated from employment after an accident on
April 20, 2002 where he was deemed to have been driving recklessly. He then filed a complaint for illegal
dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because
of his union activities, other drivers who had met accidents not having been dismissed from employment. He
later amended his complaint to implead his co-respondent union and add as grounds unfair labor practice and
reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay.
Upon appeal, with respect to Taroy’s claim for refund, the Labor Arbiter ruled in his favor for if, as contended
by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses for fuel and
maintenance also charged to overhead expense. The Labor Arbiter thus concluded that “it would appear that
the tollgate fees are deducted from the gross revenues and not from the salaries of drivers and conductors,
but certainly the deduction thereof diminishes the take home pay of the employees.
Issue: Whether the tollgate fee deductions which resulted to an underpayment given to Taroy is illegal?
Held: The deduction is considered illegal.
The amounts representing tollgate fees were deducted from gross revenues and not directly from Taroy’s
commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts
reduced the amount from which Taroy’s 9% commission would be computed. Such a computation not only
marks a change in the method of payment of wages, resulting in a diminution of Taroy’s wages in violation of
Article 113 vis-à-vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroy’s
written consent or authorization, the deduction is considered illegal.
Besides, the invocation of the rule on “company practice” is generally used with respect to the grant
of additional benefits to employees, not on issues involving diminution of benefits.

Congson vs NLRC (1995) 243 SCRA 260

Facts:

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

Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money
order, is when the circumstances prescribed in the second paragraph of Article 102 are present.
North Davao Mining vs NLRC (1996) 254 SCRA 721

Facts:

Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason
of the company’s closure on May 31, 1992, and who were the complainants in the cases before the respondent
labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business
reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos
per year, for each of the five years prior to its closure. All told five months prior to its closure, its total liabilities
had exceeded its assets by 20.392 billion pesos. When it ceased operations, its remaining employees were
separated and given the equivalent of 12.5 days’ pay for every year of service, computed on their basic monthly
pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that,
during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in
1992, it had been giving separation pay equivalent to thirty days’ pay for every year of service. Moreover, the
employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up to
1990.
Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271
other seperated employees for additional separation pay; back wages; transportation allowance; hazard pay;
etc., amounting to P58,022,878.31.
Issue: WON the time spent in collecting wages in a place other than the place of employment is compensable
notwithstanding that the same is done during official time.
Held: Hours spent by complainants in collecting salaries shall be considered compensable hours worked.
It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained
its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two
and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show
that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at
the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had
violated labor standards law, one of which is the place of payment of wages.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:
Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of undertaking.
Payment in a place other than the workplace shall be permissible only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace
and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or
other calamity rendering payment thereat impossible; (2) When the employer provides free transportation
to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent
by the employees in collecting their wages shall be considered as compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2½ hours by travel and the risks in
commuting all the time in collecting complainants’ salaries, would justify the granting of backwages equivalent
to 2 days in a month.

San Juan de Dios Hospital vs NLRC (1997) 282 SCRA 316

Facts:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees
Association sent a four (4)-page letter with attached support signatures requesting and pleading for the
expeditious implementation and payment by respondent Juan De Dios Hospital of the 40 HOURS/5-DAY

WORKWEEK with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for
enforcement by the Secretary of Labor’s Policy Instructions No. 54 dated April 12, 1988.”
Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their
claims for statutory benefits under the above-cited law and policy issuance. On February 26, 1992, the Labor
Arbiter dismissed the complaint. Petitioners appealed before public respondent National Labor Relations
Commission which affirmed the Labor Arbiter’s decision.
Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is
valid or not.
Held: The policy instruction is not valid.
This issuance clarifies the enforcement policy of this Department on the working hours and compensation of
personnel employed by hospital/clinics with a bed capacity of 100 or more and those located in cities and
municipalities with a population of one million or more.
Reliance on Republic Act No. 5901 has long been repealed with the passage of the Labor Code on May 1, 1974.
Article 302 of which explicitly provide:
“All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All
provisions of existing laws, orders, decrees, rules and regulations inconsistent herewith are likewise
repealed.”
Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced
the basic provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter’s
validity may be gauged. Article 83 of the Labor Code states: Normal Hours of Work. -- The normal hours of
work of any employee shall not exceed eight (8) hours a day.
“Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight
(8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service
require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled
to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day.
For purposes of this Article, “health personnel” shall include: resident physicians, nurses, nutritionists,
dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic personnel.”
A cursory reading of Article 83 of the Labor Code betrays petitioners’ position that “hospital employees” are
entitled to “a full weekly salary with paid two (2) days’ off if they have completed the 40-hour/5-day
workweek”. What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per
week for health personnel, and (2) where the exigencies of service require that health personnel work for six
days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least
thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then
Secretary of Labor’s assertion that “personnel in subject hospitals and clinics are entitled to a full weekly wage
for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek”. Needless to
say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the
clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court

will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute.
Sime Darby Pilipinas Inc., vs NLRC (1998) 289 SCRA 86
Facts:
Prior to the present controversy, all company factory workers in Marikina including members of private
respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid “on call” lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly
salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance
Department working on shifts, a change in work schedule effective 14 September 1992 thus –
7:45 A.M. – 4:45 P.M. (Mon to Fri) 7:45 A.M. – 11:45 P.M. (Sat).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. –10:30 A.M. and 2:30 P.M. –3:30 P.M.
Lunch break will be between: 12:00 NN –1:00 P.M. (Mon to Fri).
Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work
and break time schedules will be maintained as it is now.
Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the
30-minute paid “on call” lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for
unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court the Labor
Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the
30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and
that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight (8) hours.
Issue: WON the act of management in revising the work schedule of its employees and discarding their paid
lunch break constitutive of unfair labor practice.
Held: The revision of work schedule is a management prerogative and does not amount to unfair labor practice
in discarding the paid lunch break.
The right to fix the work schedules of the employees rests principally on their employer. In the instant case
petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations
and its improved production. It rationalizes that while the old work schedule included a 30-minute paid lunch
break, the employees could be called upon to do jobs during that period as they were “on call.” Even if
denominated as lunch break, this period could very well be considered as working time because the factory
employees were required to work if necessary and were paid accordingly for working.
With the new work schedule, the employees are now given a one-hour lunch break without any interruption
from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively
use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and
better performance in their work. Since the employees are no longer required to work during this one-hour
lunch break, there is no more need for them to be compensated for this period. The Court agrees with the
Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without
violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated
whether they are union members or not.
Philippine Airlines vs NLRC (1999) 302 SCRA 582
Facts:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical
Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at

around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was
about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo
Services.
One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio,
called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in
the evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent reached the
clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following
day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight
Surgeon to conduct an investigation. The Chief Flight Surgeon required private respondent to explain why no
disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he
immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the
clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting
for him. Finding private respondent’s explanation unacceptable, the management charged private respondent
with abandonment of post while on duty. He was given ten days to submit a written answer to the
administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that
he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In
fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency.
Issue: WON being a full-time employee is obliged to stay in the company premises for not less than eight (8)
hours.
Held: Employees are not prohibited from going out of the premises as long as they return to their posts on
time.
Articles 83 and 85 of the Labor Code read: Normal hours of work—The normal hours of work of any employee
shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours
a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require
that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an
additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For
purposes of this Article, “health personnel” shall include: resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.
Art. 85. Meal periods.—Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty
of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.—Every employer shall give his employees, regardless of sex, not less than one
(1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty
(20) minutes may be given by the employer provided that such shorter meal period is credited as compensable
hours worked of the employee;

(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable
working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company premises. Employees are not prohibited from going out
of the premises as long as they return to their posts on time. Private respondent’s act of going home to take
his dinner does not constitute abandonment.
Linton Commercial Co., vs Hellera (2007) G.R. 163147
Facts:

On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the
company's decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency
crisis that affected its business operations. Linton submitted an establishment termination report to the
Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering
the said period. The company's operation was to resume on 6 January 1998. On 7 January 1997, Linton issued
another memorandum informing them that effective 12 January 1998, it would implement a new compressed
workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation
basis for three working days only instead for six days a week. On the same day, Linton submitted an
establishment termination report concerning the rotation of its workers. Linton proceeded with the
implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers
(workers) filed a Complaint for illegal reduction of workdays.
Issue: WON there was an illegal reduction of work when Linton implemented a compressed workweek by
reducing from six to three the number of working days with the employees working on a rotation basis.
Held: The compressed workweek arrangement was unjustified and illegal.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining
when an employer can validly reduce the regular number of working days. The said bulletin states that a
reduction of the number of regular working days is valid where the arrangement is resorted to by the employer
to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the
demand for his goods or services or when there is lack of raw materials. Although the bulletin stands more as
a set of directory guidelines than a binding set of implementing rules, it has one main consideration, consistent
with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of working hours — that
the company was suffering from losses.
Certainly, management has the prerogative to come up with measures to ensure profitability or loss
minimization. However, such privilege is not absolute. Management prerogative must be exercised in good
faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before a
company can validly opt to reduce the work hours of its employees. However, to date, no definite guidelines
have yet been set to determine whether the alleged losses are sufficient to justify the reduction of work hours.
If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or
Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end up failing
to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the
employer's operation of a business or undertaking for a period not exceeding six (6) months. Records show
that Linton continued its business operations during the effectivity of the compressed workweek, which
spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of
actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial
and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably
necessary and is likely to be effective in preventing the expected losses; and (4) the alleged losses, if already
incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing
evidence. Linton failed to comply with these standards.

Bisig Manggagawa sa Tryco vs NLRC (2008) G.R. 151309

Facts:
Tryco and the petitioners signed separate Memoranda of Agreement (MOA), providing for a compressed
workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into
pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines
on the Implementation of Compressed Workweek. As provided in the MOA, 8:00a.m. to 6:12p.m., from
Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA specifically stated that the employee
waives the right to overtime pay for work rendered after 5p.m. until 6:12p.m. from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule
which also consists of 46 hours. However, should an employee be permitted or required to work beyond
6:12p.m., such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the
implementation of a compressed workweek in the company. In January 1997, BMT and Tryco negotiated for
the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new agreement.
Issue: WON the MOA providing for compressed workweek is unenforceable as it is contrary to law.
Held: The MOA is enforceable and binding against the petitioner.
Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized
as a valid and binding undertaking. Notably, the MOA complied with the following conditions set by the DOLE,
under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek
scheme:
1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall
not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement.
2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits
of the employees.
3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the
adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work
and shall be compensated in accordance with the provisions of the Labor Code or applicable CBA.
4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours
a day may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be by agreement of the
parties.
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange
of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are
written.

Union Filipro Employees vs Vivar (1992) 205 SCRA 203

Facts:
Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission a
petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid
employees for holiday pay.

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

National Sugar Refinery Corp vs NLRC (1993) 220 SCRA 452

Facts:
Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery,
namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior
Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget

Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services
Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training
Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property
Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance
Supervisor and Motorpool Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-
file to department heads which was designed to rationalized the duties and functions of all positions,
reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked
according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all
positions were re-evaluated, and all employees including the members of respondent union were granted
salary adjustments and increases in benefits commensurate to their actual duties and functions. Two years
after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent
union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday
pay allegedly in violation of Article 100 of the Labor Code.
Issue: WON the members of respondent union are entitled to overtime, rest day and holiday pay.
Held: The members of the union are not entitled to overtime, rest and holiday pay since they fall within the
classification of managerial employees which makes them a part of the exempted employees.
It must of necessity be ascertained first whether or not the union members, as supervisory employees, are to
be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82
of the Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as defined employees, as
defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: “'Managerial
employee' is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer effectively recommend such managerial actions if
the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of those above definitions are considered rank-and-file
employees of this Book."
Article 82 of the Labor Code states: “The provisions of this title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers who are paid by results as determined by the Secretary
of Labor in Appropriate regulations.”
As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision thereof, and to other officers or
members of the managerial staff.
Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if they qualify for
exemption under the condition set forth herein:
(b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are employed
or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status
of other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of
their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists
of the management of the establishment in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or
(iii) execute under general supervision special assignments and tasks;
(4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are
not directly and closely related to the performance of the work described in paragraphs (1), (2),
and above."
They are clearly officers or members of the managerial staff because they meet all the conditions prescribed
by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m)
should be made to apply only to the provisions on Labor Relations, while the right of said employees to the
questioned benefits should be considered in the light of the meaning of a managerial employee and of the
officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule
I Book III of the implementing rules.
In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and
so forth, the union members are supervisory employees. In terms of working conditions and rest periods and
entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence
they are not entitled thereto.
The union members will readily show that these supervisory employees are under the direct supervision of
their respective department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and
objectives. These supervisory employees are likewise responsible for the effective and efficient operation of
their respective departments.
More specifically, their duties and functions include, among others, the following operations whereby the
employee:
1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;
b) organizing and scheduling of work activities of the department, which
includes employee shifting scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;
d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;
2) observes, follows and implements company policies at all times and recommends disciplinary action on
erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for
their development/advancement;
5) represents the superintendent or the department when appointed and authorized by the former;
6) coordinates and communicates with other inter and intra department supervisors when necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of service and
working conditions;
9) sees to it that safety rules and regulations and procedure and are implemented and followed by all
NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and
initiates and prepares reports for any observed abnormality within the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are
properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.
From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities
which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I
Book III of the aforestated Rules to Implement the Labor Code, viz.:
(1) their primary duty consists of the performance of work directly related to management 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, The Court is constrained to agree with petitioner that the union members
should be considered as officers and members of the managerial staff and are, therefore, exempt from the
coverage of Article 82.
Salazar vs NLRC (1996) 256 SCRA 273

Facts:
On April 1990, private respondent employed petitioner as construction/project engineer for the construction
of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner
would also receive a share in the profits after completion of the project and that petitioner's services in excess

of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be compensable
overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr.
Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991.
On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor
practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay,
commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila.
Issue: WON petitioner is entitled to separation pay.
Held: The petitioner is not entitled to separation pay.
Petitioner admitted that his job was to supervise the laborers in the construction project. Hence, although
petitioner cannot strictly be classified as a managerial employee under Art. 82 of the Labor Code, and sec. 2(b),
Rule 1, Book III of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not entitled to
payment of the aforestated benefits because he falls squarely under another exempt category — "officers or
members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules:
SECTION 2. Exemption. — The provisions of this Rule shall not apply to the following persons if they
qualify for exemption under the condition set forth herein:
(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of their
employer;
(3) [i] Regularly and directly assist a proprietor or a managerial employee whose primary duty consists
of the management of the establishment in which he is employed or subdivision thereof; or
[ii] execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or
[iii] execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a work-week to activities which are
not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3)
above.
The petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is
entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime
premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the
exemptions thereto. As previously determined petitioner falls under the exemptions and therefore has no legal
claim to the said benefits. It is well and good that petitioner was compensated for his overtime services.
However, this does not translate into a right on the part of petitioner to demand additional payment when,
under the law, petitioner is clearly exempted there from.
Labor Congress of the Philippines vs NLRC (1998) G.R. 123938

Facts:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire
Food Products, which hired them on various dates. Petitioners filed against private respondents a complaint
for payment of money claims and for violation of labor standards laws They also filed a petition for direct

certification of petitioner Labor Congress of the Philippines as their bargaining representative. In an Order
dated October 24, 1990, Mediator Arbiter approved the memorandum of agreement and certified LCP "as the
sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes
of collective bargaining with respect to wages, hours of work and other terms and conditions of employment".
On November 1990, petitioners through LCP President Navarro submitted to private respondents a proposal
for collective bargaining. On January 1991, petitioners filed a complaint against private respondents for Unfair
Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting thru Harassments [sic], threats, and
interfering with the rights of employees to self-organization; Violation of the Memorandum of Agreement
dated October 23, 1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as
Wages promulgated by the Regional Wage Board; Actual, Moral and Exemplary Damages."
Issue: WON the petitioners are entitled to labor standard benefits considering they are paid by piece rate
worker.
Held: The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th month pay and
service incentive leave.
Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of
private respondents. First, as to the nature of petitioners' tasks were necessary or desirable in the usual
business of private respondents, who were engaged in the manufacture and selling of such food products;
second, petitioners worked for private respondents throughout the year, and third, the length of time that
petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece
basis," the status and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime
pay, holiday pay, service incentive leave and 13th month pay, "field personnel and other employees whose
time and performance is unsupervised by the employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the
time consumed in the performance thereof."
Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did
petitioners labor under the control of private respondents as their employer, likewise did petitioners toil
throughout the year with the fulfillment of their quota as supposed basis for compensation.
Further, in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned
as being entitled to holiday pay.
SEC. 8. Holiday pay of certain employees. —
(b) Where a covered employee is paid by results or output, such as payment on piece work, his
holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the
applicable statutory minimum wage rate.

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

Facts:

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

Facts:

The Department of Labor and Employment conducted a routine inspection in the premises of San Miguel
Corporation in Sta. Filomena, Iligan City. In the course of the inspection, it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection
result to SMC and it was received by and explained to its personnel officer Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and
4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its
employees. Hence, Director IV of DOLE Iligan District Office issued a compliance order directing SMC to
consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday
pay within thirty (30) days from the receipt of the order. SMC appealed but it was dismissed.
Issue: WON the employees are entitled with regular Muslim holiday pay.
Held: The employees are entitled to regular Muslim holiday pay.
Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083,
otherwise known as the Code of Muslim Personal Laws, which states: Official Muslim holidays. — The following
are hereby recognized as legal Muslim holidays:
(a) 'Amun Jadîd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nabî (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third
lunar month of Rabi-ul-Awwal,
(c) Lailatul Isrâ Wal Mi'râj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls
on the twenty-seventh day of the seventh lunar month of Rajab:
(d) 'Îd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) 'Îd-ul-Adhâ (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhû'l-Hijja.
Art. 170 provides the provinces and cities where officially observed. — (1) Muslim holidays shall be officially
observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan,
Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created;
(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed
in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides: Right
to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers; (b) The employer may require an
employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his
regular rate;
However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits
for Muslim holidays. The Court reminds the respondent-appellant that wages and other emoluments granted
by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on
the basis of the worker's faith or religion.

Tan vs Lagarama (2002) G.R. 151228

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

Lambo vs NLRC (1999) 317 SCRA 420

Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor
Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m.
to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless
of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought
recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay,
separation pay, 13th month pay, and attorney’s fees. After hearing, Labor Arbiter found private respondents
guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims. On appeal, the NLRC reversed
the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly
dismissed their claims except that for 13th month pay.
Issue: WON the petitioners are entitled to the minimum benefits provided by law.
Held: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners
were employees of private respondents although they were paid not on the basis of time spent on the job but
according to the quantity and the quality of work produced by them. There are two categories of employees
paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an
element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the company premises.); and (2) those whose
time and performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers
on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is done in the company premises,
while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar
plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the
first category, i.e., supervised employees.
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked
in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact
that they were paid on a piece-rate basis does not negate their status as regular employees of private
respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings,
capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of compensation and does not define the essence of
the relations. Nor does the fact that petitioners are not covered by the SSS affect the employer-employee
relationship. As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The
Arbiter applied the rule in the Mercury Drug case, according to which the recovery of back wages should be
limited to three years without qualifications or deductions. Any award in excess of three years is null and void
as to the excess. The Labor Arbiter correctly ordered private respondents to give separation pay.

R&E Transport vs Latag (2004) G.R. 155214

Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from
business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five
hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial
disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but
was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the
administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored.
On December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however
died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor
Arbiter rendered a decision in favor of Latag.
Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of quitclaims.
The Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the
document was invalid and could not bar her from demanding the benefits legally due her husband. This is not
say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights
and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the
Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement
plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall
be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader
inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th
month pay and the cash equivalent of not more than five (5) days of service incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not
entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on
the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
"boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their
benefits should be the average daily income.
Asian Transmission vs Court of Appeals (2004) 425 SCRA 478

Facts:

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

2. Maundy Thursday Movable Date
3. Good Friday Movable Date
4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)
5. Labor Day May 1
6. Independence Day June 12
7. National Heroes Day Last Sunday of August
8. Bonifacio Day November 30
9. Christmas Day December 25
10. Rizal Day December 30
The Court agrees with the voluntary arbitrator. The Voluntary Arbitrator held that Article 94 of the Labor Code
provides for holiday pay for every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day, like on April 9, 1998 when it
was Araw ng Kagitingan and at the same time was Maundy Thursday; and that that the law, as amended,

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

Facts:

Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May
1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila
and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross
income per travel, on a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was
driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a
sharp curve without giving any warning. Respondent averred that the accident happened because he was
compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four
(24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's
pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter
of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.
Issue: WON respondent is entitled to service incentive leave.
Held: The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-vis
Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:
RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all employees
except: (d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are paid in
a fixed amount for performing work irrespective of the time consumed in the performance thereof;
A careful examination of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those
employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the employer" must not be understood
as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves
as an amplification of the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis
that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence,
employees engaged on task or contract basis or paid on purely commission basis are not automatically
exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is
further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-
Clerical Commercial Employees Association 10 which states that:
As a general rule, field personnel are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days
of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering
specific service or performing specific work. If required to be at specific places at specific times, employees
including drivers cannot be said to be field personnel despite the fact that they are performing work away from
the principal office of the employee.
At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the
location where the employee regularly performs his duties but also with the fact that the employee's
performance is unsupervised by the employer. As discussed above, field personnel are those who regularly
perform their duties away from the principal place of business of the employer and whose actual hours of work
in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee
is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised by the employer. Respondent is not a field
personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of
petitioner's business. Accordingly, respondent is entitled to the grant of service incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments,
subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that
"every employee who has rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay."
Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether
continuous or broken reckoned from the date the employee started working, including authorized absences
and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said period shall be considered as
one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In
other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may
collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly
restrict such right.
San Miguel Corp., vs Del Rosario (2005) G.R. 168194

Facts:

Respondent was employed by petitioner as key account specialist. On March 9, 2001, petitioner informed
respondent that her probationary employment will be severed at the close of the business hours of March 12,
2001. On March 13, 2001, respondent was refused entry to petitioner's premises. On June 24, 2002,
respondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of
monetary benefits. Respondent alleged that petitioner feigned an excess in manpower because after her
dismissal, it hired new recruits and re-employed two of her batch mates. On the other hand, petitioner claimed
that respondent was a probationary employee whose services were terminated as a result of the excess
manpower that could no longer be accommodated by the company.
The Labor Arbiter declared respondent a regular employee because her employment exceeded six months and
holding that she was illegally dismissed as there was no authorized cause to terminate her employment. On
appeal to NLRC, it modified the previous decision.
Issue: WON the respondent was an employee and was illegally terminated. If so, is she entitled to monetary
benefits.
Held: Respondent was illegally dismissed and is thus entitled to monetary benefits.
In termination cases, the burden of proving the circumstances that would justify the employee's dismissal rests
with the employer. The best proof that petitioner should have presented to prove the probationary status of
respondent is her employment contract. None, having been presented, the continuous employment of
respondent as an account specialist for almost 11 months, from April 17, 2000 to March 12, 2001, means that
she was a regular employee and not a temporary reliever or a probationary employee. And while it is true that
by way of exception, the period of probationary employment may exceed six months when the parties so agree,
such as when the same is established by company policy, or when it is required by the nature of the work,
none of these exceptional circumstance were proven in the present case. Thus, respondent whose employment
exceeded six months is undoubtedly a regular employee of petitioner.
Her termination from employment must be for a just or authorized cause, otherwise, her dismissal would be
illegal. Petitioner tried to justify the dismissal of respondent under the authorized cause of redundancy. It thus
argued in the alternative that even assuming that respondent qualified for regular employment, her services
still had to be terminated because there are no more regular positions in the company. Undoubtedly, petitioner
is invoking a redundancy which allegedly resulted in the termination not only of the trainees, probationers but
also of some of its regular employees.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant
where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors,
such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service
activity previously manufactured or undertaken by the enterprise. The criteria in implementing a redundancy
are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. What further militated
against the alleged redundancy advanced by petitioner is their failure to refute respondent's assertion that
after her dismissal, it hired new recruits and re-employed two of her batch mates. The Court finds that
petitioner was not able to discharge the burden of proving that the dismissal of respondent was valid.

Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to
payment of full back wages, computed from the time her compensation was actually withheld from her on
March 13, 2001, up to her actual reinstatement. She is likewise entitled to other benefits, i.e., service incentive
leave pay and 13th month pay computed from such date also up to her actual reinstatement. Respondent is
not entitled to holiday pay because the records reveal that she is a monthly paid regular employee. Under
Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code, employees who are uniformly
paid by the month, irrespective of the number of working days therein, shall be presumed to be paid for all the
days in the month whether worked or not.
Penaranda vs Baganga Plywood Corp (2006) G.R. 159577

Facts:

Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood
Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001,
Peñaranda filed a Complaint for illegal dismissal with money claims against BPC and its general manager,
Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and
submit supporting documents.
Peñaranda alleges that he was employed by respondent Banganga on March 15, 1999 with a monthly salary of
P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. he
alleges that his services were terminated without the benefit of due process and valid grounds in accordance
with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days,
night shift differentials and finally claimed for payment of damages and attorney's fees having been forced to
litigate the present complaint.
Issue: WON Peñaranda is a regular, common employee entitled to monetary benefits under Art. 82 of the Labor
Code and is entitled to the payment of overtime pay and other monetary benefits.
Held: Petitioner is not entitled to overtime pay and other monetary benefits.
The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner
was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like
managerial employees, officers and member of the managerial staff are not entitled to the provisions of law
on labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with the following
duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of
the employer;
(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."
The petitioner’s work involves:
1. To supply the required and continuous steam to all consuming units at minimum cost.
2. To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel.
5. To train new employees for effective and safety white working.
6. Recommend parts and suppliers purchases. acEHSI

7. To recommend personnel actions such as: promotion, or disciplinary action.

8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness
limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time."
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the
managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the
operation of the machines and the performance of the workers in the engineering section. This work
necessarily required the use of discretion and independent judgment to ensure the proper functioning of the
steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was
the foreman responsible for the operation of the boiler. The term foreman implies that he was the
representative of management over the workers and the operation of the department. Petitioner's evidence
also showed that he was the supervisor of the steam plant. His classification as supervisors is further evident
from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees who were paid
on a monthly basis; the others were paid only on a daily basis.
House of Sara Lee vs Rey (2006) G.R. 149013

Facts:

The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and women, including
cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various
outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the
aforementioned merchandise. These dealers, known either as “Independent Business Managers” (IBMs) or
“Independent Group Supervisors” (IGSs), depending on whether they sell individually or through their own
group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell the same
products to their own customers at fixed prices also determined by the petitioner.
In turn, the dealers are paid “Services Fees,” or sales commissions, the amount of which depends on the volume
and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds
of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs,
counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late
remittances, the petitioner imposes a “Credit Administration Charge,” or simply, a penalty charge, on the value
of the unremitted payment.
The dealers under this system earn income through a profit margin between the discounted purchase price
they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this
margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him
or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to
strictly monitor the 38- or 52-day “rolling due date” of each of its IBMs and IGSs through the employment of
“Credit Administration Supervisors” (CAS) for each branch. The primary duty of the CAS is to strictly monitor
each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to
the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To
discharge these responsibilities, the CAS is provided with a computer equipped with control systems through
which data is readily generated. Under this organizational setup, the CAS is under the direct and immediate
supervision of the Branch Operations Manager (BOM).
Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration
Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the petitioner
as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred
to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to
the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch
was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan
City branch.
Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the
Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the
petitioner who happens to be respondent’s sister-in-law, from the 52-day limit to an “unauthorized” term of
60 days. The respondent made the instruction just before the computer data for the computation of the
Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this allegedly
unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as
the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the
52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other
IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM
Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions.

Issue: WON the respondent is entitled to 13th month pay.
Held: The award of 13th month pay must be deleted.
Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenth-month pay. However,
the NLRC and the CA are correct in refusing to award 14th and 15th month pay as well as the “monthly salary
increase of 10 percent per year for two years based on her latest salary rate.” The respondent must show that
these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the
absence of proof supporting the same. With respect to salary increases in particular, the respondent must
likewise show that she has a vested right to the same, such that her salary increases can be made a component
in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by
nature volatile and dependent on numerous variables, including the company’s fiscal situation, the employee’s
future performance on the job, or the employee’s continued stay in a position. In short, absent any proof,
there is no vested right to salary increases.
Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union – ALU (2007) G.R. 157775
Facts:

On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU
(respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file
employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its
Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees,
as provided for in the CBA.
Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance with the
CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of
pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by
12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days,
the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
Issue: WON Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA
provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission
of respondent in its Position Paper that the employees were paid all the days of the month even if not worked.
In light of such admission, petitioner's submission of its 360 divisor in the computation of employees' salaries
gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers Bank
of the Philippines v. National Labor Relations Commission. In this case, the monthly salary was fixed by
Wellington to provide for compensation for every working day of the year including the holidays specified by
law — and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is,
it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as
basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days
of the year, including regular and special holidays, as well as days when no work was done by reason of
fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not
attributable to the employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a
divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday
pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus,
the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays
(or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday
pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the
minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable
divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365
days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably,
petitioner's employees are being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply
brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of holiday pay, a

"double burden" was imposed upon petitioner because it was being made to pay twice for its employees'
holiday pay when payment thereof had already been included in the computation of their monthly salaries.
San Miguel Corp., et al., vs Layoc, Jr., et al., (2007) G.R. 149640
Facts:
Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel Corporation.
They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on
different dates until such time that they were promoted as supervising security guards. From the

commencement of their employment, the private respondents were required to punch their time cards for
purposes of determining the time they would come in and out of the company's work place. Corollary, the
private respondents were availing the benefits for overtime, holiday and night premium duty through time
card punching. However, in the early 1990's, the San Miguel Corporation embarked on a Decentralization
Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more efficient and
effective management of their respective operations.
As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation implemented on
January 1, 1993 a "no time card policy" whereby the Supervisory I and II composing of the supervising security
guards of the Beer Division were no longer required to punch their time cards. Consequently, on January 16,
1993, without prior consultation with the private respondents, the time cards were ordered confiscated and
the latter were no longer allowed to render overtime work. However, in lieu of the overtime pay and the
premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected by the "No
Time Card Policy" were given a 10% across-the-board increase on their basic pay while the supervisors who
were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from P2,000.00
to P2,500.00 a month.
Issue: Whether the circumstances in the present case constitute an exception to the rule that supervisory
employees are not entitled to overtime pay.
Held: The present case does not constitute an exception to the general rule.
Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods
shall not apply to managerial employees. The other provisions in the Title include normal hours of work (Article
83), hours worked (Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work
(Article 87), undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and
computation of additional compensation (Article 90). It is thus clear that, generally, managerial employees such
as respondents are not entitled to overtime pay for services rendered in excess of eight hours a day.
Respondents failed to show that the circumstances of the present case constitute an exception to this general
rule.
Aside from their allegations, respondents were not able to present anything to prove that petitioners were
obliged to permit respondents to render overtime work and give them the corresponding overtime pay. Even
if petitioners did not institute a "no time card policy," respondents could not demand overtime pay from
petitioners if respondents did not render overtime work. The requirement of rendering additional service
differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits
do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the
definition of benefits under Article 100 of the Labor Code.
Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195

Facts:
Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services,
Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine
Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for

a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private
respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned to
work. On February 15, 1997, the private respondent reported for his working station one and one-half
hours late. On February 17, 1997, the master of the vessel served to the private respondent an official
warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship
captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on
March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and
undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the
said dismissal notice.
On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary
claims. The private respondent alleged that he was paid only US$300.00 per month as monthly salary for
five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he
was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He further
asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union
dues.
Issue: WON respondent is entitled to overtime pay which was incorporated in his award for the unexpired
portion of the contract despite the fact that he did not render overtime work.
Held: The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the computation of his
salaries for the entire unexpired period of his contract has no factual or legal basis and the same should have
been disallowed.
Petitioner contends that there is no factual or legal basis for the inclusion of said amount because, after
respondent's repatriation, he could not have rendered any overtime work. This time, petitioner's contention is
well-taken.
The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor
Relations Commission, where the NLRC was questioned for awarding to an illegally dismissed overseas worker
fixed overtime pay equivalent to the unexpired portion of the latter's contract. In resolving the question, the
Court, citingCagampan v. National Labor Relations Commission, held that although an overseas employment
contract may guarantee the right to overtime pay, entitlement to such benefit must first be established,
otherwise the same cannot be allowed.
PNCC Skyway Traffic Management & Security Division Workers Organization vs PNCC Skyway Corp., (2010)
G.R. 171231
Facts:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor
and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly
organized and operating under and by virtue of the laws of the Philippines. They entered
into CBA. Pertinent provisions are as follows:

ARTICLE VIII VACATION LEAVE AND SICK LEAVE

Section 1. Vacation Leave.
[b]The company shall schedule the vacation leave of employees during the year taking into
consideration the request of preference of the employees.
PNCC then created a schedule of leaves for their employees. Petitioner objected to the
implementation of the said memorandum. It insisted that the individual members of the union have the right
to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was
done to avoid the monetization of their vacation leave in December 2004.
Issue: WON the PNCC has the sole discretion to schedule the vacation leaves of its employees.
Held: PNCC has the sole discretion to schedule the vacation leaves of its employees.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined
without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language,
and from that language alone. Stated differently, where the language of a written contract is clear and
unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words used should be understood in a different sense.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII,
Section 1 (b) of the CBA categorically provides that the scheduling of vacation leaves ha ll
be under the option of the employer. Thus, if the terms of a CBA are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be
strictly adhered to and respected if its ends have to be achieved, being the law between the parties. In Faculty
Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, this Court held that the CBA during
its life time binds all the parties. The provisions of the CBA must be respected since its terms and conditions
constitute the law between the parties. The parties cannot be allowed to change the terms they agreed upon
on the ground that the same are not favorable to them.
The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-
out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give
him additional salary and bounty. Accordingly, the vacation leave privilege was not intended to serve as
additional salary, but as a non-monetary benefit. To give the employees the option not to consume it with the
aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave.

Pantranco North Express vs NLRC (1996) 259 SCRA 161
Facts:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco
Employees Association-PTGWO. He continued in petitioner's employ until August 12, 1989, when he was

retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis of his retirement
was the compulsory retirement provision of the collective bargaining agreement between the petitioner and
the aforenamed union. On February 1990, private respondent filed a complaint for illegal dismissal against
petitioner with NLRC. The complaint was consolidated with two other cases of illegal dismissal having similar
facts and issues, filed by other employees, non-union members.
Issue: WON the CBA stipulation on compulsory retirement after twenty-five years of service is legal and
enforceable.
Held: The CBA stipulation is legal and enforceable.
The bone of contention in this case is the provision on compulsory retirement after 25 years of service.
Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement 8 between petitioner company
and the union states:
Section 1. The COMPANY shall formulate a retirement plan with the following main features:
(e) The COMPANY agrees to grant the retirement benefits herein provided to regular employees
who may be separated from the COMPANY for any of the following reasons:
(5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of
service to the COMPANY, whichever comes first, and the employee shall be compulsory retired
and paid the retirement benefits herein provided."
The said Code provides: Art. 287. Retirement. — Any employee may be retired upon reaching the retirement
age established in the Collective Bargaining Agreement or other applicable employment contract. In case of
retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under
existing laws and any collective bargaining or other agreement."
The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits
employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for early
retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e.,
before age 60, is considered a reward for services rendered since it enables an employee to reap the fruits of
his labor — particularly retirement benefits, whether lump-sum or otherwise — at an earlier age, when said
employee, in presumably better physical and mental condition, can enjoy them better and longer.
As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits,
usually consisting of a substantial cash windfall, can early on be put to productive and profitable uses by way
of income-generating investments, thereby affording a more significant measure of financial security and
independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of
his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early retirement provisions. And
the same cannot be considered a diminution of employment benefits.
Being a product of negotiation, the CBA between the petitioner and the union intended the provision on
compulsory retirement to be beneficial to the employees-union members, including herein private respondent.
When private respondent ratified the CBA with the union, he not only agreed to the CBA but also agreed to

conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the CBA
provision on compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law", which went into
effect on January 7, 1993. Although passed many years after the compulsory retirement of herein private
respondent, nevertheless, the said statute sheds light on the present discussion when it amended
Art. 287 of the Labor Code, to make it read as follows: Retirement. — Any employee may be retired upon
reaching the retirement age establish in the collective bargaining agreement or other applicable employment
contract.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the
said establishment may retire . . ."
The aforequoted provision makes clear the intention and spirit of the law to give employers and employees a
free hand to determine and agree upon the terms and conditions of retirement. Providing in a CBA for
compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as
the parties agree to be governed by such CBA. The law presumes that employees know what they want and
what is good for them absent any showing that fraud or intimidation was employed to secure their consent
thereto.
R&E Transport vs Latag (2004) G.R. 155214
Facts:

Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from
business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five
hundred pesos (P500.00) as a taxi driver.
Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted.
When he recovered, he reported for work in September 1998 but was no longer allowed to continue working
on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his
retirement pay pursuant to Republic Act 7641 but he was ignored.
Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of quitclaims.
There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of
contention is the number of years that he should be credited with in computing those benefits. As to the
Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document
was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all
quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits,
and look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the
Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement
plan or agreement providing for retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall
be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader
inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th
month pay and the cash equivalent of not more than five (5) days of service incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not
entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on
the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
"boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their
benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of
five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years
of service equals P105,000.
Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542

Facts:
Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices worldwide, hired
Marilyn Odchimar Gerlach as its local correspondent. On October 1983, respondent Reuters implemented a

local Retirement Benefit Plan (Plan) for its Philippine-hired employees. The Plan is funded by the company, but
an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund.
Petitioner was automatically covered by the Plan by reason of her age and length of service. However, she
opted not to contribute to the fund. She worked in Reuters Philippines up to December 23, 1983. On October
12, 1988, she was directed to return to Manila and resume her post by December 15, 1988.
Petitioner received her retirement benefits under the Plan in the amount of P79,228.04, which amount was
determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan.
The computation was based on her notional salary. However, she questioned the amount she received as well
as her entitlement to a disturbance grant, contending that her retirement benefits must be computed on the
basis of her actual salary abroad, not on her notional salary.
Issue: WON petitioner is allowed to claim for additional retirement benefits.
Held: The petitioner is not entitled to the additional retirement benefits.
There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The
second type is one set up by agreement between the employer and the employees in collective bargaining
agreements or other agreements between them. The third type is one that is voluntarily given by the employer,
expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for
retirement benefits. 28 It is this third type of retirement scheme which covers respondent's Plan.
Article 287 of the Labor Code reads:
Article 287. Retirement. —
Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements."
The first paragraph of the above provisions deals with the retirement age of an employee established in (a) a
collective bargaining agreement or (b) other applicable employment contract. The second paragraph deals with
the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing
law, (b) a collective bargaining or (c) other agreements.
Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code,
provides:
"Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to a bona fide retirement plan or
in accordance with the applicable individual or collective agreement or established employer policy shall
be entitled to all the retirement benefits provided therein . "
Thus, in the instant case, respondent based petitioner's retirement benefits on its Plan and established policy,
which is in accord with the above provision. Consequently, petitioner's theory that the computation of her
retirement benefits should be based on her basic annual salary while stationed abroad is untenable.

The Court ruled that petitioner's retirement benefits must be based on her notional Philippine salary. It is very
clear that from the very start of her first assignment overseas, respondent apprised her that the company's
contribution to the Plan is based on her notional Philippine salary.
In fact, under the Plan, the company's contribution to the fund is 10% of the basic monthly salary of each
participant. Respondent also informed petitioner of the amount of her notional Philippine salary whenever she
was transferred to her next overseas assignment or when there were increases in her salary, both actual and
notional. Significantly, respondent was able to prove that it has been its practice worldwide that the notional
salary of an employee is its basis in computing its contribution to the retirement plan for a local employee
detailed abroad. It follows that the amount of retirement benefits of a retiring employee assigned abroad is
based on his notional salary.
Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561
Facts:

The case stems from the collective bargaining agreement between Honda and the respondent union that it
granted the computation of 14th month pay as the same as 13th month pay. Honda continues the practice of
granting financial assistance covered every December each year of not less than 100% of the basic salary. In
the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union
filed a notice of strike on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking
employees were ordered to return to work and management to accept them back under the same terms prior
to the strike staged. Honda issued a memorandum of the new computation of the 13th month and 14th month
pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for
purpose of computing the said benefits. The amount equivalent to ½ of the employees’ basic salary shall be
deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda
shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary
arbitration where it ruled that the company’s implementation of the pro-rated computation is invalid.
Issue: WON the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid
and lawful.
Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was
the first time they implemented such practice.
The payment of the 13th month pay in full month payment by Honda has become an established practice. The
length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary
act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code.
The court also rules that the withdrawal of the benefit of paying a full month salary for 13 th month pay shall
constitute a violation of Article 100 of the Labor Code.
Jaculbe vs Siliman University (2007) G.R. 156934

Facts:

Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse. In a letter
in December 1992, respondent, through its Human Resources Development Office, informed petitioner that
she was approaching her 35th year of service with the university and was due for automatic retirement on
November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement
plan for its employees which provided that its members could be automatically retired “upon reaching the age
of 65 or after 35 years of uninterrupted service to the university.” Respondent required certain documents in
connection with petitioner’s impending retirement.
A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that
the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be
allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS
pension. But respondent stood pat on its decision to retire her, citing “company policy.”
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for
“termination of service with preliminary injunction and/or restraining order.”
Issue: WON the respondent’s retirement plan imposing automatic retirement after 35 years of service
contravenes the security of tenure clause in the 1987 Constitution and the Labor Code.
Held: Retirement plans allowing employers to retire employees who are less than the compulsory retirement
age of 65 are not per se repugnant to the constitutional guaranty of security of tenure.
Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other applicable employment contract.
By its express language, the Labor Code permits employers and employees to fix the applicable retirement age
at below 60 years.
The rules and regulations of the plan show that participation therein was not voluntary at all. Rule III of the
plan, on membership, stated:
SECTION 1 – MEMBERSHIP, All full-time Filipino employees of the University will automatically become
members of the Plan, provided, however, that those who have retired from the University, even if rehired,
are no longer eligible for membership in the Plan. A member who continues to serve the University cannot
withdraw from the Plan.
SECTION 2 – EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is hired on
a full-time basis by the University.
SECTION 3 – TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon the
death of the member, resignation or termination of employee’s contract by the University, or retirement
from the University.
Meanwhile, Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of
the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff.

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

Facts:

On various dates, petitioner employed the following persons at its Cebu station: Candido C. Quiñones, Jr,
Corsini R. Lagahit, as Studio Technician, Anatolio G. Otadoy, as Collector and Noemi Amarilla, as Traffic Clerk.
On March 1986, the government sequestered the station, including its properties, funds and other assets, and
took over its management and operations from its owner, Roberto Benedicto. However, in December 1986,
the government and Benedicto entered into a temporary agreement under which the latter would retain its
management and operation. On November 1990, the Presidential Commission on Good Government (PCGG)
and Benedicto executed a Compromise Agreement, where Benedicto transferred and assigned all his rights,
shares and interests in petitioner station to the government.
In the meantime, the four employees retired from the company and received, on staggered basis, their
retirement benefits under the 1993 Collective Bargaining Agreement between petitioner and the bargaining
unit of its employees. In the meantime, a P1,500.00 salary increase was given to all employees of the company,
current and retired, effective July 1994. However, when the four retirees demanded theirs, petitioner refused
and instead informed them via a letter that their differentials would be used to offset the tax due on their
retirement benefits in accordance with the National Internal Revenue Code (NIRC).
Issue: WON the retirement benefits of respondents are part of their gross income.
Held: The retirement benefits of respondents are part of their gross income subject to taxes.
Section 28 (b) (7) (A) of the NIRC of 1986 23 provides: Gross Income. — (b) Exclusions from gross income. —
The following items shall not be included in gross income and shall be exempt from taxation under this Title:
(7) Retirement benefits, pensions, gratuities, etc. — A.) Retirement benefits received by officials and
employees of private firms whether individuals or corporate, in accordance with a reasonable private benefit
plan maintained by the employer: Provided, That the retiring official or employee has been in the service of
the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement:
Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or
employee only once. For purposes of this subsection, the term "reasonable private benefit plan" means a
pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all
of his officials or employees, where contributions are made by such employer for officials or employees, or
both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus
accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of
the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said official and
employees.
Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides: (b) Pensions,
retirements and separation pay. — Pensions, retirement and separation pay constitute compensation subject
to withholding tax, except the following: (1) Retirement benefit received by official and employees of private
firms under a reasonable private benefit plan maintained by the employer, if the following requirements are
met: (i) The retirement plan must be approved by the Bureau of Internal Revenue; (ii) The retiring official or
employees must have been in the service of the same employer for at least ten (10) years and is not less than
fifty (50) years of age at the time of retirement; and (iii) The retiring official or employee shall not have
previously availed of the privilege under the retirement benefit plan of the same or another employer.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove
the concurrence of the following elements: (1) a reasonable private benefit plan is maintained by the employer;

(2) the retiring official or employee has been in the service of the same employer for at least 10 years; (3) the
retiring official or employee is not less than 50 years of age at the time of his retirement; and (4) the benefit
had been availed of only once.
Article VIII of the 1993 CBA provides for two kinds of retirement plans - compulsory and optional. Thus: ARTICLE
VIII RETIREMENT
Section 1: Compulsory Retirement — Any employee who has reached the age of Fifty Five (55) years shall be
retired from the COMPANY and shall be paid a retirement pay in accordance with the following schedule:
LENGTH OF SERVICE RETIREMENT BENEFITS=

1 year-below 5 yrs. 15 days for every year of service
5 years-9 years 30 days for every year of service
20 years or more 80 days for every year of service
A supervisor who reached the age of Fifty (50) may at his/her option retire with the same retirement benefits
provided above.
Section 2: Optional Retirement — Any covered employee, regardless of age, who has rendered at least five (5)
years of service to the COMPANY may voluntarily retire and the COMPANY agrees to pay Long Service Pay to
said covered employee in accordance with the following schedule:
LENGTH OF SERVICE RETIREMENT BENEFITS

5-9 years 15 days for every year of service
20 years or more 60 days for every year of service
Section 3: Fraction of a Year — In computing the retirement under Section 1 and 2 of this Article, a fraction of
at least six (6) months shall be considered as one whole year. Moreover, the COMPANY may exercise the option
of extending the employment of an employee.
Section 4: Severance of Employment Due to Illness — When a supervisor suffers from disease and/or
permanent disability and her/his continued employment is prohibited by law or prejudicial to her/his health of
the health of his co-employees, the COMPANY shall not terminate the employment of the subject supervisor
unless there is a certification by a competent public health authority that the disease is of such a nature or at
such stage that it can not be cured within a period of six (6) months even with proper medical treatment. The
supervisor may be separated upon payment by the COMPANY of separation pay pursuant to law, unless the
supervisor falls within the purview of either Sections 1 or 2 hereof. In which case, the retirement benefits
indicated therein shall apply, whichever is higher.
Section 5: Loyalty Recognition — The COMPANY shall recognize the services of the supervisor/director who
have reached the following number of years upon retirement by granting him/her a plaque of appreciation and
any lasting gift: 10 years but below 15 years (P3,000.00) worth; 15 years but below 20 year (P7,000.00) worth;
20 years and more (P10,000.00) worth.

Respondents were qualified to retire optionally from their employment with petitioner. there is no record that
the 1993 CBA had been approved or was ever presented to the BIR. Hence, the retirement benefits of
respondents are taxable.
Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxes on said benefits and
remit the same to the BIR. Section 80. Liability for Tax. — (A) Employer. — The employer shall be liable for the
withholding and remittance of the correct amount of tax required to be deducted and withheld under this
Chapter. If the employer fails to withhold and remit the correct amount of tax as required to be withheld under
the provision of this Chapter, such tax shall be collected from the employer together with the penalties or
additions to the tax otherwise applicable in respect to such failure to withhold and remit.

Reyes vs NLRC (2007) G.R. 160233

Facts:
Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12,
1977. He was eventually appointed as unit manager of Sales Department-South Mindanao District, a position
he held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation
of his separation pay. Insisting that his retirement benefits and 13th month pay must be based on the average
monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly
commission, petitioner refused to accept the check issued by private respondent in the amount of P200,322.21.
Instead, he filed a complaint before the arbitration branch of the NLRC for retirement benefits, 13th month
pay, tax refund, earned sick and vacation leaves, financial assistance, service incentive leave pay, damages and
attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators,
Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned by salesmen
form part of their basic salary. Private respondent counters that petitioner knew that the overriding
commission is not included in the basic salary because it had not been considered as such for a long time in the
computation of the 13th month pay, leave commissions, absences and tardiness.
Issue: WON the average monthly sales commission should be included in the computation of his retirement
benefits and 13th month pay.
Held: Average monthly sales commission should not be included in the computation of his retirement benefits
and 13th month pay.
This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-determined
percentage of the selling price of the goods sold by each salesman, were properly included in the term basic
salary for purposes of computing the 13th month pay. The salesmen's commission are not overtime payments,
nor profit-sharing payments nor any other fringe benefit but a portion of the salary structure which represents
an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-
Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term
basic salary because these were paid to the medical representatives and rank-and-file employees as
productivity bonuses, which are generally tied to the productivity, or capacity for revenue production, of a
corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or necessary
relation to the amount of work actually done by each individual employee. Further, commissions paid by the
Boie-Takeda Company to its medical representatives could not have been sales commissions in the same sense
that Philippine Duplicators paid the salesmen their sales commissions. Medical representatives are not
salesmen; they do not effect any sale of any article at all.
In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or
conditions for its payment, which indubitably are factual in nature for they will require a re-examination and
calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computation of his retirement
benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as amended by Republic
Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. — Any employee may
be retired upon reaching the retirement age established in the collective bargaining agreement or other
applicable employment contract… In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more,
but not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served
at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent
to at least one half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year. Unless the parties provide for broader inclusions, the term one half (1/2) month
salary shall mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his
retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of
profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when these earnings
and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing statements, they are
properly excluded in computing retirement pay. However, sales commissions which are effectively an integral
portion of the basic salary structure of an employee, shall be included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his
position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions"
paid to him by Universal Robina Corp. could not have been 'sales commissions' in the same sense that
Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect
any sale of article at all. Therefore, any commission which they receive is certainly not the basic salary which
measures the standard or amount of work of complainant as Unit Manager. Accordingly, the additional
payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-
sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox
Corporation, which pronounced that commissions are additional pay that does not form part of the basic salary,
applies to the present case. Aside from the fact that as unit manager petitioner did not enter into actual sale
transactions, but merely supervised the salesmen under his control, the disputed commissions were not
regularly received by him. Only when the salesmen were able to collect from the sale transactions can
petitioner receive the commissions. Conversely, if no collections were made by the salesmen, then petitioner
would receive no commissions at all. In fine, the commissions which petitioner received were not part of his
salary structure but were profit-sharing payments and had no clear, direct or necessary relation to the amount
of work he actually performed. The collection made by the salesmen from the sale transactions was the profit
of private respondent from which petitioner had a share in the form of a commission.

Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225
Facts:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against Colegio de San
Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. The
Labor Arbiter (LA) handling the consolidated cases, denied and dismissed the respective complaints.
Issue: WON the pay of the faculty members for teaching overloads should be included as basis in the
computation of their 13th month pay?
Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are deemed not part of
the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of Instruction No. 174; b)
profit sharing payments; c) all allowances and monetary benefits which are not considered or integrated as
part of the regular basic salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor
Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary
and in the computation of the 13th-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary
includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on
rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not
part of the basic salary and shall not be considered in the computation of the 13th-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional compensation other
than and added to the regular wage or basic salary, for reason of which such is categorically excluded from the
definition of basic salary under the Supplementary Rules and Regulations Implementing PD 851.
In the same manner that payment for overtime work and work performed during special holidays is considered
as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload
pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary,
because it is being paid for additional work performed in excess of the regular teaching load.

Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R. 142399
Facts:
In 1987, petitioner PAL and respondent and PALEA entered into a CBA covering the period of 1986-1989. Part
of said agreement required PAL to pay its rank-and-file employees 13th month pay and Christmas bonus. The
13th month pay, equivalent to one month current basic pay, shall be paid in advance in May consistent with
the existing practice while the Christmas bonus, equivalent to one month current basic pay as of November
30, shall be paid in December.
In 1988, prior to the payment of the 13th month pay, PAL released a guideline stating that the only employees
eligible for payment of 13th month pay are those ground employees in the general payroll who are regular as
of April 30, 1988. Others not falling in said category shall receive their 13th month pay on or before December
24, 1988.
Respondent PALEA assailed the implementation of the said guideline on the ground that all employees of PAL,
regular or non-regular, must be paid their 13th month pay. In response thereto, PAL informed PALEA that rank-
and-file employees who were regularized after 30th of April 1988 were not entitled to the 13th month pay as
they were already given their Christmas bonuses on December 9, 1988 per the Implementing Rules of PD 851.
Issue: Whether the 13th month pay or mid-year bonus can be equated to the Christmas bonus.
Held: The 13th month pay or mid-year bonus can be equated to the Christmas bonus.
In the case under consideration, the provision for the payment of the Christmas bonus, apart from the
13th month pay, was incorporated into the 1986-1989 CBA between respondent PALEA and petitioner PAL
without any condition. The Christmas bonus, payable in December of every year, is distinguished from the
13thmonth pay, due yearly in May, for which reason it was denominated as the mid-year bonus. Such being
the case, the only logical inference that could be derived therefrom is that petitioner PAL intended to give the
members of the bargaining unit, represented by respondent PALEA, a Christmas bonus over and above its
legally mandated obligation to grant the 13th month pay.
In United CMC Textile Workers Union v. The Labor Arbiter, one of the issues passed upon by the Court was
whether or not an employer who was already paying Christmas bonus pursuant to a CBA, was still bound to
pay the 13th month pay pursuant to Presidential Decree No. 851 which provides that “ A bonus under the CBA
is an obligation created by the contract between the management and workers while the 13 th month pay is
mandated by the law”.Finding that the intention of the parties to the CBA was that the Christmas bonus was
meant to be on top of the 13th month pay, the Court ordered the employer to pay the employees both.
It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its employees 1) the 13th month
pay or the mid-year bonus, and 2) the Christmas bonus. The 13th month pay, guaranteed by Presidential
Decree No. 851, is explicitly covered or provided for as the mid-year bonus in the CBA, while the Christmas
bonus is evidently and distinctly a separate benefit. Petitioner PAL may not be allowed to brush off said
distinction, and unilaterally and arbitrarily declare that for non-regular employees, their Christmas bonus is the
same as or equivalent to the 13th month pay. As it had willfully and intentionally agreed to under the terms of
the CBA, petitioner PAL must pay its regular and non-regular employees who are members of the bargaining
unit represented by respondent PALEA their 13th month pay or mid-year bonus separately from and in addition
to their Christmas bonus.

Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal – NAFLU (2008) G.R.
170734
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union
of petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay,
bonus, and leave encashment of three union members in amounts proportional to the service they actually
rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme,
claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7)
employees who had not served for the full 12 months. According to respondent, the prorated payment violates
the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before
the National Conciliation and Mediation Board (NCMB).
Issue: WON the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service
rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of
the said benefits constitute diminution of benefits under Article 100 of the Labor Code.
Held: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued
or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of
workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of
Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily
given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated
Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th
month pay those items that were expressly excluded by the law, we held that the act which was favorable to
the employees though not conforming to law had thus ripened into a practice and could not be withdrawn,
reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the
employer’s act of including non-basic benefits in the computation of the 13th month pay was a voluntary act
and had ripened into a company practice which cannot be peremptorily withdrawn.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless of the length of service rendered. True, there
were only a total of seven employees who benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6)
years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by
merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group
head.

Universal Sugar Milling Corp., vs Caballeda (2009) G.R. 156644

Facts:
Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23, 1997 while Alejandro
Cadalin worked for URSUMCO as crane operation from 1976 up to June 15, 1997.
John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company policy on
“Compulsory Retirement.” All employees corporate-wide who attain 60 years of age on or before April 30, 1991
shall be considered retired on May 31, 1991. Subsequently, on December 9, 1992, Republic Act No. 7641 was
enacted into law and it took effect on January 7, 1993, amending Article 287 of the Labor Code.
Agripino and Alejandro having reached the age of 60, were allegedly forced to retire by URSUMCO. They both
accepted their retirement benefits. Later on, Agripino filed a complaint for illegal dismissal because his
compulsory retirement was in violation of the provisions of RA 7641 and, was in effect, a form of illegal
dismissal.
Issues: RA 7641 can be given retroactive effect; whether or not Agripino Caballeda and Alejandro Cadalin
voluntarily retired from the service.
Held:
The issue of retroactivity has long been settled in the case of Enriquez Security Services, Inc. vs. Cabotaje.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection
measure and as a curative statute that — absent a retirement plan devised by, an agreement with,
or a voluntary grant from, an employer — can respond, in part at least, to the financial well-being
of workers during their twilight years soon following their life of labor. There should be little doubt
about the fact that the law can apply to labor contracts still existing at the time the statute has
taken effect, and that its benefits can be reckoned not only from the date of the law's enactment
but retroactively to the time said employment contracts have started.
This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this Court imposed
two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for
retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the
claimant had complied with the requirements for eligibility for such retirement benefits under the statute.
When respondents were compulsorily retired from the service, RA 7641 was already in full force and effect.
The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under
the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus,
warranting the retroactive application of R.A. 7641 in this case.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former. The age of retirement is primarily determined by the existing agreement between the employer and
the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under
Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while
the set minimum age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement
age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits

accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code
which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65,
while the second is primarily determined by the collective bargaining agreement or other employment contract
or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining
agreement, other employment contract, or employer's retirement plan, an employee may optionally retire
upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years
in the establishment concerned. That prerogative is exclusively lodged in the employee.
Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Generally,
the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured
into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just
claims of employees. They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring
recovery of the full measure of a worker's rights, and the acceptance of benefits therefrom does not amount
to estoppel.
In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer
is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is
no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and
reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law. In this case, petitioners failed to establish all the
foregoing requisites.
To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from
the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his
retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement benefit. In
Becton Dickinson Phils., Inc. v. National Labor Relations Commission, we held:
There is no nexus between intelligence, or even the position which the employee held in the company when
it concerns the pressure which the employer may exert upon the free will of the employee who is asked to
sign a release and quitclaim. The employee is confronted with the same dilemma of whether signing a
release and quitclaim and accept what the company offers them, or refusing to sign and walk out without
receiving anything, may do succumb to the same pressure, being very well aware that it is going to take
quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal
battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court
understands that such a risk of not receiving anything whatsoever, coupled with the probability of not
immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough
pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money
which may be way below what he may be entitled to based on company practice and policy or by law.
Absent any convincing proof of voluntariness in the submission of the documentary requirements and the
execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same
pressure. Respondents vigorously pursued this case all the way up to the Supreme Court. Without doubt, this
is a manifestation that respondents had no intention of relinquishing their employment, wholly incompatible
to petitioners' assertion that respondents voluntarily retired. Respondents did not voluntarily retire but were
forced to retire, tantamount to illegal dismissal.

T/Sgt. Larkins vs NLRC (1995) G.R. 92432

Facts:
On August 12, 1988, private respondents filed a complaint with the Regional Arbitration Branch No. III of the
NLRC, San Fernando, Pampanga, against petitioner Larkins, a member of the United States Air Force (USAF)
assigned to oversee the dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base,

Pampanga., Lt. Col. Frankhauser, and Cunanan (the new contractor ) for illegal dismissal and underpayment of
wages. Petitioner and Lt. Col. Frankhauser failed to answer the complaint and to appear at the hearings. They,
likewise, failed to submit their position paper, which the Labor Arbiter deemed a waiver on their part to do so.
On the basis of private respondents' position paper and supporting documents, the Labor Arbiter rendered a
decision granting all the claims of private respondents. He found both Lt. Col. Frankhauser and petitioner
"guilty of illegal dismissal" and ordered them to reinstate private respondents with full back wages, or if that
is no longer possible, to pay private respondents' separation pay.
Petitioner appealed to the NLRC claiming that the Labor Arbiter never acquired jurisdiction over her person
because no summons or copies of the complaints, both original and amended, were ever served on her. In her
"Supplemental Memorandum to Memorandum of Appeal," petitioner argued that the attempts to serve her
with notices of hearing were not in accordance with the provisions of the RP-US Military Bases Agreement of
1947.
Issue: WON the questioned resolutions are null and void.

Held: No jurisdiction was ever acquired by the Labor Arbiter over the case and the person of petitioner and the
judgment rendered is null and void.
Summonses and other processes issued by Philippine courts and administrative agencies for United States
Armed Forces personnel within any U.S. base in the Philippines could be served therein only with the
permission of the Base Commander. If he withholds giving his permission, he should instead designate another
person to serve the process, and obtain the server's affidavit for filing with the appropriate court. Respondent
Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col. Frankhauser and
not the Base Commander.
Respondents do not dispute petitioner's claim that no summons was ever issued and served on her. They
contend, however, that they sent notices of the hearings to her Notices of hearing are not summonses. The
provisions and prevailing jurisprudence in Civil Procedure may be applied by analogy to NLRC proceedings
(Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the Labor Arbiter cannot acquire jurisdiction over the
person of the respondent without the latter being served with summons. In the absence of service of summons
or a valid waiver thereof, the hearings and judgment rendered by the Labor Arbiter are null and void.
Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the said
body. This, however, does not constitute a waiver of the lack of summons and a voluntary submission of her
person to the jurisdiction of the Labor Arbiter. She may have raised in her pleadings grounds other than lack of
jurisdiction, but these grounds were discussed in relation to and as a result of the issue of the lack of
jurisdiction. In effect, petitioner set forth only one issue and that is the absence of jurisdiction over her person.
If an appearance before the NLRC is precisely to question the jurisdiction of the said agency over the person of
the defendant, then this appearance is not equivalent to service of summons.
Be that as it may, on the assumption that petitioner validly waived service of summons on her, still the case
could not prosper. There is no allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner were
being sued in their personal capacities for tortious acts. However, private respondents named 3 AGS as one of
the respondents in their complaint.

Private respondents were dismissed from their employment by Lt. Col. Frankhauser acting for and in behalf of
the U.S. Government. The employer of private respondents was neither Lt. Col. Frankhauser nor petitioner.
The employer of private respondents, as found by NLRC, was the U.S. Government which, by right of sovereign
power, operated and maintained the dormitories at Clark Air Base for members of the USAF.
Indeed, assuming that jurisdiction was acquired over the United States Government and the monetary claims
of private respondents proved, such awards will have to be satisfied not by Lt. Col. Frankhauser and petitioner
in their personal capacities, but by the United States government.
UERM Memorial Medical Center vs NLRC (1997) G.R. 1104419

Facts:
Consequently, a complaint was filed by the private respondents, represented by the Federation of Free
Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage
distortion and the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54.

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

are also confident that the real property bond posted by the petitioners sufficiently protects the interests of
private respondents should they finally prevail. It is not disputed that the real property offered by petitioners
is worth P102,345,650. The judgment in favor of private respondent is only a little more than P17 million.
Philtranco Services vs NLRC (1998) G.R. 124100

Facts:
Private respondent Roberto Nieva filed a complaint for illegal dismissal and 13th month pay with the NLRC’s
National Capital Region Arbitration Branch in Manila. The case was subsequently assigned to Labor Arbiter
Cornelio L. Linsangan. On August 28, 1992, petitioner and employer Philtranco filed a position paper with
motion to dismiss, stating, among other things, that the complaint should have been lodged with the NLRC’s

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

Facts:
Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral
Home on February 6, 1995. However, there was no contract of employment executed between him and
petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed from
his employment for allegedly misappropriating P38,000.00. Petitioner on the other hand claims that private
respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin’s

Funeral Home and in January 1996, the mother of Amelita passed away, so the latter took over the
management of the business.
Amelita made some changes in the business operation and private respondent and his wife were no longer
allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that
petitioner had illegally terminated his employment. The labor arbiter rendered a decision in favor of petitioner
declaring that no employer-employee relationship existed between the parties and therefore his office had no
jurisdiction over the case.
Issue: WON the decision of the NLRC are appealable to the Court of Appeals.
Held: NLRC decisions are appealable to the Court of Appeals.
In view of the increasing number of labor disputes that find their way to the Supreme Court, the legislative
changes introduced over the years into the provisions of P.D. 442 (Labor Code of the Philippines) and B.P. 129
(Judiciary Reorganization Act of 1980) and the present state of the law where there is no provision for appeals
from the decision of the NLRC, the Court saw the need for reassessment of this procedural aspect.
The Court noted that there may have been an oversight in the course of the deliberations on R.A. 7902,
amending B.P. 129, or an imprecision in the terminology used therein as from the records, Congress had
intended to provide for judicial review of the adjudication of the NLRC in labor cases by the Supreme Court,
but there was an inaccuracy in the term used for the intended mode of review.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the SC were
eliminated, the legislative intendment was that the special civil action for certiorari was and still is the proper
vehicle for judicial review of decisions of the NLRC. The use of the word “appeal” in relation thereto and in the
instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action
for certiorari are both modes of judicial review addressed to the appellate courts. The important distinction
between them, however, and with which the Court is particularly concerned here is that the special civil action
for certiorari is within the concurrent original jurisdiction of this Court and the Court of Appeals; whereas to
indulge in the assumption that appeals by certiorari to the SC are allowed would not subserve, but would
subvert, the intention of the Congress as expressed in the sponsorship speech on Senate Bill No. 1495.
Therefore, all references in the amended Section 9 of B.P No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule
65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict
observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.
Ludo & Luym Corp., vs Saornido (2003) G.R. 140690

Facts:
On April 1992, respondent union entered into a collective bargaining agreement with LUDO which provides
certain benefits to the employees, the amount of which vary according to the length of service rendered by
the availing employee.

Thereafter, the union requested LUDO to include in its members’ period of service the time during which they
rendered arrastre services to LUDO through the CLAS when they were not yet hired as regular rank-and-file
employees so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was
submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of regularization of
the workers for resolution by the Voluntary Arbitrator.
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent employees were
engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-only
contractor of petitioner. It disposed of the case thus: WHEREFORE, in view of the foregoing, this Voluntary
Arbitrator finds the claims of the complainants meritorious and so hold that:
a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of the respondents
six (6) months from the first day of service at CLAS;
b. the said complainants, being entitled to the CBA benefits during the regular employment, are awarded
a) sick leave, b) vacation leave & c) annual wage and salary increases during such period in the amount of
FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND SIXTY ONE
CENTAVOS (P5,707,261.61) as computed in "Annex A";
c. the respondents shall pay attorney’s fees of ten (10) percent of the total award;
d. an interest of twelve (12) percent per annum or one (1) percent per month shall be imposed to the award
from the date of promulgation until fully paid if only to speed up the payment of these long over due CBA
benefits deprived of the complaining workers.
Accordingly, all separation and/or retirement benefits shall be construed from the date of regularization
aforementioned subject only to the appropriate government laws and other social legislation. In due time,
LUDO filed a motion for reconsideration, which was denied. On appeal, the Court of Appeals affirmed in toto
the decision of the Voluntary Arbitrator.
Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which were
beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine its adjudication
to those issues submitted by the parties for arbitration, which in this case is the sole issue of the date of
regularization of the workers. Hence, the award of benefits by the arbitrator was done in excess of jurisdiction.
On the matter of the benefits, respondents argue that the arbitrator is empowered to award the assailed
benefits because notwithstanding the sole issue of the date of regularization, standard companion issues on
reliefs and remedies are deemed incorporated. Otherwise, the whole arbitration process would be rendered
purely academic and the law creating it inutile.
Issue: WON a Voluntary Arbitrator can award benefits not claimed in the submission agreement.
Held: Arbitrator can award benefits not claimed in the submission agreement.

The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is clearly defined
and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise provided under this
Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases:
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates
of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary Arbitrator or
panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel policies referred to in the
immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment
shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary
Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance
Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators,
upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor
practices and bargaining deadlocks."
In construing the above provisions, we held in San Jose vs. NLRC, that the jurisdiction of the Labor Arbiter and
the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the Labor Code,
Articles 217, 261 and 262, can possibly include money claims in one form or another. Comparatively, in
Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory arbitration has been defined both as "the process of
settlement of labor disputes by a government agency which has the authority to investigate and to make an
award which is binding on all the parties, and as a mode of arbitration where the parties are compelled to
accept the resolution of their dispute through arbitration by a third party.
While a voluntary arbitrator is not part of the governmental unit or labor department’s personnel, said
arbitrator renders arbitration services provided for under labor laws. Generally, the arbitrator is expected to

decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to make a final settlement since arbitration is the final resort for
the adjudication of disputes. The succinct reasoning enunciated by the CA in support of its holding, that the
Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves
our concurrence, thus:
In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission
agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can
assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the
arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can
reasonable assume that his powers extended beyond giving a yes-or-no answer and included the power to
reinstate him with or without back pay.
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only,
in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his
authority as embracing not merely the determination of the abstract question of whether or not a performance
bonus was to be granted but also, in the affirmative case, the amount thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While the submission
agreement mentioned only the determination of the date or regularization, law and jurisprudence give the
voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for
which the law on voluntary arbitration was created - speedy labor justice. It bears stressing that the underlying
reason why this case arose is to settle, once and for all, the ultimate question of whether respondent
employees are entitled to higher benefits. To require them to file another action for payment of such benefits
would certainly undermine labor proceedings and contravene the constitutional mandate providing full
protection to labor.
Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (2006) G.R. 165910
Facts:
In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against Hanjin
and Nam Hyun Kim, the officer-in-charge of the project (herein petitioners), before the National Labor

Relations Commission (NLRC). The complainants averred that they were regular employees of Hanjin and that
they were separated from employment without any lawful or just cause.
On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428 complainants, granting separation
pay and attorney’s fees to each of them. According to the Labor Arbiter, the complainants were regular
employees of petitioner Hanjin, and their claims for underpayment, holiday pay, premium pay for holiday and
rest day, 13th month pay, and service incentive leave would be computed after sufficient data were made
available.
Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor Arbiter’s ruling on
January 28, 2000. The NLRC dismissed the complaints of 34 complainants and awarded monetary benefits to
the others.
Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct clarificatory
hearings). Petitioners appended to their motion machine copies of some of the complainants’ employment
contracts, as well as resignation letters of others who were given monetary awards in the decision, it appearing
that their names appeared twice in the list. Petitioners also submitted to the NLRC folders consisting mostly of
payrolls.
On July 20, 2001, the NLRC issued a Resolution partially granting petitioners’ motion.Unsatisfied, petitioners
filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA.
On March 18, 2004, the CA dismissed the petition and affirmed the NLRC’s ruling that the dismissed employees
(respondents) were regular employees. The CA stressed that petitioners failed to refute the claim of the
respondents that they were regular employees. Petitioners moved to reconsider the decision, which the CA
denied.
Petitioner then filed in the SC a petition for Certiorari under Rule 65 of the Revised Rules of Court, as amended,
with prayer for temporary restraining order/preliminary injunction, seeking the annulment of the Decision of
the Court of Appeals (CA) in CA-G.R. SP No. 67601 as well as the Resolution denying the motion for
reconsideration thereof.
Issue: WON petitioner’s appeal under Rule 65 of the Revised Rules of Court is proper.
Held: Petitioner’s recourse to this Court via Rule 65 of the Revised Rules of Court was inappropriate.
Section 1, Article VIII, of the Constitution provides that judicial power shall be vested in one Supreme Court
and in such other courts as may be established by law. Judicial power includes the duty of the courts of justice
to determine whether or not there has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of bench or instrumentality of the government. The Court has original jurisdiction over
petitions for certiorari, prohibitions and mandamus, and may review on appeal or certiorari as the law on the
Rules of Court may provide final judgment and orders of lower courts, and cases in which only questions of law
is involved. However, if a petition for certiorari involves the acts or omissions of a quasi-judicial agency and
unless otherwise provided by law or the Rules of Court, the petition for certiorari shall be final and is cognizable
only by the Court of Appeals. One such quasi-judicial agency is the NLRC. Inasmuch as the appellate court has
exclusive appellate jurisdiction over quasi-judicial agencies under Rule 43, petitions for review on certiorari

should be filed only with the CA, unless otherwise provided by law or the Rules. Moreover, under Rule 45, a
party appealing from judgments or final orders or resolutions of the CA, the Sandiganbayan, the Regional Trial
Court or any other court, unless authorized by law, may file with the Supreme Court a verified petition for
review on certiorari, raising only questions of law which must be distinctly set forth.
Thus, under the Constitution and the Revised Rules of Court, judicial review of the decisions or final orders of
the NLRC should be filed with the CA under Section 5 of Rule 65, on the ground that the NLRC has committed
grave abuse of discretion amounting to excess or lack of jurisdiction. The remedy of the aggrieved party from
the CA decision, in turn, shall be by petition for review on certiorari with this Court under Rule 45.
The aggrieved party is proscribed from assailing a decision or final order of the CA via Rule 65 because such
recourse is proper only if the party has no plain, speedy and adequate remedy in the course of law. In this case,
petitioners have an adequate remedy, namely, a petition for review on certiorari under Rule 45 of the Rules of
Court. It must be stressed that the remedies of appeal under Rule 45 and an original action for certiorari under
Rule 65 are mutually exclusive.
The general rule is that a cert writ will not issue where the remedy of appeal is available to the aggrieved party.
The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules
of Court are mutually exclusive and not alternative or cumulative. Hence, the special civil action for certiorari
under Rule 65 is not and cannot be a substitute for an appeal, where the latter remedy is available.
The proper recourse of the aggrieved party from a decision of the CA is a petition for review on certiorari under
Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of the recourse is one of
jurisdiction, or the act complained of was perpetrated by a quasi-judicial officer or agency with grave abuse of
discretion amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved party is a
petition for certiorari under Rule 65 of the said Rules.
Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is necessary
to draw a line between an error of judgment and an error of jurisdiction. An error of judgment is one which
the court may commit in the exercise of its jurisdiction, and which error is reviewable only by an appeal. On
the other hand, an error of jurisdiction is one where the act complained of was issued by the court, officer or
a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount
to lack or in excess of jurisdiction. This error is correctible only by the extraordinary writ of certiorari.
The supervisory jurisdiction of the court to issue a cert writ cannot be exercised in order to review the judgment
of the lower court as to its intrinsic correctness, either upon the law or the facts of the case.
The general rule is that questions or findings of facts in the lower court, board or tribunal, and the probative
weight and sufficiency of the evidence upon which the said findings were based are not reviewable by certiorari
under Rule 65 of the Revised Rules of Court. However, the sufficiency of the evidence may be inquired into in
order to determine whether jurisdictional facts were or were not proved or whether the lower court had
exceeded its jurisdiction. This exception arises out of the most important office and function of the writ - the
keeping of the lower court and tribunal within their jurisdiction. If the decision of the lower court as to the
sufficiency of the evidence to establish jurisdictional facts were not reviewable, certiorari would be of no avail
as a remedy against an assumption of jurisdiction. For the purpose of enabling the reviewing court to determine

whether jurisdictional facts were established, it may delve into and review the evidence on which such facts
were based.
Concededly, there were occasions when this Court treated a petition for certiorari under Rule 65 of the Revised
Rules of Court as one filed under Rule 45, provided the petition is filed within the prescribed period, and that
there are special circumstances alleged therein. The circumstances prevailing in the instant case do not justify
a deviation from the general rule. For one thing, the petition was filed way beyond the reglementary period
allowed under Rule 45 without any justifiable reason therefor; for another, petitioners did not proffer any
reasonable explanation which would warrant a deviation from the general rule.
As gleaned from the records, petitioners received a copy of the assailed CA decision on March 24, 2004 and
filed its motion for reconsideration on April 6, 2004. Petitioners received a copy of the Order dated October
11, 2004 denying their Motion for Reconsideration on October 20, 2004. Instead of filing a petition under Rule
45, they filed on November 23, 2004 the instant Petition for Certiorari under Rule 65.
Petitioners had until November 4, 2004 within which to file a petition for review on certiorari on pure questions
of law. However, as already stated, petitioners filed their petition in this Court only on November 23, 2004;
indubitably, the decision of the CA had by then already become final and executory, beyond the purview of
this Court to act upon.
Since the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors committed by it
in the exercise of its jurisdiction would be errors of judgment which are reviewable by timely appeal and not
by a special civil action of certiorari. If the aggrieved party fails to do so within the reglementary period, and
the decision accordingly becomes final and executory, he cannot avail himself of the writ of certiorari, his
predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a
special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65, respectively, of the 1997 Rules
of Civil Procedure. Rule 45 is clear that the decisions, final orders or resolutions of the Court of Appeals in any
case, i.e., regardless of the nature of the action or proceeding involved, may be appealed to this Court by filing
a petition for review, which would be but a continuation of the appellate process over the original case. Under
Rule 45, the reglementary period to appeal is fifteen (15) days from notice of judgment or denial of motion for
reconsideration.
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show that he has no
plain, speedy and adequate remedy in the ordinary course of law against its perceived grievance. A remedy is
considered "plain, speedy and adequate" if it will promptly relieve the petitioner from the injurious effects of
the judgment and the acts of the lower court or agency. In this case, appeal was not only available but also a
speedy and adequate remedy.
Clearly, petitioners interposed the present special civil action of certiorari under Rule 65 as an alternative to
their petition not because it is the speedy and adequate remedy but to make up for the loss of their right of an
ordinary appeal. It is elementary that the special civil action of certiorari is not and cannot be a substitute for
an appeal, where the latter remedy is available, as it was in this case. A special civil action under Rule 65 of the
Rules of Court cannot cure a party’s failure to timely file a petition for review on certiorari under Rule 45 of the
Revised Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost

remedy of an ordinary appeal, including that under Rule 45, especially if such loss or lapse was occasioned by
a party’s neglect or error in the choice of remedies. There are exceptions to this rule: (a) when public welfare
and the advancement of public policy dictates; (b) when the broader interest of justice so requires; (c) when
the writs issued are null and void; or (d) when the questioned order amounts to an oppressive exercise of
judicial authority. None of these recognized exceptions, however, is present in the case at bar. Petitioners failed
to show circumstances that would justify a deviation from the general rule as to make available a petition for
certiorari in lieu of taking an appeal.
Whether or not respondents were project employees or regular employees is a question of fact. To arrive at a
conclusion, the Court will have to delve into and weigh and calibrate the documentary and testimonial evidence
of the parties. However, the Court is proscribed from re-examining the evidence on record and weighing the
same in a petition for certiorari under Rule 65 of the Revised Rules of Court. It must be stressed that the only
issue before the Court in a petition for certiorari under Rule 65 is whether the CA committed grave abuse of
discretion amounting to excess or lack of jurisdiction in its decision. In this case, the CA aptly stated, thus:
What is before us is a petition for certiorari under Rule 65 of the Rules of Court which will lie only in cases
where a grave abuse of discretion or an act without or in excess of jurisdiction is clearly shown to have been
committed by the respondent Commission, and the Court’s jurisdiction to review decisions or resolutions of
the respondent NLRC does not include a correction of its evaluation of the evidence. Moreover, it is a
fundamental rule that the factual findings of quasi-judicial agencies like the respondent NLRC, if supported by
substantial evidence, are generally accorded not only great respect but even finality, and are binding upon this
Court, unless the petitioner is able to clearly demonstrate that respondent Commission had arbitrarily
disregarded evidence before it or had misapprehended evidence to such an extent as to compel a contrary
conclusion if such evidence had been properly appreciated, or if the findings of the Labor Arbiter and the NLRC
are contrary to each other.
Phil. Journalistic Inc., vs NLRC (2006) G.R. 166421

Facts:
In NLRC’s Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was adjudged liable in the
total amount of P6,447,008.57 for illegally dismissing 31 complainants-employees and that there was no basis
for the implementation of petitioner's retrenchment program. Thereafter, the parties executed a Compromise
Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainant-employees effective July
1, 2001 without loss of seniority rights and benefits; 17 of them who were previously retrenched were agreed

to be given full and complete payment of their respective monetary claims, while 14 others would be paid their
monetary claims minus what they received by way of separation pay.
The compromise agreement was submitted to the NLRC for approval. All the employees mentioned in the
agreement and in the NLRC Resolution affixed their signatures thereon. They likewise signed the Joint
Manifesto and Declaration of Mutual Support and Cooperation which had also been submitted for the
consideration of the labor tribunal. The NLRC forthwith issued another Resolution on July 25, 2002, which
among others declared that Thus, the compromise agreement was approved and NCMB-NCR-NS-03-087-00
was deemed closed and terminated.
In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order dated
September 16, 2002, the DOLE Secretary certified the case to the Commission for compulsory arbitration. The
case was docketed as NCMB-NCR- NS-07-251-02. In its Resolution dated July 31, 2003, the NLRC ruled that the
complainants were not illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment program
illegal did not attain finality as "it had been academically mooted by the compromise agreement entered into
between both parties on July 9, 2001."
The Union assailed the ruling of the NLRC before the CA via petition for certiorari under Rule 65. In its Decision
dated August 17, 2004, the appellate court held that the NLRC gravely abused its discretion in ruling for PJI.
The compromise agreement referred only to the award given by the NLRC to the complainants in the said case,
that is, the obligation of the employer to the complainants.
Issue: WON the petitioner’s petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure is a
proper remedy in this case.
Held: At the outset, we note that this case was brought before us via petition for certiorari under Rule 65 of
the Revised Rules of Civil Procedure. The proper remedy, however, was to file a petition under Rule 45. It must
be stressed that certiorari under Rule 65 is "a remedy narrow in scope and inflexible in character. It is not a
general utility tool in the legal workshop." Moreover, the special civil action for certiorari will lie only when a
court has acted without or in excess of jurisdiction or with grave abuse of discretion.
Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45. Such move is
in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice. As
the instant petition was filed within the prescribed fifteen-day period, and in view of the substantial issues
raised, the Court resolves to give due course to the petition and treat the same as a petition for review on
certiorari.
Balagtas Multi-Purpose Coop vs Court of Appeals (2006) G.R. 159268

Facts:
Petitioner Josefina G. Hipolito-Herrero filed a complaint with the Provincial Office of the Department of Labor
in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus against
"Balagtas Multi-Purpose Cooperative, Inc. She pray(ed) that she be reinstated and paid backwages as well as
moral damages.

The case was referred to a Labor Arbiter. When the parties failed to settle their differences, they were required
to submit their respective position papers. Trial ensued. On March 23, 1998, the Labor Arbiter rendered his
decision favoring Josefina and ordering petitioner to pay backwages and other money judgment.
Aggrieved, Balagtas appealed the decision to the National Labor Relations Commission (NLRC) but failed to
post either a cash or surety bond as required by Article 223 of the Labor Code. Instead, petitioners filed a
manifestation and motion, stating, among others, that under Republic Act No. 6938, Article 62(7) of the
Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from the
decision of the inferior court.
On July 20, 1998, the NLRC rendered the assailed order denying petitioner’s prayer and on September 28, 1998,
the LRC struck down petitioners' Motion for Reconsideration.
Petitioners then filed a petition for certiorari with the CA, alleging that the NLRC acted with grave abuse of
discretion amounting to excess or lack of jurisdiction in directing them to post an appeal bond despite the clear
mandate of Article 62, paragraph (7) of Republic Act No. 6938 (Cooperative Code) which dispensed with such
requirement.
After the parties submitted their respective pleadings, the CA resolved to dismiss the petition in the assailed
decision dated September 27, 2002 holding that the exemption from putting up a bond by a cooperative applies
to cases decided by inferior courts only.
Issue: Whether cooperatives are exempted from filing a cash or surety bond required to perfect an employer's
appeal under Section 223 of Presidential Decree No. 442 (the Labor Code).
Held: Petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code.
The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation to the
Cooperative Code in its entirety. It must be kept in mind that the enactment of the Cooperative Code is
pursuant to the State's declared policy of fostering the "creation and growth of cooperatives as a practical
vehicle for prompting self-reliance and harnessing people power towards the attainment of economic
development and social justice." Towards this end, the government has been mandated to "ensure the
provision of technical guidance, financial assistance and other services to enable said cooperatives to develop
into viable and responsive economic enterprises and thereby bring about a strong cooperative movement that
is free from any conditions that might infringe upon the autonomy or organizational integrity of cooperatives."
In line with this, certain benefits and privileges were expressly granted to cooperative entities under the
statute. The provision invoked by petitioners regarding the exemption from payment of an appeal bond is only
one among a number of such privileges which appear under the article entitled "Tax and Other Exemptions" of
the code.
Considering that the above provision relates to "tax and other exemptions," the same must be strictly
construed. This follows the well-settled principle that exceptions are to be strictly but reasonably construed;
they extend only so far as their language warrants, and all doubts should be resolved in favor of the general
provision rather than the exceptions.

An express exception, exemption, or saving clause excludes other exceptions. Express exceptions constitute
the only limitations on the operation of a statute and no other exception will be implied. The rule proceeds
from the premise that the legislative body would not have made specific enumerations in a statute, if it had
the intention not to restrict its meaning and confine its terms to those expressly mentioned. Consequently,
where a general rule is established by a statute with exceptions, the Court will not curtail the former nor add
to the latter by implication. Courts may not, in the guise of interpretation, enlarge the scope of a statute and
include therein situations not provided nor intended by the lawmakers. Statutes which are plain and specific
should be applied without attempted construction and interpretation. Thus, where a provision of law expressly
limits its application to certain transactions, it cannot be extended to other transactions by interpretation.
The term "court" has a settled meaning in this jurisdiction which cannot be reasonably interpreted as extending
to quasi-judicial bodies like the NLRC unless otherwise clearly and expressly indicated in the wording of the
statute. Simply because these tribunals or agencies exercise quasi-judicial functions does not convert them
into courts of law.
In any event, Article 119 of the Cooperative Code itself expressly embodies the legislative intention to extend
the coverage of labor statutes to cooperatives, to wit:
Art. 119. Compliance with Other Laws. (1) The Labor Code and all other labor laws shall apply to all
cooperatives.
For this reason, petitioners must comply with the requirement set forth in Article 223 of the Labor Code in
order to perfect their appeal to the NLRC. It must be pointed out that the right to appeal is not a constitutional,
natural or inherent right. It is a privilege of statutory origin and, therefore, available only if granted or provided
by statute. The law may validly provide limitations or qualifications thereto or relief to the prevailing party in
the event an appeal is interposed by the losing party.
In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against
any occurrence that would defeat or diminish recovery by the employee under the judgment if the latter is
subsequently affirmed. This is consistent with the State's constitutional mandate to afford full protection to
labor in order to forcefully and meaningfully underscore labor as a primary social and economic force.
St. Martin Funeral Homes vs NLRC (2006) G.R. 142351

Facts:
On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmark Decision in this case then
docketed as G.R. No. 130866, holding for the first time that all petitions for certiorari under Rule 65 assailing
the decisions of the NLRC should henceforth be filed with the CA, thus:
Therefore, all references in the amended section 9 of B.P. No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and refer to petitions for certiorari under Rule 65. Consequently, all such

petitions should henceforth be initially filed in the Court of Appeals in strict observance of the doctrine on the
hierarchy of courts as the appropriate forum for the relief desired.
Thus, the petition was remanded to the CA and redocketed as CA-G.R. SP No. 49183. Subsequently, the CA
rendered the assailed September 30, 1999 Decision, dismissing petitioner's appeal for lack of merit with the
finding that respondent NLRC did not commit grave abuse of discretion, in its pronouncement that the Labor
Arbiter did not make any finding on the alleged employer-employee relationship between the parties,
reasoning this way:
Actually the Labor Arbiter did not determine whether there is an employer-employee relation between the
parties because according to him, such issue should be resolved by the regular court pursuant to the ruling of
the Supreme Court in De la Salle University vs. NLRC (135 SCRA 674, 677 (1988)).
For its part, respondent NLRC, is remanding the case to the Labor Arbiter, reminded the latter that he is
authorized by the NLRC Rules to determine, in an appropriate proceeding the existence of an employer-
employee relationship.
Issue: WON the Labor Arbiter made a determination of the presence of an employer-employee relationship.
Held: At the outset, it is clear that the issue submitted for resolution is a question of fact which is proscribed
by the rule disallowing factual issues in appeal by certiorari to the Supreme Court under Rule 45. This is explicit
in Rule 45, Section 1 that petitions of this nature "shall raise only questions of law which must be distinctly set
forth." Petitioner St. Martin would like the Court to examine the pleadings and documentary evidence extant
on the records of the Labor Arbiter to determine if said official indeed made a finding on the existence of the
alleged employer-employee nexus between the parties based on the facts contained in said pleadings and
evidence. Evidently this issue is embraced by the circumscription.
Even if we would like to relax the rule and allow the examination of the documentary evidence as an exception
to the general rule, we are precluded by the abject failure of petitioner to attach to the petition important and
material portions of the records as would support the petition prescribed by Rule 45, Section 4. St. Martin asks
us to find out if the Labor Arbiter was correct in concluding that respondent Aricayos was not in its employ;
but committed the blunder of not attaching to the petition even the Decision of the Labor Arbiter sought to be
reviewed, the NLRC Decision, the position papers and memoranda of the parties filed with the Labor Arbiter,
the affidavits of petitioner's employees, and other pieces of evidence that we can consider in resolving the
factual issue on employment. Without these vital documents, petitioner cannot be given the relief prayed for.
DOLE Phils. vs Esteva (2006) G.R. 161115

Facts:
Anent the first assignment of error, petitioner argues that judicial review under Rule 65 of the revised Rules of
Civil Procedure is limited only to issues concerning want or excess or jurisdiction or grave abuse of discretion.
The special civil action for certiorari is a remedy designed to correct errors of jurisdiction and not mere errors
of judgment.
It is the contention of petitioner that the NLRC properly assumed jurisdiction over the parties and subject
matter of the instant case. The errors assigned by the respondents in their Petition for Certiorari before the

Court of Appeals do not pertain to the jurisdiction of the NLRC; they are rather errors of judgment supposedly
committed by the the NLRC, in its Resolution, dated 29 February 2000, and are thus not the proper subject of
a petition for certiorari.
Petitioner also posits that the Petition for Certiorari filed by respondents with the Court of Appeals raised
questions of fact that would necessitate a review by the appellate court of the evidence presented by the
parties before the Labor Arbiter and the NLRC, and that questions of fact are not a fit subject for a special civil
action for certiorari.
Issue: WON questions of fact are not a fit subject for a special civil action for certiorari.
Held: There is no error on the CAs part when it made anew a factual determination of the matters.
It has long been settled in the landmark case of St. Martin Funeral Home v. NLRC, that the mode for judicial
review over decisions of the NLRC is by a petition for certiorari under Rule 65 of the revised Rules of Civil
Procedure. The different modes of appeal, namely, writ of error (Rule 41), petition for review (Rules 42 and
43), and petition for review on certiorari (Rule 45), cannot be availed of because there is no provision on
appellate review of NLRC decisions in the Labor Code, as amended.
Although the same case recognizes that both the Court of Appeals and the Supreme Court have original
jurisdiction over such petitions, it has chosen to impose the strict observance of the hierarchy of courts. Hence,
a petition for certiorari of a decision or resolution of the NLRC should first be filed with the Court of Appeals;
direct resort to the Supreme Court shall not be allowed unless the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify an availment of a remedy within
and calling for the exercise by the Supreme Court of its primary jurisdiction. The rule is settled that the original
and exclusive jurisdiction of this Court to review a decision of respondent NLRC (or Executive Labor Arbiter as
in this case) in a petition for certiorari under Rule 65 does not normally include an inquiry into the correctness
of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction, are not within
the province of a special civil action for certiorari, which is merely confined to issues of jurisdiction or grave
abuse of discretion. It is thus incumbent upon petitioner to satisfactorily establish that respondent Commission
or executive labor arbiter acted capriciously and whimsically in total disregard of evidence material to or even
decisive of the controversy, in order that the extraordinary writ of certiorari will lie. By grave abuse of discretion
is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must
be shown that the discretion was exercised arbitrarily or despotically. For certiorari to lie, there must be
capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative in
accordance with centuries of both civil law and common law traditions.
The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds that the NLRC, in its assailed
decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily
disregarding evidence which is material or decisive of the controversy; and the Court of Appeals cannot make
this determination without looking into the evidence presented by the parties. Necessarily, the appellate court
can only evaluate the materiality or significance of the evidence, which is alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record.

As this Court elucidated in Garcia v. National Labor Relations Commission: In Ong v. People, we ruled that
certiorari can be properly resorted to where the factual findings complained of are not supported by the
evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus:
It has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The
cases in which certiorari will issue cannot be defined, because to do so would be to destroy its
comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show
that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending
control over inferior courts, we are to be guided by all the circumstances of each particular case "as the ends
of justice may require." So it is that the writ will be granted where necessary to prevent a substantial wrong or
to do substantial justice.
And in another case of recent vintage, we further held: In the review of an NLRC decision through a special civil
action for certiorari, resolution is confined only to issues of jurisdiction and grave abuse of discretion on the
part of the labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and
agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is constrained
to delve into factual matters where, as in the instant case, the findings of the NLRC contradict those of the
Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case and re-
examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters,
even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive
at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court
of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see
no error on its part when it made anew a factual determination of the matters and on that basis reversed the
ruling of the NLRC.
Intercontinental Broadcasting Corp., vs Panganiban (2007) G.R. 151407

Facts:
Ireneo Panganiban was employed as Assistant General Manager of the Intercontinental Broadcasting
Corporation (petitioner) from May 1986 until his preventive suspension on August 26, 1988. Respondent
resigned from his employment on September 2, 1988. On April 12, 1989, respondent filed with the Regional
Trial Court of Quezon City, Branch 93, Civil Case No. Q-89-2244 against the members of the Board of
Administrators (BOA) of petitioner alleging, among others, non-payment of his unpaid commissions.

A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction,
as respondent's claim was a labor money claim, but this was denied by the RTC per Orders dated October 19,
1990 and November 23, 1990. Thus, Santiago filed a petition for certiorari with the CA, docketed as CA-G.R. SP
No. 23821, and in a Decision dated October 29, 1991, the CA granted Santiago's petition for lack of jurisdiction
and set aside the RTC's Orders dated October 19, 1990 and November 23, 1990.
Express acknowledgment of debt by petitioners in a letter sent by Pio S. Kaimo, Jr., Audit Group Head addressed
to IBC Gen. Manager Ceferino M. Basilio (Annex A of Motion for Reconsideration) - January 21,
1993.Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned
in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation
pay, retirement benefits, unpaid commissions, and damages. From date of dismissal of CA-G.R. SP No. 23821
up to the date of express acknowledgment of debt, only a period of 1 year and 3 months has passed by.
The CA ruled that respondent's money claim had not yet prescribed, as it was interrupted in two instances:
first, by the filing of Civil Case No. Q-89-2244 by respondent with the RTC; and second, by the express
acknowledgment of the debt by petitioners.
Issue: WON respondent's claim for unpaid commissions in the amount has already prescribed.
Held: Respondent's claim had already prescribed as of September 1991.
The applicable law in this case is Article 291 of the Labor Code which provides that "all money claims arising
from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall be forever barred." The term "money
claims" covers all money claims arising from an employer-employee relation.
Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the
absence of an equivalent Labor Code provision for determining whether the said period may be interrupted,
Article 1155 of the Civil Code may be applied, to wit: ART. 1155. The prescription of actions is interrupted when
they are filed before the Court, when there is a written extrajudicial demand by the creditors, and when there
is any written acknowledgment of the debt by the debtor.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand
by the creditor, and (c) a written acknowledgment of the debt by the debtor. On this point, the Court ruled
that although the commencement of a civil action stops the running of the statute of prescription or limitations,
its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though
no action had been commenced at all.
Hence, while the filing of Civil Case No. Q-89-2244 could have interrupted the running of the three-year
prescriptive period, its consequent dismissal by the CA in CA-G.R. SP No. 23821 due to lack of jurisdiction
effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving
respondent in exactly the same position as though no civil case had been filed at all. The running of the three-
year prescriptive period not having been interrupted by the filing of Civil Case No. Q-89-2244, respondent's
cause of action had already prescribed on September 2, 1991, three years after his cessation of employment
on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay,
retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

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

Facts:
Far East hired on March 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50.
He delivered animal feeds to the company's clients. On January 26, 2000, Lebatique sought the assistance of
the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the
nonpayment of his overtime pay.
On January 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had
never been paid for overtime work since he started working for the company. He also told Alexander that

Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for
another job.
On March 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor
Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full
back wages, 13th month pay, service incentive leave pay, and overtime pay.
Issue: WON respondent is entltled to all money claims prayed for covering since he worked with the petitioner.
Held: He can only demand for the overtime pay withheld for the period within three years preceding the filing
of the complaint on March 20, 2000.
The case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of
overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without
further delay.
Note that all money claims arising from an employer-employee relationship shall be filed within three years
from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established
that the benefits being claimed have been withheld from the employee for a period longer than three years,
the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the
amount of the benefits withheld within three years before the filing of the complaint.
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive
period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of
overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only
demand for the overtime pay withheld for the period within three years preceding the filing of the complaint
on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to
compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily
time records, payroll, or other documents in management's control to determine the correct overtime pay due
Lebatique.
Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225
Facts:
Three cases were consolidated involving petitioner Letran Calamba Faculty and Employees Association and
Colegio de San Juan de Letran, Calamba, for money claims and a petition to declare the subject strike illegal
filed by respondent.
On July 28, 1999, the NLRC promulgated its Decision dismissing both appeals. Petitioner filed a Motion for
Reconsideration but the same was denied by the NLRC in its Resolution dated June 21, 2000.Petitioner then

filed a special civil action for certiorari with the CA assailing the above-mentioned NLRC Decision and
Resolution.
On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition. Petitioner filed a
Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, 2002. Citing
Agustilo v. Court of Appeals, petitioner contends that in a special civil action for certiorari brought before the
CA, the appellate court can review the factual findings and the legal conclusions of the NLRC.
Petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence, failed
to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming the
Decision of the NLRC.
Issue: WON the Court of Appeals erred in holding that the factual findings of the NLRC cannot be reviewed in
certiorari proceedings.
Held: Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable
demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of
its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence
which supports the labor tribunals' findings of fact.
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the
Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh all
over again the evidence already considered in the proceedings below. In a petition for review on certiorari, this
Court’s jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings
complained of are devoid of support in the records or are glaringly erroneous. Firm is the doctrine that this
Court is not a trier of facts, and this applies with greater force in labor cases. Findings of fact of administrative
agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only great respect but even finality. They are binding upon this
Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived
at arbitrarily or in utter disregard of the evidence on record. We find none of these exceptions in the present
case.
In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual
findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence
and there is no cogent basis to reverse the same, as in this case.
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460

Facts:
Petitioner MTO is a government owned and controlled corporation which entered into a Management and
Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the operation of the Light Rail
Transit (LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr. was sued in his official capacity as then
Undersecretary of the Department of Transportation and Communications and Chairman of the Board of
Directors of petitioner MTO.

Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for the following: (1)
illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary damages; and (4)
attorney's fees.
On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents. Petitioners appealed to
the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006, the NLRC dismissed
petitioners' appeal for non-perfection since it failed to post the required bond. Without filing a Motion for
Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition for Certiorari with the Court
of Appeals assailing the same. On 24 August 2006, the Court of Appeals issued a Resolution dismissing the
Petition.
Issue: WON petitioner can directly file the extraordinary remedy of certiorari without filing first a motion for
reconsideration with the NLRC.
Held: Petitioners' failure to file a motion for reconsideration against the assailed Resolution of the NLRC
rendered its petition for certiorari before the appellate court as fatally defective.
It must be primarily established that petitioners contravened the procedural rule for the extraordinary remedy
of certiorari. The rule is, for the writ to issue, it must be shown that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law.
The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition for
certiorari. Its purpose is to grant an opportunity for the court to correct any actual or perceived error attributed
to it by the re-examination of the legal and factual circumstances of the case. The rationale of the rule rests
upon the presumption that the court or administrative body which issued the assailed order or resolution may
amend the same, if given the chance to correct its mistake or error.
We have held that the "plain," "speedy," and "adequate remedy" referred to in Section 1, Rule 65 of the Rules
of Court is a motion for reconsideration of the questioned Order or Resolution. As we consistently held in
numerous cases, a motion for reconsideration is indispensable for it affords the NLRC an opportunity to rectify
errors or mistakes it might have committed before resort to the courts can be had.
In the case at bar, petitioners directly went to the Court of Appeals on certiorari without filing a motion for
reconsideration with the NLRC. The motion for reconsideration would have aptly furnished a plain, speedy,
and adequate remedy. As a rule, the Court of Appeals, in the exercise of its original jurisdiction, will not take
cognizance of a petition for certiorari under Rule 65, unless the lower court has been given the opportunity to
correct the error imputed to it. The Court of Appeals correctly ruled that petitioners' failure to file a motion for
reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the
appellate court as fatally defective.
We agree in the Court of Appeals' finding that petitioners' case does not fall under any of the recognized
exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue raised is purely of law; (2)
when public interest is involved; (3) in case of urgency; or when the questions raised are the same as those
that have already been squarely argued and exhaustively passed upon by the lower court. As the Court of
Appeals reasoned, the issue before the NLRC is both factual and legal at the same time, involving as it does the
requirements of the property bond for the perfection of the appeal, as well as the finding that petitioners failed

to perfect the same. Evidently, the burden is on petitioners seeking exception to the rule to show sufficient
justification for dispensing with the requirement.
Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own omission of the
filing of the required motion for reconsideration.
Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of Appeals, and
proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at the conclusion that the
NLRC did not err in denying petitioners' appeal for its failure to file a bond in accordance with the Rules of
Procedure of the NLRC.

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University of San Carlos - College of Law

Midterm Case Digests

2 Ma. Cecelia Timbal LlB – 2 Rm 402

Odango vs NLRC (2005) G.R. 147420 .......................................................................................................... 51

3 Ma. Cecelia Timbal LlB – 2 Rm 402

4 Ma. Cecelia Timbal LlB – 2 Rm 402

5 Ma. Cecelia Timbal LlB – 2 Rm 402

PASEI vs Torres (1992) G.R. 101279

6 Ma. Cecelia Timbal LlB – 2 Rm 402

San Juan de Dios Hospital vs NLRC (1997) G.R. 126383

7 Ma. Cecelia Timbal LlB – 2 Rm 402

8 Ma. Cecelia Timbal LlB – 2 Rm 402

Held: Teaching overload may not be considered part of basic salary.

Asuncion vs NLRC (2001) G.R. 129329

9 Ma. Cecelia Timbal LlB – 2 Rm 402

10 Ma. Cecelia Timbal LlB – 2 Rm 402

Singer Sewing Machine vs NLRC () 193 SCRA 271

11 Ma. Cecelia Timbal LlB – 2 Rm 402

Issue: WON there exists an employer-employee relationship between the parties.

Held: Respondents are not employees of the company.

12 Ma. Cecelia Timbal LlB – 2 Rm 402

Held: No existence of employer-employee relationship.

Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098

13 Ma. Cecelia Timbal LlB – 2 Rm 402

14 Ma. Cecelia Timbal LlB – 2 Rm 402

Ramos vs Court of Appeals () 380 SCRA 467

15 Ma. Cecelia Timbal LlB – 2 Rm 402

The family of Ramos sued them for damages.

Held: No employer-employee between the doctors and hospital.

Sonza vs ABS-CBN (2004) G.R. 138051

16 Ma. Cecelia Timbal LlB – 2 Rm 402

Issue: WON Sonza was an employee or independent contractor?

17 Ma. Cecelia Timbal LlB – 2 Rm 402

Lazaro vs Social Security Commission (2004) G.R. 138254

18 Ma. Cecelia Timbal LlB – 2 Rm 402

Issue: WON Laudato is considered employee of Royal Star Marketing?

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

19 Ma. Cecelia Timbal LlB – 2 Rm 402

Issue: WON the respondents are regular employees?

20 Ma. Cecelia Timbal LlB – 2 Rm 402

Francisco vs NLRC (2006) 500 SCRA 690

21 Ma. Cecelia Timbal LlB – 2 Rm 402

Issue: WON there was an employer-employee relationship.

Held: Petitioner is an employee of Kasei Corporation.

22 Ma. Cecelia Timbal LlB – 2 Rm 402

Nogales et al., vs Capitol Medical Center (2006) G.R. 142625

23 Ma. Cecelia Timbal LlB – 2 Rm 402

Held: CMC is vicariously liable.

24 Ma. Cecelia Timbal LlB – 2 Rm 402

Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881

25 Ma. Cecelia Timbal LlB – 2 Rm 402

Held: No employer-employee relationship exists between the parties.

Calamba Medical Center vs NLRC (2008) G.R. 176484

26 Ma. Cecelia Timbal LlB – 2 Rm 402

Held: Drs. Lanzanas are declared employee by the petitioner hospital.

27 Ma. Cecelia Timbal LlB – 2 Rm 402

Ollendorff vs Abrahamson (1918) G.R. 13228

28 Ma. Cecelia Timbal LlB – 2 Rm 402