LABOR]

[ ] Isagani Ecal vs NLRC

[ ] Rajah Humabon Hotel Inc. vs Trajano Sep 14, 1993
[ ] LMG Chemical Corp. vs Secretary of labor 356 scra 578
[ ] P.I. Manufacturing, Inc. vs P.I. Manufacturing Supervisors and Foremen Association (PIMASUFA)
Feb 4, 2008
[ ] Norkis Free and Independent Workers Union vs Norkis Trading Company, Inc. 462 scra 485
[ ] Manila Mandarin Employees Union vs NLRC Nov 19, 1996
[ ] Meycauayan College vs Drilon May 7, 1990
[ ] Mindanao Steel Corp vs Minsteel Free Workers Organization (MINFREWO-NFL) March 4, 2004
[ ] DOLE Philippines, Inc. vs Esteva Nov 30, 2006
[ ] Maternity Childrens Hospital vs. Secretary of Labor June 30, 1989
Readings:
RA 8188 Double pay
RPC Art. 299
Article 120-129 Labor Code
RA 11058 IRR 193 (Kentex)
Isagani Ecal vs NLRC
[G.R. Nos. 92777-78. March 13, 1991.]
GANCAYCO, J.:

Facts: This case traces its origin from two consolidated complaints for illegal dismissal and money claims
filed by petitioners Isagani Ecal, et al against private respondents Hi-Line Timber, Inc. and Jimmy
Matchuka, the company foreman, with the Department of Labor and Employment. Petitioners alleged that
they have been employed by Hi-Line. Private respondents, on the other hand, denied the existence of an
employer-employee relationship between the company and the petitioners claiming that the latter are under
the employ of an independent contractor, petitioner Isagani Ecal, an employee of the company until his
resignation.

Issue: Is there an employer-employee relationship between petitioners and private respondent Hi-Line
Timber, Inc. or merely an employer-independent contractor relationship between said private respondent
and petitioner Isagani Ecal with the other petitioners being mere contract workers of Ecal? In the case of
the latter, is Ecal engaged in "job" contracting or "labor-only" contracting?

Ruling: Under the provisions of Article 106, paragraphs 1 and 2, an employer who enters into a contract
with a contractor for the performance of work for the employer does not thereby establish an employer-
employee relationship between himself and the employees of the contractor. The law itself, however,
creates such a relationship when a contractor fails to pay the wages of his employees in accordance with
the Labor Code, and only for this limited purpose, i.e. to ensure that the latter will be paid the wages due
them.

Sections 8 and 9, Rule VIII, Book III of the Omnibus Rules implementing the Labor Code set forth the
distinctions between "job" contracting and "labor-only" contracting —
Sec. 8. Job contracting. — There is job contracting permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and method,
free from control and direction of his employer or principal in all matters connected with
the performance of the work except as to the results thereof, and
(2) The contractor has substantial capital or investment in the form of tools, equipments,
machineries, work premises, and other materials which are necessary in the conduct of his
business.
Sec. 9. Labor-only contracting — (a) Any person who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipments,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are
directly related to the principal business or operations of the employer in which workers
are habitually employed.

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

Applying the foregoing provisions, the Court finds petitioner Isagani Ecal to be a "labor-only" contractor,
a mere supplier of manpower to Hi-Line. Isagani Ecal was only poor laborer at the time of his resignation
on February 4, 1987 who cannot even afford to have his daughter treated for malnutrition. He resigned and
became a supplier of laborers for Hi-Line, because he saw an opportunity for him to earn more than what
he was earning while still in the payroll of the company. At the same time, he continued working for the
company as a laborer at the kiln drying section. He definitely does not have sufficient capital to invest in
tools and machineries. There is also no question that the task performed by petitioners is directly related to
the business of Hi-Line. Petitioners were assigned to sort out the lumber materials whether wet or fresh kiln
as to sizes and to carry them from the stockpile to the dryer where they are loaded for drying after which
they are unloaded. The work of petitioners is an integral part of the operation of the sawmill of Hi-Line
without which production and company sales will suffer.

A finding that Isagani Ecal is a "labor-only" contractor is equivalent to a finding that an employer-employee
relationship exists between the company and Ecal including the latter's "contract workers" herein
petitioners, the relationship being such as provided by the law itself.

Since petitioners perform tasks which are usually necessary or desirable in the main business of Hi-Line,
they should be deemed regular employees of the latter and as such are entitled to all the benefits and rights
appurtenant to regular employment. Being regular employees, they should have been afforded due process
prior to their dismissal. Instead they were unceremoniously dismissed. Petitioners, having been illegally
dismissed are entitled to backwages equivalent to three years without qualifications and deductions in line
with prevailing jurisprudence. Private respondent Hi-Line Timber, Inc. is hereby ordered to reinstate
petitioners to their former positions with backwages equivalent to three (3) years without deductions and
qualifications. The records of the case are remanded to the labor arbiter for determination of the unpaid
benefits due petitioners.
RAJAH HUMABON HOTEL, INC. vs. HON. CRESENCIANO TRAJANO et. al
G.R. No. 100222-23. September 14, 1993
MELO, J.:

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? To answer this will be to evaluate what will be the applicable law to
the complaint, Executive Order No. 111 or Republic Act No. 6715?

Ruling: 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.
LMG Chemical Corp. vs Secretary of labor
G.R. No. 127422 April 17, 2001
SANDOVAL-GUTIERREZ, J.:

FACTS: LMG Chemicals Corp, (petitioner) is a domestic corp engaged in the manufacture and sale of
various kinds of chemical substances, including aluminum sulfate which is essential in purifying water, and
technical grade sulfuric acid used in thermal power plants. Petitioner has three divisions, namely: the
Organic Division, Inorganic Division and the Pinamucan Bulk Carriers. There are two unions within
petitioner’s Inorganic Division. One union represents the daily paid employees and the other union
represents the monthly paid employees. Chemical Workers Union, respondent, is a duly registered labor
organization acting as the collective bargaining agent of all the daily paid employees of petitioner’s
Inorganic Division.

Sometime in December 1995, the petitioner and the respondent started negotiation for a new CBA as their
old CBA was about to expire. They were able to agree on the political provisions of the new CBA, but no
agreement was reached on the issue of wage increase. The economic issues were not also settled.
With the CBA negotiations at a deadlock (Strike…Secretary assumed jurisdiction)
Secretary of Labor and Employment granted an increase of P140 (higher than the offer of petitioner-
company of P135). Also, as to the effectivity of the new CBA…Sec held:

3. Effectivity of the new CBA

Article 253-A of the Labor Code, as amended, provides that when no new CBA is signed during a period
of six months from the expiry date of the old CBA, the retroactivity period shall be according to the
parties’ agreement, Inasmuch as the parties could not agree on this issue and since this Office has
assumed jurisdiction, then this matter now lies at the discretion of the Secretary of labor and
Employment. Thus the new Collective Bargaining Agreement which the parties will sign pursuant to this
Order shall retroact to January 1, 1996.

petitioner contends that public respondent committed grave abuse of discretion when he ordered that the
new CBA which the parties will sign shall retroact to January 1, 1996

ISSUE: Whether or not the new CBA shall retroact?

HELD: Petitioner insists that public respondent’s discretion on the issue of the date of the effectivity of the
new CBA is limited to either: (1) leaving the matter of the date of effectivity of the new CBA is limited to
either: (1) leaving the matter of the date of effectivity of the new CBA to the agreement of the parties or (2)
ordering that the terms of the new CBA be prospectively applied.
It must be emphasized that respondent Secretary assumed jurisdiction over the dispute because it is
impressed with national interest. As noted by the Secretary, “the petitioner corp was then supplying the
sulfate requirements of MWSS as well as the sulfuric acid of NAPOCOR, and consequently, the
continuation of the strike would seriously affect the water supply of Metro Manila and the power supply of
the Luzon Grid.” Such authority of the Secretary to assume jurisdiction carries with it the power to
determine the retroactivity of the parties’ CBA.
It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and controversies arising
therefrom. The power is plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the primary dispute.
This Court held in St. Luke’s Medical Center, Inc. vs. Torres:
Therefore in the absence of the specific provision of law prohibiting retroactivity of the effectivity of
the arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code,
such as herein involved, public respondent is deemed vested with plenary powers to determine the
effectivity thereof.”
PETITION DENIED.
P.I. Manufacturing, Inc. vs P.I. Manufacturing Supervisors and Foremen Association (PIMASUFA)
[G.R. NO. 167217 : February 4, 2008]
SANDOVAL-GUTIERREZ, J.:

FACTS: Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in the manufacture
and sale of household appliances. Respondent P.I. Manufacturing Supervisors and Foremen Association
(PIMASUFA) is an organization of petitioner’s supervisors and foremen, joined in this case by its
federation, the National Labor Union (NLU).

December 10, 1987, R.A. No. 6640 was passed providing an increase in the statutory minimum wage and
salary rates of employees and workers in the private sector, to which it is increased by P10.00 per day,
except non-agricultural workers and employees outside Metro Manila who shall receive an increase of
P11.00 per day: Provided, That those already receiving above the minimum wage up to P100.00 shall
receive an increase of P10.00 per day. Excepted from the provisions of this Act are domestic helpers and
persons employed in the personal service of another.

December 18, 1987, petitioner and respondent PIMASUFA entered into a new CBA (1987 CBA) whereby
the supervisors were granted an increase of P625.00 per month and the foremen, P475.00 per month. The
increases were made retroactive to May 12, 1987, or prior to the passage of R.A. No. 6640, and every year
thereafter until July 26, 1989.

January 26, 1989, respondents PIMASUFA and NLU filed a complaint with NLRC charging petitioner
with violation of R.A. No. 6640. Respondents attached to their complaint a numerical illustration of wage
distortion resulting from the implementation of R.A. No. 6640.

LA favored respondents ordering Petitioner to give members of respondent PIMASUFA wage increases
equivalent to 13.5% of their basic pay they were receiving prior to December 14, 1987. On appeal by
petitioner, the NLRC affirmed LA’s judgment. Petitioner filed a petition for certiorari with SCourt.
However, SC referred the petition to CA. CA affirmed the Decision of the NLRC with modification by
raising the 13.5% wage increase to 18.5%. M.R. was denied. Petitioner went to SC but it favored
respondents. Hence this MR.

ISSUES:
1. Whether the implementation of R.A. No. 6640 resulted in a wage distortion.
2. Whether such distortion was cured or remedied by the 1987 CBA.

RULING: 1. Yes. R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly defines
“wage distortion” 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.”

Otherwise stated, wage distortion means the disappearance or virtual disappearance of pay differentials
between lower and higher positions in an enterprise because of compliance with a wage order. The increase
in the wage rates by virtue of R.A. No. 6640 resulted in wage distortion or the elimination of the intentional
quantitative differences in the wage rates of the supervisor employees of petitioner.

2. Yes. Wage distortions were cured or remedied when respondent PIMASUFA entered into the 1987
CBA with petitioner after the effectivity of R.A. No. 6640. The 1987 CBA increased the monthly salaries
of the supervisors by P625.00 and the foremen, by P475.00, effective May 12, 1987. These increases re-
established and broadened the gap, not only between the supervisors and the foremen, but also between
them and the rank-and-file employees. Significantly, the 1987 CBA wage increases almost doubled that of
the P10.00 increase under R.A. No. 6640.

The P625.00/month means P24.03 increase per day for the supervisors, while
the P475.00/month means P18.26 increase per day for the foremen. Such gap as re-established by virtue
of the CBA is more than a substantial compliance with R.A. No. 6640. CA erred in not taking into account
the provisions of the CBA. The provisions of the CBA should be read in harmony with the wage orders,
whose benefits should be given only to those employees covered thereby.

To require petitioner to pay all the members of respondent PIMASUFA a wage increase of 18.5%, over and
above the negotiated wage increases provided under the 1987 CBA, is highly unfair and oppressive to the
former. It was not the intention of R.A. No. 6640 to grant an across-the-board increase in pay to all the
employees of petitioner. Only those receiving wages P100.00 and below are entitled to the P10.00 wage
increase. The apparent intention of the law is only to upgrade the salaries or wages of the employees
specified therein. Almost all of the members of respondent PIMASUFA have been receiving wage rates
above P100.00 and, therefore, not entitled to the P10.00 increase. Only 3 of them are receiving wage
rates below P100.00, thus, entitled to such increase.

TO compel employers simply to add on legislative increases in salaries or allowances without regard to
what is already being paid, would be to penalize employers who grant their workers more than the statutory
prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the
interests of labor is concerned.

It must be stressed that a CBA constitutes the law between the parties when freely and voluntarily entered
into. Iit has not been shown that respondent PIMASUFA was coerced or forced by petitioner to sign the
1987 CBA. All of its 13 officers signed the CBA with the assistance of respondent NLU. They signed it
fully aware of the passage of R.A. No. 6640. The duty to bargain requires that the parties deal with each
other with open and fair minds. Respondents cannot invoke the beneficial provisions of the 1987 CBA but
disregard the concessions it voluntary extended to petitioner. The goal of collective bargaining is the
making of agreements that will stabilize business conditions and fix fair standards of working conditions.
Respondents’ posture contravenes this goal.

WHEREFORE, we GRANT petitioner’s MR.

Norkis Free and Independent Workers Union vs Norkis Trading Company, Inc
[G.R. NO. 157098 : June 30, 2005]
PANGANIBAN, J.:

NORKIS FREE & INDEPENDENT WORKERS UNION vs. NORKIS TRADING COMPANY, INC.
G.R. No. 157098 June 30, 2005

Facts: On January 27, 1998, a Memorandum of Agreement was forged between the parties wherein
petitioner shall grant a salary increase to all regular and permanent employees Ten pesos per day increase
effective August 1, 1997; Ten pesos per day increase effective August 1, 1998. On March 10, 1998, the
RTWPB of Region VII issued Wage Order ROVII-06 which established the minimum wage of P165.00, by
mandating a wage increase of five (P5.00) pesos per day beginning April 1, 1998, thereby raising the daily
minimum wage to P160.00 and another increase of five (P5.00) pesos per day beginning October 1, 1998,
thereby raising the daily minimum wage to P165.00 per day. In accordance with the Wage Order and
Section 2, Article XII of the CBA, petitioner demanded an across-the-board increase. Respondent, however,
refused to implement the Wage Order, insisting that since it has been paying its workers the new minimum
wage of P165.00 even before the issuance of the Wage Order, it cannot be made to comply with said Wage
Order.

Issue: Whether respondent violated the CBA in its refusal to grant its employees an across-the-board
increase as a result of the passage of Wage Order No. ROVII-06.
Held: The employees are not entitled to the claimed salary increase, simply because they are not within the
coverage of the Wage Order, as they were already receiving salaries greater than the minimum wage fixed
by the Order. Concededly, there is an increase necessarily resulting from raising the minimum wage level,
but not across-the-board. Indeed, a “double burden” cannot be imposed upon an employer except by clear
provision of law. It would be unjust, therefore, to interpret Wage Order No. ROVII-06 to mean that
respondent should grant an across-the-board increase. Such interpretation of the Order is not sustained by
its text.

MANILA MANDARIN EMPLOYEES UNION VS NLRC

GR No 108556 NOVEMBER 19, 1996

NARVASA, C.J.:

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

ISSUES: Whether or not NLRC acquired jurisdiction to take cognizance of Mandarin’s appeal from Labor
Arbiter.

RULING: The Court ruled that the Commission acted correctly in accepting and acting on Mandarin’s
appeal. The employee who was authorized to receive payment was not around so the respondent was
allowed to pay docketing fee on the next business day which was February 4, 1991. In view of the
considerations and in the interest of justice was quite served when Mandarin’s appeal was given due
course despite delayed payment of fees. . . the reglamentary period confers a directory, not a
mandatory, power to dismiss an appeal…
MATERNITY CHILDREN’S HOSPITAL VS. SECRETARY OF LABOR
G.R. NO. 78909
JUNE 30 1984
Facts:
Petitioner is a semi-government hospital, managed by the Board of Directors of
the Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs.
Antera Dorado, as holdover President. The hospital derives its finances from the
club itself as well as from paying patients, averaging 130 per month. It is also
partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan
De Oro City government. Petitioner has forty-one (41) employees. Aside from
salary and living allowances, the employees are given food, but the amount spent
therefor, is deducted from their respective salaries (pp. 77-78, Rollo).
On May 23, 1986, ten (10) employees of the petitioner employed in different
capacities/positions filed a complaint with the Office of the Regional Director of
Labor and Employment, Region X, for underpayment of their salaries and
ECOLAS, which was docketed as ROX Case No. CW-71-86.
The Regional Director issued and order based on the reports of the Labor
Standard and Welfare Officers, directing payment of P723, 888.58 representing
underpayment of wages and ECOLAs to all the petitioner’s employees. Petitioner
appealed to the Minister of Labor and Employment which modified the decision
as to the period for the payment ECOLAs only. A motion for reconsideration was
filed by petitioner and was denied by the Secretary of Labor.
Issue:
Whether or not that the salaries of the petitioner including the ECOLAS included
on the labor standards prescribed by law.
Held:
Labor standards refer to the minimum requirements prescribed by existing laws,
rules, and regulations relating to wages, hours of work, cost of living allowance
and other monetary and welfare benefits, including occupational, safety, and
health standards (Section 7, Rule I, Rules on the Disposition of Labor Standards
Cases in the Regional Office, dated September 16, 1987).