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THE APPLICABLE LAWS PHIL. ASSOCIATION OF SERVICE EXPORTERS V.

TORRES 212 SCRA 298 Facts: On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong Kong, then 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 workers. Pursuant to the DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991, dated July 10, 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. On August 1, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong. Phil. Association of Service Exporters, Inc. (PASEI) 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 September 2, 1991, PASEI filed a petition to annul said DOLE and POEA circulars and to prohibit their implementation. Issues: 1. Were the circulars issued with grave abuse of discretion and/or in excess of their rule- making authority? 2. Were the circulars issued contrary to the Constitution, unreasonable, unfair and oppressive? 3. Were the requirements for publication and filing with the Office of the National Administrative Register complied with? Ruling: No. The circulars were issued within the scope of the regulatory authority of the Secretary of Labor and POEA and are a valid exercise of the police power of the executive branch of the government. The circulars did not prohibit PASEI from engaging in the recruitment and deployment of OFWs. Petitioner may still deploy other class of Filipino workers not going to Hong Kong. The suspension was temporary. Nevertheless, these administrative circulars are legally invalid, defective and unenforceable for lack of proper publication and filing in the Office of the National Administrative Register as required in Art. 2 of the Civil Code, Art. 5 of the Labor Code and Secs. 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987. SAN JUAN DE DIOS HOSPITAL VS. NLRC G.R. No. 126383; November 28, 1997 Facts Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association, sent on July 08, 1991, 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". Petitioners appealed before public respondent National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was denied; hence, this petition.

Policy Instruction No. 54 provides: To: All Concerned Subject: Working Hours and Compensation of Hospital/Clinic Personnel This issuance clarifies the enforcement policy of this Department on the working hours and compensation of personnel employed by hospitals/clinics with a bed capacity of 100 or more and those located in cities and municipalities with a population of one million or more. Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work week for hospital/clinic personnel. At the same time, the Act prohibits the diminution of the compensation of these workers who would suffer a reduction in their weekly wage by reason of the shortened workweek prescribed by the Act. In effect, RA 5901 requires that the covered hospital workers who used to work seven (7) days a week should be paid for such number of days for working only 5 days or 40 hours a week. The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of their work, and at the same time guarantee the payment to them of a full weekly wage for seven (7) days. This is quite clear in the Exemplary Note of RA 5901 which states: As compared with the other employees and laborers, these hospital and health clinic personnel are over-worked despite the fact that their duties are more delicate in nature. If we offer them better working conditions, it is believed that the "brain drain", that our country suffers nowadays as far as these personnel are concerned will be considerably lessened. The fact that these hospitals and health clinics personnel perform duties which are directly concerned with the health and lives of our people does not mean that they should work for a longer period than most employees and laborers. They are also entitled to as much rest as other workers. Making them work longer than is necessary may endanger, rather than protect the health of their patients. Besides, they are not receiving better pay than the other workers. Therefore, it is just and fair that they may be made to enjoy the privileges of equal working hours with other workers except those excepted by law. The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its spirit and intent which is to shorten the workweek of covered hospital personnel and at the same time assure them of a full weekly wage. Consistent with such spirit and intent, it is the position of the Department that personnel in subject hospital 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. All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the disposition of cases involving the personnel of covered hospitals and clinics. Issue Whether or not Policy Instruction No. 54 is valid or not. Decision NO, IT IS NOT. 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", enacted on June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the said statute has long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which explicitly provides: "All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders, decree, 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: Art. 83. Normal Hours of Work. The normal hours of work of any employee shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, 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 40hour/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. Such act the Court shall not countenance. Administrative interpretation of the law, we reiterate, 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. Furthermore, Republic Act No. 5901 reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two days off with pay. 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. 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" "for work performed in excess of forty hours a week. LETRAN CALAMBA FACULTY & EMPLOYEES ASSOCIATION VS. NLRC G.R. No. 156225; January 29, 2008 Facts On October 8, 1992, petitioner filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint against respondent for collection of various monetary claims due its members. Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending resolution of NLRC Case No. RAB-IV-10-4560-92-L, respondent filed with Regional Arbitration Branch No. IV of the NLRC a petition to declare as illegal a strike staged by petitioner in January 1994.

Arguments Petitioner: As to the inclusion of the overloads of respondent's faculty members in the computation of their 13th-month pay, under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, promulgated by the Secretary of Labor on November 16, 1987, the basic pay of an employee includes remunerations or earnings paid by his employer for services rendered, and that excluded therefrom are the cash equivalents of unused vacation and sick leave credits, overtime, premium, night differential, holiday pay and cost-of-living allowances. Since the pay for excess loads or overloads does not fall under any of the enumerated exclusions and considering that the said overloads are being performed within the normal working period of eight hours a day, it only follows that the overloads should be included in the computation of the faculty members' 13th-month pay. the opinion of the Bureau of Working Conditions of the DOLE that payment of teaching overload performed within eight hours of work a day shall be considered in the computation of the 13 th-month pay. Respondent: 1) The DOLE Order is an administrative regulation which interprets the 13 thMonth Pay Law (P.D. No. 851) and, as such, it is mandatory for the LA to apply the same to the present case. 2) Remunerations for teaching in excess of the regular load, which includes overload pay for work performed within an eight-hour work day, may not be included as part of the basic salary in the computation of the 13th-month pay unless this has been included by company practice or policy 3) Contrary to the asseveration of petitioner, prior to the issuance of the DOLE Order, the prevailing rule is to exclude excess teaching load, which is akin to overtime, in the computation of a teacher's basic salary and, ultimately, in the computation of his 13thmonth pay. Issue Whether or not the pay of faculty members for teaching overloads should be included as basis in the computation of their 13th month pay. Decision NO, IT SHOULD NOT. Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary: a) Cost-of-living allowances granted pursuant to Presidential Decree 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 December 16, 1975. Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other

remunerations are excluded as part of the basic salary and in the computation of the 13 thmonth pay. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as fringe benefits. Likewise, the catch-all exclusionary phrase all allowances and monetary benefits which are not considered or integrated as part of the basic salary shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or fringe benefits. Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13 th-month pay. While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary. The all-embracing phrase earnings and other remunerations which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, 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. If they were not so excluded, it is hard to find any earnings and other remunerations expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose. This conclusion finds strong support under the Labor Code of the Philippines. To cite a few provisions: Art. 87 Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent thereof. 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 Presidential Decree 851. In Article 93 of the same Code, paragraph c.) work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the employee. It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional compensation other than and added to the regular wage or basic salary. For similar reason it shall not be considered in the computation of the 13 th -month pay. 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. The peculiarity of an overload lies in the fact that it may be performed within the normal eight-hour working day. This is the only reason why the DOLE, in its explanatory bulletin, finds it proper to include a teacher's overload pay in the determination of his or her 13 thmonth pay. However, the DOLE loses sight of the fact that even if it is performed within the normal eight-hour working day, an overload is still an additional or extra teaching work which is performed after the regular teaching load has been completed. Hence, any pay

given as compensation for such additional work should be considered as extra and not deemed as part of the regular or basic salary. Moreover, petitioner failed to refute private respondent's contention that excess teaching load is paid by the hour, while the regular teaching load is being paid on a monthly basis; and that the assignment of overload is subject to the availability of teaching loads. This only goes to show that overload pay is not integrated with a teacher's basic salary for his or her regular teaching load. In addition, overload varies from one semester to another, as it is dependent upon the availability of extra teaching loads. As such, it is not legally feasible to consider payments for such overload as part of a teacher's regular or basic salary. Verily, overload pay may not be included as basis for determining a teacher's 13 th-month pay. Asuncion vs NLRC 362 SCRA 56

Fatcs:

Petitioner Asuncion, upon her disclosure to routine inspection made by NCR-IRDD of DOLE for violatins of the company to the Labor Standards, was dismissed by respondent Juco (companys director) on the grounds of disobedience to lawful orders and for failure to submit a reply after petitioner was charged by Juco with chronic absenteeism, habitual tardiness, wasting of companys time and etc. Petitioner filed a case for illegal termination in which the Labor Arbiter rendered judgment in her favor but NLRC reversed such judgment. She then appealed to Supreme Court under Rule 65. Issue: Whether or not petitioner is illegaly terminated. Ruling: Respondent Jucos unexplained and unjustified non-presentation of the record book which is the best evidence of the charges against petitioner casts serious doubts on his charges of absenteeism and tardiness against petitioner. Petitioner was not given an ample oppurtunity by respondent to answer the charges leveled against her. The serious doubts in the evidence on record as to the factual basis of the charges against petitioner shall be resolved in her favor in line with the policy of the Labor Code to afford protection and construe doubts in favor of labor. Petition affirmed and petitioner is entitled to reinstatement.

BASIC PRINCIPLES SINGER SEWING MACHINE VS. NLRC G.R. No. 91307; January 24, 1991 Facts On February 15, 1989, the respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of petitioner, Baguio City. Petitioner opposed the petition mainly on the ground that the union members are actually not employees but are independent contractors as evidenced by the collection agency agreement which they signed. The respondent Med-Arbiter, finding that there exists an employer-employee relationship between the union members and the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin M. Drilon affirmed it. The motion for reconsideration of the Secretary's resolution was denied. Hence, this petition in which the

Company alleges that public respondents acted in excess of jurisdiction and/or committed grave abuse of discretion. Arguments Petitioner: The Union members are not employees of the company but rather, independent contractors, as evidenced by the collection agency agreement which they signed, which provide that: A collector is designated as a collecting agent" who is to be considered at all times as an independent contractor and not employee of the Company Collection of all payments on installment accounts are to be made monthly or oftener An agent is paid his compensation for service in the form of a commission of 6% of all collections made and turned over plus a bonus on said collections An agent is required to post a cash bond of three thousand pesos (P3,000.00) to assure the faithful performance and observance of the terms and conditions under the agreement He is subject to all the terms and conditions in the agreement; (f) the agreement is effective for one year from the date of its execution and renewable on a yearly basis His services shall be terminated in case of failure to satisfy the minimum monthly collection performance required, failure to post a cash bond, or cancellation of the agreement at the instance of either party unless the agent has a pending obligation or indebtedness in favor of the Company. Thus, there being no employee-employer relationship, DOLE has no jurisdiction over the case. Respondent: 1) They "perform the most desirable and necessary activities for the continuous and effective operations of the business of the petitioner Company" (citing Article 280 of the Labor Code). 2) Under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor Code, which defines job-contracting, they cannot legally qualify as independent contractors who must be free from control of the alleged employer, who carry independent businesses and who have substantial capital or investment in the form of equipment, tools, and the like necessary in the conduct of the business. 3) Paragraph 2 of the collection agency agreement states that an agent shall utilize only receipt forms authorized and issued by the Company. 4) Paragraph 3 of the same agreement states that an agent has to submit and deliver at least once a week or as often as required a report of all collections made using report forms furnished by the Company. 5) Paragraph 4 on the monthly collection quota required by the Company is deemed as a control measure over the means by which an agent is to perform his services. Thus, there being an employee-employer relationship, DOLE has jurisdiction. Issue Whether or not an employee-employer relationship exists to confer jurisdiction with DOLE. Whether or not an employee-employer relationship exists to entitle respondents to the constitutional right to join or form a labor organization for purposes of collective bargaining. Decision I. NO, THERE DOES NOT EXIST AN EMPLOYEE-EMPLOYER RELATIONSHIP. THUS, DOLE HAS NO JURISDICTION OVER THE CASE. 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 collectors could fall under either category depending on the facts of each case. The Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is explicitly described as such but also because the provisions permit him to perform collection services for the company without being subject to the control of the latter except only as to the result of his work.

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 of collection is to be performed. The agreement itself specifically explains that receipt forms shall be used for the purpose of avoiding a co-mingling of personal funds of the agent with the money collected on behalf of the Company. Likewise, the use of standard report forms as well as the regular time within which to submit a report of collection are intended to facilitate order in office procedures. Even if the 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 the service. The monthly collection quota is a normal requirement found in similar contractual agreements and is so stipulated to encourage a collecting agent to report at least the minimum amount of proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular commission every time the quota is reached. As a requirement for thefulfillment of the contract, it is subject to agreement by both parties. Hence, if the other contracting party does not accede to it, he can choose not to sign it. From the records, it is clear that the Company and each collecting agent intended that the former take control only over the amount of collection, which is a result of the job performed. Additionally, the following circumstances belie the claim of the existence of an employeeemployer relationship: 1. The collection agents are not required to observe office hours or report to Singer's office everyday except, naturally and necessarily, for the purpose of remitting their collections. 2. The collection agents do not have to devote their time exclusively for SINGER. There is no prohibition on the part of the collection agents from working elsewhere. Nor are these agents required to account for their time and submit a record of their activity. 3. The manner and method of effecting collections are left solely to the discretion of the collection agents without any interference on the part of Singer. 4. The collection agents shoulder their transportation expenses incurred in the collections of the accounts assigned to them. 5. The collection agents are paid strictly on commission basis. The amounts paid to them are based solely on the amounts of collection each of them make. They do not receive any commission if they do not effect any collection even if they put a lot of effort in collecting. They are paid commission on the basis of actual collections. 6. The commissions earned by the collection agents are directly deducted by them from the amount of collections they are able to effect. The net amount is what is then remitted to Singer." 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. This is consistent with the first rule of interpretation that the literal meaning of the stipulations in the contract controls. No such words as "to hire and employ" are present. Moreover, the agreement did not fix an amount for wages nor the required working hours. Compensation is earned only on the basis of the tangible results produced, i.e., total collections made. There is nothing in the agreement which implies control by the Company not only over the end to be achieved but also over the means and methods in achieving the end. The grounds specified in the contract for termination of the relationship do not support the view that control exists "for the causes of termination thus specified have no relation to the means and methods of work that are ordinarily required of or imposed upon employees." Moreover, respondent does his work "more or less at his own pleasure" without a regular daily time frame imposed on him. We are convinced from the facts that the work of respondents more nearly approximates that of an independent contractor than that of an employee. The latter is paid for the labor he performs, that is, for the acts of which such labor consists the former is paid for the result thereof. Additionally, the contention that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are those who perform

activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply to this case. There is no showing that a collection agent needs tools and machineries. Moreover, the provision must be viewed in relation to Article 106 of the Labor Code which provides: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him." It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in determining whether the employer is solidarily liable to the employees of an alleged contractor and/or sub-contractor for unpaid wages in case it is proven that there is a jobcontracting situation. II. AS NO EMPLOYEE-EMPLOYER RELATIONSHIP EXISTS, RESPONDENTS ARE NOT ENTITLED TO THE CONSTITUTIONAL RIGHT TO JOIN OR FORM A LABOR ORGANIZATION FOR PURPOSES OF COLLECTIVE BARGAINING. THUS, THE ISSUANCE OF DIRECT CERTIFICATION HAS NO CONSTITUTIONAL AND LEGAL BASIS. The question of whether employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmen's compensation, social security, medicare, termination pay and labor relations law. It is important in the determination of who shall be included in a proposed bargaining unit because, it is the sine qua non, the fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for certification election as well as to vote therein. MANILA GOLF CLUB VS. IAC G.R. No. 64948; September 27, 1994 Facts A petition was filed with the Social Security Commission by 17 persons who styled themselves as Caddies of Manila Golf and Country Club PTCCEA for coverage and availment of benefits under the Social Security Act, as amended, PTCCEA being the acronym of a labor organization with which petitioners claim to be affiliated.

The petition alleged that although the petitioners were employees of said Club, a domestic corporation, the latter had not registered them as such with the Social Security System. Arguments Petitioner: 1) Respondents, 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 2) As such caddies, the respondents were not subject to the direction and control of the Club as regards the manner in which they performed their work Thus, they are not the Clubs employees. Respondent: The club promulgates rules and regulations on the assignment, deportment, and conduct of caddies, and suggests the rate of fees payable by the players to the caddies. Thus, they are the Clubs employees. Issue Whether or not persons rendering caddying services for members in golf clubs and their guests in said clubs courses or premises are the employees of such clubs, thus within the compulsory coverage of the SSS. Decision NO, THEY ARE NOT. The list detailing the various matters of conduct, dress, language, etc. covered by the petitioner's regulations, does not so circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufference but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment. The fact that petitioner 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 that the intendment of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess. The group rotation system, 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. Petitioner 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.

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In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not required to render a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute because a player is at liberty to choose a caddy of his preference regardless of the caddy's order in the rotation. ENCYCLOPEDIA BRITANICA VS. NLRC G.R. No. 87098; November 4, 1996 Facts Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner and was in charge of selling petitioners products through some sales representatives. As compensation, private respondent received commissions from the products sold by his agents. He was also allowed to use petitioners name, goodwill and logo. It was, however, agreed upon that office expenses would be deducted from private respondents commissions. Petitioner would also be informed about appointments, promotions, and transfers of employees in private respondents district. On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business. Then on October 30, 1975, he filed a complaint against petitioner with the Department of Labor and Employment, claiming for non-payment of separation pay and other benefits, and also illegal deduction from his sales commissions. Arguments Petitioner: 1) Respondent was not its employee but an independent dealer authorized to promote and sell its products and in return, received commissions therefrom. 2) Respondent did not have any salary and his income from the petitioner company was dependent on the volume of sales accomplished. 3) Respondent 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. 4) It had no control and supervision over the complainant as to the manner and means he conducted his business operations. The latter did not even report to the office of the petitioner and did not observe fixed office hours. Thus, there was no employer-employee relationship. Respondent: 1) He was hired by the petitioner in July 1970, was assigned in the sales department, and was earning an average of P4,000.00 monthly as his sales commission. 2) He was under the supervision of the petitioners officials who issued to him and his other personnel, memoranda, guidelines on company policies, instructions and other orders. 3) He was dismissed by petitioner when the Laurel-Langley Agreement expired. As a result thereof, in accordance with the established company practice and the provisions of the collective bargaining agreement, he was entitled to termination pay equivalent to one month salary, the unpaid benefits (Christmas bonus, midyear bonus, clothing allowance, vacation leave, and sick leave), and the amounts illegally deducted from his commissions which were then used for the payments of office supplies, office space, and overhead expenses. Issue Whether or not there exists an employee-employer relationship between petitioner and respondent. Decision NO, THERE IS NONE. In determining the existence of an employer-employee relationship the following elements must be present: 1) selection and engagement of the employee; 2) payment of wages; 3) power of dismissal; and 4) the power to control the employees conduct. Of the above, control of employees conduct is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the

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services are performed reserves the right to control not only the end to be achieved, but also the manner and means to be used in reaching that end. The fact that petitioner issued memoranda to private respondents and to other division sales managers did not prove that petitioner had actual control over them. The different memoranda were merely guidelines on company policies which the sales managers follow and impose on their respective agents. It should be noted that in petitioners business of selling encyclopedias and books, the marketing of these products was done through dealership agreements. The sales operations were primarily conducted by independent authorized agents who did not receive regular compensations but only commissions based on the sales of the products. These independent agents hired their own sales representatives, financed their own office expenses, and maintained their own staff. Thus, there was a need for the petitioner to issue memoranda to private respondent so that the latter would be apprised of the company policies and procedures. Nevertheless, private respondent Limjoco and the other agents were free to conduct and promote their sales operations. The periodic reports to the petitioner by the agents were but necessary to update the company of the latters performance and business income. While it was true that the petitioner had fixed the prices of the products for reason of uniformity and private respondent could not alter them, the latter, nevertheless, had free rein in the means and methods for conducting the marketing operations. He selected his own personnel and the only reason why he had to notify the petitioner about such appointments was for purpose of deducting the employees salaries from his commissions. He 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. At the very least, it would indicate that petitioner has no effective control over the personal activities of Limjoco. 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. SUNLIFE G.R. No. 118086; December 15, 1997 Facts Petitioner began her career in the insurance industry in 1974 as an agent of respondent Sun Life. She signed an Agent Agreement with respondent on September 10, 1974 (retroactive to June, 1974), in virtue of which she was designated the latters agent to solicit applications for its insurance and annuity policies. 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. This contract was superseded some five years later when she signed two (2) new agreements, both dated July 1, 1979. The first, denominated Career Agents (or Unit Managers Agreement, dealt with such matters as the agents 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 the Agreement shall be construed as creating an employer-employee relationship. The second was titled, MANAGERS Supplementary Agreement. Making explicit reference to the first (Agents [the Unit Managers] Agreement) which became effective on the first 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, petitioner and respondent executed another Agreement made and effective as of January 1, 1986 by which the former was named New Business Manager with the function generally to manage a New Business Office established by respondent, to

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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. The Agreement governed such matters as the New Business Managers duties: limitations on authority; compensation; expenses; termination of relation, by among others, notice in writing with or without cause. Like the Career Agents (or Unit Managers) Agreement first signed by petitioner, 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. Sometime in November, 1989, the Manager of respondents Internal Audit Department, commenced an inquiry into the special fund availments of peititoner and other New Business Managers; this, allegedly because the Companys Vice President for Far East Asia, respondent Kemp, had been receiving reports of anomalies in relation thereto from unit managers and agents. These special fund availments are governed by the following portion of the Agreement of January 1, 1986 under the sub-head, New Business Managers Expenses, which provided for reimbursement to the New Business Manager for actual and reasonable expenses properly incurred in performing his duties as New Business Manager provided such expenses are within the guidelines issued by Sun Life from time to time and are incurred for the purposes of gaining or producing income and that they are accounted for in the manner established by Sun Life and made known to the New Business Manager. Thereafter, on January 4, 1990, and again on January 10, 1990, petitioner was confronted with and asked to explain the discrepancies set out in a report. On January 11, 1990, she was given a letter which advised of the termination of her relationship with Sun Life. Petitioner promptly instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commissions on January 16, 1990. Arguments Petitioner: Although she was not, as new business manager, required either to account for her time or perform her duties in a fixed manner, she was nonetheless an employee subject to the control and supervision of Sun Life like any other managerial employee. Respondent: No employee-employer relationship exists. Issue: Whether or not an employment relationship exists to justify the benefits sought for. Decision NO, THERE IS NONE. Her contracts/ agreement since she started as insurance agent, then as unit manager and finally as business/branch manager expressly say so. The contracts/agreements entered into by the parties herein are the laws between the said parties. Moreover, it is true that petitioners duties and functions derived from her then existing agreements/contracts were made subject to rules and regulations issued by respondent company, and for that matter, have likewise been made subject of certain limitations imposed by said respondent company. Nonetheless, these are not sufficient to accord the effect of establishing employer-employee relationship absent in this case. This is so because the insurance business is not just any other ordinary business. It is one that is imbued with public interest hence, it must be governed by rules and regulations of the state. The controls adverted to by complainant are latent in the kind of business she is into and are mainly aimed at promoting the results the parties so desire and do not necessarily create any employer-employee relationships, where the employers controls have to interfere in the methods and means by which the employee would like to employ to arrive at the desired results. Petitioner having admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so, where in spite of the controls imposed by respondents, she suffered no interference whatsoever in relation to the manner and methodology she used for her to achieve her desired results. She was never paid a fixed wage or salary but was mainly paid by commissions, depending on the level and volume of her performance/production, the number of trained agents, when taken in and assigned to her,

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being responsible for her added income as she gets a certain percentage from the said agents production as part of her commission. She could solicit insurance anywhere or at any time she deemed convenient, She never accounted for her working time, or that daily working hours were ever applicable to her situation. She gave unequivocal testimony that she performed her duties as a New Business Manager, i.e., monitoring, training, recruitment and sales, at her own time and convenience, at however she deemed convenient, and with whomsoever she chose. Although respondent issued rules and regulations to which she should conform, no showing has been made that such rules and regulations effectively and actually controlled or restricted her choice of methods in performing her duties as New Business Manager. RAMOS VS. CA G.R. No. 124354; December 29, 1999 Facts Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985, a 47-year old robust woman. Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder, she was as normal as any other woman. Because the discomforts somehow interfered with her normal ways, she sought professional advice. She was advised to undergo an operation for the removal of a stone in her gall bladder. She underwent a series of examinations which included blood and urine tests which indicated she was fit for surgery. Through the intercession of a mutual friend, she and her husband Rogelio met for the first time respondent Hozaka on June 10, 1985. They agreed that their date at the operating table at respondent DLMC would be on June 17, 1985 at 9:00 A.M.. Dr. Hosaka decided that she should undergo a "cholecystectomy" operation after examining the documents presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist. A day before the scheduled date of operation, she was admitted at one of the rooms of the DLSMC. At around 7:30 A.M. of June 17, 1985 and while still in her room, she was prepared for the operation by the hospital staff. Her sister-in-law, Herminda, was also there for moral support. Her husband, Rogelio, was also with her. At the operating room, Herminda saw about two or three nurses and respondent Gutierrez, who was to administer anesthesia. At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look for Dr. Hosaka who was not yet in. Dr. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka. Thereafter, Herminda went out of the operating room and informed the patient's husband, Rogelio, that the doctor was not yet around. At about 12:15 P.M., respondent Hozaka arrived. She then saw people inside the operating room moving, doing this and that, and preparing the patient for the operation. As she held the hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless patient. She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka approached her. She then heard Dr. Hosaka issue an order for someone to call Dr. Calderon, another anesthesiologist. After Dr. Calderon arrived at the operating room, she saw this anesthesiologist trying to intubate the patient. The patient's nailbed became bluish and the patient was placed in a trendelenburg position, a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patient's brain. Immediately thereafter, she went out of the operating room, and she told Rogelio E. Ramos that something wrong was happening. Dr. Calderon was then able to intubate the patient. At almost 3:00 P.M. of that fateful day, she saw the patient taken to the Intensive Care Unit (ICU). Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15, 1985, the patient was released from the hospital.

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Thus, on 8 January 1986, petitioners filed a civil case for damages with the Regional Trial Court of Quezon City against herein private respondents alleging negligence in the management and care of Erlinda Ramos. Arguments Petitioners: The injury sustained by the patient was due to lack of oxygen in the brain caused by the faulty management of her airway by respondents during the anesthesia phase. Respondents: The cause of the brain damage was the patients allergic reaction to the anesthetic agent, Penthotal. Hozaka: He cannot be held liable for the negligence of his surgical team. DLMC: No employee-employer relationship exists between the hospital and its consultants, thus it cannot be held solidarily liable with respondents doctors for the patients condition. Issues Whether or not respondents Gutierrez and Hozaka are liable for the condition of petitioner Ramos. Whether or not, under the employee-employer relationship, DLMC is solidarily liable with respondent doctors for the condition of petitioner Ramos. Decision I. YES, THEY ARE. With regard to respondent Gutierrez, we find her negligent in the care of the patient during the anesthesia phase as she failed to properly intubate the patient. She made no thorough assessment of the patients airway, prior to the induction of anesthesia, and no preoperative evaluation of the patient, pior to the administration of anesthesia in order to lessen the possibility of anesthetic accident, was made. She admitted that she saw the patient for the first time on the day of the operation itself. Before this fate, no prior consultations with, or pre-operative evaluation of the patient, was done by her. Until the day of the operation, respondent was unaware of the psychological and physiological makeup and needs of the patient. She was not properly informed of the possible difficulties she would face during the administration of anesthesia to the patient. Respondents act of seeing her patient for the first time only an hour before the scheduled operative procedure was, thus, an act of exceptional negligence and professional irresponsibility. With regard to respondent Hozaka, he shares equal responsibility for the events which resulted in the patients condition. As the so-called Captain of the Ship, it was his responsibility to see to it that those under him perform their task in the proper manner. He failed to exercise the proper authority in not determining if his anesthesiologist observed proper anesthesia protocols, thus he was remiss in his professional duties towards his patient. II. YES, IT IS. Hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for "consultant" slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board, evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician's performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the

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minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. 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. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioner's condition. The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the former's responsibility under a relationship of patria potestas. Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage. In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlinda's condition. SONZA VS. ABS-CBN G.R. No. 138051; June 10, 2004 Facts In May 1994, respondent signed an Agreement with the Mel and Jay Management and Development Corporation (MJMDC). Respondent was represented by its corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the services SONZA would render to ABS-CBN, and ABSCBN agreed to pay for SONZAs 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 tenth and twenty-fifth days of the month. On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, saying: We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA. As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career. We consider these acts of the station violative of the Agreement and the station as in breach thereof. In this connection, we hereby serve notice of rescission of said Agreement at our instance effective as of date. Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other benefits under said Agreement.

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On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13 th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the Agreement. Arguments Petitioner: 1) The Labor Arbiter has jurisdiction since he was an employee of respondent. 2) All essential elements of an employer-employee relationship are present in this case. 3) Respondent exercised control over the means and methods of his work, as shown by its power not to broadcast his shows, and supplying equipment and crew. 4) Respondent subjected him to its rules and standards of performance. 5) The Exclusivity Clause in the Agreement is the most extreme form of control that respondent can exercise over him. 6) Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station and program employees. 7) Respondents practice of treating talents as independent contractors is void for violating the right to security of tenure. 8) The discretion used by respondent in specifically selecting and hiring him over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent contractorship Respondent directly paid him his monthly talent fees. Respondent granted him benefits and privileges which he would not have enjoyed if he were truly the subject of a valid contract. Respondent: 1) The Labor Arbiter does not have jurisdiction since SONZA is an independent contractor. 2) There exists a prevailing practice in the broadcasting and entertainment industries to treat talents like petitioner as independent contractors. Issue Whether or not petitioner is an employee of respondent, so as to entitle him to his money claims. Decision NO, THERE IS NONE. ABS-CBN engaged petitioners services to co-host its television and radio programs because of his peculiar skills, talent and celebrity status. Likewise, petitioners talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary. Additionally, the Agreement provided that for violation of any provision of the Agreement, either party may terminate their relationship. Petitioner failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as provided under labor laws. During the life of the Agreement, ABS-CBN agreed to pay petitioners 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 petitioner because ABS-CBN remained obligated to pay his talent fees during the life of the Agreement. These circumstances are indicative of an independent contractual relationship. However, the method of selecting and engaging petitioner, the power to bargain talent fees way above the salary scales of ordinary employees, and the obligation of respondent to pay petitioners talent fees during the lifetime of the Agreement in all cases except breach of contract are not conclusive of

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such relationship. We must consider all the circumstances of the relationship, with the control test being the most important element. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. 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, petitioner contends that ABS-CBN exercised control over the means and methods of his work, because respondent had the power to broadcast his shows, and also supplied him with equipment and crew. However, ABS-CBN engaged petitioner services specifically to co-host the Mel & Jay programs. ABS-CBN did not assign any other work to petitioner. To perform his work, petitioner only needed his skills and talent. How he delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. Petitioner did not have to render eight hours of work per day. The Agreement required him 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 petitioners script. However, the Agreement prohibited petitioner from criticizing in his shows ABS-CBN or its interests. The clear implication is that petitioner had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. Furthermore, ABS-CBN was not involved in the actual performance that produced the finished product of petitioners work. ABS-CBN did not instruct petitioner how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule for more effective programming. ABS-CBNs sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of petitioners work. Although ABS-CBN did have the option not to broadcast petitioners show, ABS-CBN was still obligated to pay his talent fees. Thus, even if ABS-CBN was completely dissatisfied with the means and methods of his performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline petitioner. All that ABS-CBN could do is not to broadcast his show but ABS-CBN must still pay his talent fees in full. Clearly, ABS-CBNs right not to broadcast petitioners show, burdened as it was by the obligation to continue paying in full his talent fees, did not amount to control over the means and methods of the performance of his work. ABS-CBN could not terminate or discipline petitioner even if the means and methods of performance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that ABSCBNs control was limited only to the result of petitioners work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay petitioners talent fees in full until the expiry of the Agreement. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting objectionable features. As to supplying petitioner with equipment, crew, and airtime, these not the tools and instrumentalities he needed to perform his job. What he principally needed were his talent or skills and the costumes necessary for his appearance. Even though ABS-CBN provided him with the place of work and the necessary equipment, he was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBNs sole concern was for him to display his talent during the airing of the programs. A radio broadcast specialist who works under minimal supervision is an independent contractor. Second, petitioner urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and standards of performance. The Agreement does not require petitioner to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on him 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

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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. In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. In this case, petitioner failed to show that these rules controlled his performance. We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. One could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his services according to his own initiative. Lastly, petitioner insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-CBN exercised over him. This argument is futile. Being an exclusive talent does not by itself mean that petitioner 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, as in the present case. Petitioner protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to ABS-CBN, thus he is not an employee of ABS-CBN. Instead, petitioner insists that MJMDC is a labor-only contractor and ABS-CBN is his employer. In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the employee who is ostensibly under the employ of the labor-only contractor; and (3) the principal who is deemed the real employer. Under this scheme, the labor-only contractor is the agent of the principal. The law makes the principal responsible to the employees of the labor-only contractor as if the principal itself directly hired or employed the employees. These circumstances are not present in this case. There are essentially only two parties involved under the Agreement, namely, petitioner and ABS-CBN. MJMDC merely acted as petitioners agent. The Agreement expressly states that MJMDC acted as the AGENT of petitioner. The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and Jay Management and Development Corporation, is a corporation organized and owned by petitioner and TIANGCO. The President and General Manager of MJMDC is petitioner himself. It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by petitioner, acted as agent of ABS-CBN in entering into the Agreement with petitioner, who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and petitioner. As petitioner admits, MJMDC is a management company devoted exclusively to managing the careers of petitioner and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not even job contracting. MJMDC does not have any other function apart from acting as agent of petitioner or TIANGCO to promote their careers in the broadcast and television industry. Petitioner argues that the practice of respondent in treating talents like him as independent contractors is void for violating the right of labor to security of tenure. The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee relationship under labor laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that every person who renders

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services to another for a fee is an employee - to give meaning to the security of tenure clause - will lead to absurd results. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. This Court will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as employees. If radio and television program hosts can render their services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press. LAZARO VS. SOCIAL SECURITY COMMISSION G.R. No. 138254; July 30, 2004 Facts Private respondent Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three employers. Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star Marketing (Royal Star), which is engaged in the business of selling home appliances. Arguments Petitioner: 1) Laudato was not a sales supervisor of Royal Star, but was a mere sales agent whom he paid purely on commission basis. 2) Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star. Respondent: 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 Laudatos social security contributions. Issue Whether or not respondent is an employee, bringing her under the coverage of the Social Security Act Decision YES, SHE IS. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished.

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Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. A supervisor is exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes. Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work. ABS CBN VS. NAZARENO G.R. No. 164156; September 26, 2006 Facts Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the National Telecommunications Commission. Petitioner employed respondents 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 prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; coordinate, arrange personalities for air interviews; coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; facilitate, prepare and arrange airtime schedule for public service announcement and complaints; assist, anchor program interview, etc; and record, log clerical reports, man based control radio. The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Manager Leo Lastimosa. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA. On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective August 1, 2000, they would be assigned to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. Arguments Petitioner: 1) Respondents were PAs who basically assist in the conduct of a particular program ran by an anchor or talent. Among their duties include monitoring and receiving incoming calls from listeners and field reporters and calls of news sources; generally, they

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perform leg work for the anchors during a program or a particular production. They are considered in the industry as program employees in that, as distinguished from regular or station employees, they are basically engaged by the station for a particular or specific program broadcasted by the radio station. 2) As PAs, the complainants were issued talent information sheets which are updated from time to time, and are thus made the basis to determine the programs to which they shall later be called on to assist. 3) PAs, reporters, anchors and talents occasionally sideline for other programs they produce, such as dramatalents in other productions. As program employees, a PAs engagement is coterminous with the completion of the program, and may be extended/renewed provided that the program is on-going; a PA may also be assigned to new programs upon the cancellation of one program and the commencement of another. As such program employees, their compensation is computed on a program basis, a fixed amount for performance services irrespective of the time consumed. 4) Respondents were paid all salaries and benefits due them under the law. 5) The Labor Arbiter had no jurisdiction to involve the CBA and interpret the same, especially since respondents were not covered by the bargaining unit. Respondent: 1) They belonged to a work pool from which petitioner chose persons to be given specific assignments at its discretion, and were thus under its direct supervision and control regardless of nomenclature. 2) 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. Issue Whether or not respondents are employees of petitioner, and as such, are entitled to its money claims. Decision YES, THEY ARE. Article 280 of the Labor Code provides: ART. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular

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business or trade. But, although the work to be performed is only for a specific project or seasonal, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a regular workers security of tenure, however, can hardly be doubted. Not considered regular employees are project employees, the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project, and seasonal employees whose employment by its nature is only desirable for a limited period of time. Even then, 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. Thus, 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. The law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining situation necessitates the succor of the State. What determines whether a certain employment is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It 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. It is obvious that one year after they were employed by petitioner, respondents became regular employees by operation of law. Thus, it is of no moment that petitioner hired respondents as talents. 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. Respondents cannot be considered talents because they are not actors or actresses or radio specialists or mere clerks or utility employees. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors. Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration and scope of the project were determined or specified at the time of their engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a project may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, the term project may also refer to a particular job or undertaking that is not within the regular business of the employer. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.

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The principal test is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employees were engaged for that project. In this case, it is undisputed that respondents had continuously performed the same activities for an average of five years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. The persisting need for their services is sufficient evidence of the necessity and indispensability of such services to petitioners business or trade. While length of time may not be a sole controlling test for project employment, it can be a strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual trade or business of the employer. The employer-employee relationship between petitioner and respondents has been proven by the following circumstances: 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 petitioners 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. It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA. FRANCISCO VS. NLRC G.R. No. 170087; August 31, 2006 Facts In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate

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Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company. In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all employees of Kasei Corporation and announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. Arguments Respondents: 1) Petitioner is not an employee of the company. 2) Petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted. The company never interfered with her work except that from time to time, the management would ask her opinion on matters relating to her profession. Petitioner did not go through the usual procedure of selection of employees, but her services were engaged through a Board Resolution designating her as technical consultant. The money received by petitioner from the corporation was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was not one of those reported to the BIR or SSS as one of the companys employees. 3) Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may be terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation.

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Issue Whether or not an employment relationship exists between petitioner and respondent to admit the claim of illegal dismissal. Decision YES, THERE IS. 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. However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employers power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment. 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 employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency. By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer.

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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 corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement. Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business. In a business establishment, an identification card is provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of private respondent. Likewise, a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The coverage of Social Security Law is predicated on the existence of an employer-employee relationship. Thus, 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. The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement. A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. Where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises

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which creates an adverse working environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making and therefore amounted to an illegal termination of employment. In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development. NOGALES VS. CAPITOL MEDICAL CENTER G.R. No. 142625; December 19, 2006 Facts Pregnant with her fourth child, Corazon Nogales, who was then 37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada beginning on her fourth month of pregnancy or as early as December 1975. While Corazon was on her last trimester of pregnancy, Dr. Estrada noted an increase in 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 Corazon and Rogelio Nogales to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical Center. On 26 May 1976, Corazon was admitted at 2:30 a.m. at the CMC. Dr. Rosa Uy, who was then a resident physician of CMC, conducted an internal examination of Corazon. Dr. Uy then called up Dr. Estrada to notify him of her findings. Based on the Doctors Order Sheet, around 3:00 a.m., Dr. Estrada ordered for 10 mg. of valium to be administered immediately by intramuscular injection. Dr. Estrada later ordered the start of intravenous administration of syntocinon admixed with dextrose, 5%, in lactated Ringers solution, at the rate of eight to ten micro-drops per minute. According to the Nurses Observation Notes, Dr. Joel Enriquez, an anesthesiologist at CMC, was notified at 4:15 a.m. of Corazons admission. Subsequently, when asked if he needed the services of an anesthesiologist, Dr. Estrada refused. Despite Dr. Estradas refusal, Dr. Enriquez stayed to observe Corazons condition. At 6:00 a.m., Corazon was transferred to Delivery Room No. 1 of the CMC. At 6:10 a.m., Corazons bag of water ruptured spontaneously. At 6:12 a.m., Corazons cervix was fully dilated. At 6:13 a.m., Corazon started to experience convulsions. At 6:15 a.m., Dr. Estrada ordered the injection of ten grams of magnesium sulfate. However, Dr. Ely Villaflor, who was assisting Dr. Estrada, administered only 2.5 grams of magnesium sulfate. At 6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazons baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue was allegedly torn. The baby came out in an apnic, cyanotic, weak and injured condition. Consequently, the baby had to be intubated and resuscitated by Dr. Enriquez and Dr. Payumo.

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At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Corazons blood pressure dropped from 130/80 to 60/40 within five minutes. There was continuous profuse vaginal bleeding. The assisting nurse administered hemacel through a gauge 19 needle as a side drip to the ongoing intravenous injection of dextrose. At 7:45 a.m., Dr. Estrada ordered blood typing and cross matching with bottled blood. It took approximately 30 minutes for the CMC laboratory, headed by Dr. Perpetua Lacson, to comply with Dr. Estradas order and deliver the blood. At 8:00 a.m., Dr. Noe Espinola, head of the Obstetrics-Gynecology Department of the CMC, was apprised of Corazons condition by telephone. Upon being informed that Corazon was bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Rogelio was made to sign a Consent to Operation. Due to the inclement weather then, Dr. Espinola, who was fetched from his residence by an ambulance, arrived at the CMC about an hour later or at 9:00 a.m. He examined the patient and ordered some resuscitative measures to be administered. Despite Dr. Espinolas efforts, Corazon died at 9:15 a.m. The cause of death was hemorrhage, post partum. Arguments Petitioner: 1) Defendant physicians and CMC personnel were negligent in the treatment and management of Corazons condition. 2) CMC was negligent in the selection and supervision of defendant physicians and hospital staff. 3) CMC is vicariously liable for Dr. Estradas negligence based on Article 2180 in relation to Article 2176 of the Civil Code. 4) CMC, in allowing Dr. Estrada to practice and admit patients at CMC, should be liable for Dr. Estradas malpractice. 5) He knew Dr. Estrada as an accredited physician of CMC, though he discovered later that Dr. Estrada was not a salaried employee of the CMC. He was dealing with CMC, whose primary concern was the treatment and management of his wifes condition. Dr. Estrada just happened to be the specific person he talked to representing CMC. The fact that CMC made Rogelio sign a Consent on Admission and Admission Agreement and a Consent to Operation printed on the letterhead of CMC indicates that CMC considered Dr. Estrada as a member of its medical staff. 7) A hospital which is the employer, master, or principal of a physician employee, servant, or agent, may be held liable for the physicians negligence under the doctrine of respondeat superior. Respondents: 1) Dr. Estrada was a mere visiting physician and that it admitted Corazon because her physical condition then was classified an emergency obstetrics case. 2) Dr. Estrada is an independent contractor for whose actuations CMC would be a total stranger. CMC maintains that it had no control or supervision over Dr. Estrada in the exercise of his medical profession.

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Issue: Whether or not CMC is vicariously liable for the negligence of Dr. Estrada. Decision YES, IT IS. The control 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. CMC does not exercise of control over Dr. Estradas treatment and management of Corazons condition. It is undisputed that throughout Corazons pregnancy, she was under the exclusive prenatal care of Dr. Estrada. At the time of Corazons 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 Corazons 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. The question now is whether CMC is automatically exempt from liability considering that Dr. Estrada is an independent contractor-physician. 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. 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 element of justifiable reliance on the part of the plaintiff is satisfied if the plaintiff relies upon the hospital to provide complete emergency room care, rather than upon a specific physician.

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The doctrine of apparent authority essentially involves two factors to determine the liability of an independent-contractor physician. The first factor focuses on the hospitals manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not make express representations to the patient that the treating physician is an employee of the hospital; rather a representation may be general and implied. The doctrine of apparent authority is a species of the doctrine of estoppel. Article 1431 of the Civil Code provides that through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. Estoppel rests on this rule: Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it. In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through CMCs acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority. First, CMC granted staff privileges to Dr. Estrada. CMC extended its medical staff and facilities to Dr. Estrada. Upon Dr. Estradas request for Corazons admission, CMC, through its personnel, readily accommodated Corazon and updated Dr. Estrada of her condition. Second, CMC made Rogelio sign consent forms printed on CMC letterhead. Prior to Corazons admission and supposed hysterectomy, CMC asked Rogelio to sign release forms, the contents of which reinforced Rogelios belief that Dr. Estrada was a member of CMCs medical staff. Without any indication in these consent forms that Dr. Estrada was an independent contractor-physician, the Spouses Nogales could not have known that Dr. Estrada was an independent contractor. Significantly, no one from CMC informed the Spouses Nogales that Dr. Estrada was an independent contractor. On the contrary, Dr. Atencio, who was then a member of CMC Board of Directors, testified that Dr. Estrada was part of CMCs surgical staff. Third, Dr. Estradas referral of Corazons profuse vaginal bleeding to Dr. Espinola, who was then the Head of the Obstetrics and Gynecology Department of CMC, gave the impression that Dr. Estrada as a member of CMCs medical staff was collaborating with other CMCemployed specialists in treating Corazon. The second factor focuses on the patients 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 Spouses Nogales relied upon a perceived employment relationship with CMC in accepting Dr. Estradas services. Rogelio testified that he and his wife specifically chose Dr. Estrada to handle Corazons delivery not only because of their friends recommendation, but more importantly because of Dr. Estradas connection with a reputable hospital, the [CMC]. In other words, Dr. Estradas relationship with CMC played a significant role in the Spouses Nogales decision in accepting Dr. Estradas services as the obstetrician-

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gynecologist for Corazons delivery. Moreover, as earlier stated, there is no showing that before and during Corazons confinement at CMC, the Spouses Nogales knew or should have known that Dr. Estrada was not an employee of CMC. Further, the Spouses Nogales looked to CMC to provide the best medical care and support services for Corazons delivery. The Court notes that prior to Corazons fourth pregnancy, she used to give birth inside a clinic. Considering Corazons age then, the Spouses Nogales decided to have their fourth child delivered at CMC, which Rogelio regarded one of the best hospitals at the time. This is precisely because the Spouses Nogales feared that Corazon might experience complications during her delivery which would be better addressed and treated in a modern and big hospital such as CMC. Moreover, Rogelios consent in Corazons hysterectomy to be performed by a different physician, namely Dr. Espinola, is a clear indication of Rogelios confidence in CMCs surgical staff. The conception that the hospital does not undertake to treat the patient, does not undertake to act through its doctors and nurses, but undertakes instead simply to procure them to act upon their own responsibility, no longer reflects the fact. Present day hospitals, as their manner of operation plainly demonstrates, do far more than furnish facilities for treatment. They regularly employ on a salary basis a large staff of physicians, nurses and interns, as well as administrative and manual workers, and they charge patients for medical care and treatment, collecting for such services, if necessary, by legal action. Certainly, the person who avails himself of hospital facilities expects that the hospital will attempt to cure him, not that its nurses or other employees will act on their own responsibility. COCA-COLA BOTTLERS PHILS. VS DR. CLIMACO G.R. No. 146881; February 15, 2007 Facts Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement. 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 dated March 9, 1995 from petitioner company concluding their retainership agreement effective 30 days from receipt thereof. As early as September 1992, petitioner was already making inquiries regarding his status with petitioner company. Respondent inquired from the management of petitioner company whether it was agreeable to recognizing him as a regular employee. The management refused to do so. On February 24, 1994, respondent filed a Complaint before the NLRC, Bacolod City, seeking recognition as a regular employee of petitioner company. While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9, 1995 from petitioner company concluding their retainership agreement effective thirty (30) days from receipt thereof. This prompted respondent to file a complaint for illegal dismissal against petitioner company with the NLRC, Bacolod City. Arguments

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Petitioner: They exercised no control over petitioner for the reason that the latter was not directed as to the procedure and manner of performing his assigned tasks. Petitioner was not told how to immunize, inject, treat or diagnose the employees. Issue Whether or not there exists an employee-employer relationship between the parties. Decision NO, THERE IS NONE. 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 employees conduct, or the so-called control test, considered to be the most important element. Petitioner company lacked the power of control over the performance by respondent of his duties. The Comprehensive Medical Plan, which contains the respondents 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 [petitioner] company, in each case. Petitioner company, through 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. 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. The provision in the Retainer Agreement that respondent was on call during emergency cases likewise did not make him a regular employee. Outside of the two (2) hours that he is required to be at respondent companys 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 employers workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. In addition, the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination. CALAMBA MDEICAL CENTER VS. NLRC, et. Al., GR No. 176484, Nov. 28, 2008

Facts: Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital

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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. RIGHT TO HIRE OLLENDORF VS. ABRAHANSON G.R. No. 13228; September 13, 1918

Facts

Plaintiff is and for a long time past has been engaged in the city of Manila and elsewhere in the Philippine Islands in the business of manufacturing ladies embroidered underwear for export. Plaintiff imports the material from which this underwear is made and adopts decorative designs which are embroidered upon it by Filipino needle workers from patterns selected and supplied by him. Most of the embroidery work is done in the homes of the workers. The embroidered material is then returned to plaintiff's factory in Manila where it is made into finished garments and prepared for export. The embroiderers employed by

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plaintiff are under contract to work for plaintiff exclusively. Some fifteen thousand home workers and eight hundred factory workers are engaged in this work for plaintiff, and some two and a half million pesos are invested in his business. On September 10, 1915, plaintiff and defendant entered into a contract wherein petitioner agreed to employ defendant for a term of two years at a salary rate of P50.00 per week. In said contract, respondent also bound himself to devote his entire time, attention, energies and industry to the promotion of the furtherance of the business and interest of petitioner and to perform during the term of this contract such duties as may be assigned to him and failure by respondent to comply with these conditions to the satisfaction of petitioner shall entitle the latter to discharge and dismiss the respondent from employment. The contract, upon expiration, may be renewed for a like, longer or shorter period as may be agreed upon. In addition, respondent also bound himself, his heirs, successors and assigns, not to enter into or engage himself directly or indirectly, nor permit any other person under his control to enter in or engage in a similar or competitive business to that of petitioner anywhere within the Philippine Islands for a period of five years from the date of the contract. Under the terms of this agreement defendant entered the employ of plaintiff and worked for him until April, 1916, when defendant, on account of ill health, left plaintiff's employ and went to the United States. While in plaintiff's establishment, he had full opportunity to acquaint himself with plaintiff's business method and business connection. The duties performed by him were such as to make it necessary that he should have this knowledge of plaintiff's business. Defendant had a general knowledge of the Philippine embroidery business before his employment by plaintiff, having been engaged in similar work for several years. Some months after his departure for the United States, defendant returned to Manila as the manager of the Philippine Underwear Company, a corporation. This corporation does not maintain a factory in the Philippine Islands, but sends 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. Defendant admits that both firms turn out the same class of goods and that they are exported to the same market. It also clearly appears from the evidence that defendant has employed to work his form some of the same workers employed by the plaintiff. Shortly after defendant's return to Manila and the commencement by him of the discharge of the duties of his position as local manager of the Philippine Embroidery Company, plaintiff commenced an action, the principal purpose of which is to prevent by injunction, any further breach of that part of defendant's contract of employment by plaintiff, 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. Arguments Respondent: 1) Plaintiff failed to substantiate the averments of his complaints to the effect that the business in which the defendant is employed is competitive with that of plaintiff. 2) The contract is void for lack of mutuality 3) The contract is void as constituting an unreasonable restraint of trade Issue: Whether or not the disputed stipulation in the employment contract is valid as a condition for pre-employment. Decision YES, IT IS. The rule in this jurisdiction is that the obligations created by contracts have the force of law between the contracting parties and must be enforced in accordance with their tenor. The only limitation upon the freedom of contractual agreement is that the pacts established shall not be contrary to "law, morals or public order." In the nature of things, it is impossible to frame a general rule by which to determine in advance the precise point at which the right of freedom of contract must yield to the

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superior interest of community in keeping trade and commerce free from unreasonable restrictions. But it has consistently been adhered to that If the restraint is no greater than is reasonably necessary for the protection of the party in whose favor it is imposed it is upheld, but if it goes beyond this is declared void. Public welfare is first considered, and if it be not involved, and the restraint upon one party is not greater than protection to the other party requires, the contract may be sustained. 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. The validity of restraints upon trade or employment is to be determined by the intrinsic 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. If there is one thing more than another which is essential to the trade and commerce of this country, it is the inviolability of contract deliberately entered into; and to allow a person of mature age, and not imposed upon, to enter into a contract, to obtain the benefit of it, and then to repudiate it and the obligation which he has undertaken, is prima facie, at all events, contrary to the interest of any and every country. The public policy which allows a person to obtain employment on certain terms understood by and agreed to by him, and to repudiate his contract, conflicts with, and must, to avail the defendant, for some sufficient reason, prevail over, the manifest public policy, which, as a rule holds him to his bond. DEL CASTILLO VS. RICHMOND G.R. No. L-21127; February 9, 1924 Facts Petitioner seeks to declare as null and void a contract entered into by him with respondent on July 20, 1915. The contract stipulated that petitioner be employed by respondent as pharmacist and to take charge of the prescription department of the drugstore, and to perform all the duties and obligations as such pharmacist together with such other duties in connection with the same that by custom correspond to the pharmacist in a drugstore for a monthly remuneration of P125. Additionally, the contract also included a stipulation that petitioner 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 respondent 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. Furthermore, either of the parties to the contract may terminate his relations as employer and employee with or without reason, and upon thirty days' notice; remaining, nevertheless, in full force and effect all the other conditions and agreements stipulated in the contract. Petitioner is not to divulge or make use of any of the business secrets or private formulas of the said respondent.

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Arguments Petitioner: The provisions and conditions contained in 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 Respondent: During the time the plaintiff was in the defendant's employ he obtained knowledge of his trade and professional secrets and came to know and became acquainted and established friendly relations with his customers so that to now annul the contract and permit plaintiff to establish a competing drugstore in the town of Legaspi, as plaintiff has announced his intention to do, would be extremely prejudicial to defendant's interest Issue Whether or not the disputed stipulation is a valid condition for pre-employment. Decision YES, IT IS. It will be noted that the restrictions placed upon the plaintiff are strictly limited (a) to a limited district or districts, and (b) during the time while the defendant or his heirs may own or have open a drugstore, or have an interest in any other one within said limited district. 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. The general tendency, we believe, of modern authority, is to make the test whether the restraint is reasonably necessary for the protection of the contracting parties. If the contract is reasonably necessary to protect the interest of the parties, it will be upheld. 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. Thus, 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. Of course in establishing whether the contract is a reasonable or unreasonable one, the nature of the business must also be considered. PT&T VS. NLRC G.R. No. 118978; May 23, 1997 Facts Respondent was initially hired by petitioner as a reliever, for a fixed period from November 21, 1990 until April 20, 1991 vice employee who went on maternity leave, which was to be terminated upon expiration of the agreed period. From June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondents services as reliever were again engaged by petitioner, in replacement of yet another employee who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated. On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier, that is, on May 26, 1991. She had made the same representation in the two previous reliever agreements which she signed. When petitioner supposedly learned about the same later, it required her to explain the discrepancy. Additionally, she was reminded about the companys policy of not accepting married women for employment. Private respondent stated that she was not aware of PT&Ts policy regarding married women at the time, and that all along she had not deliberately hidden her true civil status. Petitioner nonetheless remained unconvinced by her explanations. Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living

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allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio City. Arguments Petitioner: It dismissed respondent not because she was married, but because she concealed that fact, Respondent: 1) She was terminated because she got married, which was prohibited in petitioners company policies. 2) She was discriminated against in gross violation of law, such proscription being outlawed by article 136 of the Labor Code. Issue Whether or not the company policy of non-marriage for female employees is valid. Decision YES, IT IS. Article 136 of the Labor Code explicitly prohibits discrimination merely by reason of the marriage of a female employee. In the case at bar, petitioners 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. Private respondents act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work. While loss of confidence is a just cause for termination of employment, it should not be simulated. It must rest on an actual breach of duty committed by the employee and not on the employers caprices. Furthermore, it should never be used as a subterfuge for causes that are improper, illegal, or unjustified. Petitioner glosses over the fact that it was its unlawful policy against married women, both on the aspects of qualification and retention, which compelled private respondent to conceal her supervenient marriage. It was, however, that very policy alone which was the cause of private respondents secretive conduct now complained of. It is then apropos to recall the familiar saying that he who is the cause of the cause is the cause of the evil caused. Private respondent, it must be observed, had gained regular status at the time of her dismissal. When she was served her walking papers on January 29, 1992, she was about to complete the probationary period of 150 days as she was contracted as a probationary employee on September 2, 1991. That her dismissal would be effected just when her probationary period was winding down clearly raises the plausible conclusion that it was done in order to prevent her from earning security of tenure. On the other hand, her earlier stints with the company as reliever were undoubtedly those of a regular employee, even if the same were for fixed periods, as she performed activities which were essential or necessary in the usual trade and business of PT&T. The primary standard of determining regular employment is the reasonable connection between the activity performed by the employee in relation to the business or trade of the employer. Petitioners 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 petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage. It must be noted that the requirement that a woman employee must remain unmarried could be justified as a bona fide occupational qualification, or BFOQ, where the particular

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requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. It must be related to the employees job performance. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by job discrimination laws. Employment rules that forbid or restrict the employment of married women, but do not apply to married men, have been held to be invalid for being a violation of law. Parenthetically, the Civil Code provisions on the contract of labor state that the relations between the parties, that is, of capital and labor, are not merely contractual, impressed as they are with so much public interest that the same should yield to the common good. It goes on to intone that neither capital nor labor should visit acts of oppression against the other, nor impair the interest or convenience of the public. In the final reckoning, the danger of just such a policy against marriage followed by petitioner PT&T is that it strikes at the very essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the family as the foundation of the nation. That it must be effectively interdicted here in all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land is not only in order but imperatively required. DUNCAN ASSOCIATION OF DETAILMAN PTGWO VS. GALXO WELLCOME G.R. No. 162994; September 17, 2004 Facts Petitioner was hired by respondent as medical representative on October 24, 1995. 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. If management perceives a conflict of interest or a potential conflict between such relationship and the employees employment with the company, the management and the employee will explore the possibility of a "transfer to another department in a non-counterchecking position" or preparation for employment outside the company after six months. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in September 1998. In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson requested for time to comply with the company policy against entering into a relationship with an employee of a competitor company. Meanwhile, in September 1999, Tecson applied for a transfer in Glaxos milk division, thinking that since Astra did not have a milk division, the potential conflict of interest would be eliminated. His application was denied in view of Glaxos "least-movement-possible" policy. In November 1999, Tecson was transferred to another area. The latter asked Glaxo to reconsider its decision, but his request was denied. Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to Glaxos Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon until February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.

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During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of products which were competing with similar products manufactured by Astra. He was also not included in product conferences regarding such products. Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half month pay for every year of service, or a total of P50,000.00 but he declined the offer. Arguments Petitioner: Glaxos policy against employees marrying employees of competitor companies violates the equal protection clause of the Constitution because it creates invalid distinctions among employees on account only of marriage. They claim that the policy restricts the employees right to marry. Respondent: 1) The company policy prohibiting its employees from having a relationship with and/or marrying an employee of a competitor company is a valid exercise of its management prerogatives and does not violate the equal protection clause 2) As a company engaged in the promotion and sale of pharmaceutical products, it has a genuine interest in ensuring that its employees avoid any activity, relationship or interest that may conflict with their responsibilities to the company. Thus, it expects its employees to avoid having personal or family interests in any competitor company which may influence their actions and decisions and consequently deprive Glaxo of legitimate profits. The policy is also aimed at preventing a competitor company from gaining access to its secrets, procedures and policies. 3) The policy does not prohibit marriage per se but only proscribes existing or future relationships with employees of competitor companies, and is therefore not violative of the equal protection clause. It maintains that considering the nature of its business, the prohibition is based on valid grounds. 4) Tecsons marriage to Bettsy, an employee of Astra, posed a real and potential conflict of interest. Astras products were in direct competition with 67% of the products sold by Glaxo. Hence, Glaxos enforcement of the foregoing policy in Tecsons case was a valid exercise of its management prerogatives. 5) Tecson can no longer question the assailed company policy because when he signed his contract of employment, he was aware that such policy was stipulated therein. In said contract, he also agreed to resign from respondent if the management finds that his relationship with an employee of a competitor company would be detrimental to the interests of Glaxo. Issue Whether or not Glaxos policy against its employees marrying employees from competitor companies is valid. Decision YES, IT IS. Glaxos policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Further, the challenged policy has been implemented by Glaxo impartially and disinterestedly for a long period of time. 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 Glaxos 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

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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. it is a legitimate business practice to guard business confidentiality and protect a competitive position by even-handedly disqualifying from jobs male and female applicants or employees who are married to a competitor. The policy was applied to men and women equally, and the employers business was highly competitive and that gaining inside information would constitute a competitive advantage. Significantly, the company actually enforced the policy after repeated requests to the employee to comply with the policy. Indeed, the application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee. Additionally, Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. The policy being questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that belongs only to the individual. However, an employees personal decision does not detract the employer from exercising management prerogatives to ensure maximum profit and business success. The assailed company policy which forms part of respondents Employee Code of Conduct and of its contracts with its employees was made known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be complied with in good faith." He is therefore estopped from questioning said policy. STAR PAPER CORP., v. SIMBOL GR No. 164774; April 12, 2006 Facts: Respondents were employees of Star Paper Corporation, a corporation engaged in trading of paper products, who married with employees in the same company, which was prohibited by the company policies of Star. The policy was that 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 and in case, of two of the employees decided to get married, one of them should resign to preserve the policy stated above. The respondents allegedly resigned. But respondents Simbol and Comia alleged that they did not resign voluntarily, they were compelled to resign in view of the policy. Issue: Whether the company policy banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code. Decision: The prohibition in the instant case is not valid for the reason that there no exists logical business necessity in the instant case. The prohibition is premised on the mere fear that employees married to each other will be less efficient. If such can be a valid exercise justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employees right to security of tenure. The policy 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 effect. The failure of the petitioners to prove a legitimate business concern in imposing the

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questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. RIVERA VS. SOLIDBANK G.R. No. 163269; April 19, 2006

Facts

Petitioner had been working for Solidbank Corporation since July 1, 1977. Prior to his retirement, he became the Manager of the Credit Investigation and Appraisal Division of the Consumers Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry business in Cavite. In December 1994, Solidbank offered two retirement programs to its employees, the ORP and the SRP. Since Rivera was only 45 years old, he was not qualified for retirement under the ORP. Under the SRP, he was entitled to receive P1,045,258.95 by way of benefits. Deciding to devote his time and attention to his poultry business in Cavite, Rivera applied for retirement under the SRP. Solidbank approved the application and Rivera was entitled to receive the net amount of P963,619.28. This amount included his performance incentive award (PIA), and his unearned medical, dental and optical allowances in the amount of P1,666.67, minus his total accountabilities to Solidbank amounting to P106,973.00. Rivera received the amount and confirmed his separation from Solidbank on February 25, 1995. Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, which was notarized on March 1, 1995. 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. Rivera also agreed that the bank may bring any action to seek an award for damages resulting from his breach of the Release, Waiver and Quitclaim, and that such award would include the return of whatever sums paid to him by virtue of his retirement under the SRP. Rivera was likewise required to sign an undated Undertaking as a supplement to the Release, Waiver and Quitclaim in favor of Solidbank in which he declared that he received in full his entitlement under the law (salaries, benefits, bonuses and other emoluments), including his separation pay in accordance with the SRP. In this Undertaking, he promised that [he] will not seek employment with a competitor bank or financial institution within one (1) year from February 28, 1995, and that any breach of the Undertaking or the provisions of the Release, Waiver and Quitclaim would entitle Solidbank to a cause of action against him before the appropriate courts of law. Unlike the Release, Waiver and Quitclaim, the Undertaking was not notarized. On May 1, 1995, the Equitable Banking Corporation (Equitable) employed Rivera as Manager of its Credit Investigation and Appraisal Division of its Consumers Banking Group. Upon discovering this, Solidbank wrote a letter dated May 18, 1995, informing Rivera that he had violated the Undertaking. It 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 to return the amount demanded within the given period, Solidbank filed a complaint against Rivera in court.

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Arguments Respondent: 1) In accepting employment with a competitor bank for the same position he held in Solidbank before his retirement, Rivera violated his Undertaking under the SRP. Considering that Rivera accepted employment with Equitable barely three months after executing the Undertaking, it was clear that he had no intention of honoring his commitment under said deed. 2) The wisdom of requiring the Undertaking from the 1995 SRP is purely a management prerogative. It was not for Rivera to question and decry the banks policy to protect itself from unfair competition and disclosure of its trade secrets. The substantial monetary windfall given the retiring officers was meant to tide them over the one-year period of hiatus, and did not prevent them from engaging in any kind of business or bar them from being employed except with competitor banks/financial institutions. Petitioner: 1) the undertaking not to seek employment with any competitor bank or financial institution within one (1) year from February 28, 1995 was void for being contrary to the Constitution, the law and public policy, that it was unreasonable, arbitrary, oppressive, discriminatory, cruel, unjust, inhuman, and violative of his human rights. 2) He could not cause injury or prejudice to Solidbanks interest since he never acquired any sensitive or delicate information which could prejudice the banks interest if disclosed. 3) Respondents management prerogative does not give it a license to entice its employees to retire at a very young age and prohibit them from seeking employment in a so-called competitor bank or financial institution, thus prevent them from working and supporting their families. A line must be drawn between management prerogative regarding business operations per se and those which affect the rights of the employees. In treating its employees, management should see to it that its employees are at least properly informed of its decision or modes of action. Issue Whether or not the employment ban is unreasonable, and oppressive, hence contrary to public policy. Decision YES, IT IS. Article 1306 of the New Civil Code 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. The freedom of contract is both a constitutional and statutory right. A contract is the law between the parties and courts have no choice but to enforce such contract as long as it is not contrary to law, morals, good customs and against public policy. The well-entrenched doctrine is that the law does not relieve a party from the effects of an unwise, foolish or disastrous contract, entered into with full awareness of what he was doing and entered into and carried out in good faith. Such a contract will not be discarded even if there was a mistake of law or fact. Courts have no jurisdiction to look into the wisdom of the contract entered into by and between the parties or to render a decision different therefrom. They have no power to relieve parties from obligation voluntarily assailed, simply because their contracts turned out to be disastrous deals.

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On the other hand, retirement plans, in light of the constitutional mandate of affording full protection to labor, must be liberally construed in favor of the employee, it being the general rule that pension or retirement plans formulated by the employer are to be construed against it. Retirement benefits, after all, are intended to help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his financial support, and are a form of reward for being loyal to the employer. 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 partys 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. Public welfare is first considered, and if it be not involved, and the restraint upon one party is not greater than protection to the other party requires, the contract may be sustained. 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. 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. Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent. However, petitioner is not proscribed, by waiver or estoppel, from assailing the postretirement competitive employment ban since under Article 1409 of the New Civil Code, those contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy are inexistent or void from the beginning. Estoppel cannot give validity to an act that is prohibited by law or one that is against public policy. Respondent, as employer, is burdened to establish that a restrictive covenant barring an employee from accepting a competitive employmentafter 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. 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 employers legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employees legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy. Courts should carefully scrutinize all contracts limiting a mans natural right to follow any trade or profession anywhere he pleases and in any lawful manner. But it is just as important to protect the enjoyment of an establishment in trade or profession, which its employer has built up by his own honest application to every day duty and the faithful performance of the tasks which every day imposes upon the ordinary man. What one creates by his own labor is his. Public policy does not intend that another than the producer shall reap the fruits of labor; rather, it gives to him who labors the right by every legitimate means to protect the fruits of his labor and secure the enjoyment of them to himself. Freedom to contract must not be unreasonably abridged. Neither must the right to protect by reasonable restrictions that which a man by industry, skill and good judgment has built up, be denied.

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The question of reasonableness of a restraint requires a thorough consideration of surrounding circumstances, including the subject matter of the contract, the purpose to be served, the determination of the parties, the extent of the restraint and the specialization of the business of the employer. The court has to consider whether its enforcement will be injurious to the public or cause undue hardships to the employee, and whether the restraint imposed is greater than necessary to protect the employer. Thus, the court must have before it evidence relating to the legitimate interests of the employer which might be protected in terms of time, space and the types of activity proscribed. Consideration must be given to the employees right to earn a living and to his ability to determine with certainty the area within which his employment ban is restituted. A provision on territorial limitation is necessary to guide an employee of what constitutes as violation of a restrictive covenant and whether the geographic scope is co-extensive with that in which the employer is doing business. In considering a territorial restriction, the facts and circumstances surrounding the case must be considered. Thus, in determining whether the contract is reasonable or not, the trial court should consider the following factors: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy. Not to be ignored is the fact that the banking business is so impressed with public interest where the trust and interest of the public in general is of paramount importance such that the appropriate standard of diligence must be very high, if not the highest degree of diligence. We are not impervious of the distinction between restrictive covenants barring an employee to accept a post-employment competitive employment or restraint on trade in employment contracts and restraints on post-retirement competitive employment in pension and retirement plans either incorporated in employment contracts or in collective bargaining agreements between the employer and the union of employees, or separate from said contracts or collective bargaining agreements which provide that an employee who accepts post retirement competitive employment will forfeit retirement and other benefits or will be obliged to restitute the same to the employer. The strong weight of authority is that forfeitures for engaging in subsequent competitive employment included in pension and retirement plans are valid even though unrestricted in time or geography. The reasoning behind this conclusion is that the forfeiture, unlike the restraint included in the employment contract, is not a prohibition on the employees engaging in competitive work but is merely a denial of the right to participate in the retirement plan if he does so engage . A postretirement competitive employment restriction is designed to protect the employer against competition by former employees who may retire and obtain retirement or pension benefits and, at the same time, engage in competitive employment. However, the Undertaking provided that in case of failure to comply with the promise not to accept competitive employment within one year from February 28, 1995, respondent will have a cause of action against petitioner for protection in the courts of law. The words cause of action for protection in the courts of law are so broad and comprehensive, that they may also include a cause of action for prohibitory and mandatory injunction against petitioner, specific performance plus damages, or a damage suit (for actual, moral and/or exemplary damages), all inclusive of the restitution of the P963,619.28 which petitioner received from respondent. The Undertaking and the Release, Waiver and Quitclaim do not provide for the automatic forfeiture of the benefits petitioner received under the SRP upon his breach of said deeds. Thus, the post-retirement competitive employment ban

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incorporated in the Undertaking of respondent does not, on its face, appear to be the recognized exception. YRASUEGUI V. PHIL. AIRLINE GR NO. 168081; Oct. 17, 2008 Facts: THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company. Petitioner was a former international flight steward of PAL. He had problems meeting the required weight standards for cabin and crew. He was advised to go on leave without pay several times to address his weight concerns, to no avail. PAL had him grounded until such time he satisfactorily complies with the weight standards and he was directed to report every two weeks for weight checks. On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner. [15] However, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor. NLRC affirmed the decision of the Labor Arbiter, with modifications. The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employees position. The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest. Issue: Whether or not the petitioner was illegally dismissed. Held: I. The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code. [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company . In other words, they were standards that establish continuing qualifications for an employees position. By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed

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II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being overwieight impedes mobility in times of emergencies where seconds are precious. Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his regular allowances. WAGE AND THE WAGE RATIONALIZATION ACT ILAW AT BUKLOD NG MANGGAGAWA VS. NLRC G.R. No. 91980; June 27, 1991 Parties Petitioner: Ilaw At Buklod Ng Manggagawa Respondent: NLRC Hon. Carmen Talusan San Miguel Corporation Facts Upon the effectivity of R.A. No. 6727 (Wage Rationalization Act) on June 5, 1989, petitioner, said to represent 4,500 employees of San Miguel Corporation, more or less working at various plants, offices and warehouses, presented to the company a demand for correction of the significant distortion in the workers wages. Petitioner explicitly invoked Section 4 of the Act in their demand. But petitioner claims their demand was ignored, and that the company offered a measly across-the-board wage increase of P7.00 per day, per employee, as against the proposal of petitioner of P25.00 per day, per employee, which they later on reduced to P15.00 by way of amicable settlement. When the company refused the proposal, the members of petitioner, on their own accord, refused to render overtime services staring October 16, 1989. This decision was observed by some 800 daily-paid workers. This abandonment of the long-standing schedule of work and the reversion to the eight-hour shift caused substantial losses to SMC. Thus, on October 18, 1989, SMC filed with the Arbitration Branch of the NLRC a complaint against petitioner and its members to declare the strike or slowdown illegal and to terminate the employment of petitioners officers and shop stewards. On December 8, 1989, their complaint having yielded no results, it filed another complaint, this time with the NLRC, to enjoin and restrain illegal slowdown and for damages, with prayer for issuance of a cease-and-desist and TRO, which was subsequently issued. Arguments Petitioner: 1) SMC cannot force their employees to work beyond eight hours a day. 2) SMC had been paying its workers far below the productivity per employee and turning a deaf ear to petitioners demands for wage increases.

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3) The NLRCs TRO dated December 19, 1989 was issued with haste and had the effect of forcing the workers to work beyond eight hours a day. 4) The NLRC, as essentially an appellate body, had no jurisdiction to act on the plea for injunction in the first instance. Respondent: 1) The workers abandonment of the regular work schedule and their deliberate and willful reduction of the plants production efficiency is a slowdown, which is an illegal and unprotected concerted activity. It is contrary to law and to the CBA between it and petitioner. 2) Against such a slowdown, the NLRC has jurisdiction to issue injunctive relief in the first instance. 3) The NLRC has the positive legal duty and statutory obligation to enjoin the slowdown complained of and to compel the parties to arbitrate and to effectuate the important national policy of peaceful settlement of labor disputes through arbitration. Accordingly, NLRC had no legal choice but to issue injunction to enforce the reciprocal no lockout-noslowdown and mandatory arbitration agreement of the parties. Issue Whether or not the concerted stoppage of work was lawful. Whether or not the NLRC may authorize the TRO, compelling the workers to stio their concerted refusal to work beyond the eight-hour shift. Decision I. NO, IT WAS NOT. Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted activities in order to attain their legitimate objectives. Article 263 of the Labor Code states In line with "the policy of the State to encourage free trade unionism and free collective bargaining, workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection." A similar right to engage in concerted activities for mutual benefit and protection is tacitly and traditionally recognized in respect of employers. The more common of these concerted activities as far as employees are concerned are: strikes (the temporary stoppage of work as a result of an industrial or labor dispute); picketing (the marching to and fro at the employer's premises, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute); and boycotts (the concerted refusal to patronize an employer's goods or services and to persuade others to a like refusal). On the other hand, the counterpart activity that management may licitly undertake is the lockout (the temporary refusal to furnish work on account of a labor dispute). In this connection, the same Article 263 provides that the "right of legitimate labor organizations to strike and picket and of employer to lockout, consistent with the national interest, shall continue to be recognized and respected." The legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed therefor. It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. In the particular 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

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issue. It 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 therefrom 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 abitration, 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." Moreover, the collective bargaining agreement between the SMC and the Union, relevant provisions of which are quoted by the former without the latter's demurring to the accuracy of the quotation, also prescribes a similar eschewal of strikes or other similar or related concerted activities as a mode of resolving disputes or controversies, generally, said agreement clearly stating that settlement of "all disputes, disagreements or controversies of any kind" should be achieved by the stipulated grievance procedure and ultimately by arbitration. The Union was thus prohibited to declare and hold a strike or otherwise engage in nonpeaceful concerted activities for the settlement of its controversy with SMC in respect of wage distortions, or for that matter; any other issue "involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations." The partial strike or concerted refusal by the Union members to follow the five-year-old work schedule which they had therefore been observing, resorted to as a means of coercing correction of "wage distortions," was therefore forbidden by law and contract and, on this account, illegal. II. YES, IT MAY. Article 254 of the Code provides that "No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264. Article 264 lists down specific "prohibited activities" which may be forbidden or stopped by a restraining order or injunction. Article 218 inter alia enumerates the powers of the National Labor Relations Commission and lays down the conditions under which a restraining order or preliminary injunction may issue, and the procedure to be followed in issuing the same. Among the powers expressly conferred on the Commission by Article 218 is the power to "enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party." As a rule such restraining orders or injunctions do not issue ex parte, but only after compliance with the conditions set forth in article 218 of the Labor Code, except when the complainant "shall also allege that, unless a temporary restraining order shall be issued without notice, a substantial and irreparable injury to complainant's property will be

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unavoidable; there is "testimony under oath, sufficient, if sustained, to justify the Commission in issuing a temporary injunction upon hearing after notice;" the "complainant shall first file an undertaking with adequate security in an amount to be fixed by the Commission sufficient to recompense those enjoined for any loss, expense or damage caused by the improvident or erroneous issuance of such order or injunction, including all reasonable costs, together with a reasonable attorney's fee, and expense of defense against the order or against the granting of any injunctive relief sought in the same proceeding and subsequently denied by the Commission;" and the "temporary restraining order shall be effective for no longer than twenty (20) days and shall become void at the expiration of said twenty (20) days. The reception of evidence "for the application of a writ of injunction may be delegated by the Commission to any of its Labor Arbiters who shall conduct such hearings in such places as he may determine to be accessible to the parties and their witnesses and shall submit thereafter his recommendation to the Commission." The record reveals that the Commission exercised the power directly and plainly granted to it by sub-paragraph (e) Article 217 in relation to Article 254 of the Code, and that it faithfully observed the procedure and complied with the conditions for the exercise of that power prescribed in said sub-paragraph (e) It acted on SMC's application for immediate issuance of a temporary restraining order ex parte on the ground that substantial and irreparable injury to its property would transpire before the matter could be heard on notice; it, however, first directed SMC Labor Arbiter Carmen Talusan to receive SMC's testimonial evidence in support of the application and thereafter submit her recommendation thereon; it found SMC's evidence adequate and issued the temporary restraining order upon bond. No irregularity may thus be imputed to the respondent Commission in the issuance of that order. EMPLOYERS CONFEDERATION OF THE PHILS. VS. NWPC G.R. No. 96169; September 24, 1991 Facts Petitioner questions the validity of Wage Order No. NCR-01-A dated October 23, 1990 of the RTWPB-NCR, amending a previous wage order promulgated by it on October 15, 1990, which increased the minimum wage byP17.00 daily. This new wage order granted an increase of P17.00 per day to employees in the private sector in the NCR who were already receiving wages above the statutory minimum rates up to P125.00. Petitioner appealed to the NWPC, which appeal was dismissed. Thus, the petition. Arguments Petitioner: 1) The across-the-board wage increase is an excess of authority. Under R.A. No. 6727, the Boards may only prescribe minimum wages, not determine salary ceilings. 3) R.A. No. 6727 was meant to promote collective bargaining as the primary mode of settling wages, and the board cannot pre-empt collective bargaining agreements by establishing ceilings. 4) Wage is a legislative function, and R.A. No. 6727 delegated to the regional boards no more than the power to grant minimum wage adjustments and in the absence of clear statutory authority. The boards may no more than adjust floor wages.

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Respondent: 1) The Board, in prescribing an across-the-board hike, did not in reality grant additional or other benefits to workers and employees, such as the extension of wage increases to employees and workers already receiving more than minimum wages, but rather, fixed minimum wages according to the salary-ceiling method. 2) R.A. No. 6727 is intended to correct wage distortions and the salary-ceiling method in determining wages is meant precisely to rectify wage distortions. Issue Whether or not the Wage Order was promulgated in excess of the Boards functions. Decision NO, IT WAS NOT. In the National Wages and Productivity Commission's Order of November 6, 1990, the Commission noted that the determination of wages has generally involved two methods, the "floor-wage" method and the "salary-ceiling" method. The first method involves the fixing of determinate amount that would be added to the prevailing statutory minimum wage. The other involves "the salary-ceiling method" whereby the wage adjustment is applied to employees receiving a certain denominated salary ceiling. Apparently, the wage order provisions that wage distortions shall be resolved through the grievance procedure was perceived by legislators as ineffective in checking industrial unrest resulting from wage order implementations. With the establishment of the second method as a practice in minimum wage fixing, wage distortion disputes were minimized. The increasing trend is toward the second mode, the salary-cap method, which has reduced disputes arising from wage distortions (brought about, apparently, by the floor-wage method). Of course, disputes are appropriate subjects of collective bargaining and grievance procedures, but as the Commission observed and as we are ourselves agreed, bargaining has helped very little in correcting wage distortions. Precisely, Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages roundthe-clock, and second, by giving the boards enough powers to achieve this objective. Congress meant the boards to be creative in resolving the annual question of wages without labor and management knocking on the legislature's door at every turn. If Republic No. 6727 intended the boards alone to set floor wages, the Act would have no need for a board but an accountant to keep track of the latest consumer price index, or better, would have Congress done it as the need arises, as the legislature, prior to the Act, has done so for years. The fact of the matter is that the Act sought a "thinking" group of men and women bound by statutory standards. It is true that wage-fixing, like rate constitutes an act Congress; it is also true, however, that Congress may delegate the power to fix rates provided that, as in all delegations cases, Congress leaves sufficient standards. As this Court has indicated, it is impressed that the standards embodied in article 124 of the Labor Code are sufficient, and in the light of the floor-wage method's failure. Apparently, ECOP is of the mistaken impression that Republic Act No. 6727 is meant to "get the Government out of the industry" and leave labor and management alone in deciding wages. The Court does not think that the law intended to deregulate the relation between labor and capital for several reasons provided by the basic principles in the Constitution, making it the States duty to intervene when the common good so demands. The Act is meant to rationalize wages, that is, by having permanent boards to decide wages rather than leaving wage determination to Congress year after year and law after law. The Court is not of course saying that the Act is an effort of Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave the question of wages to the expertise of experts. The concept of minimum wage means more than setting a floor wage to upgrade existing wages, as ECOP takes it to mean. The statute would have no need for a board if the question

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were simply "how much". The State is concerned, in addition, that wages are not distributed unevenly, and more important, that social justice is subserved. MABEZA VS. NLRC G.R. No. 118506; April 18, 1997 Facrs Around the first week of May 1991, petitioner and her co-employees at the Hotel Supreme in Baguio City were asked by the hotels management to sign an instrument attesting to the latters compliance with minimum wage and other labor standards provisions of law. The affidavit was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE, in an inspection of respondents establishment on February 2, 1991, apparently adverse to the private respondent. Petitioner refused to go to the City Prosecutors 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 DOLE in Baguio City. However, due to the refusal, 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. She reluctantly filed a leave of absence from her job, which was denied by management. When she attempted to return to work on May 10, 1991, the hotels cashier informed her that she should not report to work, and instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the NLRC, CAR, Baguio City. In addition, she alleged underpayment of wages, and non-payment of other benefits. Arguments Respondent: 1) Petitioner surreptitiously left without notice to the management and that she actually abandoned her work when she failed to return on May 8, 1991. 2) 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 hotels other employees. 3) According to the affidavit signed, his employees have no problems with management. 4) The hotel lost confidence in petitioner as evidenced by the criminal complaint of qualified theft filed before the Prosecutors Office on July 4, 1991. Issues Whether or not the dismissal constitutes an unfair labor practice. Whether or not the money claims are valid. Decision I. YES, IT DOES. The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse

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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. This actuation is analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code" which distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony" under the Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and conditions of employment. 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. II. YES, THEY ARE. Respondent claims that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and water she received during the period in her computations. Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's ages. 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. Private respondent "failed to present any company policy or guideline to show that the meal and lodging are part of the salary;" he failed to provide proof of the employee's written authorization; and, he failed to show how he arrived at the valuations. 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, therefore, 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. It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the full wage applicable from May 13, 1988 up to the date of her illegal dismissal, and other benefits. However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of employer-employee relationship to three (3) years from the time the cause of action accrues. JOY BROTHERS INC., NWPC 273 SCRA 622 Facts: A wage order was issued which provided for wage increase for all private sector workers and employees in the NCR receiving 154 pesos. Petitioner applied for exemption from said wage order on the ground that it was a distressed establishment. The RTWPB denied petitioners application for exemption after holding that the corporation accumulated profits amounting to 40,000 for the period under review. Issue: Whether or not petitioner is exempted

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Decision: The NWPC Revised Guidelines on Exemption provided that exemption from compliance with the wage increase may be granted to distressed establishment whose paidup capital has been impaired by at least 25% or which registers capital deficiency or negative net worth. Since wage order was published on December 1, 1993 and thus became effective on December 16, 1993, the coverage of the interim period shall be the three quarter prior to December 16, 1993, the third quarter ending on September 30, 1993. The petitioner errs in claiming that said interim period is up to December 15, 1993 or December 31, 1993. Hence, petitioner is not exempted. PRUBANKERS ASSOCIATION VS. PRUDENTIAL BANK G.R. No. 131247; January 25, 1999

Facts

On November 18, 1993, the RTWPB of Region V issued WO No. RB-05-03 which provided for a Cost of Living Allowance to workers in the private sector who had rendered service for at least three months before its effectivity, and for the same period thereafter. Subsequently, on November 23, 1993, the RTWPB of Region VII issued WO No. RB VII-03 which directed the integration of the COLA mandated pursuant to WO RB 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. Petitioner then granted a COLA of P17.50 to its employees at their branch covered by WO No. RB-5-03 and integrated the P15.00 per month COLA into the basic pay of its rank-andfile employees at two other branches, the branches covered by WO No. RB VII-03. On June 7, 1994, respondent 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 WOs. Respondent demanded in the Labor Management Committee meetings that petitioner extend the application of the WOs 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 petitioners employees nationwide. As the grievance could not be settled in the meetings, the parties agreed to submit the matter to voluntary arbitration. The Voluntary Arbitration Committee ruled that wage distortion existed. The Court of Appeals reversed the decision. Hence, this petition. Arguments Petitioner: 1) Wage distortion exists because the implementation of the two WOs had resulted in the discrepancy in the compensation of employees of similar pay classification in different regions. As a result of the two WOs, the employees in the affected regions have higher compensation than their counterparts of the same level in other regions. 2) It is wrong of the bank to peremptorily abandon a national wage structure and replace the same with a regionalized structure in violation of the principle of equal pay for equal work.

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3) The regional offices of the bank do not themselves constitute, but are simply branches of, the establishment which is the whole bank. In effect, the wage distortion covers the pay scales even of employees in different regions, and not only those of employees in the same region or branch. 4) The bank has adopted a uniform wage policy, which has attained the status of an established management practice. Issue Whether or not wage distortion exists. Whether or not the regionalized implementation of the WO violates the principle of equal pay for equal work. Whether or not the term establishment as used in article 125 of the Labor Code refers to the regional branches of the bank and not the bank as a whole. Whether or not the uniform wage policy of the bank has attained the status of an established management practice, thus the bank is estopped from implementing a wage order for a specific region. Decision I. NO, THERE IS NONE. Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. The concept of a wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees" 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 4. The existence of the distortion in the same region of the country In the present case, it is clear that no wage distortion resulted when respondent implemented the subject Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, lengh of service and other logical bases of differentiation was preserved. In other words, the quantitative difference in compensation between different pay classes remained the same in all branches in the affected region. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the implementation of the two Wage Orders in the said region. Hence, it cannot be said that there was a wage distortion. A wage parity between employees in different rungs, is not at issue here, but a wage disparity between employees in the same rung but located in different regions 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 previously enunciated, 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. Put

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differently, a wage distortion arises when a wage order engenders wage parity between employees in different rungs of the organizational ladder of the same establishment. It bears emphasis that wage distortion involves a parity in the salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in the same region. Furthermore, the difference in wages between employees in the same pay scale in different regions is not the mischief sought to be banished by the law. In fact, Republic Act No. 6727 (the Wage Rationalization Act), recognizes "existing regional disparities in the cost of living in section 2 of the law. Article 124 providing for the standards for minimum wage fixing also recognizes this fact. From the above-quoted rationale of the law, as well as the criteria enumerated, a disparity in wages between employees with similar positions in different regions is necessarily expected. To reiterate, a uniform national wage structure is antithetical to the purpose of RA 6727. It must be understood that varying in each region of the country are controlling factors such as the cost of living; supply and demand of basic goods, services and necessities; and the purchasing power of the peso. Other considerations underscore the necessity of the law. Wages in some areas may be increased in order to prevent migration to the National Capital Region and, hence, to decongest the metropolis. RA 6727 recognizes that there are different needs for the different situations in different regions of the country. The fact that a person is receiving more in one region does not necessarily mean that he or she is better off than a person receiving less in another region. We must consider, among others, such factors as cost of living, fulfillment of national economic goals, and standard of living. II. NO, IT DOES NOT. RA 6727 mandates that wages in every region must be set by the particular wage board of that region, based on the prevailing situation therein. Necessarily, the wages in different regions will not be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that in Region 13, because the socioeconomic conditions in the two regions are different. III. YES, IT DOES. Sec. 13 provides that the "minimum wage rates of workers working in branches or agencies of establishments in or outside the National Capital Region shall be those applicable in the place where they are sanctioned" The last part of the sentence was omitted by petitioner in its argument. Given the entire phrase, it is clear that the statutory provision does not support petitioner's view that "establishment" includes all branches and offices in different regions. Further negating petitioner's theory is NWPC Guideline No. 1 (S. 1992) entitled "Revised Guidelines on Exemption From Compliance With the Prescribed Wage/Cost of Living Allowance Increases Granted by the Regional Tripartite Wages and Productivity Board," which states that "establishment" "refers to an economic unit which engages in one or predominantly one kind of economic activity with a single fixed location." IV. NO, IT HAS NOT. Said nationwide uniform wage policy of the Bank had been adopted prior to the enactment of RA 6727. After the passage of said law, the Bank was mandated to regionalize its wage structure. Although the Bank implemented Wage Order Nos. NCR-01 and NCR-02 nationwide instead of regionally even after the effectivity of RA 6727, the Bank at the time was still uncertain about how to follow the new law. In any event, that single instance cannot be constitutive of "management practice."

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MILLARE v. NLRC 305 SCRA 501 Facts of the Case: 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. The issue is 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. Ruling of the Court: 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. 18

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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 G.R. No. 128845; June 1, 2000

Facts

Private respondent International School, Inc., pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School grants foreign-hires certain benefits not accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreignhires are also paid a salary rate twenty-five percent (25%) more than local-hires. When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members" of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties. On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. Arguments Petitioner: 1) The point-of-hire classification employed by the school is discriminatory to Filipinos. 2) The grant of higher salaries to foreign-hires constitutes racial discrimination. Respondent: 1) The compensation scheme is its adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. 2) The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires.

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3) There are significant economic disadvantages that foreign-hires have to endure dislocation factor and limited tenure. There are other faculty members with nationalities other than Filipino, who have been hired locally and classified as local-hires. They receive the same compensation package as localhires. There is substantial distinction between foreign-hires and local-hires Petitioner has not adduced evidence that local-hires perform work equal to that of foreignhires. Issues Whether or not the point-of-hire classification constitutes racial discrimination. Whether or not the point-of-hire classification violates the principle of equal pay for equal work. Decision I. and II. YES, IT DOES. That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. International law, which springs from general principles of law, likewise proscribes discrimination. In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace, the factory, the office or the field but include as well the manner by which employers treat their employees. The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. 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, its "international character" notwithstanding. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. The School cannot invoke the need to entice foreign-hires to leave their domicile

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to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers and promote their welfare," "to afford labor full protection." The State, therefore, has the right and duty to regulate the relations between labor and capital. These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must yield to the common good. Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations. In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreignhires and local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court. BANKARD EMPLOYEES UNION VS. NLRC G.R. No. 140689; February 17, 2004 Facts Bankard, Inc. classifies its employees by levels. On May 28, 1993, its Board of Directors approved a "New Salary Scale", made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industrys labor market. The "New Salary Scale" increased the hiring rates of new employees. Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted to reach such rates under their levels. Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to press for the increase in the salary of its old, regular employees. Bankard took the position, however, 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. As the continued request of petitioner for increase in the wages and salaries of Bankards regular employees remained unheeded, it filed a Notice of Strike on August 26, 1993 on the ground of discrimination and other acts of Unfair Labor Practice (ULP). A director of the National Conciliation and Mediation Board treated the Notice of Strike as a "Preventive Mediation Case" based on a finding that the issues therein were "not strikeable". Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain, discrimination, and other acts of ULP - union busting. The strike was averted, however, when the dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. The Second Division of the NLRC, by Order of May 31, 1995, finding no wage distortion, dismissed the case for lack of merit. Arguments Petitioner: 1) There is wage distortion. For purposes of wage distortion, the classification is not one based on levels or ranks, but on two groups of employees, the newly-hired and the old, in each and every level, and not between and among the different levels or ranks in the salary structure. The obligation to rectify wage distortion is not confined to wage distortion resulting from government decreed law or wage order.

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Issue Whether or not the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees without increasing the salary rates of old employees result in wage distortion. Decision NO, IT DOES NOT. 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. To determine the existence of wage distortion, the "historical" classification of the employees prior to the wage increase must be established. Likewise, it must be shown that as between the different classification of employees, there exists a "historical" gap or difference. The employees of private respondent have been "historically" classified into levels, and not on the basis of their length of service. Put differently, the entry of new employees to the company ipso facto place[s] them under any of the levels mentioned in the new salary scale which private respondent adopted retroactive [to] April 1, 1993. Petitioner cannot make a contrary classification of private respondents employees without encroaching upon recognized management prerogative of formulating a wage structure, in this case, one based on level. It is thus clear that there is no hierarchy of positions between the newly hired and regular employees of Bankard, hence, the first element of wage distortion provided in Prubankers is wanting. While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases where the nature of their work differs. 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-theboard increase in salary. the formulation of a wage structure through the classification of employees is a matter of management judgment and discretion. Whether or not a new additional scheme of classification of employees for compensation purposes should be established by the Company (and the legitimacy or viability of the bases of distinction there embodied) is properly a matter of management judgment and discretion, and ultimately, perhaps, a subject matter for bargaining negotiations between employer and employees. It is assuredly something that falls outside the concept of "wage distortion. Additionally, the third element is also wanting. Even assuming that there is a decrease in the wage gap between the pay of the old employees and the newly hired employees, to Our mind said gap is not significant as to obliterate or result in severe contraction of the intentional quantitative differences in the salary rates between the employee group. As already stated, the classification under the wage structure is based on the rank of an employee, not on seniority. For this reason, wage distortion does not appear to exist. Petitioner cannot legally obligate Bankard to correct the alleged "wage distortion" as the increase in the wages and salaries of the newly-hired was not due to a prescribed law or wage order. 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. 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

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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 Bankards 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. Petitioner cites Metro Transit Organization, Inc. v. NLRC to support its claim that the obligation to rectify wage distortion is not confined to wage distortion resulting from government decreed law or wage order. Reliance on Metro Transit is however misplaced, as the obligation therein to rectify the wage distortion was not by virtue of Article 124 of the Labor Code, but on account of a then existing "company practice" that whenever rank-and-file employees were paid a statutorily mandated salary increase, supervisory employees were, as a matter of practice, also paid the same amount plus an added premium. Wage distortion is a factual and economic condition that may be brought about by different causes. In Metro Transit, the reduction or elimination of the normal differential between the wage rates of rank-and-file and those of supervisory employees was due to the granting to the former of wage increase, which was, however, denied to the latter group of employees. 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. Unlike in Metro Transit then where there existed a "company practice," no such management practice is herein alleged to obligate Bankard to provide an across-the-board increase to all its regular employees. Furthermore, Bankards right to increase its hiring rate, to establish minimum salaries for specific jobs, and to adjust the rates of employees affected thereby is embodied in the parties CBA. This CBA provision, which is based on legitimate business-judgment prerogatives of the employer, is a valid and legally enforceable source of rights between the parties. In fine, absent any indication that the voluntary increase of salary rates by an employer was done arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any legitimate purpose other than to discriminate against the regular employees, this Court will not step in to interfere with this management prerogative. Employees are of course not precluded from negotiating with its employer and lobby for wage increases through appropriate channels, such as through a CBA. ODANGO VS. NLRC G.R. No. 147420; June 10, 2004 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 DOLE found it liable for underpayment of the monthly salaries of its employees. On September 10, 1989, the DOLE directed ANTECO to pay its employees the wage differentials. ANTECO failed to pay. Thus, in various dates in 1995, the employee filed complaints with the NLRC sub-regional branch VI, praying for payment of wage differentials, among other things. The Labor Arbiter ruled in favor of the employees. ANTECO appealed to the NLRC, which reversed the previous ruling. Arguments Petitioner: 1) ANTECO owes them wage differentials. Under the Omnibus Rules Implementing the Labor Code, Section 2, Rule IV, Book III, monthly-paid employees are

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considered paid for all days of the month, including un-worked days. They should be paid for all the 365 days of a year. In the computation of leave credits, ANTECO used a divisor of 304, thus it is not paying them 61 days every year. Issue Whether or not petitioners are entitled to their money claim. Decision NO, THEY ARE NOT. We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary (then Minister) of Labor are null and void since in the guise of clarifying the Labor Codes provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion. The Labor Code is clear that monthly-paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly-paid employees from the said benefits by inserting, under Rule IV, Book III of the implementing rules, Section 2 which provides that monthlypaid employees are presumed to be paid for all days in the month whether worked or not. Even assuming that Section 2, Rule IV of Book III is valid, petitioners claim will still fail. The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. In effect, petitioners demand that ANTECO should pay them on Sundays, the un-worked half of Saturdays and other days that they do not work at all. Petitioners line of reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal protection clause. Sustaining petitioners argument will make monthly-paid employees a privileged class who are paid even if they do not work. The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment. The facts show that petitioners are required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means that ANTECOs workers are deprived of their holiday pay for some or all of the ten legal holidays. The 304 days divisor used by ANTECO is clearly above the minimum of 287 days. C. PLANAS COMMERCIAL VS. NLRC G.R. No. 144619; November 11, 2005

Facts

On September 14, 1993, private respondents filed a complaint against petitioner for underpayment of wages, non-payment of overtime pay, and other benefits. Some respondents, though, signed quitclaims. Petitioner hired respondents as helpers or laborers in his wholesale plastic products and fruit business.

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Arguments Petitioner: 1) It is a retail establishment principally engaged in the sale of plastic products and fruits to the consumers for personal use, thus exempted from the application of the minimum wage law. 2) It merely leases and occupies a stall and the level of its business activity requires and sustains only less than 10 employees at a time. 3) Respondents were paid over and above the minimum wage required for a retail establishment. 4) The quitclaims entered into are valid, as they were entered into voluntarily by respondents. 5) They only worked 6 days a week, and not entitled to holiday and service incentive leave pays for they were employed in a retail and service establishment regularly employing less than 10 workers, thus exempt from the minimum wage requirement. Respondents: 1) They were paid below the minimum wage law for the past 3 years. They were required to work for more than 8 hours a day without overtime pay. 3) They never enjoyed holiday pay and did not have a rest day as they worked seven days a week. 4) They were not paid service incentive leave pay although they had been working for more than one year. 5) Petitioner employed more than 24 workers, thus not exempt from the minimum wage requirement. Issue Whether or not petitioner is exempted from the application of the minimum wage law. Whether or not the quitclaims are valid. Decision I. NO, IT IS NOT. Section 4 of R.A. No. 6727 provides for exemption from the coverage xxx. Clearly, for a retail/service establishment to be exempted from the coverage of the minimum wage law, it must be shown that the establishment is regularly employing not more than ten (10) workers and had applied for exemptions with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Petitioners had not shown any evidence to show that they had applied for such exemption and if they had applied, the same was granted. The clear policy of the Labor Code is to include all establishments, except a few classes, under the coverage of the provision granting service incentive leave to workers. Petitoiners claim is that they fell within the exception. Hence, it was incumbent upon them to prove that they belonged to a class excepted by law from the general rule. Specifically, it was the duty of petitioners, and not of respondents, to prove that there were less than ten (10) employees in the company. Having failed to discharge its task, petitioners must be deemed

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to be covered by the general rule, notwithstanding the failure of respondents to allege the exact number of employees of the corporation. II. YES, THEY ARE. Not all quitclaims are per se invalid or against public policy, except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In these cases, the law will step in to annul the questionable transactions. Such quitclaim and release agreements are regarded as ineffective to bar the workers from claiming the full measure of their legal rights. A quitclaim executed in favor of a company by an employee amounts to a valid and binding compromise agreement between them." In the absence of any showing that respondents were "coerced or tricked" into signing the Quitclaim and Release or that the consideration thereof was very low, they are bound by the conditions thereof. EJR CRAFTS CO. VS. CA G.R. No. 154101; March 10, 2006 Facts On August 22, 1997, an inspection was conducted on the premises of petitoners offices wherein it was found that certain violations of labor standards laws were committed. On the same day, the Notice of Inspection Result was received by and explained to, the manager, with the corresponding directive that necessary restitution be effected within five days from said receipt. As no restitution was made, the Regional Office conducted summary investigations. However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore, petitioner failed to question the findings of the Labor Inspector received by and explained to the manager. The inspection was prompted by the filing of respondents sometime in 1997 against petitioner a complaint for underpayment of wages, regular holiday pay, and other benefits. On November 6, 1997, the Regional Director issued a ruling against petitioner, which was appealed, but later on denied. Thus, the petition. Arguments Petitioner: The Regional Director has no jurisdiction over the case since respondents have ceased to be connected with petitioner at the time of the filing of the complaint as well as when the inspection/investigation was conducted. Thus, there being no ER-EE relationship, the claims of payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiter. Issue Whether or not the Regional Director had jurisdiction to hear the case. Decision

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YES, IT DOES. Aside from photocopies of documents entitled Release and Quitclaim, no other evidence was adduced by the petitioner to substantiate this claim. These documents, being mere photocopies are unreliable and incompetent without the original and deserves little credence or weight. As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. Since it is a timehonored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the formers favor. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code. PAG-ASA STEEL WORKS VS. CA G.R. No. 166647; March 31, 2006

Facts

Petitioner is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods. Respondent Union is the duly authorized bargaining agent of the rank-and-file employees of petitioner. On January 8, 1998, the RTWPB of the NCR issued Wage Order No. NCR-06. It provided for an increase of P13.00 per day in the salaries of employees receiving the minimum wage, and a consequent increase in the minimum wage rate to P198.00 per day. Petitioner and the Union negotiated on how to go about the wage adjustments. Petitioner forwarded a letter dated March 10, 1998 to the Union with the list of the salary adjustments of the rank-and-file employees after the implementation of Wage Order No. NCR-06, and the notation that said "adjustments were in accordance with the formula they have discussed and were]designed so as no distortion shall result from the implementation of Wage Order No. NCR-06." On September 23, 1999, petitioner and the Union entered into a Collective Bargaining Agreement (CBA), effective July 1, 1999 until July 1, 2004, wherein the company agreed to grant all the workers who are already regular and covered by the agreement a general wage increase. This shall be implemented across-the-board. Any WO implemented by RTWPB shall be in addition to the wage increase agreed upon. However, if no wage increase is given by the Board, within six months from the signing of the Agreement, the Company is willing to give a specified increase. The difference of the first year adjustment to retroact to July 1, 1999. The across-the-board wage increase for the 4th and 5th year of the Agreement shall be subject to a re-opening of re-negotiation as provided for by R.A. No. 6715. On October 14, 1999, Wage Order No. NCR-077 was issued, and on October 26, 1999, its Implementing Rules and Regulations. 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 July 1, 2000, the rank-and-file employees were granted the second year increase provided in the CBA in the amount of P25.00 per day. On November 1, 2000, WO No. NCR-08 took effect, providing for P26.50 increase to all employees receiving the P223.50 minimum wage, and setting the new minimum wage to P250.00 per day.

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Then Union president requested petitioner to implement the increase under Wage Order No. NCR-08 in favor of the companys rank-and-file employees. Petitioner rejected the request, claiming that since none of the employees were receiving a daily salary rate lower than P250.00 and there was no wage distortion, it was not obliged to grant the wage increase. The Union elevated the matter to the National Conciliation and Mediation Board. When the parties failed to settle, they agreed to refer the case to voluntary arbitration. On June 6, 2001, the VA rendered judgment in favor of the company and ordered the case dismissed. The Union filed a petition for review with the Court of Appeals. On September 23, 2004, the CA rendered judgment in favor of the Union and reversed that of the VA. Arguments Petitioner: 1) Respondent did not anchor its claim for such wage increase on the CBA but on an alleged company practice of granting the increase pursuant to a wage order. 2) The CBA is clear when it says that only the implementation of a wage order issued within six months from the execution of the CBA, and not every order issued during its effectivity. 3) It complied with WO No. NCR-07 which was issued 28 days after the execution of the CBA. This was implemented not because it was a matter of practice but because it was agreed upon in the CBA. 4) Union is not entitled to the wage increase provided under WO No. NCR-08 as a matter of practice. There is no company practice of granting a wage-order-mandated increase in addition to the CBA-mandated increase. The previous were not automatically implemented and were made applicable only after negotitations. 5) The previous WO were implemented because at that time, some employees were receiving salaries below the minimum wage and the resulting wage distortion had to be remedied. Respondent: 1) The provision in the CBA that says any WO to be implemented by the RTWPB shall be in addition to the wage increase adverted to above referred to a company practice of paying a wage increase whenever the government issues a wage order even if the employees salaries were above the minimum wage and there is no resulting wage distortion. 2) CBA contemplated all the salary increases that may be mandated by wage order to be issued in the future. Since the wage order was only a device to determine exactly how much and when the increase would be given, these increases are, in effect, CBA-mandated and not wage order increases. Issue Whether or not the wage increase under WO No. NCR-08 must be paid to the Union members as a matter of practice. Decision NO, IT SHOULD NOT. There is no dispute that, when the order was issued, the lowest paid employee of petitioner was receiving a wage higher than P250.00 a day. As such, its employees had no right to demand for an increase under said order. Employers (unless exempt) are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. Neither could they insist for an adjustment of P26.50 increase under Wage Order #8. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of 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.

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Additionally, the CBA cannot be considered independently of the wage order. 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. Regarding the contention that there exist a collateral agreement to pay the equivalent of wage orders across the board or at least to negotiate how much will be paid" and that "parol evidence is now applicable to show or explain what the unclean provisions of the CBA means regarding wage adjustment, is also untenable. We find it to have more than amply covered all aspects of the collective bargaining. To allow alleged collateral agreements or parol/oral agreements would be violative of the CBA provision afore-quoted. A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system. The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties. When a CBA may be expected to speak on a matter, but does not, its sentence imports ambiguity on that subject. The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the parties to anticipate or address all future problems, gaps may be left to be filled in by reference to the practices of the industry, and the step which is equally a part of the CBA although not expressed in it. In order to ascertain the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. The VA may also consider and rely upon negotiating and contractual history of the parties, evidence of past practices interpreting ambiguous provisions. The VA has to examine such practices to determine the scope of their agreement, as where the provision of the CBA has been loosely formulated. Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it. However, just like any other fact, habits, customs, usage or patterns of conduct must be proved. Habit, custom, usage or pattern of conduct must be proved like any other facts. Courts must contend with the caveat that, before they admit evidence of usage, of habit or pattern of conduct, the offering party must establish the degree of specificity and frequency of uniform response that ensures more than a mere tendency to act in a given manner but rather, conduct that is semi-automatic in nature. The offering party must allege and prove specific, repetitive conduct that might constitute evidence of habit. The examples offered in evidence to prove habit, or pattern of evidence must be numerous enough to base on inference of systematic conduct. Mere similarity of contracts does not present the kind of sufficiently similar circumstances to outweigh the danger of prejudice and confusion. In determining whether the examples are numerous enough, and sufficiently regular, the key criteria are adequacy of sampling and uniformity of response. After all, habit means a course of behavior of a person regularly represented in like circumstances. It is only when examples offered to establish pattern of conduct or habit are numerous enough to lose an inference of systematic conduct that examples are admissible. The key criteria are adequacy of sampling and uniformity of response or ratio of reaction to situations. The only instance when petitioner admittedly implemented a wage order despite the fact that the employees were not receiving salaries below the minimum wage was under Wage Order No. NCR-07. Petitioner, however, explains that it did so because it was agreed upon in the CBA that should a wage increase be ordered within six months from its signing, petitioner would give the increase to the employees in addition to the CBA-mandated

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increases. Respondents isolated act could hardly be classified as a "company practice" or company usage that may be considered an enforceable obligation. 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. In this case, petitioner granted the increase under Wage Order No. NCR-07 on its belief that it was obliged to do so under the CBA. EQUITABLE BANK VS. SADAC G.R. No. 164772; June 8, 2006 Facts Respondent was appointed VP of the legal department of petitioner, and subsequently, General Counsel thereof. On June 26, 1989, nine lawyers of petitioners legal department accused respondent of abusive conduct and ultimately petitioned for a change in leadership of the department. On the ground of lack of confidence in respondent, under the rules of client-lawyer relationship, petitioner instructed respondent to deliver all materials in his custody in all cases in which he was appearing as its counsel of record. Respondent requested a full hearing and formal investigation but the same remained unheeded. On November 9, 1989, respondent filed a complaint for illegal dismissal against petitioner and individual members of the BOD. After learning of the filing, petitioner terminated the services of respondent. On August 10, 1989, respondent was removed from his office and ordered disentitled to any compensation and other benefits. Respondent was found to have been illegally dismissed, entitling him to backwages from termination of employment until turning 60 years of age, and to retirement benefits in accordance with law. However, respondents computation of the total amount of the monetary reward differed from that of petitioners, as he included the general increases which he should have earned during the period of his illegal termination. Pursuant to a Motion for Execution filed by respondent with the Labor Arbiter, the latter ruled in favor of the formers computation. The NLRC reversed the Labor Arbiters decision. The CA ruled in favor of respondents. Hence, the petition for review by petitioner. Arguments Petitioner: 1) Article 279 of the Labor Code does not contemplate the inclusion of salary increases in the definition of full backwages. 2) While R.A. No. 6715, in amending article 279, intends to give more benefits to workers, nowhere in article 279, as amended, are salary increases spoken of. 3) The employee is paid the wage rate at the time of the dismissal. Respondent: 1) Article 279 of the Labor Code provides that it is the obligation of the employer to pay an illegally dismissed employee the whole amount of the salaries/wages,

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plus all other benefits and bonuses and general increases to which he could have been normally entitled to, had he not been dismissed. Thus, salary increases should be deemed a component in the computation of backwages. Issue Whether or not general salary increases should be included in the computation of full backwages. Decision NO, THEY ARE NOT. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the formers unlawful act or bad faith. Conformably with the evident legislative intent as expressed in Rep. Act No. 6715, abovequoted, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Article 279 mandates that an employees full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do not see that a salary increase can be interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. The term "allowances" is sometimes used synonymously with "emoluments," as indirect or contingent remuneration, which may or may not be earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are added to the employees salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not separate grants by themselves but once granted, they are deemed part of the employees salary. To extend the coverage of an allowance or a benefit to include salary increases would be to strain both the imagination of the Court and the language of law. Indeed, if the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. An unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal. The base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employees dismissal, inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under the law. "The term backwages without

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qualification and deduction means that the workers are to be paid their backwages fixed as of the time of the dismissal or strike without deduction for their earnings elsewhere during their layoff and without qualification of their wages as thus fixed; i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers who are not dismissed or did not go on strike. Awards including salary differentials are not allowed. The salary base properly used should, however, include not only the basic salary but also the emergency cost of living allowances and also transportation allowances if the workers are entitled thereto." Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of ones salary or wage. The outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment. Respondents claim, however, is based simply on expectancy or his assumption that, because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased, it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this contention is based merely on speculation. Furthermore, it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. The mere fact that he had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and, therefore, qualify for the said increase later. What is more, his claim is tantamount to saying that he had a vested right to remain as General Counsel and given salary increases simply because he had performed well in such position, and thus he should not be moved to any other position where management would require his services. There was no lawful decree or order supporting his claim, such that his 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 its nature volatile and are dependent on numerous variables, including the companys fiscal situation and even the employees future performance on the job, or the employees continued stay in a position subject to management prerogative to transfer him to another position where his services are needed. In short, there is no vested right to salary increases. That respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadacs computation of his full backwages which includes his prospective salary increases cannot be permitted. 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 Sadacs 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. The distinction between salary and wage was for the purpose of Article 1708 of the Civil Code which mandates that, "the laborers 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 Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another mans 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. METROPOLITAN BANK VS. NWPC

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G.R. No. 144322; February 6, 2007 Facts On October 17, 1995, the RTWPB, Region II, issued WO No. RO2-03, mandating all employees or workers in the private sector throughout Region II, regardless of the status of employment, be granted an across-the-board increase of P15.00 daily. In a letter-inquiry to the NWPC dated July 23, 1996, petitioner sought for interpretation of the applicability of the Wage Order. In a letter-reply on August 12, 1996, the RTWPB clarified that the wage orders covers all private establishments situated in Region II, regardless of the voluntary adoption by said establishments of the wage orders established in Metro Manila and irrespective of the amounts already paid by petitioner. Petitioner appealed to the CA, which denied the petition. Hence, the present petition to the SC. Arguments Petitioner: 1) RTWPB, in issuing the wage order, exceeded the authority delegated to it under R.A. No. 6727, which is limited to determining and fixing the minimum wage rate within their respective territorial jurisdiction and with respect only to employees who do not earn the prescribed minimum wage rate. 2) RTWPB is not authorized to grant a general across-the-board wage increase for nonminimum wage earners. 3) The WO is an unreasonable intrusion into its property rights, undermines the essence of collective bargaining and fails to take into account the rationale for a unified wage structure. 4) The WO undermines the essence of collective bargaining. 5) The WO fails to take into account the rationale for a unified wage structure. 6) Ultra vires acts of administrative agencies are correctible by way of a writ of certiorari and prohibition; that even assuming that it did not observe the proper remedial procedure in challenging the Wage Order, the remedy of certiorari and prohibition remains available to it by way of an exception, on grounds of justice and equity Respondent: 1) The WO was issued pursuant to the mandate of R.A. No. 6727 and in accordance with jurisprudence. 2) The WO is not an intrusion into its property rights, undermines the essence of collective bargaining and fails to take into account the rationale for a unified wage structure. 3) Petitioners petition is fatally defective from inception since no appeal from the WO was filed. The letter-query to the NWPC did not constitute the appeal contemplated by law. Issue Whether or not the WO is void and of no legal effect. Whether or not petitioners recourse to a petition for certiorari and prohibition with the CA was proper.

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Decision I. YES IT IS, BUT ONLY TO THE PART THAT GRANTS A WAGE INCREASE TO EMPLOYEES EARNING MORE THAN THE MINIMUM WAGE RATE. 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. There are two ways of fixing the minimum wage: the "floor-wage" method and the "salaryceiling" 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 "salaryceiling" 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. To illustrate: under the "floor wage method", it would have been sufficient if the Wage Order simply set P15.00 as the amount to be added to the prevailing statutory minimum wage rates, while in the "salary-ceiling method", it would have been sufficient if the Wage Order states a specific salary, such as P250.00, and only those earning below it shall be entitled to the salary increase. In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. The Wage Order granted additional benefits not contemplated by R.A. No. 6727. It has been said that when the application of an administrative issuance modifies existing laws or exceeds the intended scope, as in this case, the issuance becomes void, not only for being ultra vires, but also for being unreasonable. Thus, the Court finds that 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. However, employees, other than minimum wage earners, who received the wage increase mandated by the Wage Order need not refund the wage increase received by them since they received the wage increase in good faith, in the honest belief that they are entitled to such wage increase and without any knowledge that there was no legal basis for the same. II. NO, IT WAS NOT. BUT SINCE ACCEPTANCE OF A PETTION FOR CERTIORARI OR PROHIBITION AS WELL AS THE GRANT OF DUE COURSE THERETO IS ADDRESSED TO THE SOUND DISCRETION OF THE COURT, THE PETITION IS GIVEN DUE COURSE.

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Certiorari as a special civil action is available only if the following essential requisites concur: (1) it must be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law. On the other hand, prohibition as a special civil action is available only if the following essential requisites concur: (1) it must be directed against a tribunal, corporation, board, officer, or person exercising functions, judicial, quasi-judicial, or ministerial; (2) the tribunal, corporation, board or person has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. A respondent is said to be exercising judicial function where he has the power to determine what the law is and what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties. Quasi-judicial function is a term which applies to the action, discretion, etc., of public administrative officers or bodies, who are required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature. Ministerial function is one which an officer or tribunal performs in the context of a given set of facts, in a prescribed manner and without regard to the exercise of his own judgment upon the propriety or impropriety of the act done. In the issuance of the assailed Wage Order, respondent RTWPB did not act in any judicial, quasi-judicial capacity, or ministerial capacity. It was in the nature of subordinate legislation, promulgated by it in the exercise of delegated power under R.A. No. 6727. It was issued in the exercise of quasi-legislative power. Quasi-legislative or rule-making power is exercised by administrative agencies through the promulgation of rules and regulations within the confines of the granting statute and the doctrine of non-delegation of certain powers flowing from the separation of the great branches of the government. Moreover, the rule on the special civil actions of certiorari and prohibition equally mandate that these extra-ordinary remedies are available only when "there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law." A remedy is considered plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effects of the judgment or rule, order or resolution of the lower court or agency. Section 13 of the assailed Wage Order explicitly provides that any party aggrieved by the Wage Order may file an appeal with the NWPC through the RTWPB within 10 days from the publication of the wage order.31 The Wage Order was published in a newspaper of general circulation on December 2, 1995. In this case, petitioner did not avail of the remedy provided by law. No appeal to the NWPC was filed by the petitioner within 10 calendar days from publication of the Wage Order on December 2, 1995. Petitioner was silent until seven months later, when it filed a letterinquiry on July 24, 1996 with the NWPC seeking a clarification on the application of the Wage Order. Evidently, the letter-inquiry is not an appeal. It must also be noted that the NWPC only referred petitioner's letter-inquiry to the RTWPB. Petitioner did not appeal the letter-reply dated August 12, 1996 of the RTWPB to the NWPC. No direct action was taken by the NWPC on the issuance or implementation of the Wage Order. Petitioner failed to invoke the power of the NWPC to review regional wage levels set by the RTWPB to determine if these are in accordance with prescribed guidelines. Thus, not only was it improper to implead the NWPC as party-respondent in the petition before the CA and this Court, but also petitioner failed to avail of the primary jurisdiction of the NWPC under Article 121 of the Labor Code. Under the doctrine of primary jurisdiction, courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the

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special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact. Nevertheless, the Court will proceed to resolve the substantial issues in the present petition pursuant to the well-accepted principle that acceptance of a petition for certiorari or prohibition as well as the grant of due course thereto is addressed to the sound discretion of the court. It is a well-entrenched principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and promote the administration of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate, rather than promote substantial justice, must always be eschewed. WAGE ENFORCEMENT AND RECOVERY RAJAH HUMABON HOTEL VS. TRAJANO G.R. No. 100222-23; November 14, 1993 Facts For redress in regard to underpaid wages and non-payment of benefits, respondents turned to the Regional Director of the DOLE. Subsequent to its institution on March 14, 1989 of the initial pleading with Regional Office No. 7 of the DOLE, 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 pickets staged by other workers at the premises which prevented the inspectors entry thereat. At the re-scheduled examination after closure of petitoners business on April 16, 1989, instead of presenting the payrolls and daily time records of respondents, petitioner submitted a motion to dismiss, on the supposition that the Regional Director has no jurisdiction over the claim because the EE-ER relationship has been severed as a result of the closure of petitioners business, apart from the fact that each of the claims of respondents exceeded the jurisdictional limit of P5000 as pegged by R.A. No. 6715 of the New Labor Relations Law. Petitioners plea was rejected by the Regional Director. The DOLE sustained the Order. Thus, the petition to the SC. Arguments Petitioner: 1) The subsequent severance of EE-ER relationship between the parties divested the Regional Director of his jurisdiction over the case, as the severance reduced respondents grievances to simple monetary demands. It is the Labor Arbiter who may properly entertain the grievance. Respondent: In addition to money claims, they are also advancing enforcement of Labor Standards laws, which are within the authority of the Regional Director. Issue Whether or not the Regional Director has authority to hear the case. Decision NO, IT DOES NOT.

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The regional directors under Republic Act No. 6715, can try money claims only if the following requisites concur: the claim is presented by an employee or person employed in domestic or household service, or househelper under the code; the claimant, no longer being employed, does not seek reinstatement; and, the aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00). 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. In the process of harmonizing Articles 128 (b), 129 and 217(6) of the Labor Code, a careful consideration of the above-quoted three (3) provisions of the Labor Code leads the Court to reiterate its ruling that the exclusive jurisdiction to hear and decide employees' claims arising from employer-employee relations, exceeding the aggregate amount of P5,000.00 for each employee, is vested in the Labor Arbiter (Article 217 (a) [6]). This exclusive jurisdiction of the Labor Arbiter is confirmed by the provisions of Article 129 which excludes from the jurisdiction of the Regional Director or any hearing officer of the Department of Labor the power to hear and decide claims of employees arising from employer-employee relations exceeding the amount of P5,000.00 for each employee. To construe the visitorial power of the Secretary of Labor to order and enforce compliance with labor laws as including the power to hear and decide cases involving employees' claims for wages, arising from employer-employee relations, even if the amount of said claims exceed P5,000.00 for each employee, would, in our considered opinion, emasculate and render meaningless, if not useless, the provisions of Article 217 (a) (6) and Article 129 of the Labor Code which, as above-pointed out, confer exclusive jurisdiction on the Labor Arbiter to hear and decide such employees' claims (exceeding P5,000.00 for each employee). To sustain the respondents' position would, in effect, sanction a situation where all employees' claims, regardless of amount, can be heard and determined by the Secretary of Labor under his visitorial power. This does not, however, appear to be the legislative intent. We further hold that to harmonize the above-quoted three (3) provisions of the Labor Code, the Secretary of Labor should be held as possessed of his plenary visitorial powers to order the inspection of all establishments where labor is employed, to look into all possible violations of labor laws and regulations but the power to hear and decide employees' claims 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 other words, the inspection conducted by the Secretary of Labor, through labor regulation officers or industrial safety engineers, may yield findings of violations of labor standard under labor laws; the Secretary of Labor may order compliance with said labor standards, if necessary, through appropriate writs of execution but when the findings disclose an employee claim of over P5,000.00, the matter should be referred to the Labor Arbiter in recognition of his exclusive jurisdiction over such claims. Nor is this position devoid of sound reason or purpose, because the proceedings before the Secretary of Labor (or his agents) exercising his visitorial powers is summary in nature. On the other hand, proceedings before the Labor Arbiters are more formal and in accord with rules of evidence. When the employee's claim is less than P5,000.00, a summary procedure for its settlement can be justified, but not when a claim is more or less substantial, from the standpoint of both employee and management, for which reason, an employee's claim exceeding P5,000.00 is placed within the exclusive jurisdiction of the Labor Arbiter to hear and decide; Article 129 of the Labor Code expressly provides that "upon complaint of any interested party," the Regional Director (and, consequently, the Secretary of Labor to whom appeals from the Regional Director are taken) is empowered to hear and decide simple money claims, i. e. those that do not exceed P5,000.00 for each employee, employing for this purpose a summary procedure. If Article 128 (b) of the Labor Code were to be construed as empowering the Secretary of Labor, under his visitorial power, to hear and decide all types of employee's claims, including those exceeding P5,000.00 for each employee, employing for this purpose a summary procedure, then, Article 129 (limiting the Regional

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Director's jurisdiction to a claim not exceeding P5,000.00) becomes a useless surplusage in the Labor Code; and Article 129 would seem to limit the jurisdiction of the Regional Director (and, therefore, the Secretary of Labor on appeal from the Regional Director) to "complaints of any interested party" seeking an amount of not more than P5,000.00, for each employee, it cannot be that, because of the absence of any complaint from any interested party, the Secretary of Labor under his visitorial power, is motu proprio empowered to hear and decide employee's claim of more than P5,000.00, for each employee. GUICO VS. SECRETARY OF LABOR G.R. No. 131750; November 16, 1998

Facts

The Office of the Regional Director, DOLE, Region 1, received a letter-complaint dated April 25, 1995, requesting for an investigation of petitioner establishment for violation of labor standards laws. Pursuant to article 128 of the Labor Code, as amended, inspections were conducted at petitoners outlets on April 27 and May 2, 1995. The inspections yielded the violations of certain labor standards laws with regards to 21 employees. The first hearing was thus held on June 14, 1995. On July 14, 1995, petitioner submitted a Joint Affidavit signed and executed by the employees expressing their disinterest in prosecuting the case and their waiver and release of petitioner from his liabilities arising from violations of labor standards laws. Individually signed documents dated December 21, 1994 purporting to be the employees receipt, waiver and quitclaim were also submitted. In the investigation conducted on July 21, 1995, the employees claimed that they signed the JA for fear of losing their jobs. They added that their daily salary was increased but the incentive and commission schemes were discontinued. They alleged that they did not waive the unpaid benefits due them. The Regional Director ruled in favor or respondents. Subsequently, petitioner questioned the jurisdiction of the Regional Director, citing article 129 of the Labor Code, as amended and section 1 Rule IX of the Implementing Rules of R.A. No. 6715. Arguments Petitioner: 1) The Regional Director has no jurisdiction over this case since the individual money claims of the 21 employees exceed P5000. 2) Following article 129 of the Labor Code, as amended and section 1, Rule IX of the Implementing Rules of R.A. No. 6715, the Labor Arbiter has jurisdiction and the Regional Director should have endorsed it to the appropriate NLRC branch. Respondent: The jurisdictional limitation imposed by article 129 on the SOLEs visitorial and enforcement power under article 128(b) of the Labor Code, as amended, has been repealed by R.A. No. 7730. The amendment nothwithstanding the provisions of article 129 and 217 of the Labor Code to the contrary erased all doubts as to the amendatory nature of the new law. Issue Whether or not the Regional Director has jurisdiction over the instant labor standards case.

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Decision YES, IT DOES. The ruling 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. EJR CRAFTS CO. VS. CA G.R. No. 154101; March 10, 2006 Facts On August 22, 1997, an inspection was conducted on the premises of petitoners offices wherein it was found that certain violations of labor standards laws were committed. On the same day, the Notice of Inspection Result was received by and explained to, the manager, with the corresponding directive that necessary restitution be effected within five days from said receipt. As no restitution was made, the Regional Office conducted summary investigations. However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore, petitioner failed to question the findings of the Labor Inspector received by and explained to the manager. The inspection was prompted by the filing of respondents sometime in 1997 against petitioner a complaint for underpayment of wages, regular holiday pay, and other benefits. On November 6, 1997, the Regional Director issued a ruling against petitioner, which was appealed, but later on denied. Thus, the petition. Arguments Petitioner: The Regional Director has no jurisdiction over the case since respondents have ceased to be connected with petitioner at the time of the filing of the complaint as well as when the inspection/investigation was conducted. Thus, there being no ER-EE relationship, the claims of payment of monetary benefits fall within the exclusive and original jurisdiction of the Labor Arbiter.

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Issue Whether or not the Regional Director had jurisdiction to hear the case. Decision YES, IT DOES. Aside from photocopies of documents entitled Release and Quitclaim, no other evidence was adduced by the petitioner to substantiate this claim. These documents, being mere photocopies are unreliable and incompetent without the original and deserves little credence or weight. As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. Since it is a timehonored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the formers favor. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code. EX-BATAAN VETERANS SECURITY AGENCY VS. SOLE G.R. No. 152396; November 20, 2007 Facts Petitioner is in the business of providing security services while respondents are employees assigned to the National Power Corporation. On February 20, 1996, respondents instituted a complaint for underpayment of wages against petitioner before the Regional Office of the DOLE. On March 7, 1996, the Regional Office conducted a complaint inspection of the Plant, and violations of labor standards laws were found. On the same date, the Regional Office issued a notice of hearing, requiring petitioner and respondents to attend. On August 19, 1996, the Director of the Regional Office issued an order in favor of respondents. Petitioner filed a motion for reconsideration, questioning the jurisdiction of the Regional Director, which was denied. Petitioner appealed to the SOLE, which affirmed the Regional Directors orders. Petitioner appealed to the CA, which dismissed the petition. Hence, the present petition. Arguments Petitioner: 1) The Regional Director did not acquire jurisdiction over petitioner because he failed to comply with section 11, Rule 14 of the 1997 Rules of Civil Procedure. The notice of hearing was served at the Plant, not at petitioners main office, and addressed to its VP.

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2) Under articles 129 and 217(b) of the Labor Code, the Labor Arbiter, not the Regional Director, has exclusive and original jurisdiction over the case because the individual monetary claim of respondents exceeds P5000. 3) The case falls under the exception clause in article 128(b) of the Labor Code. The Regional Director should have certified the case to the arbitration branch of the NLRC. Issue Whether or not the SOLE or his duly authorized representatives acquired jurisdiction over petitioner. Whether or not the SOE or his duly authorized representatives have jurisdiction over the money claims which exceed P5000. Decision I. YES, THEY HAVE. The Rules on the Disposition of Labor Standards Cases in the Regional Offices (rules) specifically state that notices and copies of orders shall be served on the parties or their duly authorized representatives at their last known address or, if they are represented by counsel, through the latter. The rules shall be liberally construedand only in the absence of any applicable provision will the Rules of Court apply in a suppletory character. In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao, detachment commander and bookkeeper of EBVSAI, respectively, appeared before the Regional Director. They claimed that the 22 March 1996 notice of hearing was received late and manifested that the notices should be sent to the Manila office. Thereafter, the notices of hearing were sent to the Manila office. They were also informed of EBVSAIs violations and were asked to present the employment records of the private respondents for verification. They were, moreover, asked to submit, within 10 days, proof of compliance or their position paper. The Regional Director validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional Director after receiving the notices of hearing and after appearing before the Regional Director. II. YES, THEY DO. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus: Art. 128 Visitorial and enforcement power. --- (b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where the relationship of employeremployee 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

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employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217of this Code to the contrary x x x thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representatives to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officer or industrial safety engineer made in the course of inspection. The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000. However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause. The Court notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. It was only in its supplemental motion for reconsideration before the Regional Director that EBVSAI questioned the findings of the labor regulations officer and presented documentary evidence to controvert the claims of private respondents. But even if this was the case, the Regional Director and the Secretary of Labor still looked into and considered EBVSAIs documentary evidence and found that such did not warrant the reversal of the Regional Directors order. The Secretary of Labor also doubted the veracity and authenticity of EBVSAIs documentary evidence. Moreover, the pieces of evidence presented by EBVSAI were verifiable in the normal course of inspection because all employment records of the employees should be kept and maintained in or about the premises of the workplace, which in this case is in Ambuklao Plant, the establishment where private respondents were regularly assigned. CATHOLIC VICARIATE BAGUIO CITY V. HON. STO. TOMAS GR No. 167334, March 7, 2008 FACTS: Petitioner contracted Kunwha Luzon Construction (KUNWHA) 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.

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On 29 August 2000, respondent George 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 12 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 of P1,029,952.80 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. On 21 May 2001, the Regional Director dismissed the complaint by reason of the said settlement. On appeal, the Secretary of Labor reversed the ruling of the Regional Director and held that pursuant to Articles 106 and 107 of the Labor Code, the liability of KUNWHA, CEREBA and the Catholic Vicariate is solidary notwithstanding the absence of an employeremployee relationship.The settlement with respect to the 23 workers was declared unconscionable and the Order of the Regional Director dated 12 March 2001 was reinstated. On 28 September 2004, the Court of Appeals affirmed the order of the Secretary of Labor with the modification that payments made in favor of the 23 workers amounting to P84,544.00 be deducted from whatever amount still due each of them. ISSUES: (1) 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; (2) whether the quitclaims signed by affected employees are valid; and (3) whether the appeal interposed by petitioner inures to the benefit of the other affected employees. RULING: (1) 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 formers jurisdiction to hear and decide the case. This Court declares that petitioner is barred by estoppel from raising the issue of jurisdiction. (2) Not all quitclaims are per se invalid or against public policy. A quitclaim is said to be invalid and against public policy (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In such cases, the law will step in to annul the questionable transaction. The second exception obtains in the case at bar. Indeed, as ordered by the Regional Director, the 23 affected workers are entitled to receive P12,560.40 each or a total of P288,889.20 for unpaid wages and special and regular holiday premium pay. KUNWHA however paid them only P84,544.00, less than half of what they are entitled to as computed by the Regional Director. Therefore, this Court is not inclined to sustain the validity of the quitclaims although apparently they were signed voluntarily and in the presence of the Regional Director. (3) Finally, petitioner asserts that the Secretary of Labor erred in granting affirmative relief to those who did not appeal. On the contrary, however, the Court of Appeals properly affirmed the monetary award of the Secretary of Labor to the other affected employees.

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While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. Instant petition for review is DENIED. SAPIO VS. UNDALOC CONSTRUCTION, ET. AL. G.R. No. 155034; May 22, 2008 Facts 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. Petitioner filed a complaint against respondent for illegal dismissal, underpayment of wages and non-payment of statutory benefits. It should be useful to note that respondent is a single proprietorship engaged in road construction business. On July 12, 1999, the Labor Arbiter rendered a decision against petitioner, to which they appealed to the NLRC. The NLRC sustained the Labor Arbiters decision. An appeal to the CA yielded no result. Thus, the instant petition. Arguments Petitioner: 1) He was a regular employee having been engaged to perform works which are usually necessary or desirable in respondents business. 2) From 1 May to 31 August 1995 and from 1 September to 31 December 1995, his daily wage rate was only P80.00 and P90.00, respectively, instead of P121.87 as mandated by Wage Order No. ROVII-03. From 1 March 1996 to 30 May 1998, his daily rate was P105.00. 3) He was made to sign two payroll sheets, the first bearing the actual amount he received wherein his signature was affixed to the last column opposite his name, and the second containing only his name and signature. 4) He also averred that his salary from 18 to 30 May 1998 was withheld by respondents 5) He was paid a daily salary way below the minimum wage provided for by law. His claim of salary differential represents the difference between the daily wage he actually received and the statutory minimum wage, Respondents: 1) Petitioner was hired as a project employee on 1 May 1995 and was assigned as watchman from one project to another until the termination of the project on 30 May 1998. 2) He was indeed paid, as evidenced by 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.

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Issue Whether or not the payrolls made in pencil were valid. Whether or not petitioner is entitled to the salary differential ordered by the Labor Arbiter. Decision I. YES, THEY ARE. The conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. The claim that the December 1995 payroll sheet was written in pencil and was thus rendered it prone to alterations or erasures is clearly non sequitur. The same is true with respect to the typewritten payroll sheets. In fact, neither the Labor Arbiter nor the NLRC found any alteration or erasure or traces thereat, whether on the pencil-written or typewritten payroll sheets. Indeed, the most minute examination will not reveal any tampering. Furthermore, if there is any adverse conclusion as regards the December 1995 payroll sheet, it must be confined only to it and cannot be applied to the typewritten payroll sheets. 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, petitioners bare assertions of fraud do not suffice to overcome the disputable presumption of regularity. II. NO, HE IS NOT. The Labor Arbiter erred in his computation. He fixed the daily wage rate actually received by petitioner at P105.00 without taking into consideration the P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover, the Labor Arbiter misapplied the wage orders when he wrongly categorized respondent as falling within the first category. Based on the stipulated number of employees and audited financial statements, respondents should have been covered by the second category. The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00 However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00. Section 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act shall be punished by a fine not less than Twenty-five thousand pesos (P25,000.00) nor more than One hundred thousand pesos (P100,000.00) or imprisonment of not less than two (2) years nor more than four (4) years, or both such fine and imprisonment at the discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law. The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act.

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If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entitys responsible officers, including, but not limited to, the president, vice president, chief executive officer, general manager, managing director or partner. The award of attorneys fees is warranted under the circumstances of this case. Under Article 2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of wages of laborers and actions for indemnity under employer's liability laws but shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

HON. SECRETARY OF LABOR VS. PANAY VETERANS SECURITY AND INVESTIGATION AGENCY GR NO. 167708, AUGUST 22, 2008 Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr.[4] were hired by respondent Panay Veterans Security and Investigation Agency, Inc. as security guards stationed at the plant site of Food Industries, Inc. (FII) 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. This prompted them to file a complaint for violation of labor standards in the regional office of DOLE NCR. A labor employment officer conducted an inspection of respondent security agency but respondent security agency failed to present its payroll as well as the daily time records. Such was noted as violation and the officer, thereafter, issued a notice of inspection to respondent security agency. Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor employment officers findings. Thus, the Regional Director of DOLE-NCR rendered judgment in favor of petitioners Agapay and Alonso, Jr. Respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of Labor and Employment. The Secretary of Labor and Employment found that respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. Thus, the appeal was dismissed. Upon appeal, the CA initially dismissed the petition for lack of merit but later on granted reconsideration and allowed respondents to pursue their appeal. Issue: Whether or not respondents may still pursue their appeal Held: We uphold the Secretary of Labor and Employment. RESPONDENTS FAILED TO PERFECT THEIR APPEAL Article 128(b) of the Labor Code clearly provides that the appeal bond must be in the amount equivalent to the monetary award in the order appealed from. The records show that petitioner failed to post the required amount of the appeal bond. His appeal was therefore not perfected. The rule is that, to perfect an appeal of the Regional Directors 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.

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In this case, respondents admit that they failed to post the required bond when they filed their appeal to the Secretary of Labor and Employment. Because of such failure, the appeal was never perfected. MOTION TO REDUCE APPEAL BOND IS NOT ALLOWED IN APPEALS TO THE SECRETARY OF LABOR The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and Employment. 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. The CAs amended decision also contradicted the spirit that animates all labor laws, the promotion of social justice and the protection of workers. The posting of a cash or surety bond to perfect an appeal of an order involving a monetary award has a two-fold purpose: (1) to assure the employee that, if he finally prevails in the case, the monetary award will be given to him upon dismissal of the employers appeal and (2) to discourage the employer from using the appeal to delay or evade payment of his obligations to the employee. The CA should have resolved any doubt in the implementation and interpretation of the Labor Code and its implementing rules in favor of labor. MONETARY AWARD IS SUBJECT TO LEGAL INTEREST The obligation of respondents to pay the lawful claims of petitioners Agapay and Alonso, Jr. was established with reasonable certainty when respondents received the notice of inspection from the labor employment officer. Since such obligation did not constitute a loan or forbearance of money, it was subject to legal interest at the rate of 6% per annum from that date until the May 10, 2001 order of the DOLE-NCR Regional Director attained finality. From the time the May 10, 2001 order of the DOLE-NCR Regional Director became final and executory, petitioners Agapay and Alonso, Jr. were entitled to 12% legal interest per annum until the full satisfaction of their respective claims. NATIONAL MINES AND ALLIED WORKERS UNION VS. MARCOPPER MINING CORP. GR NO. 174641, NOVEMBER 11, 2008 FACTS: On April 1, 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. It filed a complaint at 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.

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Labor Arbiter Pedro C. Ramos ruled in NAMAWU's favor. MARCOPPER and the President and its General Manager of the company were ordered to pay jointly and severally the rank-andfile workers represented by NAMAWU and other employees similarly situated their wages for suspension of operation for the period April 12, 1996 to October 12, 1996; separation pay; and attorneys fees. 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. The NLRC dismissed MARCOPPER's appeal for its failure to post the appeal bond required by Article 223 of the Labor Code. Loney (President) and Reed (General Manager) were at the same time dropped as respondents in the case. The NLRC subsequently denied MARCOPPER's motion for reconsideration.11 MARCOPPER thus sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court. The petition imputed grave abuse of discretion on the NLRC for disregarding an earlier CA decision on the illegal strike case involving the same parties and the same reliefs; and for awarding wages and separation pay to NAMAWU members who had earlier been dismissed and were no longer MARCOPPER employees when MARCOPPER suspended its operations. The CA granted MARCOPPERs petition, nullified the resolution of the NLRC, and ordered the NLRC to give due course to MARCOPPERs appeal. The CA found the non-filing of the appeal bond for the 615 NAMAWU members covered by the Labor Arbiter's award to be justified since their employment had been terminated as early as March 7, 1995, i.e., prior to the suspension of operations for which wages and separation pay were being claimed. The CA noted in the assailed decision that it had previously confirmed the validity of the termination of employment of NAMAWU members in its decision dated May 28, 1999 on the illegal strike case. The CA stressed that NAMAWU elevated the illegal strike case in this court but denied the petition for review. Further, CA denied NAMAWUs motion for reconsideration. Thus, this petition. ISSUES: Whether the CA erred in ruling that there was no need for MARCOPPER to post an appeal bond; Whether the CA erred in ordering the NLRC to give due course to MARCOPPER's appeal. RULING: SC stated at the outset that they do not agree with NAMAWU's position that the illegal strike case between it and MARCOPPER is "an entirely separate and distinct case not connected with the case under consideration." In the first place, both the previous and the present cases are between the same parties - NAMAWU and MARCOPPER. Both cases refer to termination of employment and its consequences. In fact, the payment of separation pay that NAMAWU seeks in the present case was considered by the NLRC in its decision in the illegal strike case, although the award was stricken out by the CA when the illegal strike case was brought to it for review.

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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. The environmental incident referred to in this illegal strike ruling is the same environmental incident that gave rise to the present complaint that NAMAWU filed on April 10, 1996. While the NLRC had not yet ruled on the illegal strike case when the present environmental incident complaint was filed, the Labor Arbiter's ruling on the latter complaint came very much later, in fact long after both the NLRC and the CA had ruled on the illegal strike case. The NLRC denied the motion for reconsideration of its November 11, 1996 decision in the illegal strike case on June 11, 1997, while the CA issued its decision on the same case on May 28, 1999. The Labor Arbiter issued his decision on the present environmental incident case only on March 14, 2000. Under this sequence of rulings, the Labor Arbiter effectively restored in the environmental incident case the same separation pay award that the CA struck off from the NLRC decision in the illegal strike case. In effect, the Labor Arbiter disregarded the CA ruling and actually reversed it. Further, the NLRC was already burdened with knowledge of the final and executory decision of no less than this Court (confirming the March 7, 1995 dismissal of the striking NAMAWU members) when the NLRC issued its decision in the present case dismissing the MARCOPPER appeal for failure to file an appeal bond for the already dismissed workers. Thus, like the Labor Arbiter below, the NLRC in effect sought to negate what a higher tribunal, this Court no less, had already affirmed and confirmed, i.e., the termination of employment of 615 NAMAWU members. Whether the CA erred in ruling that there was no need for MARCOPPER to post an appeal bond 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. SC subsequently ruled on the same issue during the time the environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed MARCOPPER's appeal for failure to file the requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a settled matter that the NLRC was in no position to disregard. In this light, the CA was correct in reversing the dismissal of MARCOPPER's appeal for failure to file an appeal bond. Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWU's complaint with respect to its 615 previously dismissed members. In contrast with the above, the case of the three other employees - Apollo V. Saet, Rogelio Regencia and Jose Romasanta - who were in MARCOPPER's employ at the time of the suspension of operations on April 12, 1996 and for whom MARCOPPER properly posted an appeal bond before the NLRC - is another matter. The SC ruled on it even if it is within the jurisdiction of the NLRC since it passed a decade from that issue. SC find from the pleadings filed that the environmental incident that gave rise to NAMAWU's April 1996 complaint to be undisputed; MARCOPPER caused the spillage of mine waste and tailings into the Boac River. Neither is it disputed that the company had to suspend its operations by order of the DENR, and that the company's indefinite cessation of operations lasted beyond the 6-month temporary suspension of operations that Article 286 of the Labor Code allows. All that remains is the determination of the employees' rights under the circumstances.

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The suspension of MARCOPPER's operations was decreed in an Ex-Parte Order dated April 1, 1996 issued by the Pollution Adjudication Board of the DENR pursuant to Presidential Decree (P.D.) No. 984 and Section 36 of its Implementing Rules. Separately from this Order, the DENR Secretary ordered on June 21, 1996 the cancellation of MARCOPPER's ECC without which MARCOPPER could not continue to undertake its mining operations. Thus, as of that date, the temporary suspension of operations that started on April 12, 1996 became permanent so that MARCOPPER did not have to wait for the end of the six-month suspension of operations before the services of the three employees were deemed terminated. In Labor Code terms, the cancellation of the ECC on June 21, 1996 amounted to a company closure governed by Article 283 of the Labor Code - the provision that governs the relationship of employers and employees in closure situations. The rule that NAMAWU cites in its claim for wages is Rule X, Book III, Section 3(b) of the Rules and Regulations implementing the Labor Code.41 This rule, however, specifically relates to suspension of operations due to health and safety concerns. It states: Enforcement power on health and safety of workers. - (a) The Regional Director may likewise order stoppage of work or suspension of operation of any unit or department of an establishment when non-compliance with the law, safety order or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. (b) x x x In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. While the mine tailing leakage and pollution of the Boac River cannot but affect the health and safety of those in the MARCOPPER vicinity, particularly its employees, we find that the Department of Labor and Employment (DOLE) Regional Director - at whose initiative a suspension of operation must originate for the above-quoted provision to apply - did not act as envisioned by the above rule. Specifically, there was no ruling or directive from the DOLE that the environmental incident was a workplace health and safety concern that required a suspension of operation. There is likewise nothing in the laws applicable to pollution, specifically, P.D. No. 984 and P.D. No. 1586 and their implementing rules that speak of the consequences of a DENR-ordered suspension of operations on employment relationships. Neither does the CBA between MARCOPPER and NAMAWU provide for the consequences of a suspension of operation due to environmental causes. Under the circumstances, we can only conclude that the general "no work, no pay" rule should prevail with respect to employees' wages during the suspension period, subject to existing CBA terms on leave credits and similar benefits of employees. Because the initial suspension of operations that the DENR imposed eventually turned into an involuntary closure as discussed above, Article 283 of the Labor Code comes into play entitling the three remaining employees the payment of separation pay computed under the terms of that Article. The termination of employment date, for separation pay purposes, should be computed from June 21, 1996 and not from October 12, 1996 (or six months from the April 12, 1996 suspension of operation date); June 21, 1996 must be the closure date as it is from this date that MARCOPPER, by law, ceased to have any authority to conduct its mining operations. *SC PARTIALLY GRANTED NAMAWU's petition with respect to the payment of separation pay to Apollo V. Saet, Rogelio Regencia and Jose Romasanta. MARCOPPER is hereby ORDERED to PAY them separation pay pursuant to Article 283 of the Labor Code. The claim under the petition for the payment of wages during the suspension of operation period is hereby DENIED for lack of merit.

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DISMISSED the petition with respect to the remaining 615 NAMAWU members who were no longer MARCOPPER employees at the time MARCOPPER suspended its operations in April 1996. PEOPLES BROADCASTING VS. SEC/DOLE GR NO. 179652, MAY 8, 2009

Facts:

Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) 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 employeremployee 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 petitioners evidence. Petitioners 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 respondents claim exceeded P5,000.00. Issue: Does the Secretary of Labor have the power to determine the existence of an employeremployee relationship? Held: No. 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

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tthe mechanical. While documents, particularly documents found in the employers office are the primary source materials, what may prove decisive are factors related to the history of the employers 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 DOLEs 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 illafford to disclaim an employment relationship with all of the people under its aegis.

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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 NLRCs jurisdiction and the DOLEs prerogative but also the procedure when the case involves the fundamental challenge on the DOLEs prerogative based on lack of employer-employee relationship. As exhaustively discussed here, the DOLEs 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 petitioners employee. But the DOLE did not address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant petition on a technicality would deprive the Court of the opportunity to resolve the novel controversy. WHEREFORE, the petition is GRANTED. PHIL. HOTELIERS INC., ET. AL., VS. NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES-DUSIT HOTEL NIKKO CHAPTER GR NO. 181972, AUGUST 25, 2009 FACTS: RTWPB issued Wage Order No. 9 that took effect on November 5, 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 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 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. Rasing sent Dir. Maraan another letter following-up his previous request for assistance. Acting on Rasings letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. LSO Natividads Inspection Results Report dated 2 May 2002 stated: Based on interviews/affidavits of employees, they are receiving more than P290.00 average daily rate which is exempted in the compliance of Wage Order NCR-09; Remarks: There is an ongoing negotiation under Case # NCMB-NCR-NS-12-369-01 & NCMBNCR-NS-01-019-02 now forwarded to the NLRC office for the compulsory arbitration. NOTE: Payrolls to follow later upon request including position paper of [Dusit Hotel]. By virtue of Rasings request for another inspection, LSO Natividad conducted a second inspection of Dusit Hotel premises on 29 May 2002. In her Inspection Results Report dated 29 May 2002, LSO Natividad noted:

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*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 dated 9 October 2002 in NLRC-NCR-CC No. 000215-02 the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union granting the hotel employees the following wage increases, in accord with the CBA: Effective January 1, 2001- P500.00/month Effective January 1, 2002- P550.00/month Effective January 1, 2003- P600.00/month On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR, through Dir. Maraan, issued the Order 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. The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, that payment of indemnity shall not absolve the employer from the criminal liability under this Act. If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the penalty of imprisonment shall be imposed upon the entitys responsible officers including but not limited to the president, vice president, chief executive officer, general manager, managing director or partner. Dusit Hotel filed a Motion for Reconsideration 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. 9. Acting on the Motion, DOLE-NCR issued a Resolution setting aside its earlier Order for being moot and academic, in consideration of the NLRC decision and dismissing the complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit. The Union appealed before the DOLE Secretary maintaining that the wage increases granted by the NLRC Decision of 9 October 2002 should not be deemed as compliance by Dusit Hotel with WO No. 9. The DOLE, through Acting Secretary Manuel G. Imson, issued an Order

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granting the appeal of the Union. The DOLE Secretary reasoned that the NLRC Decision dated 9 October 2002 categorically declared that the wage increase under the CBA finalized between Dusit Hotel and the Union shall not be credited as compliance with WOs No. 8 and No. 9. Furthermore, Section 1 of Rule IV of the Rules Implementing WO No. 9, which provides that wage increases granted by an employer in an organized establishment within three months prior to the effectivity of said Wage Order shall be credited as compliance with the ECOLA prescribed therein, applies only when an agreement to this effect has been forged between the parties or a provision in the CBA allowing such crediting exists. Expectedly, Dusit Hotel sought reconsideration of the Order of the DOLE Secretary. In an Order, the DOLE Secretary granted the Motion for Reconsideration of Dusit Hotel and reversed his Order dated 22 July 2004. The DOLE Secretary, in reversing his earlier Order, admitted that he had disregarded therein that the wage increase granted by the NLRC in the latters Decision dated 9 October 2002 retroacted to 1 January 2001. The said wage increase, taken together with the hotel employees share in the service charges of Dusit Hotel, already constituted compliance with the WO No. 9. It was then the turn of the Union to file a Motion for Reconsideration, but it was denied by the DOLE Secretary. The DOLE Secretary found that it would be unjust on the part of Dusit Hotel if the hotel employees were to enjoy salary increases retroactive to 1 January 2001, pursuant to the NLRC Decision dated 9 October 2002, and yet said salary increases would be disregarded in determining compliance by the hotel with WO No. 9. The Union appealed the Orders dated 16 December 2004 and 13 October 2005 of the DOLE Secretary with the Court of Appeals, the Court of Appeals promulgated its Decision ruling in favor of the Union. Referring to Section 13 of WO No. 9, the Court of Appeals declared that wage increases/allowances granted by the employer shall not be credited as compliance with the prescribed increase in the same Wage Order, unless so provided in the law or the CBA itself; and there was no such provision in the case at bar. The appellate court also found that Dusit Hotel failed to substantiate its position that receipt by its employees of shares in the service charges collected by the hotel was to be deemed substantial compliance by said hotel with the payment of ECOLA required by WO No. 9. The Court of Appeals adjudged that Dusit Hotel should be liable for double indemnity for its failure to comply with WO No. 9 within five days from receipt of notice. The appellate court stressed that ECOLA is among the laborers financial gratifications under the law, and is distinct and separate from benefits derived from negotiation or agreement with their employer. The Motion for Reconsideration of Dusit Hotel was denied for lack of merit by the Court of Appeals. ISSUE: 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 latters Decision dated 9 October 2002. RULING: The reliance of the Union on Section 13 of WO No. 9 in this case is misplaced. Dusit Hotel is not contending creditability of the hotel employees salary increases as compliance with the ECOLA mandated by WO No. 9. Creditability means that Dusit Hotel would have been allowed to pay its employees the salary increases in place of the ECOLA required by WO No. 9. This, however, is not what Dusit Hotel is after. The position of Dusit Hotel is merely that the salary increases should be taken into account in determining the employees entitlement to ECOLA. The retroactive increases could raise the hotel employees daily salary rates

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above P290.00, consequently, placing said employees beyond the coverage of WO No. 9. Evidently, Section 13 of WO No. 9 on creditability is irrelevant and inapplicable herein. The Court agrees with Dusit Hotel that the increased salaries of the employees should be used as bases for determining whether they were entitled to ECOLA under WO No. 9. The very fact that the NLRC decreed that the salary increases of the Dusit Hotel employees shall be retroactive to 1 January 2001 and 1 January 2002, means that said employees were already supposed to receive the said salary increases beginning on these dates. The increased salaries were the rightful salaries of the hotel employees by 1 January 2001, then again by 1 January 2002. Although belatedly paid, the hotel employees still received their salary increases. It is only fair and just, therefore, that in determining entitlement of the hotel employees to ECOLA, their increased salaries by 1 January 2001 and 1 January 2002 shall be made the bases. There is no logic in recognizing the salary increases for one purpose (i.e., to recover the unpaid amounts thereof) but not for the other (i.e., to determine entitlement to ECOLA). For the Court to rule otherwise would be to sanction unjust enrichment on the part of the hotel employees, who would be receiving increases in their salaries, which would place them beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA under the very same provision. The NLRC, in its Decision dated 9 October 2002, directed Dusit Hotel to increase the salaries of its employees by P500.00 per month, retroactive to 1 January 2001. After applying the said salary increase, only 82 hotel employees would have had daily salary rates falling within the range of P250.00 to P290.00. Thus, upon the effectivity of WO No. 9 on 5 November 2001, only the said 82 employees were entitled to receive the first tranch of ECOLA, equivalent to P15.00 per day. The NLRC Decision also ordered Dusit Hotel to effect a second round of increase in its employees salaries, equivalent to P550.00 per month, retroactive to 1 January 2002. As a result of this increase, the daily salary rates of all hotel employees were already above P290.00. Consequently, by 1 January 2002, no more hotel employee was qualified to receive ECOLA. The assertion of Dusit Hotel that the receipt by said hotel employees of their shares in the service charges already constituted substantial compliance with the prescribed payment of ECOLA under WO No. 9. 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.

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SC finds no basis to hold Dusit Hotel liable for double indemnity Under Section 2(m) of DOLE Department Order No. 10, Series of 1998, the Notice of Inspection Result "shall specify the violations discovered, if any, together with the officers 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. SC AFFIRMED WITH THE FOLLOWING MODIFICATIONS: (1) Dusit Hotel Nikko is ORDERED to pay its 82 employees who, after applying the salary increases for 1 January 2001, had daily salaries of P250.00 to P290.00 the first tranch of Emergency Cost of Living Allowance, equivalent to P15.00 per day, from 5 November 2001 to 31 December 2001, within ten (10) days from finality of this Decision; and (2) the penalty for double indemnity is DELETED. No costs. 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. WAGE PROTECTION PROVISIONS AND PROHIBITIONS REGARDING WAGES GAA VS. COURT OF APPEALS G.R. No. L-44169; December 3 1985 Facts Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while petitioner 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. Arguments

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Petitioner: Her salaries, commission and or remuneration are exempted from execution under article1708 of the New Civil Code. Issue Whether or not petitioners salaries, commission and or remuneration are exempted from execution under article 1708 of the New Civil Code. Decision NO, IT IS NOT. ART. 1708. 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 placed 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. In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or physical labor, but as commonly and customarily used and understood, it only applies to one engaged in some form of manual or physical labor. That is the sense in which the courts generally apply the term as applied in exemption acts, since persons of that class usually look to the reward of a day's labor for immediate or present support and so are more in need of the exemption than are other. In determining whether a particular laborer or employee is really a "laborer," the character of the word he does must be taken into consideration. He must be classified not according to the arbitrary designation given to his calling, but with reference to the character of the service required of him by his employer. All men who earn compensation by labor or work of any kind, whether of the head or hands, including judges, lawyers, bankers, merchants, officers of corporations, and the like, are in some sense "laboring men." But they are not "laboring men" in the popular sense of the term, when used to refer how the legislature used the term. Contractors, consulting or assistant engineers, agents, superintendents, secretaries of corporations and livery stable keepers, do not come within the meaning of the term. A laborer, within the statute exempting from garnishment the wages of a "laborer," is one whose work depends on mere physical power to perform ordinary manual labor, and not one engaged in services consisting mainly of work requiring mental skill or business capacity, and involving the exercise of intellectual faculties. It is a term ordinarily employed to denote one who subsists by physical toil in contradistinction to those who subsists by professional skill. They are those persons who earn a livelihood by their own manual labor. Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what are to be exempted from attachment and execution. The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the term wages " indicates considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important services. Wages are the compensation given to a hired person for service, and the same is true of 'salary'. The words seem to be synonymous, convertible terms, though we believe that use and general acceptation have given to the word 'salary' a significance somewhat different from the word 'wages' in this: that the former is understood to relate to position of office, to

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be the compensation given for official or other service, as distinguished from 'wages', the compensation for labor. 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. VS. NLRC G.R. No. 91231; February 4, 1991 Facts Four collective bargaining agreements 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. Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rankand-file employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office. In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective bargaining negotiations between the parties ensued. On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the union officers and members of the negotiating panel who participated in the illegal strike. The NLRC affirmed the dismissals on November 2, 1988. On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union assailed the validity of those agreements and filed a case of unfair labor practice against the company on November 16, 1988. Arguments Petitioner: Since its retirement plan is non-contributory, it (Nestl) has the sole and exclusive prerogative to define the terms of the plan because the workers have no vested and demandable rights thereunder, 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 mollify the same. Issue Whether or not petitioner may de directed to change the terms of its retirement plan. Decision YES, IT MAY. The Retirement Plan was "a collective bargaining issue right from the start" for the improvement of the existing Retirement Plan was one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president of Nestl Philippines. The union's original proposal was to modify the existing plan by including a provision for early retirement. The company did not question the validity of that proposal as a collective bargaining issue but merely offered to maintain the existing non-contributory retirement

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plan which it believed to be still adequate for the needs of its employees, and competitive with those existing in the industry. The union thereafter modified its proposal, but the company was adamant. Consequently, the impass on the retirement plan become one of the issues certified to the NLRC for compulsory arbitration. The company's contention that its retirement plan is non-negotiable, is not well-taken. The NLRC correctly observed that 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, mid-year 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 deadlock between the company and the union on this issue was resolvable by the Secretary of Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute. The petitioner's contention, that employees have no vested or demandable right to a noncontributory 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 G.R. No. 111474; August 22, 1994 Facts Private respondents 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. Later, petitioners learned that he was working for "Mine of Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on September 6, 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 his 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," that is, 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

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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. That complaint was dismissed. Thus, the petition to the SC. Issue Whether or not respondent Maldigan is entitled to their reimbursement of their daily cash deposits. Whether or not respondent Sabsalon may be compelled to pay for the washing of his taxi seat covers. Decision I. NO, HE IS NOT. The P15.00 daily deposits made by respondents to defray any shortage in their "boundary" is covered by the general prohibition in Article 114 of the Labor Code against requiring employees to make deposits, and that there is no showing that the Secretary of Labor has recognized the same as a "practice" in the taxi industry. Consequently, the deposits made were illegal and the respondents must be refunded therefor. Article 114 of the Labor Code provides as follows: Art. 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations. It can be deduced therefrom 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." Also, when private respondents stopped working for petitioners, the alleged purpose for which petitioners required such unauthorized deposits no longer existed. In other case, any balance due to private respondents after proper accounting must be returned to them with legal interest. II. YES, HE MAY. 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 driven to the same clean condition when he took it out. And as claimed by petitioners, respondents 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 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 car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play. MANILA ELECTRIC COMPANY V. SEC. OF LABOR GR No. 127598, Jan. 27, 1999 Facts:

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MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 CBA covering the remaining period of two years. 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 newly create CBA eliminated some of the benefits previously enjoyed by employees. Issue: Whether or not withdrawal of benefits amounted to diminution of benefits. Decision: The record shows that 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. PHIL. VETERANS BANK VS. NLRC G.R. No. 130439; October 26, 1999 Facts In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko Sentral) by virtue of Resolution No. 334 issued by the Monetary Board. Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina (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 as well as moral damages and attorney's fees. In his decision, the 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 P4,136.64 and P2,190 representing the wage differentials due him under W.O. 1 and W.O. 2. They were also required to pay him P100,000 in moral damages and attorney's fees. 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. Arguments Petitioner: 1) He started working for petitioner as a legal assistant on 17 March 1974. When petitioner was placed under liquidation in 1985, he was retained as Manager II in the Legal Department, where he continued to receive a monthly salary of P3,754,60. Meanwhile, W.O. 1 took effect on 10 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,

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which became effective on 8 January 1991, mandated a P12-increase in the daily wage of employees whose monthly salary did not exceed P4,319.16. His salary should have been adjusted in compliance with said wage orders. 2) Upon petitioner's rehabilitation it assumed all the rights and obligations of the liquidator, including the NLRC's monetary award arising from the labor complaint he filed against the liquidation team. Respondent: 1) MOLINA was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60 broken down as follows: P3,754.60 as basic compensation, P2,000 as representation and transportation allowance (RATA), and a special allowance of P900. 2) The factor of 26.16 should have been applied in determining MOLINA's daily wage. Doing so would show that MOLINA's daily pay exceeded the minimum wage and, therefore, was beyond the scope of the wage orders. 3) When it was placed under liquidation, it lost its juridical personality, such that it could no longer enter into contracts or transact business. All its assets and liabilities were turned over to the Central Bank. MOLINA's complaint pertained to acts committed during liquidation and so was correctly filed against the liquidation team. Its substitution as partyrespondent was clearly erroneous. Issue Whether or not WO 1 and WO 2 are applicable to petitioner. Who is liable to pay petitioners claims? Decision I. YES, THEY ARE. The old practice of the bank in using factor 365 days in a year in determining the equivalent monthly salary cannot unilaterally be changed by the employer without the consent of the employees, such practice being now a part of the terms and conditions of the employment. An employment agreement, whether written or unwritten, is a bilateral contract and, as such other party thereto cannot change or amend the terms thereof without the consent of the other party thereto. From the foregoing, it is clear that Molina 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. Petitioner can no longer invoke the 26.16 factor after it voluntarily adopted the 365 factor as a policy even prior to its receivership. 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, including MOLINA, because it results in a higher determination of their monthly salary. II. PETITIONER IS LIABLE. When a bank is declared insolvent and placed under receivership, the Monetary Board of the Central Bank determines whether to proceed with the liquidation or reorganization of the financially distressed bank. A receiver takes control and possession of the assets of the bank for the benefit of its creditors and concurrently represents the bank. On the other hand, a liquidator assumes the role of the receiver upon the determination by the Monetary Board

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that the bank can no longer resume business. His task is to dispose of all the assets of the bank and effect partial payments of its obligations in accordance with their legal priority. In both receivership and liquidation proceedings, the bank retains its juridical personality notwithstanding the closure of its business; in fact, the bank may even be sued. Its corporate existence is assumed by the receiver or liquidator. The latter, however, acts not only for the benefit of the bank, but for the bank's creditors as well. In the instant case, petitioner was initially closed and put under receivership and liquidation. Subsequently, its rehabilitation was effected by virtue of Republic Act No. 7169 and Monetary Board Resolution No. 348 dated 10 April 1992. Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. Upon its rehabilitation, petitioner assumed the rights and obligations of the receiver and liquidator. This includes MOLINA's claim for unpaid wages. It must be borne in mind that all the acts of the receiver and liquidator pertain to petitioner, both having assumed petitioner's corporate existence. Petitioner cannot disclaim liability by arguing that the non-payment of MOLINA's just wages was committed by the liquidators during the liquidation period. PHIL. APPLIANCES CORP. VS. CA G.R. No. 149434; June 3, 2004 Facts Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators, freezers and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly elected collective bargaining representative of the rank-and-file employees of petitioner. During the collective bargaining negotiations between petitioner and respondent union in 1997 (for the last two years of the collective bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner offered the amount of four thousand pesos (P4,000.00) to each employee as an "early conclusion bonus". 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 National Conciliation and Mediation Board (NCMB), Region IV in Calamba, Laguna, due to the bargaining deadlock. A conciliation and mediation conference was held on October 30, 1999 at the NCMB in Imus, Cavite, before a Conciliator. The conciliation meetings started with eighteen unresolved items between petitioner and respondent union. At the meeting on November 20, 1999, respondent union accepted petitioners 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 18, 2000, respondent union went on strike at the petitioners plant at Barangay Maunong, Calamba, Laguna and at its washing plant at Paraaque, Metro Manila. 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 (DOLE). Labor Secretary assumed jurisdiction over the dispute and, on January 28, 2000, ordered the striking workers to return to work within twenty-four hours from notice and directed petitioner to accept back the said employees. On April 14, 2000, SOLE issued the Order ruling in favor of Companys proposal on signing bonus, pegging the amount of P3,000 bonus as fair and reasonable under the circumstances. Arguments

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Petitioner: The award of the signing bonus was patently erroneous since it was not part of the employees salaries or benefits or of the collective bargaining agreement. It is not demandable or enforceable since it is in the nature of an incentive. As no CBA was concluded through the mutual efforts of the parties, the purpose for the signing bonus was not served. Issue Whether or not the award of the signing bonus is warranted. Decision NO, IT IS NOT. The signing bonus is a grant motivated by the goodwill generated when a CBA is successfully negotiated and signed between the employer and the union. A signing bonus is not a benefit which may be demanded under the law. It may not be demanded as a matter of right. If it is not agreed upon by the parties or unilaterally offered as an additional incentive, the condition for awarding it must be duly satisfied. In the case at bar, two things militate against the grant of the signing bonus: first, the nonfulfillment of the condition for which it was offered, i.e., the speedy and amicable conclusion of the CBA negotiations; and second, the failure of respondent union to prove that the grant of the said bonus is a long established tradition or a "regular practice" on the part of petitioner. Petitioner admits, and respondent union does not dispute, that it offered an "early conclusion bonus" or an incentive for a swift finish to the CBA negotiations. The offer was first made during the 1997 CBA negotiations and then again at the start of the 1999 negotiations. The bonus offered is consistent with the very concept of a signing bonus. In the case at bar, the CBA negotiation between petitioner and respondent union failed notwithstanding the intervention of the NCMB. Respondent union went on strike for eleven days and blocked the ingress to and egress from petitioners two work plants. The labor dispute had to be referred to the Secretary of Labor and Employment because neither of the parties was willing to compromise their respective positions regarding the four remaining items which stood unresolved. While we do not fault any one party for the failure of the negotiations, it is apparent that there was no more goodwill between the parties and that the CBA was clearly not signed through their mutual efforts alone. Hence, the payment of the signing bonus is no longer justified and to order such payment would be unfair and unreasonable for petitioner. Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable obligation. True, it may nevertheless be granted on equitable considerations as when the giving of such bonus has been the companys 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 G.R. No. 143304; July 8, 2004

Facts

Petitioner is a domestic corporation engaged in the principal business of importation, sale, and marketing of BOHLER steel products. Respondents worked for petitioner as assistant sales manager and salesman, respectively.

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Sometime in May 1993, respondent Villareal obtained a car loan from the Bank of Commerce, with petitioner as surety, as shown by a "continuing suretyship agreement" and "promissory note" wherein they jointly and severally agreed to pay the bank P786,611.60 in 72 monthly installments. On January 15, 1997, respondent Villareal resigned and thereafter joined Hi-Grade Industrial and Technical Products, Inc. as executive vice-president. Sometime in August 1994, petitioner "sponsored" respondent Frederick So to attend a training course in Kapfenberg, Austria conducted by BOHLER, petitioners principal company. This training was a reward for respondent Sos outstanding sales performance. When respondent returned nine months thereafter, petitioner directed him to sign a memorandum providing that BOHLER requires trainees from Kapfenberg to continue working with petitioner for a period of three (3) years after the training. Otherwise, each trainee shall refund to BOHLER $6,000.00 (US dollars) by way of set-off or compensation. On January 16, 1997 or 2 years and 4 months after attending the training, respondent resigned from petitioner. Immediately, petitioner ordered respondents to render an accounting of its various Christmas giveaways they received. These were intended for distribution to petitioners customers. In protest, respondents demanded from petitioner payment of their separation benefits, commissions, vacation and sick leave benefits, and proportionate 13 th month pay. But petitioner refused and instead, withheld their 13th month pay and other benefits. On April 16, 1997, respondents filed with the Labor Arbiter a complaint for payment of their monetary benefits against petitioner and its president. Arguments Petitioner: 1) It was withholding of Villareals monetary benefits as a lien for the protection of its right as surety in the car loan. It will release Villareals monetary benefits if he would cause its substitution as surety by Hi-Grade. 2) Since Villareals debt to the Bank is now due and demandable, it may, pursuant to Art. 2071 of the New Civil Code, demand a security that shall protect him from any proceeding by the creditor and from the danger of insolvency of the debtor. 3) As a guarantor, it could legally withhold respondent Villareals monetary benefits as a preliminary remedy pursuant to Article 2071 of the Civil Code, as amended. As to respondent So, petitioner, citing Article 113 of the Labor Code, as amended, in relation to Article 1706 of the Civil Code, as amended, maintains that it could withhold his monetary benefits being authorized by the memorandum he signed. Issue Whether or not the withholding of the monetary benefits is valid. Decision NO, IT IS NOT. Article 116 of the Labor Code, as amended, provides: "ART. 116. 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 workers consent." 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 employers property. Nonetheless, petitioner, relying on Article 2071 contends that the right to demand security and obtain release from the guaranty it executed in favor of respondent Villareal may be exercised even without initiating a separate and distinct action.

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There is no guaranty involved herein and, therefore, the provision of Article 2071 does not apply. A guaranty is distinguished from a surety in that a guarantor is the insurer of the solvency of the debtor and thus binds himself to pay if the principal is unable to pay, while a surety is the insurer of the debt, and he obligates himself to pay if the principal does not pay. Based on the above distinction, it appears that the contract executed by petitioner and respondent Villareal (in favor of the Bank of Commerce) is a contract of surety. In fact, it is denominated as a "continuing suretyship agreement." Hence, petitioner could not just unilaterally withhold respondents wages or benefits as a preliminary remedy under Article 2071. It must file an action against respondent Villareal. Petitioner may only protect its right as surety by instituting an action to demand a security. As to respondent So, petitioner maintains that there can be a set-off or legal compensation between them. Consequently, it can withhold his 13th month pay and other benefits. For legal compensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code, quoted below, must be present. "ARTICLE 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. "ARTICLE 1279. In order that compensation may be proper, it is necessary: (1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; (2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) That the two debts be due; (4) That they be liquidated and demandable; (5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor." In the present case, set-off or legal compensation cannot take place between petitioner and respondent So because they are not mutually creditor and debtor of each other. A careful reading of the Memorandum dated August 22, 1994 reveals that the "lump sum compensation of not less than US $6,000.00 will have to be refunded" by each trainee to BOHLER, not to petitioner. In fine, we rule that petitioner has no legal right to withhold respondents 13 th month pay and other benefits to recompense for whatever amount it paid as security for respondent Villareals car loan; and for the expenses incurred by respondent So in his training abroad. AGABON VS. NLRC G.R. No. 158693; November 17, 2004 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 2 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 3 and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence. 5 Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. Arguments

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Petitioner: 1) They were dismissed because the private respondent refused to give them assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. 2) Private respondent did not comply with the twin requirements of notice and hearing. Respondent: 1) Petitioners were not dismissed but had abandoned their work. In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondent's manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. 2) Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case. Issue Whether or not petitioners were illegally dismissed. Whether or not petitioners are entitled to their money claims. Whether or not the deductions of the loans and the value of the shoes from petitioners 13 th month pay were valid. Decision I. NO, THEY WERE NOT. Petitioners' dismissal was for a just cause. They had abandoned their employment and were already working for another employer. In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employeremployee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him. 17 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.21 Thus, it should be held liable for non-compliance with the procedural requirements of due process. The rule is: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized. II. YES, THEY ARE. Private respondent is liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave

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and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer. In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed. Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. III. NO, THEY WERE NOT. 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 from which an employer is prohibited under Article 113 of the same Code from making any deductions without the employee's knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES VS. AMERICAN WIRE G.R. No.155059, April 29, 2005

Facts American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-Rated Union). On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment (DOLE) by the two unions for voluntary arbitration. Arguments Petitioner: 1) Private respondent, without valid cause, suddenly and unilaterally withdrew and denied the benefits and entitlements of service award (35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29), Christmas party, and promotional increase which they have long enjoyed. 2) The grant of these benefits was a customary practice that can no longer be unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The benefits in question were given by the respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial. The benefits/entitlements were not given to petitioner due to an error in interpretation, or a construction of a difficult question of law, but simply, the grant has been a practice over a long period of time. As such, it cannot be withdrawn from the petitioner at respondents whim and caprice, and without the consent of the former. The benefits given by the respondent cannot be considered as a bonus as they are not founded on profit. Even assuming that it can be treated as a bonus, the grant of the same, by reason of its long and regular concession, may be regarded as part of regular compensation. 3) A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or assigned new job classifications. According to petitioner, the new job classifications were in the nature of a promotion, necessitating the grant of an increase in the salaries of the said 15 members.

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4) On the matter of the withdrawal of the service award, it is the employees length of service which is taken as a factor in the grant of this benefit, and not whether the company acquired profit or not. 5) On respondent companys Revenues and Profitability Analysis for the years 1996-2000, the petitioner insists that since the former was unaudited, it should not have justified the companys sudden withdrawal of the benefits/entitlements. The normal and/or legal method for establishing profit and loss of a company is through a financial statement audited by an independent auditor. Respondent: 1) The grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them. The grant of these benefits was conditional based upon the financial performance of the company and that conditions/circumstances that existed before have indeed substantially changed thereby justifying the discontinuance of said grants. The companys financial performance was affected by the recent political turmoil and instability that led the entire nation to a bleeding economy. Hence, it only necessarily follows that the companys financial situation at present is already very much different from where it was three or four years ago. 2) It is not required that the only legal method to ascertain profit and loss is through an audited financial statement. The cases only provide that an audited financial statement is the normal method. 3) The 15 members of petitioner union were not actually promoted. There was only a realignment of positions. Issue Whether or not respondent is guilty of violating article 100 of the Labor Code when it withdrew the benefits or entitlements given to members of petitioner Union. Decision NO, IT IS NOT. Article 100 of the Labor Code provides: ART. 100. 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. For the Court to resolve the issue presented, it is critical that a determination must be first made on whether the benefits/entitlements are in the nature of a bonus or not, and assuming they are so, whether they are demandable and enforceable obligations. The benefits/entitlements subjects of the instant case are all bonuses which were given by the private respondent out of its generosity and munificence. The additional 35% premium pay for work done during selected days of the Holy Week and Christmas season, the holding of Christmas parties with raffle, and the cash incentives given together with the service awards are all in excess of what the law requires each employer to give its employees. Since they are above what is strictly due to the members of petitioner-union, the granting of the same was a management prerogative, which, whenever management sees necessary, may be withdrawn, unless they have been made a part of the wage or salary or compensation of the employees. The consequential question therefore that needs to be settled is if the subject benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these bonuses be considered part of the wage or salary or compensation making them enforceable obligations? For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties, or it must have had a fixed amountand had been a long and regular practice on the part of the employer. The benefits/entitlements in question were never subjects of any express agreement between the parties. They were never incorporated in the Collective Bargaining Agreement (CBA). As observed by the Voluntary Arbitrator, the records reveal that these

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benefits/entitlements have not been subjects of any express agreement between the union and the company, and have not yet been incorporated in the CBA. In fact, the petitioner has not denied having made proposals with the private respondent for the service award and the additional 35% premium pay to be made part of the CBA. The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service award cannot be said to have fixed amounts. What is clear from the records is that over the years, there had been a downtrend in the amount given as service award. There was also a downtrend with respect to the holding of the Christmas parties in the sense that its location changed from paid venues to one which was free of charge, evidently to cut costs. Also, the grant of these two aforementioned bonuses cannot be considered to have been the private respondents 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 downtrend in the grant of these two bonuses over the years demonstrates that there is nothing consistent about it. The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioner herein have a right to demand. Aside from the general averment of the petitioner that this benefit had been granted by the private respondent since time immemorial, there had been no evidence adduced that it had been a regular practice. Notwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that provided by the law, the same however did not ripen into a company practice on account of the fact that it was only granted for two (2) years and with the express reservation from respondent corporations owner that it cannot continue to rant the same in view of the companys current financial situation. To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for his past generosity. On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their salaries, considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with respect to the 15 employees, the Daily Rated Unions claim for promotional increase likewise falls there being no promotion established under the records at hand. HONDA PHILS. VS. SAMAHANG MALAYANG MANGGAGAWA SA HONDA G.R. No. 145561; June 15, 2005 Facts A Collective Bargaining Agreement (CBA) was forged between petitioner Honda and respondent which contained provisions on 13th Month Pay (The COMPANY shall maintain the present practice in the implementation [of] the 13th month pay), 14th Month Pay (The COMPANY shall grant a 14th Month Pay, computed on the same basis as computation of 13th Month Pay, and an agreement by the COMPANY to continue the practice of granting, in its discretion, financial assistance to covered employees in December of each year, of not less than 100% of basic pay. This CBA is effective until year 2000. In the latter part of 1998, the parties started renegotiations for the fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, then Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over the labor dispute and ordered the parties to cease and desist from committing acts that would aggravate the situation. Both parties complied accordingly. On May 11, 1999, however, respondent union filed a second Notice of Strike on the ground of unfair labor practice alleging that Honda illegally contracted out work to the detriment of the workers. Respondent union went on strike and picketed the premises of Honda on May 19, 1999. On June 16, 1999, DOLE Acting Secretary assumed jurisdiction over the case and certified the same to the National Labor Relations Commission (NLRC) for compulsory

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arbitration. The striking employees were ordered to return to work and the management accepted them back under the same terms prior to the strike staged. On November 22, 1999, the management of Honda issued a memorandum announcing its new computation of the 13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike shall be considered unworked days for purposes of computing said benefits. As per the companys new formula, the amount equivalent to 1/12 of the employees basic salary shall be deducted from these bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay the amount deducted. Respondent union opposed the pro-rated computation of the bonuses in a letter dated November 25, 1999. The matter was brought before the Grievance Machinery in accordance with the parties existing CBA but when the issue remained unresolved, it was submitted for voluntary arbitration. In his decision dated May 2, 2000, Voluntary Arbitrator invalidated Hondas computation. Issue Whether or not the pro-rated computation of the 13th month pay and other bonuses in question is valid and lawful. Decision NO, IT IS NOT. A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law. In some instances, however, the provisions of a CBA may become contentious, as in this case. Honda wanted to implement a pro-rated computation of the benefits based on the no work, no pay rule. According to the company, the phrase present practice as mentioned in the CBA refers to the manner and requisites with respect to the payment of the bonuses, i.e., 50% to be given in May and the other 50% in December of each year. Respondent union, however, insists that the CBA provisions relating to the implementation of the 13 th month pay necessarily relate to the computation of the same. The assailed CBA provisions are far from being unequivocal. A cursory reading of the provisions will show that they did not state categorically whether the computation of the 13 th month pay, 14th month pay and the financial assistance would be based on one full months basic salary of the employees, or pro-rated based on the compensation actually received. The arbitrator thus properly resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code. The Court of Appeals affirmed the arbitrators finding and added that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. Presidential Decree No. 851, otherwise known as the 13 th Month Pay Law, which required all employers to pay their employees a 13th month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. The guidelines pertinently provides that the basic salary of an employee for the purpose of computing the 13th month pay shall include all remunerations or earnings paid by his

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employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances. For employees receiving regular wage, we have interpreted basic salary to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of basic salary payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays. The 13th month pay due an employee was computed based on the employees basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment. The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year. More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. Honda did not adduce evidence to show that the 13th month, 14th month and financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent upon the companys financial standing. This is an implicit acceptance that prior to the strike, a full month basic pay computation was the present practice intended to be maintained in the CBA. With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. Some may be 6 years (Davao Fruits Corporation vs. Associated Labor Unions), 3 and 9 months (Davao Integrated Port Stevedoring Services vs. Abarquez), 3 years and 4 months (Tiangco vs. Leogardo, Jr.), or two years (Sevilla Trading Company vs. Semana). This, we rule constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code. Lastly, the foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. To allow the pro-ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate that the workingmans welfare should be the primordial and paramount consideration. What is more, the factual milieu of this case is such that to rule otherwise inevitably results to dissuasion, if not a deterrent, for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law. PRODUCERS BANK VS. NLR G.R. No. 100701; March 28, 2001

Facts Private respondent filed a complaint on 11 February 1988 with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages. On 31 March 1989, Labor Arbiter found private respondent's claims to be unmeritorious and dismissed its complaint. In a complete reversal, however, the NLRC granted all of private respondent's claims, except for damages. Arguments

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Petitioner: 1) It cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, the collective bargaining agreement of the parties does not provide for the payment of any mid-year or Christmas bonus. 2) It is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its employees from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month pay, pursuant to Section 2 of PD 851. 3) It complied with Wage Order No. 6 because the first year salary and allowance increase provided for under the collective bargaining agreement can be credited against the wage and allowance increase mandated by such wage order. Under Wage Order No. 6, all increases in wages or allowances granted by the employer between 17 June 1984 and 1 November 1984 shall be credited as compliance with the wage and allowance adjustments prescribed therein. Although the collective bargaining agreement was signed by the parties on 16 November. 1984, the first year salary and allowance increase was made to take effect retroactively, beginning from 1 March 1984 until 28 February 1985. This period encompasses the period of creditability provided for under Wage Order No. 6 and that, therefore, the balance remaining after applying the first year salary and allowance increase in the collective bargaining agreement to the increase mandated by Wage Order No. 5, in the amount of P125.00, should be made chargeable against the increase prescribed by Wage Order No. 6, and if not sufficient, petitioner is willing to pay the difference. Respondent: 1) The mid-year and Christmas bonuses, by reason of their having been given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree No. 4429 which prohibits the diminution or elimination of benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may become part of the employee's regular compensation. 2) The conservator was not justified in diminishing or not paying the 13 th month pay and that petitioner should have instead applied for an exemption, in accordance with section 7 of Presidential Decree No. 851 (PD 851), as amended by Presidential Decree No. 1364, but that it did not do so. The actions of the conservator ran counter to the provisions of PD 851. 3) The first year salary and allowance increases under the collective bargaining agreement cannot be applied towards the satisfaction of the increases prescribed by Wage Order No. 6 because the former were not granted within the period of creditability provided for in such wage order. The significant dates with regard to the granting of the first year increases are 9 November 1984 the date of issuance of the MOLE Resolution, 16 November 1984 - the date when the collective bargaining agreement was signed by the parties and 1 March 1984 the retroactive date of effectivity of the first year increases. None of these dates fall within the period of creditability under Wage Order No. 6 which is from 17 June 1984 to 1 November 1984. Thus, petitioner has not complied with Wage Order No. 6. 4) The Inter-office Memorandum dated August 13,1986 provides for a divisor of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the employees then, there is a disputable presumption that the employees are paid their holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its divisor. Hence, it is not paying its employees their corresponding holiday pay. Issue Whether or not petitioner is entitled to pay the bonuses and 13 th month pay. Whether or not petitioner has complied with WO No. 6. Whether or not the 303 divisor used by petitioner is violative of article 94 of the Labor Code.

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Decision I. NO, THEY ARE NOT. A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee. However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for his past generosity. Private respondent's contention, that the decrease in the mid-year and year-end bonuses constituted a diminution of the employees' salaries, is not correct, for bonuses are not part of labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided by the Labor Code. Petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act No. 265,21 as amended by Presidential Decree No. 72. Under Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the bank is continuously unable or unwilling to maintain a condition of solvency or liquidity. Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of petitioner's employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and restore the viability of the financially precarious bank. Ultimately, it is to the employees' advantage that the conservatorship achieve its purposes for the alternative would be petitioner's closure whereby employees would lose not only their benefits, but their jobs as well. With regard to 13th month pay, PD 851, which was issued by President Marcos on 16 December 1975, requires all employers to pay their employees receiving a basic salary of not more than P 1,000 a month, regardless of the nature of the employment, a 13th month pay, not later than December 24 of every year. However, employers already paying their employees a 13th month pay or its equivalent are not covered by the law. Under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, the term "equivalent" shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary. The intention of the law was to grant some relief - not to all workers - but only to those not actually paid a 13 th month salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent whether out of pure generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of a 13 th month pay would be to penalize him for his liberality and in all probability, the employer would react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit. In the case at bar, even assuming the truth of private respondent's claims as contained in its position paper or Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be considered as an "equivalent" of the 13 th month pay mandated by PD 851.

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Thus, petitioner is justified in crediting the mid-year bonus and Christmas bonus as part of the 13th month pay. II. YES, IT HAS. WO 6 came into effect on 1 November 1984, increased the statutory minimum wage of workers, with different increases being specified for agricultural plantation and nonagricultural workers. The bone of contention, however, involves Section 4 thereof which reads: All wage increase in wage and/or allowance granted by employers between June 17, 1984 and the effectivity of this Order shall be credited as compliance with the minimum wage and allowance adjustments prescribed herein, provided that where the increases are less than the applicable amount provided in this Order, the employer shall pay the difference. Such increases shall not include anniversary wage increases provided in collective bargaining agreements unless the agreement expressly provide otherwise. The creditability provision in Wage Order No. 6 is based on important public policy, that is, the encouragement of employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation. To obliterate the creditability provisions in the Wage Orders through interpretation or otherwise, and to compel employers simply to add on legislated 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 statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. The creditability provisions in the Wage Orders prevent the penalizing of employers who are industry leaders and who do not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or regulations require. Section 1 of Article VIII of the collective bargaining agreement of the parties states that "the parties have formulated and agreed on the following highly substantial packaged increases in salary and allowance which take into account and cover (a) any deflation in income of employees because of such price increases and inflation and (b) the expected governmental response thereto in the form of statutory adjustments in wages, allowances and benefits, during the next three (3) years of this Agreement..." The unequivocal wording of this provision manifests the clear intent of the parties to apply the wage and allowance increases stipulated in the collective bargaining agreement to any statutory wage and allowance, adjustments issued during the effectivity of such agreement from 1 March 1984 to 28 February 1987. Furthermore, contrary to private respondent's contentions, there is nothing in the wording of Section 2 of Article VIII of the collective bargaining agreement that would prevent petitioner from crediting the first year salary and allowance increases against the increases prescribed by Wage Order No. 6. It would be inconsistent with the above stated rationale underlying the creditability provision of Wage Order No. 6 if, after applying the first year increase to Wage Order No. 5, the balance was not made chargeable to the increases under Wage Order No. 6 for the fact remains that petitioner actually granted wage and allowance increases sufficient to cover the increases mandated by Wage Order No. 5 and part of the increases mandated by Wage Order No. 6. III. NO, IT IS NOT. Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays and that 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. In this case, the divisor used by petitioner in arriving at the employees' daily rate for the purpose of computing salary-related benefits is 314. Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus,

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the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein. However, the divisor was reduced to 303 by virtue of an interoffice memorandum issued on 13 August 1986. The usual practice of 314 days as divisor used in the computation for cash conversion and determination of daily rate, among others, still remain, Saturdays, therefore, are still considered paid rest days. Corollarily, the Acting Conservator also approved the increase of meal allowance from P25.00 to P30.00 for a minimum of four (4) hours of work for Saturdays. The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. The reduction of the divisor to 303 was done for the sole purpose of increasing the employees' overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner's employees. In fact, it was expressly stated in the inter-office memorandum - also referred to by private respondent in its pleadings - that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate. Thus, based on the records of this case and the parties' own admissions, the Court holds that petitioner has complied with the requirements of Article 94 of the Labor Code. JARDIN VS. NLRC G.R. No. 119268; February 23, 2000 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 decision dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. On appeal, the NLRC, in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code. Issue Whether or not the second motion for reconsideration was properly entertained. Whether or not there is an existence of employee-employer relationship. Whether or not the deduction of car wash is valid. Decision I. NO, IT WAS NOT. The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical

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exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power. In labor cases, this Court has declared in several instances that disregarding rules it is bound to observe constitutes grave abuse of discretion on the part of labor tribunal. In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent's decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had. Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party. The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry. The second motion for reconsideration filed by private respondent is indubitably a prohibited pleading which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice", especially when its disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondent's second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases. II. YES, THERE IS. The relationship between taxiowners/operators on one hand and taxi drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. In the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of taxi owners/operators and taxi drivers, the former exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer. III. YES, IT IS. 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 JOCKEYS CLUB EMPLOYEES LABOR UNION VS. MANILA JOCKEY CLUB G.R. No. 167601; March 7 2007

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Facts Petitioner and respondent, 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 respondents 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. The CBA likewise reserved in respondent certain management prerogatives, including the determination of the work schedule. 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 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 NCMBs 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. Dissatisfied, petitioner then appealed the panels decision to the CA. which upheld that of the panel and denied petitioners subsequent motion for reconsideration via its equally challenged resolution of April 4, 2005. Hence, petitioners present recourse. Arguments Respondents: The change in the program of horse races as reason for the adjustment of the employees work schedule. It rationalizes that when the CBA was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to change the employees' work schedule as there was no work to be done in the morning. Evidently, the adjustment in the work schedule of the employees is justified. Issue Whether or not the memorandum constitutes a violation of article 100 of the Labor Code on diminution of wages? Decision NO, IT DOES NOT.

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We are not unmindful that every business enterprise endeavors to increase profits. As it is, the Court will not interfere with the business judgment of an employer in the exercise of its prerogative to devise means to improve its operation, provided that it does not violate the law, CBAs, and the general principles of justice and fair play. We have thus held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal, and recall of workers. While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI, however, expressly reserves on respondent the prerogative to change existing methods or facilities to change the schedules of work. Such exact language lends no other meaning but that while respondent may have allowed the initial determination of the work schedule to be done through collective bargaining, it expressly retained the prerogative to change it. Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that customary prerogative of management to set the work schedule. Had that been the intention, Section 2 of Article XI would not have made any reference at all to the retention by respondent of that prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As it were, however, the CBA expressly recognized in respondent the prerogative to change the work schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to change the work schedule. The same provision of the CBA also grants respondent the prerogative to relieve employees from duty because of lack of work. 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. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be presumed that every labor dispute will be automatically decided in favor of labor. The partiality for labor has not in any way diminished our belief that justice in every case is for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. SAN MIGUEL CORP. VS. LAYOC, JR. G.R. No. 149640; October 19, 2007

Facts Respondents were among the Supervisory Security Guards of the Beer Division of the San Miguel Corporation, a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines with offices at No. 40 San Miguel Avenue, Mandaluyong City. They started working as guards with the petitioner San Miguel

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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 companys 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 1990s, 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. On 1 December 1994, respondents filed a complaint 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. Respondents prayed for actual damages for two years (1993-1994), moral damages, exemplary damages, and overtime, holiday, and night premium pay. Arguments Petitioner: Respondents were supervisory security guards who were exempt from the provisions of the Labor Code on hours of work, weekly rest periods, and rest days. The no time card policy did not just prevent respondents from punching their time cards, but it also granted respondents an across-the-board increase of 10% of basic salary and either a P2,000 or P2,500 night shift allowance on top of their yearly merit increase. The no time card policy was a valid exercise of management prerogative and that all supervisors in the Beer Division were covered by the no time card policy, which classification was distinct and separate from the other divisions within SMC. 2) There was no evidence that respondents rendered overtime work and respondents admitted that they never or seldom rendered overtime work. The award of overtime pay was thus contrary to the principle of no work, no pay.

Respondent: 1) The Beer Division of SMC maliciously and fraudulently refused payment of their overtime, holiday, and night premium pay from 1 to 15 January 1993 because of the no time card policy. Moreover, petitioners had no written authority to stop respondents from punching their time cards because the alleged memorandum authorizing such stoppage did not include supervisory security guards. Thus, the respondents suffered a diminution of benefits, making petitioners liable for non-payment of overtime, holiday, and night premium pay. 2) They are entitled to render overtime work and receive overtime pay despite the institution of the no time card policy because (1) SMC previously allowed them to render

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overtime work and paid them accordingly, and (2) supervising security guards in other SMC divisions are allowed to render overtime work and receive the corresponding overtime pay. Issues Whether or not the circumstances in the present case constitute an exception to the rule that supervisory employees are not entitled to overtime pay. Decision I. NO, THEY DO NOT. Respondents are supervising security guards, thus, managerial employees. Article 82[13] 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. First, respondents assert that Article 100[14] of the Labor Code prohibits the elimination or diminution of benefits. However, contrary to the nature of benefits, petitioners did not freely give the payment for overtime work to respondents. Petitioners paid respondents overtime pay as compensation for services rendered in addition to the regular work hours. Respondents rendered overtime work only when their services were needed after their regular working hours and only upon the instructions of their superiors. Respondents even differ as to the amount of overtime pay received on account of the difference in the additional hours of services rendered. 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. Given the discretion granted to the various divisions of SMC in the management and operation of their respective businesses and in the formulation and implementation of policies affecting their operations and their personnel, the no time card policy affecting all of the supervisory employees of the Beer Division is a valid exercise of management prerogative. The no time card policy undoubtedly caused pecuniary loss to respondents. However, petitioners granted to respondents and other supervisory employees a 10% across-the-board increase in pay and night shift allowance, in addition to their yearly merit increase in basic salary, to cushion the impact of the loss. So long as a companys management prerogatives are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. SAN MIGUEL CORP. VS. PONTILLAS

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G.R. No. 155178; May 7, 2008 Facts On 24 October 1980, petitioner employed respondent as a daily wage company guard. In 1984, respondent became a monthly-paid employee which entitled him to yearly increases in salary. Respondent alleged that his yearly salary increases were only a percentage of what the other security guards received. 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. During the mandatory conference on 23 November 1993, respondent questioned the rate of salary increase given him by petitioner. On 6 December 1993, petitioners 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. In compliance with Memorandum, another Memorandum was issued dated 7 February 1994 addressed to VisMin Logistics Operations Manager, effecting the formal transfer of responsibility of the security personnel and equipment in the Oro Verde Warehouse to Security Officer of the VisMin Logistics Operations, effective 14 February 1994. Simultaneously, it gave the same information to his Supervising Security Guards for them to relay the information to the company security guards. 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. Respondent also alleged that he was wary of the transfer because of his pending case against petitioner. He further claimed that two other security guards continue to report at Oro Verde Warehouse despite the order to transfer. Petitioner alleged that respondent was properly notified of the transfer but he refused to receive 14 memoranda issued by Major Enriquez from 14-27 February 1994. Petitioner also alleged that respondent was given notices of Guard Detail dated 9 February 1994 and 15 February 1994 but he still refused to report for duty at the VisMin Logistics Operations. In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation would be conducted on 4 March 1994 relative to his alleged offenses of Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior. During the investigation, respondent was given an opportunity to present his evidence and be assisted by counsel. 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. On 15 June 1994, respondent filed an amended complaint against petitioner for illegal dismissal and payment of backwages, termination pay, moral and exemplary damages, and attorneys fees. Issue Whether or not respondent was illegally dismissed. Decision NO, HE WAS NOT.

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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 employees 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. Respondents 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. The entire Oro Verde Warehouse, to which unit respondent belonged, was affected by the integration. We do not agree that respondent was not formally notified of the transfer. As early as 9 February 1994, Major Enriquez, the head of the VisMin Logistics Operations and thus, respondents new superior, issued a guard detail for 14-20 February 1994. All agency guards signed the detail, except respondent who refused to sign. On 15 February 1994, Major Enriquez again issued a guard detail for 21-27 February 1994. Again, all security guards concerned signed the detail except respondent who refused to sign. Major Enriquez issued successive memoranda to respondent officially informing him of his transfer to the VisMin Logistics Operations but respondent refused to sign all the notices. 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 employees 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. Respondents persistent refusal to obey petitioners lawful order amounts to willful disobedience under Article 282 of the Labor Code. ARCO METAL PRODUCTS CO. VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL NAFLU G.R. No. 170734; May 14, 2008 Facts Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners 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. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration. Arguments

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Petitioner: 1) The grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered does not constitute voluntary employer practice and, consequently, the prorated payment of the said benefits does not constitute diminution of benefits under Article 100 of the Labor Code. 2) There is a one-year cutoff in the entitlement to the benefits provided in the CBA which is evident from the wording of its pertinent provisions as well as of the existing law. Its full payment of benefits regardless of the length of service to the company does not constitute voluntary employer practice. The payments had been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. It was only in 2003 that the accounting department discovered the error when there were already three (3) employees involved with prolonged absences and the error was corrected by implementing the pro-rata payment of benefits pursuant to law and their existing CBA. The seven earlier cases of full payment of benefits went unnoticed considering the proportion of one employee concerned (per year) vis vis the 170 employees of the company. For a grant of a benefit to be considered a practice, it should have been practiced over a long period of time and must be shown to be consistent, deliberate and intentional, which is not what happened in this case. The CBA has not been modified to incorporate the giving of full benefits regardless of the length of service, proof that the grant has not ripened into company practice. Issue Whether or not the prorated payments of the benefits constitutes diminution of benefits under article 100 of the Labor Code. Decision YES, THEY DO. First, we determine whether the intent of the CBA provisions is to grant full benefits regardless of service actually rendered by an employee to the company. There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The clear wording of the provisions does not allow any other interpretation. Anent the 13th month pay and bonus, the CBA provisions did not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total compensation which an employee receives for the whole calendar year. The bonus is also equivalent to the amount of the 13th month pay given, or in proportion to the actual service rendered by an employee within the year. Petitioner granted, in several instances, full benefits to employees who have not served a full year. Petitioner arguers that its full payment of benefits regardless of the length of service does not constitute voluntary employer practice. This is untenable. 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. The act

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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 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. In cases involving money claims of employees, the employer has the burden of proving that the employees did receive the wages and benefits and that the same were paid in accordance with law. Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily presented other proofs, such as the names of other employees who did not fully serve for one year and thus were given prorated benefits. Experientially, a perfect attendance in the workplace is always the goal but it is seldom achieved. There must have been other employees who had reported for work less than a full year and who, as a consequence received only prorated benefits. This could have easily bolstered petitioners theory of mistake/error, but sadly, no evidence to that effect was presented. GENESIS TRANSPORT SERVICE INC. et al., vs. UNYON NG MALATANG MANGGAGAWA NG GENESIS TRANSPORT et, al., GR No. 182114; April 5, 2010 Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport Service, Inc. (Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip. On May 10, 2002, Taroy was, after due notice and hearing, terminated from employment after an accident on April 20, 2002 where he was deemed to have been driving recklessly. Taroy thus 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. Taroy later amended his complaint to implead his herein co-respondent Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as complainant and add as grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay. Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner started deducting from his weekly earnings an amount ranging from P160 to P900 representing toll fees, without his consent and written authorization as required under Article 113 of the Labor Code and contrary to company practice; and that deductions were also taken from the bus conductors earnings to thus result to double deduction. Genesis Transport countered that Taroy committed several violations of company rules for which he was given warnings or disciplined accordingly; that those violations, the last of which was the April 20, 2002 incident, included poor driving skills, tardiness, gambling inside the premises, use of shabu, smoking while driving, insubordination and reckless driving; and that Taroys dismissal was on a valid cause and after affording him due process. The Labor Arbiter rendered dismissing instant complaint for illegal dismissal for lack of merit and was ordered to refund to complainant the underpayment/differential due him as a result of the deduction of the tollgate fees from the gross receipts. The NLRC affirmed the Labor Arbiters decision with modification. It deleted the award to Taroy of attorneys fees. The respondent challenged the decision on the CA questioning the Labor Arbiters failure to pass on the propriety of his preventive suspension, dismissal of his complaint for

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constructive dismissal and ULP, and failure to award him service incentive leave pay. The petitioners questioned the order for them to refund "underpayment" and pay attorneys fees. Issue: Whether or not the respondent is entitled for a refund underpayment for the toll fees deducted from his weekly earnings. Whether or not the issue of preventive suspension violated Taroys right to due process. Held: The Supreme Court affirmed CA decision with the refund of underpayment with the modification that the award of nominal damages to respondent Juan Taroy is deleted. First Issue: The Court take judicial notice of petitioners claim that the deduction of tollgate fees from the gross earnings of drivers is an accepted and long-standing practice in the transportation industry. Expertravel & Tours, Inc. v. Court of Appeals10 instructs: Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. None of the material requisites for the Court to take judicial notice of a particular matter was established by petitioners. Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroys 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 Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroys written consent or authorization, the deduction is considered illegal. 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. Second Issue: Respecting the issue of statutory due process, the Court holds that Taroys right thereto was not violated. In any event, what the Rules require is that the employer act on the suspended workers status of employment within the 30-day period by concluding the investigation either by absolving him of the charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employees wages and benefits are paid in the interim. In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport. Taroys statutory due process not having been violated, he is not entitled to the award of nominal damages. PAYMENT OF WAGES

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Facts Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates by petition'er 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, that is, from the fishing boats down to petitioner's storage plant at a load/unload cycle of work until the tuna catch reached its final shipment/destination. They did the work of unloading tuna from fishing boats to truck haulers; unloading them again at petitioner's cold storage plant for filing, storing, cleaning, and maintenance; and finally loading the processed tuna for shipment. 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, When they requested for a dialogue with the management, they were instructed to wait for further notice. They waited for the notice of dialogue for a full week but in vain. On 15 June 1990, private respondents filed a case against petitioner before the NLRC for underpayment of wages 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. On 2 July 1990, private respondents filed another case against petitioner containing an additional claim for separation pay should their complaint for constructive dismissal be upheld. Arguments Petitioner: 1) Private respondents were not dismissed but rather, they abandoned their work after learning of petitioner's proposal to reduce tuna movement rates because of the scarcity of tuna, and that, it took private respondents one (1) month to return to work, but they could no longer be accommodated as petitioner had already hired their replacements after private respondents failed to heed petitioner's repeated demands for them to return to work. Upon said premises, petitioner contended that private respondents were not entitled to separation pay. 2) Notwithstanding the fact that private respondents' actual cash wage fell below the minimum wage fixed by law, respondent NLRC should have considered as forming a substantial part of private respondents' total wages the cash value of the tuna liver and intestines private respondents were entitled to retrieve. Petitioner therefore argues that the combined value of private respondents' cash wage and the monetary value of the tuna liver and intestines clearly exceeded the minimum wage fixed by law. Respondent: 1) Petitioner refused to give them work assignments and replaced them with new workers when they showed resistance to the petitioner's proposed reduction of the rate-per-tuna movement. 2) Petitioner violated 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). Issue Whether or not the tuna liver and intestines respondents were entitled to retrieve should be considered as forming a substantial part of respondents total wages. Decision NO, THEY SHOULD NOT. 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 as specified in

CONGSON VS. NLRC G.R. No. 114250; April 5, 1995

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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 informs other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present. NORTH DAVAO MINING VS. NLRC G.R. No. 112546; March 13, 1996

Facts Petitioner was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the national government hold 81.8% of the common stock and 100% of the preferred stock of said company. 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 completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos (P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31, 1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20,392 billion pesos, as shown by its financial statements audited by the Commission on Audit. 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 (30) days' pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 1/2 hours' 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 separated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent. Arguments Respondents: 1) North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them.

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2) They are also entitled to backwages and transportation allowance. Issue Whether or not an employer whose business operations ceased due to serious business losses reverses is obliged to pay separation pay to its employees separated by reason of such closure. Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred. Decision I. NO, IT IS NOT. Art. 283 of the Labor Code, which reads as follows: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. The underscored portion of Art. 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses. Where, however, the closure was due to business losses, as in the instant case, in which the aggregate losses amounted to over P20 billion, the Labor Code does not impose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. The company's practice of giving one month's pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. It gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood, its cashflow, literally dries up. Therefore, the fact that less separation benefits ware granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land. As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy, a fact that is not controlled by management

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prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all, although not required by law, and 12.5-days worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that "it would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents' money claims." Such argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced. From another angle, the national government is not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence. II. YES, THEY SHOULD. 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: Sec. 4. 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. Thus, the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 1/2 hours by travel and the risks in commuting all the time in collecting complainants' salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. III. YES, THEY ARE.

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On the contrary, it will be petitioners' burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their backwages and transportation expenses. Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days. HEIRS OF SARA LEE VS. REY G.R. No. 149013; August 31, 2006

Facts The House of Sara Lee (petitioner) 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 and 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. Additionally, if the dealer concerned has overdue payments or is said to be in default, he or she cannot purchase additional products from the petitioner. 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, or on June 25, 1996, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. Respondent was first employed by the petitioner in July 16, 1993 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.

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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 respondents sister-in-law, from the 52-day limit to an unauthorized term of 60 days. The respondent made the instruction, the petitioner avers, 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 ReyPetilla 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. The petitioner alleges that during that confrontation, respondent admitted her infractions and begged the BOM not to elevate or disclose the matter further to higher authorities. In a letter dated June 22, 1995, Villagracia formally reported the matter to higher management, stating that respondent, in tears and remorse and confiding her sincerest apology, personally admitted that the credit terms of certain IBMs were adjusted in the computer for purposes of computing the Service Fees. On June 24, 1995, Villagracia formally served a show-cause letter to respondent and placed her on indefinite suspension effective on the same day. On June 27, 1995, respondent submitted her explanation denying the accusations made against her and stated that the discrepancies in the service fees may have been the result of deadlines falling on holidays, after reconsiderations had been requested by the IBM concerned and with the full knowledge of and approval by BOM Villagracia as part of his campaign to increase collections. Additionally, in the same letter-response, respondent vehemently denied that she waived her right to explain as well as any admission she allegedly made before Villagracia, and she pointed to the latter as the author of the discrepancies. As a consequence of the discovery of the foregoing alleged anomalous practice of extending the credit terms of certain IBMs, management undertook an audit of the Cagayan de Oro City and Butuan City branches. During the process, the petitioner alleges, respondent was interviewed by the auditors before whom she again openly admitted her infractions. Upon being furnished a copy of the Auditors Report, Petitioner, on July 29, 1995, directed respondent again to explain, but in more detail, the alleged anomalies uncovered by the audit. After requesting more time to review the report and submit her comment, on July 31, 1995, respondent requested instead that a formal investigation be conducted in the presence of her lawyer. In the meantime, respondents suspension was lifted, but without prejudice to the outcome of the administrative investigation. On September 7, 1995, the petitioner conducted a formal hearing which was attended by respondent and her counsel of record. Subsequently, respondent and her counsel affixed their respective signatures on the transcripts of the hearing. Meanwhile, on April 15, 1996, BOM Villagracia resigned. Upon his resignation, respondent managed the Cagayan de Oro branch for three months pending the appointment of a new BOM. On the basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the auditors report, the petitioner, on June 25, 1996, formally dismissed the respondent for breach of trust and confidence. On September 24, 1996, as stated above, respondent filed her Complaint for illegal dismissal, backwages and damages, with the Labor Arbiter. Issue

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Whether or Whether or Whether or increase. Whether or

not petitioner was illegally dismissed not petitioner is entitled to 13th month pay. not petitioner is entitled to 14th, and 15th month pay, as well as monthly salary not petitioner is entitled to separation pay.

Decision I. NO, SHE WAS NOT. Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for dismissal is premised on the fact that an employee concerned holds a position of trust and confidence. This situation applies where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employers property. But, in order to constitute a just cause for dismissal, the act complained of must be work-related, such that the employee concerned is unfit to continue working for the employer. The degree of proof required in labor cases is not as stringent as in other types of cases. It must be noted, however, that recent decisions of this Court have distinguished the treatment of managerial employees from that of rank-and-file personnel in the application of the doctrine of loss of trust and confidence. With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as to a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required; it is sufficient that there is some basis for the loss of confidence, as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. In the present case, the respondent is not an ordinary rank-and-file employee. The nature of her work requires a substantial amount of trust and confidence on the part of the employer. Being the Credit Administration Supervisor of the Cagayan de Oro and Butuan City branches of the petitioner, respondent occupied a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust and confidence. Respondents position involves a high degree of responsibility requiring trust and confidence. The position carried with it the duty to observe proper company procedures in the fulfillment of her job, as it relates closely to the financial interests of the company. Respondents unauthorized extensions of the credit periods of the dealers are prejudicial to the interest of the petitioner and bear serious financial implications. Moreover, respondent was not guilty of one-time unauthorized extension of the credit terms, but of repeated acts over the course of several months. Her bare, unsubstantiated and uncorroborated denial of her participation in the anomalies does not prove her innocence nor disprove her alleged guilt, especially considering that she would vacillate between admitting and denying the charges. On the contrary, such denial or failure to rebut the serious accusations hurled against her militate against her innocence and strengthen the adverse averments of the petitioner. The requirement that there must be some basis or

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reasonable ground to believe that the employee is responsible for the misconduct was sufficiently met in this case. Additionally, even if the employee had no actual and direct participation in the alleged anomalies, his failure to detect any anomaly that would normally fall within the scope of his work reflects his ineffectiveness and amounts to gross negligence and incompetence, which are, likewise, justifiable grounds for his dismissal; and that it is not necessary to prove the employees direct participation in the irregularity, for what is material is that his actuations were more than sufficient to sow in his employer the seed of mistrust and loss of confidence. Furthermore, as alleged by petitioner that her mistakes had the blessing of management, while case law provides that where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management, then the same could not serve as a basis for termination, in this case respondent failed to show that her extensions of the credit terms were condoned by management. Pending the final outcome of the investigation, respondent, as with all persons, has in her favor the presumption of innocence, and for this reason she may even be entitled to a promotion in due course. But after due investigation and marshalling of facts, after the employer forms a moral conviction that indeed the employee breached its trust and confidence, and despite such promotion, the employer may then proceed to dismiss the erring employee. The rules on termination of employment and the penalties for infractions, insofar as fiduciary employees are concerned, are not necessarily the same as those applicable to the termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employers trust and confidence, than in the case of ordinary rank-and-file employees. II. NO, SHE IS NOT. Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenthmonth pay. III. NO, SHE IS NOT. The respondent must show that these benefits are due to her as a matter of right. The rule in these cases is, she who alleges, not she who denies, must prove. 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 companys fiscal situation, the employees future performance on the job, or the employees continued stay in a position. In short, absent any proof, there is no vested right to salary increases. IV. NO, SHE IS NOT. Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on her moral character. Inasmuch as the reason for which the respondent was

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validly separated involves her integrity, which is required for the position of Credit Administration Supervisor, she is not worthy of compassion as to deserve separation pay for her length of service. EQUITABLE BANK VS. SADAC G.R. No. 164772; June 8, 2006

Facts Respondent was appointed VP of the legal department of petitioner, and subsequently, General Counsel thereof. On June 26, 1989, nine lawyers of petitioners legal department accused respondent of abusive conduct and ultimately petitioned for a change in leadership of the department. On the ground of lack of confidence in respondent, under the rules of client-lawyer relationship, petitioner instructed respondent to deliver all materials in his custody in all cases in which he was appearing as its counsel of record. Respondent requested a full hearing and formal investigation but the same remained unheeded. On November 9, 1989, respondent filed a complaint for illegal dismissal against petitioner and individual members of the BOD. After learning of the filing, petitioner terminated the services of respondent. On August 10, 1989, respondent was removed from his office and ordered disentitled to any compensation and other benefits. Respondent was found to have been illegally dismissed, entitling him to backwages from termination of employment until turning 60 years of age, and to retirement benefits in accordance with law. However, respondents computation of the total amount of the monetary reward differed from that of petitioners, as he included the general increases which he should have earned during the period of his illegal termination. Pursuant to a Motion for Execution filed by respondent with the Labor Arbiter, the latter ruled in favor of the formers computation. The NLRC reversed the Labor Arbiters decision. The CA ruled in favor of respondents. Hence, the petition for review by petitioner. Arguments Petitioner: 1) Article 279 of the Labor Code does not contemplate the inclusion of salary increases in the definition of full backwages. 2) While R.A. No. 6715, in amending article 279, intends to give more benefits to workers, nowhere in article 279, as amended, are salary increases spoken of. 3) The employee is paid the wage rate at the time of the dismissal. Respondent: 1) Article 279 of the Labor Code provides that it is the obligation of the employer to pay an illegally dismissed employee the whole amount of the salaries/wages, plus all other benefits and bonuses and general increases to which he could have been normally entitled to, had he not been dismissed. Thus, salary increases should be deemed a component in the computation of backwages. Issue Whether or not general salary increases should be included in the computation of full backwages.

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Decision NO, THEY ARE NOT. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the formers unlawful act or bad faith. Conformably with the evident legislative intent as expressed in Rep. Act No. 6715, abovequoted, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Article 279 mandates that an employees full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do not see that a salary increase can be interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. The term "allowances" is sometimes used synonymously with "emoluments," as indirect or contingent remuneration, which may or may not be earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are added to the employees salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not separate grants by themselves but once granted, they are deemed part of the employees salary. To extend the coverage of an allowance or a benefit to include salary increases would be to strain both the imagination of the Court and the language of law. Indeed, if the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. An unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal. The base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employees dismissal, inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under the law. "The term backwages without qualification and deduction means that the workers are to be paid their backwages fixed as of the time of the dismissal or strike without deduction for their earnings elsewhere during their layoff and without qualification of their wages as thus fixed; i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers who are not dismissed or did not go on strike. Awards including salary differentials are not allowed. The salary base properly used should, however, include not only the basic salary but also

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the emergency cost of living allowances and also transportation allowances if the workers are entitled thereto." Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of ones salary or wage. The outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment. Respondents claim, however, is based simply on expectancy or his assumption that, because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased, it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this contention is based merely on speculation. Furthermore, it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. The mere fact that he had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and, therefore, qualify for the said increase later. What is more, his claim is tantamount to saying that he had a vested right to remain as General Counsel and given salary increases simply because he had performed well in such position, and thus he should not be moved to any other position where management would require his services. There was no lawful decree or order supporting his claim, such that his 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 its nature volatile and are dependent on numerous variables, including the companys fiscal situation and even the employees future performance on the job, or the employees continued stay in a position subject to management prerogative to transfer him to another position where his services are needed. In short, there is no vested right to salary increases. That respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadacs computation of his full backwages which includes his prospective salary increases cannot be permitted. 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 Sadacs 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. The distinction between salary and wage was for the purpose of Article 1708 of the Civil Code which mandates that, "the laborers 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 Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another mans 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. CONDITIONS OF EMPLOYMENT SAN JUAN DE DIOS HOSPITAL V. NLRC (supra) SIMEDARBY VS. NLRC

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G.R. No. 119205; April 15, 1998 Facts Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break. On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992. 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. However, the Labor Arbiter dismissed the complaint. Private respondent appealed to respondent National Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the appeal. 4 However, upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as the decision of the Labor Arbiter. Issue Whether or not the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice. Decision NO, IT DOES NOT. 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. We agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not. The change effected by management with regard to working time is made to apply to all factory employees engaged in the same line of work whether or not they are members of private respondent union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of private respondent to self-organization. Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management

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prerogatives. Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise. 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 dispute will be automatically decided in favor of labor. Management also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the employer, such favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. PHIL. AIRLINES VS. NLRC G.R. No. 132805; February 2, 1999

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, in turn, required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him. Finding private respondent's explanation unacceptable, the management charged private respondent with abandonment of post while on duty. 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. After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for three months effective December 16, 1994. Private respondent filed a complaint for illegal suspension against petitioner. On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision declaring the suspension of private respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to all the benefits he should have received during his period of suspension plus P500,000.00 moral damages.

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Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that the decision of the Labor Arbiter is supported by the facts on record and the law on the matter. The NLRC likewise denied petitioner's motion for reconsideration. Hence, this petition. Arguments Petitioner: Being a full-time employee, private respondent is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals. Issue Whether or not the suspension was valid. Decision NO, IT WAS NOT. The facts do not support petitioner's allegation that private respondent abandoned his post on the evening of February 17, 1994. Private respondent left the clinic that night only to have his dinner at his house, which was only a few minutes' drive away from the clinic. His whereabouts were known to the nurse on duty so that he could be easily reached in case of emergency. Upon being informed of Mr. Acosta's condition, private respondent immediately left his home and returned to the clinic. These facts belie petitioner's claim of abandonment. Art. 83 and 85 of the Labor Code read: Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (emphasis supplied) Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. Sec. 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

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time. Private respondent's act, therefore, of going home to take his dinner does not constitute abandonment. LINTON COMMERCIAL CO. INC. VS. HELLERA G.R. No. 163147; October 10, 2007 Facts Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its by-products. Petitioner Desiree Ong is Lintons vice president. On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the companys 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 companys 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 with the Arbitration Branch of the NLRC on 17 July 1998. Arguments Petitioner: 1) The devaluation of the peso created a negative impact in international trade and affected their business because a majority of their raw materials were imported. Their business suffered a net loss of P3,569,706.57 primarily due to currency devaluation and the slump in the market. Consequently, Linton decided to reduce the working days of its employees to three (3) days on a rotation basis as a cost-cutting measure. 2) The compressed workweek was actually implemented on 12 January 1998 and not on 7 January 1998, and that Article 283 was not applicable to the instant case. 3) The reduction of workdays is not equivalent to constructive dismissal. There was no reduction of salary but instead only a reduction of working days from six to three days per week. The reduction of workdays, while not expressly covered by any of the provisions of the Labor Code, is analogous to the situation contemplated in Article 286 of the Labor Code because the company implemented the reduction of workdays to address its financial losses. 4) Since there was no retrenchment, the one-month notice requirement under Article 283 of the Labor Code is not applicable. Respondent: Linton implemented the reduction of work hours without observing Article 283 of the Labor Code, which required submission of notice thereof to DOLE one month prior to the implementation of reduction of personnel, since Linton filed only the establishment termination report enacting the compressed workweek on the very date of its implementation. Issue Whether or not had committed illegal reduction of work when it imposed a reduction of work hours thereby affecting its employees.

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Decision YES, IT DID. For the reduction of working hours to be valid, the following must be taken into consideration: the arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel, there was notice and consultations with the workers and supervisors, a consensus were reached on how to deal with deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses. 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. A close examination of petitioners financial reports for 1997-1998 shows that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the States policy to afford protection to labor and provide full employment. 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 employers 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 V. NLRC GR No. 151309; Oct. 15, 2008 Facts: RESPONDENT Tryco Pharma Corp. received a letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City. Accordingly, respondent issued memoranda directing petitioners to report to the companys plant site in Bulacan.

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Petitioners opposed the transfer and filed a case for illegal dismissal with money claims against respondent claiming that the transfer was tantamount to constructive dismissal. Is there merit to the claim? Ruling: No. Furthermore, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. () MINIMUM LABOR STANDARDS UNION OF FILIPRO EMPLOYEES VS. VIVAR G.R. No. 79255; January 20, 1992

Facts On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay. Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to: pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor. Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases

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pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P. Blg. 130. However, in a letter dated July 6, 1987, 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. Hence, this petition. Argumentefits Petitioner: 1) The award should be made effective from the date of effectivity of the Labor Code 2) Their sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished. 3) The fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of work in the field can be determined with reasonable certainty. 4) The period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty. 5) The divisor should not be changed from 251 to 261 days to include the additional 10 holidays and the employees should not reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor. Issue Whether or not the sales personnel should be excluded from the computation of holiday pay award. Whether or not the change in the divisor in the computation of benefits from 251 to 261 is valid. Decision I. YES, THEY SHOULD. 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 controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. 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. The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of determination on the actual field work of the employees which can be reasonably ascertained. The theoretical analysis that salesmen and other similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field,

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the extent or scope and result of which are subject to their individual capacity and industry and which "cannot be determined with reasonable certainty." This is the reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay award. 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 Sec. 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 xxx 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. To the argument that the giving of incentive bonus proves that their actual hours in the field can be determined with reasonable certainty, 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 above 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. 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. The same rule on holiday pay benefits also apply to overtime pay. II. NO, IT IS NOT. The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. Following the criterion laid down in the Chartered Bank case (the Chartered Bank, in computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251), the use of 251 days' divisor by respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261. It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays. To change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor

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Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay. NATIONAL SUGAR REFINERIES CO. VS. NLRC G.R. No. 101761; March 24, 1993 Facts Petitioner, a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head of Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Assistant Shift Process Supervisor, Shift R/M 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. The JE Program was designed to rationalize the duties and functions of all positions, reestablish levels of responsibility, and reorganize 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. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and-file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code, as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay on the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; and (5) there was a grant of P100.00 allowance for rest day/holiday work. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act No. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complaint 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.

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Arguments Petiitioner: 1) The members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and petitioner should not assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program. 2) 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. Issue Whether or not supervisory employees are entitled to overtime, rest day and holiday pay. Decision NO, THEY ARE NOT. It is not disputed that the members of respondent union are supervisory employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: (m) "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, discharge, 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 the above definitions are considered rank-and-file employees for purposes of this Book. Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, however, provides: Art. 82. Coverage. The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. xxx xxx xxx 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: xxx xxx xxx (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

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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. Petitioner hinges its argument on the latter, while respondent hinges its argument on the former. The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case. In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. A cursory perusal of the Job Value Contribution Statements of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling, communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. It is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I, Book III of the Rules to Implement the Labor Code. The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Article 82 or 212(m) of the Labor Code, is puerile and inefficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria. We likewise do not subscribe to the view that the payment of the questioned benefits to the union members has ripened into a contractual obligation. The members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingfully well that said employees are not covered by the law requiring payment thereof. In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity. With the implementation of the JE Program, there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their former positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer meet the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

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Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted in bad faith in implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive. SALAZAR VS. NLRC G.R. No. 109210; April 17, 1996 Facts On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after completion of the project and that petitioner's services in excess of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour. On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991. On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila. Arguments Petitioner: 1) Since he performs his duties in the project site or away from the principal place of business of his employer (herein private respondent), he falls under the category of "field personnel." However, his case constitutes the exception to the exception because his actual working hours can be determined as evidenced by the disbursement vouchers containing payments of petitioner's salaries and overtime services. Field personnel may include managerial employees. 2) Private respondent compensated him for his overtime services as indicated in the various disbursement vouchers he submitted as evidence. Thus, he is entitled to the benefits. 3) He is entitled to separation pay. Issue Whether or not petitioner may be considered as managerial employee. Whether or not petitioner is entitled to separation pay. Decision I. NO, HE MAY NOT. In his original complaint, petitioner stated that the nature of his work is "supervisoryengineering." Similarly, in his own petition and in other pleadings submitted to this Court, petitioner confirmed that his job was to supervise the laborers in the construction project. Hence, although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the Labor Code, and sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely under another exempt category"officers or members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules. That petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As previously determined, petitioner falls under the exemptions and therefore has no legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime services.

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However, this does not translate into a right on the part of petitioner to demand additional payment when, under the law, petitioner is clearly exempted therefrom. II. NO, HE IS NOT. The applicable provision is Article 280 of the Labor Code which defines the term "project employee," thus: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific period or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. In the case at bench, it was duly established that private respondent hired petitioner as project or construction engineer specifically for its Monte de Piedad building project. Accordingly, as project employee, petitioner's services are deemed coterminous with the project, that is, petitioner's services may be terminated as soon as the project for which he was hired is completed. Petitioner, thus, has no legal right to demand separation pay. Policy Instruction No. 20 entitled "Stabilizing Employer-Employee Relations in the Construction Industry" explicitly mandates that: xxx xxx xxx Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes. xxx xxx xxx Department Order No. 19 of the Department of Labor and Employment (DOLE) entitled "Guidelines Governing the Employment of Workers in the Construction Industry" promulgated on 1 April 1993, reiterates the same rule. LABOR CONGRESS OF THE PHILIPPINES VS. NLRC G.R. No. 123938; May 21, 1998 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. On October 23, 1990, petitioners private respondents entered into a Memorandum of Agreement which provided, among others, the following: 1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE, Management of the Empire Food Products has no objection [to] the direct certification of the LCP Labor Congress and is now recognizing the Labor Congress of the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and Representative for all rank and file employees of the Empire Food Products regarding "WAGES, HOURS Of WORK, AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT;" 2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC parties jointly and mutually agreed that the issues thereof, shall be discussed by the parties and resolve[d] during the negotiation of the Collective Bargaining Agreement;

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3. That Management of the Empire Food Products shall make the proper adjustment of the Employees Wages within fifteen (15) days from the signing of this Agreement and further agreed to register all the employees with the SSS; 4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll deduction UNION DUES and other Assessment[s] upon submission by the LCP Labor Congress individual Check-Off Authorization[s] signed by the Union Members indicating the amount to be deducted and further agreed all deduction[s] made representing Union Dues and Assessment[s] shall be remitted immediately to the LCP Labor Congress Treasurer or authorized representative within three (3) or five (5) days upon deductions [sic], Union dues not deducted during the period due, shall be refunded or reimbursed by the Employer/Management. Employer/Management further agreed to deduct Union dues from non-union members the same amount deducted from union members without need of individual Check-Off Authorizations [for] Agency Fee; 5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations Commission (NLRC), while the Petition for direct certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress; 6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic], Threats, Interferences [sic] of their respective rights under the law, no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the operations of the business; 7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA, this Memorandum of Agreement shall govern the parties in the exercise of their respective rights involving the Management of the business and the terms and condition[s] of employment, and whatever problems and grievances may arise by and between the parties shall be resolved by them, thru the most cordial and good harmonious relationship by communicating the other party in writing indicating said grievances before taking any action to another forum or government agencies; 8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and comply with all the terms and conditions hereof. Further agreed that violation by the parties of any provision herein shall constitute an act of ULP. In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employee of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment". On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining. On January 23, 1991, petitioners filed a complaint against private respondents for unfair Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting thru Harassments, 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. Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners' prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants. Issue Whether or not petitioners, as piece-rate workers, are regular employees and thus entitled to holiday pay, premium pay, 13th month pay and service incentive leave benefits.

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Decision YES, THEY ARE. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners' tasks, their job of repacking snack food was necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, their employment not having been dependent on a specific project or season; and third, the length of time that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their employment was that of regular employees. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, "field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay. Sec. 8. Holiday pay of certain employees. (b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 2. EXEMPTED EMPLOYERS The following employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private respondents did not allege adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the National Labor Relations Commission would be in a better position to determine the exact amounts owed petitioners, if any. MERCIDAR FISHING CORP. VS. NLRC G.R. No. 112574; October 8, 1998 Facts

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This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and nonpayment of five days service incentive leave for 1990. 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. Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without leave for three months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned private respondent to another vessel, but the latter was left behind on September 1, 1990. Thereafter, private respondent asked for a certificate of employment on September 6 on the pretext that he was applying to another fishing company. On September 10, 1990, he refused to get the certificate and resign unless he was given separation pay. Arguments Petitioner: 1) It cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are "field personnel" and thus not entitled to such pay under the Labor Code. 2) Since the work of private respondent is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. Issue Whether or not fishermen are field personnel, thus not entitled to service incentive leave pay. Decision NO, THEY ARE NOT. Art. 82 of the Labor Code provides: Art. 82. Coverage. 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. xxx xxx xxx "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. The 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 Sec. 1. Coverage. This rule shall apply to all employees except: xxx xxx xxx (e) Field personnel and other employees whose time and performance is unsupervised by the employer.

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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 nonagricultural 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 as the NLRC correctly held. SAN MIGUEL CORP. VS. CA G.R. No. 146775; January 30, 2002 Facts On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office, conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City. 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. 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, dated 17 December 1993, directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from the receipt of the order. Arguments Petitioner: 1) Article 3(3) of Presidential Decree No. 1083 provides that the provisions of this Code shall be applicable only to Muslims However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. 2) The Regional Director has no jurisdiction over the case. Issue Whether or not petitioner is liable to pay regular Muslim holiday pay to non-Muslim its employees. Whether or not the Regional Director has jurisdiction. Decision YES, IT IS. Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states: Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays: (a) Amun Jadd (New Year), which falls on the first day of the first lunar month of Muharram; (b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar month of Rabi-ul-Awwal; (c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the twenty-seventh day of the seventh lunar month of Rajab; (d) d-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) d-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhl-Hijja. Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created; (2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities. The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides: Art. 94. Right to holiday pay. -

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(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; x x x. Petitioners arguments are untenable. We must remind the petitioner that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the workers faith or religion. At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that nothing herein shall be construed to operate to the prejudice of a non-Muslim. In addition, the 1999 Handbook on Workers Statutory Benefits, approved by then DOLE Secretary Bienvenido E. Laguesma on 14 December 1999 categorically stated: Considering that all private corporations, offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not report for work on the days designated by law as Muslim holidays. II. YES, HE DOES. Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides: Article 128. Visitorial and enforcement power. xxx (b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of the inspection. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. xxx In the case before us, Regional Director Macaraya acted as the duly authorized representative of the Secretary of Labor and Employment and it was within his power to issue the compliance order to SMC. In addition the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim employees. Indeed, petitioner merely contends that its non-Muslim employees are not entitled to Muslim holiday pay. Hence, the issue could be resolved even without documentary proofs. In any case, there was no indication that Regional Director Macaraya failed to consider any documentary proof presented by SMC in the course of the inspection. TAN VS. LAGRAMA G.R. No. 151228; August 15, 2002 Facts Petitioner is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get out.")

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Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. Arguments Petitioner: 1) Lagrama was not his employee. He asserted that Lagrama was an independent contractor who did his work according to his methods, while he (petitioner) was only interested in the result thereof. 2) He was paid on a fixed piece-work basis, i.e., that he was paid for every painting turned out as ad billboard or mural for the pictures shown in the three theaters, on the basis of a "no mural/billboard drawn, no pay" policy. 3) It was the latter who refused to paint for him after he was scolded for his habits. Issue Whether or not an employee-employer relationship existed. Decision YES, IT DID. In determining whether there is an employer-employee relationship, we have applied a "four-fold test," to wit: (1) whether the alleged employer has the power of selection and engagement of employees; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. These elements of the employeremployee relationship are present in this case. First, It was petitioner who engaged the services of Lagrama without the intervention of a third party. It is the existence of the second element, the power of control, that requires discussion here. Of the four elements of the employer-employee relationship, the "control test" is the most important. Compared to an employee, an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his principal, an employee is subject to the employer's power to control the means and methods by which the employee's work is to be performed and accomplished. In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee, the evidence shows that the latter performed his work as painter under the supervision and control of petitioner. Lagrama worked in a designated work area inside the Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms. Petitioner's control over Lagrama's work extended not only to the use of the work area, but also to the result of Lagrama's work, and the manner and means by which the work was to be accomplished. Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the materials used for the paintings, because he admitted that he paid Lagrama only for the latter's services. Private respondent Lagrama claimed that he worked daily, from 8 o'clock in the morning to 5 o'clock in the afternoon. Petitioner disputed this allegation and maintained that he paid Lagrama P1,475.00 per week for the murals for the three theaters which the latter usually

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finished in 3 to 4 days in one week. Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week proves regularity in his employment by petitioner. Second, petitioner had the right to hire and fire respondent. The right to hire and fire is another important element of the employer-employee relationship. Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture such an expectancy, the frustration of which, unless satisfactorily explained, can bring about some disciplinary action on the part of the employer. Third, payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. That Lagrama worked for Tan on a fixed piecework basis is of no moment. Payment by result is a method of compensation and does not define the essence of the relation. It is a method of computing compensation, not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not. The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll. The payroll should show among other things, the employee's rate of pay, deductions made, and the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll to support his claim that Lagrama was not his employee, raising speculations whether his failure to do so proves that its presentation would be adverse to his case. The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. In this case, there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. To let the people know what movie was to be shown in a movie theater requires billboards. Petitioner in fact admits that the billboards are important to his business. The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner. Otherwise, an employer would be rewarded for his failure or even neglect to perform his obligation. Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner. That he did so only during weekends has not been denied by petitioner. On the other hand, Samuel Villalba, for whom Lagrama had rendered service, admitted in a sworn statement that he was told by Lagrama that the latter worked for petitioner. Lagrama had been employed by petitioner since 1988. Under the law, therefore, he is deemed a regular employee and is thus entitled to security of tenure, as provided in Art. 279 of Labor Code: ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This Court has held that if the employee has been performing the job for at least one year, even if not continuously but intermittently, the repeated and continuing need for its performance is sufficient evidence of the necessity, if not indispensability, of that activity to the business of his employer. Hence, the employment is also considered regular, although with respect only to such activity, and while such activity exists. Corrolarily, the Bureau of Working Conditions classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while

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the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay since he is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work. LAMBO VS. NLRC G.R. No. 111042; October 26, 1999 Facts Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees. Arguments Petitioner: They were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work. Issue Whether or not petitioners are entitled to their claims. Whether or not the quitclaims are valid. Whether or not petitioners are entitled to separation pay, backwages, overtime pay, holiday pay, 13th month pay, separation pay and attorneys fees, corresponding to 10% of the total monetary awards. Decision I. YES, THEY ARE. First. 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 employers 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. Piecerate 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. Petitioners belong to the first category, i.e., supervised employees. In determining the existence of an employer-employee relationship, the following elements must be considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.

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In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the companys 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. Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2) petitioners worked for private respondents throughout the year, their employment not being dependent on a specific project or season; and, (3) petitioners worked for private respondents for more than one year. II. NO, THEY ARE NOT. To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction. However, considering that the Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held in another case, the subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers legal rights. An employee who is merely constrained to accept the wages paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received. III. YES, THEY ARE. As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis. R&E TRANSPORT VS. LATAG G.R. No. 155214; February 13, 2004

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 petitioner. 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.

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Latag thus asked Felix Fabros, the administrative officer of petitioners, for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latag filed a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag. On January 21, 2000, Respondent Avelina Latag, with her then counsel, was invited to the office of petitioners counsel and was offered the amount of P38,500.00, which she accepted. Respondent was also asked to sign an already prepared quitclaim and release and a joint motion to dismiss the case. After a day or two, respondent received a copy of the January 10, 2000 Decision of the Labor Arbiter. "On January 24, 2000, petitioners filed the quitclaim and motion to dismiss. Thereafter, on May 23, 2000, the Labor Arbiter issued an order, still upholding the January 10, 2000 decision of the Labor Arbiter. On January 21, 2000, petitioners interposed an appeal before the NLRC. On March 14, 2001, the latter dismissed the appeal for failure to post the required bond. On April 10, 2001, petitioners filed a motion for reconsideration of the above resolution. On September 28, 2001, the NLRC came out with the assailed Decision, which gave due course to the motion for reconsideration." Arguments Respondent: Under Article 223 of the Labor Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an employers appeal of a decision involving monetary awards may be perfected only upon the posting of an adequate cash or surety bond. Petitioner: The CA erred in disregarding the factual findings of the NLRC and in deciding to affirm those of the labor arbiter. Allegedly, the NLRC findings were based on substantial evidence, while those of the labor arbiter were groundless. Petitioners add that the appellate court should have refrained from tackling issues of fact and, instead, limited itself to those of jurisdiction or grave abuse of discretion on the part of the NLRC. Issue Whether or not the CA erred when it overturned the factual findings of the Labor Arbiter. Whether or not the quitclaim was valid. Whether or not the Labor Arbiters decision of May 23, 2000 involved a monetary award. Decision I. NO, IT DID NOT. The power of the CA to review NLRC decisions via a Rule 65 petition is now a settled issue. The proper remedy to ask for the review of a decision of the NLRC is a special civil action for certiorari under Rule 65 of the Rules of Court, and that such petition should be filed with the CA in strict observance of the doctrine on the hierarchy of courts. Moreover, it has already been explained that under Section 9 of Batas Pambansa (BP) 129, as amended by Republic Act 7902, the CA -- pursuant to the exercise of its original jurisdiction over petitions for certiorari -- was specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. II. NO, THEY ARE NOT. This is not to say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for instance, was wangled from an unsuspecting or a gullible person; or

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where the agreement or settlement was "unconscionable on its face." A quitclaim is ineffective in barring recovery of the full measure of a workers rights, and the acceptance of benefits therefrom does not amount to estoppel. Moreover, a quitclaim in which the consideration is "scandalously low and inequitable" cannot be an obstacle to the pursuit of a workers legitimate claim. 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, provides: "Art. 287. Retirement. - x x x "x x x x x x x x x "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. x x x x x x x x x" 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 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. Compared with this amount, the P38,850 he received, which represented just over one third of what was legally due him, was unconscionable. III. YES, IT DID. Petitioners contention is that the labor arbiters January 10, 2000 Decision was supplanted by the Compromise Agreement that had preceded the formers official release to, and receipt by, the parties. It appears from the records that they had entered into an Amicable Settlement on January 21, 2000; that based on that settlement, respondent filed a Motion to Dismiss on January 24, 2000, before the labor arbiter who officially released on the same day his Decision dated January 10, 2000; that upon receipt of a copy thereof, respondent filed a Manifestation and Motion to Set Aside the Motion to Dismiss; and that the labor arbiter subsequently calendared the case for conference, held hearings thereon, and required the parties to exchange positions -- by way of comments, replies and rejoinders -after which he handed down his May 23, 2000 Order. Under the circumstances, the case was in effect reopened by the proceedings held after respondent had filed her Manifestation and Motion to Set Aside the Motion to Dismiss. This ruling is in accordance with the fourth paragraph of Section 2, Rule V of the New Rules of Procedure of the NLRC, which therefore correctly held as follows: "x x x Thus, the further hearings conducted thereafter, to determine the validity of complainants manifestation and motion are but mute confirmation that indeed the 10 January 2000 decision in this case has not as yet attained finality. Finally, the appealed order of 23 May 2000 itself declaring that the decision stands and the Labor Arbitration Associate of this office is directed to prepare the Writ of Execution in due course, obviously,

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is a conclusion that the decision in this case has been supplanted and rendered functus officio by the herein parties acts. Thus, when the Labor Arbiter a quo found in his appealed order that the amount of P38,850.00 is unconscionable viewed against the amount awarded in the decision, the same became appealable independently of the 10 January 2000 decision, which has not attained finality, in the first place." We cannot concur, however, in petitioners other contention that the May 23, 2000 Order did not involve a monetary award. If the amicable settlement between the parties had rendered the January 10, 2000 Decision functus oficio, then it follows that the monetary award stated therein was reinstated -- by reference -- by the aforementioned Order. The appeal from the latter should perforce have followed the procedural requirements under Article 223 of the Labor Code. As amended, this provision explicitly provides that an appeal from the labor arbiters decision, award or order must be made within ten (10) calendar days from receipt of a copy thereof by the party intending to appeal it; and, if the judgment involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. Such cash or bond must have been issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award stated in the judgment. Sections 1, 3 and 6 of Rule VI of the New Rules of Procedure of the NLRC implement this Article. Indeed, this Court has repeatedly ruled that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and the failure to perfect an appeal has the effect of rendering the judgment final and executory. Nonetheless, procedural lapses may be disregarded because of fundamental considerations of substantial justice; or because of the special circumstances of the case combined with its legal merits or the amount and the issue involved. The requirement to post a bond to perfect an appeal has also been relaxed in cases when the amount of the award has not been included in the decision of the labor arbiter. Besides, substantial justice will be better served in the present case by allowing petitioners appeal to be threshed out on the merits, especially because of serious errors in the factual conclusions of the labor arbiter as to the award of retirement benefits. ASIAN TRANSMISSION VS. CA G.R. No. 144664; March 15, 2004 Facts The Department of Labor and Employment (DOLE), through Undersecretary, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which, apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday]. The bulletin reads: Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan. Despite the explanatory bulletin, petitioner 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 Kagitignan and Maundy Thursday." Issue

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Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on the same day. Decision YES, HE IS. 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." 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. ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New Years 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 Years 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 As reflected above, Art. 94 of the Labor Code, as amended, affords 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. In the case at bar, there is nothing in the law which provides or indicates that the entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on the same day. In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working mans welfare should be the primordial and paramount consideration.

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Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in the law or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked regular holidays as provided in existing individual or collective agreement or employer practice or policy. Furthermore, from the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the legal holidays as required by law. In Wellington, the issue was whether monthly-paid employees are entitled to an additional days pay if a holiday falls on a Sunday. This Court, in answering the issue in the negative, observed that in fixing the monthly salary of its employees, Wellington took into account "every working day of the year including the holidays specified by law and excluding only Sunday." This case is not applicable here. AUTOBUS TRANSPORT SYSTEM VS. BAUTISTA G.R. No. 156364; May 16, 2005

Facts Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent 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 respondents 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. Arguments Petitioner: 1) Respondents employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. 2) In the exercise of its management prerogative, respondents employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000. 3) Respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis. 4) The only criterion that should be considered is the nature of work of the employee in that, if the employees job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel. Issue Whether or not respondent is entitled to service incentive leave Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondents claim of service incentive leave pay. Decision I. YES, HE IS.

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Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Book III, Rule V: SERVICE INCENTIVE LEAVE SECTION 1. Coverage. 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 perusal 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 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. The definition of a field personnel is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised by the employer. 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 employees 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 petitioners business. Accordingly, respondent is entitled to the grant of service incentive leave.

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II. YES, IT IS. Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred. In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period. It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291. Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the threeyear 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 (3) years before the filing of the complaint. It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment. Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employees services, as the case may be. The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingmans welfare should be the primordial and paramount consideration. The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither

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did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits. Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code. SAN MIGUEL CO. VS. DEL ROSARIO G.R. No. 168194; December 13, 2005

Facts On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9, 2001, petitioner informed respondent that her probationary employment will be severed at the close of the business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioners premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of monetary benefits. Arguments Petitioner: 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. Respondent was allegedly employed on April 17, 2000 as a temporary reliever of Patrick Senen, an account specialist, who met an accident. Anticipating an increase in sales volume, petitioner hired respondent as an account specialist on a probationary status effective September 4, 2000 and was assigned at petitioners Greater Manila Area-Key Accounts Group (GMA-KAG) Beer Sales Group. However, petitioners expected business growth did not materialize, hence, it reorganized the GMA-KAG, and created the Centralized Key Accounts Group. This restructuring led to an initial excess of 49 regular employees, who were redeployed to other positions, including the one occupied by respondent. Her employment was thus terminated effective March 12, 2001. 2) The dismissal of respondent was under the authorized cause of redundancy. 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.

Respondent: Petitioner feigned an excess in manpower because after her dismissal, it hired new recruits, namely, Jerome Sanchez and Marilou Marfil and re-employed two of her batch mates, Rosendo To and Ruel Rocha. Issue Whether or not respondent is a regular employee of petitioner. If so, whether or not she is entitled to any monetary benefit. Decision I. YES, SHE IS.

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In termination cases, like the present controversy, the burden of proving the circumstances that would justify the employees dismissal rests with the employer. The best proof that petitioner should have presented to prove the probationary status of respondent is her employment contract. None, having been presented, the continuous employment of respondent as an account specialist for almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary reliever or a probationary employee. And while it is true that by way of exception, the period of probationary employment may exceed six months when the parties so agree, such as when the same is established by company policy, or when it is required by the nature of the work, none of these exceptional circumstance were proven in the present case. Hence, respondent whose employment exceeded six months is undoubtedly a regular employee of petitioner. Moreover, even assuming that the employment of respondent from April 7, 2000 to September 3, 2000, is only temporary, and that the reckoning period of her probationary employment is September 4, 2000, she should still be declared a regular employee because by the time she was dismissed on March 12, 2001, her alleged probationary employment already exceeded six months, i.e., six months and eight days to be precise. A worker was found to be a regular employee notwithstanding the presentation by the employer of a Payroll Authority indicating that said employee was hired on probation, since it was shown that he was terminated four days after the 6th month of his purported probationary employment. Neither will petitioners belated claim that respondent became a probationary employee starting October 1, 2000 work against respondent. As earlier stated, the payroll authorities indicating that respondents probationary status became effective as of such date are of scant evidentiary value since it does not show the conformity of respondent. At any rate, in the interpretation of employment contracts, whether oral or written, all doubts must be resolved in favor of labor. Hence, the contract of employment in the instant case, which appears to be an oral agreement since no written form was presented by petitioner, should be construed as one vesting respondent with a regular status and security of tenure. Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The determination that the employees services are no longer necessary or sustainable and, therefore, properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees. The following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring.

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In the case at bar, petitioner presented an affidavit of its Sales Manager and a memorandum of the company both to the effect that there is a need to redeploy its regular employees and terminate the employment of temporary employees, in view of an excess in manpower. These documents, however, do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to support a conclusion. Moreover, the lingering doubt as to the existence of redundancy or of petitioners so called restructuring, realignment or reorganization which resulted in the dismissal of not only probationary employees but also of regular employees, is highlighted by the nonpresentation by petitioner of the required notice to the DOLE and to the separated employees. If there was indeed a valid redundancy effected by petitioner, these notices and the proof of payment of separation pay to the dismissed regular employees should have been offered to establish that there was excess manpower in petitioners GMA-KAG caused by a decline in the sales volume. In balancing the interest between labor and capital, the prudent recourse in termination cases is to safeguard the prized security of tenure of employees and to require employers to present the best evidence obtainable, especially so because in most cases, the documents or proof needed to resolve the validity of the termination, are in the possession of employers. A contrary ruling would encourage employers to prevent the regularization of an employee by simply invoking a feigned or unsubstantiated redundancy program. Granting that petitioner was able to substantiate the validity of its reorganization or restructuring, it nevertheless, failed to effect a fair and reasonable criterion in dismissing respondent. The criteria in implementing a redundancy are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its sales unit was the employment status of the employee. However, in the implementation thereof, petitioner erroneously classified respondent as a probationary employee, resulting in the dismissal of the latter. Verily, the absence of criteria and the erroneous implementation of the criterion selected, both render invalid the redundancy because both have the ultimate effect of illegally dismissing an employee. II. YES, SHE IS, AS TO BACKWAGES, SERVICE INCENTIVE LEAVE PAY AND 13 th MONTH PAY, PLUS ATTORNEYS FEES. Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to payment of full backwages, computed from the time her compensation was actually withheld from her on March 13, 2001, up to her actual reinstatement. As a regular employee of petitioner from the date of her employment on April 17, 2000, she is likewise entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed from such date also up to her actual reinstatement. Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by the month, irrespective of the number of working days therein, shall be presumed to be paid for all the days in the month whether worked or not. Anent attorneys fees, in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary award by way of attorneys fees is justifiable under Article 111 of the

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Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of attorneys fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly, as in the instant controversy. PENARANDA VS. BAGANGA PLYWOOD CORP. G.R. No. 159577; May 3, 2006 Facts Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC. Arguments Petitioner: He was employed by respondent on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. Further. His services were terminated without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and attorneys fees having been forced to litigate the present complaint. 2) He is not a managerial employee, and therefore entitled to the awards claimed. Respondent: 1) Complainants separation from service was done pursuant to Art. 283 of the Labor Code. The respondent was on temporary closure due to repair and general maintenance and it applied for clearance with the Department of Labor and Employment, Regional Office No. XI to shut down and to dismiss employees. And due to the insistence of herein complainant he was paid his separation benefits. Consequently, when respondent [BPC] partially reopened in January 2001, Pearanda failed to reapply. Hence, he was not terminated from employment much less illegally. He opted to severe employment when he insisted payment of his separation benefits. 2) Being a managerial employee he is not entitled to overtime pay and if ever he rendered services beyond the normal hours of work, there was no office order/or authorization for him to do so. Issue Whether or not petitioner is a regular employee entitled to monetary benefits under article 82 of the Labor Code. Decision NO, HE IS NOT. Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for working on rest days. Under this provision, managerial employees are "those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision." The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions: "(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." 31

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Petitioner was not a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: "(1) The primary duty consists of the performance of work directly related to management policies of the employer; "(2) Customarily and regularly exercise discretion and independent judgment; "(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and "(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above." Petitioner 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. Petitioners evidence also showed that he was the supervisor of the steam plant. His classification as supervisor is further evident from the manner his salary was paid. He belonged to the 10% of respondents 354 employees who were paid on a monthly basis; the others were paid only on a daily basis. On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to petitioner. HOUSE OF SARA LEE VS. REY (SUPRA) LEYTE IV ELECTRIC COOPERATIVE INC. VS. LEYECO IV EMPLOYEES UNION-ALU G.R. No. 1577745; October 19, 2007 Facts On April 6, 1998, petitioner and 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. On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining that after perusing all available pay slips, it found that it had paid all employees all the holiday pays enumerated in the CBA. After exhausting the procedures of the grievance machinery, the parties agreed to submit the issues of the interpretation and implementation of Section 2, Article VIII of the CBA on the payment of holiday pay, for arbitration of the National Conciliation and Mediation Board

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(NCMB), Regional Office No. VIII in Tacloban City. The parties were required to submit their respective position papers, after which the dispute was submitted for decision. On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision in favor of respondent, holding petitioner liable for payment of unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07. On April 11, 2001, petitioner filed a Motion for Reconsideration but it was denied by the Voluntary Arbitrator in a Resolution dated June 17, 2002. Petitioner received said Resolution on June 27, 2002. Thirty days later, or on July 27, 2002, petitioner filed a Petition for Certiorari in the CA. In a Resolution dated September 4, 2002, the CA dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of appeal. Petitioner filed a Motion for Reconsideration but it was denied by the CA in a Resolution dated February 28, 2003. Hence, the present petition. Arguments Petitioner: 1) It already made 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. 2) Rule 65 of the Rules of Court is the applicable mode of appeal to the CA from judgments issued by a voluntary arbitrator since Rule 43 only allows appeal from judgments of particular quasi-judicial agencies and voluntary arbitrators authorized by law and not those judgments and orders issued under the Labor Code. 3) The petition before the CA did not raise issues of fact but was founded on jurisdictional issues and, therefore, reviewable through a special civil action for certiorari under Rule 65. Respondent: 1) The employees were paid all of the days of the month even if there was no work, but it is not prevented from making separate demands for the payment of regular holidays concomitant with the provisions of the CBA. 2) Judgments of the Voluntary Arbitrator are appealable to the CA under Section 1, Rule 43 of the Rules of Court. Having failed to file the appropriate remedy due to the lapse of the appeal period, petitioner cannot simply invoke Rule 65 for its own convenience, as an alternative remedy. Issue Whether or not a petition for certiorari under Rule 65 of the Rules of Court instead of Rule 43 is proper. Whether or not 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. Decision

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I. NO, IT IS NOT. A voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency; hence, his decisions and awards are appealable to the CA. This is so because the awards of voluntary arbitrators become final and executory upon the lapse of the period to appeal; and since their awards determine the rights of parties, their decisions have the same effect as judgments of a court. Therefore, the proper remedy from an award of a voluntary arbitrator is a petition for review to the CA, following Revised Administrative Circular No. 1-95, which provided for a uniform procedure for appellate review of all adjudications of quasi-judicial entities, which is now embodied in Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which reads: SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that: SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders issued under the Labor Code of the Philippines. did not alter this rule. Section 2, Rule 42 of the 1997 Rules of Civil Procedure, is nothing more than a reiteration of the exception to the exclusive appellate jurisdiction of the CA, as provided for in Section 9, Batas Pambansa Blg. 129, as amended by Republic Act No. 7902: (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit. The fact that the voluntary arbitrators functions and powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of Appeals under the foregoing

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rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated therein. This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter. Thus, the general rule is that the proper remedy from decisions of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court. Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the tribunal, board or officer exercising judicial or quasi-judicial functions acted in total disregard of evidence material to or decisive of the controversy. In addition, while the settled rule is that an independent action for certiorari may be availed of only when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law and certiorari is not a substitute for the lapsed remedy of appeal, there are a few significant exceptions when the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal, namely: (a) when public welfare and the advancement of public policy dictate; (b) when the broader interests of justice so require; (c) when the writs issued are null; and (d) when the questioned order amounts to an oppressive exercise of judicial authority. In this case, while the petition was filed on July 27, 2002, 15 days after July 12, 2002, the expiration of the 15-day reglementary period for filing an appeal under Rule 43, the broader interests of justice warrant relaxation of the rules on procedure. Besides, petitioner alleges that the Voluntary Arbitrators conclusions have no basis in fact and in law; hence, the petition should not be dismissed on procedural grounds. II. YES, IT DID. 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. The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employees salary and in the computation of his daily rate. In Wellington, 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

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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. In Odango v. National Labor Relations Commission, the 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. Moreover, it is absurd to grant respondent's claim of non-payment when they in fact admitted that they were being paid all of the days of the month even if not worked. By granting respondent's claim, the Voluntary Arbitrator sanctioned unjust enrichment in favor of the respondent and caused unjust financial burden to the petitioner. Obviously, the Court cannot allow this. 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 would automatically be decided in favor of labor. Management also has it own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. SAN MIGUEL CORP. VS. LAYOC, JR. (SUPRA) BAHIA SHIPPING SERVICES VS. CHUA G.R. No. 162195; April 8, 2008 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.

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On February 15, 1997, the private respondent reported for his working station one and one-half (1) hours late. On February 17, 1997, the master of the vessel served to the private respondent an official warningtermination 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. Arguments Petitioner: 1) It received a copy of an addendum to the collective bargaining agreement (CBA) from the petitioner's principal, Blackfriars Shipping Company, Ltd. Consequently, the petitioner requested permission from the POEA through a letter dated March 17, 1997 to amend the salary scale of the private respondent to US$300.00 per month. 2) Its monthly deduction made for union dues against the private respondent's salary in view of an alleged existing CBA between the Norwegian Seaman's Union (NSU, for brevity) and the petitioner's principal, Blackfriars Shipping Co., Ltd. 3) Private respondent has violated the terms and conditions of his contract as manifested in the said official warning-termination form by always coming late when reporting for duty even prior to the February 15, 1997 incident. 4) The LA and NLRC decisions which imposed the cap can no longer be altered as said decisions where not questioned by respondent. 5) There is no factual or legal basis for the inclusion of the guaranteed overtime pay because, after respondent's repatriation, he could not have rendered any overtime work. Respondent: 1) 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 was underpaid in the amount of US$110.00 per month for that same period of five (5) months. 2) His salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. It was his first offense committed on board the vessel. 3) Petitioner has no proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the said union dues [from] his monthly salary . Issue Whether or not the CA acted properly in altering the LA and NLRCs decision when it was not questioned by respondent. Whether or not in the computation of the award, respondennts guaranteed overtime pay should be included as part of his salary . Decision I. YES, IT DID. It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled to payment of his salary for the unexpired portion of his contract, as provided under Republic Act (R.A.) No. 8042,

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considering that his employment was pre-terminated on March 9, 1997 or four months prior to the expiration of his employment contract on July 17, 1997. However, the LA limited the award to an amount equivalent to respondent's salary for three months. The NLRC affirmed said award but deducted therefrom his salary for one day as penalty for the tardiness incurred. The CA affirmed the one-day salary deduction imposed by the NLRC but removed the three months - salary cap imposed by the LA. In effect, as this particular monetary award now stands, it is to be computed based on the salary of respondent covering the period March 9, 1997 to July 17, 1997, less his salary for one day . Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and can no longer obtain from the appellate court any affirmative relief other that what was already granted under said judgment.. However, when strict adherence to such technical rule will impair a substantive right, such as that of an illegally dismissed employee to monetary compensation as provided by law, then equity dictates that the Court set aside the rule to pave the way for a full and just adjudication of the case. Thee Court of Appeals is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less. The second option which imposes a three months salary cap applies only when the term of the overseas contract is fixed at one year or longer; otherwise, the first option applies in that the overseas worker shall be entitled payment of all his salaries for the entire unexpired period of his contract. n Skippers Pacific, Inc. v. Mira, wherein the overseas contract involved was only for six months, the Court held that it is the first option provided under Section 10 of R.A. No. 8042 which is applicable in that the overseas worker who was illegally dismissed is entitled to payment of all his salaries covering the entire unexpired period of his contract. The CA committed no error in adhering to the prevailing interpretation of Section 10 of R.A. No. 8042. II. NO, IT SHOULD NOT. 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. Hence, it being improbable that respondent rendered overtime work during the unexpired term of his contract, 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. PNCC Skyway T raffic management and Security Division Workers Organization GR No. 171321; February 17, 2010 Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of the laws of the Philippines. They entered into CBA. Pertinent provisions are as follows:

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ARTICLE VIII VACATION LEAVE AND SICK LEAVE Section 1. Vacation Leave. [b] T he 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: YES. Petitioner insisted that their union members have the preference in scheduling their vacation leave. On the other hand, respondent argued that Article VIII, Section 1 (b) gives the management the final say regarding the vacation leave schedule of its employees. Respondent may take into consideration the employees' preferred schedule,but the same is not controlling. The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from that language alone. Stated differently, where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a different sense. In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. 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 lifetime 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. Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the option of the employees, as the public using the skyway system should be assured of its safety, security and convenience. Petitioner's contention that labor contracts should be construed in favor of the laborer is without basis and, therefore, inapplicable to the present case. This rule of construction does not benefit petitioners because, as stated, there is here no room for interpretation. Since the CBA is clear and unambiguous, its terms should be implemented as they are written.

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OTHER SPECIAL BENEFITS PATRANCO NORTH EXPRESS V. NLRC 259 SCRA 161 (1996)

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. Labor Arbiter rendered his decision finding that the three complainants were illegally and unjustly dismissed and order the respondent to reinstate them to their former or substantially equivalent positions without loss of seniority rights with full back wages and other benefits. Petitioner appealed to public respondent, which issued the questioned Resolution affirming the labor arbiter's decision in toto. The issue is whether the CBA stipulation on compulsory retirement after twenty-five years of service is legal and enforceable. HELD: The Court rules that 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

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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: ART. 287. 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 V. LATAG (supra)

GERLACH VS. REUTERS, LTD., PHILS. G.R. No. 148542; January 17, 2005 Facts On February 15, 1982, respondent Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices worldwide, hired Marilyn Odchimar Gerlach, petitioner, as its local correspondent.

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On October 1, 1983, respondent Reuters implemented a local Retirement Benefit Plan (Plan) for its Philippine-hired employees. The Plan is funded by the company, but an employeeparticipant 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 January 23, 1984, respondent assigned petitioner as a journalist to Reuters Singapore. Before leaving, Rachel Addison, Reuters Eastern Region Staff Manager, apprised her of the details of her forthcoming assignment, specifically that her home base will always be the Philippines. Again, on December 7, 1983, Addison wrote petitioner regarding her social security and pension funds during her stay in Singapore. Petitioner stayed in Singapore up to December 1985. In a letter of April 15, 1985, Addison informed her of the corresponding increases in her actual and notional salaries. On March 26 to June 4, 1986, petitioner was assigned to Reuters Hongkong. Thereafter, or in July, 1986, she was appointed correspondent in Sri Lanka and that her peso salary was increased to P12,600.00 per month. While in Sri Lanka, petitioners notional peso salary was increased twice. On October 12, 1988, she was directed to return to Manila and resume her post by December 15, 1988. However, she requested to be assigned to the Reuters Office either in Bonn, West Germany or in London. But due to the worldwide reduction of personnel, respondent denied her request. She then applied for a 14-month study leave to take up economic subjects at Bonn University. Respondent approved her request for a 14- month leave without pay from January 1, 1989 up to March 1, 1990. On May 20, 1990, petitioner resigned from Reuters. On March 1, 1991, 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. Eventually, petitioner filed with the Office of the Labor Arbiter, NCR, a money claim against respondent. Issue Whether or not petitioners retirement benefits should be computed on the basis of her actual salary abroad, not on her national salary. Decision NO, IT SHOULD NOT. 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 respondents 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."

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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. Article 287, does not in itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws, like the Social Security Act. 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 petitioners retirement benefits on its Plan and established policy, which is in accord with the above provision. Consequently, petitioners theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. Petitioners 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 companys contribution to the Plan is based on her notional Philippine salary. In fact, under the Plan, the companys 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. Besides, it is a basic rule in evidence that the burden of proof is on the part of the party who makes the allegations - ei incumbit probatio, qui dicit, non qui negat. HONDA PHILS. VS. SAMAHANG MALAYANG MANGGAGAWA SA HONDA G.R. No. 145561; June 15, 2005 Facts A Collective Bargaining Agreement (CBA) was forged between petitioner Honda and respondent which contained provisions on 13th Month Pay (The COMPANY shall maintain the present practice in the implementation [of] the 13th month pay), 14th Month Pay (The COMPANY shall grant a 14th Month Pay, computed on the same basis as computation of 13th Month Pay, and an agreement by the COMPANY to continue the practice of granting, in its discretion, financial assistance to covered employees in December of each year, of not less than 100% of basic pay. This CBA is effective until year 2000. In the latter part of 1998, the parties started renegotiations for the fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, then Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over the labor dispute and ordered the parties to cease and desist from committing acts that would aggravate the situation. Both parties complied accordingly. On May 11, 1999, however, respondent union filed a second Notice of Strike on the ground of unfair labor practice alleging that Honda illegally contracted out work to the detriment of the workers. Respondent union went on strike and picketed the premises of Honda on May 19, 1999. On June 16, 1999, DOLE Acting Secretary assumed jurisdiction over the case and

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certified the same to the National Labor Relations Commission (NLRC) for compulsory arbitration. The striking employees were ordered to return to work and the management accepted them back under the same terms prior to the strike staged. On November 22, 1999, the management of Honda issued a memorandum announcing its new computation of the 13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike shall be considered unworked days for purposes of computing said benefits. As per the companys new formula, the amount equivalent to 1/12 of the employees basic salary shall be deducted from these bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay the amount deducted. Respondent union opposed the pro-rated computation of the bonuses in a letter dated November 25, 1999. The matter was brought before the Grievance Machinery in accordance with the parties existing CBA but when the issue remained unresolved, it was submitted for voluntary arbitration. In his decision dated May 2, 2000, Voluntary Arbitrator invalidated Hondas computation. Issue Whether or not the pro-rated computation of the 13th month pay and other bonuses in question is valid and lawful. Decision NO, IT IS NOT. A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law. In some instances, however, the provisions of a CBA may become contentious, as in this case. Honda wanted to implement a pro-rated computation of the benefits based on the no work, no pay rule. According to the company, the phrase present practice as mentioned in the CBA refers to the manner and requisites with respect to the payment of the bonuses, i.e., 50% to be given in May and the other 50% in December of each year. Respondent union, however, insists that the CBA provisions relating to the implementation of the 13 th month pay necessarily relate to the computation of the same. The assailed CBA provisions are far from being unequivocal. A cursory reading of the provisions will show that they did not state categorically whether the computation of the 13 th month pay, 14th month pay and the financial assistance would be based on one full months basic salary of the employees, or pro-rated based on the compensation actually received. The arbitrator thus properly resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code. The Court of Appeals affirmed the arbitrators finding and added that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. Presidential Decree No. 851, otherwise known as the 13 th Month Pay Law, which required all employers to pay their employees a 13th month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. The guidelines pertinently provides that the basic salary of an employee for the purpose of computing the 13th month pay shall include all remunerations or earnings paid by his employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the

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cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances. For employees receiving regular wage, we have interpreted basic salary to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of basic salary payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays. The 13th month pay due an employee was computed based on the employees basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment. The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year. More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. Honda did not adduce evidence to show that the 13th month, 14th month and financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent upon the companys financial standing. This is an implicit acceptance that prior to the strike, a full month basic pay computation was the present practice intended to be maintained in the CBA. With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. Some may be 6 years (Davao Fruits Corporation vs. Associated Labor Unions), 3 and 9 months (Davao Integrated Port Stevedoring Services vs. Abarquez), 3 years and 4 months (Tiangco vs. Leogardo, Jr.), or two years (Sevilla Trading Company vs. Semana). This, we rule constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code. Lastly, the foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. To allow the pro-ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate that the workingmans welfare should be the primordial and paramount consideration. What is more, the factual milieu of this case is such that to rule otherwise inevitably results to dissuasion, if not a deterrent, for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law. JACULBE VS. SILIMAN UNIVERSITY G.R. No. 156934; March 16, 2007 Facts Sometime in 1958, petitioner began working for respondents university medical center as a nurse. In a letter dated December 3, 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35 th 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 respondents 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 petitioners impending retirement.

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A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing company policy. On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for termination of service with preliminary injunction and/or restraining order. On November 18, 1993, respondent compulsorily retired petitioner. Issue Whether or not respondents retirement plan imposing automatic retirement after 35 years of service contravene the security of tenure clause in the Constitution and the Labor Code. Whether or not respondent commit illegal dismissal by retiring petitioner solely by reason of the retirement plan. Decision 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: ART. 287. Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. xxx By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. However, the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII, also known as the provision on Social Justice and Human Rights. From the language of the foregoing retirement plan rules, the compulsory nature of both membership in and contribution to the plan debunked the theory that petitioners voluntary contributions were evidence of her willing participation therein. 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). Respondents retirement plan had been in effect for more than 30 years. What was not pointed out, however, was that the retirement plan came into being in 1970 or 12 years after petitioner started working for respondent. In short, it was not part of the terms of employment to which petitioner agreed when she started working for respondent. Neither did it become part of those terms shortly thereafter. 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. In this case, no agreement, collective or otherwise, justifies the latters imposition of the early retirement age in its retirement plan, opting instead to harp on petitioners alleged voluntary contributions to the plan, which was simply untrue. 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

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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. Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still fully capable of discharging her duties as shown by the fact that respondents board of trustees seriously considered rehiring her after the effectivity of her compulsory retirement. As already stated, 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 employers 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 CO. VS. AMARILLA G.R. No. 162775; October 27, 2006 Facts: On various dates, petitioner employed certain persons at its Cebu station. On March 1, 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 3, 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. The PCGG submitted the Agreement to the Sandiganbayan in Civil Case No. 0034 entitled Republic of the Philippines v. Roberto S. Benedicto, et al. In the meantime, the four (4) employees retired from the company and received, on staggered basis, their retirement benefits under the 1993 Collective Bargaining Agreement (CBA) 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). Amarilla was informed that the P71,480.00 of the amount due to her would be used to offset her tax liability of P340,641.42. Otadoy was also informed in a letter dated July 5, 1999, that his salary differential of P170,250.61 would be used to pay his tax liability which amounted to P127,987.57. Since no tax liability was withheld from his retirement benefits, he even owed the company P17,727.26 after the offsetting. Quiones was informed that he should have retired compulsorily in 1992 at age 55 as provided in the CBA, and that since he was already 58 when he retired, he was no longer entitled to receive salary increases from 1992 to 1995. Consequently, he was overpaid by P137,932.22 for the extension of his employment from 1992 to 1995, which amount he was obliged to return to the company. In any event, his claim for salary differentials had expired pursuant to Article 291 of the Labor Code of the Philippines. Lagahits claim for salary differential of P73,165.23 was rejected by petitioner in a letter dated July 6, 1999, on the ground that he had a tax liability of P396,619.03; since the amount would be used as partial payment for his tax liability, he still owed the company P323,453.80.

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The four (4) retirees filed separate complaints against IBC TV-13 Cebu and Station Manager Louella F. Cabaero for unfair labor practice and non-payment of backwages before the NLRC, Regional Arbitration Branch VII. Arguments Petitioner: 1) Under Section 21 of the NIRC, the retirement benefits received by employees from their employers constitute taxable income. While retirement benefits are exempt from taxes under Section 28(b) of said Code, the law requires that such benefits received should be in accord with a reasonable retirement plan duly registered with the Bureau of Internal Revenue (BIR) after compliance with the requirements therein enumerated. Since its retirement plan in the 1993 CBA was not approved by the BIR, complainants were liable for income tax on their retirement benefits. It was mandated to withhold the income tax due from the retirement benefits of said complainants. It was not estopped from correcting the mistakes of its former officers. Under the law, complainants are obliged to return what had been mistakenly delivered to them. 2) The retirement benefits received by the complainants were based on the CBA between it and its bargaining units. Under Sections 72 and 73 of the NIRC, it is obliged to deduct and withhold taxes determined in accordance with the rules and regulations to be prepared by the Secretary of Finance. It was its duty to withhold the taxes on complainants retirement benefits, otherwise, it would be held civilly and criminally liable under Sections 251, 254 and 255 of the NIRC. 3) Respondents are liable for taxes on their retirement benefits because the retirement plan under the CBA was not approved by the BIR. It insisted that it failed to comply with the requisites of Section 32 of the NIRC and Rule II, Section 6 of the Rules Implementing the New Retirement Law which provides that retirement pay shall be tax exempt upon compliance with the requirements under Section 2(b) of Revenue Regulation No. 12-86 dated August 1, 1986. Respondent: Their retirement benefits are exempt from income tax under Article 32 of the NIRC. Sections 28 and 72 of the NIRC, which petitioner relied upon in withholding their differentials, do not apply to them since these provisions deal with the applicable income tax rates on foreign corporations and suits to recover taxes based on false or fraudulent returns. They pointed out that, under Article VIII of the CBA, only those employees who reached the age of 60 were considered retired, and those under 60 had the option to retire, like Quiones and Otadoy who retired at ages 58 and 51, respectively. Issue Whether or not the retirement benefits of respondents are part of their gross income. Decision YES, THEY ARE. Under the CBA, it is not obliged to pay for the taxes on the respondents retirement benefits. We have carefully reviewed the CBA and find no provision where petitioner obliged itself to pay the taxes on the retirement benefits of its employees. Also, under the NIRC, the retirement benefits of respondents are part of their gross income subject to taxes. Section 28 (b) (7) (A) of the NIRC of 1986 provides: Sec. 28. xxxx Gross Income.

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(b) Exclusions from gross income. - The following items shall not be included in gross income and shall be exempt from taxation under this Title: xxxx (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. 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

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with the penalties or additions to the tax otherwise applicable in respect to such failure to withhold and remit. An agreement to pay the taxes on the retirement benefits as an incentive to prospective retirees and for them to avail of the optional retirement scheme is not contrary to law or to public morals. Petitioner had agreed to shoulder such taxes to entice them to voluntarily retire early, on its belief that this would prove advantageous to it. Respondents agreed and relied on the commitment of petitioner. For petitioner to renege on its contract with respondents simply because its new management had found the same disadvantageous would amount to a breach of contract. There is even no evidence that any new management was ever installed by petitioner after respondents retirement; nor is there evidence that the Board of Directors of petitioner resolved to renege on its contract with respondents and demand the reimbursement for the amounts remitted by it to the BIR. The well-entrenched rule is that estoppel may arise from a making of a promise if it was intended that the promise should be relied upon and, in fact, was relied upon, and if a refusal to sanction the perpetration of fraud would result to injustice. The mere omission by the promisor to do whatever he promises to do is sufficient forbearance to give rise to a promissory estoppel. REYES VS. NLRC G.R. No. 160233; August 8, 2007 Facts Petitioner was employed as a salesman at private respondents 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 attorneys fees. Arguments Petitioner: The commissions form part of the basic salary Respondent: 1) 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. 2) The fixed or guaranteed wage is patently the basic salary for this is what the employee receives for a standard work period, and that commissions are given for extra efforts exerted in consummating sales or other transactions. 3) Overriding commission is not properly includible in the basic salary as it must be earned by actual market transactions attributable to the claimant. Thus, as a unit manager who supervised the salesmen under his control and did not enter into actual sale transactions, petitioners overriding commissions must not be considered in the computation of the retirement benefits and 13th month pay. Issue

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Whether or not commissions form part of the basic salary. Decision NO, IT DOES NOT. The salesmens 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 salesmens 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. Should petitioners commissions be considered in the computation of his retirement benefits and 13th month pay? No, it should not. Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, provides xxx. Likewise, Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides xxx. The article 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 employers retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employers 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. For the purpose of computing retirement pay, one-half month salary shall include all of the following: 1) 2) 3) 4) 15 days salary based on the latest salary rate; cash equivalent of 5 days of service incentive leave (or vacation leave); 1/12 of the 13th month pay; other benefits as may be agreed upon by employer and employee for inclusion.

But, it shall not include the following: 1) cost of living allowance; 2) profit-sharing payments; and 3) other monetary benefits which are not considered as part of or integrated into the regular salary of the employees

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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. 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, 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. The criterion which would entitle him to a commission, but the actual sale transactions brought about by the individual efforts of the salesmen. Insofar as what constitutes basic salary, the foregoing discussions equally apply to the computation of petitioners 13th month pay. Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary a) Cost-of-living allowances granted pursuant to Presidential Decree 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 December 16, 1975. LETRAN FACULTY & EMPLOYEES ASSOCIATION VS. NLRC G.R. No. 156225; January 29, 2008 (supra)

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PHIL. AIRLINES v. PHIL. AIRLINES EMPLOYEES ASSO. GR No. 142399 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 respondents 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. After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for three months effective December 16, 1994. Issue: Whether or not being a full-time employee is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals. SC Ruling: The Court does not agree with the petitioner. Articles 83 and 85 of the Labor Code read: Normal hours of workThe 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.

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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 respondents act of going home to take his dinner does not constitute abandonment. ARCO METAL PRODUCTS CO., INC. VS. SAMAHAN NG MGA MANGGAGAWA SA ACRO METAL NAFLU (SUPRA) PHILIPPINE JOURNALISTS, INC., vs. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 166421 September 5, 2006 FACTS: The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in the publication and sale of newspapers and magazines. The exclusive bargaining agent of all the rank-and-file employees in the company is the Journal Employees Union (Union for brevity). The Union filed a notice of strike before the National Conciliation and Mediation Board (NCMB), claiming that PJI was guilty of unfair labor practice. PJI was then going to implement a retrenchment program due to over-staffing or bloated work force and continuing actual losses sustained by the company for the past three years resulting in negative stockholders equity of P127.0 million. The NLRC declared that the 31 complainants were illegally dismissed and that there was no basis for the implementation of petitioner's retrenchment program . It declared that the retrenchment of 31 employees was illegal and ordered their reinstatement "to their former position without loss of seniority rights and other benefits, with payment of unpaid salaries, bonuses and backwages from the date of dismissal up to the actual date of reinstatement plus 10% of the total monetary award as attorney's fees." Thereafter, the parties executed a Compromise Agreement 8 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

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NLRC granted the computation of their benefits as shown in the individual affidavits of the complainants. The compromise agreement was approved and was deemed closed and terminated. In the meantime, however, the Union filed another Notice of Strike. The Union claimed that 29 employees were illegally dismissed from employment, and that the salaries and benefits14 of 50 others had been illegally reduced.15 After the retrenchment program was implemented, 200 Union members-employees who continued working for petitioner had been made to sign five-month contracts. 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." According to the Commission, it was on the basis of this agreement that the July 25, 2002 Resolution which declared the case closed and terminated was issued. . The NLRC further declared that the two cases involved different sets of facts, hence, the inapplicability of the doctrine of stare decisis. The NLRC pointed out that since they were mere contractual employees, the complainants were necessarily excluded from the collective bargaining unit. The NLRC dismissed the case for lack of merit, but directed the company to "give preference to the separated 29 complainants should they apply for reemployment." The Union assailed the ruling of the NLRC before the CA via petition for certiorari under Rule 65. 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 . It further held that the act of respondent in hiring the retrenched employees as contractual workers was a ploy to circumvent the latter's security of tenure. The CA also ruled that the dismissed employees were not barred from pursuing their monetary claims despite the fact that they had accepted their separation pay and signed their quitclaims. ISSUE: Whether an NLRC Resolution, which includes a pronouncement that the members of a union had been illegally dismissed, is abandoned or rendered "moot and academic" by a compromise agreement subsequently entered into between the dismissed employees and the employer; this, in turn, raises the question of whether such a compromise agreement constitutes res judicata to a new complaint later filed by other union members-employees, not parties to the agreement, who likewise claim to have been illegally dismissed. RULING: The petition is denied. The nature of a compromise is spelled out in Article 2028 of the New Civil Code: it is "a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced." Parties to a compromise are motivated by "the hope of gaining, balanced by the dangers of losing."26 It contemplates mutual concessions and mutual gains to avoid the expenses of litigation, or, when litigation has already begun, to end it because of the uncertainty of the result.27 Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State "to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes." Thus, a judgment rendered in accordance with a compromise agreement is not appealable, and is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake, or duress, in which case an appeal may be taken against the order denying the motion.30 Under Article 2037 of the Civil Code, "a compromise has upon the parties the effect and authority of res judicata," even when effected without judicial

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approval; and under the principle of res judicata, an issue which had already been laid to rest by the parties themselves can no longer be relitigated. Thus, contrary to the allegation of petitioners, the execution and subsequent approval by the NLRC of the agreement forged between it and the respondent Union did not render the NLRC resolution ineffectual, nor rendered it "moot and academic." The agreement becomes part of the judgment of the court or tribunal, and as a logical consequence, there is an implicit waiver of the right to appeal. In any event, the compromise agreement cannot bind a party who did not voluntarily take part in the settlement itself and gave specific individual consent.34 It must be remembered that a compromise agreement is also a contract; it requires the consent of the parties, and it is only then that the agreement may be considered as voluntarily entered into. The Court went on to state that a judgment approving a compromise agreement cannot have the effect of res judicata upon non-signatories since the requirement of identity of parties is not satisfied. A judgment upon a compromise agreement has all the force and effect of any other judgment, and, conclusive only upon parties thereto and their privies, hence, not binding on third persons who are not parties to it. 41 A careful perusal of the wordings of the compromise agreement will show that the parties agreed that the only issue to be resolved was the question of the monetary claim of several employees. The CA was correct in holding that the compromise agreement pertained only to the "monetary obligation" of the employer to the dismissed employees, and in no way affected the Resolution in NCMB-NCR-NS-03-087-00 dated May 31, 2001 where the NLRC made the pronouncement that there was no basis for the implementation of petitioners' retrenchment program. To reiterate, the rule is that when judgment is rendered based on a compromise agreement, the judgment becomes immediately executory, there being an implied waiver of the parties' right to appeal from the decision.43 The judgment having become final, the Court can no longer reverse, much less modify it. This Court approves the findings of the CA on the following: Respondents alleged that it hired contractual employees majority of whom were those retrenched because of the increased but uncertain demand for its publications. It could not be said that the employees in this case are barred from pursuing their claims because of their acceptance of separation pay and their signing of quitclaims. It is settled that "quitclaims, waivers and/or complete releases executed by employees do not stop them from pursuing their claims if there is a showing of undue pressure or duress. The basic reason for this is that such quitclaims, waivers and/or complete releases being figuratively exacted through the barrel of a gun, are against public policy and therefore null and void ab initio. UNIVERSAL ROBINA SUGAR MILLING CORP. VS. CABALLEDA GR No. 156644, July 28,2008 FACTS: Respondent Ogripino Caballeda and Alejandro Codalin were employers of the petitioner, Agripino worked as a welder from March 1989 until June 23, 1997 with a salary of P124.00 per day while Alejandro worked as a crone operator from 1976 up to June 15,1997 with a salary of P209.30 per day. On April 24, 1991, John Gokongwei Jr., Pres of URSOMCO issued a memorandum establishing a policy on compulsory retirements of its employees. In the memorandum, any employee shall be deemed retired when he attained the age of 60 yrs. old. Subsequently, on Dec. 9, 1992, RA 7641 was enacted into law and took effect on January 7, 1993, amending article 287 of the labor code on provisions of retirement. On April 29, 1993, URSOMCO and the national federation of labor, a legitimate labor organization and the recognized sole and exclusive bargaining representative of all the monthly and daily paid employees of URSOMCO , of which Alejandro was a member, entered into a CBA. Article XV of the CBA particularly provided that the retirement benefits of the members of the collective bargaining units shall be in accordance with law.

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Upon reaching the age of 60, respondents Agripino and Alejandro, were allegedly forced to retire by URSOMCO Agripino covered that petitioner illegally dismissed him from employment on June 24,1997 when he was forced to retire upon reaching the age of sixty upon termination of his employment, he accepted his separation pay and applied for retirement benefits with SSS. Earlier, on April 15, 1997, Alejandro turned 60 and May 28, 1997 he filed his application for retirement with URSOMCO, attaching his birth and baptismal certificates. On July 22, 1997 he accepted his retirement benefits and executed a quitclaim in favor of URSOMCO. Thereafter, both respondents filed a complaint for illegal dismissal before the labor arbiter of Dumaguete City. Agripino alleged that his compulsory retirement was in violation of the provision of RA 7641 and was in effect a form of illegal dismissal. While Alejandro alleged that there was underpayment of retirement benefits for he was only given 15 days per year of service by way retirement benefits and partner assails that his compulsory retirement was discriminatory considering that were other workers over 60 yrs. of age who were allowed to continuosly report per work. On Sept. 30, 1998 the LA rendered a decision in favor of the respondents. It find the petitioner guilty of illegal dismissal and thus ordered to pay the complainant. Petitioner appealed to the NLRC. On June 27, 2000 NLRC held that Alejandro voluntarily retired because he freely submitted his application for retirement together with his birth and baptismal certificates. Nevertheless. T/GSP LARKINS v. NLRC GR No. 92432; February 23, 1995 FACTS: This is a petition for certiorari to set aside the resolutions by the National Labor Relations Commission. Petitioner was a member of the United States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga. The 3 AGS terminated their contract for the maintenance and upkeep of its dormitories with the De Guzman Custodial Services. The employees including the private respondents herein were allowed to still work with the 3 AGS. The decision was left to the new contractor, the JAC Maintenance Services owned by Joselito Cunanan, whether to retain such employees. However, Cunanan brought his own workers which as a result the employees of the De Guzman Custodial Services were requested to surrender their base passes to Lt. Col. Frankhauser or to petitioner. Herein private respondents filed a complaint with the Regional Arbitration Branch No. III of the NLRC, San Fernando, Pampanga, against petitioner, Lt. Col. Frankhauser, and Cunanan for illegal dismissal and underpayment of wages. Further, they amended their complaint and added therein claims for emergency cost of living allowance, thirteenth-month pay, service incentive leave pay and holiday premiums. Cunanan was dropped as a party by the Labor Arbiter. The petitioner and Lt. Col. Frankhauser failed to answer the complaint and attend the hearings. Also they failed to submit their own position paper, which the Labor Arbiter deemed such act as a waiver on their part to do so. The Labor Arbiter rendered a decision granting the private respondents and found both the petitioner and Lt. Col. Frankhauser 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.

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Petitioner appealed to the NLRC alleging that the Labor Arbiter never acquired jurisdiction over her person since no summons or copies of the complaints were served to her. Petitioner further argued that the attempts to serve her with notices of hearings were not in accordance with the R.P. U.S. Military Bases Agreement of 1947. NLRC issued a Resolution affirming the decision of the Labor Arbiter but declared that the real party is the United States Government through its Armed Forces stationed in Clark Air Base, and that such execution be made subject to the existing international agreements diplomatic protocol. Hence, this petition. ISSUE: Whether or not the Labor Arbiter have acquired jurisdiction to entertain and decide the case? RULING: Under Article XIV of the R.P. U.S. Military Bases Agreement: . . . [N]o process, civil or criminal, shall be served within any base except with the permission of the commanding officer of such base; but should the commanding officer refuse to grant such permission he shall forthwith take the necessary steps . . . . to serve such process, as the case may be, and to provide the attendance of the server of such process before the appropriate court in the Philippines or procure such server to make the necessary affidavit or declaration to prove such service as the case may require. Summonses and other processes issued by Philippine courts and administrative agencies for United States Armed Forces personnel within any U.S. base in the Philippines could be served therein only with the permission of the Base Commander. If he withholds giving his permission, he should instead designate another person to serve the process, and obtain the server's affidavit for filing with the appropriate court. Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col. Frankhauser and not the Base Commander. 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. 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.