Ccd-Llaw1 (C)

LABOR STANDARDS FRAMEWORK DEAN PORFIRIO DG. PANGANIBAN, JR.
Labor Law in General
Abello Labor Law Defined
MATERNITY CHILDREN’S HOSPITAL VS. SECRETARY OF LABOR

GR No. 78909 June 30,1989
Medialdea, J.
FACTS:
This is a petition for certiorari seeking the annulment of the Decision of the respondent
Secretary of Labor dated September 24, 1986, affirming with modification the Order of
respondent Regional Director of Labor, Region X, dated August 4, 1986, awarding salary
differentials and emergency cost of living allowances (ECOLAS) to employees of petitioner, and
the Order denying petitioner's motion for reconsideration dated May 13, 1987, on the ground of
grave abuse of discretion.
Petitioner is a semi-government hospital, managed by the Board of Directors of the

Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as
holdover President. The hospital derives its finances from the club itself as well as from paying
patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity
Sweepstakes Office and the Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the
employees are given food, but the amount spent therefor is deducted from their respective
salaries.
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions
filed a complaint with the Office of the Regional Director of Labor and Employment, Region X, for
underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.
The Regional Director issued an Order dated August 4, 1986, directing the payment of
P723,888.58, representing underpayment of wages and ECOLAs to all the petitioner's employees.
Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S.
Sanchez, who rendered a Decision on September 24, 1986, modifying the said Order in that
deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986.
On October 24, 1986, the petitioner filed a motion for reconsideration which was denied
by the Secretary of Labor in his Order dated May 13, 1987.
ISSUE:
Whether or not the petitioners are entitled to payment for the underpayment of their
salaries and ECOLAS (Emergency Cost of Living Allowance)?
RULING:
Arellano University School of Law 1

Yes. This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as
amended by E.O. No. 111. Labor standards refer to the minimum requirements prescribed by
existing laws, rules, and regulations relating to wages, hours of work, cost of living allowance and
other monetary and welfare benefits, including occupational, safety, and health standards
(Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated
September 16, 1987).
Alarkon Social Justice as the aim of Labor Laws
MAXIMO CALALANG VS. A. D. WILLIAMS

GR No. 47800 December 2, 1940
LAUREL, J.
FACTS:
 Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, filed a
WRIT OF PROHIBITION against the respondents;
o A.D. Williams (Chairman, National Traffic Commission)
o Vicente Fragrante (Director of Public Works)
o Sergio Bayan (Acting Secretary, Public Works and Communications)
o Eulogio Roriguez, (Mayor, City of Manila)
o Juan Dominguez (Acting Chief of Police, City of Manila)
 It is alleged in the petition that the National Traffic Commission, in its resolution of July
17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of
Public Works and Communications that animal-drawn vehicles be prohibited from
passing
o along Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas
Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.;
o and along Rizal Avenue extending from the railroad crossing at Antipolo Street to
Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date
of the opening of the Colgante Bridge to traffic;
o that the Chairman of the National Traffic Commission, on July 18, 1940
recommended to the Director of Public Works the adoption of the measure
proposed in the resolution aforementioned, in pursuance of the provisions of
Commonwealth Act No. 548
 Commonwealth Act No. 548 authorizes said Director of Public Works, with the
approval of the Secretary of Public Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on national roads
 August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary
of Public Works and Communications, recommended to the latter the approval of the
recommendation made by the Chairman of the National Traffic Commission as aforesaid,
with the modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles
be limited to the portion thereof extending from the railroad crossing at Antipolo Street to
Azcarraga Street
 August 10, 1940, the Secretary of Public Works and Communications, in his second
indorsement addressed to the Director of Public Works, approved the recommendation
of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn
vehicles, between the points and during the hours as above indicated, for a period of

one year from the date of the opening of the Colgante Bridge to traffic; that the
Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be
enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in
the places above-mentioned to the detriment not only of their owners but of the riding
public as well.
ISSUES:
 PETITIONER’S CONTENTION: C.A.548 UNCONSTITUTIONAL

o because it constitutes an undue delegation of legislative power
o unlawful interference with legitimate business or trade and abridge the right to
personal liberty and freedom of locomotion
o infringe upon the constitutional precept regarding the promotion of social justice
to insure the well-being and economic security of all the people
ASSAILED LAW/ STATUTE

 CA 548 (SEC.1)
o To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive
orders of the President of the Philippines, the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, shall
promulgate the necessary rules and regulations to regulate and control
the use of and traffic on such roads and streets. Such rules and regulations,
with the approval of the President, may contain provisions controlling or regulating
the construction of buildings or other structures within a reasonable distance from
along the national roads. Such roads may be temporarily closed to any or
all classes of traffic by the Director of Public Works and his duly
authorized representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public
convenience and interest, or for a specified period, with the approval of the
Secretary of Public Works and Communications
RULING:
 Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the
paramount police power of the state.
 CA 548 aims to promote safe transit upon and avoid obstructions on national
roads, in the interest and convenience of the public
 It was inspired by a desire to relieve congestion of traffic.
DOCTRINE
 Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but
the humanization of laws and the equalization of social and economic forces by
the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people,
the adoption by the Government of measures calculated to insure economic stability of all
the competent elements of society, through the maintenance of a proper economic and
social equilibrium in the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-constitutionally, through the

exercise of powers underlying the existence of all governments on the time-honored

principle of salus populi est suprema lex.
 Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number.”
Police Power as the basis of Labor

Laws
PEOPLE OF THE PHILIPPINES VS. VERA REYES

67 Phil 190
FACTS:
The defendant was charged in the Court of First Instance of Manila by the assistant city
fiscal with a violation of Act No. 2549, as amended by Acts Nos. 3085 and 3958. The information
alleged that from September 9 to October 28, 1936, and for the sometime after, the accused, in
his capacity as president and general manager of the Consolidated Mines, having engaged the
services of Severa Velasco de Vera as stenographer, at an agreed salary of P35 a month willfully
and illegally refused to pay the salary of said stenographer corresponding to the above-mentioned
period of time, which was long due and payable, in spite of her repeated demands.
The accused interposed a demurrer on the ground that the facts alleged in the information
do not constitute any offense, and that even if they did, the laws penalizing it are unconstitutional.
After the hearing, the court sustained the demurrer, declaring unconstitutional the last part of
section 1 of Act No. 2549 as last amended by Act No. 3958 for the reason that it violates the
constitutional prohibition against imprisonment for debt, and dismissed the case.
The last part of Section 1 of Act No. 2549, as last amended by section 1 of Act No. 3958
considers as illegal the refusal of an employer to pay when he can do so, the salaries of his
employers or laborers on the 15th or last day of every month or on Saturday of every week, with
only two days extension, and the non-payment of the salary within the period specified is
considered as a violation of the law. The same act exempts from criminal responsibility the
employer who, having failed to pay the salary, should prove satisfactorily that it was impossible
to make such payment.
The fiscal appealed from said order. In this appeal the Solicitor-General contends that the
court erred in declaring Act No. 3958 unconstitutional, and in dismissing the cause.
ISSUE:
Whether or not the last part of Sec. 1 of Act No. 2594 as amended by Act No. 3958 is
constitutional and valid.
RULING:

We hold that the last part of section 1 of Act No. 2549, as last amended by section 1 of
Act No. 3958, is valid. We do not believe that this constitutional provision has been correctly
applied in this case. A close perusal of the last part of section 1 of Act No. 2549, as amended by
section 1 of Act No. 3958, will show that its language refers only to the employer who, being able
to make payment, shall abstain or refuse to do so, without justification and to the prejudice of
the laborer or employee. An employer so circumstanced is not unlike a person who defrauds
another, by refusing to pay his just debt. In both cases the deceit or fraud is the essential element
constituting the offense. The first case is a violation of Act No. 3958, and the second is estafa
punished by the Revised Penal Code. In either case the offender cannot certainly invoke the
constitutional prohibition against imprisonment for debt.
Police power is the power inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals, and general welfare of society. In the exercise
of this power the Legislature has ample authority to approve the disputed portion of Act No. 3958
which punishes the employer who, being able to do so, refuses to pay the salaries of his laborers
or employers in the specified periods of time. Undoubtedly, one of the purposes of the law is to
suppress possible abuses on the part of employers who hire laborers or employees without paying
them the salaries agreed upon for their services, thus causing them financial difficulties. Without
this law, the laborers and employees who earn meager salaries would be compelled to institute
civil actions which, in the majority of cases, would cost them more than that which they would
receive in case of a decision in their favor.
Decision:
We hold that the last part of section 1 of Act No. 2549, as last amended by section 1 of
Act No. 3958, is valid, and we reverse the appealed order with instructions to the lower court to
proceed with the trial of the criminal case until it is terminated, without special pronouncement
as to costs in this instance. So ordered.
Police Power as the basis of Labor Laws
PEOPLE OF THE PHILIPPINES VS. POMAR

46 Phil 455
FACTS:
On the 26th day of October, 1923, the prosecuting attorney of the City of Manila presented
a complaint in the Court of First Instance, accusing the defendant of a violation of section 13 in
connection with section 15 of Act No. 3071 of the Philippine Legislature. The complaint alleged
that the defendant being the manager and person in charge of La Flor de la Isabela (a tobacco
factory) failed and refused to pay Macaria Fajardo (employed as cigar maker) the sum of P80 to
which she was entitled as her regular wages on time of delivery and confinement by reason of
pregnancy depite and over the demands to do so.
To said complaint, the defendant demurred, alleging that the facts therein contained did
not constitute an offense. The demurrer was overruled, whereupon the defendant answered and
admitted at the trial all of the allegations contained in the complaint, and contended that the
provisions of said Act No. 3071, upon which the complaint was based were illegal, unconstitutional
and void.

Upon a consideration of the facts charged in the complaint and admitted by the defendant,
the Honorable C. A. Imperial, judge, found the defendant guilty of the alleged offense described
in the complaint, and sentenced him to pay a fine of P50, in accordance with the provisions of
section 15 of said Act, to suffer subsidiary imprisonment in case of insolvency, and to pay the
costs. From that sentence the defendant appealed.
ISSUE:
Whether or not the provisions of sections 13 and 15 of Act No. 3071 are a reasonable and
lawful exercise of the police power of the state.
RULING:
The provisions of section 13, of Act No. 3071 of the Philippine Legislature, are
unconstitutional and void, in that they violate and are contrary to the provisions of the first
paragraph of section 3 of the Act of Congress of the United States of August 29, 1916.
Said section 13 was enacted by the Legislature of the Philippine Islands in the exercise of
its supposed police power, with the praiseworthy purpose of safeguarding the health of pregnant
women laborers in "factory, shop or place of labor of any description," and of insuring to them,
to a certain extent, reasonable support for one month before and one month after their delivery.
It has been said that the particular statute before us is required in the interest of social justice
for whose end freedom of contract may lawfully be subjected to restraint.
The right to liberty includes the right to enter into contracts and to terminate contracts.
One citizen cannot be compelled to give employment to another citizen, nor can anyone be
compelled to be employed against his will. The Act of 1893, now under consideration, deprives
the employer of the right to terminate his contract with his employee. Clearly, therefore, the law
has deprived, every person, firm, or corporation owning or managing a factory, shop or place of
labor of any description within the Philippine Islands, of his right to enter into contracts of
employment upon such terms as he and the employee may agree upon. The law creates a term
in every such contract, without the consent of the parties. Such persons are, therefore, deprived
of their liberty to contract. The constitution of the Philippine Islands guarantees to every citizen
his liberty and one of his liberties is the liberty to contract.
Every law for the restraint and punishment of crimes, for the preservation of the public
peace, health, and morals, must come within this category. But the state, when providing by
legislation for the protection of the public health, the public morals, or the public safety, is subject
to and is controlled by the paramount authority of the constitution of the state, and will not be
permitted to violate rights secured or guaranteed by that instrument or interfere with the
execution of the powers and rights guaranteed to the people under their law — the constitution.
The police power of the state is a growing and expanding power. But that power cannot
grow faster than the fundamental law of the state, nor transcend or violate the express inhibition
of the people's law — the constitution. If the people desire to have the police power extended
and applied to conditions and things prohibited by the organic law, they must first amend that
law.

It will also be noted from an examination of said section 13, that it takes no account of
contracts for the employment of women by the day nor by the piece. The law is equally applicable
to each case. It will hardly be contended that the person, firm or corporation owning or managing
a factory, shop or place of labor, who employs women by the day or by the piece, could be
compelled under the law to pay for sixty days during which no services were rendered.
Decision:
The rule in this jurisdiction is, that the contracting parties may establish any agreements,
terms, and conditions they may deem advisable, provided they are not contrary to law, morals or
public policy. (Art. 1255, Civil Code.)
Therefore, the sentence of the lower court is hereby revoked, the complaint is hereby
dismissed, and the defendant is hereby discharged from the custody of the law, with costs de
oficio. So ordered.
Dagaerag Police Power as the basis of Labor Laws
PHIL ASSOCIATION OF SERVICE EXPORTERS INC. VS. DRILON

GR No. 81958 June 30, 1988
FACTS:
Petitioner, Phil association of Service Exporters, Inc., is engaged principally in

the recruitment of Filipino workers, male and female of overseas employment. It challenges the
constitutional validity of Dept. Order No. 1 (1998) of DOLE entitled “Guidelines Governing the
Temporary Suspension of Deployment of Filipino Domestic and Household Workers.” It claims
that such order is a discrimination against males and females. The Order does not apply to
all Filipino workers but only to domestic helpers and females with similar skills, and that it is in
violation of the right to travel, it also being an invalid exercise of the lawmaking power. Further,
PASEI invokes Sec 3 of Art 13 of the Constitution, providing for worker participation in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
Thereafter the Solicitor General on behalf of DOLE submitting to the validity of the challenged
guidelines involving the police power of the State and informed the court that the respondent
have lifted the deployment ban in some states where there exists bilateral agreement with the
Philippines and existing mechanism providing for sufficient safeguards to ensure the welfare and
protection of the Filipino workers.
ISSUE:
Whether or not there has been a valid classification in the challenged Department Order
No. 1.
RULING:
SC in dismissing the petition ruled that there has been valid classification,
the Filipino female domestics working abroad were in a class by themselves, because of the
special risk to which their class was exposed. There is no question that Order No.1 applies only

to female contract workers but it does not thereby make an undue discrimination between sexes.
It is well settled hat equality before the law under the constitution does not import a perfect
identity of rights among all men and women. It admits of classification, provided that:
1. Such classification rests on substantial distinctions

2. That they are germane to the purpose of the law
3. They are not confined to existing conditions
4. They apply equally to al members of the same class
In the case at bar, the classifications made, rest on substantial distinctions. Dept. Order
No. 1 does not impair the right to travel. The consequence of the deployment ban has on the
right to travel does not impair the right, as the right to travel is subjects among other things, to
the requirements of “public safety” as may be provided by law. Deployment ban of female
domestic helper is a valid exercise of police power. Police power as been defined as the state
authority to enact legislation that may interfere with personal liberty or property in order to
promote general welfare. Neither is there merit in the contention that Department Order No. 1
constitutes an invalid exercise of legislative power as the labor code vest the DOLE with rule
making powers.
Diambulang, Roldan Significance of Foreign Desicions
CLARA CEREZO VS. THE ATLANTIC GULF & PACIFIC COMPANY

G.R. No. L-10107 February 4, 1916
FACTS:
This is an action for damages against the defendant for negligently causing the death of
the plaintiff's son, Jorge Ocumen, on the 7th of July, 1913, deceased being plaintiff's only means
of support. Judgment was entered in a favor of the plaintiff for the sum of P1,250, together with
interest and costs. Defendant appealed.
The deceased was an employee of the defendant as a day laborer on the 8th of July,
1913, assisting in laying gas pipes on Calle Herran in the city of Manila . The digging of the trench
was completed both ways from the cross-trench in Calle Paz, and the pipes were laid therein up
to that point. The men of the deceased's gang were filling the west end, and there was no work
in the progress at the east end of the trench. Shortly after the deceased entered the trench at
the east end to answer a call of nature, the bank caved in, burying him to his neck in dirt, where
he died before he could be released. It has not been shown that the deceased had received
orders from the defendant to enter the trench at this point; nor that the trench had been prepared
by the defendant as a place to be used as a water-closet; nor that the defendant acquiesced in
the using of this place for these purposes. The trench at the place where the accident occurred
was between 3 and 4 feet deep. Nothing remained to be done there except to refill the trench as
soon as the pipes were connected. The refilling was delayed at that place until the completion of
the connection. At the time of the accident the place where the deceased's duty of refilling the
trench required him to be was at the west end. There is no contention that there was any danger
whatever in the refilling of the trench.
ISSUE:

Whether or not the plaintiff’s right to recover is based on the Employer’s Liability Act (Act
No. 1874)
RULING:
Act No. 1874 is essentially a copy of the Massachusetts Employers' Liability Act (Rev. Laws.
1902, chap. 106 secs. 71-79), it having been originally enacted in that jurisdiction in 1887. (Stat.
1887, chap. 270.) The Massachusetts statute was "copied verbatim, with some variations of detail,
from the English statute (43 & 44 Vict., c. 42).
This court is not finally concluded by the decision of any other State court or the British
court, in their construction of a similar statute, but the opinion of learned courts upon similar
questions are entitled to great weight and this is especially true when the statute, from which
ours was copied, had been construed prior to its enactment by our legislature." ( Birmingham Ry.
and Electric Co. vs. Allen, 99 Ala. 359, 371; 120 L. R. A., 457.)
The right of the master to shift responsibility for the performance of all or at least most
of these personal duties to the shoulders of a subordinate and thereby escape liability for the
injuries suffered by his workmen through his non-performance of these duties, was, in England,
definitely settled by the House of Lords in the case of Wilson vs. Merry (L.R. 1 H.L. Sc. Appl Cas.,
326; 19 Eng. Rul. Cas., 132). This was just two years before the enactment of the Employers'
Liability Act of 1880, and no doubt the full significance of such a doctrine was one of the impelling
causes which expedited the passage of the Act, and chiefly accounts for the presence in it of
subsection 1 of section 1.
The cause of Ocumen's death was not the weight of the earth which fell upon him, but
was due to suffocation. He was sitting or squatting when the slide gave way. Had he been even
half-erect, it is highly probable that he would have escaped suffocation or even serious injury.
Hence, the accident was of a most unusual character. Experience and common sense demonstrate
that ordinarily no danger to employees is to be anticipated from such a trench as that in question.
The fact that the walls had maintained themselves for a week, without indication of their giving
way, strongly indicates that the necessity for bracing or shoring the trench was remote. To require
the company to guard against such an accident as the one in question would virtually compel it
to shore up every foot of the miles of trenches dug by it in the city of Manila for the gas mains.
Upon a full consideration of the evidence, we are clearly of the opinion that ordinary care did not
require the shoring of the trench walls at the place where the deceased met his death. The event
properly comes within the class of those which could not be foreseen; and, therefore, the
defendant is not liable under the Civil Code.
Effect upon the Law in this country
The act was not intended to curtail the any of the rights which an employee had under
the pre-existing law. Under the act, the defense of contributory negligence would defeat an action
for damages.
Martin, Alvin Jae I. Laborer’s Welfare: Liberal Approach
ABELLA VS. NATIONAL RELATIONS COMMISSION

G.R No. 71812 July 20, 1987
FACTS:
On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in
Monteverde, Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10)
years, renewable, at her option, for another ten (10) years. On August 13, 1970, she opted to
extend the lease contract for another ten (10) years. At the expiration of the lease, she dismissed
both private respondents and turned over the hacienda to the owners. Private respondents filed
a complaint against petitioner for overtime pay, reinstatement, and illegal dismissal. Labor Arbiter
Manuel M. Lucas, Jr., in a Decision dated July 16, 1982, ruled that the dismissal is warranted by
the cessation of business, but granted the private respondents separation pay. After the parties
had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated
July 16, 1982, ruled that the dismissal is warranted by the cessation of business, but the
respondents are entitled to separation pay, invoking Art. 284 of the Labor Code, as amended.
ISSUE:
Whether or not private respondents are entitled to separation pay.
RULING:
The Court upheld the ruling of the Labor Arbiter that Article 284 is the applicable law in
this case. Art 284, as amended refers to employment benefits to farm hands who were not parties
to petitioner's lease contract with the owner of Hacienda Danao-Ramona. That contract cannot
have the effect of annulling subsequent legislation designed to protect the interest of the working
class.
It is well-settled that in the implementation and interpretation of the provisions of the

Labor Code and its implementing regulations, the workingman's welfare should be the primordial
and paramount consideration. It is the kind of interpretation which gives meaning and substance
to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor
Code which states that "all doubts in the implementation and interpretation of the provisions of
this Code including its implementing rules and regulations shall be resolved in favor of labor." 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.
Laborer’s Welfare: Liberal Approach
EURO-LINES, PHILIPPINES INC. VS. NLRC

G.R. No. 78282 December 01, 1987
FACTS:
Petitioner Euro-Linea Phil, Inc hired private respondent Pastoral as shipping expediter on
a probationary basis for a period of six months. Prior to hiring by petitioner, Pastoral had been

employed by Fitscher Manufacturing Corporation also as shipping expediter. On 4 February 1984,

Pastoral received a memorandum terminating his probationary employment in view of his failure
“to meet the performance standards set by the company”. Pastoral filed a complaint for illegal
dismissal against petitioner. On 19 July 1985, the Labor Arbiter found petitioner guilty of illegal
dismissal. Petitioner appealed the decision to the NLRC on 5 August 1985 but the appeal was
dismissed. Hence the petition for review seeking to reverse and set aside the resolution of public
respondent NLRC, affirming the decision of the Labor Arbiter, which ordered the reinstatement
of complainant with six months backwages.
ISSUE:
Whether or not the National Labor Relations Commission acted with grave abuse of
discretion amounting to excess of jurisdiction in ruling against the dismissal of the respondent, a
temporary or probationary employee, by his employer.
RULING:
Although a probationary or temporary employee has a limited tenure, he still enjoys the
constitutional protection of security of tenure.
Furthermore, what makes the dismissal highly suspicious is the fact that while petitioner
claims that respondent was inefficient, it retained his services until the last remaining two weeks
of the six months probationary employment. No less important is the fact that private respondent
had been a shipping expediter for more than one and a half years before he was absorbed by
petitioner. It therefore appears that the dismissal in question is without sufficient justification.
It must be emphasized that the prerogative of management to dismiss or lay-off an

employee must be done without abuse of discretion, for what is at stake is not only petitioner's
position but also his means of livelihood. The right of an employer to freely select or discharge
his employees is subject to regulation by the State, basically in the exercise of its paramount
police power.
Decision:
In the instant case, it is evident that the NLRC correctly applied Article 282 in the light of the
foregoing and that its resolution is not tainted with unfairness or arbitrariness that would amount
to grave abuse of discretion or lack of jurisdiction (Rosario Brothers Inc. v. Ople, 131 SCRA 73
[1984]).
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, and the resolution of the
NLRC is affirmed. SO ORDERED.
Miranda Laborer’s Welfare; Liberal Approach
MANILA ELECTRIC COMPANY VS. NLRC

G.R. No. 78763 July 12,1989
Medialdea, J.

FACTS:
Apolinario Signo was employed in Meralco as supervisor-leadman since Jan 1963. In 1981,
he supervised the installation of electricity in de Lara’s house in Antipolo. De Lara’s house was
not yet within the required 30-meter distance from the Meralco facility hence he is not yet within
the service scope of Meralco. As a workaround, Signo had it be declared that a certain sarisari
store nearer the facility be declared as de Lara’s so as to facilitate the installation. Evertything
would have been smooth thereafter but due to fault of the Power Sales Division of Meralco, de
Lara was not billed for a year. Investigation was conducted and Meralco found out the irregularity
in Signo’s work on de Lara’s electricity installation. Signo was dismissed on May 18, 1983. Signo
filed a case for illegal dismissal and for backwages. The Lanor Arbiter ruled that though there is
a breach of trust in the actuations of Signo dismissal is a harsh penalty as Signo has been
employed for more than 20 years by Meralco and has been commended twice before for honesty.
The NLRC affirmed the Labor Arbiter. Meralco appealed.
ISSUE:
Whether or not there has been due process in the dismissal of Signo.
RULING:
The SC sustained the decision of the NLRC. Well-established is the principle that findings
of administrative agencies which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but even finality. Judicial review by this
Court on labor cases does not go so far as to evaluate the sufficiency of the evidence upon which
the proper labor officer or office based his or its determination but is limited to issues of
jurisdiction or grave abuse of discretion. Notwithstanding the existence of a valid cause for
dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed,
as it is too severe a penalty if the latter has been employed for a considerable length of time in
the service of his employer. Reinstatement of respondent Signo is proper in the instant case, but
without the award of backwages, considering the good faith of the employer in dismissing the
respondent.
Montero, Joseph Brilliant A. Management Rights
MANUEL SOSITO VS. AGUINALDO DEVELOPMENT CORPORATION

GR No.L-48926 December 14, 1987
Cruz, J.
FACTS:
Petitioner Manuel Sosito filed for an indefinite leave from the company on January 16,
1976. Months later, the company underwent a retrenchment program but offered separation pay
to those who had been in the active service as of June 30, 1976 and had tendered their resignation
not later than July 31, 1976. Petitioner, to avail of the benefits, submitted his resignation. The
company denied him the benefits.
ISSUE:

Whether or not petitioner was entitled to the benefits?
RULING:
The Court held that the petitioner was not qualified to avail of the benefits because at the
time he submitted his resignation, he was not in the active service, having been on voluntary
indefinite leave. The petitioner cannot just do as he please to the detriment of the company.
The Court expressed that labor disputes aren’t necessarily immediately tipped in favor of
labor. The Management also has its own rights, which must also be afforded the same protection
as that of labor. The Court held “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.”
Mortel Management Rights
COLGATE PALMOLIVE PHILIPPINES VS. OPLE

G.R. No 73681 June 30, 1988
FACTS:
The respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR) on
ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union
officers/members; and coercing employees to retract their membership with the union and
restraining non-union members from joining the union. As the amicable settlement proved
unavailing, the Office of the MOLE, upon petition of petitioner assumed jurisdiction over the
dispute pursuant to Article 264 (g) of the Labor Code.
Petitioner contends as to the preventive suspensions of salesmen Peregrino Sayson,

Salvador Reynante and Cornelio Mejia, and their eventual dismissal from the employ of the
company were carried out pursuant to the inherent right and prerogative of management to
discipline erring employees. The respondent Minister rendered a decision which: (a) found no
merit in the Union's Complaint for unfair labor practice; (b) found the three salesmen, "not without
fault" and that "the company has grounds to dismiss above named salesmen", and at the same
time respondent Minister ordered the reinstatement of the three salesmen to the company on the
ground that the employees were first offenders.
Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in
his assailed Order.
ISSUE:
Whether or not Respondent Minister committed grave abuse of discretion on ordering the
reinstatement of the three salesmen.
RULING:

The order of the respondent Minister to reinstate the employees despite a clear finding of
guilt on their part is not in conformity with law. Reinstatement is simply incompatible with a
finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the
employees the law warrants their dismissal without making any distinction between a first
offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to
equally protect and respect not only the labor or workers' side but also the management and/or
employers' side. The law, in protecting the rights of the laborer, authorizes neither oppression
nor self-destruction of the employer. To order the reinstatement of the erring employees namely,
Mejia, Sayson and Reynante would in effect encourage unequal protection of the laws as a
managerial employee of petitioner company involved in the same incident was already dismissed
and was not ordered to be reinstated.
Navarro, Bryan Christopher L. Management Rights
ELMER MENDOZA VS. RURAL BANK OF LUCBAN

G.R. No 155421 07 July 2004
Panganiban, J.
FACTS:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53 which reshuffles the assignments of bank employees in line with
the policy of the bank to familiarize its employees with various phases of bank operations and
further strengthen the existing internal control system of all officers and employees. The new
assignments were to "be effective on 01 May 1999 without changes in salary, allowances, and
other benefits received by the aforementioned employees. Petitioner Elmer Mendoza wrote a
letter dated 03 May 1999 to the bank’s board chairman Alejo B. Daya expressed his opinion and
stated that the change of job order from being an Appraiser for 6 years with good standing to
Clerk-Meralco collection is a demotion without legal basis. Mendoza also expressed his concern
on remaining in his position. On 10 May 1999, Daya replied on Mendoza’s letter and said that the
conduct of reshuffle was a prerogative of bank management. On 07 July 1999, petitioner applied
for a 10-day leave effective on the same date. On 21 July 1999, petitioner again submitted a
letter asking for another leave of absence for twenty days effective on the same date. On June
24, 1999, while on his second leave of absence, petitioner filed a Complaint for illegal dismissal,
underpayment, separation pay and damages against the Rural Bank of Lucban. The Labor Arbiter
ruled in favor of petitioner. However, on appeal, it was reversed by the NLRC finding that the
reshuffling of employees by the respondent bank was of noble objective, as not only would the
employees obtain additional knowledge, they would also be more well-rounded in the operations
of the bank. Moreover, the NLRC cannot grant the petitioner’s claim on unfair labor practices as
the Board Resolution was not only aimed at the petitioner but also to other employees. There
was also no evidence of showing that the reshuffle was motivated by bad faith or ill-will. The
Court of Appeals affirmed the NLRC decision stating further that when Mendoza was reshuffled
to the position of clerk at the bank, he was not demoted as there was no diminution of his salary
benefits and rank. The reshuffling of its employees was done in good faith and cannot be made
the basis of a finding of constructive dismissal.
ISSUE:

Whether or not the reshuffling of private respondent's employees was done in good faith
and cannot be made as the basis of a finding of constructive dismissal, even as the petitioner's
demotion in rank is admitted by both parties
RULING:
Yes. Jurisprudence recognizes the exercise of management prerogatives. For this reason,
courts often decline to interfere in legitimate business decisions of employers. Indeed, labor laws
discourage interference in employers' judgments concerning the conduct of their business. The
law must protect not only the welfare of employees, but also the right of employers. In the pursuit
of its legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another - provided there is no demotion in
rank or diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. Managerial prerogatives, however, are subject to limitations provided by law,
collective bargaining agreements, and general principles of fair play and justice. The test for
determining the validity of the transfer of employees was explained in Blue Dairy Corporation v.
NLRCas follows: “The managerial prerogative to transfer personnel must be exercised without
grave abuse of discretion, bearing in mind the basic elements of justice and fair play. the employer
must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits.” Wherefore, this Petition is DENIED, and the June 14, 2002 Decision and the
September 25, 2002 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
Right to ROI
GELMART INDUSTRIES PHILIPPINES, INC. VS. NLRC

GR No. 55668 August 10, 1989
FACTS:
Private respondent Felix Francis started working as an auto-mechanic for petitioner

Gelmart Industries Phils., Inc. (GELMART) sometime in 1971. As such, his work consisted of the
repair of engines and underchassis, as well as trouble shooting and overhauling of company
vehicles. He is likewise entrusted with some tools and spare parts in furtherance of the work
assigned to him.
On April 11, 1987, private respondent was caught by the security guards taking out of
GELMART's premises one (1) plastic container filled with about 16 ounces of "used' motor oil,
without the necessary gate pass to cover the same as required under GELMART's rules and
regulations which provides that theft and/or pilferage of company property merits an outright
termination from employment. By reason thereof, petitioner was placed under preventive
suspension pending investigation for violation of company rules and regulations on April 13, 1987.

After due investigation, or on May 20, 1987, private respondent was found guilty of theft
of company property. As a consequence, his services were severed.
Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In
a decision dated February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private
respondent was illegally dismissed and, accordingly, ordered the latter's reinstatement with full
backwages from April 13, 1987 up to the time of actual reinstatement.
From this decision, GELMART interposed an appeal with the NLRC. In its decision dated
October 21, 1988, the NLRC affirmed with modification the ruling of Labor Arbiter Diosana.
On December 12, 1988, GELMART filed before this Court a special civil action for certiorari
with a prayer for the issuance of a temporary restraining order.
On January 18, 1989, this Court, without necessarily giving due course to the petition,
issued a temporary restraining order enjoining respondents from enforcing the assailed decision.
ISSUE:
Whether or not the NLRC committed a grave abuse of discretion for rendering a decision
that is contrary to law and existing jurisprudence in ordering the reinstatement of private
respondent to his former position with payment of backwages.
RULING:
We find no merit in this petition.
Consistent with the policy of the State to bridge the gap between the underprivileged
workingmen and the more affluent employers, the NLRC rightfully tilted the balance in favor of
the workingmen — and this was done without being blind to the concomitant right of the employer
to the protection of his property.
On the other hand, without being too harsh to the employer, and naively liberal to labor,
on the other, the NLRC correctly pointed out that private respondent cannot totally escape liability
for what is patently a violation of company rules and regulations.
To reiterate, be it of big or small commercial value, intended to be re-used or altogether

disposed of or wasted, the "used" motor oil still remains, in legal contemplation, the property of
GELMART. As such, to take the same out of GELMART's premises without the corresponding gate
pass is a violation of the company rule on theft and/or pilferage of company property.
In this score, it is very difficult for this Court to discern grave abuse of discretion on the
part of the NLRC in modifying the appealed decision. The suspension imposed upon private
respondent is a sufficient penalty for the misdemeanor committed.
Considering that private respondent herein has no previous derogatory record in his fifteen
(15) years of service with petitioner GELMART the value of the property pilfered (16 ounces of
used motor oil) is very minimal, plus the fact that petitioner failed to reasonably establish that
non-dismissal of private respondent would work undue prejudice to the viability of their operation

or is patently inimical to the company's interest, it is more in consonance with the policy of the
State, as embodied in the Constitution, to resolve all doubts in favor of labor.
Thus, the penalty of preventive suspension was sufficient punishment for the violation
under the circumstance and that complainant-appellee’s dismissal unwarranted.
Decision:
WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit. The,
restraining order issued by this Court on January 18, 1989 enjoining the enforcement of
the questioned decision of the National Labor Relations Commission is hereby lifted. No
pronouncement as to costs. SO ORDERED.
Right to Prescribe Rules
LAGATIC VS. NLRC

GR No. 121904 January 28, 1988
FACTS:
Petitioner Romeo Lagatic was employed in May 1986 by Cityland. As a marketing

specialist, he was tasked with soliciting sales for the company, with the corresponding duties of
accepting call-ins, referrals, and making client calls and cold calls (the practice of prospecting for
clients through the telephone directory). Cityland, believing that the same is an effective and
cost-efficient method of finding clients, requires all its marketing specialists to make cold calls but
nonetheless requires submission of daily progress reports on the same in order to assess to
determine the results thereof.
On November 1992, petitioner was suspended for three days for failing to submit cold call
reports on various dates of September and October 1992 notwithstanding a written reprimand
for infraction of the same committed a year earlier and a warning that further non-compliance
would result to termination.
Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit
cold call reports for five (5) days of February 1993. He was verbally reminded to submit the same
and was even given up to February 17, 1993 to do so. Instead of complying with said directive,
Petitioner, on February 16, 1993, wrote a note, TO HELL WITH COLD CALLS! WHO CARES? and
exhibited the same to his co-employees. To worsen matters, he left the same lying on his desk
where everyone could see it.
On February 23, 1993, petitioner received a memorandum requiring him to explain why
Cityland should not make good its previous warning for his failure to submit cold call reports, as
well as for issuing the written statement aforementioned. On February 24, 1993, he sent a letter-
reply alleging that his failure to submit cold call reports should not be deemed as gross
insubordination. He denied any knowledge of the damaging statement, TO HELL WITH COLD
CALLS!

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal

upon him on February 26, 1993. Aggrieved by such dismissal, petitioner filed a complaint against
Cityland for illegal dismissal, illegal deduction, underpayment, overtime and rest day pay,
damages and attorney’s fees. The labor arbiter dismissed the petition for lack of merit. On appeal,
the same was affirmed by the NLRC; hence the present recourse.
ISSUE:
Whether or not the respondent NLRC gravely abused its discretion in not finding the
petitioner illegally dismissed.
RULING:
The petition lacks merit.
To constitute a valid dismissal from employment, two requisites must be met, namely: (1)
the employee must be afforded due process, and (2) the dismissal must be for a valid cause.
Petitioner loses sight of the fact that except as provided for, or limited by, special laws,
an employer is free to regulate, according to his discretion and judgment, all aspects of
employment. Employers may, thus, make reasonable rules and regulations for the government
of their employees, and when employees, with knowledge of an established rule, enter the
service, the rule becomes a part of the contract of employment. It is also generally recognized
that company policies and regulations, unless shown to be grossly oppressive or contrary to law,
are generally valid and binding on the parties and must be complied with.
Corollarily, an employee may be validly dismissed for violation of a reasonable company

rule or regulation adopted for the conduct of the company business. An employer cannot rationally
be expected to retain the employment of a person whose x x x lack of regard for his employers
rules x x x has so plainly and completely been bared. Petitioners continued infraction of company
policy requiring cold call reports, as evidenced by the 28 instances of non-submission of aforesaid
reports, justifies his dismissal. He cannot be allowed to arrogate unto himself the privilege of
setting company policy on the effectivity of solicitation methods. To do so would be to sanction
oppression and the self-destruction of the employer.
More than that, his written statement shows his open defiance and disobedience to lawful
rules and regulations of the company. Likewise, said company policy of requiring cold calls and
the concomitant reports thereon is clearly reasonable and lawful, sufficiently known to petitioner,
and in connection with the duties which he had been engaged to discharge. There is, thus, just
cause for his dismissal.
Decision:
WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is
hereby
DISMISSED for lack of merit. Costs against petitioner. SO ORDERED.

Pascasio Right to Prescribe Rules
CHINA BANKING CORPORATION VS. BORROMEO

G.R. No. 156515 October 19, 2004
FACTS:
Borromeo, without authority from the Executive Committee or Board of Directors, approved
several DAUD/BP accommodations amounting to P2,441,375 in favor of Joel Maniwan, with
Edmundo Ramos as surety.
As a result of the DAUD/BP accommodations in favor of Maniwan, a total of ten out-of-town

checks of various dates amounting to P2,441,375 were returned unpaid from September 20, 1996
to October 17, 1996. The petitioner Bank learned that these DAUD/BP accommodations exceeded
the limit granted to clients, were granted without proper prior approval and already past due.
Remedios Cruz, petitioner Banks Vice-President of the Human Resources Division, again
informed him that the management would withhold the sum of P836,637.08 from his separation
pay, mid-year bonus and profit sharing. The amount withheld represented his proportionate share
in the accountability vis--vis the DAUD/BP accommodations in favor of Maniwan. The said amount
would be released upon recovery of the sums demanded from Maniwan in a Civil Case.
Consequently, the respondent, through counsel, made a demand on the petitioner Bank for
the payment of his separation pay and other benefits. the respondent argues that the petitioner
Bank could not properly impose the accessory penalty of restitution on him without imposing the
principal penalty of Written Reprimand/Suspension as provided under its Code of Ethics.
RULING:
The petitioner Banks Code of Ethics provides:
7.2.5. Restitution/Forfeiture of Benefits

Restitution may be imposed independently or together with any other penalty in case of loss or
damage to the property of the Bank, its employees, clients or other parties doing business with
the Bank. The Bank may recover the amount involved by means of salary deduction or whatever
legal means that will prompt offenders to pay the amount involved. But restitution shall in no way
mitigate the penalties attached to the violation or infraction.
It is well recognized that company policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and valid on the parties and must be complied
with until finally revised or amended unilaterally or preferably through negotiation or by
competent authority. Moreover, management has the prerogative to discipline its employees and
to impose appropriate penalties on erring workers pursuant to company rules and regulations.
With more reason should these truisms apply to the respondent, who, by reason of his position,
was required to act judiciously and to exercise his authority in harmony with company policies.
Contrary to the respondents contention that the petitioner Bank could not properly impose
the accessory penalty of restitution on him without imposing the principal penalty of Written

Reprimand/Suspension, the latters Code of Ethics expressly sanctions the imposition of

restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in
view of his voluntary separation from the petitioner Bank, the imposition of the penalty of
reprimand or suspension would be futile. The petitioner Bank was left with no other recourse but
to impose the ancillary penalty of restitution. It was certainly within the petitioner Banks
prerogative to impose on the respondent what it considered the appropriate penalty under the
circumstances pursuant to its company rules and regulations.
Samson Right to Prescribe Rules
ASSOCIATED WATCHMEN AND SECURITY UNION VS. LANTING

GR No. L – 14120 February 29, 1960
Labrador, J.
FACTS:
Petitioner and its members declared a strike against respondent-company and other
shipping firms. Subsequently, through the Court of Industrial Relations (CIR), the strikers
expressed their willingness to return to work. However, the respondent-company stated that it
would re-instate the said strikers if the petitioner would file a bond of Php 5, 000.00. Petitioner
did not comply with said condition, thus, their members were not re-instated by the respondent-
company. Eventually, petitioners filed a case against the respondent-company for allegedly
committing unfair labor practice. The trial court decided in favor of the petitioners on the basis
that the bond hinders the re-employment of the union members. The CIR, however, reversed the
trial court’s decision.
ISSUE:
Is the respondent company guilty of unfair labor practice when it asked the petitioner
to file a bond of Php 5,000.00 in order for the latter’s members to be re-instated?
RULING:
No, the Supreme Court finds no merit in the petitioner’s contention that the respondent-
company committed unfair labor practice. As embodied in the Labor Code, the employers are
vested with certain rights that they may exercise so as to protect their interests and capital.
In the present case, the Court ruled in favor of the respondents due to the following
reasons:
The law gives respondent company the right to protect its interest, especially, when in this case,
the union members abandoned their posts without notice when they joined the strike.
Consequently, the acts of the union members exposed the company to possible dangers such as
theft and pilferage.

It was obvious that the bond asked by the respondent company was not demanded from the
petitioner. The agreement between the two parties was plain and simple – re-instatement shall
be applied to those agencies who are willing to file the bond.
There is no existing contract between the two parties and that the union members were
not direct employees of the respondent company. Said union members were merely casual guards
of the said company.
Therefore, the Court affirms the decision of the CIR and costs are imposed against
the petitioner.
Sandoval Right to Select Employees
PAMPANGA BUS COMPANY VS. PAMBUSEO EMPLOYEES UNION

G.R. NO. 46739 September 23, 1939
FACTS:
On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner
herein, Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco
Employees'Union, Inc., new employees or laborers it may need to replace members of the union
who may be dismissed from the service of the company, with the proviso that, if the union fails
to provide employees possessing the necessary qualifications, the company may employ any
other persons it may desire. This order, in substance and in effect, compels the company, against
its will, to employ preferentially, in its service, the members of the union.
ISSUE:
Whether or not the said order issued by the CIR valid and not violative of the right of the
employer to select employees.
HELD:
We hold that the court has no authority to issue such compulsory order. The general right
to make a contract in relation to one's business is an essential part of the liberty of the citizens
protected by the due-process clause of the Constitution. The right of the laborer to sell his labor
to such person as he may choose is, in its essence, the same as the right of an employer to
purchase labor from any person whom it chooses. The employer and the employee have thus an
equality of right guaranteed by the Constitution. Section of Commonwealth Act No. 213 confers
upon labor organizations the right "to collective bargaining with employers for the purpose of
seeking better working and living conditions, fair wages, and shorter working hours for laborers,
and, in general, to promote the material, social and moral well-being of their members." This
provision in granting to labor unions merely the right of collective bargaining, impliedly recognizes
the employer's liberty to enter or not into collective agreements with them. Indeed, we know of
no provision of the law compelling such agreements. Such a fundamental curtailment of freedom,
if ever intended by law upon grounds of public policy, should be effected in a manner that is

beyond all possibility of doubt. The supreme mandates of the Constitution should not be loosely
brushed aside. As held by the Supreme Court of the United States in Hitchman Coal & Co. vs.
Mitchell.
Serrano Right to Transfer or Discharge Employees
GREGORIO ARANETA EMPLOYEES VS. ROLDAN

G.R. No. L-6846 July 20, 1955
JUGO, J.
FACTS:
The Agricultural Division of Gregorio Araneta, Inc. as agricultural enterprise was

overcapatalized due to this its Board of Directors felt that it was necessary to either invite fresh
capital from outside or to adop a retrenchment policy. The first plan of invitation was unsuccessfull
as investors refused to invest in the enterprise. The Board was left with no other recourse but to
reduce its merchandise imports lower than the usual, reduction of credits and ultimately reduction
of personnel which caused the company to lay off 17 employees. These employees were given
one month separation pay except for one employee who refused to accept it. In predicament
reorganization of the company had been adopted by unanimous decision of its Board of Directors
even before petitioner's organization.
ISSUE:
Whether or not the laying off of the employees was justified?
RULING:
The retrenchment policy was adopted even before the petitioner was organized and
consequently, it was never directed against the union. Considering this fact and taking into
account all the circumstances of this case, especially the actual reduction of business of said
Division, the court fails to find sufficient justification for altering the action of the Board of
Directors regarding those employees which received their severance pay. In justifying the
affirmance of trial court's decision is ratiocinated on the ground that the laying off of the 17
employees was due to the retrenchment policy which the Company had to adopt in order to
reduce the overcapitalization and minimize expenses. The volume of business was considerablly
reduced. It should be noted that the retrenchment policy was adopted before even the
organization of the petitioning union. It was not, therefore, aimed at the Union or any of its
members of union or labor activities.

Tejares, Anthony Angel S. Right to Transfer or Discharge Employees
PHILIPPINE STEEL METAL WORKERS UNION VS. CIR

G.R. No. L-2028 April 28, 1949
Reyes, J.:
FACTS:
The case involving an industrial dispute between the respondent company (a corporation
engaged in the manufacture of tin plates, aluminum sheets, etc.) and its laborers some of whom
belong to the Philippine Sheet Metal Workers' Union (CLO) and some to the Liberal Labor Union.
The dispute was over certain demands made upon the company by the laborers, one of the
demands (No. 13th in the list) being for the recall of eleven workers who had been laid off.
Temporarily taken back on certain conditions pending final determination of the controversy,
these eleven workers were in the end ordered retained in the decision handed down by the court.
The petitioner tried to prove that the 11 laborers were laid off by the respondent company due
to their union activities. As a matter of fact, of the 11 workers laid off, there are included officers
and members of the petitioning union.On February 10, 1947, that is, nine days before the decision
came down, filed a motion in the case, asking for authority to lay off at least 15 workers in its
can department on the ground that the installation and operation of nine new labor-saving
machines in said department had rendered the services of the said workers unnecessary.
ISSUE:
Whether or not it is valid firing the laborers based on their union activities.
RULING:
The right to reduce personnel should, of course, not be abused. It should not be made a
pretext for easing out laborers on account of their union activities. But neither should it be denied
when it is shows that they are not discharging their duties in a manner consistent with good
discipline and the efficient operation of an industrial enterprise. The petitioner contends that the
order complained of was made with grave abuse of discretion and in excess of jurisdiction in that
it is contrary to the pronouncement made by the lower court in its decision in the main case
where it disapproved of the dismissal of eleven workers "with whom the management is
displeased due to their union activities." It appears, however, that the pronouncement was made
upon a distinct set of facts, which are different from those found by the court in connection with
the present incident, and that very decision, in ordering the reinstatement of the eleven laborers,
qualifies the order by saying that those laborers are to be retained only "until the occurrence of
facts that may give rise to a just cause of their laying off or dismissal, or there is evidence of
sufficient weight to convince the Court that their conduct is not satisfactory." After a careful
review of the record, we find that the Court of Industrial Relations has neither exceeded its
jurisdiction nor committed grave abuse of discretion in rendering the order complained of. The
petition for certiorari is, therefore, denied, but without costs against the petitioner for the reasons
stated in its motion to litigate as pauper.

Alquiza, Leslie Hennah D. Right to Transfer or Discharge Employees
TIONG KING VS CIR

GR NO. L-3587 December 21, 1951
Paras, J.
FACTS:
Gaw Pun So owned and operated a tailor shop known as the Army Shirt Factory. He had
a labor dispute with his personnel and, pending the case in the Court of Industrial Relations, Gaw
Pun So, irked and worried by the incidents of litigation, thought of dissolving the business and
selling the sewing machines. Aware of the plan of Gaw Pun So, Tiong King offered to take over
the business by leasing the place and the sewing machines. The transfer was put in writing. Tiong
King continued the Army Shirt Factory with the same employees had by Gaw Pun So. This transfer
was known to the personnel, so much so that the latter, as petitioner in the pending dispute
prayed that Tiong King be included as a respondent. In due time, the National Tailors Association
entered that all cases were terminated against the respondents. This agreement was duly
approved by the Court of Industrial Relations.
Tiong King filed a petition in the CIR a case alleging that since he operated his shop in
February, 1948, he had continually suffered losses; he prayed that he be allowed to close his
tailor shop and business. The CIR issued an order enjoining Tiong King not to close his factory
and not to dismiss, suspend or lay off any laborer or employee without previous authority of said
court.
Upon petitioner for reconsideration filed by counsel for Tiong King, the CIR promulgated
a resolution, allowing Tiong King to close his business and shop, subject to the condition that,
upon reopening the same, his former personnel would be taken back.
ISSUE:
Whether Tiong King was the owner or operator thereof and had the right to file the petition
in the Court of Industrial Relations to close the same.
RULING:
It is only sufficient to recall that the National Tailors Association entered into a stipulation
with Tiong King alone whereby they agreed that all cases against the former owners of the
business were terminated. As correctly observed in the resolution of the CIR dated May 27, 1949,
granting the petition of Tiong King, that Tiong King was conceded to be the owner and operator
of the army shirt factory at the time his petition to close it was filed, is conclusively borne out by
the fact that Presiding Judge in his decision of January 13, 1949, ordered Tiong King, and not
Gaw Pun So, to pay the salaries and wages of the personnel
In entering into the agreement with the National Tailors Association, Tiong King acted in
his own behalf, regardless of the former owners of the business. Indeed, it was covenanted that
all the cases against the latter were deemed terminated. Considerations of fair play and justice

demand that Tiong King be given the full legal effect of said agreement which before the sanction
of the CIR.
There being no question that Tiong King's capital invested in the Army Shirt Factory was almost
exhausted at the time of the filing of his petition to close it, said petition must necessity be
granted. It is admitted by all the Judges of the CIR that an employer may close his business,
provided the same is done in good faith and is due beyond his control. To rule otherwise, would
be oppressive and inhuman.
Biyo, Irish Samantha S. Rules and Regulations
Rizal Empire Insurance Corporation vs. NLRC

GR No. 73140 28 May 1987
FACTS:
Private respondent, Rogelio R. Coria was hired by petitioner Rizal Empire Insurance Group
as a casual employee. He was made a regular employee, having been appointed as clerk-typist.
Subsequently, he was transferred to the Claims Department and his salary was. Then, he was
transferred to the Underwriting Department and his salary was increased plus cost of living
allowance, until he was transferred to the Fire Department as filing clerk. In July, 1983, he was
made an inspector of the Fire Division. After some time, private respondent Rogelio R. Coria was
dismissed from work, allegedly, on the grounds of tardiness and unexcused absences.
Accordingly, he filed a complaint with the Ministry of Labor and Employment (MOLE), and in a
Decision, Labor Arbiter Teodorico L. Ruiz reinstated him to his position with back wages. Petitioner
filed an appeal with the National labor Relations Commission (NLRC) but was dismissed on the
ground that the same had been filed out of time.
ISSUE:
Whether or not the NLRC committed grave abuse of discretion amounting to lack of
jurisdiction.
RULING:
No. Rule VIII of the Revised Rules of the National Labor Relations Commission on appeal,
provides:
SECTION 1. (a) Appeal. — Decision or orders of a labor Arbiter shall be final
and executory unless appealed to the Commission by any or both of the
parties within ten (10) calendar days from receipt of notice thereof.
SECTION 6. No extension of period. — No motion or request for extension of
the period within which to perfect an appeal shall be entertained.
Pursuant to the "no extension policy" of the National Labor Relations Commission,
aforesaid motion for extension of time was denied in its resolution dated and the appeal was
dismissed for having been filed out of time. Under the above-quoted provisions of the Revised
NLRC Rules, the decision appealed from in this case has become final and executory and can no
longer be subject to appeal. The ruling of the Labor Arbiter appears to be correct; the consistent
promotions in rank and salary of the private respondent indicate he must have been a highly
efficient worker, who should be retained despite occasional lapses in punctuality and attendance.
Perfection cannot after all be demanded.

Custodio, Reyna C. Rules and Regulations
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. vs. HON. FRANKLIN M.

DRILON et. al.
G.R. No. 81958 June 30, 1988
Sarmiento, J.
FACTS:
The Philippine Association of Service Exporters, Inc. (PASEI), engaged principally in the
recruitment of Filipino workers for overseas placement, challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment on the
temporary suspension of deployment of Filipino domestic and household workers.
It alleged that such order is does not apply to all Filipino workers but only to domestic
helpers and females with similar skills. It further alleged that the order is an invalid exercise of
the lawmaking power, police power being legislative, and not executive, in character.
ISSUE:
Whether or not Department Order no. 1, Series of 1988 of the Department of Labor and
Employment is unconstitutional due to invalid exercise of the lawmaking power
RULING:
In the case at bar, there is no gainsaying the fact that Department Order No. 1 implements
the rule-making powers granted by the Labor Code. But what should be noted is the fact that in
spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions
indeed call for a deployment ban.
There is likewise no doubt that such a classification is germane to the purpose behind the
measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the
protection for Filipino female overseas workers" this Court has no quarrel that in the midst of the
terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their
own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply
indefinitely so long as those conditions exist. This is clear from the Order itself, meaning to say
that should the authorities arrive at a means impressed with a greater degree of permanency,
the ban shall be lifted.
De Leon Rules and Regulations
CBTC EMPLOYERS UNION VS. CLAVE

FACTS:

Commercial Bank and Trust Company Employees' Union lodged a complaint with the
Department of Labor, against Commercial trust Bank for non-payment of the holiday pay benefits
provided for under Art 95 of the Labor Code in relation to Rule X, Book III of the Rules and
Regulations Implementing the Labor Code. Failing to arrive at an amicable settlement at
conciliation level, the parties opted to submit their dispute for voluntary arbitration.
The issue presented was whether the permanent employees of the Bank within the
collective bargaining unit paid on a monthly basis are entitled to holiday pay effective November
1, 1974, pursuant to Article 94 of the Labor Code. In addition, the disputants signed a Submission
Agreement stipulating as final, unappealable and executory the decision of the Arbitrator,
including subsequent issuances for clarificatory and/or relief purposes, notwithstanding Article
262 of the Labor Code.
The Union filed a Manifestation stating that in the event that said Interpretative Bulletin
regarding holiday pay would be adverse to the present claim union respectfully reserves the right
to take such action as may be appropriate to protect its interests, a question of law being involved.
An Interpretative Bulletin which was inexistent at the time they said commitment was made and
which maybe contrary to the law itself should not bar the right of the union to claim for its holiday
pay benefits.
Voluntary Arbitrator stated that, there is more reason to believe that, if the Bank has never made
any deduction from its monthly-paid employees for unworked Saturdays, Sundays, legal and
special holidays, it is because there is really nothing to deduct properly since the monthly salary
never really included pay for such unworked days-and which give credence to the conclusion that
the divisor '250' is the proper one to use in computing the equivalent daily rate of the monthly-
paid employees that both the decree itself and the Rules mentioned enumerated the excepted
workers. It is a basic rule of statutory construction that putting an exception limits or modifies
the enumeration or meaning made in the law. It is thus easy to see that a mere reading of the
Decree and of the Rules would show that the monthly-paid employees of the Bank are not
expressly included in the enumeration of the exception.
Voluntary Arbitrator directed the bank to pay its monthly paid employees their “legal
holiday pay.” The next day, the Department of Labor released Policy Instructions No. 9 which
clarifies controversies on the entitlement of monthly paid employees. The new determining rule
is this: If the monthly paid employee is receiving not less than P 240, the maximum monthly
minimum wage, and his monthly pay is uniform from January to December, he is presumed to
be already paid the ten (10) paid legal holidays. However, if deductions are made from his
monthly salary on account of holidays in months where they occur, then he is still entitled to the
ten (10) paid legal holidays.
ISSUE:
Whether the permanent employees of the bank are entitled to holiday pay
RULING:
Yes. They are entitled to holiday pay. In excluding the union members of herein petitioner
from the benefits of the holiday pay law, public respondent predicated his ruling on Section 2,
Rule IV, Book IIIof the Rules to implement Article 94 of the labor Code promulgated by the then
Secretary of labor and Policy Instructions No. 9. The questioned Section 2, Rule IV, Book III of

the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group,
namely, 'employees who are uniformly paid by the month'. While the additional exclusion is only
in the form of a presumption that all monthly paid employees have already been paid holiday
pay, it constitutes a taking away or a deprivation towards the employee.
Evangelista Government Corporations
NATIONAL HOUSING CORPORATION VS. JUCO

(134 SCRA 172) January 17, 1985
FACTS:
JUCO was an employee of the National Housing Corporation. He filed a complaint

for illegal dismissal with MOLE but his case was dismissed by the Labor Arbiter on the
ground that NHC is a government-owned corporation and jurisdiction over its employees
is vested in the Civil Service Commission. On appeal, the NLRC reversed the said decision
and remanded the case to the labor arbiter for further proceedings. NHC in turn appealed
to the Supreme Court.
ISSUE:
Whether or not the employees of the National Housing Corporation, a government-

owned and controlled corporation without original charted was covered by the Labor Code
RULING:
No, National Housing Corporation comes under the jurisdiction of the Civil Service
Commission, not the Ministry of Labor and Employment. Under the Sec. 11 of the 1987
Constitution, it states that the Civil Service embraces every branch, agency, subdivision
and instrumentality of the Government, including every government owned and
controlled corporation. The inclusion of the GOCC within the embrace of the civil service
shows a deliberate effort at the framers to plug an earlier loophole which allowed GOCC
to avoid the full consequences of the civil service system. All offices and firms of the
government are covered.
This constitutional provision has been implemented by the statute under PD 807
and which it is unequivocal that personnel of GOCC belong to the Civil Service and subject
to civil service requirements. “Every” means each one of a group, without exception. This
case refers to a GOCC. It does not cover cases involving private firms taken over by the
government in foreclosure or similar proceedings.
For purposes of coverage of Civil Service, employees of GOCC, whether created

by special law or formed as subsidiaries are covered by the Civil Service Law, not the

Labor Code, and the fact that private corporations owned and controlled by the
government may be created by special charter does not mean that such corporations not
created by special laws are not covered by the Civil Service.
Flores Government Corporations
NATIONAL SERVICE CORP. VS. NLRC

GR No. L-69870 November 29, 1988
PADILLA, J.
FACTS:
Eugenio Credo was an employee of the National Service Corporation. She claims she was
illegally dismissed. NLRC ruled ordering her reinstatement. NASECO argues that NLRC has no
jurisdiction to order her reinstatement. NASECO as a government corporation by virtue of its
being a subsidiary of the NIDC, which is wholly owned by the Phil. National Bank which is in
turn a GOCC, the terms and conditions of employment of its employees are governed by the
Civil Service Law citing National Housing v Juco.
ISSUE:
W/N employees of NASECO, a GOCC without original charter, are governed by the Civil
Service Law.
RULING:
NO. The holding in NHC v Juco should not be given retroactive effect, that is to cases that
arose before its promulga¬tion of Jan 17, 1985. To do otherwise would be oppressive to Credo
and other employees similarly situated because under the 1973 Constitute prior to the ruling in
NHC v Juco, this court recognized the applicability of the Labor jurisdiction over disputes involvin
g terms andconditions of employment in GOCC's, among them NASECO. In the matter of covera
ge by the civil service of GOCC, the 1987 Consti starkly differs from the 1973 consti where
NHC v Juco wasbased. It provides that the "civil service embraces all branches, subdivisions, ins
trumentalities, and agencies of the Government, including government owned or controlled corp
oration with original charter." Therefore by clear implication, the civil service does not include
GOCC which are organized as subsidiaries of GOCC under the general corporation law.
Fortuno, Nikki C. Non-Applicability to Government Agencies
REPUBLIC OF THE PHILIPPINES VS. COURT OF APPEALS

G.R. No. 87676 December 20, 1989
GRIÑO-AQUINO, J.

FACTS:
NPDC was originally created in 1963 under Executive Order No. 30, as the Executive
Committee for the development of the Quezon Memorial, Luneta and other national parks, and
later renamed as the National Parks Development Committee under Executive Order No. 68, it
was registered in the Securities and Exchange Commission (SEC) as a non-stock and non-profit
corporation, known as "The National Parks Development Committee, Inc."
The NPDC was ordered by the SEC to show cause why it’s Certificate of Registration should
not be suspended, SEC was later then informed that the Office had no objection to the
suspension, cancellation, or revocation of the Certificate of Registration of NPDC. Meanwhile, the
Rizal Park Supervisory Employees Association, consisting of employees holding supervisory
positions in the different areas of the parks, was organized and it affiliated with the Trade Union
of the Philippines and Allied Services (TUPAS). Later, these unions staged a strike in various parks,
alleging unfair labor practices by NPDC, a complaint against the union to declare the strike illegal
and to restrain it on the ground that the strikers, being government employees, have no right to
strike although they may form a union. The lower court dismissed the complaint and lifted the
restraining order for lack of jurisdiction. It held that the case "properly falls under the jurisdiction
of the Department of Labor," because "there exists an employer-employee relationship".
ISSUE:
Whether or not the petitioner's labor dispute with its employees is cognizable by the
Department of Labor.
RULING:
No, The National Parks Development Committee has remained under the Office of the
President (E.O. No. 709, dated July 27, 1981). Since 1977 to 1981, the annual appropriations
decrees listed NPDC as a regular government agency under the Office of the President and
allotments for its maintenance and operating expenses were issued direct to NPDC. Since NPDC
is a government agency, its employees are covered by civil service rules and regulations (Sec. 2,
Article IX, 1987 Constitution). Its employees are civil service employees (Sec. 14, Executive Order
No. 180).
While NPDC employees are allowed under the 1987 Constitution to organize and join unions of
their choice, there is as yet no law permitting them to strike. In case of a labor dispute between
the employees and the government, Section 15 of Executive Order No. 180 dated June 1, 1987
provides that the Public Sector Labor- Management Council, not the Department of Labor and
Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in
holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable
by the Department of Labor and Employment.
Grayda, Jean Louie Non-Applicability to Government Agencies
LUZON DEVELOPMENT BANK VS. ASSOCIATION OF LUZON DEVELOPMENT BANK

EMPLOYEES
GR No. 120319 October 6, 1995

Romero, J.
FACTS:
An arbitration case arose from the submission agreement of Luzon Development Bank vs
Association of Luzon Development Bank Employees when the said bank failed to submit its
position paper to the voluntary arbitrator even after the other party had submitted theirs and
despite a reminder to do so was made.
The voluntary arbitrator then rendered a disposition holding that the Bank has not adhered
to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on
promotion.
Thus this petition for certiorari and prohibition seeking to set aside the decision of the
Voluntary Arbitrator and to prohibit her from enforcing the same.
ISSUE:
Which court has the jurisdiction for the appellate review of adjudications of all quasi-
judicial entities
RULING:
Past record shows that appeals from the decision of the voluntary arbitrator were directed
to the Supreme Court which makes the former on equal footing with NLRC or the Court of Appeals.
The Court held that this is illogical and imposes an unnecessary burden upon it.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court
of Appeals shall exercise:
(B) 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 voluntary arbitrator falls within the “instrumentalities” as contemplated in the Labor
Code as it performs a state function pursuant to the governmental power delegated to him by
the provisions thereof.
An "instrumentality" is anything used as a means or agency. Thus, the terms

governmental "agency" or "instrumentality" are synonymous in the sense that either of them is a
means by which a government acts, or by which a certain government act or function is
performed. The word "instrumentality," with respect to a state, contemplates an authority to
which the state delegates governmental power for the performance of a state function.

In effect, in a petition for certiorari from that award or decision, the Court of Appeals must
be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this nature for proper
disposition.
Emancipation of Tenants
Lindain Department of Agrarian Reform
ASSOCIATION OF SMALL LANDOWNERS OF THE PHILS. VS. SECRETARY OF

AGRARIAN REFORM
GR No. 78742 July 14,1989
FACTS:
The association of the Small Landowners of the Philippines invokes the right of retention
granted by PD 27 to owners of rice and corn lands not exceeding 7 hectares as long as they are
cultivating on intend to cultivate the same. Their respected lands do not exceed the statutory
limits but are occupied by tenants who re actually cultivating such lands.Because PD No. 316
provides that no tenant-farmer in agricultural land primarily devoted to rice and corn shall be
ejected or removed from his farm holding until such time as the respective rights of the tenant-
farmers and the land owners shall have been determined, they petitioned the court for a writ of
mandamus to compel the DAR Secretary to issue the IRR, as they could not eject their tenants
and so are unable to enjoy their right of retention.
ISSUE:
1. Whether or not the assailed statutes are valid exercises of police power.
2. Whether or not the content and manner of just compensation provided for the CARP is
violative of the Constitution.
3. Whether or not the CARP and EO 228 contravene a well-accepted principle of eminent
domain by divesting the land owner of his property even before actual payment to him in
full of just compensation
HELD:
Yes. The subject and purpose of agrarian reform have been laid down by the Constitution
itself, which satisfies the first requirement of the lawful subject. However, objection is raised to
the manner fixing the just compensation, which it is claimed is judicial prerogatives. However,
there is no arbitrariness in the provision as the determination of just compensation by DAR is only
preliminary unless accepted by all parties concerned. Otherwise, the courts will still have the right
to review with finality the said determination.
No. Although the traditional medium for payment of just compensation is money and no
other, what is being dealt with here is not the traditional exercise of the power and eminent
domain. This is a revolutionary kind of expropriation, which involves not mere millions of pesos.

The initially intended amount of P50B may not be enough, and is in fact not even fully available
at the time. The invalidation of the said section resulted in the nullification of the entire program.
No. EO 228 categorically stated that all qualified farmer-beneficiaries were deemed full owners of
the land they acquired under PP 27, after proof of full payment of just compensation. The CARP
Law, for its part, conditions the transfer of possession and ownership of the land to the
government on the receipt by the landowner of the corresponding payment or the deposit of DAR
of the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains
with the landowner.
Maghirang Department of Agrarian

Reform
ACUNA VS. ARROYO
G.R. No. 79310 Date: July 14, 1989
Cruz, J.
FACTS:
The petitioners are landowners and sugar planters in the Victorias Mill District in Negros
Occidental. Co-Petitioner Planters’ Committee is an organization composed of 1,400 planter-
members. This petition seeks to prohibit the implementation of Proclamation No. 131 and EO No.
229.The petitioners claim that the power to provide for a CARP as decreed by the constitution
belongs to Congress and not the President. Even assuming that the interim legislative power of
the President was properly exercised, Proc. No. 131 and EO No.229 would still have to be annulled
for violating the constitutional provisions on just compensation, due process and equal protection.
Section 2 of Proc. No. 131 provides: Agrarian Reform Fund. There is hereby created a special
fund, to be known as the Agrarian Reform Fund, an initial amount of FIFTY BILLION PEOS to
cover the estimated cost of the CARP from 1987 -1992 which shall be sourced from the receipts
of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten wealth
received through the PCGG and such other sources as government may deem appropriate. The
amounts collected and accruing to this special fund shall be appropriated automatically for the
purpose authorized in this Proclamation. The money needed to cover the cost of the contemplated
expropriated has yet to be raised and cannot be appropriated at this time. Petitioners contend
that taking must be simultaneous with payment of just compensation as it is traditionally
understood, i.e., with money and in full, but no such payment is contemplated in Sec. 5 of EO
No. 229.The petitioners also argue that in the issuance of the two measures, no effort was made
to make a careful study of the sugar planters’ situation. To the extent that the sugar planters
have been lumped in the same legislation with other farmers, although they are a separate group
with problems exclusively their own, their right to equal protection has been violated.
ISSUE:
Whether or not Proc. No. 131 and EO No. 229 are valid.
RULING:
The Court upheld the presumption of constitutionality in favour of Proc. No. 131 and EO
No. 229. Contrary to the petitioners’ contention, a pilot project to determine the feasibility of
CARP and a general survey on the people’s opinion thereon are not indispensable prerequisites

to its promulgation. On the alleged violation of the equal protection clause, the sugar planters
have failed to show that they belong to a different class and should be treated differently.
Regarding the issue of just compensation, it cannot be denied that the issue involved in the case
is a revolutionary kind of expropriation. The expropriation in the instant case affects all private
agricultural lands whenever found and of whatever kind as long as they are in excess of the
maximum retention limits allowed their owners. This kind of expropriation is intended for the
benefit not only of a particular community but of the entire Filipino nation. Such a program will
involve not mere million of pesos. The cost will be tremendous. Considering the vast areas of land
subject to expropriation under the laws before us, the Court estimate that hundreds of billions of
pesos will be needed, far more indeed that the amount of P50 billion initially appropriated, which
is already staggering as it is by our present standards. The Court assumes that the framers of the
Constitution were aware of this difficulty when they called for agrarian reform as a top priority
project of the government. It is a part of this assumption that when they envisioned the
expropriation that would be needed, they also intended that the just compensation would have
to be paid not in the orthodox way but a less conventional if more practical method. There can
be doubt that they were aware of the financial limitations of the government and had no illusions
that there would be enough money to pay in cash and in full for the lands they wanted to be
distributed among the farmers. The Court may therefore assume that their intention was to allow
such manner of payment as is now provided for by the CARP Law, particularly the payment of
the balance, or indeed of the entire amount of the just compensation, with other things of value.
Accepting the theory that payment of the just compensation is not always required to be made
fully in money, the Court further interpreted that the proportion of cash payment to the other
things of value constituting the total payment, as determined on the basis of the areas of the
lands expropriated, is not unduly oppressive upon the landowner.
Mascariñas Department of Agrarian Reform
PABICO VS. JUICO

G.R. No. 79744 July 14, 1989
FACTS:
Inocentes Pabico alleges that then DAR Secretary placed his landholding under the
coverage of OLT, in violation of due process and the requirement for just compensation.
Certificates of land transfer were subsequently issued to tenants, who then refused to pay lease
rentals to him. He then protested the erroneous inclusion of his small landholding under OLT and
asked for the recall and cancellation of the said CLT, which was denied without hearing. Although
he filed an MR, EO Nos. 228 and 229 were issued, rendering his MR moot and academic because
the said EOs directly affected the transfer of his land to his farmer-tenants.
ISSUE:
1. Whether or not PP No. 131 and EO No. 229 should be invalidated because they do not
provide for retention limits.
2 Whether or not the assailed statutes violates the equal protection clause.
HELD:

1. No. This argument is no longer tenable because RA 6657 does not provide for such
limits now in Section 6 of the law. As such, landowners who were unable to exercise their rights
to retention under PD 27 shall enjoy the retention rights granted by RA 6657 under the condition
therein prescribed.
2. No. The petitioners have not shown that they belong to a different class and entitled
to different treatment. The argument that not only landowners but also owners of their properties
must be rejected. There is substantial distinction between these two classes of owners that is
clearly visible except to those who will not see.
Monton Department of Agrarian Reform
MANAAY VS. JUICO

G.R. No. 79777 July 14, 1989
Cruz, J.
FACTS:
Nicolas Manaay and wife owned a 9-hectare riceland while Agustin Hermano owned 5,
each worked by 4 tenants. The tenants were declared full owners of these lands by virtue of 228
as qualified farmers under P.D. No. 27.
Petitioners questioned the validity of the agrarian reform laws, PD 27, EO 228, and 229,
on the ground that these laws already valuated their lands for the agrarian reform program and
that the specific amount must be determined by the Department of Agrarian Reform (DAR).
Manaay averred that this violated the principle in eminent domain which provides that only courts
can determine just compensation. This, for Manaay, also violated due process for under the
constitution, no property shall be taken for public use without just compensation.
They also questioned the provision which states that landowners may be paid for their
land in bonds and not necessarily in cash. They averred that just compensation has always been
in the form of money and not in bonds.
ISSUE:
(1) Whether or not there was a violation of due process.

(2) Whether or not under the agrarian reform program, just compensation must be in the
form of cash.
RULING:
(1) No. It is true that the determination of just compensation is a power lodged in the courts.
However, there is no law which prohibits administrative bodies like the DAR from determining
just compensation. In fact, just compensation can be that amount agreed upon by the landowner
and the government – even without judicial intervention so long as both parties agree. The DAR
can determine just compensation through appraisers and if the landowner agrees, then judicial
intervention is not needed. What is contemplated by law however is that, the just compensation
determined by an administrative body is merely preliminary. If the landowner does not agree with

the finding of just compensation by an administrative body, then it can go to court and the
determination of the latter shall be the final determination. This is even so provided by RA 6657:
Section 16 (f): Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation.
(2) No. Money as (sole) payment for just compensation is merely a concept in traditional exercise
of eminent domain. The agrarian reform program is a revolutionary exercise of eminent domain.
The program will require billions of pesos in funds if all compensation have to be made in cash –
if everything is in cash, then the government will not have sufficient money hence, bonds, and
other securities, i.e., shares of stocks, may be used for just compensation.
Rillera Lands Not Covered
ALITA VS. CA
GR No. 78517 February 27, 1989
Paras, J.
FACTS:
The subject matter of the case consists of two (2) parcels of land, acquired by private
respondents' predecessors-in-interest through homestead patent under the provisions of
Commonwealth Act No. 141. Said lands are situated at Guilinan, Tungawan, Zamboanga del Sur.
Private respondents herein are desirous of personally cultivating these lands, but petitioners
refuse to vacate, relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations
issued by the then Ministry of Agrarian Reform (DAR for short), now Department of Agrarian
Reform (MAR for short).
On June 18, 1981, private respondents then plaintiffs, instituted a complaint against Hon.
Conrado Estrella as then Minister of Agrarian Reform, P.D. Macarambon as Regional Director of
MAR Region IX, and herein petitioners then defendants for the declaration of P.D. 27 and all other
Decrees, Letters of Instructions and General Orders issued in connection therewith as inapplicable
to homestead lands.
On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch
IV, Pagadian City (now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its
decision dismissing the said complaint and the motion to enjoin the defendants was denied. Court
of Appeals, sustained RTC’s judgment, finding no reversible error
Hence, the present petition for review on certiorari.
ISSUE:
Whether or not lands obtained through homestead patent are covered by the Agrarian
Reform under P.D. 27.
HELD:
We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants
from the bondage of the soil and transferring to them ownership of the land they till is a sweeping

social legislation, a remedial measure promulgated pursuant to the social justice precepts of the
Constitution. However, such contention cannot be invoked to defeat the very purpose of the
enactment of the Public Land Act or Commonwealth Act No. 141. Also the Philippine Constitution
likewise respects the superiority of the homesteaders' rights over the rights of the tenants
guaranteed by the Agrarian Reform statute. In point is Section 6 of Article XIII of the 1987
Philippine Constitution which provides: Section 6. The State shall apply the principles of agrarian
reform or stewardship, whenever applicable in accordance with law, in the disposition or
utilization of other natural resources, including lands of public domain under lease or concession
suitable to agriculture, subject to prior rights, homestead rights of small settlers, and the rights
of indigenous communities to their ancestral lands.
It is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of
1988 or Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D.
27 to lands covered by homestead patents like those of the property in question, on, Section 6.
Retention Limits, Provided further, That original homestead grantees or their direct compulsory
heirs who still own the original homestead at the time of the approval of this Act shall retain the
same areas as long as they continue to cultivate said homestead.
The decision of the respondent Court of Appeals sustaining the decision of the Regional
Trial Court is hereby AFFIRMED.
Robles Lands Not Covered
GONZALES VS. CA
GR No. 36213 June 29, 1989
FACTS:
Defendant spouses Agcaoile are the owners of two parcels of land registered in their
names. Several tenants tilled the lands until it was converted into a residential subdivision and
was subdivided into residential lots. Petitioner spouses offered to pay a rental for a certain lot of
the subdivision on which they were to build a house, to which Leonora Agcaoile agreed. While
plaintiffs were renting a portion of the subdivision, they requested to be allowed to plant palay
on the lots that have not yet been sold. When they defaulted in their payment, they were asked
to pay the accrued rentals or to vacate the premises. Petitioners countered with an action to elect
the leasedhold system of tenancy and praying for a reliquidation of past harvests. Meanwhile,
defendants alleged that the subject property is a residential land.
ISSUE:
Whether or not an agricultural tenancy relationship can be created over land embraced in
an approved residential subdivision.
RULING:
The petition for review was denied for lack of merit.

There is no merit in the petitioners' argument that inasmuch as residential and commercial
lots may be considered "agricultural", an agricultural tenancy can be established on land in a
residential subdivision. An agricultural leasehold cannot be established on land which has ceased
to be devoted to cultivation or farming because of its conversion into a residential subdivision.
Petitioners may not invoke Section 36(l) of Republic Act No. 3844 which provides that
"when the lessor-owner fails to substantially carry out the conversion of his agricultural land into
a subdivision within one year after the dispossession of the lessee, the lessee shall be entitled to
reinstatement and damages," for the petitioners were not agricultural lessees or tenants of the
land before its conversion into a residential subdivision. Not having been dispossessed by the
conversion of the land into a residential subdivision, they may not claim a right to reinstatement.
Recruitment and Placement
Savellano Recruitment and Placement
PEOPLE OF THE PHILIPPINES VS. HON. DOMINGO PANIS and SERAPIO ABUG
G.R. No. L-58674-77 July 11, 1986
Cruz, J.
FACTS:
Four complaints against private respondent Serapio Abug was filed charging him for the
operation of a private fee-charging employment agency by charging fees and expenses (from)
and promising employment in Saudi Arabia. A violation of Articles 16 in relation to Article 39 of
the Labor Code.
Respondent Abug filed a motion to quash on the ground that he was charged for illegal
recruitment of one person in all 4 complaints filed against him. Also, not all the requisites
mentioned in Article 13(b) of the Labor Code is present.
The said motion was dismissed. Hence the case at bar.
ISSUE:
W/N there is a valid recruitment and placement.
HELD:
NO, there is no valid recruitment and placement in the case at bar.
The number of persons dealt with is not an essential ingredient of the act of recruitment
and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will
constitute recruitment and placement even if only one prospective worker is involved.
According to Article 13(b) of P. D. 442 otherwise known as the Labor Code, reading as
follows: "(b) 'Recruitment and placement' refers to any act of canvassing, 'enlisting, contracting,
transporting, hiring, or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not: Provided, That any

person or entity which, in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement."
Silverio Recruitment and Placement
PEOPLE OF THE PHILIPPINES VS. GOCE

G.R. No. 113161 August 29, 1995
Regalado, J.
FACTS:
On January 12, 1988, an information for illegal recruitment committed by a

syndicate a n d i n l a r g e s c a l e , p u n i s h a b l e u n d e r A r t i c l e s 3 8 a n d 3 9 o f t h e
L a b o r C o d e a s a m e n d e d b y Section 1(b) of Presidential Decree No. 2018, was
filed against spouses Dan and Loma Goce and herein accused-appellant Nelly Agustin in
the Regional Trial Court of Manila, Branch 5.
On January 21, 1987, a warrant of arrest was issued against the three accused but not
one of them was arrested. Hence, on February 2, 1989, the trial court ordered the case archived
but it issued a standing warrant of arrest against the accused. Thereafter, on
learning of the w h e r e a b o u t s o f t h e a c c u s e d , a t a r o u n d m i d d a y o f F e b r u a r y
2 6 , 1 9 9 3 , N e l l y A g u s t i n w a s apprehended by the Parañaque police.
On November 19, 1993, the trial court rendered judgment finding herein
appellant guilty as a p r i n c i p a l i n t h e c r i m e o f i l l e g a l r e c r u i t m e n t i n l a r g e
s c a l e , a n d s e n t e n c i n g h e r t o s e r v e t h e penalty of life imprisonment, as well as to pay
a fine of P100,000.00.
In her appeal, appellant Agustin raises the following arguments:( 1 ) h e r a c t o f

i n t r o d u c i n g c o m p l a i n a n t s t o t h e G o c e c o u p l e d o e s n o t f a l l w i t h i n t h e meaning
of illegal recruitment and placement under Article 13(b) in relation to Article 34of the Labor
Code;(2) there is no proof of conspiracy to commit illegal recruitment among appellant and the
Goce spouses; and(3) there is no proof that appellant offered or promised overseas
employment to the complainants
Appellant counsel agreed to stipulate that she was neither licensed nor authorized to
recruit applicants for overseas employment. Appellant, however, denies that she was in any way
guilty of illegal recruitment. It is appellant's defensive theory that all she did was to
introduce complainants to the Goce spouses. Being a neighbor of said couple,
and owing to the fact that her son's overseas job application was processed and facilitated
by them, the complainants asked her to introduce t h e m t o s a i d s p o u s e s . A l l e g e d l y o u t
o f t h e g o o d n e s s o f h e r h e a r t , s h e c o m p l i e d w i t h t h e i r request.
ISSUE:

Whether or not Agustin’s act of introducing couple Goce to the complainants, falls within
the meaning of illegal recruitment and placement under Art. 13 (b) in relation to Art. 34 of the
Labor Code?
RULING:
The testimonial evidence shows that Agustin indeed committed acts constitutive of illegal
recruitment. Under said Code, recruitment and placement refers to any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit
or not; provided, that any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement. On
the other hand, referral is the act of passing along or forwarding of an applicant for employment
after an initial interview of a selected applicant for employment to a selected employer, placement
officer or bureau. All four prosecution witnesses testified that it was Agustin whom they initially
approached regarding their plans of working overseas. It was from her that they learned about
the fees they had to pay, as well as the papers that they had to submit. It was after they had
talked to her that they met the accused spouses who owned the placement agency.
As correctly held by the trial court, being an employee of the Goces, it was therefore
logical for appellant to introduce the applicants to said spouses, they being the owners of the
agency. As such, appellant was actually making referrals to the agency of which she was a part.
She was therefore engaging in recruitment activity.
There is illegal recruitment when one gives the impression of having the ability to send a
worker abroad. It is undisputed that appellant gave complainants the distinct impression that she
had the power or ability to send people abroad for work such that the latter were convinced to
give her the money she demanded in order to be so employed. Wherefore, the appealed
judgment is affirmed, with costs against accused-appellant.
Angeles Recruitment and Placement
IMELDA DARVIN VS. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES

G.R. No. 125044 July 13, 1998
Romero, J.
FACTS:
Imelda Darvin was charged of fraudulent representation to one Macaria Toledo to the
effect that she has the authority to recruit workers and employees for abroad and can facilitate
the necessary papers in connection thereof, did, then and there, willfully, unlawfully and
feloniously, hire, recruit, and promise a job abroad to Macaria Toledo, without first securing the
necessary license and permit from the Philippine Overseas Employment Administration (POEA) to
do so, thereby causing damage and prejudice to the aforesaid Macaria Toledo. Macaria Toledo,
shows that she met Imelda Darvin in the latter are residence through the introduction of their

common friends. In said meeting, Imelda Darvin allegedly convinced Toledo that by giving her
150,000 php, the latter can immediately leave for the United States without any appearance
before the U.S. embassy. After receiving the money, Darvin assured Toledo that she can leave
within a week. When after a week, there was no word from Darvin, Toledo filed a complaint
against Imelda Darvin. Imelda Darvin is neither licensed nor authorized to recruit workers for
overseas employment and she was accused of estafa and illegal recruitment. Imelda Darvin
testified that she used to be connected with Dale Travel Agency and that she was assisting
individuals in securing passports, visa and airline tickets. The Regional Trial Court found Imelda
Darvin guilty of the crime of simple illegal recruitment but acquitted her of the crime of estafa.
ISSUE:
Whether or not appellant is guilty beyond reasonable doubt of illegal recruitment
HELD:
The court found no sufficient evidence to prove that Imelda Darvin offered a job to private
Macaria Toledo. It is not clear that she gave the impression that she was capable of providing
Toledo work abroad. There is nothing to show that Imelda Darvin engaged in recruitment
activities. The Court can hardly rely on the bare allegations of private respondent that she was
offered employment abroad, nor on mere presumptions and conjectures. The appeal was granted
and the decision of the Court of Appeals is reversed and set aside. Imelda Darvin was acquitted
on ground of reasonable doubt.
Overseas Employment
Bprja, Merryl Angelic C. Cases under the Jurisdiction of POEA
EASTERN SHIPPING LINES, INC. VS. PHILIPPINE OVERSEAS EMPLOYMENT

ADMINISTRATION (POEA)
G.R. No. 76633 October 18, 1988
Cruz, J.
FACTS:
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accident in Tokyo, Japan. His widow sued for damages under Executive Order No. 797 and
Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the
complaint was cognizable not by the POEA but by the Social Security System and should have
been filed against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and
after considering the position papers of the parties ruled in favor of the complainant. The award
consisted of P180,000.00 as death benefits and P12,000.00 for burial expenses.
ISSUE:
Whether Saco was an overseas worker or a domestic worker.

RULING:
We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an
overseas employee of the petitioner at the time he met with the fatal accident in Japan in 1985.
Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined
as "employment of a worker outside the Philippines, including employment on board vessels
plying international waters, covered by a valid contract. A contract worker is described as "any
person working or who has worked overseas under a valid employment contract and shall include
seamen" or "any person working overseas or who has been employed by another which may be
a local employer, foreign employer, principal or partner under a valid employment contract and
shall include seamen." These definitions clearly apply to Vitaliano Saco for it is not disputed that
he died while under a contract of employment with the petitioner and alongside the petitioner's
vessel, the M/V Eastern Polaris, while berthed in a foreign country.
It is worth observing that the petitioner performed at least two acts which constitute
implied or tacit recognition of the nature of Saco's employment at the time of his death in 1985.
The first is its submission of its shipping articles to the POEA for processing, formalization and
approval in the exercise of its regulatory power over overseas employment under Executive Order
NO. 797. The second is its payment of the contributions mandated by law and regulations to the
Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of
providing social and welfare services to Filipino overseas workers."
It is not denied that the private respondent has been receiving a monthly death benefit
pension of P514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by
the Social Security System. In addition, as already observed, she also received a P5,000.00 burial
gratuity from the Welfare Fund for Overseas Workers. These payments will not preclude
allowance of the private respondent's claim against the petitioner because it is specifically
reserved in the standard contract of employment for Filipino seamen under Memorandum Circular
No. 2, Series of 1984.
Said provisions are manifestations of the concern of the State for the working class,
consistently with the social justice policy and the specific provisions in the Constitution for the
protection of the working class and the promotion of its interest.
Santos Cases under the Jurisdiction of POEA
PHILSA INTERNATIONAL PLACEMENT VS. SECRETARY OF LABOR

G.R. No. 103144. April 4, 2001
FACTS:
Private respondents, who were recruited by Philsa Intrnational Placement and Services
Corp. (Philsa) for employment in Saudi Arabi, were required to pay placement fees. After the
execution of their respective work contracts, private respondents left for Saudi Arabia. While in
Saudi Arabia, private respondents were allegedly made to sign a second contract which changed
some of the provisions of the original contract resulting in the reduction of some of their benefits
and privileges. Their foreign employer force them to sign a third contract which increased their

work hours from 48 hours to 60 hours a week without any corresponding increase in their basic
monthly salary. When they refused to sign the third contract, the services of private respondents
were terminated and they were repatriated to the Philippines. Upon their arrival, private
respondents demanded from Philsa the return of their placement fees and for the payment of
their salaries for the unexpired portion of their contract. When Philsa refused, they filed a case
before the POEA against Philsa on the grounds of illegal dismissal, payment of salary differentials,
illegal deductions/withholding of salaries, illegal exactions/refund of placement fees, and contract
substitution. Philsa filed a petition for certiorari from the Order dated November 25, 1991 issued
by public respondent Secretary of Labor and Employment. The November 25, 1991 Order affirmed
en toto the August 29, 1988 Order of the POEA which found petitioner liable for three (3) counts
of illegal exaction, two (2) counts of contract substitution and one count of withholding or unlawful
deduction from salaries of workers in POEA Case No. (L) 85-05-0370.
ISSUE:
Whether or not Philsa cannot be held liable for illegal exaction pursuant to POEA
Memorandum Circular No. II, Series of 1983, which enumerated the allowable fees which may be
collected from applicants for being void due to lack of publication
HELD:
Applying the doctrine in Tañada vs. Tuvera Case, POEA Memorandum Circular No. 2,
Series of 1983 must be declared ineffective as the same was never published or filed with the
National Administrative Register.
POEA Memorandum Order No. 2, Series of 1983 provides for the applicable schedule of
placement and documentation fees for private employment agencies or authority holders. Under
the said Order, the maximum amount which may be collected from prospective Filipino overseas
workers is P2,500.00. The said circular was apparently issued in compliance with the provisions
of Article 32 of the Labor Code which provides, as follows:
Article 32. Fees to be paid by workers. Any person applying with a

private fee-charging employment agency for employment
assistance shall not be charged any fee until he has obtained
employment through its efforts or has actually commenced
employment. Such fee shall be always covered with the approved
receipt clearly showing the amount paid. The Secretary of Labor
shall promulgate a schedule of allowable fees.
It is thus clear that the administrative circular under consideration is one of those
issuances which should be published for its effectivity, since its purpose is to enforce and
implement an existing law pursuant to a valid delegationi. Considering that POEA Administrative
Circular No. 2, Series of 1983 has not as yet been published or filed with the National
Administrative Register, the same is ineffective and may not be enforced.
Petitioner was absolved from the three (3) counts of illegal exaction as POEA
Administrative Circular No. 2, Series of 1983 could not be the basis of administrative sanctions
against petitioner for lack of publication. However, the Suprme Court affirmed the ruling of the
POEA and the Secretary of Labor and Employment that petitioner should be held administratively

liable for two (2) counts of contract substitution and one (1) count of withholding or unlawful
deduction of salary.
Evangelista Cases not in the Jurisdiction of POEA
PACIFIC ASIA OVERSEAS SHIPPING CORP. VS. NLRC

GR No. 76595 May 6, 1988
FACTS:
Pacific Asia is an overseas employment agency that provided Rances work abroad. Rances
was engaged by Gulf-East Ship Management a Radio Operator but due to insubordination
he was dismissed our months later. According to Rances he sued Gulf-East in Dubai and
the Gulf-East compromised with him that instead of paying him $9k+ they’ll just pay him
$5.5k plus his fare going home to the Philippines plus if in case Rances’ wife does not
agree with the amount of the allowance being sent to her via Pacific Asia, Rances is
entitled to have $1.5k more from pacific Asia.
Back in the Philippines, Rances was sued by Pacific Asia for acts unbecoming of a marine
officer (due in part to his insubordination to Pacific Asia’s client). Rances filed a
counterclaim for the $1.5k as his wife did not agree with the monthly allowance sent by
Pacific Asia to her. POEA ruled in favor of Pacific Asia but did not rule on Rances’
counterclaim. Rances then filed a separate case for his $1.5k claim. Rances produced the
original copy of the Dubai court decision awarding him the compromised amount of $5.5k.
The said court decision was in Arabic but it came with an English translation. It also came
with a certification from a certain Mohd Bin Saleh who was purportedly an Honorary
Consul for the Philippines. This time he won.
Pacific Asia appealed but its appeal was one day late after the reglementary period. POEA
denied the appeal. NLRC likewise denied the appeal.
ISSUE:
Whether or not Pacific Asia can be allowed to appeal.
HELD:
Yes. The delay was due to an excusable mistake. Apparently, there was a mistake in the
filing of the appeal when the new messenger honestly thought that the appeal was
supposed to be filed in NLRC Intramuros but actually it was supposed to be in POEA
Ortigas (that happened to be the last day as well, and when he was advised to go to
Ortigas, offices were already closed). Also, on the merits; POEA has no jurisdiction to
enforce foreign judgments. It’s the regular courts that have jurisdiction. The POEA is not
a court; it is an administrative agency exercising, inter alia, adjudicatory or quasi-judicial
functions. Further, Rances is not suing on the strength of an employer-employee
relationship between him and Gulf-East, but rather on the strength of a foreign judgment.

And, even if the POEA has jurisdiction over the matter, it cannot take in evidence the
alleged original copy o the court decision from Dubai as it was not properly authenticated
pursuant to the Rules of Court (Sect 25, 26 Rule 132). The translation was also not duly
authenticated. And an honorary consul is not authorized to make authentication of foreign
public records.
Abello Cases under the Jurisdiction of NLRC
MILLARES AND LAGDA VS. NLRC

GR No. 110524 July 29, 2002
KAPUNAN, J.
FACTS:
Douglas Millares was employed by ESSO International Shipping Company through its local
manning agency,Trans-Global MaritimeAgency, as a machinist he was promoted as Chief Engineer
which position Millares applied for a leave of absence for almost 1month. The Trans-Global,
approved the request for leave of absence. Millares wrote to the Operations Manager of Exxon
International Co.informing him of his intention to avail of the optional retirement plan under the
Consecutive Enlistment Incentive Plan (CEIP)considering that he had already rendered more than
twenty (20) years of continuous service. Esso International, denied the request for optional
retirement on the following grounds, to wit: (1) he was employed on a contractual basis; (2) his
contract of enlistment(COE) did not provide for retirement before the age of sixty (60) years; and
(3) he did not comply with the requirement for claimingbenefits under the CEIP, i.e., to submit a
written advice to the company of his intention to terminate his employment within thirty (30)days
from his last disembarkation date Millares requested for an extension of his leave of absence for
another 15days. TheCrewing Manager, Ship Group A, Trans-Global, wrote petitioner Millares
advising him that respondent Esso International "has corrected the deficiency in its manpower
requirements specifically in the Chief Engineer rank by promoting a First Assistant Engineer to
this position as a result of (his) previous leave of absence which expired last August 8, 1989. The
adjustment in saidrank was required in order to meet manpower schedules as a result of (his)
inability. Esso International advised Millares that his absence without leave, which is equivalent
to abandonment of his position,On the other hand Lagda was employed by Esso International as
wiper/oiler He was promoted as Chief Engineer in 1980, a position he continued to occupy until
his last COE expired on April 10, 1989.Lagda applied for a leave of absence from June 19,1989
up tothe whole month of August 1989. Then the Trans-Global’s approved petitioner Lagda’s leave
of absence from June 22, 1989 to July20, 1989[7] and advised him to report for re-assignment
on July 21, 1989. Lagda wrote a letter to Operations Manager of Esso International, through
Trans-Global’s President informing him of his intention to avail of the optional early retirement
plan in view of his twenty (20) years continuous service in the company Trans-Global denied
petitioner Lagda’s request for availment of theoptional early retirement scheme on the same
grounds upon which petitioner Millares’ request was denied.he requested for an extension of his
leave of absence up to August 26, 1989 and the same was approved. However Esso International
through Personnel Administrator,adise petitioner Lagda that in view of his "unavailability for
contractual sea service," he had beendropped from the roster of crew members effective
September 1, 1989. Millares and Lagda filed a complaint-affidavit, for illegal dismissal and

nonpayment of employee benefits against privaterespondents Esso International and Trans-

Global, before the POEA. POEA: dismissing the complaint for lack of merit. NLRC dismissing
petitioners’ appeal and denying their motion for new trial for lack of merit.
ISSUE:
WHETHER OR NOT THEY ARE REGULAR EMPLOYEES.
RULING:
Art. 280. Regular and casual employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is for the duration of the
season. An employment shall be deemed to be casual if it is not covered by the preceding
paragraph. Provided, That, any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists. The
primary standard to determine a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the
employer. The test is whether the former is usually necessary or desirable in the usual business
or trade of the employer The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Also,
if the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the 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 also considered regular, but only with respect to such activity
and while such activity exists.[it is undisputed that petitioners were employees of private
respondents until their services were terminated on September 1, 1989.They served in their
capacity as Chief Engineers, performing activities which were necessary and desirable in the
business of private respondents Esso International, a shipping company; and Trans-Global, its
local manning agency which supplies the manpower and crew requirements of Esso
International’s vessels. It is, likewise, clear that petitioners had been in the employ of private
respondents for 20 years. The records reveal that petitioners were repeatedly re-hired by private
respondents even after the expiration of their respective eight month contracts. Such repeated
re-hiring which continued for 20 years, cannot but be appreciated as sufficient evidence of the
necessity and indispensability of petitioners’ service to the private respondents’ business or trade.
Verily, as petitioners are by express provision of Article 280 of the Labor Code, considered regular
employees. There was no valid cause for the termination of petitioners. It will be recalled, that
petitioner Millares was dismissed for allegedly having "abandoned" his post; and petitioner Lagda,
for his alleged "unavailability for contractual sea service." However, that petitioners did not
abandon their jobs such as to justify the unlawful termination of their employment is borne out
by the records. To constitute abandonment, two elements must concur: (1) the failure to report
for work or absence without valid or justifiable reason; and (2) a clear intention to sever the
employer-employee relationship. Furthermore, the absence of petitioners was justified by the fact
that they secured the approval of respondents to take a leave of absence after the
termination.

Alarkon Cases under the Jurisdiction of NLRC
TIERRA INTERNATIONAL CONSTRUCTION CORPORATION VS. NLRC

G.R. No. 101825 April 2, 1996
FACTS:
 Petition for certiorari to set aside the decision of the National Labor Relations
Commission (Second Division) dated February 22, 1991, finding private respondents to
have been illegally dismissed, reversing for this purpose the contrary decision of the Labor
Arbiter, as well as the resolution of the NLRC denying reconsideration
 Private respondents Manuel S. Cruz, Raymundo G. Nepa and Rolando F. Cario were
recruited by petitioner Tierra International Construction Corporation
(Name, Assignment, Salary per month, and Date of Hiring)

o MANUEL CRUZ as transit mixer [US$375.00 12-01-88]
o RAYMUNDO NEPA as a truck driver [US$375.00 11-23-88]
o ROLANDO CARIO as a batch plant operator [US$500.00 11-20-88]
 For a construction project at Diego Garcia, British Indian Ocean Territory.
o CONTRACT: 12 MONTHS
 Private respondents had barely started work in the foreign assignment when they had a
disagreement with the plant supervisor, Engineer Terrance Filby.
o What exactly they had been ordered to do which they refused to execute - whether
to dig and excavate canals and to haul bags of cement, cement pipes, heavy
plumbing equipments and large electric cables, as they claimed, or only to do
household chores consisting of keeping the workplace clean
 The fact is that private respondents refused to work as ordered and for this,
they were dismissed on January 28, 1989 and sent back to the Philippines.
 The company offered to pay the final fees representing their salaries from December 26,
1988 to January 28, 1989, but private respondents demanded as well the payment of their
salaries corresponding to the balance of their employment contracts.
o Private respondents made their formal demand on petitioners on February 27,
1989, claiming that, in violation of their contract of employment, they had been
required to perform work not related to the jobs for which they had been
hired.
o demand was denied, private respondents filed on March 20, 1989 a complaint
for illegal dismissal with the POEA. They sought recovery of unpaid salaries
and salaries corresponding to the unexpired portion of their employment
contracts
 Petitioners denied the allegations of private respondents and claimed that the latter’s
dismissal was for cause.
o private respondents were merely requested by the plant supervisor, Terrance
Filby, to do housekeeping job since they were idle for the rest of the day.
o Because private respondents did not do what they had been ordered to do, they
were confronted by Filby. This led to an altercation between Filby and private
respondents

 According to petitioners, because private respondents were unyielding, they were given
three options: (1) apologize to their supervisors; (2) go back to work; or (3) repatriation.
Private respondents refused to go back to work and instead asked to be
repatriated. They were sent home on January 28, 1989.
 The POEA
o dismissed private respondents claim that they had been required to do work other
than that for which they had been hired.
o The POEA said no evidence had been presented to support this allegation
o But finding that private respondents had not been paid their salaries, it ordered
petitioners as follows:
 WHEREFORE, in view of the foregoing, respondents are hereby ordered,
jointly and severally, to pay complainants the following, in Philippine
Currency at the prevailing rate of exchange at the time of payment:
 Manuel S. Cruz - (US$551.34) - representing salaries for the period
December 26, 1988 to January 28, 1989;
 Raymundo G. Nepa - (US$559.46) - representing salaries for the
period December 26, 1988 to January 28, 1989;
 Rolando F. Cario - (US$766.48) - representing salaries for the
period December 26, 1988 to January 28, 1989.
 Private respondents appealed to the NLRC

o NLRC: found private respondents to have been illegally dismissed
o modified the decision of the POEA and ordered petitioners to pay private
respondents salaries corresponding to the unexpired portion of their contracts, in
addition to the salaries ordered paid to them by the POEA.
o Petitioners filed a motion for reconsideration but their motion was denied
ISSUE:
 W/N the NLRC gravely abused its discretion and/or acted in excess of its jurisdiction by
(1) deciding the wrong issue of the case; (2) not considering the evidence presented; (3)
rendering a decision which is not supported by substantial evidence; and (4) rendering a
decision not based on the evidence presented at the hearing or at least contained in the
record and disclosed to the parties.
 The question in this case boils down to whether private respondents were dismissed
because they had been required to dig canals and haul construction materials and they
refused to do so, or whether they had simply been asked to do housekeeping chores
which they refused to do because they thought it was menial work and beneath their
dignity to do
RULING:
 SUPREME COURT
o The NLRCs mistake was in attributing to the POEA, rather than to petitioners the
claim that the dismissal of private respondents was justified on the basis of these
provisions of the employment contract. But the mistake may be overlooked
because the fact is that the POEA sustained petitioners claim or
allegation based on these provisions of the contract.
o They were therefore fully justified in refusing to do the assignment.

o According to the report of the company’s Site Administration Officer, private

respondents were given three options: (1) to go back to work; (2) to apologize to
their supervisor; and (3) to be repatriated. What private respondents were
given were not really options. They were given the choice of apologizing for
their refusal to work and then resume working as ordered, or else, resign and be
sent back home
 Under the circumstances they really had no choice but to resign
 It was not pride or arrogance which made them refuse to work as ordered,
but the assertion of their right not to be made to work Outside of what
they had been hired to do.
 For asserting their right, private respondents should not be punished. We,
therefore, hold that private respondents dismissal was illegal and that for
this reason they are entitled to be paid their salaries corresponding to the
unexpired portion of their employment contract, in addition to their unpaid
salaries prior to their dismissal, as found by both the POEA and the NLRC
DOCTRINE
 The right of an employer to regulate all aspects of employment is recognized. Let there
be no doubt about this. This right, aptly called management prerogative, gives employers
the freedom to regulate, according to their discretion and best judgment, all aspects of
employment including work assignments, working methods, processes to be followed,
working regulations, transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of work. But the exercise of this right must be in keeping
with good faith and not be used as a pretext for defeating the rights of employees under
the laws and applicable contracts.
Cases under the Jurisdiction of NLRC
VINTA MARITIME CO. VS. NLRC AND BASCONCILLO

G.R. No. 113911 January 23, 1998
FACTS:
On April 20, 1987, Leonides C. Basconcillo, herein private respondent, filed a complaint
with the Philippine Overseas Employment Administration (POEA) Workers' Assistance and
Adjudication Office for illegal dismissal against Vinta Maritime Co., Inc. and Elkano Ship
Management, Inc., herein petitioners. In their answer, petitioners alleged that private respondent
was dismissed for his gross negligence and incompetent performance as chief engineer of the
M/V Boracay.
March 9, 1990, POEA Administrator Tomas D. Achacoso ruled that private respondent was
illegally dismissed. The NLRC affirmed the decision of the POEA.
ISSUE:
Whether the Commission erred in affirming the decision of the POEA.
RULING:

Using these legal criteria, we hold that private respondent was illegally dismissed. No
notice was ever given to him prior to his dismissal. This fact alone disproves petitioners' allegation
that "private respondent was given fair warning and enough opportunity to explain his side
[regarding] the incidents that led to his dismissal." These requisites cannot be replaced as they
are not mere technicalities, but requirements of due process to which every employee is entitled
to ensure that the employer's prerogative to dismiss is not exercised arbitrarily.
Illegally dismissed workers are entitled to the payment of their salaries corresponding to
the unexpired portion of their employment where the employment is for a definite period.
Conformably, the administrator and the Respondent Commission properly awarded private
respondent salaries for the period beginning April 9, 1987, the date of his illegal dismissal, until
February 18, 1988, the expiration of his contract.
WHEREFORE, the petition is hereby DISMISSED. The challenged Decision and Resolution are
AFFIRMED. Costs against petitioners.
RA 8042 Migrant Workers Act
MMA VS. NLRC
FACTS:
MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal

DIAMANTIDES MARITIME, INC. (DIAMANTIDES) assail the Decision of public respondent National
Labor Relations Commission dated 16 September 1996 as well as its Resolution dated 12
November 1996 affirming the Labor Arbiter's decision finding them guilty of illegal dismissal and
ordering them to pay respondent Wilfredo T. Cajeras salaries corresponding to the unexpired
portion of his employment contract, plus attorney's fees.
Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local
manning agent of petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned
and operated by DIAMANTIDES, for a contract period of ten (10) months with a monthly salary
of US$600.00, evidenced by a contract between the parties dated 15 June 1995. Cajeras started
work on 8 August 1995 but less than two (2) months later, or on 28 September 1995, he was
repatriated to the Philippines allegedly by mutual consent.
On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal
against petitioners with the NLRC National Capital Region Arbitration Branch alleging that he was
dismissed illegally, denying that his repatriation was by mutual consent, and asking for his unpaid
wages, overtime pay, damages, and attorneys fees.[1] Cajeras alleged that he was assigned not
only as Chief Cook Steward but also as assistant cook and messman in addition to performing
various inventory and requisition jobs. Because of his additional assignments he began to feel
sick just a little over a month on the job constraining him to request for medical attention. He
was refused at first by Capt. Kouvakas Alekos, master of the MV Prigipos, who just ordered him
to continue working. However a day after the ships arrival at the port of Rotterdam, Holland, on
26 September 1995 Capt. Alekos relented and had him examined at the Medical Center for
Seamen. However, the examining physician, Dr. Wden Hoed, neither apprised private respondent

about the diagnosis nor issued the requested medical certificate allegedly because he himself
would forward the results to private respondents superiors. Upon returning to the vessel, private
respondent was unceremoniously ordered to prepare for immediate repatriation the following day
as he was said to be suffering from a disease of unknown origin.
MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal
dismissal. They alleged that Cajeras approached Capt. Alekos on 26 September 1995 and
informed the latter that he could not sleep at night because he felt something crawling over his
body. Furthermore, Cajeras reportedly declared that he could no longer perform his duties and
requested for repatriation. The following paragraph in the vessel's Deck Log was allegedly entered
by Capt. Alekos, to wit: Private respondent was then sent to the Medical Center for Seamen at
Rotterdam where he was examined by Dr. Wden Hoed whose diagnosis appeared in a Medical
Report as paranoia and other mental problems.[5] Consequently, upon Dr. Hoeds
recommendation, Cajeras was repatriated to the Philippines on 28 September 1995.
WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of

complaint Wilfredo T. Cajeras as illegal and ordering respondents Marsaman Manning Agency,
Inc. and Diamantides Maritime, Inc. to jointly and severally pay complainant the sum of USD
5,100.00 or its peso equivalent at the time of payment plus USD 510.00 as 10% attorneys fees
it appearing that complainant had to engage the service of counsel to protect his interest in the
prosecution of this case.
1. The employment of the seaman shall cease upon expiration of the contract period indicated in
the Crew Contract unless the Master and the Seaman, by mutual consent, in writing, agree to an
early termination x x x x (underscoring ours).
Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to
the expiration of the stipulated period provided that the master and the seaman (a) mutually
consent thereto and (b) reduce their consent in writing.
The Labor Arbiter, rationalizing that the aforesaid law did not apply since it became effective only
one (1) month after respondent's overseas employment contract was entered into on 15 June
1995, simply awarded private respondent his salaries corresponding to the unexpired portion of
his employment contract, i.e., for 8.6 months. The NLRC affirmed the award and the Office of
the Solicitor General (OSG) fully agreed. But petitioners now insist that Sec. 10, RA 8042 is
applicable because although private respondents contract of employment was entered into before
the law became effective his alleged cause of action, i.e., his repatriation on 28 September 1995
without just, valid or authorized cause, occurred when the law was already in effect. Petitioners'
purpose in so arguing is to invoke the law in justifying a lesser monetary award to private
respondent, i.e., salaries for three (3) months only pursuant to the last portion of Sec. 10 as
opposed to the salaries for 8.6 months awarded by the Labor Arbiter and affirmed by the NLRC.
RULING:
The questioned Decision and Resolution dated 16 September 1996 and 12 November
1996, respectively, of public respondent National Labor Relations Commission are AFFIRMED.
Petitioners MARSAMAN MANNING AGENCY, INC., and DIAMANTIDES MARITIME, INC., are
ordered, jointly and severally, to pay private respondent WILFREDO T. CAJERAS his salaries for

the unexpired portion of his employment contract or USD$5,100.00, reimburse the latter's
placement fee with twelve percent (12%) interest per annum conformably with Sec. 10 of RA
8042, as well as attorney's fees of ten percent (10%) of the total monetary award. Costs against
petitioners.
RA 8042 Migrant Workers Act
ASIAN CENTER FOR CAREER AND EMPLOYMENT SERVICES VS. NLRC AND MEDIALES
G.R. No. 131656. October 12, 1998
FACTS:
Petitioner hired respondent IBNO MEDIALES to work as a mason in Jeddah, Saudi Arabia,
with a monthly salary of 1,200 Saudi Riyals (SR) with a term of contract for two (2) years, from
February 28, 1995 until February 28, 1997.
On May 26, 1996, respondent applied with petitioner for vacation leave with pay which he
earned after working for more than a year. His application for leave was granted. While en route
to the Philippines, his co-workers informed him that he has been dismissed from service. The
information turned out to be true.
On June 17, 1996, respondent filed a complaint with the labor arbiter for illegal dismissal,
non-payment of overtime pay, refund of transportation fare, illegal deductions, non-payment of
13th month pay and salary for the unexpired portion of his employment contract.
On March 17, 1997, the labor arbiter found petitioner guilty of illegal dismissal. In the
dispositive portion or the fallo, the Labor Arbiter ordered the respondent ACCESS and/or
ABDULLAH LELINA to pay the complainant the amount of SR 13,200 representing complainant’s
payment for the unexpired portion of his contract, refund of the illegality deducted amount less
P5,000.00, the legally allowed placement fee and attorney’s fees equivalent to ten percent (10%)
of the judgment award or the amount of SR 1,320.
It is noteworthy, however, that in the body of his decision, the labor arbiter applied Section
10 R.A. 8042,ii[2] the law relative to the protection of Filipino overseas-workers, and computed
private respondent’s salary for the unexpired portion of his contract as follows: SR1,200 x 3
months = SR3,600.
On appeal by petitioner, the NLRC affirmed the factual findings of the labor arbiter but
modified the appealed decision by DELETING the order of refund of excessive placement fee for
lack of jurisdiction.
Petitioner moved for reconsideration with respect to the labor arbiter’s award of SR13,200 in
the dispositive portion of the decision, representing respondent’s salary for the unexpired portion
of his contract invoking Section 10 R.A. 8042. Petitioner urged that its liability for respondent’s
salary is for only three (3) months. Petitioner claimed that it should pay only SR 3.600 (SR 1,200
x 3 months) for the unexpired portion of respondent’s employment and SR360 (10% of SR3,600)
for attorney’s fees.
The NLRC DENIED petitioner’s motion. It ruled that R.A. 8042 does NOT apply as
respondent’s employment which started in February 1995 occurred prior to its effectivity on July
15, 1995.
Hence, this petition for certiorari.

ISSUE:
Whether or not R.A. 8042 applies to the case of the respondent and in case of conflict
between the dispositive portion or the fallo and the body of the decision, which one shall prevail.
HELD:
As a rule, jurisdiction is determined by the law at the time of the commencement of the
action. In the case at bar, private respondent’s cause of action did not accrue on the date of his
date of his employment or on February 28, 1995. His cause of action arose only from the-time
he was illegally dismissed by petitioner from service in June 1996, after his vacation leave expired.
It is thus clear that R.A. 8042 which took effect a year earlier in July 1995 APPLIES to the case
at bar.
Under Section 10 of R.A. 8042, a worker dismissed from overseas employment without just,
valid or authorized cause is entitled to his salary for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.
In the case at bar, the unexpired portion of private respondent’s employment contract is
eight (8) months. Private respondent should therefore be paid his basic salary corresponding to
three (3) months or a total of SR3,600, which is the same computation was made by the labor
arbiter in the body of his decision. Despite said computation in the body of the decision, however,
the labor arbiter awarded higher sum (SR13,200) in the dispositive portion.
The general rule is that where there is a CONFLICT between the dispositive portion or the
fallo and the body of the decision, the FALLO CONTROLS. This rule rests on the theory that the
fallo is the final order while the opinion in the body is merely a statement ordering nothing.
However, where the inevitable conclusion from the body of the decision is so clear as to show
that there was a mistake in the dispositive portion, the body of the decision will prevail. As in
this case, the labor arbiter’s award of a higher amount in the dispositive portion was clearly an
error for there is nothing in the text of the decision which support the award of said higher
amount. Hence, the correct award to private respondent for the unexpired portion of his
employment contract is SR3,600.
The decision of the public respondent National Labor Relations Commission, dated October 14,
1997, is AFFIRMED with modifications: petitioner is ordered to pay private respondent IBNO
MEDIALES the peso equivalent of the amounts of SR3,600 for the unexpired portion of his
employment contract, and SR360 for attorney’s fees. No costs.
Martin RA 8042 Migrant Workers Act
ATHENA INTERNATIONAL MANPOWER SERVICES INC. VS. VILLANOS

G.R 151303 April 15, 2005
FACTS:

The petitioner is a domestic corporation engaged in recruitment and placement of workers

for overseas employment. Respondent applied to work overseas as caretaker thru petitioner.
Respondent applied to work overseas as caretaker thru petitioner. The petitioner asked for a
placement fee amounting to P100, 000 but the respondent begged to lessen the fee and it was
reduced to P94, 000 with the petitioner paying only P30, 000 and the remaining will be paid
through salary deductions. Upon arrival on Taiwan, he was assigned to a mechanical shop, owned
by Hsien, as a hydraulic installer and repairer for car lifters, instead of the job for which he was
hired. Barely a month after his placement, he was terminated by Hsien and received his salary
and instructed for departure to the Philippines. Upon arrival, the respondent went to petitioner’s
office and demanded for the reimbursement of P30, 000 but instead the petitioner gave him a
summary of expenses relating his deployment. Petitioner alleged that under the employment
contract, the respondent was to undergo a probationary period of forty (40) days. However, at
the job site, respondent was found to be unfit for his work, thus he resigned from his employment
and requested for his repatriation signing a statement to the effect. The Labor Arbiter rendered
a decision holding petitioner Wei Yu Hsien solidary liable for the wages representing the unserved
portion of the employment contract, the amount unlawfully deducted from respondent’s monthly
wage, moral damages, exemplary damages and attorney’s fees. On appeal, the NLRC reversed
the Labor was not all dismissed, much less illegally.
ISSUE:
Whether or not the respondent voluntarily resign or was illegally dismissed?
RULING:
An employee voluntarily resigns when he finds himself in a situation where he believes

personal reasons cannot be surrendered in favor of the exigency of the service; therefore, he has
no other choice but to disassociate himself from his employment. In this case, the respondent
maintain that petitioner did not explain why he was unqualified nor inform of any qualifications
needed for the job prior to his deployment as mandated by Article 281(9) of the Labor Code and
failed to prove the legality of the dismissal, regardless the fact that the burden of proof lies on
the employment and requirement agency.
Death and Other Benefits, Basis of Compensation
EASTERN SHIPPING LINES VS. POEA
G.R. No. 76633 October 18, 1988
FACTS:
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in
Tokyo, Japan. His widow sued for damages under Executive Order No. 797 and Memorandum
Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the complaint was
cognizable not by the POEA but by the Social Security System and should have been filed against
the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the
position papers of the parties ruled in favor of the complainant. The award consisted of
P180,000.00 as death benefits and P12,000.00 for burial expenses.

ISSUE:
Whether Saco was an overseas worker or a domestic worker.
RULING:
We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas
employee of the petitioner at the time he met with the fatal accident in Japan in 1985.
Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined
as "employment of a worker outside the Philippines, including employment on board vessels
plying international waters, covered by a valid contract. A contract worker is described as "any
person working or who has worked overseas under a valid employment contract and shall include
seamen" or "any person working overseas or who has been employed by another which may be
a local employer, foreign employer, principal or partner under a valid employment contract and
shall include seamen." These definitions clearly apply to Vitaliano Saco for it is not disputed that
he died while under a contract of employment with the petitioner and alongside the petitioner's
vessel, the M/V Eastern Polaris, while berthed in a foreign country.
It is worth observing that the petitioner performed at least two acts which constitute implied or
tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is
its submission of its shipping articles to the POEA for processing, formalization and approval in
the exercise of its regulatory power over overseas employment under Executive Order NO.
797. The second is its payment of the contributions mandated by law and regulations to the
Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of
providing social and welfare services to Filipino overseas workers."
It is not denied that the private respondent has been receiving a monthly death benefit pension
of P514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by the Social
Security System. In addition, as already observed, she also received a P5,000.00 burial gratuity
from the Welfare Fund for Overseas Workers. These payments will not preclude allowance of the
private respondent's claim against the petitioner because it is specifically reserved in the standard
contract of employment for Filipino seamen under Memorandum Circular No. 2, Series of 1984.
Said provisions are manifestations of the concern of the State for the working class, consistently
with the social justice policy and the specific provisions in the Constitution for the protection of
the working class and the promotion of its interest.
Mirande Death and Other Benefits, Basis of Compensation
INTER ORIENT MARITIME ENTERPRISES INC. ET. AL VS. NLRC
Montero Death and Other Benefits, Basis of Compensation

NORSE MANAGEMENT CO. (PTE) and PACIFIC SEAMEN SERVICES, INC. VS.
ANATIONAL SEAMEN BOARD, HON. CRESCENCIO M. SIDDAYAO, OSCAR M. TORRES,
REBENE C. CARRERA and RESTITUTA C. ABORDO
G.R. No. L-54204 September 30, 1982
RELOVA, J.
FACTS:
Napoleon B. Abordo, the deceased husband of private respondent Restituta C. Abordo,

was the Second Engineer of M.T. "Cherry Earl" when he died from an apoplectic stroke in the
course of his employment with petitioner NORSE MANAGEMENT COMPANY (PTE). The M.T.
"Cherry Earl" is a vessel of Singaporean Registry. In her complaint for compensation benefits filed
before the National Seamen Board, private respondent alleged that the amount of compensation
due her from petitioners should be based on the law where the vessel is registered. Petitioners
contend that the law of Singapore should not be applied in this case because the National Seamen
Board cannot take judicial notice of the Workmen's Insurance Law of Singapore instead must be
based on Board’s Memeorandum Circular No. 25. Ministry of Labor and Employment ordered the
petitioner to pay jointly and severally the private respondent. Petitioner appealed to the Ministry
of Labor but same decision. Hence, this petition.
ISSUE:
Whether or not the law of Singapore ought to be applied in this case.
RULING:
The SC denied the petition. It has always been the policy of this Board, as enunciated in
a long line of cases, that in cases of valid claims for benefits on account of injury or death while
in the course of employment, the law of the country in which the vessel is registered shall be
considered. In Section 5(B) of the Employment Agreement between petitioner and respondent’s
husband states that In the event of illness or injury to Employee arising out of and in the course
of his employment and not due to his own willful misconduct, EMPLOYER will provide employee
with free medical attention. If such illness or injury incapacitates the EMPLOYEE to the extent the
EMPLOYEE's services must be terminated as determined by a qualified physician designated by
the EMPLOYER and provided such illness or injury was not due in part or whole to his willful act,
neglect or misconduct compensation shall be paid to employee in accordance with and subject to
the limitations of the Workmen's Compensation Act of the Republic of the Philippines or the
Workmen's Insurance Law of registry of the vessel whichever is greater. Finally, Article IV of the
Labor Code provides that "all doubts in the implementation and interpretation of the provisions
of this code, including its implementing rules and resolved in favor of labor.
Mortel Death and Other Benefits, Basis of Compensation
NFD INTERNATIONAL MANNING AGENTS VS. NLRC ET. AL

G.R. No. 116629 January 16, 1998
Puno, J.
FACTS:

Petitioner NFD International Manning Agents, Inc., a domestic manning corporation,

engaged the services of Eduardo P. Misada and Enrico A. Envidiado to work for petitioner Barber
International A/S (Barber), a Norwegian shipping company.
Private respondent Nelia Misada and Himaya Envidiado received notices that their
husband, Eduardo Misada, and Enrico Evidiado, respectively, died on board the vessel. As heirs
of the deceased seamen, private respondents, in their behalf and in behalf of their minor children,
filed for death compensation benefits Their claims were denied by petitioners. Private respondents
filed separate complaints before the POEA Adjudication Office. Petitioners claimed that private
respondents are not entitled to death benefits on the ground that the seamen's deaths were due
to their own willful act. They alleged that the deceased were among three (3) Filipino seamen
who implanted fragments of reindeer horn in their respective sexual organs. The POEA
Administrator dismissed the case for lack of merit.
Private respondents appealed to respondent Commission. Then respondent Commission

reversed the POEA Administrator and ordered petitioners to pay private respondents.
ISSUE:
Whether respondent Commission gravely erred in finding that the deaths of the two
seamen, did not come as a result of their willful and deliberate act.
RULING:
In the instant case, petitioners presented the medical reports of Misada and Envidiado,
and the written statements of three (3) officers of the vessel taken during a special inquiry
conducted after their deaths. The testimonies of the officers are insufficient to prove the fact that
Misada's and Envidiado's deaths were caused by self-inflicted injuries. The testimonies were given
by people who merely observed and narrated the circumstances surrounding the deaths of the
two seamen, are at best, hearsay. Moreover, the officers did not have the competence to make
a medical finding as to the actual cause of the deaths. No autopsy report was presented to
corroborate their testimonies.
As correctly found by respondent Commission, petitioners' evidence insufficiently proves
the fact that the deaths of the two seamen were caused by their own willful and deliberate act.
And even if the seamen implanted fragments of reindeer horn in their sex organs, the evidence
does not substantially prove that they contracted tetanus as a result of the unsanitary surgical
procedures they performed on their bodies. Neither does the evidence show that the tetanus was
the direct cause of their deaths.
Navarro Overseas Compensation Benefits in Dollars
PHILIPPINE INTERNATIONAL SHIPPING CORPORATION VS. NLRC

136 SCRA 605 27 May 1985
Alampay, J.
FACTS:

Brigido Samson, worked as 2nd Engineer on its vessel the M/V Asean Knowledge, filed a
case against petitioner Philippine International Shipping Corp claiming disability compensation
benefits and hospitalization expenses under employment contract before the National Seaman's
Board (NSB). On April 2, 1981, a decision was rendered on by the Executive Director of the NSB,
ordering petitioner herein to pay complainant the sum of US $3,800.00 or its equivalent in
Philippine Currency as disability compensation benefits. Not satisfied with the foregoing judgment,
petitioner appealed to the NLRC. During the pendency of said appeal, petitioner offered
P18,000.00 and was received by private respondent and executed a “release” document. The
appealed decision was affirmed by the NLRC. During the scheduled hearing, private respondent
maintained that the P18,000.00 was accepted by him only as partial payment of the award since
he badly needed the money for his on-going medical treatment. Petitioner herein, however,
insisted that said amount constituted full payment of the award. On June 17, 1982, an Order was
issued by the Board claiming that the payment of P18,000 to complainant do not appear to be
full compliance of the decision award rendered. The sum of P18,000.00 paid to complainant would
constitute only as partial compliance with the said decision but not a waiver of the balance
including the attorney's fees. An instant petition for certiorari, with petitioner attributing to the
NLRC the commission of the alleged error that respondent NLRC erred in recognizing a clearly
illegal decision, because said decision orders payment in the dollar standard in violation of law.
ISSUE:
Whether or not ordering payment of the award using the dollar standard is in violation of
law.
RULING:
No. While it is true that Republic Act No. 529 makes it unlawful to require payment of
domestic obligations in foreign currency, this particular statute is not applicable to the case at
bar. A careful reading of the decision rendered by the Executive Director of the NSB dated April
2, 1981 and which led to the Writ of Execution protested to by petitioner, will readily disclose that
the award to the private respondent does not compel payment in dollar currency but in fact
expressly allows payment of "its equivalent in Philippine currency." In the case of MRR Yard Crew
Union versus Philippine National Railways, 72 SCRA 88 (1976), this Court held that the fact that
the employee "has signed a satisfaction receipt does not result in waiver; the law does not
consider as valid any agreement to receive less compensation than that the worker is entitled to
recover." Moreover, as pointed out by public respondent, without any subsequent controversy
interposed by petitioner, the fixing of the award in dollars was based on the parties employment
contract, stipulating wages and benefits in dollars since private respondent was engaged in an
overseas seaman on board petitioner's foreign vessel. Nonetheless, it is worth noting that despite
the execution of said release document, the petitioner did not file any motion to dismiss its appeal
or to have said appealed case declared terminated due to the alleged satisfaction of the judgment.
This omission negates an inference that the parties had actually agreed that the payment of the
P18,000.00 would be equivalent to a full satisfaction of the award and/or a waiver of the balance
on the award. Wherefore, the petition in this case is hereby DISMISSED for lack of merit. Costs
against petitioner.
Article 20: National Seamen Board

VIRJEN SHIPPING AND MARINE SERVICES VS. NLRC
FACTS:
Certain seamen entered into a contract of employment for a 12-month period. Some three
months after the commencement of their employment, the seamen demanded a 50 % increase
of their salaries and benefits. The seamen demanded this increase while their vessel was en route
to a port in Australia controlled by thye International Transport Workers’ Federation (ITF), a
militant international labor organization with affiliates in different ports of the world, which
reputedly can tie a vessel in a port by preventing its loading and unloading unless it paid its
seamen their prescribed ITF rates.
In reply, the agent of the owner of the vessel agreed to pay a 25% increase, but when
the vessel arrived in Japan shortly afterwards, the seamen were repatriated to Manila and their
contract terminated. There is no showing that the Seamen were given the opportunity to at least
comment for the cancellation of their contracts, although they had served only three (3) out of
the twelve (12) months' duration of their contracts.
The private respondents filed a complaint for illegal dismissal and non-payment of earned
wages with the National Seamen Board (NSB). The Vir-jen Shipping and Marine Services Inc. in
turn filed a complaint for breach of contract and recovery of excess salaries and overtime pay
against the private respondents. On July 2, 1980, the NSB rendered a decision declaring that the
seamen breached their employment contracts when they demanded and received from Vir-jen
Shipping wages over and above their contracted rates. The dismissal of the seamen was declared
legal and the seamen were ordered suspended.
The seamen appealed the decision to the NLRC which reversed the decision of the on the
ground that the termination of the contract by the petitioner was without valid cause. Hence, the
petition.
ISSUE:
Whether or not the findings of the NSB is more credible than the NLRC that the seamen
did not violate their contract.
RULING:
The decision sought to be reconsidered appears to be a deviation from the Court's

decision, speaking through the First Division, in Wallem Shipping, Inc. v. Hon. Minister of Labor
(102 SCRA 835). Faced with two seemingly conflicting resolutions of basically the same issue by
its two Divisions, the Court. therefore, resolved to transfer the case to the Court en banc.
We sustain the decision of the respondent National labor Relations Commission.
The contention that manning industries in the Philippines would not survive if the instant
case is not decided in favor of the petitioner is not supported by evidence. The Wallem case was
decided on February 20, 1981. There have been no severe repercussions, no drying up of
employment opportunities for seamen, and none of the dire consequences repeatedly emphasized
by the petitioner. Why should Vir-jen be all exception?

Filipino seamen are admittedly as competent and reliable as seamen from any other
country in the world. Otherwise, there would not be so many of them in the vessels sailing in
every ocean and sea on this globe. It is competence and reliability, not cheap labor that makes
our seamen so greatly in demand. Filipino seamen have never demanded the same high salaries
as seamen from the United States, the United Kingdom, Japan and other developed nations. But
certainly they are entitled to government protection when they ask for fair and decent treatment
by their employer.-, and when they exercise the right to petition for improved terms of
employment, especially when they feel that these are sub-standard or are capable of
improvement according to internationally accepted rules. In the domestic scene, there are
marginal employers who prepare two sets of payrolls for their employees — one in keeping with
minimum wages and the other recording the sub-standard wages that the employees really
receive, The reliable employers, however, not only meet the minimums required by fair labor
standards legislation but even go way above the minimums while earning reasonable profits and
prospering. The same is true of international employment. There is no reason why this Court and
the Ministry of Labor and. Employment or its agencies and commissions should come out with
pronouncements based on the standards and practices of unscrupulous or inefficient shipowners,
who claim they cannot survive without resorting to tricky and deceptive schemes, instead of
Government maintaining labor law and jurisprudence according to the practices of honorable,
competent, and law-abiding employers, domestic or foreign.
Prescinding from the above, we now hold that neither the National Seamen Board nor the
National Labor Relations Commission should, as a matter of official policy, legitimize and enforce
cubious arrangements where shipowners and seamen enter into fictitious contracts similar to the
addendum agreements or side contracts in this case whose purpose is to deceive. The Republic
of the Philippines and its ministries and agencies should present a more honorable and proper
posture in official acts to the whole world, notwithstanding our desire to have as many job
openings both here and abroad for our workers. At the very least, such as sensitive matter
involving no less than our dignity as a people and the welfare of our workingmen must proceed
from the Batasang Pambansa in the form of policy legislation, not from administrative rule making
or adjudication
Decision:
WHEREFORE, the motions for reconsideration are hereby GRANTED. The petition is
DISMISSED for lack of merit. The decision of the National Labor Relations Commission is
AFFIRMED. No costs. SO ORDERED.
Pascasio Article 20: National Seamen Board
SUZARA VS. JUDGE BENIPAYO, MAGSAYSAY LINES, AND NLRC

G.R. No. L-57999 August 15, 1989
Gutierrez, Jr., J.
FACTS:
The cases at bar involve a group of Filipino seamen who were declared by the defunct
National Seamen Board (NSB) guilty of breaching their employment contracts with the private
respondent because they demanded, upon the intervention and assistance of a third party, the

International Transport Worker's Federation (ITF), the payment of wages over and above their
contracted rates without the approval of the NSB. The petitioners were ordered to reimburse the
total amount of US$91,348.44 or its equivalent in Philippine Currency representing the said over-
payments and to be suspended from the NSB registry for a period of three years.
That on different dates in April 1978 respondents (petitioners) joined the M/V "GRACE
RIVER"; that on or about October 30, 1978 aforesaid vessel, with the respondents on board,
arrived at the port of Vancouver, Canada; that at this port respondent received additional wages
under rates prescribed by the Intemational Transport Worker's Federation (ITF) in the total
amount of US$98,261.70. When the vessel reached Manila, the private respondent demanded
from the petitioners the "overpayments" made to them in Canada. As the petitioners refused to
give back the said amounts, charges were filed against some of them with the NSB and the
Professional Regulations Commission.
ISSUE:
Whether or not the petitioners are entitled to the amounts they received from the private
respondent representing additional wages as determined in the special agreement
RULING:
The International Labor Organization (ILO) set the minimum basic wage of able seamen
at US$187.00 as early as October 1976, it was only in 1979 that the respondent NSB issued Memo
Circular No. 45, enjoining all shipping companies to adopt the said minimum basic wage. It was
correct for the respondent NSB to state in its decision that when the petitioners entered into
separate contracts between 1977-1978, the monthly minimum basic wage for able seamen
ordered by NSB was still fixed at US$130.00. However, it is not the fault of the petitioners that
the NSB not only violated the Labor Code which created it and the Rules and Regulations
Implementing the Labor Code but also seeks to punish the seamen for a shortcoming of NSB
itself.
Article 21(c) of the Labor Code, when it created the NSB, mandated the Board to "(O)btain
the best possible terms and conditions of employment for seamen.
Section 18 of Rule VI of the same Rules and Regulations provides:

Sec. 18. Basic minimum salary of able-seamen. — The basic minimum salary
of seamen shall be not less than the prevailing minimum rates established by
the International Labor Organization or those prevailing in the country whose
flag the employing vessel carries, whichever is higher. However, this provision
shall not apply if any shipping company pays its crew members salaries above
the minimum herein provided."
It took three years for the NSB to implement requirements which, under the law, they
were obliged to follow and execute immediately. During those three years, the incident in
Vancouver happened. The terms and conditions agreed upon in Vancouver were well within ILO
rates even if they were above NSB standards at the time. The sanctions applied by NSB and
affirmed by NLRC are moreover not in keeping with the basic premise that this Court stressed in
the Vir-Jen Shipping case (supra) that the Ministry now the Department of Labor and Employment
and all its agencies exist primarily for the workingman's interest and the nation's as a whole.

Invalid Side Agreement
CHAVEZ VS. BONTO-PEREZ, RAYALA ET., AL

G.R. No. 109808
FACTS:
Petitioner entered into a standard employment contract for overseas employment as an

entertainer in Japan. The contract, as approved by POEA, had a duration of two to six months
and the stipulated monthly compensation was $1500. However, a side agreement was entered
into by Petitioner with the foreign employer through her local manager. Such agreement
stipulated a lesser compensation and other deductions. Petitioner pushed through with her foreign
employment and worked for six months. Two years upon her return, Petitioner filed a complaint
of underpayment of wages.
ISSUE:
Whether or not the side agreement entered into by the petitioner superseded the
employment contract previously entered into?
RULING
It was expressly stated in the employment contract that any changes or alterations made
to any part of said contract without prior approval from the POEA shall be null and void
notwithstanding the fact the employee had agreed to said contract.
Regulations of Recruitment and Placement Activities
Sandoval Cases under the jurisdiction of the POEA
FINMAN GENERAL ASSURANCE VS. INNOCENCIO

G.R. No. 90273-75 November 15, 1989
FACTS:
Pan Pacific Overseas is a recruitment agency which offers jobs abroad duly registered with
the POEA. Finman General is acting as Pan Pacific’s surety (as required by POEA rules and Art.
31 of the Labor Code). Pan Pacific was sued by William Inocencio and 3 others for alleged violation
of Article 32 and 34 of the Labor Code. Inocencio alleged that Pan Pacific charged and collected
fees but failed to provide employment abroad. POEA ruled in favor of Inocencio et al and had
impleaded Finman (upon request of Inocencio) in the complaint as well (Pan Pacific changed
business address without prior notice to POEA). The Labor Secretary affirmed POEA’s ruling.

Finman General asserts that it should not be impleaded in the case because it is not a party to
the contract between Pan Pacific and Inocencio et al.
ISSUE:
Whether or not Finman General is solidarily liable in the case at bar.
HELD:
Yes. Since Pan Pacific had thoughtfully refrained from notifying the POEA of its new
address and from responding to the complaints, petitioner Finman may well be regarded as an
indispensable party to the proceedings before the POEA. Whether Finman was an indispensable
or merely a proper party to the proceedings, the SC held that the POEA could properly implead it
as party respondent either upon the request of Inocencio et al or motu propio. Such is the
situation under the Revised Rules of Court. Finman General is solidarily liable. Under Section 176
of the Insurance Code, as amended, the liability of a surety in a surety bond (Finman) is joint
and several with the principal obligor (Pan Pacific).
Further, Article 31 of the Labor Code provides:

Art. 31. Bonds. — All applicants for license or authority shall post such cash
and surety bonds as determined by the Secretary of Labor to guarantee
compliance with prescribed recruitment procedures, rules and regulations,
and terms and, conditions of employment as appropriate.
The Secretary of Labor shall have the exclusive power to determine, decide, order or direct
payment from, or application of, the cash and surety bond for any claim or injury covered and
guaranteed by the bonds.
Cases under the jurisdiction of the POEA
EASTERN ASSURANCE AND SURETY CORP. VS. SECRETARY OF LABOR

GR No L-79436-50 January 17, 1990
FACTS:
In connection with the application with the Philippine Overseas Employment
Administration (POEA) of J & B Manpower Specialist, Inc. for a license to engage in business as
a recruitment agency, a surety bond was filed on January 2, 1985 by the applicant and the Eastern
Assurance and Surety Corporation, herein petitioner, in virtue of which they both held themselves
—
. . . firmly bound unto (said) Philippine Overseas Employment Administration, Ministry of
Labor in the penal sum of PESOS ONE HUNDRED FIFTY THOUSAND ONLY . . .
(Pl50,000.00) for the payment of which will and truly to be made, . . . (they bound
themselves, their) heirs, executors, administrators, successors and assigns, jointly and
severally . .
The bond stipulated that:

a) it was "conditioned upon the true and faithful performance and observance of the . . .
principal (J & B Manpower Specialist, Inc.) of its duties and obligations in accordance with
all the rules and regulations promulgated by the Ministry of Labor Philippine Overseas
Employment Administration and with the terms and conditions stipulated in the License;
b) the liability of the . . . Surety (petitioner) shall in no case exceed the sum of PESOS
ONE HUNDRED FIFTY THOUSAND (P150,000.00) ONLY, PHILIPPINE CURRENCY;
c) notice to the Principal is also a notice to the Surety; and
d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986 and this bond shall be
automatically cancelled ten (10) days after its expiration and the surety shall not be liable
for any claim not discovered and presented to it in writing within said period of . . . from
expiration and the obligee hereby expressly waives the rights to file any court action
against the Surety after termination of said period of . . . . above cited.
ISSUE:
EASCO essentially disclaimed liability on the ground that the claims were not expressly
covered by the bond, that POEA had no jurisdiction to order forfeiture of the bond, that some of
the claims were paid beyond or prior to the period of effectivity of the bond.
RULING:
EASCO's liability for the refund, jointly and severally with its principal, was limited to 19
named complainants (in contrast to verdicts of the POEA and the Deputy Minister which both
ordered payment to no less than 33 complainants) and was correspondingly reduced from
P308,751.75 and US $ 400.00 to the aggregate amount of P 140,817.75.
The penalties of suspension and cancellation of license or authority are prescribed for
violations of the above quoted provisions, among others. And the Secretary of Labor has the
power under Section 35 of the law to apply these sanctions, as well as the authority, conferred
by Section 36, not only, to "restrict and regulate the recruitment and placement activities of all
agencies," but also to "promulgate rules and regulations to carry out the objectives and implement
the provisions" governing said activities. Pursuant to this rule-making power thus granted, the
Secretary of Labor gave the POEA "on its own initiative or upon filing of a complaint or report or
upon request for investigation by any aggrieved person, . . . (authority to) conduct the necessary
proceedings for the suspension or cancellation of the license or authority of any agency or entity"
for certain enumerated offenses including —
1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or
services, or any fee or bond in excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other relevant laws,
rules and regulations.
The Administrator was also given the power to "order the dismissal of the case or the
suspension of the license or authority of the respondent agency or contractor or recommend to
the Minister the cancellation thereof."
EASCO's claim that it had not been properly served with summons as regards a few of the
complaints must be rejected, the issue being factual, and the Court having been cited to no grave

error invalidating the respondent Secretary's conclusion that summons had indeed been duly
served.
EASCO's half-hearted argument that its liability should be limited to the maximum amount
set in its surety bond, i.e., P150,000.00, is palpably without merit, since the aggregate liability
imposed on it, P140,817.75, supra, does not in fact exceed that limit.
Decision:
WHEREFORE, the petition is DISMISSED for lack of merit, and this decision is declared to be
immediately executory. Costs against petitioner.
Tejares Cases under the jurisdiction of the POEA
HORTENCIA SALAZAR VS. HON. TOMAS D. ACHACOSO and FERDIE MARQUEZ

G.R. No. 81510 March 14, 1990
SARMIENTO, J.:
FACTS:
Rosalie Tesoro of Pasay City, in a sworn statement filed with the Philippine Overseas
Employment Administration (POEA for brevity) charged petitioner Hortencia Salazar. Public
respondent Atty. Ferdinand Marquez sent petitioner a telegram directing him to appear to the
POEA regarding the complaint against him. On the same day, after knowing that petitioner had
no license to operate a recruitment agency, public respondent Administrator Tomas Achacoso
issued a Closure and Seizure Order No. 1205 to petitioner. It stated that there will a seizure of
the documents and paraphernalia being used or intended to be used as the means of committing
illegal recruitment, it having verified that petitioner has— (1) No valid license or authority from
the Department of Labor and Employment to recruit and deploy workers for overseas
employment; (2) Committed/are committing acts prohibited under Article 34 of the New Labor
Code in relation to Article 38 of the same code. A team was then tasked to implement the said
Order. The group, accompanied by mediamen and Mandaluyong policemen, went to petitioner’s
residence. They served the order to a certain Mrs. For a Salazar, who let them in. The team
confiscated assorted costumes. Petitioner filed with POEA a letter requesting for the return of the
seized properties, because she was not given prior notice and hearing. The said Order violated
due process. She also alleged that it violated sec 2 of the Bill of Rights, and the properties were
confiscated against her will and were done with unreasonable force and intimidation.
ISSUE:
May the Philippine Overseas Employment Administration (or the Secretary of Labor) validly
issue warrants of search and seizure (or arrest) under Article 38 of the Labor Code?
RULING:
Under the new Constitution, “. . . no search warrant or warrant of arrest shall issue except
upon probable cause to be determined personally by the judge after examination under oath or

affirmation of the complainant and the witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be seized”. Mayors and prosecuting officers
cannot issue warrants of seizure or arrest. The Closure and Seizure Order was based on Article
38 of the Labor Code. The Supreme Court held, “We reiterate that the Secretary of Labor, not
being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go
through the judicial processThe power of the President to order the arrest of aliens for deportation
is, obviously, exceptional. It (the power to order arrests) cannot be made to extend to other
cases, like the one at bar. Under the Constitution, it is the sole domain of the courts.”
Furthermore, the search and seizure order was in the nature of a general warrant. The court held
that the warrant is null and void, because it must identify specifically the things to be seized. To
that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no
force and effect.
Alquiza Article 34: Prohibited Practice
SORIANO VS OFFSHORE SHIPPING AND MARKETING CORPORATION

GR 78409 September 14, 1989
FERNAN, C.J.
FACTS:
Petitioner Norberto Soriano, a licensed Second Marine Engineer, sought employment and
was hired by private respondent Knut Knutsen O.A.S. Noberto was hired to work as Third Marine
Engineer on board Knut Provider" with a salary of US$800.00 a month on a conduction basis for
a period of (15) days. He admitted that the term of the contract was extended to six (6) months
by mutual agreement on the promise of the employer to the petitioner that he will be promoted
to Second Engineer. Due to the alleged failure of private respondent-employer to fulfill its promise
to promote petitioner to the position of Second Engineer and for the unilateral decision to reduce
petitioner's basic salary from US$800.00 to US$560.00. Petitioner was made to shoulder his return
airfare to Manila.
In the Philippines, petitioner filed with the POEA, a complaint against private respondent
for payment of salary differential, overtime pay, unpaid salary for November, 1985 and refund of
his return airfare and cash bond allegedly in the amount of P20,000.00.
In resolving aforesaid case, the OIC of the POEA found that petitioner-complainant's total monthly
emolument is US$800.00 inclusive of fixed overtime as shown and proved in the Wage Scale
submitted to the Accreditation Department of its Office which would therefore not entitle
petitioner to any salary differential; that the version of complainant that there was in effect
contract substitution has no grain of truth because said corrections or alterations are in conformity
with the Wage Scale duly approved by the POEA.
ISSUE:
WON an alteration of the employment contract without the approval of the Department
of Labor is a serious violation of law
RULING:

Article 34 paragraph (i) of the Labor Code reads: Prohibited Practices. — It shall be
unlawful for any individual, entity, licensee, or holder of authority:
xxxx
i. To substitute or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and including the
period of expiration of the same without the approval of the Department of Labor.
Both the Labor Arbiter and the NLRC correctly analyzed the questioned annotations as not
constituting an alteration of the original employment contract but only a clarification thereof which
by no stretch of the imagination can be considered a violation of the above-quoted law. This
Court ruled that as a general proposition, exceptions from the coverage of a statute are strictly
construed. But such construction nevertheless must be at all times reasonable, sensible and fair.
Hence, to rule out from the exemption amendments set forth, although they did not materially
change the terms and conditions of the original letter of credit, was held to be unreasonable and
unjust, and not in accord with the declared purpose of the Margin Law.
The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both
parties. The alleged amendment served to clarify what was agreed upon by the parties and
approved by the Department of Labor.
The rule that there should be concern, sympathy and solicitude for the rights and welfare
of the working class, is meet and proper. Doubts reasonably arising from the evidence or in the
interpretation of agreements and writings should be resolved in the former's favor, is not an
unreasonable or unfair rule. But to disregard the employer's own rights and interests solely on
the basis of that concern and solicitude for labor is unjust and unacceptable.
Finally, it is well-settled that factual findings of quasi-judicial agencies like the National
Labor Relations Commission which have acquired expertise because their jurisdiction is confined
to specific matters are generally accorded not only respect but at times even finality if such
findings are supported by substantial evidence.
Biyo Article 35: Suspension and/or Cancellation of License or Authority
CATAN vs. NLRC

GR 77279 15 April 1988
FACTS:
Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group,
a Saudi Arabian firm, recruited private respondent to work in Saudi Arabia as a steelman. The
contract was automatically renewed when private respondent was not repatriated by his Saudi
employer but instead was assigned to work as a crusher plant operator. While he was working as
a crusher plant operator, private respondent's right ankle was crushed under the machine he was
operating. After the expiration of the renewed term, private respondent returned to the
Philippines. His ankle was operated for which he incurred expenses. He returned to Saudi Arabia
to resume his work. Subsequently, he was repatriated. Upon his return, he had his ankle treated
for which he incurred further expenses. On the basis of the provision in the employment contract
that the employer shall compensate the employee if he is injured or permanently disabled in the
course of employment, private respondent filed a claim,against petitioner with respondent

Philippine Overseas Employment Administration. The POEA rendered judgment in favor of private
respondent,
ISSUE:
Whether or not there is grave abuse of discretion on the part of the NLRC.
RULING:
No. Private respondents contract of employment cannot be said to have expired as it was
automatically renewed since no notice of its termination was given by either or both of the parties
at least a month before its expiration. Therefore, private respondent's injury was sustained during
the lifetime of the contract. Even if indeed petitioner and the Saudi principal had already severed
their agency agreement at the time private respondent was injured, petitioner may still be sued
for a violation of the employment contract because no notice of the agency agreement's
termination was given to the private respondent. No evidence was introduced to prove that
private respondent was not medically fit to work when he returned to Saudi Arabia.
Custodio Solidary Liability assumed by Recruitment Agent
ROYAL CROWN INTERNATIONALE VS. NATIONAL LABOR RELATIONS COMMISSION

et. al.
G.R. No. 78085 October 16, 1989
Cortes, J.
FACTS:
In 1983, Royal Crown Internationale, a duly licensed private employment agency,

recruited and deployed Virgilio Nacionales for employment with ZAMEL as an architectural
draftsman in Saudi Arabia. A service agreement was executed between Nacionales and ZAMEL
whereby the former was to receive per month a salary of US$500.00 plus US$100.00 as allowance
for a period of one year commencing from the date of his arrival in Saudi Arabia.
In 1984, ZAMEL terminated the employment of Nacionales on the ground that his performance
was below par.
Nacionales then filed a complaint for illegal termination against Royal Crown Internationale
and ZAMEL with the Philippine Overseas Employment Administration.
ISSUE:
Whether or not Royale Crown Internationale, the employment agency is liable for illegal
termination of Virgilio Nacionales
RULING:
In applying for its license to operate a private employment agency for overseas
recruitment and placement, Royal Crown Internationale was required to submit, among others,
a document or verified undertaking whereby it assumed all responsibilities for the proper use of

its license and the implementation of the contracts of employment with the workers it recruited
and deployed for overseas employment.
It was also required to file with the Bureau a formal appointment or agency contract
executed by the foreign-based employer in its favor to recruit and hire personnel for the former,
which contained a provision empowering it to sue and be sued jointly and solidarily with the
foreign principal for any of the violations of the recruitment agreement and the contracts of
employment.
Royal Crown Internationale was required as well to post such cash and surety bonds as
determined by the Secretary of Labor to guarantee compliance with prescribed recruitment
procedures, rules and regulations, and terms and conditions of employment as appropriate.
These contractual undertakings constitute the legal basis for holding Royal Crown
Internationale, and other private employment or recruitment agencies, liable jointly and severally
with its principal, the foreign-based employer, for all claims filed by recruited workers which may
arise in connection with the implementation of the service agreements or employment contracts.
De Leon Suability of a foreign corporation which hires Filipino workers
FACILITIES MANAGEMENT CORP. VS. DE LA ROSA

G.R. No. L-38649 March 26, 1979
MAKASIAR, J:
FACTS:
Facilities Management Corporation and J. S. Dreyer are domiciled in Wake Island while J.
V. Catuira is an employee of FMC stationed in Manila. Leonardo dela Rosa was employed by FMC
in Manila, but rendered work in Wake Island, with the approval of the Department of Labor of
the Philippines. De la Rosa was employed as:
(1) painter with an hourly rate of $1.25 from March 1964 to November 1964,
inclusive;
(2) houseboy with an hourly rate of $1.26 from December 1964 to November 1965,
inclusive;
(3) houseboy with an hourly rate of $1.33 from December 1965 to August 1966, inclusive;
and
(4) cashier with an hourly rate of $1.40 from August 1966 to March 27 1967, inclusive.
He further averred that from December, 1965 to August, 1966, inclusive, he rendered
overtime services daily, and that this entire period was divided into swing and graveyard shifts to
which he was assigned, but he was not paid both overtime and night shift premiums despite his
repeated demands from FMC, et al. He sought his reinstatement with full backwages, as well as
the recovery of his overtime compensation, swing shift and graveyard shift differentials.
The petitioner, a foreign corporation domiciled outside the Philippines was ordered by CIR
then to pay the unpaid overtime and premium pay. However, on certiorari, the petitioner
contended that because it was domiciled outside and not doing business in Philippines, it could
not be sued in the country.

ISSUE:
(1) Whether the mere act by a non-resident foreign corporation of recruiting Filipino
workers for its own use abroad, in law doing business in the Philippines.
(2) Whether FMC has been "doing business in the Philippines" so that the service of
summons upon its agent in the Philippines vested the Court of First Instance of Manila with
jurisdiction.
RULING:
(1) In its motion to dismiss, FMC admits that Mr. Catuira represented it in the Philippines "for the
purpose of making arrangements for the approval by the Department of Labor of the employment
of Filipinos who are recruited by the Company as its own employees for assignment abroad." In
effect, Mr. Catuira was alleged to be a liaison officer representing FMC in the Philippines.
Under the rules and regulations promulgated by the Board of Investments implementing RA 5455,
the phrase "doing business" has been exemplified with illustrations, among them being as follows:
""(1) Soliciting orders, purchases (sales) or service contracts. Concrete

and specific solicitations by a foreign firm, not acting independently of
the foreign firm, amounting to negotiation or fixing of the terms and
conditions of sales or service contracts, regardless of whether the
contracts are actually reduced to writing, shall constitute doing
business even if the enterprise has no office or fixed place of business
in the Philippines;
(2) appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an
independent status, i.e., it transacts business in its name and for its
own account, and not in the name or for the account of the principal;
xxx
(4) Opening offices, whether called 'liaison' offices, agencies or
branches, unless proved otherwise. xxx
(10) Any other act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions
normally incident to, or in the progressive prosecution of, commercial
gain or of the purpose and objective of the business organization."
(2) Yes, the object of Sections 68 and 69 of the Corporation Law was not to prevent the foreign
corporation from performing single acts, but to prevent it from acquiring a domicile for the
purpose of business without taking the steps necessary to render it amenable to suit in the local
courts. It was never the purpose of the Legislature to exclude a foreign corporation which happens
to obtain an isolated order for business from the Philippines, from securing redress in the
Philippine courts.
Indeed, if a foreign corporation, not engaged in business in the Philippines, is not banned from
seeking redress from courts in the Philippines, a fortiori, that same corporation cannot claim
exemption from being sued in Philippine courts for acts done against a person or persons in the
Philippines.

Evangelista Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. BULU CHOWDRY

G.R. No. 129577-80 February 15, 2000
FACTS:
Bulu Chowdury was charged with the crime of illegal recruitment in large scale by
recruiting Estrella B. Calleja, Melvin C. Miranda and Aser S. Sasis for employment in Korea.
Evidence shows that the Chowdury interviewed complainants in 1994 at Craftrade’s office.
At that time, he was an interviewer of Craftrade which was operating under temporary
authority given by POEA pending the renewal of license. He was charged based on the
fact that he was not registered with the POEA as employee of Craftrade and he is not in
his personal capacity, licensed to recruit overseas workers. The complainants also averred
that during their applications for employment for abroad, the license of Craftrade was
already expired.
For his defense Chowdury testified that he worked as interviewer at Craftrade from
1990 until 1994. His primary duty was to interview job applicants for abroad. As a mere
employee, he only followed the instructions given by his superiors, Mr. Emmanuel Geslani,
the agency’s President and General Manager, and Mr. Utkal Chowdury was the agency’s
Managing Director.
ISSUE:
Wheteher or not Bulu Chowdury knowingly and intentionally participated in the

commission of the crime charged.
RULING:
No, an employee of a company or corporation engaged in illegal recruitment may

be held liable as principal, together with his employer , if it is shown that he actively and
consciously participated in illegal recruitment. In this case, Chowdury merely performed
his tasks under the supervision of its President and Managing Director. The prosecution
failed to show that Chowdury is conscious and has an active participation in the
commission of the crime of illegal recruitment. Moreover, Chowdury was not aware of
Craftrade’s failure to register his name with the POEA and the prosecution failed to prove
that he actively engaged in recruitment despite this knowledge. The obligation to register
its personnel with the POEA belongs to the officers of the agency. A mere employee of
the agency not be expected to know the legal requirements for its operation. Chowdury
carried out his duties as interviewer of Craftrade believing that the agency was duly
licensed by the POEA and he, in turn, was duly authorized by his agency to deal with he
applicants in its behalf. Chowdury in fact confined his actions to his job description. He

merely interviewed the applicants and informed them of the requirements for deployment
but he never received money from them. Chowdury did nit knowingly and intentionally
participated in the commission of illegal recruitment being merely performing his task and
unaware of illegality of recruitment.
Flores Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. CABAIS

G.R. No. 129070 March 16, 2001
PARDO, J.
FACTS:
This case is an appeal to the decision of the Rrgional Trial Court of Baguio convicting Nel
lie Cabais of illegal recruitment in large scale by a syndicate and estafa after promising the com
plainants a deployment to work abroad and charging them fees for their deployment and other
processing fees.
ISSUE:
Whether or not the accused Nellie Cabais is guilty of illegal recruitment and estafa.
RULING:
Yes, the decision of the Regional Trial Court of Baguio convicting Nellie Cabais of illegal r
ecruitment and estafa was correct. The court held that even Nellie Cabais was a mere employee
of the RSEA he is still liable of the crimes because she entertained and promised the complaina
nts to work abroad while in fact she is not authorized ato do so. The accused also contended th
at the money which she received from the complainants was for their deployment and not for h
er own personal use but the court held regardless if she does not used the money for her perso
nal use she is still liable because she defrauded the complainants by abuse of confidence or by
means of deceit.
Fortuno Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. FLORES

G.R. Nos. 138535-38 April 19, 2001
MENDOZA, J.
FACTS:

Sometime in August, 1994, in Quezon City, Philippines, the said accused, conspiring
together, confederating with several persons whose true names and true identities have not as
yet been ascertained, and helping one another, did then and there wilfully, unlawfully and
feloniously defraud FELIXBERTO LEONGSON, JR. y CASTAEDA in the following manner, to wit:
the said accused, by means of false manifestations and fraudulent representation which she made
to said complainant to the effect that they had the power and capacity to recruit and employ
complainant abroad as seaman and could facilitate the processing of the requirements thereof,
and by means of other similar deceits, induced and succeeded in inducing said complainant to
give and deliver, as in fact he gave and delivered to said accused the amount of P45,000.00 on
the strength of said manifestations and representations, said accused well knowing that the same
were false and fraudulent and were made solely to obtain, as in fact they did obtain the amount
of P45,000.00, which amount once in possession, with intent to defraud FELIXBERTO LEONGSON,
JR. wilfully, unlawfully and feloniously misappropriated, misapplied and converted to their own
personal use and benefit, to the damage and prejudice of said complainant in the aforesaid
amount of P45,000.00, Philippine Currency. Based on the evidence presented during trial, court
rendered its assailed decision finding the guilt of the accused for illegal recruitment in large scale
and estafa in three (3) counts having been proved beyond reasonable doubt and was hereby
convicted of said crimes and is sentenced.
ISSUE:
Whether or not the lower court erred in holding the accused guilty of illegal recruitment.
RULING:
No, according to the certification of the POEA, accused-appellant had no license or

authority to engage in any recruitment activities. In fact, this was stipulated at the trial. Accused-
appellant claims, however, that she herself was a victim of illegal recruitment and that she simply
told complainants about job opportunities abroad.
The allegation is untenable. Art. 13 (b) of the Labor Code defines recruitment and
placement as referring to any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not. The same article further states that any
person or entity which, in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement. The evidence for the prosecution
shows that accused-appellant sought out complainants and promised them overseas
employment. Despite their initial reluctance because they lacked the technical skills required of
seamen, complainants were led to believe by accused-appellant that she could do something so
that their applications would be approved. Thus, because of accused-appellants
misrepresentations, complainants gave her their moneys. Accused-appellants companions,
Domingo, Baloran, and Mendoza, made her ploy even more plausible.
It must be remembered that the trial courts appreciation of complainants’ testimonies

deserves the highest respect since it was in a better position to assess their credibility. In these
cases, complainants’ testimonies, to the effect that they paid money to accused-appellant and
her companions, Domingo and Baloran, because the latter promised them overseas employment,
were positive, straightforward, and categorical. They maintained their testimonies despite the

lengthy and gruelling cross-examination by the defense counsel. They have not been shown to
have any ill motive to falsely testify against accused-appellant. Naive, simple-minded, and even
gullible as they may have been, it is precisely for people like complainants that the law was made.
Accordingly, their testimonies are entitled to full faith and credit.
Grayda Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. SAGAYADO

GR No 124671-75 September 29, 2000
Pardo, J.
FACTS:
The accused was found guilty beyond reasonable doubt for illegal recruitment in large
scale and 4 cases of Estafa. The Regional Trial Court of Baguio City, Branch 59, sentenced her to
suffer the penalty of life imprisonment for the violation of Art. 38, P.D. 442 and a fine of P100,000;
indeterminate penalties from prision correccional to prision mayor for the four (4) Estafa cases
which the accused shall serve simultaneously.
In the appeal submitted by the accused, she raised the defense that the lower court erred
to consider that she only processed the travel documents of the complainants as tourists and no
employment took place abroad.
ISSUE:
Whether or not the accused is guilty of illegal recruitment in large scale.
RULING:
Yes. For illegal recruitment be considered committed, the accused shall: (1) engage in the
recruitment and placement of workers defined under Article 13 or in any of the prohibited
activities under Article 34 of the Labor Code; (2) not have a license or authority to lawfully engage
in the recruitment and placement of workers; and (3) commit the infraction against three or more
persons, individually or as a group.
The accused was guilty of all the aforementioned requisites. Promising that she will send
the complainants in Korea to work as factory workers, clearly constitutes misrepresentation of
her ability to have the complainants employed. From the testimonies of the private complainants,
there is no denying that accused gave the complainants the distinct impression that she had the
power or ability to send them abroad for work such that the latter were convinced to part with
their money in order to be employed. As against the positive and categorical testimonies of the
complainants, mere denial of accused cannot prevail. As to the license requirement, the record
showed that accused-appellant did not have the authority to recruit for employment abroad as
the certification issued by the POEA in Baguio City.
Lindain Illegal Recruitment

PEOPLE OF THE PHILIPPINES VS. CALONZO

GR. Nos. 115150-55 September 27, 1996
FACTS:
Reydante Calonzo was charged with Illegal Recruitment in large scale and 5 counts of
Estafa by Brenando Miranda, Danilo de los Reyes, Elmer Clamor, Belarmino Torregrosa and Hazel
de Paula. The complainants recounted that they met the accused-appellant who was then
employed in R.A.C. Business Agency and offered to them employment in Italy. The accused was
persuasive that they were lured to give payment for the processing of their application for work
in Italy. The accused-appellant was able to send the complainants to Bangkok and were brought
to P.S. Guest Hotel. While in Bangkok, the complainants again gave additional amounts to the
accused. However, they only remain in Bangkok and the promise of employment in Italy was not
fulfilled. Upon return to the Philippines, the complainants verified from POEA to which the latter
issued a certification that the accused and R.A.C. Business Agency were not licensed to recruit
workers for overseas employment. As for his part, accused-appellant denies involvement in any
recruitment activities.
ISSUE:
Whether or not accused appellant is guilty of illegal recruitment committed in large scale.
RULING:
Yes. Illegal recruitment in large scale is committed when a person "(a) undertakes any
recruitment activity defined under Article 13(b) or any prohibited practice enumerated under
Article 34 of the Labor Code; (b) does not have a license or authority to lawfully engage in the
recruitment and placementof workers; and (c) commits the same
against three or more persons, individually or as a group."[3] The testimony of complainants
evidently showed that Calonzo was engaged in recruitment activities in large scale. Firstly, he
deluded complainants into believing that jobs awaited them in Italy by distinctly impressing upon
them that he had the facility to send them for work abroad. He even showed them his passport
to lend credence to his claim. To top it all, he brought them to Bangkok and not to
Italy. Neither did he have any arrangements in Bangkok for the transfer of his recruits to
Italy. Secondly, POEA likewise certified that neither Calonzo nor R. A. C. Business Agency was
licensed to recruit workers for employment abroad. Appellant admitted this fact
himself. Thirdly, appellant recruited five (5) workers thus making the crime illegal recruitment in
large scale constituting economic sabotage.
Maghirang Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. HERNANDEZ

G.R. No. 141221-36 March 7, 2002
PUNO, J.

FACTS:
An appeal on the case of Spouses Karl Reichl and Yolanda Gutierrez de Reichl for five (5)
counts of estafa and one (1) count of syndicated and large scale illegal recruitment. The evidence
for the prosecution consisted of the testimonies of private complainants; a certification from the
Philippine Overseas Employment Administration (POEA) that Francisco Hernandez, Karl Reichl and
Yolanda Gutierrez Reichl in their personal capacities were neither licensed nor authorized by the
POEA to recruit workers for overseas employment; the receipts for the payment made by private
complainants; and two documents signed by the Reichl spouses where they admitted that they
promised to secure Austrian tourist visas for private complainants and that they would return all
the expenses incurred by them if they are not able to leave by March 24, 1993, and where Karl
Reichl pledged to refund to private complainants the total sum of P1,388,924.00 representing the
amounts they paid for the processing of their paper. After assessing the evidence presented by
the parties, the trial court rendered a decision convicting accused-appellants of one (1) count of
illegal recruitment in large scale and six (6) counts of estafa.
ISSUE:
Whether or not the trial court erred in convicting the accused-appellant is guilty of illegal
recruitment on a large scale by cumulating five separate cases of illegal recruitment each filed by
a single private complainant.
RULING:
Article 38 of the Labor Code defines illegal recruitment as "any recruitment activities,
including the prohibited practices enumerated under Article 34 of (the Labor Code), to be
undertaken by non-licensees or non-holders of authority." The term "recruitment and placement"
refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, including referrals, contract services, promising or advertising for employment, locally
or abroad, whether for profit or not, provided that any person or entity which, in any manner,
offers or promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement. The law imposes a higher penalty when the illegal recruitment is
committed by a syndicate or in large scale as they are considered an offense involving economic
sabotage. Illegal recruitment is deemed committed by a syndicate if carried out by a group of
three (3) or more persons conspiring and/or confederating with one another in carrying out any
unlawful or illegal transaction, enterprise or scheme. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.
In the case at bar, the prosecution was able to prove beyond reasonable doubt that
accused-appellants engaged in activities that fall within the definition of recruitment and
placement under the Labor Code. The evidence on record shows that they promised overseas
employment to private complainants and required them to prepare the necessary documents and
to pay the placement fee, although they did not have any license to do so. There is illegal
recruitment when one who does not possess the necessary authority or license gives the
impression of having the ability to send a worker abroad.
The charge was not only for illegal recruitment committed in large scale but also for illegal
recruitment committed by a syndicate. Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring and/or confederating with one
another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under

the first paragraph of Article 38 of the Labor Code. It has been shown that Karl Reichl, Yolanda
Reichl and Francisco Hernandez conspired with each other in convincing private complainants to
apply for an overseas job and giving them the guaranty that they would be hired as domestic
helpers in Italy although they were not licensed to do so. Thus, the Court hold that accused-
appellants should be held liable for illegal recruitment committed by a syndicate which is also
punishable by life imprisonment and a fine of one hundred thousand pesos (P100,000.00) under
Article 39 of the Labor Code.
Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. HERNANDEZ K. REICHL AND Y.G. DE REICHI
FACTS:
In April 1993, eight (8) informations for syndicated and large scale illegal recruitment and
eight (8) informations for estafa were filed against accused-appellants, spouses Karl and Yolanda
Reichl, together with Francisco Hernandez. Only the Reichl spouses were tried and convicted by
the trial court as Francisco Hernandez remained at large.1âwphi1.nêt
ISSUE:
Whether or not the respondents are guilty of illegal recruitment.
HELD:
In the case at bar, the prosecution was able to prove beyond reasonable doubt that
accused-appellants engaged in activities that fall within the definition of recruitment and
placement under the Labor Code. The evidence on record shows that they promised overseas
employment to private complainants and required them to prepare the necessary documents and
to pay the placement fee, although they did not have any license to do so. There is illegal
recruitment when one who does not possess the necessary authority or license gives the
impression of having the ability to send a worker abroad.
Accused-appellants assert that they merely undertook to secure Austrian visas for private
complainants, which act did not constitute illegal recruitment. They cite the document marked at
Exhibit "J" stating that they promised to obtain Austrian tourist visas for private complainants.
We are not convinced. Private complainants Narcisa Hernandez, Leonora Perez and Charito
Balmes categorically stated that Karl and Yolanda Reichl told them that they would provide them
overseas employment and promised them that they would be able to leave the country on a
specified date. We do not see any reason to doubt the truthfulness of their testimony. The defense
has not shown any ill motive for these witnesses to falsely testify against accused-appellants if it
were not true that they met with the Reichl spouses and the latter represented themselves to
have the capacity to secure gainful employment for them abroad. The minor lapses in the
testimony of these witnesses pointed out by accused-appellants in their brief do not impair their
credibility, especially since they corroborate each other on the material points, i.e., that they met
with the three accused several times, that the three accused promised to give them overseas
employment, and that they paid the corresponding placement fee but were not able to leave the

country. It has been held that truth-telling witnesses are not always expected to give error-free
testimonies considering the lapse of time and the treachery of human memory. Moreover, it was
shown that Karl Reichl signed a document marked as Exhibit "C" where he promised to refund
the payments given by private complainants for the processing of their papers. We are not inclined
to believe Mr. Reichl's claim that he was forced by Francisco Hernandez to sign said document.
There is no showing, whether in his testimony or in that of his wife, that private complainants
threatened to harm them if he did not sign the document. Mr. Reichl is an educated man and it
cannot be said that he did not understand the contents of the paper he was signing. When he
affixed his signature thereon, he in effect acknowledged his obligation to ensure the departure of
private complainants and to provide them gainful employment abroad. Such obligation arose from
the promise of overseas placement made by him and his co-accused to private complainants. The
admission made by accused-appellants in Exhibit "J" that they promised to obtain Austrian visas
for private complainants does not negate the fact that they also promised to procure for them
overseas employment. In fact, in Exhibit "J", accused-appellants admitted that each of the private
complainants paid the amount of P50,000.00. However, in Exhibit "C", which was executed on a
later date, accused-appellants promised to refund to each complainant an amount
exceeding P150,000.00. This is an acknowledgment that accused-appellants received payments
from the complainants not only for securing visas but also for their placement abroad.
Accused-appellants' defense of denial and alibi fail to impress us. The acts of recruitment were
committed from June 1992 until January 1993 in Batangas City. Karl Reichl was in Manila from
July 29, 1992 until September 19, 1992, and then he returned to the Philippines and stayed in
Batangas from October 21, 1992. Yolanda Reichl, on the other hand, claimed that he was in
Manila on the dates alleged in the various informations. It is of judicial notice that Batangas City
is only a few hours' drive from Manila. Thus, even if the spouses were staying in Manila, it does
not prevent them from going to Batangas to engage in their recruitment business. Furthermore,
it appears that the three accused worked as a team and they conspired and cooperated with each
other in recruiting domestic helpers purportedly to be sent to Italy. Francisco Hernandez
introduced Karl and Yolanda Reichl to the job applicants as his business partners. Karl and Yolanda
Reichl themselves gave assurances to private complainants that they would seek employment for
them in Italy. Francisco Hernandez remitted the payments given by the applicants to the Reichl
spouses and the latter undertook to process the applicants' papers. There being conspiracy, each
of the accused shall be equally liable for the acts of his co-accused even if he himself did not
personally take part in its execution.
Monton Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. TAN TIONG MENG alias “TOMMY TAN”
GR No. 120835 April 10, 1997
Padilla, J.
FACTS:
From June to August 1993, 6 complainants namely Ernesto Orcullo, Manuel Latina, Neil Mascardo,
Librado Pozas, Edgardo Tolentino and Cavino Asiman went to Jose Percival Borja's house in Cavite
to meet the accused Tan Tiong Meng, allegedly a a job recuiter under the business name of
Rainbow Sim Factory, who promised them employment in Taiwan. Tan Tiong required them to
submit necessary documents such as passports, bio-data, high school diplomas and a fee of

P15,000.00 each as processing fee. Accused kept on postponing the departure dates of the private
complainants but were never fulfilled. They later discovered that Tan Tiong was not a licensed
recruiter and was arrested for illegal recruitment activities.
Tan Tiong appealed with the admission that he indeed received money from all complainants but
the same was turned over to Borja who was introduced by Malou Lorenzo after deducting
commission. He averred that he merely acted as a collector of money for the principal recruiter
Borja.
ISSUE:
Whether or not Tan Tiong Meng was guilty of illegal recruitment in large scale.
RULING:
YES. Several circumstances belie the version of defense: (1) Neil Mascardo testified that accused-
appellant told him he could no longer return his money because he had already sent it to his
brother-in-law Lee Shut Kua in Taiwan; (2) All the receipts issued to complainants were signed
by accused-appellant; (3) Tan admitted that he and his wife were respondents in about 70 cases
for estafa and illegal recruitment in Batangas; (4) Tan executed a sworn statement dated Sept.
13, 1993 before SPO2 Eduardo Nover, Jr. in the presence of his lawyer Atty. Florendo Medina
wherein he admitted receiving P15, 000.00 from Asiman.; and (6) The complainants all pointed
to Tan and not Borja as the one who had represented to them that he could give them jobs in
Taiwan. There is no showing that ay of the complainants had ill motives against Tan other than
to bring him to the bar of justice. The testimonies for the witnesses were straight-forward,
credible and convincing. The constitutional presumption of innocence in Tan’s favour has been
overcome by proof beyond reasonable doubt and the court affirms his convictions. It is clear that
accused-appellants acts of accepting placement fees from job applicants and representing to said
applicants that he could get them jobs in Taiwan constitute recruitment and placement under the
provision of the Labor Code. The POEA having certified that accused-appellant is not authorized
to recruit workers for overseas employment, it is clear that the offense committed against the six
complainants in this case is illegal recruitment in large scale punishable under Art, 39 (a) of the
Labor Code with life imprisonment and a fine of P100,000.00. SC affirmed the conviction of Tan
Tiong Meng.
Rillera Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. ARABIA AND TOMAS

G.R. No. 138431-36 September 12, 2001
GONZAGA-REYES, J.
FACTS:
This is an appeal from the decisionof the Regional Trial Court of Quezon City, Branch 102,
finding accused-appellants Dioscora M. Arabia and Francisca L. Tomas both guilty of illegal
recruitment in large scale and five (5) counts each of estafa. That on or about the period
comprised from October 1992 to January 16, 1993, in Quezon City, Philippines, the above-named

accused, conspiring together, confederating with and mutually helping each other, by falsely
representing themselves to have the capacity to contract, enlist and recruit workers for
employment abroad, did, then and there willfully, unlawfully and feloniously for a fee, recruit and
promise employment or job placement abroad to VIOLETA S. DE LA CRUZ, NOEL DE LA CRUZ,
PELAGIA DE LA CRUZ, REMELYN JACINTO, TERESITA LORENZO and ROLANDO RUSTIA, without
first securing the required license or authority from the Department of Labor and Employment, in
violation of said law.
Five other informations for estafa were also filed before the same court each charging
Dioscora Arabia and Francisca Tomas with estafa under par. 2, subpar. (a), of Art. 315, of the
Revised Penal Code.Of the six (6) complainants in the case for Illegal Recruitment in Large Scale,
only one, Pelagia de la Cruz, did not file a case for estafa.
The undersigned accuses DIOSCORA M. ARABIA and FRANCISCA L. TOMAS of the crime
of Estafa, committed as follows: that on or sometime in the month of October, 1992, in Quezon
City, Philippines, the said accused, conspiring together, confederating with and mutually helping
each other, did then and there willfully, unlawfully and feloniously defraud ROLANDO RUSTIA in
the following manner, to wit: the said accused, by means of false manifestations and fraudulent
representation which they made to said Rolando Rustia to the effect that they had the power and
capacity to recruit and employ Rolando Rustia and could facilitate the processing of the pertinent
papers if given the necessary amount to meet the requirements thereof, and by means of other
similar deceits, induced and succeeded in inducing said Rolando Rustia to give and deliver, as in
fact he gave and delivered to said accused the amount of P23,000.00 on the strength of said
manifestations and representations, said accused well knowing that the same were false and
fraudulent and were made solely to obtain, as in fact they did obtain the amount of P23,000.00,
which amount once in possession, with intent to defraud Rolando Rustia, willfully, unlawfully and
feloniously misappropriated, misapplied and converted to their own personal use and benefit, to
the damage and prejudice of said Rolando Rustia in the aforesaid amount of P23,000.00,
Philippine Currency.
That in October 1992, private complainants Violeta de la Cruz, Remelyn Jacinto, Teresita
Lorenzo, Rolando Rustia and Noel de la Cruz were introduced by the latters mother, private
complainant Pelagia de la Cruz, to appellant Dioscora Arabia, a recruiter of job applicants for a
factory in Taiwan.They all saw appellants at the residence of Arabia at Block 22, Lot 25, Villanova
Subdivision, Quezon City. Then and there, appellants convinced them and other applicants to
apply for jobs in Taiwan that would give them a monthly pay of P22,000.00 with two (2) months
advance salary to boot. Service fees for processing and placement, private complainants were
told by appellants Arabia and Tomas, would be P16,000.00 for each of them. Three (3) days later,
appellants themselves went to the Dela Cruz residence where they convinced private
complainants to give the amount of P16,000.00 each so that they could leave for Taiwan by
December 18, 1992. On November 6, 1992, each of the private complainants, except Roland
Rustia who gave P23,000.00, gave P16,000.00 to Arabia at the latters residence and in the
presence of Tomas.Arabia, however, did not issue any receipt upon her assurance that she would
not fool them . Private complainants were told to prepare for their departure and that the
P16,000.00 placement fee would be reimbursed by their employer in Taiwan. Various
requirements, such as pictures, passports and bio-data, were submitted by private complainants.
However, On December 18, 1992,private complainants were not able to leave for Taiwan because
appellants told them that the person who was supposed to accompany them to Taiwan did not
arrive. The departure date was thus reset to January 16, 1993, but private complainants were
still unable to leave because of the same excuse that appellants gave. Private complainants asked

for the return of their money as they were no longer interested in working abroad. They were
informed by Arabias sister, however, that appellants were arrested by the NBI and detained at
the Quezon City Jail. Records also showed that appellants were neither licensed nor authorized
to recruit workers for overseas.
The only defense of the accused Arabia and Tomas is denial. They claim that, like the
complainants, they too, accused Arabia and Tomas, were job applicants and their recruiter was
one Rebecca de Jesus; that they were likewise victimized by Rebecca de Jesus. As a matter of
fact, according to the accused, like them, complainants also filed a case against said illegal
recruiter, Rebecca de Jesus. However, accused Arabia and Tomas failed to present proof that
they indeed filed a case against Rebecca de Jesus for illegal recruitment.
ISSUE:
WHETHER OR NOT THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-

APPELLANTS FOR ILLEGAL RECRUITMENT AND FIVE (5) COUNTS OF ESTAFA DESPITE THE
FAILURE OF THE PROSECUTION TO PROVE THEIR GUILT BEYOND REASONABLE DOUBT.
RULING:
There is no doubt as to accused-appellants guilt for all the essential elements of the crime
of Illegal Recruitment in Large Scale have been established beyond reasonable doubt. Accused-
appellants recruited at least four persons, giving them the impression that they had the capability
to send them to Taiwan for employment. They collected various amounts allegedly for recruitment
and placement fees without license or authority to do so. It is settled that the fact that an accused
in an illegal recruitment case did not issue the receipts for amounts received from the
complainants has no bearing on his culpability so long as complainants show through their
respective testimonies and affidavits that the accused was involved in the prohibited recruitment.
It has also been held that the Statute of Frauds and the rules of evidence do not require the
presentations of receipts in order to prove the existence of a recruitment agreement and the
procurement of fees in illegal recruitment cases. The amounts may consequently be proved by
the testimony of witnesses. The complainants were positive and categorical in their testimonies
that they personally met accused-appellants and that the latter asked from them sums of money
in exchange for the promised employment overseas. Complainants had no motive to testify falsely
against accused-appellants. Needless to state, against the positive and categorical statements of
the complainants, the mere denials of accused-appellants and their pinpointing of the crime to
one Rebecca de Jesus who was never produced in court cannot prevail. As the Court held in
another illegal recruitment case, with the accused-appellants failure to present the person who
was allegedly responsible for the recruitment of the complainants, she risked the adverse
inference and legal presumption that evidence suppressed would be adverse if produced.
Large scale illegal recruitment is punishable by life imprisonment and a fine of P100,000.00
under Article 39 (a) of the Labor Code. Hence, the trial court imposed the proper penalty. As
regards the conviction of accused-appellants for estafa on five (5) counts we have ruled in a
number of cases that a person convicted of illegal recruitment under the Labor Code can be
convicted of violation of the Revised Penal Code provisions on estafa, provided the elements of
the crime are present. The elements of estafa are: (a) that the accused defrauded another by
abuse of confidence or by means of deceit, and (b) that damage or prejudice capable of pecuniary
estimation is caused to the offended party or third person.

However, accused-appellants should be acquitted of the two counts of estafa, both

Rolando Rustia and Noel de la Cruz did not appear in court to testify against accused-appellants.
After Rolando Rustia and Noel de la Cruz signed the Joint Complaint Affidavit accusing Dioscora
Arabia and Francisco Tomas of Illegal Recruitment in Large Scale and Estafa, nothing more was
heard from them. The prosecution did not present any testimonial or documentary evidence to
prove the estafa committed by accused-appellants against Rolando Rustia and Noel de La Cruz.
The judgment of the trial court finding accused-appellants Dioscora M. Arabia and
Francisca L. Tomas guilty of Illegal Recruitment in Large Scale in Crim. Case No. Q-93-48585 and
Estafa in Criminal Cases Nos. Q-93-48588, Q-93-48589 and Q-93-48587 is hereby AFFIRMED.
However, accused-appellants are ACQUITTED of the two (2) counts of estafa in Criminal Cases
Nos. Q-93-48584 and Q-93-48586 for insufficiency of evidence.
Robles Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. VERANO

GR. No. 110109 November 21, 1996
FACTS:
Respondent was engaged in the recruitment and placement for employment abroad when
she informed she informed her cousin Alfonso, and the latter’s friends, Jose and Arturo, of an
employment opportunity abroad. She solicited payments from the three for various expenses and
fees, including processing costs, plane ticket fees, medical examination and recruitment fees.
After the Alfonso, Jose and Arturo paid, respondent promised them employment in Bahrain.
However, the promised employment never materialized because the respondent failed to give the
three their plane tickets. The three lodged their complaint and later found out that respondent
was not a licensed labor recruiter according to POEA.
ISSUE:
Whether or not respondent is engaged in illegal recruitment.
RULING:
The respondent was indeed found to be guilty of illegal recruitment in large scale and
sentenced her to suffer the penalty of life imprisonment, to pay a fine of P100,000.00 and to pay
interests and legal rates.
Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. ESPANOL

Criminal Case No. Q-88 4444

FACTS:
In or about February and August 1988, at Quezon City, accused J. Espanol canvassed, enlisted,
contracted and promised employment to 14 persons, exacting a total of P21,500.00 as
recruitment fees, without authority or license from the POEA. Accused introduced himself to the
14 private complainants as one who had rich and influential relatives in California, U.S.A. The
positions promised were for a dressmaker, cook, dishwasher, driver and housemaid, and accused
exacted payments for processing of travel documents in amounts ranging from P1,000 – P3,000.
On September 3, 1988, the birthday of accused, he informed the 14 applicants that a certain Atty.
Dizon, who was working for their documents, would definitely be coming and would advise them
to their departure. The lawyer never appeared. The birthday turned out to be a grand affair,
applicants donating pigs, dogs, goats, and some other items. After the party, complainants
became apprehensive.
On several occasions, complainants talked to the accused, who kept promising that he could send
them abroad. When the complainants sensed that they were deceived, they demanded return of
their money, but accused failed and started hiding. They chanced on him and forcibly took him
to the police station where they gave their sworn statements. Accused’s defense was that he did
not know the applicants except one, that he had no brother or sister in California, U.S.A. and that
the house where he celebrated his birthday was owned by one de la Pasion, who shouldered all
the expenses.
ISSUE:
Whether or not the accused committed illegal recruitment.
RULING:
The accused is a dangerous member of society who feels happy and comfortable victimizing the
poor, innocent and the gullible, of their hard-earned money. Evidence woven together proves the
pattern for illegal recruitment, hence, mere denial must necessarily fall.
Decision:
The Court found the accused guilty beyond reasonable doubt of the crime charged and sentenced
him to suffer eight years imprisonment and to pay a fine of P50,000 and the costs. The accused
was likewise ordered to reimburse the amount of P21,500.00 to the 14 private complainants listed
in the criminal information.
Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. REMULLO

G.R. No. 124443 – 36
J. Quisumbing
FACTS:

Petitioner falsely represented herself as an employee of a recruitment agency to have the

capacity and power to contract, enlist and recruit workers for job placement abroad, and willfully,
unlawfully, and feloniously collected fees, and promised employment abroad to multiple (4)
complainants. Complainants paid sums of money to accused for the promise of employment and
scheduled flights abroad. When complainants had their flights cancelled repeatedly, they decided
to inquire their status to the recruitment agency allegedly being represented by accused. There,
complainants have been informed that accused was not anymore an employee and such role she
handled did not authorize her to recruit workers and moreso accept payment and other fees.
ISSUE:
Whether or not accused is guilty of large-scale illegal recruitment?
RULING:
Accused is guilty of large-scale illegal recruitment.
Ratio Decidendi: The elements of large scale illegal recruitment are as follows: (1) the accused
was engaged in recruitment activity under Article 13 b, or any prohibited practice under Article
34 of the Labor Code; (2) he or she lacks the requisite license or authority to lawfully engage in
the recruitment and placement of workers; and (3) he or she committed such acts against three
or more persons, individually or as a group. In this case, such elements have been fulfilled in the
case of the accused.
Angeles Illegal Recruitment
PEOPLE OF THE PHILIPPINES VS. S. ANGELES

G.R. No. 132376 April 11, 2002
FACTS:
Samina Angeles was charged with four counts of estafa and one count of illegal
recruitment. Maria Sardeña was working in Saudi Arabia when she received a call from her sister
who was in Paris. Priscilla advised Maria to return to the Philippines and await for the arrival of
Samina Angeles who will assist in processing her travel and employment documents to Paris.
Maria immediately returned to the Philippines. Although Samina did not deceive complainants into
believing that she could find employment for them in abroad, nonetheless, she made them believe
that she was processing their travel documents and parted with their money believing also that
it would be used to pay plane tickets, hotel accommodations and other travel requirements. In
Samina Angeles’ defense, she averred that contrary to prosecution’s allegations, she never
represented to the complainants that she can provide them with work abroad. After trial on the
merits, the trial court found accused-appellant guilty of illegal recruitment and four counts of
estafa.
ISSUE:
Whether or not Samina Angeles is guilty with four counts of estafa and one count of illegal
recruitment

RULING:
Accused-appellant posits that the prosecution did not present a single evidence to prove
that she promised or offered any of the complainants jobs abroad. Illegal recruitment is
committed when two elements concur: 1) that the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and placement of workers; and
2) that the offender undertakes either any activity within the meaning of recruitment and
placement defined under Article 13(b), or any prohibited practices enumerated under Article 34.
To be engaged in the practice of recruitment and placement, it is plain that there must at least
be a promise or offer of an employment from the person posing as a recruiter whether locally or
abroad. Clearly, Samina Angeles defrauded complainants by falsely pretending to possess the
power and capacity to process their travel documents. Article 315 of the Revised Penal Code
imposes the penalty of prision  correccional in its maximum period to prision mayor in its
minimum period, if the amount of the fraud is over P12,000.00 but does not exceed P22,000.00;
if the amount exceeds P22,000.00, the penalty provided shall be imposed in its maximum period,
adding one year for each additional P10,000.00. However, the total penalty which may be
imposed shall not exceed twenty years.
Employment of Non-Resident Aliens
Borja Employment of Non-Resident Aliens
ALMODIEL VS. NLRC

GR No 100641 June 14, 1993
Nocon, J.
FACTS:
Petitioner F. Almodiel, a CPA, was hired as Cost Accounting Manager of Raytheon

Philippines, Inc. He started as a probationary or temporary employee. His major duties were: (1)
plan, coordinate and carry out year - end and physical inventory; (2) formulate and issue out
hard copies of Standard Product costing and other cost/pricing analysis if needed and required
and (3) set up the written Cost Accounting System for the whole company. After a few months,
he was given a regularization increase of P1,600.00 a month.
On August 17, 1988, he recommended and submitted a Cost Accounting/Finance

Reorganization, affecting the whole finance group but the same was disapproved by the
Controller. However, he was assured by the Controller that should his position or department
which was apparently a one-man department with no staff becomes untenable or unable to
deliver the needed service due to manpower constraint, he would be given a three (3) year
advance notice.
On January 27, 1989, petitioner was summoned by his immediate boss and in the
presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition of his position on the
ground of redundancy. He pleaded with management to defer its action or transfer him to another
department, but he was told that the decision of management was final and that the same has

been conveyed to the Department of Labor and Employment. Thus, he was constrained to file
the complaint for illegal dismissal before the Arbitration Branch of the National Capital Region,
NLRC, Department of Labor and Employment.
ISSUES:
· Whether NLRC committed grave abuse of discretion amounting to (lack of) or in

excess of jurisdiction in declaring as valid and justified the termination of petitioner on the
ground of redundancy.
· Whether bad faith, malice and irregularity crept in the abolition of petitioner's
position of Cost Accounting Manager on the ground of redundancy.
RULING:
· No. There is no dispute that petitioner was duly advised, one (1) month before, of
the termination of his employment on the ground of redundancy in a written notice by his
immediate superior in January 27, 1989. He was issued a check representing separation
pay but in view of his refusal to acknowledge the notice and the check, they were sent to
him thru registered mail on January 30, 1989. The Department of Labor and Employment
was served a copy of the notice of termination of petitioner in accordance with the
pertinent provisions of the Labor Code and the implementing rules.
· No. Whether petitioner's functions as Cost Accounting Manager have been

dispensed with or merely absorbed by another is however immaterial. For even conceding
that the functions of petitioner's position were merely transferred, no malice or bad faith
can be imputed from said act. The Supreme Court said that redundancy, for purposes of
our Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. The characterization
of an employee's services as no longer necessary or sustainable, and therefore, properly
terminable, was an exercise of business judgment on the part of the employer. The
wisdom or soundness of such characterization or decision was not subject to discretionary
review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of
law or merely arbitrary and malicious action is not shown.
Indeed, an employer has no legal obligation to keep more employees than are
necessary for the operation of its business. Petitioner does not dispute the fact that a cost
accounting system was installed and used at Raytheon subsidiaries and plants worldwide;
and that the functions of his position involve the submission of periodic reports utilizing
computerized forms designed and prescribed by the head office with the installation of
said accounting system. Petitioner attempts to controvert these realities by alleging that
some of the functions of his position were still indispensable and were actually dispersed
to another department. What these indispensable functions that were dispersed, he failed
however, to specify and point out. Besides, the fact that the functions of a position were
simply added to the duties of another does not affect the legitimacy of the employer's
right to abolish a position when done in the normal exercise of its prerogative to adopt
sound business practices in the management of its affairs.
It is a well-settled rule that labor laws do not authorize interference with the
employer's judgment in the conduct of his business. The determination of the qualification

and fitness of workers for hiring and firing, promotion or reassignment are exclusive
prerogatives of management. The Labor Code and its implementing Rules do not vest in
the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial
authority. The employer is free to determine, using his own discretion and business
judgment, all elements of employment, "from hiring to firing" except in cases of unlawful
discrimination or those which may be provided by law.
Santos Employment of Non-Resident Aliens
GENERAL MILLING CORPORATION VS. TORRES

G.R No. 9366, April 22, 1991
FACTS:
Earl Timothy Cone is a US citizen, who was hired by General Milling as a sports consultant
and assistant coach. He possessed an alien employment permit which was changed to pre-
arranged employee by the Board of Special Inquiry of the Commission on Immigration and
Deportation. GMC requested that Cone’s employment permit be changed to a full-fledged coach,
which was contested by The Basketball Coaches Association of the Philippines. Alleging that GMC
failed to show that there is no competent person in the Philippines to do the coaching job.
Secretary of Labor cancelled Cone’s employment permit.
ISSUE:
Whether or not the Secretary of Labor act with grave abuse of discretion in revoking
Cone’s Alien Employment Permit?
HELD:
The Secretary of Labor did not act with grave abuse of discretion in revoking Cone’s Alien
Employment Permit. GMC’s claim that hiring of a foreign coach is an employer’s prerogative has
no legal basis. Under Section 40 of the Labor Code, an employer seeking employment of an alien
must first obtain an employment permit from the Department of labor. GMC’s right to choose
whom to employ is limited by the statutory requirement of an employment permit.
The Labor Code empowers the Labor Secretary to determine as to the availability of the
services of a “person in the Philippines who is competent, able and willing at the time of the
application to perform the services for which an alien is desired.

Training and Employment of Special Workers
Abello Article 57 – 72: Apprentices
NITTO ENTERPRISES VS. NLRC AND R. CAPILI

G.R. NO. 114337 SEPT. 29, 1995
KAPUNAN, J.
FACTS:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum
products, hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and
core maker as evidenced by an apprenticeship agreement 2for a period of six (6) months from
May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75 which was 75% of the
applicable minimum wage. On August 2, 1990, Roberto Capili who was handling a piece of glass
which he was working on, accidentally hit and injured the leg of an office secretary who was
treated at a nearby hospital. Further, Capili entered a workshop within the office premises which
was not his work station. There, he operated one of the power press machines without authority
and in the process injured his left thumb. The following day he was asked to resign. Three days
after, private respondent formally filed before the NLRC Arbitration Branch, National Capital
Region a complaint for illegal dismissal and payment of other monetary benefits. The Labor Arbiter
rendered his decision finding the termination of private respondent as valid and dismissing the
money claim for lack of merit. On appeal, NLRC issued an order reversing the decision of the
Labor Arbiter. The NLRC declared that Capili was a regular employee of Nitto Enterprises and not
an apprentice. Consequently, Labor Arbiter issued a Writ of Execution ordering for the
reinstatement of Capili and to collect this back wages. Petitioner, Nitto Enterprises filed a case to
the Supreme Court.
ISSUE:
Does the NLRC correctly rule that Capili is a regular employee and not an apprentice of
Nitto Enterprises?
RULING:
Yes. The apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder. However, the apprenticeship Agreement was filed only on June 7,
1990.Notwithstanding the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed. The act of filing the proposed
apprenticeship program with the Department of Labor and Employment is a preliminary step
toward sits final approval and does not instantaneously give rise to an employer apprentice
relationship. Nitto Enterprises did not comply with the requirements of the law. It is mandated
that apprenticeship agreements entered into by the employer and apprentice shall be entered
only in accordance with the apprenticeship program duly approved by the Minister of Labor and

Employment. Thus, the apprenticeship agreement has no force and effect; and Capili is
considered to be a regular employee of the company.
Alarkon Article 57 – 72: Apprentices
FILAMER CHRISTIAN INSTITUTE VS. HON. INTERMEDIATE APELLATE COURT

G.R. No. 75112 AUGUST 17, 1992
J. GUTIERREZ, JR.
FACTS:
 Private respondents, heirs of the late Potenciano Kapunan, files a Motion for
Reconsideration of the decision rendered by the Supreme Court (Filamer Christian
Institute v. Court of Appeals, 190 SCRA 477)
 In the previous case:
o Daniel Funtecha was a working student at the Filamer Christian Institute.
He was assigned as the school janitor to clean the school 2 hours every morning.
o Allan Masa was the son of the school president and at the same time he was the
school’s jeepney service driver.
o On October 20, 1977 at about 6:30pm, after driving the students to their homes,
Masa returned to the school to report and thereafter have to go home with the
jeep so that he could fetch the students early in the morning.
o Masa and Funtecha live in the same place so they usually go home together.
o Funtecha had a student driver’s license so Masa let him take the driver’s seat.
o While Funtecha was driving, he accidentally hit Potenciano Kapunan which
led to his hospitalization for 20 days. Kapunan filed a criminal case and an
independent civil action based on Article 2180 against Funtecha.
o In the independent civil action, the lower court ruled that Filamer is
subsidiarily liable for the tortious act of Funcheta and was compelled to
pay for damages based on Article 2180 which provides that employers shall
be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks. Filamer assailed
the decision and it argued that under Section 14, Rule X, Book III of the Labor
Code IRR, working scholars are excluded from the employment coverage hence
there is no employer-employee relations between Filamer and Funcheta; that the
negligent act of Funcheta was due to negligence only attributable to him alone as
it is outside his assigned task of being the school janitor. The CA denied Filamer’s
appeal but the Supreme Court agreed with Filamer.
ISSUE (THE MOTION FOR RECONSIDERATION):
 Whether or not Filamer should be held subsidiarily liable.
RULING:
 the SC ruled in favor of the heirs of Potenciano Kapunan

 The provisions of Section 14, Rule X, Book III of the Labor Code IRR was only meant to
provide guidelines as compliance with labor provisions on working conditions, rest periods,
and wages is concerned.
 This does not in any way affect the provisions of any other laws like the civil
code. The IRR cannot defeat the provisions of the Civil Code.
 In other words, Rule X is merely a guide to the enforcement of the substantive
law on labor. There is a distinction, hence Section 14, Rule X, Book III of the Rules is
not the decisive law in a civil suit for damages instituted by an injured person during a
vehicular accident against a working student of a school and against the school itself.
 The present case does not deal with a labor dispute on conditions of employment between
an alleged employee and an alleged employer. It invokes a claim brought by one for
damages for injury caused by the patently negligent acts of a person, against both doer-
employee and his employer.
 Hence, the reliance on the implementing rule on labor to disregard the primary
liability of an employer under Article 2180 of the Civil Code is misplaced.
 An implementing rule on labor cannot be used by an employer as a shield to
void liability under the substantive provisions of the Civil Code.
 Funtecha is an employee of Filamer. He need not have an official appointment for a
driver’s position in order that Filamer may be held responsible for his grossly negligent
act, it being sufficient that the act of driving at the time of the incident was for the benefit
of Filamer (the act of driving the jeep from the school to Masa’s house is beneficial to the
school because this enables Masa to do a timely school transportation service in the
morning).
 The fact that Funtecha was not the school driver or was not acting with the scope of his
janitorial duties does not relieve Filamer of the burden of rebutting the presumption that
there was negligence on its part either in the selection of a servant or employee, or in the
supervision over him.
 Filamer has failed to show proof of its having exercised the required diligence of a good
father of a family over its employees Funtecha and Allan. (ART 1163 NCC) [Obligations]
Conditions of Employment
Employer- Employee Relationship
“BROTHERHOOD” LABOR UNITY MOVEMENT OF THE PHILIPPINES VS. ZAMORA

G.R. No. 48645, Jan. 7, 1987
FACTS:
Petitioners have been reporting as loaders for San Miguel Parola Glass Factory under the
supervision of a certain Camahort. Job orders for work came from Camahort and petitioners were
also supplied with tools and other equipment for the fulfillment of their duties. With the job orders
being dependent on the volume of production of the factory, work was not necessarily 8 hours
but at times petitioners would be asked to work more than 8 hours and at times also on Saturdays
and Sundays They were not paid for their overtime and rendered work during Saturdays and
Sundays.

Petitioners organized and held union activities to push management to pay for their overtime and
holiday compensation as well as other grievances. Some members were then dismissed from
work due to their membership with the union. Due to this, Petitioners filed a notice of strike on
the Bureau of Labor Relations and a meeting was held between the parties wherein petitioners
gave proposals for recognition and collective bargaining.
San Miguel refused to bargain with petitioners alleging that there was no employer – employee
relationship.
The NLRC heard the dispute and the arbiter decided in favor of the Petitioners to receive one
year salary. Upon appeal of SMC, the Secretary stressed upon the decision that there was no
employer – employee relationship.
ISSUE:
Whether or not the employer – employee relationship exists between the “Brotherhood” Labor
Union Movement and San Miguel Corporation?
RULING:
The petition is granted. SMC was ordered to reinstate petitioners, with three (3) years backwages.
However, if reinstatement is no longer possible, SMC is ordered to pay separation pay equivalent
to one (1) month pay for every year of service.
RATIO:
The question of whether an employer – employee relationship exists in a certain situation
continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer
– employee relationship in their enterprises because that judicial relation spawns obligations
connected with workmen’s compensation, social security, medicare, termination pay, and
unionism.
TABAS ET., AL VS. CALIFORNIA MANUFACTURING CO. ET., AL

G.R. No. L-80680 January 26, 1989
FACTS:
On July 21, 23, and 28, 1986, the petitioners petitioned the NLRC for reinstatement and
payment of various benefits, including minimum wage, overtime pay, holiday pay, thirteen-month
pay, and emergency cost of living allowance pay, against the respondent.
On October 7, 1986, after the cases had been consolidated, the respondent filed a motion
to dismiss as well as a position paper denying the existence of an employer-employee relation
between the petitioners and the respondents and, consequently, any liability for payment of
money claims.

It appears that the petitioners were, prior to their stint with respondents, employees of
Livi, which subsequently assigned them to work as "promotional merchandisers" 3 for the former
firm pursuant to a manpower supply agreement. The petitioners were made to sign employment
contracts with durations of six months, upon the expiration of which they signed new agreements
with the same period, and so on. The petitioners now allege that they had become regular
California employees and demand, as a consequence whereof, similar benefits. They likewise
claim that pending further proceedings below, they were notified by California that they would
not be rehired. As a result, they filed an amended complaint charging California with illegal
dismissal.
California admits having refused to accept the petitioners back to work but deny liability
therefor for the reason that it is not, to begin with, the petitioners' employer and that the
"retrenchment" had been forced by business losses as well as expiration of contracts. 9
ISSUE:
Whether there exist an employer-employee relation between the petitioners and the
respondents based on the manpower supply contract agreement between repondent California
and Livi.
RULING:
The existence of an employer-employees relation is a question of law and being such, it

cannot be made the subject of agreement. Hence, the fact that the manpower supply agreement
between Livi and California had specifically designated the former as the petitioners' employer
and had absolved the latter from any liability as an employer, will not erase either party's
obligations as an employer, if an employer-employee relation otherwise exists between the
workers and either firm. At any rate, since the agreement was between Livi and California, they
alone are bound by it, and the petitioners cannot be made to suffer from its adverse
consequences.
This Court has consistently ruled that the determination of whether or not there is an
employer-employee relation depends upon four standards:
(1) the manner of selection and engagement of the putative employee;
(2) the mode of payment of wages;
(3) the presence or absence of a power of dismissal; and
(4) the presence or absence of a power to control the putative employee's conduct.
Of the four, the right-of-control test has been held to be the decisive factor.
The Court need not therefore consider whether it is Livi or California which exercises
control over the petitioner vis-a-vis the four barometers referred to earlier, since by fiction of law,
either or both shoulder responsibility.

The records show that the petitioners bad been given an initial six-month contract,
renewed for another six months. Accordingly, under Article 281 of the Code, they had become
regular employees-of-California-and had acquired a secure tenure. Hence, they cannot be
separated without due process of law.
Decision:
WHEREFORE, the petition is GRANTED. Judgment is hereby RENDERED: (1): SETTING

ASIDE the decision, dated March 20, 1987, and the resolution, dated August 19, 1987; (2)
ORDERING the respondent, the California Manufacturing Company, to REINSTATE the petitioners
with full status and rights of regular employees; and (3) ORDERING the respondent, the California
Manufacturing Company, and the respondents, Livi Manpower Service, Inc. and/or Lily-Victoria
Azarcon, to PAY, jointly and severally, unto the petitioners: (a) backwages and differential pays
effective as and from the time they had acquired a regular status under the second paragraph,
of Section 281, of the Labor Code, but not to exceed three (3) years, and (b) all such other and
further benefits as may be provided by existing collective bargaining agreement(s) or other
relations, or by law, beginning such time; and (4) ORDERING the private respondents to PAY
unto the petitioners attorney's fees equivalent to ten (10%) percent of all money claims hereby
awarded, in addition to those money claims. The private respondents are likewise ORDERED to
PAY the costs of this suit.
Dagaerag Employer- Employee Relationship
SEVILLA VS. COURT OF APPEALS

GR No. L-41182-3 April 16, 1988
FACTS:
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees) entered into
on Oct. 19, 1960 by and between Mrs. Segundina Noguera, party of the first part; the Tourist
World Service, Inc., represented by Mr. Eliseo Canilao as party of the second part, and hereinafter
referred to as appellants, the Tourist World Service, Inc. leased the premises belonging to the
party of the first part at Mabini St., Manila for the former-s use as a branch office. In the said
contract the party of the third part held herself solidarily liable with the party of the part for the
prompt payment of the monthly rental agreed on. When the branch office was opened, the same
was run by the herein appellant Una 0. Sevilla payable to Tourist World Service Inc. by any airline
for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3%
was to be withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to have
been informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau,
and, since the branch office was anyhow losing, the Tourist World Service considered closing
down its office. This was firmed up by two resolutions of the board of directors of Tourist World
Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing the office of the manager
and vice-president of the Tourist World Service, Inc., Ermita Branch, and the second,authorizing
the corporate secretary to receive the properties of the Tourist World Service then located at the
said branch office. It further appears that on Jan. 3, 1962, the contract with the appellees for the
use of the Branch Office premises was terminated and while the effectivity thereof was Jan. 31,

1962, the appellees no longer used it. As a matter of fact appellants used it since Nov. 1961.
Because of this, and to comply with the mandate of the Tourist World Service, the corporate
secretary Gabino Canilao went over to the branch office, and, finding the premises locked, and,
being unable to contact Lina Sevilla, he padlocked the premises on June 4, 1962 to protect the
interests of the Tourist World Service. When neither the appellant Lina Sevilla nor any of her
employees could enter the locked premises, a complaint wall filed by the herein appellants against
the appellees with a prayer for the issuance of mandatory preliminary injunction. Both appellees
answered with counterclaims. For apparent lack of interest of the parties therein, the trial court
ordered the dismissal of the case without prejudice. Trial court ruled in favor of the respondent,
hence this petition.
ISSUE:
WHETHER OR NOT THERE IS AN EMPLOYER-EMPLOYEE RELATIONSHIP EXIST.
RULING:
No, there was no employer-employee relationship. The records will show that the petitioner, Lina
Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either
as to the result of the enterprise or as to the means used in connection therewith. In the first
place, under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself
in solidum as and for rental payments, an arrangement that would be like claims of a master-
servant relationship. True the respondent Court would later minimize her participation in the lease
as one of mere guaranty, that does not make her an employee of Tourist World, since in any
case, a true employee cannot be made to part with his own money in pursuance of his employer's
business, or otherwise, assume any liability thereof. In that event, the parties must be bound by
some other relation, but certainly not employment.
Diambulang Employer- Employee Relationship
CONTINENTAL MARBLE CORPORATION VS. NLRC

G.R. No. :L-43825 May 9, 1988
FACTS:
Private respondent Rodito Nasayao claimed that sometime in May 1974, he was appointed
plant manager of the petitioner corporation, with an alleged compensation of P3,000.00, a month,
or 25% of the monthly net income of the company, whichever is greater, and when the company
failed to pay his salary for the months of May, June, and July 1974, Rodito Nasayao filed a
complaint with the National Labor Relations Commission, Branch IV, for the recovery of said
unpaid varies.
petitioners denied that Rodito Nasayao was employed in the company as plant manager with a
fixed monthly salary of P3,000.00. They claimed that the undertaking agreed upon by the parties
was a joint venture, a sort of partnership, wherein Rodito Nasayao was to keep the machinery in
good working condition and, in return, he would get the contracts from end-users for the
installation of marble products, in which the company would not interfere. In addition, private

respondent Nasayao was to receive an amount equivalent to 25% of the net profits that the
petitioner corporation would realize, should there be any. Petitioners alleged that since there had
been no profits during said period, private respondent was not entitled to any amount.
The case was submitted for voluntary arbitration and the parties selected the herein respondent
Jose T. Collado as voluntary arbitrator. In the course of the proceedings, however, the herein
petitioners challenged the arbitrator’s capacity to try and decide the case fairly and judiciously
and asked him to desist from further hearing the case. But, the respondent arbitrator refused. In
due time, or on 29 December 1975, he rendered judgment in favor of the complainant, ordering
the herein petitioners to pay Rodito Nasayao the amount of P9,000.00, within 10 days from notice.
petitioners appealed to the National Labor Relations Commission on grounds that the labor arbiter
gravely abused his discretion in persisting to hear and decide the case notwithstanding petitioners’
request for him to desist therefrom: and that the appealed decision is not supported by evidence.
Rodito Nasayao filed a motion to dismiss the appeal on the ground that the decision of the
voluntary arbitrator is final, unappealable, and immediately executory
respondent Commission, in a resolution dated 7 May 1976, dismissed the appeal on the ground
that the decision appealed from is final, unappealable and immediately executory, and ordered
the herein petitioners to comply with the decision of the voluntary arbitrator within 10 days from
receipt of the resolution.
Court issued a temporary restraining order, restraining herein respondents from enforcing and/or
carrying out the questioned decision and resolution.
ISSUE:
Voluntary Arbitration award, generally final. Exceptions.
RULING:
A voluntary arbitrator by the nature of her fucntions acts in quasi-judicial capacity. There
is no reason why herdecisions involving interpretation of law should be beyond this Court’s review.
Administrative officials are presumed to act in accordance with law and yet we do hesitate to pass
upon their work where a question of law is involved or where a showing of abuse of authority or
discretion in their official acts is properly raised in petitions for certiorari.
While the Court has accorded great respect for, and finality to, findings of fact of a
voluntary arbitrator and administrative agencies which have acquired expertise in their respective
fields, like the Labor Department and the National Labor Relations Commission, their findings of
fact and the conclusions drawn therefrom have to be supported by substantial evidence. ln that
instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an employee of the
petitioner corporation is not supported by the evidence or by the law.
The decisions of the voluntary arbitrators must be given the highest respect and as a general rule
must be accorded a certain measure of finality. This is especially true where the arbitrator chosen
by the parties enjoys first rate credentials. It is not correct however, that this respect precludes
the exercise of judicial review over their decisions.
In spite of statutory provisions making final the decisions of certain administrative agencies, the
SC may take cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous
interpretation of the law are brought to its attention.

Martin Employer- Employee Relationship
ENCYCLOPEDIA BRITANNICA INC. VS. NLRC

G.R No. 87098 November 04, 1996
FACTS:
Private respondent was a sales division manager of private petitioner and was in charge
of selling the latter’s products through sales representatives. As compensation, private respondent
receive commissions from the products sold by his agents. After resigning from office to pursue
his private business, he filed a complaint against the petitioner, claiming for non-payment of
separation pay and other benefits.
Petitioner alleged that complainant was not its employee but an independent dealer
authorized to promote and sell its products and in return, received commissions therefrom.
Petitioner did not have any salary and his income from petitioner was dependent on the volume
of sales accomplished. He had his own office, financed the business expense, and maintained his
own workforce. Thus petitioner argued that it had no control and supervision over the
complainant as to the manner and means he conducted his business operations.
The Labor Arbiter ruled that complainant was an employee of the petitioner company. The
petitioner had control over the complainant since the latter was required to make periodic reports
of his sales activities to the company.
ISSUE:
Whether or not there exists an employer-employee relationship.
RULING:
No, because control of employee’s conduct is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship. Under
this, an employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be achieved, but also the manner and
means to be used in reaching that end.
The fact that petitioner issued memoranda to private respondent 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.
DY KEH BENG VS. INTERNATIONAL LABOR AND MARITIME UNION ET., AL

GR NO. L-32245, May 25, 1979

FACTS:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory,
for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic
Act No. 875, 3 by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and
Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case was
filed in the Court of Industrial Relations for in behalf of the International Labor and Marine Union
of the Philippines and two of its members, Solano and Tudla In his answer, Dy Keh Beng
contended that he did not know Tudla and that Solano was not his employee because the latter
came to the establishment only when there was work which he did on pakiaw basis, each piece
of work being done under a separate contract. Moreover, Dy Keh Beng countered with a special
defense of simple extortion committed by the head of the labor union, Bienvenido Onayan.
After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by
the Court of Industrial Relations. An employee-employer relationship was found to have existed
between Dy Keh Beng and complainants Tudla and Solano, although Solano was admitted to have
worked on piece basis.
According to the Hearing Examiner, the evidence for the complainant Union tended to show that
Solano and Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955, 5
respectively, and that except in the event of illness, their work with the establishment was
continuous although their services were compensated on piece basis. Evidence likewise showed
that at times the establishment had eight (8) workers and never less than five (5); including the
complainants, and that complainants used to receive P5.00 a day. sometimes less.
According to Dy Keh Beng, however, Solano was not his employee for the following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the order given him by Dy;
(3) When there were no orders needing his services there was nothing for him to do;
(4) When orders came to the shop that his regular workers could not fill it was then that
Dy went to his address in Caloocan and fetched him for these orders; and
(5) Solano's work with Dy's establishment was not continuous. ,
According to petitioner, these facts show that respondents Solano and Tudla are only piece
workers, not employees under Republic Act 875, where an employee 8 is referred to as shall
include any employee and shag not be limited to the employee of a particular employer unless
the Act explicitly states otherwise and shall include any individual whose work has ceased as a
consequence of, or in connection with any current labor dispute or because of any unfair labor
practice and who has not obtained any other substantially equivalent and regular employment.
while an employer includes any person acting in the interest of an employer, directly or indirectly
but shall not include any labor organization (otherwise than when acting as an employer) or
anyone acting in the capacity of officer or agent of such labor organization.

Petitioner really anchors his contention of the non-existence of employee-employer relationship

on the control test. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del
Rosario, et al., L-13130, October 31, 1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is whether there is an
understanding between the parties that one is to render personal services to or for the benefit of
the other and recognition by them of the right of one to order and control the other in the
performance of the work and to direct the manner and method of its performance.
ISSUE:
1. Whether there existed an employee employer relation between petitioner Dy Keh Beng
and the respondents Solano and Tudla .
RULING:
While this Court upholds the control test under which an employer-employee relationship exists
"where the person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end, " it finds no merit with
petitioner's arguments as stated above. It should be borne in mind that the control test calls
merely for the existence of the right to control the manner of doing the work, not the actual
exercise of the right. Considering the finding by the Hearing Examiner that the establishment of
Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, it is natural to expect
that those working under Dy would have to observe, among others, Dy's requirements of size
and quality of the kaing. Some control would necessarily be exercised by Dy as the making of the
kaing would be subject to Dy's specifications. Parenthetically, since the work on the baskets is
done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control
on the men he employed.
Nevertheless, considering that about eighteen (18) years have already elapsed from the time the
complainants were dismissed, and that the decision being appealed ordered the payment of
backwages to the employees from their respective dates of dismissal until finally reinstated, it is
fitting to apply in this connection the formula for backwages worked out by Justice Claudio
Teehankee in "cases not terminated sooner." The formula cans for fixing the award of backwages
without qualification and deduction to three years, "subject to deduction where there are
mitigating circumstances in favor of the employer but subject to increase by way of exemplary
damages where there are aggravating circumstances. Considering there are no such
circumstances in this case, there is no reason why the Court should not apply the abovementioned
formula in this instance.
WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein
modified to an award of backwages for three years without qualification and deduction at the
respective rates of compensation the employees concerned were receiving at the time of
dismissal. The execution of this award is entrusted to the National Labor Relations Commission.
Costs against petitioner.
Mirande Employer- Employee Relationship

ZANOTTE SHOES VS. NLRC

G.R NO.100665 February 13,1995
J. VITUG
FACTS:
Private respondents Joseph Lluz, et. al averred that they started to work for petitioners
Zanotte Shoes/ Leonardo Lorenzo between 1975 to 1987. They alleged that they worked for a
minimum of 12 hours daily, including Sundays and holidays when needed and that they were
paid on piece-work basis. Private respondents claimed that it angered petitioner Lorenzo when
they requested to be made members of the SSS and that when they demanded an increase in
their pay rates, they were prevented from entering the work premises. Private respondents filed
a complaint for illegal discharge against petitioners. Petitioners, in their Answer, claim that their
business operations were only seasonal, normally twice a year- one in June and another in
December, when heavy job orders would come in. They contend that private respondents were
engaged on purely contractual basis and paid the rates conformably with their respective
agreements. The Labor Arbiter rendered judgment in favor of private respondents. He declared
that there was an employer-employee relationship between petitioners and private respondents
and that the latter were regular employees of the former. The Labor Arbiter concluded that there
is neither dismissal nor abandonment, but ordered petitioners to pay the private respondents
their separation pay. The NLRC, on appeal, affirmed the Labor Arbiter’s decision.
ISSUE:
Whether or not there is an employer-employee relationship between petitioners and

private respondents.
RULING:
YES. There is an employer-employee relationship between petitioners and private

respondents. The work of private respondents is clearly related to and in the pursuit of the
principal activity of the petitioners. The indicia used for determining the existence of an employer-
employee relationship, all extant in the case at bench, include: (1) the selection and engagement
of the employee, (2) the payment of wages, (3) the power of dismissal, and(4)the employer’s
power to control the employee with respect to the result of the work to be done and to the means
and methods by which the work is to be accomplished. The last requirement, so herein posed as
an issue, refers to the existence of the right to control and not necessarily to the actual exercise
of the right. The Court, however, finds the award of separation pay to be unwarranted. The Labor
Arbiter, sustained by the NLRC, concluded that there was neither dismissal nor abandonment.
The fact of the matter is that petitioners have repeatedly indicated their willingness to accept the
private respondents, but the latter have steadfastly refused the offer. For being without any clear
legal basis, the award of separation pay must thus be set aside. There is nothing, however, that
prevents petitioners from voluntarily giving private respondents some amounts on ex gratia basis.

AIR MATERIAL WING SAVINGS AND LOAN ASSOCIATION INC. VS. NLRC
FACTS:
Private respondent Luis S. Salas was appointed "notarial and legal counsel" for the petitioner.
The appointment was renewed for three years.
The petitioner issued an order reminding Salas of the approaching termination of his legal services
under their contract. This prompted Salas to lodge a complaint against AMWSLAI for separation
pay, vacation and sick leave benefits, cost of living allowances, refund of SSS premiums, moral
and exemplary damages, payment of notarial services, and attorney's fees.
AMWSLAI moved to dismiss for lack of jurisdiction. It averred that there was no employer-
employee relationship between it and Salas and that his monetary claims properly fell within the
jurisdiction of the regular courts.
It was there held that Salas was not illegally dismissed and so not entitled to collect separation
benefits. His claims were rejected on the ground that he was a managerial employee. He was
also denied moral and exemplary damages for lack of evidence of bad faith on the part of
AMWSLAI. Neither was he allowed to collect his notarial fees because the claim therefor had
already prescribed. However, the petitioner was ordered to pay Salas his notarial fees, and
attorney's fee equivalent to 10% of the judgment award.
On appeal, the decision was affirmed in toto by the respondent Commission
ISSUE:
Whether or not Salas can be considered an employee of the petitioner company.
RULING:
We have held in a long line of decisions that the elements of an employer-employee relationship
are: (1) selection and engagement of the employee; (2) payment of wages; (3) power of
dismissal; and (4) employer's own power to control employee's conduct. 3
The existence of such a relationship is essentially a factual question.
The terms and conditions set out in the letter-contract entered into by the parties on, clearly
show that Salas was an employee of the petitioner. His selection as the company counsel was
done by the board of directors in one of its regular meetings. The petitioner paid him a monthly
compensation/retainer's fee for his services. Though his appointment was for a fixed term of
three years, the petitioner reserved its power of dismissal for cause or as it might deem necessary
for its interest and protection. No less importantly, AMWSLAI also exercised its power of control
over Salas by defining his duties and
We hold, therefore, that the public respondent committed no grave abuse of discretion in ruling
that an employer-employee relationship existed between the petitioner and the private
respondent.

The public respondents agreed that Salas was entitled to collect notarial fees from 1987 to 1990
by virtue of his having been assigned as notarial officer. We feel, however, that there is no
substantial evidence to support this finding.
The letter-contract, does not contain any stipulation for the separate payment of notarial fees to
Salas in addition to his basic salary. On the contrary, it would appear that his notarial services
were part of his regular functions and were thus already covered by his monthly compensation.
It is true that the notarial fees were paid by members-borrowers of the petitioner for its own
account and not of Salas. However, this is not a sufficient basis for his claim to such fees in the
absence of any agreement to that effect.
ACCORDINGLY, the appealed judgment of the NLRC is AFFIRMED, with the modification that the
award of notarial fees and attorney's fees is disallowed. It is so ordered.
Mortel Employer- Employee Relationship
HYDRO RESOURCES CONTRACTORS CORP. VS. PAGALILANAN

G.R. No. L-62909 April 18, 1989
Gutierrez, Jr., J.
FACTS:
Petitioner corporation hired the private respondent Aban as its "Legal Assistant." On 1980,
Aban received a letter from the corporation informing him that he would be considered terminated
because of his alleged failure to perform his duties well. Aban filed a complaint against the
petitioner for illegal dismissal.
The labor arbiter ruled that Aban was illegally dismissed.
This ruling was affirmed by the NLRC on appeal.
ISSUE:
Whether or not there was an employer-employee relationship between the petitioner-

corporation and Aban.
RULING:
A lawyer, like any other professional, may very well be an employee of a private
corporation or even of the government. It is not unusual for a big corporation to hire a staff of
lawyers as its in-house counsel, pay them regular salaries, rank them in its table of organization,
and otherwise treat them like its other officers and employees
This Court is not without a guide, as stated in the case of Tabas v. California Manufacturing Co.
It consistently ruled that the determination of whether or not there is an employer-employee
relation depends upon four standards: (1) the manner of selection and engagement; (2) the
mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the

presence or absence of a power to control the putative employee's conduct. Of the four, the right-
of-control test has been held to be the decisive factor.
Aban was employed by the petitioner to be its Legal Assistant. The petitioner paid him a
basic salary plus living allowance. Aban worked solely for the petitioner and dealt only with legal
matters involving the said corporation and its employees. He also assisted the Personnel Officer
in processing appointment papers of employees. This latter duty is not an act of a lawyer in the
exercise of his profession but rather a duty for the benefit of the corporation.
The above-mentioned facts show that there was an employee-employer relationship, as

the petitioner paid Aban's wages, exercised its power to hire and fire the respondent employee
and more important, exercised control over Aban by defining the duties and functions of his work.
Navarro Employer- Employee Relationship
INSULAR ASSURANCE CO. VS. NLRC

G.R. No. 119930 12 March 1998
Bellosillo, J.
FACTS:
On 21 August 1992 petitioner entered into an agency contract with private respondent
Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life
insurance and annuities for which he would be paid compensation in the form of commissions.
The contract was prepared by petitioner in its entirety and De los Reyes merely signed his
conformity thereto. It contained the stipulation that no employer-employee relationship shall be
created between the parties and that the agent shall be free to exercise his own judgment as to
time, place and means of soliciting insurance. De los Reyes, however, was prohibited by petitioner
from working for any other life insurance company, and violation of this stipulation was sufficient
ground for termination of the contract. In a written communication by petitioner to respondent
De los Reyes, the latter was urged to register with the Social Security System as a self-employed
individual as provided under PD No. 1636. On 1 March 1993 petitioner and private respondent
entered into another contract 6 where the latter was appointed as Acting Unit Manager under its
office. It was similarly provided in the management contract that the relation of the acting unit
manager and/or the agents of his unit to the company shall be that of independent contractor. If
the appointment was terminated for any reason other than for cause, the acting unit manager
would be reverted to agent status and assigned to any unit. Private respondent worked
concurrently as agent and Acting Unit Manager until he was notified by petitioner on 18 November
1993 that his services were terminated effective 18 December 1993. On 7 March 1994 he filed a
complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was
not paid his salaries and separation pay. Petitioner filed a motion to dismiss the complaint of De
los Reyes for lack of jurisdiction, citing the absence of employer-employee relationship. It
reasoned out that based on the criteria for determining the existence of such relationship or the
so-called "four-fold test," i.e., (a) selection and engagement of employee, (b) payment of wages,
(c) power of dismissal, and, (d) power of control, De los Reyes was not an employee but an
independent contractor. On 17 June 1994 the motion of petitioner was granted by the Labor
Arbiter and the case was dismissed. Respondent NLRC however appreciated the evidence from a

different perspective. It determined that respondent De los Reyes was under the effective control
of petitioner in the critical and most important aspects of his work as Unit Manager.
ISSUE:
Whether or not an employer – employee relationship existed in the private respondent’s

contract
RULING:
Yes. It is axiomatic that the existence of an employer-employee relationship cannot be

negated by expressly repudiating it in the management contract and providing therein that the
"employee" is an independent contractor when the terms of the agreement clearly show
otherwise. For, the employment status of a person is defined and prescribed by law and not by
what the parties say it should be. In determining the status of the management contract, the
"four-fold test" on employment earlier mentioned has to be applied. Petitioner contends that De
los Reyes was never required to go through the pre-employment procedures and that the
probationary employment status was reserved only to employees of petitioner. On this score, it
insists that the first requirement of selection and engagement of the employee was not met. A
look at the provisions of the contract shows that private respondent was appointed as Acting Unit
Manager only upon recommendation of the District Manager. The very designation of the
appointment of private respondent as "acting" unit manager obviously implies a temporary
employment status which may be made permanent only upon compliance with company
standards. On the matter of payment of wages, the private respondent’s contract indicates quite
clearly that the unit manager receives a financial assistance during the first year of appointment.
Private respondent was already entitled to be paid both the free and validated portions of the
UDF every month because his production performance could not be determined until after the
lapse of the quarter involved. As to the matter involving the power of dismissal and control by
the employer, the latter of which is the most important of the test, private respondent complied
to all his duties and functions as Unit Manager. He served exclusively to the company, and he
could only be promoted to permanent unit manager if he met certain requirements. As found by
the NLRC, he exercised administrative functions which were necessary and beneficial to the
business of Insular Life. This obtaining, there is no escaping the conclusion that private
respondent Pantaleon de los Reyes was an employee of herein petitioner. Wherefore, the petition
of Insular Life Assurance Company, is DENIED and the Decision of the National Labor Relations
Commission dated 3 March 1995 and its Order of 6 April 1996 sustaining it are AFFIRMED. Let
this case be REMANDED to the Labor Arbiter a quo who is directed to hear and dispose of this
case with deliberate dispatch in light of the views expressed herein.
OPULENCIA ICE PLANT VS. NLRC
FACTS:
MANUEL P. ESITA was hired as compressor operator-mechanic for the ice plants of petitioner Dr.
Melchor Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially assigned at the
ice plant in Tanauan, Esita would work from seven o'clock in the morning to five o'clock in the

afternoon receiving a daily wage of P35.00. In 1986, Esita was transferred to the ice plant in
Calamba, which was then undergoing overhauling. For less than a month, Esita helped in the
construction-remodeling of Dr. Opulencia's house.
For demanding the correct amount of wages due him, Esita was dismissed from service.
Consequently, he filed a complaint for illegal dismissal, underpayment, non-payment for overtime,
legal holiday, premium for holiday and rest day, 13th month, separation/retirement pay and
allowances against petitioners.
Petitioners deny that Esita is an employee. They claim that Esita could not have been employed
in 1980 because the Tanauan ice plant was not in operation due to low voltage of electricity and
that Esita was merely a helper/peon of one of the contractors they had engaged to do major
repairs and renovation of the Tanauan ice plant in 1986. Petitioners further allege that when they
had the Calamba ice plant repaired and expanded, Esita likewise rendered services in a similar
capacity, and thus admitting that he worked as a helper/peon in the repair or remodeling of Dr.
Opulencia's residence in Tanauan.
Labor Arbiter rendered a decision finding the existence of an employer-employee relationship

between petitioners and Esita and accordingly directed them to pay him P33,518.02 representing
separation pay, underpayment of wages, allowances, 13th month, holiday, premium for holiday,
and rest day pays.
ISSUE:
Whether there exists employer-employee relation between the petitioners and the private
respondent Esita.
RULING:
No particular form of evidence is required to prove the existence of an employer-employee

relationship. Any competent and relevant evidence to prove the relationship may be admitted.
For, if only documentary evidence would be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as no employer would wish to come
out with any trace of the illegality he has authored considering that it should take much weightier
proof to invalidate a written instrument. Thus, as in this case where the employer-employee
relationship between petitioners and Esita was sufficiently proved by testimonial evidence, the
absence of time sheet, time record or payroll has become inconsequential.
The petitioners' reliance on Sevilla v. Court of Appeals is misplaced. In that case, we did not
consider the inclusion of employer's name in the payroll as an independently crucial evidence to
prove an employer-employee relation. Moreover, for a payroll to be utilized to disprove the
employment of a person, it must contain a true and complete list of the employees. But, in this
case, the testimonies of petitioners' witnesses admit that not all the names of the employees
were reflected in the payroll.
In their Consolidated Reply, petitioners assert that "employees who were absent were naturally
not included in the weekly payrolls." But this simply emphasizes the obvious. Petitioners' payrolls
do not contain the complete list of the employees, so that the payroll slips cannot be an accurate
basis in determining who are and are not their employees. In addition, as the Solicitor General

observes: ". . . the payroll slips submitted by petitioners do not cover the entire period of nine
years during which private respondent claims to have been employed by them, but only the
periods from November 2 to November 29, 1986 and April 26 to May 30, 1987 . . . . It should be
noted that petitioners repeatedly failed or refused to submit all payroll slips covering the period
during which private respondent claims to have been employed by them despite repeated
directives from the Labor Arbiter . . . ." In this regard, we can aptly apply the disputable
presumption that evidence willfully suppressed would be adverse if produced.
Petitioners further contend that the claim of Esita that he worked from seven o'clock in the
morning to five o'clock in the afternoon, which is presumed to be continuous, is hardly credible
because otherwise he would not have had the time to tend his crops. As against this positive
assertion of Esita, it behooves petitioners to prove the contrary. It is not enough that they raise
the issue of probability, nay, improbability, of the conclusions of public respondents based on the
facts bared before them, for in case of doubt, the factual findings of the tribunal which had the
opportunity to peruse the conflicting pieces of evidence should be sustained.
The petitioners point out that even granting arguendo that Esita was indeed a mechanic, he could
never be a regular employee because his presence would be required only when there was a
need for repair. We cannot sustain this argument. This circumstance cannot affect the regular
status of employment of Esita. An employee who is required to remain on call in the employer's
premises or so close thereto that he cannot use the time effectively and gainfully for his own
purpose shall be considered as working while on call.
In sum, the determination of regular and casual employment is not affected by the fact that the
employee's regular presence in the place of work is not required, the more significant
consideration being that the work of the employee is usually necessary or desirable in the business
of the employer. More importantly, Esita worked for 9 years and, under the Labor Code, "any
employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to that activity in which he is
employed . . . ."
The petitioners would give the impression that the repair of the ice plant and the renovation of
the residence of Dr. Opulencia were voluntarily extended by Esita because "[r]espondent did it
on their (sic) own." Unfortunately for petitioners, we cannot permit these baseless assertions to
prevail against the factual findings of public respondents which went through the sanitizing
process of a public hearing. The same observation may be made of the alleged inconsistencies in
Esita's testimonies. Moreover, on the claim that Esita's construction work could not ripen into a
regular employment in the ice plant because the construction work was only temporary and
unrelated to the ice-making business, needless to say, the one month spent by Esita in
construction is insignificant compared to his nine-year service as compressor operator in
determining the status of his employment as such, and considering further that it was Dr.
Opulencia who requested Esita to work in the construction of his house.
In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to
augment his income, there is no doubt that petitioners should be commended; however, in view
of the existence of an employer-employee relationship as found by public respondents, we cannot
treat humanitarian reasons as justification for emasculating or taking away the rights and
privileges of employees granted by law. Benevolence, it is said, does not operate as a license to
circumvent labor laws. If petitioners were genuinely altruistic in extending to their employees
privileges that are not even required by law, then there is no reason why they should not be

required to give their employees what they are entitled to receive. Moreover, as found by public
respondents, Esita was enjoying the same privileges granted to the other employees of
petitioners, so that in thus treating Esita, he cannot be considered any less than a legitimate
employee of petitioners.
WHEREFORE, there being no grave abuse of discretion on the part of public respondents, the
instant petition is DISMISSED. Accordingly, the restraining order we issued on 13 May 1991 is
LIFTED.
SO ORDERED.
Pascasio Employer- Employee Relationship
DOMASIG VS. NLRC

G.R. No. 118101 September 16, 1996
Padilla, J.:
FACTS:
The complaint was instituted by Eddie Domasig against respondents Cata Garments
Corporation for illegal dismissal, unpaid commission and other monetary claims. Complainant
alleged that he started working with the respondent on July 6, 1986 as Salesman when the
company was still named Cato Garments Corporation. That on August 29, 1992, he was dismissed
when respondent learned that he was being pirated by a rival corporation which offer he refused.
Prior to his dismissal, complainant alleged that he was receiving a salary of P1,500.00 a month
plus commission. On September 3, 1992 he filed the instant complaint.
Respondent denied complainants claim that he is a regular employee contending that he

is a mere commission agent who receives a commission of P5.00 per piece of article sold at
regular price and P2.50 per piece sold in bargain price; that in addition to commission,
complainant received a fixed allowance of P1,500.00 a month; that he had no regular time
schedule; and that the company come into existence only on September 17, 1991.
RULING:
The list of sales collection including computation of commissions due, expenses incurred
and cash advances received which, according to public respondent, the labor arbiter failed to
appreciate in support of private respondents allegation as regards the nature of petitioners
employment as a commission agent, cannot overcome the evidence of the ID card and salary
vouchers presented by petitioner which private respondents have not denied. The list presented
by private respondents would even support petitioners allegation that, aside from a monthly
salary of P1,500.00, he also received commissions for his work as a salesman of private
respondents.
Having been in the employ of private respondents continuously for more than one year,
under the law, petitioner is considered a regular employee. Proof beyond reasonable doubt
is not required as a basis for judgment on the legality of an employers dismissal of an

employee, nor even preponderance of evidence for that matter, substantial evidence
being sufficient. Petitioners contention that private respondents terminated his employment
due to their suspicion that he was being enticed by another firm to work for it was not refuted
by private respondents. The labor arbiters conclusion that petitioners dismissal is therefore illegal,
is not necessarily arbitrary or erroneous. It is entitled to great weight and respect.
Samson Employer- Employee Relationship
EQUITABLE BANKING CORPORATION VS. NLRC

G.R. NO. 102467 JUNE 13, 1997
VITUG, J.
FACTS:
Atty. Sadac was appointed as VP for the Legal Department of Equitable. Nine lawyers,
members of the said department, filed a letter-petition for Sadac’s abusive conduct,
mismanagement, ineffectiveness and indecisiveness. They warned that they would resign
en masse if Atty. Sadac were retained in his position. The Board asked Sadac to voluntarily
resign rather than conduct a formal hearing to terminate him. Atty. Sadac filed a complaint
for illegal dismissal and damages.
ISSUE:
Whether or not there is employee-employer relationship.
HELD:
Yes. Aside from his work as VP, he was also working under the supervision of the
President and Board of Directors. As employed for 8 years, Atty. Sadac received pay slips for
monthly salaries. The bank withheld his taxes with BIR. The bank also enrolled him as employee
under the SSS and Medicare programs. He contributed to Equitable’s Employees’ Provident Fund.
A lawyer, like any other professional, may work in a company and be employed as a regular
employee.
The Court resolved first the issue of employee-employer relationship and ruled in the
affirmative on the ground that private respondent participated as part of management and is one
of its senior officers holding the position of Vice-President. Upon finding that private respondent
is an employee of petitioner, the latter violated the right to due process of private respondent
when the latter's request of full hearing was not granted. While it is true that the essence of due
process is simply an opportunity to be heard or, as applied in administrative proceedings, an
opportunity to explain one's side, meetings in the nature of consultation and conferences such
as the case here, however, may not be valid substitutes for the proper observance of notice and
hearing. However, reinstatement, which is the consequence of illegal dismissal, has markedly
been rendered undesirable. Private respondent shall, instead, be entitled to back wages from the
time of his dismissal until reaching sixty years of age and, thereupon, to retirement benefits in
accordance with Article 287 of the Labor Code and Sec 14, Rule 1, Book VI of the Implementing
rules of the Labor Code.

Sandoval Employer- Employee Relationship
ZAMUDIO VS. NLRC

GR No. 76723 March 25, 1990
FACTS:
Petitioners rendered services essential for the cultivation of respondent’s farm. While the
services were not continuous in the sense that they were not rendered everyday throughout the
year, as is the nature of farm work, petitioners had never stopped working for respondent from
year to year from the time he hired them to the time he dismissed.
ISSUE:
Whether or not the petitioners are considered employees so that employee employer
relationship may exist.
RULING:
The nature of their employment, i.e. “Pakyao” basis, does not make petitioner
independent contractors. Pakyao workers are considered employees as long as the employer
exercises control over the means by which such workers are to perform their work inside private
respondents farm, the latter necessarily exercised control over the performed by petitioners.
The seasonal nature of petitioner’s work does not detract from the conclusion that
employer – employee relationship exits. Seasonal workers whose work is not merely for the
duration of the season, but who are rehired every working season are considered regular
employees. The circumstances that petitioners do not appear in respondent’s payroll do not
destroy the employer – employee relationship between them. Omission of petitioners in the
payroll was not within their control; they had no hand in the preparation of the payroll. This
circumstance, even if true, cannot be taken against petitioners.
Serrano Employer- Employee Relationship
PAGUIO VS. NLRC

GR No. 147816 May 9, 2003
FACTS:
Metro Times Corporation, publisher of "The Manila times" hired petitioner as account
executive tasked to solicit advertisements for the said newspaper. In return he will receive
commission equivalent to 15% on direct advertisements subject to tax deductions. Furthermore,
he receives a monthly allowance of 2000 if he meets the quota. On August 15, 1992, barely 2
months after the fifth renewal of his contract with the company he was informed about his

termination based on accusations not clearly established. In their contract, there is a stipulation,
which states that petitioner in not an employee of the company. Moreover, it states that either
party may terminate the contract after 30 days’ notice. Respondent filed a complaint for illegal
dismissal. Labor Arbiter found respondent company liable for illegal dismissal and ordered the
reinstatement of the petitioner. On appeal NLRC reversed the decision affirmed in toto by CA,
hence the appeal.
ISSUES:
Whether or not petitioner is an employee of the said company.
Whether or not the dismissal was proper.
RULING:
The prime question here is whether petitioner is a regular employee or not. A regular
employee is one who is engaged to perform activities, which are necessary and desirable in the
usual business or trade of the employer as against those which are undertaken for a specific
project or are seasonal. Even in these latter cases, where such person has rendered at least one
year of service, regardless of the nature of the activity performed or of whether it is continuous
or intermittent, the employment is considered regular as long as the activity exists, it not being
indispensable that he be first issued a regular appointment or be formally declared as such before
acquiring a regular status. Admittedly, company’s president acceded that petitioner’s work is of
great importance in the survival of the company being the advertisements solicited by the
petitioner are the lifeblood of the company.
Tejares Employer- Employee Relationship
GREAT PACIFIC LIFE INSURANCE CORP. VS. JUDICO

G.R. No. 73887 December 21, 1989
PARAS J.:
FACTS:
Honorato Judico filed a complaint for illegal dismissal against Grepalife, a duly organized
insurance firm, before the NLRC Regional, prayed for award of money claims consisting of
separation pay, unpaid salary and 13th month pay, refund of cash bond, moral and exemplary
damages and attorney's fees.
Judico entered into an agreement of agency with Grepalife to become a debit agent
attached to the industrial life agency in Cebu City. Petitioner defines a debit agent as "an insurance
agent selling/servicing industrial life plans and policy holders. He had definite work assignments
including but not limited to collection of premiums from policy holders and selling insurance to
prospective clients. He received a definite minimum amount per week as his wage known as
“Sales Reserve” wherein the failure to maintain the same would bring him back to the beginner’s
employment with fixed weekly wage of P200 for 13 weeks regardless of production. He was
assigned a definite a definite place in the office to work on when he is not in the field; and in
addition to his canvassing work he was burdened with the job collection. In both cases he was
required to make a regular report to the company regarding their duties. He was then promoted

to Zone Supervisor with additional allowance. On June 28,1982 he was dismissed by way of
Termination of his agency contract.
ISSUE:
Whether or not there is an employer-employee relationship between insurance agents and

their principal?
RULING:
Yes, there is an employer-employee relationship between Grepalife which the element of

control by the petitioner on Judico was very much present. The record shows that petitioner
Judico received a definite minimum amount per week as his wage known as "sales reserve"
wherein the failure to maintain the same would bring him back to a beginner's employment with
a fixed weekly wage of P 200.00 for thirteen weeks regardless of production. The facts shows
that Judico was controlled by Grepalife insurance company not only as to the kind of work; that
amount of results, the kind of performance but also the power of dismissal. Judico by nature and
his position and work has been a regular employee and therefore entitled to the protection of the
law and not to be terminated without valid and justifiable cause.
Alquiza Employer- Employee Relationship
FEATI UNIVERSITY VS. HON. JOSE S. BAUTISTA AND FEATI UNIVERSITY FACULTY
CLUB
G.R. No. L-21278 December 27, 1966
ZALDIVAR, J.
FACTS:
January 14, 1963, the President of Feati University Faculty Club (PAFLU) wrote a letter to
Mrs. Victoria L. Araneta, President of Feati University informing her that it registered as a labor
union. PAFLU sent another letter with 26 demands in relation to their employment and requesting
an answer within 10 days from receipt thereof. Araneta answered the letters, requesting that she
be given at least 30 days to study thoroughly the different phases of the demands. Meanwhile
counsel for Feati, wrote a letter to the President of PAFLU demanding proof of its majority status
and designation as a bargaining representative. The President of PAFLU rejected the extension
of time and filed a notice of strike with the Bureau of Labor due to Feati’s refusal to bargain
collectively.
Parties were called to the Conciliation Division of the Bureau of Labor but efforts to
conciliate them failed. On February 18, 1963, PAFLU declared a strike and established picket
lines in the premises of Feati resulting in the disruption of classes in the University. The President
of the Philippines certified to the Court of Industrial Relations (CIR) the dispute between Feati
and PAFLU pursuant to the provisions of Section 10 of Republic Act No. 875.
3 cases were filed with the CIR

(1) CIR Case No. 41-IPA – PAFLU’s petition to declare in contempt of court since Feati refused to
accept them back to work in violation of the return-to-work order of March 30, 1963 and has
employed other professors and/or instructors to take their places. Also includes the motion to
dismiss filed by Feati contending that the CIR has no jurisdiction over the case.
(2) CIR Case No. 1183-MC – PAFLU’s petition for certification election praying that it be certified
as the sole and exclusive bargaining representative. This case was later withdrawn since the Case
41-IPA had already been certified by the President to the CIR and has absorbed the issues herein.
(3) CIR Case No. V-30 – PAFLU’s complaint for indirect contempt of court filed against the
administrative officials of the Feati reiterating Case 41-IPA.
May 10, 1963: Feati filed before the SC a petition for certiorari and prohibition with writ
of preliminary injunction which was issued upon the Feati's filing a bond of P50,000 (increased
from P1,000), ordering CIR Judge Jose S. Bautista to desist and refrain from further proceeding.
On the strength of the presidential certification, Judge Bautista set the case for hearing. Feati,
thru counsel filed a motion to dismiss the case upon the ground that the CIR has no jurisdiction
over the case, because: (1) the Industrial Peace Act is NOT applicable to the University, it being
an educational institution, nor to the members of the Faculty Club, they being independent
contractors (2) the presidential certification is violative of Section 10 of the Industrial Peace Act,
as the University is not an industrial establishment and there was no industrial dispute which
could be certified to the CIR. Judge Bautista denied the motion to dismiss and ordered the strikers
to return immediately to work and the University to take them back under the last terms and
conditions existing before the dispute arose.
Without the motion for reconsideration having been acted upon by the CIR en banc, Judge
Bautista set the case for hearing on the merits but was cancelled upon Feati’s petition for certiorari
alleging that Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with grave
abuse of discretion, in taking cognizance of, and in issuing the questioned orders in, CIR Cases
Nos. 41-IPA 1183-MC and V-30. Feati claims that it is not an employer within the contemplation
of R.A. 875, because it is not an industrial establishment. It also claims that it is only a lessee of
the services of its professors and/or instructors pursuant to a contract of services entered into
between them because the University does not exercise control over their work.
ISSUE:
Whether can be considered an employer and PAFLU as an employee to be covered by

R.A. 875 and have right to unionise
RULING:
YES. Petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-
21278 is dismissed.
The Supreme Court denied the petition. Based on RA 875 Section 2(c) The term employer
include any person acting in the interest of an employer, directly or indirectly, but shall not
include any labor organization (otherwise than when acting as an employer) or any one acting in
the capacity or agent of such labor organization.

In this case, the University is operated for profit hence included in the term of employer.
Professors and instructors, who are under contract to teach particular courses and are paid for
their services, are employees under the Industrial Peace Act.
Professors and instructors are not independent contractors. university controls the work
of the members of its faculty; that a university prescribes the courses or subjects that professors
teach, and when and where to teach; that the professors’ work is characterized by regularity and
continuity for a fixed duration; that professors are compensated for their services by wages and
salaries, rather than by profits; that the professors and/or instructors cannot substitute others to
do their work without the consent of the university; and that the professors can be laid off if their
work is found not satisfactory. All these indicate that the university has control over their work;
and professors are, therefore, employees and not independent contractors.
Moreover, even if university professors are considered independent contractors, still they
would be covered by Rep. Act No. 875. Professors, instructors or teachers of private educational
institutions who teach to earn a living are entitled to the protection of our labor laws — and one
such law is Republic Act No. 875.
To certify a labor dispute to the CIR is the prerogative of the President under the law, and
this Court will not interfere in, much less curtail, the exercise of that prerogative. The jurisdiction
of the CIR in a certified case is exclusive. The parties involved in the case may appeal to the
Supreme Court from the order or orders thus issued by the CIR. The return-to-work order cannot
be considered as an impairment of the contract entered into with the replacements. Besides,
labor contracts must yield to the common good and such contracts are subject to the special laws
on labor unions, collective bargaining, strikes and similar subjects.
Biyo Employer- Employee Relationship
VILLAMARIA VS. CA AND BUSTAMANTE

GR No. 165881, 19 April 2006
FACTS:
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship
engaged in assembling passenger jeepneys with a public utility franchise to operate along the
Baclaran-Sucat route. One of those drivers was respondent Bustamante. Bustamante remitted
P450.00 a day to Villamaria as boundary and kept the residue of his daily earnings as
compensation for driving the vehicle. Villamaria verbally agreed to sell the jeepney to Bustamante
under the boundary-hulog scheme, where Bustamante would remit to Villarama P550.00 a day
for a period of four years; Bustamante would then become the owner of the vehicle and continue
to drive the same under Villamarias franchise. It was also agreed that Bustamante would make a
downpayment of P10,000.00. The parties agreed that if Bustamante failed to pay the boundary-
hulog for three days, Villamaria Motors would hold on to the vehicle until Bustamante paid his
arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily
boundary-hulog for a period of one week, the Kasunduan would cease to have legal effect and
Bustamante would have to return the vehicle to Villamaria Motors. Bustamante and other drivers
who also had the same arrangement with Villamaria Motors failed to pay their respective
boundary-hulog. This prompted Villamaria to serve a Paalala, reminding them that under the

Kasunduan, failure to pay the daily boundary-hulog for one week, would mean their respective
jeepneys would be returned to him without any complaints. Villamaria took back the jeepney
driven by Bustamante and barred the latter from driving the vehicle. Bustamante filed a Complaint
for Illegal Dismissal. Bustamante alleged that he was employed by Villamaria in July 1996 under
the boundary system.
ISSUE:
Whether the existence of a boundary-hulog agreement negates the employer-employee

relationship between the vendor and vendee, and, as a corollary, whether the Labor Arbiter has
jurisdiction over a complaint for illegal dismissal in such case.
RULING:
Yes. the nature of an action and the subject matter thereof, as well as, which court or
agency of the government has jurisdiction over the same, are determined by the material
allegations of the complaint in relation to the law involved and the character of the reliefs prayed
for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs. Under the
boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created
between petitioner and respondent: that of employer-employee and vendor-vendee. The
Kasunduan did not extinguish the employer-employee relationship of the parties extant before
the execution of said deed.
Custodio Employer- Employee Relationship
SY ET. AL. VS. CA AND J. SAHOT

G.R. No. 142293 February 27, 2003
Quisumbing, J.
FACTS:
In 1958, Jaime Sahot started working as a truck helper for Vicente Sy’s family-owned
trucking business. In 1965, he became a truck driver of the same family business, renamed T.
Paulino Trucking Service, later 6B’s Trucking Corporation in 1985, and thereafter known as SBT
Trucking Corporation since 1994. Throughout all these changes in names and for 36 years, Sahot
continuously served the trucking business of the petitioners.
In 1994, Sahot who was already 59 years old had been incurring absences as he was
suffering from various ailments. He inquired about his medical and retirement benefits with the
Social Security System (SSS) but discovered that his premium payments had not been remitted
by his employer.
Sahot applied for extension of his leave. It was at this time when petitioners allegedly
threatened to terminate his employment should he refuse to go back to work.
Eventually, petitioners carried out their threat and dismissed him from work. He ended up sick,
jobless and penniless.

This prompted Sahot to file with the NLRC NCR Arbitration Branch, a complaint for illegal
dismissal against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T.
Paulino Trucking Service, 6B’s Trucking and SBT Trucking.
ISSUE:
Whether or not Jaime Sahot is an employee of Vicente Sy and Trinidad Paulino-Sy, Belen
Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6B’s Trucking and SBT Trucking.
RULING:
Jaime Sahot was not an industrial partner but an employee of petitioners from 1958 to
1994.
The elements to determine the existence of an employment relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer’s power to control the employee’s conduct. The most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it.
As found by the appellate court, petitioners owned and operated a trucking business since
the 1950s and by their own allegations, they determined Sahot’s wages and rest day. Records of
the case show that Sahot actually engaged in work as an employee.
During the entire course of his employment he did not have the freedom to determine
where he would go, what he would do, and how he would do it. He merely followed instructions
of petitioners and was content to do so, as long as he was paid his wages. Indeed, Sahot had
worked as a truck helper and driver of petitioners not for his own pleasure but under the latter’s
control.
De Leon Employer- Employee Relationship
MAKATI HABERDASBERY, INC. VS. NLRC

GR No. 83380-81 November 15, 1989
Fernan, CJ
FACTS:
The private respondents herein have been working for Makati Haberdashery, Inc (MHI)
as tailors, seamstress, sewers, basters and “plantsadoras”. They are paid on a piece-rate basis
except Maria Angeles and Leonila Serafina who are paid on a monthly basis. They are also given
a daily allowance of P3.00 provided they report for work before 9:30am everyday. They are
required to work from or before 9:30am up to 6:00 or 7:00pm from Monday to Saturday and
during peak periods even on Sundays and holidays.
On 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the workers,

filed a complaint for (a) underpayment of the basic wage, and living allowance; (b) non-payment
of overtime work, holiday pay, service incentive pay, 13th month pay; and (c) other benefits
provided for under some Wage Orders.

During the pendency of the first case, Dioscoro Pelobello left with Salvador Rivera, a
salesman of MHI, an open package, which was discovered to contain a “jusi” barong tagalog.
When confronted, Pelobello replied that the same was ordered by Casimiro Zapata for his
customer. Zapata allegedly admitted that he copied the design of MHI. But in the afternoon, when
again questioned about the said barong, Pelobello and Zapata denied ownership of the same.
Consequently, a memorandum was issued to them to explain why no action should be taken
against them for accepting a job order which is prejudicial and in direct competition with the
business of the company. Both allegedly did not submit their explanation and did not report for
work. Hence, they were dismissed by MHI. They filed a complaint for illegal dismissal.
Labor Arbiter Ceferina J. Diosana found MHI guilty of illegal dismissal, violating the decrees
on the cost of living allowance, service incentive leave pay and the 13th Month Pay but dismissed
the claims for underpayment re: violation of the minimum wage law for lack of merit. The NLRC
affirmed the LA’s decision.
ISSUE:
Is there employer-employee relationship existing between MHI and the respondent

workers?
RULING:
YES. We have repeatedly held in countless decisions that the test of employer-employee
relationship is four-fold: (1) the selection and engagement of the employee (2) the payment of
wages (3) the power of dismissal and (4) the power to control the employee’s conduct. It is the
so-called “control test” that is the most important element.
This simply means the determination of whether the employer controls or has reserved
the right to control the employee not only as to the result of the work but also as to the means
and method by which the same is to be accomplished.
The facts at bar indubitably reveal that the most important requisite of control is present.
As gleaned from the operations of MHI, when a customer enters into a contract with the
haberdashery or its proprietor, MHI directs an employee who may be a tailor, pattern maker,
sewer, or “planstadora” to take the customer’s measurements, and to sew the pants, coat, or
shirt as specified by the customer. Supervision is actively manifested in all these aspects – the
manner and quality of cutting, sewing and ironing.
From the memorandum alone, it is evident that MHI has reserved the right to control its
employees not only as to the result but also the means and methods by which the same are to
be accomplished. That private respondents are regular employees is further proven by the fact
that they have to report for work regularly from 9:30am to 6:00pm or 7:00pm and are paid an
additional allowance of P3.00 daily if they report for work before 9:30am and which is forfeited
when they arrive at or after 9:30am.
Since private respondents are regular employees, necessarily the argument that they are
independent contractors must fail. As established in the preceding paragraphs, private
respondents did not exercise independence in their own methods, but on the contrary were
subject to the control of petitioners from the beginning of their tasks to their completion. Unlike
independent contractors who generally rely on their own resources, the equipment, tools,

accessories and paraphernalia used by private respondents are supplied and owned by MHI.
Private respondents are totally dependent on petitioners in all these aspects.
Evangelista Employer- Employee Relationship
CAUDDANETAAN PIECE WORKERS UNION VS. UNDERSECRETARY BIENVENIDO

LAGUESMA
G.R No. 113542 February 24, 1998
Facts:
Caurdanetaan Piece Workers Union members (petitioners) worked as cargadores for
Corfarms Grains,Inc. (private respondent). They loaded, unloaded and piled sacks of
palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers.
They were paid by private respondent on a piece rate basis. When Corfarm denied some
benefits to these cargadores, they organized a union. Upon learning of its formation,
Corfarm barred its members from working with them and replaced them with non-
members of the union. Petitioner filed [a petition] for certification election before the
Department of Labor and Employment and also filed a complaint for illegal dismissal.
Corfarm denies that it had the power of control, rationalizing that petitioner's members
"were 'street-hired' workers engaged from time to time to do loading and unloading work.
There was no superintendent-in-charge to give orders and there were no gate passes
issued, nor tools, equipment and paraphernalia issued by Corfarm for loading/unloading.
Furthermore they contended that employer-employee relationship is negated by the fact
that they offer and actually perform loading and unloading work for various rice mills in
Pangasinan. Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal
of petitioner's members illegal. Public Respondent Laguesma premised the dismissal of
the petition for certification election on the absence of an employer-employee relationship
between petitioner's members and private respondent
ISSUE:
The present controversy hinges on whether or not an employer-employee relationship

between the CPWU members and Respondent Corfarm exist.
HELD:
Yes there is employer-emploee relationship. To determine the existence of an employer-

employee relation, this Court has consistently applied the "four-fold" test which has the
following
elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and
(4) the power to control - the last being the most important element. Caurdanetaan Piece
Workers Union members (petitioners) performed work which is directly related, necessary
and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much less

prove, that petitioner's members have "substantial capital or investment in the form of
tools, equipment, machineries, [and] work premises, among others. To be considered as
independent contractors. Furthermore, said respondent did not contradict petitioner's
allegation that it paid wages directly to these workers without the intervention of any
third-party
independent contractor. It also wielded the power of dismissal over petitioners; in fact,
its exercise of this power was the progenitor of the illegal dismissal case. Clearly, the
workers are not independent contractors. Assuming arguendo that they did work with
other rice mills, this was required by the imperative of meeting their basic needs.
Flores Employer- Employee Relationship
RUGA ET. AL. VS. NLRC

G.R. No. 72654-61 January 22, 1990
FERNAN, C.J.
FACTS:
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge d
e Guzman, president of private respondent, to proceed to the police station at Camaligan, Cama
rines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the
prejudice of private respondent. Petitioners denied the charge claiming that the same was a cou
ntermove to their having formed a labor union and becoming members of Defender of Industria
l Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3, 19
83.
During the investigation, no witnesses were presented to prove the charge against petitioners,
and no criminal charges were formally filed against them. Notwithstanding, private respondent r
efused to allow petitioners to return to the fishing vessel to resume their work on the same day,
September 11, 1983
ISSUE:
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman I
I are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether or no
t they were illegally dismissed from their employment.
RULING:
Yes, the court held that the petitioners were employeess of De Guzman Fishing Enterpris
es. Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of priva
te respondent virtually resulting in their dismissal evidently contradicts private respondent's the
ory of "joint fishing venture" between the parties herein. A joint venture, including partnership,
presupposes generally a parity of standing between the joint co-venturers or partners, in which

each party has an equal proprietary interest in the capital or property contributed 16 and where
each party exercises equal lights in the conduct of the business. 17 It would be inconsistent wit
h the principle of parity of standing between the joint co-venturers as regards the conduct of bu
siness, if private respondent would outrightly exclude petitioners from the conduct of the busine
ss without first resorting to other measures consistent with the nature of a joint venture undert
aking, Instead of arbitrary unilateral action, private respondent should have discussed with an o
pen mind the advantages and disadvantages of petitioners' action with its joint co-venturers if i
ndeed there is a "joint fishing venture" between the parties. But this was not done in the instan
t case. Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were fi
led against them. The lame excuse of private respondent that the non-filing of the criminal com
plaints against petitioners was for humanitarian reasons will not help its cause either.
Fortuno Employer- Employee Relationship
MARAGUINOT AND P. ENERO VS. NLRC AND VIVA FILMS
G.R. No. 120969. January 22, 1998

DAVIDE, JR., J.:
FACTS:
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on
18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months
later, he was designated Assistant Electrician with a weekly salary of P400.00, which was
increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with
a weekly salary of P475.00, which was increased to P593.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990
as a member of the shooting crew with a weekly salary of P375.00, which was increased to
P425.00 in May 1991, then to P475.00 on 21 December 1991.
Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shooting
area as instructed by the cameraman, returning the equipment to Viva Films warehouse, assisting
in the fixing of the lighting system, and performing other tasks that the cameraman and/or
director may assign.
Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria
Cesario, to facilitate their request that private respondents adjust their salary in accordance with
the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario
would agree to increase their salary only if they signed a blank employment contract. As
petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then
refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot
was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June
1992. He was again asked to sign a blank employment contract, and when he still refused, private
respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal
before the Labor Arbiter. The NLRC, in reversing the Labor Arbiter, then concluded that these
circumstances, taken together, indicated that complainants (herein petitioners) were project
employees thus reversing the decision of the Labor Arbiter.

ISSUE:
Whether or not the NLRC committed grave abuse of discretion amounting to lack or excess
of jurisdiction in: (1) finding that petitioners were project employees; (2) ruling that petitioners
were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.
RULING:
Yes, a work pool may exist although the workers in the pool do not receive salaries and
are free to seek other employment during temporary breaks in the business, provided that the
worker shall be available when called to report for a project. Although primarily applicable to
regular seasonal workers, this set-up can likewise be applied to project workers insofar as the
effect of temporary cessation of work is concerned. This is beneficial to both the employer and
employee for it prevents the unjust situation of coddling labor at the expense of capital and at
the same time enables the workers to attain the status of regular employees.
The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening
the labor sector, but, we stress, not at the expense of management. Lest it be misunderstood,
this ruling does not mean that simply because an employee is a project or work pool employee
even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we
hold today is that once a project or work pool employee has been: (1) continuously, as opposed
to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2)
these tasks are vital, necessary and indispensable to the usual business or trade of the employer,
then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor
Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries
not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing
the prevention of acquisition of tenurial security by project or work pool employees who have
already gained the status of regular employees by the employers conduct.
In closing then, as petitioners had already gained the status of regular employees, their dismissal
was unwarranted, for the cause invoked by private respondents for petitioners dismissal, viz.,
completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the
Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss
of seniority rights and other benefits that may have accrued. Nevertheless, following the principles
of suspension of work and no pay between the end of one project and the start of a new one, in
computing petitioners back wages, the amounts corresponding to what could have been earned
during the periods from the date petitioners were dismissed until their reinstatement when
petitioners respective Shooting Units were not undertaking any movie projects, should be
deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was
already in effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code
of the Philippines and Bustamante v. NLRC, petitioners are entitled to receive full back wages
from the date of their dismissal up to the time of their reinstatement, without deducting whatever
earnings derived elsewhere during the period of illegal dismissal, subject, however, to the above
observations.
Grayda Article 82: Excluded Employees Managerial

Employees

NATIONAL SUGAR REFINERIES CORP. VS. NLRC

GR No. 101761 March 24, 1993
Regalado, J.
Facts:
Respondent union filed a case against National Sugar Refineries Corporation to the NLRC
asking the said corporation to pay them holiday, rest day or overtime payments as they contended
that the members were just supervisory employees and not to be considered as “officers or
members of the managerial staff” as contemplated under Article 82 of the Labor Code.
In 1988, NASUREFCO implemented a Job evaluation program affecting all employees,

from rank-and-file to department heads. It was created to follow new structure - to reestablish
levels of responsibility, re-define positions and functions and re-evaluated performance of
employees including the members of the union and were granted salary adjustments and
increases in benefits as they were promoted as supervisory employees.
Ten (10) years before such 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 of 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; (5) there was a grant of P100.00
allowance for rest day/holiday work.
Executive Labor Arbiter Antonio Pido rendered a decision in favor of the union ordering
the NASUREFCO to pay the union members the difference of rest day, holiday and overtime pay
instead of the P100.00 special allowance.
Thus, this petition for Certiorari.
Issue:
Whether the union members as supervisory employees considered as “officers or

members of the managerial staff” to be exempted from holiday, rest day and overtime pay.
Held:
No. The law is clear and unambiguous. With reference to Art 82 which states that 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.

Managerial employees were defined as employees whose (1) primary duty consists of the
performance of work directly related to management policies of their employer; (2) they
customarily and regularly exercise discretion and independent judgment; (3) they regularly and
directly assist the managerial employee whose primary duty consist of the management of a
department of the establishment in which they are employed (4) they execute, under general
supervision, work along specialized or technical lines requiring special training, experience, or
knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6)
they do not devote more than 20% of their hours worked in a work-week to activities which are
not directly and clearly related to the performance of their work hereinbefore described.
All these primarily constitute what the members of the union’s roles are.
From the foregoing, the Court annulled and set aside the resolution given by the
respondent NLRC and dismissed the basic complaint of the respondent union.
Lindain Article 82: Excluded Employees Managerial Employees
PENARANDA VS. BANGANGA PLYWOOD CORP. ET. AL

GR No. 159577 May 3, 2006
FACTS:
In June 1999, Peñaranda was hired by Baganga Plywood Corporation (owned by Hudson Chua)
to take charge of the operations and maintenance of its steam plant boiler. Peñaranda was
employed as a Foreman/Boiler Head/Shift Engineer tasked to do the following tasks among
others:
“1. To supply the required and continuous steam to all consuming units at
minimum cost.
“2. To supervise, check and monitor manpower workmanship as well as
operation of boiler and accessories.
“3. To evaluate performance of machinery and manpower.
xxx
“5. To train new employees for effective and safety while working.
xxx
“7. To recommend personnel actions such as: promotion, or disciplinary
action.
xxx
In 2001, BPC shut down due to some repairs and maintenance. BPC did not technically fire
Peñaranda but due to the latter’s insistence, BPC gave him his separation benefits.
BPC subsequently reopened but Peñaranda did not reapply.
Peñaranda now claims that BPC still needed to pay him his overtime pays and premium pays.
The NLRC ruled that Peñaranda is a managerial employee and as such he is not entitled to
overtime and premium pay as stated under the Labor Code. Peñaranda appealed. He said that
he is not a managerial employee.

ISSUE:
Whether or not Peñaranda is entitled to overtime and premium pay.
RULING:
No. Though there is an error made by the NLRC in finding Peñaranda as a managerial
employee, the Supreme Court still ruled that Peñaranda is not entitled to overtime and premium
pay.
Peñaranda is not a managerial employee. Under the Implementing Rules and Regulations
of the Labor Code, managerial employees are those that perform the following:
“(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.”
Peñaranda does not meet the above requirements.
Peñaranda is instead considered as a managerial staff. Under the Implementing Rules and
Regulations of the Labor Code, managerial staffs are those that perform the following:
“(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.”
Peñaranda’s function as a shift engineer illustrates that he 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.
Peñaranda 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.

Further, Peñaranda in his position paper admitted that he was a supervisor for BPC. As
supervisor, petitioner is deemed a member of the managerial staff.
Maghirang Field Personnel
AUTO BUS TRANSPORT SYSTEM INC. VS. BAUTISTA

GR No. 156367 May 16, 2005
CHICO-NAZARIO, J.
FACTS:
Bautista, a driver-conductor of the Autobus transport, was dismissed after his failure to
pay an amount demanded by the company for the repair of the bus damaged in an accident
caused by him. He receives compensation by way of commission per travel. Bautista complained
for illegal dismissal with money claims for nonpayment of 13th month pay and service incentive
leave pay against Autobus.
Auto Bus’ defenses were:

1. Bautista’s employment was replete with offenses involving reckless imprudence, gross
negligence, and dishonesty supported with copies of letters, memos, irregularity reports,
warrants of arrest; and
2. In the exercise of management prerogative, Bautista was terminated only after providing for
an opportunity to explain.
Labor Arbiter dismissed the complaint, however, awarded Bautista his 13thmonth pay and
service incentive leave pay. Auto Bus appealed. NLRC deleted the 13th month pay award. In the
CA, NLRC’s decision was affirmed.
ISSUE:
Whether or not respondent is entitled to service incentive leave pay.
RULING:
Yes. Under Article 95 of the Labor Code, every employee who has rendered at least one
year or service shall be entitled to a yearly service incentive leave of five days with pay. In Section
1, Rule V, Book III of the Implementing Rules and Regulations of the Labor Code, the rule shall
apply to all, 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.
Petitioner’s contention that Bautista is not entitled to service incentive leave because he
is paid on a purely commission basis must fail. The phrase following “Field personnel” should not
be construed as a separate classification of employees but is merely an amplification of the
definition of field personnel defined under the Labor Code.

Bautista neither falls under the category field personnel. As defined, field personnel are those
whose performance of service is unsupervised by the employer, the workplace being away from
the principal place of business and whose hours and days of work cannot be determined with
reasonable certainty. Bus companies have ways of determining the hours worked by their drivers
and conductors with reasonable certainty. The courts have taken judicial notice of the following:
1. Along the routes traveled, there are inspectors assigned at strategic places who board the
bus to inspect the passengers, the punched tickets, and the conductor’s reports;
2. There is a mandatory once-a week car barn or shop day, where the bus is regularly checked;
3. The drivers and conductors must be at specified place and time, as they observe prompt
departure and arrival; and
4. At every depot, there is always a dispatcher whose function is to see to it that the bus and
crew leaves and arrives at the estimated proper time.
By these reasons, drivers and conductors are therefore under constant supervision while
in the performance of their work.
Mascarinas Field Personnel
UNION OF FILIPINO EMPLOYEES VS. VIVAR

G..R. NO. 79255 JANUARY 20, 1992
GUTIERREZ, JR., J.
FACTS:
This labor dispute stems from the exclusion of sales personnel from the holiday pay
award and the change of the divisor in the computation of benefitsfrom 251 to 261 days. On
November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling
on its rights and obligations respecting claims of its monthly paid employees for holiday pay
in the light of the Court's decision in Chartered Bank Employees Association v. Ople (138
SCRA 273 [1985]). Both Filipro and the Union of Filipino Employees (UFE) agreed to submit
the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary
arbitrator.
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. Petitioner UFE
answered that the award should be made effective from the date of effectivity of the Labor
Code, that 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.
ISSUE:

WON the respondent's sales personnel are not field personnel under Article 82 of
the Labor Code?
RULING:
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 Court thereby resolves that the grant of holiday pay be effective, not from the
date of promulgation of the Chartered Bank case or from the date of effectivity of the Labor
Code, but from October 23, 1984, the date of promulgation of the IBAA case.
Monton Field Personnel
SAN MIGUEL BREWERY INC. VS. DOMESTIC LABOR ORGANIZATION

GR No. L-18353 July 31, 1963
Angelo Bautista, J.
FACTS:
The Democratic Labor Association filed a complaint against the San Miguel Brewery,
Inc. (SMB) embodying 12 demands for the betterment of the conditions of employment of its
members. SM filed its answer specifically denying its material averments and answering the
demands point by point and asked for the dismissal of the complaint. During the hearing, the
union manifested its desire to confine its claim to its demands for overtime, night-shift differential
pay, and attorney's fees, although it was allowed to present evidence on service rendered during
Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave
compensation. After the case had been submitted for decision, Presiding Judge Jose S. Bautista,
who was commissioned to receive the evidence, rendered decision expressing his disposition with
regard to the points embodied in the complaint on which evidence was presented. The demands
for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of
accumulated vacation and sick leave and attorney's fees, as well as the award of additional
separation pay, were either dismissed, denied, or set aside. Its motion for reconsideration having
been denied by the industrial court en banc, which affirmed the decision of the court a quo with
few exceptions, the SMB interposed the present petition for review.
ISSUE:
Whether or not those working in the field or engaged in the sale of the company’s products
outside its premises are covered by the Eight-Hour Law.
RULING:

NO. In the Court’s opinion the Eight-Hour Labor Law only has application where an
employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily compensation,
in which case, if he is made to work beyond the requisite period of 8 hours, he should be paid
the additional compensation prescribed by law. This law has no application when the employee
or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time
employed. The philosophy behind this exemption is that his earnings in the form of commission
based on the gross receipts of the day. His participation depends upon his industry so that the
more hours he employs in the work the greater are his gross returns and the higher his
commission. This philosophy is better explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F.
2d 202, as follows:” The reasons for excluding an outside salesman are fairly apparent. Such
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.”
SC modified the decision of CIR, the award with regard to extra work performed by those
employed in the outside or field sales force is set aside.ROBL
Savellano Workers paid by result
LARA VS. DEL ROSARIO

G.R. No. L-6339 April 20, 1954
Montemayor, J
FACTS:
Petitioners were former taxi drivers of Petronilo Del Rosario, Jr. In September 1950, Del
Rosario sold some of his vehicles which led to petitioner drivers not being needed anymore.
Eventually, their services were terminated. Because their employer did not give them their one
month’s salary in lieu of the notice required in Article 302 of the Code of Commerce, Lara et al
sued Del Rosario.
However, Del Rosario contended that the Code of Commerce was already repealed hence Lara et
al have no legal basis. Del Rosario contends that the New Civil Code took effect in August 1950
or a year after release for publication.
ISSUE:
Whether or not the petitioners are entitled to overtime pay.
RULING:
NO, the petitioners are not entitled to receive the overtime premium pay.
Section 2 of Commonwealth Act No. 444 excludes from the application premium pay of
overtime to laborers who preferred to be on piece work basis. This connotes that a laborer or
employee with no fixed salary, wages or remuneration but receiving as compensation from his
employer an uncertain and variable amount depending upon the work done or the result of said

work (piece work) irrespective of the amount of time employed, is not covered by the Eight-Hour
Labor Law and is not entitled to extra compensation should he works in excess of 8 hours a day.
Silverio Article 83: Hours of Work
MANILA TERMINAL CO. INC. VS. CIR ET. AL.

G.R. NO. L-4148 JULY 16, 1952
PARAS, CJ.
FACTS:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as

to the petitioner, undertook the arrastre service in some of the piers in Manila's Port Area at the
request and under the control of the United States Army. The petitioner hired some thirty men
as watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per
day for the night shift. On February 1, 1946, the petitioner began the postwar operation of the
arrastre service at the present at the request and under the control of the Bureau of Customs, by
virtue of a contract entered into with the Philippine Government. The watchmen of the petitioner
continued in the service with a number of substitutions and additions, their salaries having been
raised during the month of February to P4 per day for the day shift and P6.25 per day for the
nightshift. On March 28, 1947, Dominador Jimenez, a member of the Manila Terminal Relief and
Mutual Aid Association, sent a letter to the Department of Labor, requesting that the matter of
overtime pay be investigated, but nothing was done by the Department. On April 29, 1947,
Victorino Magno Cruz and five other employees, also member of the Manila Transit Mutual Aid
Association, filed a 5-point demand with the Department of Labor, including overtime pay, but
the Department again filed to do anything about the matter. On May 27, 1947, the petitioner
instituted the system of strict eight-hour shifts. On June 19, 1947, the Manila Port Terminal Police
Association, not registered in accordance with the provisions of Commonwealth Act No. 213, filed
a petition with the Court of Industrial Relations. On July 16, 1947, the Manila Terminal Relief and
Mutual Aid Association was organized for the first time, having been granted certificate No. 375
by the Department of Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid Association
filed an amended petition with the Court of Industrial Relations praying, among others, that the
petitioner be ordered to pay its watchmen or police force overtime pay from the commencement
of their employment. On May 9, 1949, by virtue of Customs Administrative Order No. 81 and
Executive Order No. 228 of the President of the Philippines, the entire police force of the petitioner
was consolidated with the Manila Harvor Police of the Customs Patrol Service, a Government
agency under the exclusive control of the Commissioner of Customs and the Secretary of Finance
The Manila Terminal Relief and Mutual Aid Association will hereafter be referred to as the
Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April 1, 1950,
as amended on April 18, 1950, while dismissing other demands of the Association for lack of
jurisdiction, ordered the petitioner to pay to its police force —
a. Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as
additional overtime compensation for the period from September 1, 1945 to May 24, 1947;

b. Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m.
during the same period:
c. Additional compensation of 50 per cent for work performed on Sundays and legal holidays
during the same period;
d. Additional compensation of 50 per cent for work performed on Sundays andlegal holidays
from May 24, 1947 to May 9, 1949; and
e. Additional compensation of 25 per cent for work performed at night from May 29, 1947
to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been integrated into
the Manila Harbor Police, Judge Yanson ruled that the court has no jurisdiction because it affects
the Bureau of Customs, an instrumentality of the Government having no independent personality
and which cannot be sued without the consent of the State. (Metran vs. Paredes, 45. Off. Gaz.,
2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for
reconsideration in so far its other demands were dismissed. Judge Yanson, concurred in by Judge
Jose S. Bautista, promulgated on July 13, 1950, a resolution denying both motions for
reconsideration. Presiding Judge Arsenio C. Roldan, in a separate opinion concurred in by Judge
Modesto Castillo, agreed with the decision of Judge Yanson, as to the dismissal of other demands
of the Association, but dissented therefrom as to the granting of overtime pay. In a separate
decisive opinion, Judge Juan S. Lanting concurred in the dismissal of other demands of the
Association. With respect to overtime compensation, Judge Lanting ruled:
The decision under review should be affirmed in so far it grants compensation for overtime
on regular days (not Sunday and legal holidays)during the period from the date of entrance to
duty to May 24, 1947, such compensation to consists of the amount corresponding to the four
hours' overtime at the regular rate and an additional amount of 25 per cent thereof.
As to the compensation for work on Sundays and legal holidays, the petitioner should pay to
its watchmen the compensation that corresponds to the overtime (in excess of 8 hours) at the
regular rate only, that is, without any additional amount, thus modifying the decision under review
accordingly.
The watchmen are not entitled to night differential pay for past services, and therefore the
decision should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari.
ISSUE:
Whether or not he petitioner's watchmen is entitled to extra compensation for past

overtime work?
RULING:
Yes, they are entitled. Sections 3 and 5 of Commonwealth Act 444 expressly provides for
the payment of extra compensation in cases where overtime services are required, with the result
that the employees or laborers are entitled to collect such extra compensation for past overtime
work.

The court said tha, It is high time that all employers were warned that the public is
interested in the strict enforcement of the Eight-Hour Labor Law. This was designed not only to
safeguard the health and welfare of the laborer or employee, but in a way to minimize
unemployment by forcing employers, in cases where more than 8-hour operation is necessary,
to utilize different shifts of laborers or employees working only for eight hours each.
The appealed decision was affirmed.
Angeles Article 83: Hours of Work
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW ET. AL. VS INTERPHIL

LABORATORIES
G.R. No. 142824 December 19, 2001
Kapunan, J.
FACTS:
Interphil Laboratories Employees Union-FFW has a collective bargaining agreement

effective from August 1, 1990 to July 31, 1993. Prior to the expiration of the collective bargaining
agreement, Salazar was approached by Ocampo and Clemente. The two union officers inquired
about the stand of the company regarding the duration of the collective bargaining agreement,
which was set to expire in a few months. Salazar told the union officers that the matter could be
best discussed during thr formal negotiation which would start soon. Ocampo and Clemente again
approached Salazar. They inquired once more about the collective bargaining agreement status
and received the same reply from Salazar. Ocampo requested for a meeting to discuss the
duration and effectivity of the collective bargaining agreement. Salazar declared that it would still
be premature to discuss the matter and that the company could not make a decision at the
moment. All the rank-and-file employees of the company refused to follow their regular two-shift
work schedule of from 6:00a.m. to 6:00p.m., and from 6:00p.m. to 6:00a.m. To minimize the
damage the overtime boycott was causing the company, Salazar immediately asked for a meeting
with the union officers. In the meeting, Gonzales told Salazar that the employees would only
return to their normal work schedule if the company would agree to their demands as to the
effectivity and duration of the new collective bargaining agreement. The union was unsatisfied
with the answer of the company and the overtime boycott continued. The employees started to
engage in a work slowdown campaign during the time they working, thus substantially delaying
the production of the company.
ISSUE:
Whether or not the Honorable Fifth Division of Court of Appeals committed grave abuse
RULING:
On the matter of the authority and jurisdiction of the Secretary of Labor and Employment
to rule on the illegal strike committed by petitioner union, it is undisputed that the petition to
declare the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor
and Employment issued the assumption order on 14 February 1994.However, it cannot be denied
that the issues of "overtime boycott" and "work slowdown" amounting to illegal strike before

Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on
16 March 1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings
before him and consolidate the same with the case before the Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and
Employment's jurisdiction over labor and labor-related disputes was already settled in
International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU).
The petition is denied due course and decision of the Court of Appeals is affirmed.
Borja Article 84: Hours Worked
PAN AMERICAN WORLD AIRWAYS SYSTEM VS. PAN AMERICAN EMPLOYEES

ASSOCIATION
G.R. No. L-16275 February 23, 1961
Reyes, J.B.L., J.
FACTS:
The employees of Pan American World Airways System alleged that the company does
not provide them of a one-hour break period. The employees were asked to wait in case of any
emergencies while having their break or they will be reprimanded, thus the petition of the
employees to ask the court for a proper compensation from the employers. The employees
alleged that the said one-hour break actually constitutes working overtime.
ISSUE:
Whether or not the time given to the employees for break is considered an over time.
RULING:
The Industrial Court's order for permanent adoption of a straight 8-hour shift including
the meal period was but a consequence of its finding that the meal hour was not one of complete
rest, but was actually a work hour, since for its duration, the laborers had to be on ready call. Of
course, if the Company practices in this regard should be modified to afford the mechanics a real
rest during that hour (eg. by installing an entirely different emergency crew, or any similar
arrangement), then the modification of this part of the decision may be sought from the Court
below. As things now stand, we see no warrant for altering the decision. The judgment appealed
from is affirmed. Costs against appellant.
Santos Article 84: Hours Worked
JOSE GAYOTIA VS. GOOD EARTH EMPORIUM AND SUPERMARKET
Fortuno Article 84: Hours Worked
UNIVERSITY OF PANGASINAN FACULTY UNION VS. UNIVERSITY OF PANGASINAN

G.R. Nos. 64821-23 January 29, 1993

ROMERO, J.:
FACTS:
The petitioner union seeks to enjoin the respondent National Labor Relations Commission (NLRC)
to resolve, or direct the Labor Arbiter to hear and decide, the merits of three of petitioner's
unresolved complaints, and to annul and set aside the resolution of the NLRC affirming the
decision of the Executive Labor Arbiter dismissing the petitioner's complaints for violation of
certain labor standards laws but requiring respondent university to integrate the cost of living
allowance into the basic pay of the covered employees and reminding it to pay its employees at
intervals not exceeding sixteen (16) days.
Petitioner further prays for safeguards and/or measures to insure the correct computation of the
amount of claims herein sought due to each covered member of petitioner, and for such other
reliefs just and equitable in the premises.
ISSUE:
Whether or not the NLRC abuse its discretion in resolving the appeal from the decision of
Executive Labor Arbiter
RULING:
No, the NLRC did not abuse its discretion in resolving the appeal from the decision of Executive
Labor Arbiter Tumang except for the disallowance of the emergency cost of living allowance to
members of the petitioner. The Rules Implementing P.D. No. 1713 which took effect on August
18, 1980 provide:
Sec. 6. Allowances of full-time and part-time employees. — Employees shall be paid in full the
monthly allowance on the basis of the scales provided in Section 3 hereof, regardless of the
number of their regular working days if they incur no absences during the month. If they incur
absences without pay, the amounts corresponding to the absences may be deducted from the
monthly allowance provided that in determining the equivalent daily allowance of such deduction,
the applicable monthly allowance shall be divided by thirty (30) days.
This Section, which is a virtual reproduction of Section 12 of the old Rules Implementing P.D. No.
1123, has been interpreted by this Court as requiring that the full amount of the cost of living
allowance mandated by law should be given monthly to each employee if the latter has worked
continuously for each month, regardless of the number of the regular working days. But more
apropos is the ruling of this Court in University of Pangasinan Faculty Union v. University of
Pangasinan and NLRC,a case involving the same parties as in the instant petition and dealing with
a complaint filed by the petitioner on December 18, 1981 seeking, among others, the payment
of emergency cost of living allowances for November 7 to December 5, 1981, a semestral break.
The Court held therein:

. . . The "No work, no pay" principle does not apply in the instant case. The petitioner's members
received their regular salaries during this period. It is clear from the . . . law that it contemplates
a "no work" situation where the employees voluntarily absent themselves. Petitioners, in the case
at bar, certainly do not, ad voluntatem absent themselves during semestral breaks. Rather, they
are constrained to take mandatory leave from work. For this, they cannot be faulted nor can they
be begrudged that which is due them under the law. To a certain extent, the private respondent
can specify dates when no classes would be held. Surely, it was not the intention of the framers

of the law to allow employers to withhold employee benefits by the simple expedient of
unilaterally imposing "no work" days and consequently avoiding compliance with the mandate of
the law for those days.
As interpreted and emphasized in the same case, the law granting emergency cost of living
allowances was designed to augment the income of the employees to enable them to cope with
the rising cost of living and inflation. Clearly, it was enacted in pursuance of the State's duty to
protect labor and to alleviate the plight of the workers. To uphold private respondent's
interpretation of the law would be running counter to the intent of the law and the Constitution.
Abello Article 84: Hours Worked
LUZON STEVEDORING CO. INC. VS. LUZON MARINE DEPARTMENT UNION

G. R NO. L-9265 APRIL 29, 1957
Felix, J.
FACTS:
Respondents filed a petition with the Court of Industrial Relations containing the full recognition
of the right of collective bargaining close stop and check off. Also, that the worked performed in
excess of (8) hours bw paid on overtime pay of 50% the regular rate of pay, and that work
performed on Sunday and Legal holidays be paid double the regular rate pay. In one of the
hearing of the case, the court ruled that the employees entitled to receive overtime pay for work
rendered in excess of 8 hours on ordinary day including Sunday and Legal Holidays. Herein,
petitioner sought for the reconsideration of the decision only in so far as it interpreted that the
period during which seaman is board a tugboat shall be considered as “working time” for purpose
of the 8 hours Labor Law. However, it was denied.
ISSUE:
Whether or not the definition for “hours work”, as presently applied to dry land laborers,
equally applicable to seaman.
RULING:
The court ruled that there is no need to set for seaman a criterion different from that applied to
laborers on land, that the only thing to be done is to determine the meaning and scope of the
“working place”. A labourer, need not leave the premises of the factory shop or boat in order that
his period of rest shall be counted, it being enough that he “cease to be work” may rest completely
and leave or may leave at his will the spot where he actually stays while working.
Alarkon Article 84: Hours Worked
CAGAMPAN ET. AL. VS. NLRC

G.R. Nos. 85122 – 24 MARCH 22, 1991
J. PARAS
FACTS

 On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of
employment with the Golden Light Ocean Transport, Ltd., through its local agency, private
respondent ACE MARITIME AGENCIES, INC. with their respective ratings and monthly
salary rates.
 Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986. Thereafter,
petitioners collectively and/or individually filed complaints for non-payment of
overtime pay, vacation pay and terminal pay against private respondent.
 In addition, they claimed that they were made to sign their contracts in blank;
 that although they agreed to render services on board the vessel Rio Colorado
managed by Golden Light Ocean Transport, Ltd., the vessel they actually
boarded was MV "SOIC I" managed by Columbus Navigation;
 and more so, petitioners de Castro and de Jesus charged that although they were
employed as ordinary seamen, they actually performed the work and duties of Able
Seamen.
 Private respondent was furnished with copies of petitioners' complaints and summons,
but it failed to file its answer within the reglementary period. Thus, on January 12, 1987,
an Order was issued declaring that private respondent has waived its right to present
evidence in its behalf and that the cases are submitted for decision.
 On August 5, 1987, the Philippine Overseas Employment Administration (POEA)
rendered a Decision DISMISSING petitioners' claim for terminal pay but
GRANTED their prayer for leave pay and overtime pay.
 Private respondent appealed from the POEA's Decision to the NLRC on August 24, 1987.
 On March 16, 1988, the NLRC promulgated a Decision, REVERSING and SETTING ASIDE
and another one entered dismissing the cases for lack of merit.
 On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of the NLRC's
Decision but the same was denied by the NLRC for lack of merit in its Resolution dated
September 12, 1988. Hence, this appeal from the decision and resolution of the
respondent NLRC.
 Petitioners allege that respondent Commission, NLRC, gravely abused its discretion or
erred in reversing and setting aside the POEA decision and correspondingly dismissing the
appeal of petitioners, allegedly in contravention of law and jurisprudence. Private
respondent maritime company disclaims the aforesaid allegations of petitioners. The
Solicitor General, arguing for public respondent NLRC, contends that: The NLRC did not
abuse its discretion in the rendition of subject decision because the evidence presented
by petitioners in support of their complaint is by itself sufficient to reinforce the decision.
 The issue of the disallowance of overtime pay stems from an interpretation of particular
provisions of the employment contract.
ISSUE
 W/N respondent the NLRC gravely abused its discretion or erred in REVERSING the
decision of POEA (in granting overtime pay to petitioners equivalent to 30% of their basic
pay).
RULING
 No, the NLRC cannot be faulted for disallowing the payment of overtime pay
because it merely straightened out the distorted interpretation asserted by
petitioners and defined the correct interpretation of the provision on overtime
pay embodied in the CONTRACT conformably with settled doctrines on the matter.

 Notably, the NLRC ruling on the disallowance of overtime pay is ably supported by the
fact that petitioners never produced any proof of actual performance of overtime work.
 Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime
pay of 30% of the basic salary per month" embodied in their employment contract
should be awarded to them as part of a "package benefit."
 They have theorized that even without sufficient evidence of actual rendition of overtime
work, they would automatically be entitled to overtime pay.
 Their theory is erroneous for being illogical and unrealistic. Their thinking even
runs counter to the intention behind the provision.
 The contract provision means that the fixed overtime pay of 30% would be the
basis for computing the overtime pay if and when overtime work would be
rendered. Simply, stated, the rendition of overtime work and the submission of sufficient
proof that said work was actually performed are conditions to be satisfied before a seaman
could be entitled to overtime pay which should be computed on the basis of 30% of the
basic monthly salary.
 In short, the contract provision guarantees the right to overtime pay but the entitlement
to such benefit must first be established. Realistically speaking, a seaman, by the very
nature of his job, stays on board a ship or vessel beyond the regular eight-hour work
schedule. For the employer to give him overtime pay for the extra hours when he might
be sleeping or attending to his personal chores or even just lulling away his time would
be extremely unfair and unreasonable.
 Reiterated in the case of National Shipyards and Steel Corporation v. CIR (3 SCRA 890),
the Supreme Court ruled: We cannot agree with the Court below that the respondent
(Malondras) should be paid overtime compensation for every hour in excess of the regular
working hours that he was on board his vessel or barge each day, irrespective of whether
or not he actually put in work during those hours.
 Seamen are required to stay on board their vessels by the very nature of their duties, and
it is for this reason that, in addition to their regular compensation, they are given free
living quarters and subsistence allowances when required to be on board. It could not
have been the purpose of our law to require their employers to pay them overtime even
when they are not actually working; otherwise, every sailor on board a vessel would be
entitled to overtime for sixteen hours each day, even if he spent all those hours resting or
sleeping in his bunk, after his regular tour of duty.
 The correct criterion in determining whether or not sailors are entitled to overtime pay is
not, therefore, whether they were on board and cannot leave ship beyond the regular
eight working hours a day, but whether they actually rendered service in excess
of said number of hours.
Dagaerag Article 84: Hours Worked
MERCURY DRUG CO. INC. VS. NARDO DAYAO, ET. AL

FACTS:
The respondents filed a petition against the petitioner praying: 1) payment of their unpaid
back wages for work done on Sundays and legal holidays plus 25c/c additional compensation

from date of their employment up to June 30, 1962; 2) payment of extra compensation on work
done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions
with back salaries; and, as against the respondent union, for its disestablishment and the refund
of all monies it had collected from petitioners.
The respondent court rendered its decision that:
1. The claim of the petitioners for payment of back wages corresponding to the first four hours
work rendered on every other Sunday and first four hours on legal holidays should be denied for
lack of merit;
2. Respondent Mercury Drug Company, Inc. is hereby ordered to pay the sixty- nine (69)
petitioners: (a) An additional sum equivalent to 25% of their respective basic or regular salaries
for services rendered on Sundays and legal holidays during the period from March 20, 1961 up
to June 30, 1962; and (b) Another additional sum or premium equivalent to 25% of their
respective basic or regular salaries for nighttime services rendered from March 20, 1961 up to
June 30, 1962; and
3. Petitioners' petition to convert them to monthly employees should be, as it is hereby, denied
for lack of merit. Not satisfied with the decision, the respondents filed a motion for its
reconsideration. The motion for reconsideration, was however, denied by the Court en banc.
ISSUE/S:
a.Whether or not private respondent is entitled to claims for 25% additional compensation
performing work during Sunday and legal holidays.
b.Whether or not the 25% compensation had already been included in the private
respondents monthly salaries.
c.Whether or not the contracts of employment were null and void was not put in issue,
hence, the respondent court pursuant to the Rules of Court should have refrained from
ruling that such contracts of employment were null and void.
RULING:
The Supreme Court dismissed the petition. On the first issue, based on Sec. 4 CA No. 444,
No person, firm or corporation, business establishment or place of center of labor shall compel
an employee or laborer to work during Sundays and legal holidays unless he is paid an additional
sum of at least twenty-five per centum of his regular remuneration: PROVIDED, HOWEVER, That
this prohibition shall not apply to public utilities performing some public service such as supplying
gas, electricity, power, water, or providing means of transportation or communication.
In this case, the petitioner does not fall on exemptions. On the second issue, their 25%
additional compensation for work done on Sundays and Legal Holidays were not included in their
respective monthly salaries. The petitioner contention was not supported by substantial evidence.
The last issue, the Mercury Drug Co., Inc., maintains a chain of drugstores that are open
every day of the week and, for some stores, up to very late at night because of the nature of the

pharmaceutical retail business. The respondents knew that they had to work Sundays and
holidays and at night, not as exceptions to the rule but as part of the regular course of
employment. Presented with contracts setting their compensation on an annual basis with an
express waiver of extra compensation for work on Sundays and holidays, the workers did not
have much choice.
The private respondents were at a disadvantage insofar as the contractual relationship

was concerned. Workers in our country do not have the luxury or freedom of declining job
openings or filing resignations even when some terms and conditions of employment are not only
onerous and inequitous but illegal.
It is precisely because of this situation that the framers of the Constitution embodied the
provisions on social justice (Section 6, Article 11) and protection to labor (Section 9, Article I I)
in the Declaration of Principles And State Policies.
Diambulang Article 84: Hours

Worked
NATIONAL SHIPYARDS AND STEEL CORPORATION VS. CIR
G.R. No. L-17068
FACTS:
The petitioner NASSCO, a government-owned and controlled corporation, is the owner of

several barges and tugboats used in the transportation of cargoes and personnel in connection
with its business of shipbuilding and repair. In order that its bargeman could immediately be
called to duty whenever their services are needed, they are required to stay in their respective
barges, for which reason they are given living quarters therein as well as subsistence allowance
of P1.50 per day during the time they are on board. However, upon prior authority of their
superior officers, they may leave their barges when said barges are idle.
On April 15, 1957, 39 crew members of petitioner's tugboat service, including therein respondent
Dominador Malondras, filed with the Industrial Court a complaint for the payment of overtime
compensation
On February 14, 1958, the court examiner submitted his report covering the period from January
1 to December 31, 1957. In said report, the examiner found that the petitioners in Case No. 1058-
V, including herein respondent Dominador Malondras, rendered an average overtime service of
five (5) hours each day for the period aforementioned, and upon approval of the report by the
Court, all the claimants, including Malondras, were paid their overtime compensation by the
NASSCO.
Subsequently, on April 30, 1958, the court examiner submitted his second partial report covering
the period from January 1, 1954 to December 31, 1956, again giving each crewman an average
of five (5) overtime hours each day. Respondent Malondras was not, however, included in this
report as his daily time sheets were not then available. Again upon approval by the Court, the
crewmen concerned were paid their overtime compensation because of his exclusion from the
second report of the examiner, and his time sheets having been located in the meantime,
Dominador Malondras, on September 18, 1959, filed petitions in the same case asking for the
compensation and payment of his overtime compensation for the period from January 1, 1954 to
December 31, 1956, and from January to April 30, 1957 which, he alleged, was not included in

the first report of the examiner because his time sheets for these months could not be found at
the time.
On February 20, 1960, the Court ordered the examiner to make a re-examination of the records
with a view to determining Malondras' overtime service from January 1, 1954 to December 31,
1956, and from January 1, 1957 to April 30, 1957, but without deducting from the compensation
to be paid to him his subsistence allowance.
ISSUE:
1. Whether or not the number of hours of overtime for which Malondras should be paid for the
periods January 1, 1954 to December 31, 1956, and from January to April 30, 1957
2. Whether or not the subsistence allowance received by Malondras for the periods covered by
the report in question should be deducted from his overtime compensation.
RULING:
1. Seamen are required to stay on board their vessels by the very nature of their duties, and it is
for this reason that, in addition to their regular compensation, they are given free living quarters
and subsistence allowances when required to be on board. It could not have been the purpose
of our law to require their employers to pay them overtime even when they are not actually
working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours
each day, even if he had spent all those hours resting or sleeping in his bunk, after his regular
tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime
pay is not, therefore, whether they were on board and cannot leave ship beyond the regular eight
working hours a day, but whether they actually rendered service in excess of said number of
hours.
2. For the Stipulation of the Facts of the parties show that this allowance is independent of and
has nothing to do with whatever additional compensation for overtime work was due the
petitioner NASSCO's bargemen. Petitioner having already paid Malondras and his companions
overtime for 1957 without deduction of the subsistence allowances received by them during this
period, and Malondras' companions having been paid overtime for the other years also without
deducting their subsistence allowances, there is no valid reason why Malondras should be singled
out now and his subsistence allowance deducted from the overtime compensation still due him.
Martin Article 84: Hours Worked
BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC.

FACTS:
Petitioner union Bisig ng Manggagawa ng Philippine Refining Company, Inc. filed with the
Court of First Instance of Manila a petition for declaratory relief seeking, among others, the
judgement that their Christmas bonus be included as part of their basic pay for the computation
of overtime pay. Petitioner based its contention primarily on the ruling of the Supreme Court in
NAWASA vs. NAWASA Consolidated Unions, where it was declared that the 'regular rate' is also
deemed to include other incentives and bonuses which employers may receive as part of their
regular pay.

Respondent Philippine Refining Company, Inc. on the other hand contended that in their
collective bargaining agreement (CBA), the parties never intended to include the employees'
Christmas bonus in the computation of the overtime pay, and that it did agree to raise the
overtime rate to 50% instead of 25% of the regular base pay precisely on the consideration that
it be based only on the regular base pay and should not include Christmas bonus.
ISSUE:
The issue resolved by the Supreme Court was whether or not, in the interpretation of the
provision of the CBA of the parties on overtime pay, the term "regular base pay" should include
Christmas bonus, and that in case it should not, whether such interpretation would contravene
the principle established in the Nawasa vs. Nawasa case.
RULING:
The Supreme Court ruled that the term "regular base pay" is clear, unequivocal and
requires no interpretation. It held that the term means regular basic pay which necessarily
excludes money received in different concepts such as Christmas bonus and other fringe benefits.
The Court observed that in framing up their CBA especially on the provision regarding overtime
pay, it was only the regular base pay that was considered, and the same fact was undeniably
known to the petitioner. The very reason, according to the court, why it attempted to have a
different provision pertaining to overtime pay which would include Christmas bonus and other
benefits. This factual information by itself constrains the petitioner to question the intention of
that particular phrase in their CBA pertaining to overtime pay but could only claim that it violated
the Nawasa doctrine and insist that it be reformed to conform to said doctrine.
The Supreme Court held that the Nawasa ruling did not limit that the computation of
overtime pay to be based solely on the employees' regular wage or salary, which according to
law includes bonuses and other benefits. What is important is that the product resulting from the
computation must always be equal or higher than the statutory requirement of 25% more than
the regular wage. In the case at bar, the formula adopted by the CBA is 50% more than the
regular basic pay, which when computer is much higher than what can be arrived at using the
statutory formula. Thus, the Court declared that the provisions of the CBA as to the computation
of overtime pay has amply complied with what is required by law, and therefore is valid and not
in contravention to the Nawasa doctrine.
Mirande Article 84: Hours Worked
PNB VS. PNB EMPLOYEES ASSN

Gr No. L-30279 July 30,1982
FACTS:
PNB and PNB Employees Association (PEMA) had a dispute regarding the proper
computation of overtime pay. PEMA wanted the cost of living allowance (granted in 1958)
and longevity pay (granted in 1961) to be included in the computation. PNB disagreed

and the 2 parties later went before the CIR to resolve the dispute. CIR decided in favor
of PEMA and held that PNB should compute the overtime pay of its employees on the
basis of the sum total of the employee’s basic salary or wage plus cost of living allowance
and longevity pay. The CIR relied on the ruling in NAWASA v NAWASA Consolidated
Unions, which held that “for purposes of computing overtime compensation, regular wage
includes all payments which the parties have agreed shall be received during the work
week, including differentiated payments for working at undesirable times, such as at night
and the board and lodging customarily furnished the employee.” This prompted PNB to
appeal, hence this case.
ISSUE:
WON the cost of living allowance and longevity pay should be included in the
computation of overtime pay as held by the CIR
HELD:
NO, Overtime pay is for extra effort beyond that contemplated in the employment
contract; additional pay given for any other purpose cannot be included in the basis for
the computation of overtime pay. Absent a specific provision in the CBA, the bases for
the computation of overtime pay are 2 computations, namely:
WON the additional pay is for extra work done or service rendered
WON the same is intended to be permanent and regular, not contingent nor
temporary as a given only to remedy a situation which can change any time.
Longevity pay cannot be included in the computation of overtime pay for the very
simple reason that the contrary is expressly stipulated in the CBA, which constitutes the
law between the parties.
As regards cost of living allowance, there is nothing in Commonwealth Act 444 [or
“the 8-hour Labor Law,” now Art. 87 Labor Code] that could justify PEMA’s posture that
it should be added to the regular wage in computing overtime pay. C.A. 444 prescribes
that overtime work shall be paid “at the same rate as their regular wages or salary, plus
at least 25% additional.” The law did not define what is a regular wage or salary. What
the law emphasized is that in addition to “regular wage,” there must be paid an additional
25% of that “regular wage” to constitute overtime rate of pay. Parties were thus allowed
to agree on what shall be mutually considered regular pay from or upon which a 25%
premium shall be based and added to makeup overtime compensation.
No rule of universal application to other cases may be justifiably extracted from

the NAWASA case. CIR relies on the part of the NAWASA decision where the SC cited
American decisions whose legislation on overtime is at variance with the law in this
jurisdiction. The US legislation considers work in excess of forty hours a week as overtime;
whereas, what is generally considered overtime in the Philippines is work in excess of the
regular 8 hours a day. It is understandably material to refer to precedents in the US for

purposes of computing weekly wages under a 40-hour week rule, since the particular
issue involved in NAWASA is the conversion of prior weekly regular earnings into daily
rates without allowing diminution or addition.
To apply the NAWASA computation would require a different formula for each and
every employee. It would require reference to and continued use of individual earnings
in the past, thus multiplying the administrative difficulties of the Company. It would be
cumbersome and tedious a process to compute overtime pay and this may again cause
delays in payments, which in turn could lead to serious disputes. To apply this mode of
computation would retard and stifle the growth of unions themselves as Companies would
be irresistibly drawn into denying, new and additional fringe benefits, if not those already
existing, for fear of bloating their overhead expenses through overtime which, by reason
of being unfixed, becomes instead a veritable source of irritant in labor relations.
**Overtime Pay Rationale Why is a laborer or employee who works beyond the
regular hours of work entitled to extra compensation called, in this enlightened time,
overtime pay?
Verily, there can be no other reason than that he is made to work longer than
what is commensurate with his agreed compensation for the statutorily fixed or
voluntarily agreed hours of labor he is supposed to do. When he thus spends additional
time to his work, the effect upon him is multi- faceted; he puts in more effort, physical
and/or mental; he is delayed in going home to his family to enjoy the comforts thereof;
he might have no time for relaxation, amusement or sports; he might miss important pre-
arranged engagements; etc. It is thus the additional work, labor or service employed and
the adverse effects just mentioned of his longer stay in his place of work that justify and
are the real reasons for the extra compensation that is called overtime pay.
**Overtime Pay Definition The additional pay for service or work rendered or performed
in excess of 8 hours a day by employees or laborers in employment covered by the 8
hour Labor Law [C.A. 444, now Art. 87 Labor Code] and not exempt from its
requirements. It is computed by multiplying the overtime hourly rate by the number of
hours worked in excess of eight.
Disposition decision appealed from is REVERSED.
Montero Quitclaim
PAMPANGA SUGAR DEVELOPMENT CO. VS. CIR

G.R. No. 112650. May 29, 1997
FACTS:

Petitioner PASUDECO is a domestic corporationengaged in milling of sugar and its

byproducts. It operates a sugar mill in San Fernando, Pampanga.
Private respondent Manuel Roxas was an employee of PASUDECO from 1967 to 1990, his
last job being that of a purchasing officer of the company, at a monthly salary of P10,000.00. On
October 16, 1990, Roxas was dismissed for serious misconduct, fraud, willful breach of trust, and
abandonment of work. The other respondent is PASUDECO Union of Professionals, Technical and
Department Staffs (hereinafter referred to as the UNION) of which Roxas is a member.
As purchasing officer, Roxas duties were to compare price quotations for supplies as gathered
by a canvasser, to choose the best bid, and to initial the purchase order prepared based on his
selection to signify his approval. In 1982, however, Antonio de Leon became Assistant General
Manager and took over the position of head of the Purchasing Department in Manila. The authority
to initial purchase orders was transferred from private respondent to Antonio de Leon. When De
Leon became the General Manager in June of 1990, the function of initialing purchase orders was
given to Venicio Jalandoni.
In October 1990, PASUDECO discovered alterations and falsification of purchase orders and
overpricing of materials and supplies bought by the company from 1986 to September 1990,
resulting in total loss of P120,000,000.00 to the company. On October 25, 1990, Roxas and his
assistant, Canvasser Norberto Gabriel, were confronted with the anomalies by PASUDECOs
counsel, Atty. Rodolfo B. Valdez. They were asked to tender their resignation and waive
separation benefits.Roxas denied the charges. He pointed out that he had been relieved of the
authority to approve purchase orders in 1982 when Antonio de Leon became Assistant Manager
and denied that he authorized the insertions made in the purchase orders. He claimed that he
had no control over his assistant.
Roxas did not report for work on October 26, 1990.When he reported on November 5, 1990,
he was informed by Ricardo Tiglao, Chief Accountant of the company, that the management
ordered his name removed from the payroll effective October 16, 1990.
On November 7, 1990, PASUDECO President Luis Panlilio notified Roxas of the charges
against him and required him to show cause in writing, within 72 hours, why he should not be
dismissed for abandonment of work, serious misconduct, gross and habitual neglect of duties,
and fraud or willful breach of trust and to appear at an investigation on November 14, 1990. The
investigation did not proceed because the next day, November 8, 1990, the Union and Roxas filed
this case for illegal dismissal and nonpayment of salaries before the regional arbitration branch
of the NLRC.
After several conferences and hearings Executive Labor Arbiter Lita Aglibut issued an order
on December 26, 1990, referring the case to the grievance machinery, as provided in their
collective bargaining agreement, and directing private respondent Manuel Roxas to return to work
beginning January 2, 1991.
Private respondent reported for work on January 2, 1991. On the same day, Union President
Pacifico A. Santiago sent PASUDECO a letter submitting the names of the Union grievance panel
and requesting the company for the names of its representatives in preparation for the grievance
meetings.

On January 7, 1991, private respondent Roxas received a notice informing him of the charges
against him and of the fact that an investigation would be held. As Roxas refused to acknowledge
the notice, because, as he later explained, he thought the investigation was in violation of the
Order of the Executive Labor Arbiter, the investigation proceeded in his absence on January 10,
1991.
On February 11, 1991, Roxas was dismissed for fraud, breach of trust and confidence, gross
and habitual neglect, and abandonment. The letter to him stated
Dear Mr. Roxas:

This is to advise you that after due investigation conducted by the investigating Committee on
January 10, 1991, of which you were duly notified, and with the approval of the Board of Directors
in a special meeting held on January 22, 1991, it was proven that you, in conspiracy, connivance,
confederation and/or collusion with Mr. Norberto Gabriel, overpriced and/or allowed the
overpricing of the value of materials and supplies purchased by the company covering a period
of at least five (5) years, resulting to losses totalling P6,750,322.53 to the resulting damage and
prejudice of the company.It was also proven that you altered and/or falsified Purchase Orders by
making additional unauthorized entries which increased the liabilities of the company without its
consent. These acts were committed by you as Purchasing Officer and constituted serious
misconduct, fraud and willful breach of trust on your part. The evidence further showed that you
were negligent in the performance of your duties as Purchasing Officer because you did not
properly supervise your subordinate, Mr. Norberto Gabriel whom you allowed to commit similar
acts of overpricing. The records of the company further showed that you were AWOL from
October 26, 1990 to December 31, 1990, constituting abandonment of work.
Pursuant to the applicable provisions of the CBA between the company and the supervisors union
of which you are a member, recognizing the prerogative of the company to exercise the right of
dismissal for cause and considering that your guilt was amply proven, we hereby notify you that
we are terminating your employment in the company effective February 11, 1991 on the grounds
of serious misconduct, gross and habitual neglect of duties, negligence, fraud, willful breach of
trust and abandonment of work.
Very truly yours,
GERRY RODRIGUEZ
Acting President
On March 5, 1991, petitioner filed a motion to disqualify the Executive Labor Arbiter Lita
Aglibut from hearing the case for which reason the case was reassigned, first to Labor Arbiter
Leandro Jose and later to Labor Arbiter Quintin Mendoza. On March 9, 1991,Labor Arbiter
Mendoza rendered a decision dismissing the case.
On March 31, 1993, the UNION and Roxas filed a Notice of Appeal and Memorandum.
PASUDECO moved to dismiss the appeal on the ground that the memorandum on appeal was not
verified as required by the rules of the NLRC and that consequently the filing of the memorandum
did not interrupt the running of the period of appeal and the NLRC did not acquire jurisdiction
over the case.
Private respondents opposed PASUDECOs motion. However, the Labor Arbiter did not resolve
the incident but instead referred the records to the NLRC.

On July 30, 1993, the NLRC rendered a decision, reversing the findings of the Labor
Arbiter. The dispositive portion of its decision reads:
ISSUE:
Whether or not NLRC erred in reversing the decision
HELD:
The appealed Decision is hereby REVERSED and SET ASIDE. Another one is entered
ordering the respondent to reinstate complainant to his former position without loss of seniority
rights, privilege and benefits plus backwages, as above computed
Mortel Article 87-88: Offset Overtime
NWSA VS. NWSA CONSOLIDATED UNIONS

G.R. No. L-18939 August 31, 1964
Bautista Angelo, J.
FACTS:
Petitioner and respondent unions submitted a joint stipulation of facts on the issues
concerning the 40-Hour Week Law, "distress pay," minimum wage, filling of vacancies, night
compensation, and salary adjustments, reserving the right to present evidence on matters not
covered therein. On 1957, respondent intervenors filed a petition in intervention on the issue
for additional compensation for night work. Later, however, they amended their petition by
including a new demand for overtime pay in favor of Jesus Centeno, Cesar Cabrera, Feliciano
Duiguan , Cecilio Remotigue, and other employees receiving P4,200.00 per annum or more. On
1958, petitioner filed a motion to dismiss the claim for overtime pay alleging
thatrespondent Court of Industrial Relations was without jurisdiction to pass upon the samebec
ause, as mere intervenors, the latter cannot raise new issues not litigated in the principal case,
the same not being the lis mota therein involved. To this motion the intervenors filed an
opposition. Thereafter, respondent court issued an order allowing the issue to be litigated.
Petitioner's motion to reconsider having been denied, it filed its answer to the petition
for intervention
ISSUE:
Whether undertime work shall be offset by overtime work.
RULING:
Where a worker incurs undertime hours during his regular daily work, said undertime
hours should not be offset against the overtime hours. If it were otherwise, the unfairness would
be evident from the fact that the undertime hours represent only the employees’ hourly rate of
pay while the overtime hours reflect both the employees’ hourly rate of pay and the appropriate
premium such that, not being of equal value, offsetting the undertime hours against the overtime

hours would result in the undue deprivation of the employees’ overtime premium. The situation
is even more acceptable where the undertime hours are not only offset against the overtime
hours but are also charged against the accrued leave of the employee, for under this method the
employee is made to pay twice the for his undertime hours with work beyond the regular working
hours. The proper method should be to deduct the undertime hours from the accrued leave but
to pay the employee the overtime compensation to which he is entitled. Where the employee
has exhausted his leave credits, his undertime hours may simply be deducted from his day’s
wage, but he should still be paid his overtime compensation for work in excess of eight hours a
day.
Pascasio Article 94: Holiday and Holiday Pays
SAN MIGUEL CORP. VS. CA ET. AL.

G.R. No. 146775 Janurary 30, 2002
Kapunan, J.:
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.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that the
provisions of this Code shall be applicable only to Muslims.
RULING:
There should be no distinction between Muslims and non-Muslims as regards payment of

benefits for Muslim holidays. The Court of Appeals did not err in sustaining Undersecretary Espaol
who stated:
Assuming arguendo that the respondents position is correct, then by the same
token, Muslims throughout the Philippines are also not entitled to holiday pays
on Christian holidays declared by law as regular holidays. We must remind the
respondent-appellant that wages and other emoluments granted by law to the
working man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion.
At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that 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.
Samson Article 94: Holiday and Holiday Pays
INSULAR BANK OF ASIA AND AMERICAN EMPLOYEES UNION VS. HON. AMADO G.
INCIONG
G.R. NO. L – 52415 OCTOBER 23, 1984
FACTS:
The Union filed a complaint against the bank for the payment of holiday pay before the
then Department of Labor, Regional Office IV in Manila. Conciliation having failed on June 20,
1975, and upon the request of both parties, the case was certified for arbitration on July 7, 1975.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered decision granting petitioner's
complaint for payment of holiday pay. Respondent bank did not appeal from the said decision.
Instead, it complied with the order of the Labor Arbiter by paying their holiday pay up to and
including January 1976. P.D. 850 was promulgated amending the provisions of the Labor Code
on the right to holiday pay. Accordingly by authority of Article 5 of the Labor Code, the Department
of Labor (now Ministry of Labor) promulgated the rules and regulations for the implementation
of holidays with pay. The section reads:
“Status of employees paid by the month. – Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with
a salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.”
Policy Instruction 9 was issued by the then Secretary of Labor on April 23, 1976,
interpreting the said rule. The bank, by reason of the ruling laid down by the rule implementing
Article 94 of the Labor Code and by Policy Instruction 9, stopped the payment of holiday pay to
an its employees. On August 30, 1976, the Union filed a motion for a writ of execution to enforce
the arbiter's decision dated August 1975, which the bank opposed. On October 18, 1976, the
Labor Arbiter, instead of issuing a writ of execution, issued an order enjoining the bank to continue
paying its employees their regular holiday pay. On November 17, 1976, the bank appealed from
the order of the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC promulgated its resolution
dismissing the bank’s appeal, and ordering the issuance of the proper writ of execution. On
February 21, - 1979, the bank filed with the Office of the Minister of Lab or a motion for
reconsideration/appeal with urgent prayer to stay execution. On August 13, 1979 the NLRC issued
an order directing the Chief of Research and Information of the Commission to compute the
holiday pay of the IBAA employees from April 1976 to the present in accordance with the Labor
Arbiter dated August 25, 1975. On November 10, 1979, the Office of the Minister of Labor,
through Deputy Minister Amado Inciong, issued an order setting aside the resolution of the NLRC
dated June 20, 1978, and dismissing the case for lack of merit.
ISSUE:
Whether or not the monthly paid employees are excluded from the benefits of holiday
pay.

RULING:
No. The provisions of the Labor Code on the entitlement to the benefits of holiday pay
are clear and explicit – it provides for both the coverage of and exclusion from the benefits. In
Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay
Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9 issued by the
then Secretary of Labor are null and void since in the guise of clarifying the Labor Code’s
provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.
From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article 32
of the same Code, it 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 17 Rule IV,
of the implementing rules, Section 2, which provides that: “employees who are uniformly paid by
the month, irrespective of the number of working days therein, with a salary of not less than the
statutory or established minimum wage shall be presumed to be paid for all days in the month
whether worked or not." Even contemporaneous construction placed upon a statute by executive
officers whose duty is to enforce it is given great weight by the courts, still if such construction is
so erroneous, the same must be declared as null and void. So long, as the regulations relate
solely to carrying into effect the provisions of the law, they are valid. Where an administrative
order betrays inconsistency or repugnancy to the provisions of the Act, the mandate of the Act
must prevail and must be followed. A rule is binding on the Courts so long as the procedure fixed
for its promulgation is followed and its scope is within the statutory authority granted by the
legislature, even if the courts are not in agreement with the policy stated therein or its innate
wisdom. Further, administrative interpretation of the law is at best merely advisory, for it is the
courts that finally determine what the law means.
Sandoval Article 94: Holiday and Holiday Pays
THE CHARTERED BANK EMPLOYEES ASSOCIATION VS. HON. BLAS OPLE

G.R. No. L-44717 August 28, 1985
FACTS:
On May 20, 1975, petitioner instituted a complaint with the Ministry of Labor and
Employment (MOLE) against private respondent Chartered Bank, for the payment of ten
(10) unworked legal holidays, as well as for premium and overtime differentials for worked legal
holidays from November 1, 1974. Both the arbitrator and the National Labor Relations Commission
(NLRC) ruled in favor of the petitioners ordering the respondent bank to pay its monthly paid
employees, holiday pay for the ten (10) legal holidays effective November 1, 1974 and to pay
premium or overtime pay differentials to all employees who rendered work during said legal
holidays. On appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the
petitioner's claim for lack of merit basing its decision on Section 2, Rule IV, Book Ill of the

Integrated Rules and Policy Instruction No. 9. Petitioners contends that the respondent Minister
of Labor’s promulgation of Section 2, Rule IV, Book III of the Integrated Rules and Policy
Instruction No. 9 as guidelines for the interpretation of Articles 82 and 94 of the Labor Code and
in applying said guidelines to this case constitutes a grave abuse of his discretion of his authority
to promulgate rules and regulations to implement construe and clarify the Labor Code On the
other hand, the private respondent contends that the questioned guidelines did not deprive the
petitioner's members of the benefits of holiday
pay but merely classified those monthly paid employees whose monthly salary already includes
holiday pay and those whose do not, and that the guidelines did not deprive the employees of
holiday pay.
ISSUE:
Whether or not the monthly salaries of the petitioner's members already include holiday
pay
RULING:
NO. The Court held that the issue in the case at bar, was the same issue raised and
resolved in the case of Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong
(132 SCRA 663), which the Court ruled that Section 2, Rule IV, Book III of the Integrated Rules
and Policy Instruction No. 9, are contrary to the provisions of the Labor Code and, therefore,
invalid. Since the private respondent premises its action on the invalidated rule and policy
instruction, it is clear that the employees belonging to the petitioner association are entitled to
the payment of ten (10) legal holidays under Articles 82 and 94 of the Labor Code, aside from
their monthly salary. They are not among those excluded by law from the benefits of such holiday
pay.
Serrano Article 94: Holiday and Holiday Pays
OBANGO VS. NLRC AND ANTIQUE ELECTRIC COOPERATIVE INC.

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 Department of
Labor and Employment found ANTECO liable for underpayment of the monthly salaries of its
employees. On September 1989, the DOLE directed ANTECO to pay its employees wage
differentials amounting to P1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-
three (33) monthly-paid employees filed complaints with the NLRC praying for payment of wage
differentials, damages and attorney’s fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting
them wage differentials amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECO
appealed the Decision to the NLRC where it reversed the Labor Arbiter’s Decision. The NLRC
denied petitioners’ motion for reconsideration. Petitioners then elevated the case to CA where it
dismissed the petition for failure to comply with Section 3, Rule 46 of the Rules of Court. The
Court of Appeals explained that petitioners failed to allege the specific instances where the NLRC

abused its discretion. The appellate court denied petitioners’ motion for reconsideration. Hence,
this petition.
ISSUE:
Whether or not the petitioners are entitled to money claims.
RULING:
The Court ruled that the petitioners are not entitled to money claims or wage differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules
and Policy Instructions No. 9 issued by the Secretary of Labor which was declared null and void
since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effect amended
them by enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The
basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is
generally limited to the ten legal holidays in a year. Petitioners’ claim is based on a mistaken
notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days
beyond the ten legal holidays. Petitioners’ line of reasoning is not only a violation of the "no work,
no pay" principle, it also gives rise to an invidious classification, a violation of the equal protection
clause.
Tejares Article 94: Holiday and Holiday Pays
UNION OF FILIPRO EMPLOYEES VS. BENIGNO VIVAR, JR., NLRC AND NESTLE
PHILS. INC.
G.R. No. 79255 January 20, 1992
GUTIERREZ, JR., J
FACTS:
Filipro Inc. (now Nestle Philippines, Inc.) had excluded sales personnel from the holiday
pay award and changed the divisor in the computation of benefits from 251 to 261 days. Both
Filipro and the Union of Filipro Employees submitted the case for voluntary arbitration and
appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. In his decision, Vivar directed
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.” With the decision by Vivar, Filipro filed a motion for clarification
seeking (1) the limitation of the award to 3 years, (2) exclusion of its sales personnel (consisted
by salesmen, sales representatives, truck drivers, merchandisers and medical representatives)
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 the same light, the Union filed their answer that the award should be made effective
from the date of effectivity of the Labor Code, their sales personnel are not field personnel and

are therefore entitled to holiday pay, and the use of 251 as divisor is an established employee
benefit which cannot be diminished.
Vivar issued an order declaring that the effectivity of the holiday pay award shall retroact
to November 1, 1974, the date of effectivity of the labor Code. However, he adjudged the sales
personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that
the divisor should be changed from 251 to 261 due to the grant of 10 days’ holiday pay and
ordered the reimbursement of overpayment for overtime, night differential, vacation and sick
leave pay due to the use of 251 days as divisor. Treating the motions for partial reconsideration
of the parties, Vivar forwarded the case to the NLRC, which remanded the case to Vivar on the
ground that it has no jurisdiction to review decisions involuntary arbitration cases. In a letter,
Vivar refused to take cognizance of the case because, according to him, he had resigned from
service already.
ISSUE:
Whether or not Nestle’s sales personnel are entitled to holiday pay
RULING:
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agritultural 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 Court finds that the clause "whose time and performance is unsupervised by the
employer" did not amplify but merely interpreted and expounded the clause "whose actual hours
of work in the field cannot be determined with reasonable certainty." The former clause is still
within the scope and purview of Article 82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the field can be determined with reasonable
certainty, query must be made as to whether or not such employee's time and performance is
constantly supervised by the employer.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result
in a lower daily rate which is violative of the prohibition on non-diminution of benefits found in
Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261
days, then the dividend, which represents the employee's annual salary, should correspondingly
be increased to incorporate the holiday pay. 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.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use
of 251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations,
shall be resolved in favor of labor." (Article 4). Nevertheless, in order to fully settle the issues,
the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle.
Applying the “operative fact” aforementioned doctrine to the case at bar, it is not far-
fetched that Nestle, relying on the implicit validity of the implementing rule and policy instruction

before this Court nullified them, and thinking that it was not obliged to give holiday pay benefits
to its monthly paid employees, may have been moved to grant other concessions to its employees,
especially in the collective bargaining agreement. This possibility is bolstered by the fact that
respondent Nestle's employees are among the highest paid in the industry. With this
consideration, it would be unfair to impose additional burdens on Nestle when the non-payment
of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but
from the date of promulgation of the IBAA case.
Alquiza Article 94: Holiday and Holiday Pays
WELLINGTON INVESTMENT AND MANUFACTURING

G.R. No. 114698 July 3, 1995
NARVASA, C.J.
FACTS:
The case arose from a routine inspection conducted by a Labor Enforcement Officer on
August 6, 1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner
Wellington Investment and Manufacturing Corporation. The officer thereafter drew up a report,
a copy of which was "explained to and received by" Wellington's personnel manager, in which he
set forth his finding of "non-payment of regular holidays falling on a Sunday for monthly-paid
employees."
Wellington sought reconsideration of the Labor Inspector's report. It argued that "the
monthly salary of the company's monthly-salaried employees already includes holiday pay for all
regular holidays . . . (and hence) there is no legal basis for the finding of alleged non-payment of
regular holidays falling on a Sunday." and asserting that it pays its monthly-paid employees a
fixed monthly compensation "using the 314 factor which undeniably covers and already includes
payment for all the working days in a month as well as all the 10 unworked regular holidays within
a year."
Wellington's arguments failed to persuade the Regional Director who, in an Order issued
on July 28, 1992, ruled that "when a regular holiday falls on a Sunday, an extra or additional
working day is created and the employer has the obligation to pay the employees for the extra
day except the last Sunday of August since the payment for the said holiday is already included
in the 314 factor," and accordingly directed Wellington to pay its employees compensation
corresponding to four (4) extra working days.
ISSUE:
Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is

entitled to an additional pay aside from his usual holiday pay, whenever a regular holiday falls on
a Sunday
RULING:

Every worker should, according to the Labor Code, "be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten
(10) workers;" this, of course, even if the worker does no work on these holidays. The regular
holidays include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of
December, and the day designated by law for holding a general election (or national referendum
or plebiscite).
Particularly as regards employees "who are uniformly paid by the month, "the monthly
minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided
by twelve."12 This monthly salary shall serve as compensation "for all days in the month whether
worked or not," and "irrespective of the number of working days therein."13 In other words,
whether the month is of thirty (30) or thirty-one (31) days' duration, or twenty-eight (28) or
twenty-nine (29) (as in February), the employee is entitled to receive the entire monthly salary.
So, too, in the event of the declaration of any special holiday, or any fortuitous cause precluding
work on any particular day or days (such as transportation strikes, riots, or typhoons or other
natural calamities), the employee is entitled to the salary for the entire month and the employer
has no right to deduct the proportionate amount corresponding to the days when no work was
done. The monthly compensation is evidently intended precisely to avoid computations and
adjustments resulting from the contingencies just mentioned which are routinely made in the
case of workers paid on daily basis.
In the case, there seems to be no question that at the time of the inspection conducted
by the Labor Enforcement Officer on August 6, 1991, it was and had been paying its employees
"a salary of not less than the statutory or established minimum wage," and that the monthly
salary thus paid was "not . . . less than the statutory minimum wage multiplied by 365 days
divided by twelve," supra. There is, in other words, no issue that to this extent, Wellington
complied with the minimum norm laid down by law.
Biyo Article 94: Holiday and Holiday Pays
JOSE RIZAL COLLEGE VS. NLRC

GR No. L-65482, 01 December 1987
FACTS:
Petitioner is a non-stock, non-profit educational institution duly organized and existing

under the laws of the Philippines. It has three groups of employees categorized as follows: (a)
personnel on monthly basis, who receive their monthly salary uniformly throughout the year,
irrespective of the actual number of working days in a month without deduction for holidays; (b)
personnel on daily basis who are paid on actual days worked and they receive unworked holiday
pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start
of the semester they sign contracts with the college undertaking to meet their classes as per
schedule. Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977,
private respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the
faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against
the college for said alleged non-payment of holiday pay.

ISSUE:
Whether or not the school faculty who according to their contracts are paid per lecture
hour are entitled to unworked holiday pay.
RULING:
No. Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442,
as amended), which reads:
Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but
such employee shall be paid a compensation equivalent to twice his
regular rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. — (a) Private school teachers,

including faculty members of colleges and universities, may not be paid
for the regular holidays during semestral vacations. They shall, however,
be paid for the regular holidays during Christmas vacations. ...
We believe that the aforementioned implementing rule is not justified by the provisions of the
law which after all is silent with respect to faculty members paid by the hour who because of their
teaching contracts are obliged to work and consent to be paid only for work actually done. Regular
holidays specified as such by law are known to both school and faculty members as no class
days;" certainly the latter do not expect payment for said unworked days, and this was clearly in
their minds when they entered into the teaching contracts.
Custodio Sick Leave
BALTAZAR VS. SAN MIGUEL BREWERY, INC.

G.R. No. L-23076 February 27, 1969
Dizon, J.
FACTS:
Nicanor Baltazar was appointed salesman-in-charge of San Miguel Brewery's Dagupan

warehouse in 1955.
In 1956, sixteen regular workers at San Miguel Brewery's Dagupan warehouse went on a
strike.
For the purpose of relieving the tension prevailing at the place because it was alleged that
the unfair treatment dispensed to the employees by Baltazar was the cause of the strike, Baltazar
was recalled to San Miguel Brewery's Manila office upon recommendation of its sales supervisor

and industrial relations officer, who found out, after a personal investigation, that the employees'
grievance was well founded. The day following Baltazar's recall to Manila the strikers returned to
work voluntarily.
When Baltazar reported at the main office in Manila, the latter's sales supervisor informed
him that he was not to return to Dagupan anymore. Thereafter, he reported for work at the main
office, apparently without being given any specific work or assignment. For a period of more than
one and one-half months, he absented himself from work without prior authority from his
superiors and without advising them or anybody else of the reason for his prolonged absence.
For this reason, he was dismissed from his work.
ISSUE:
Whether or not there is a valid sick leave on the part of Nicanor Baltazar
RULING:
The trial court found that Baltazar’s absence for forty-eight successive days was without
permission or authority of his superiors. Sick leave benefits under San Miguel Brewery's health,
welfare and retirement plan may be enjoyed only if and when the sickness is certified to by the
company physician, a requirement which was admittedly not complied with. As a result, it was
sufficient cause for his dismissal in accordance with the rules and regulations of his employer.
De Leon Sick Leave
DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. ABARQUEZ

G.R. No. 102132 March 19, 1993
Romero, J.
FACTS:
Petitioner-company and respondent-union entered into a collective bargaining agreement

which includes provisions on sick leave with pay benefits each year to employees who have
rendered at least one year of service with the former. Unused sick leaves shall then be converted
into cash by the end of the year. Said CBA provision covers both intermittent and non-intermittent
employees but with differences in the manner of computing the pay. Upon renewing the CBA,
the petitioner-company’s new assistant manager discontinued the intermittent employee’s unused
sick leave cash conversion on the basis that the last sentence of the CBA disqualifies them to
enjoy such benefits. Further, said assistant manager stated that his predecessor committed a
wrongfully understood and applied the said CBA. Eventually, Voluntary Arbitrator Ruben Abarquez
decided on the matter and ruled in favor of the respondent-union. Petitioner-company disagreed
with Abarquez.
ISSUE:
Whether or not petitioner-company has the right to remove the existing benefits of the
employees?

RULING:
NO. The Supreme Court finds two applicable legal basis: (1) the essence of the terms and
conditions of a CBA which is more than regular contract but which is the law that regulates the
relationship between labor and capital. It is impressed with public interest which requires it to
yield to the common good; (2) Article 100 of the Labor Code which prohibits the construction of
labor provision which would lead to the elimination, or in any way diminution of the supplements
or other employee benefits.
In the instant case, and after careful scrutiny of the CBA between the parties, it was
clarified that the cash conversion of the unused sick leaves are applicable to employees who have
complied with the following requirements: (1) the employee should be regular and at least
rendered one year of service with the company; and (2) said claim should be certified by a
company-designated physician. From the said requirements, it is quite obvious that both
intermittent and non-intermittent employees could qualify to receive the unused sick leaves as
long as they have met the requirements of the CBA. The contention of the petitioner-company,
as to the last sentence of the CBA, only applies to those employees who have not successfully
satisfied the said provisions above.
Therefore, the Court dismissed the petition and affirmed the decision of Abarquez.
Evangelista Sick Leave
KWOK VS. PHILIPPINE CARPET MANUFACTURING CORP.

G.R. No. 149252 April 28, 2005
FACTS:
Petitioner filed a complaint against the respondent corporation for the recovery of
accumulated vacation and sick leave credits before the NLRC. Petitioner clung to the verbal
contract with Mr. Lim, the President of the respondent corporation and his father-in-law for his
claims. Petitioner obtained favorable judgment. In their appeal, respondent averred that the
position the petition held was not entitled cash conversions of vacation and sick leave credits.
The decision of the Labor Arbiter was reversed. The Court of Appeals affirmed the reversed
decision.
ISSUE:
Whether or not the verbal contract in favor of petitioner is valid.
RULING:
NO. It is true that for a contract to be binding on the parties thereto, it need not be in
writing unless the law requires that such contract be in some form in order that it may be valid
or enforceable or that it be executed in a certain way, in which case that requirement is absolute
and independent. (Art. 1356, NCC) But the court disbelieved petitioner’s testimony and gave
credence and probative weight to the collective testimonies of the employees and officers of the

respondent corporation, including Mr. Lim, whom the petitioner presented as a hostile witness.
Even assuming that the petitioner was entitled of such benefits, there was no record to show the
record of absences to arrive at the actual number of leave credits. There was no conformity of
such agreement with the Board and if so, such claim was already barred by prescription under
Article 291 of the Labor Code.
Wages and Salary
Flores Wages and Salary
SONGCO, ET. AL. VS. NLRC
FACTS:
Zuelig filed an application for clearance to terminate the services of Songco, and others,
on the ground of retrenchment due to financial losses. During the hearing, the parties agreed t
hat the sole issue to be resolved was the basis of the separation pay due. The salesmen receive
d monthly salaries of at least P400.00 and commission for every sale they made.
The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al. wer
e members contained the following provision: "Any employee who is separated from employme
nt due to old age, sickness, death or permanent lay-off, not due to the fault of said employee, s
hall receive from the company a retirement gratuity in an amount equivalent to one (1) month's
salary per year of service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one mo
nth salary (exclusive of commissions, allowances, etc.) for every year of service with the compa
ny.
The National Labor Relations Commission sustained the Arbiter.
ISSUE:
Whether or not earned sales commissions and allowances should be included in the mon
thly salary of Songco, et al. for the purpose of computing their separation pay.
RULING:
In the computation of backwages and separation pay, account must be taken not only of
the basic salary of the employee, but also of the transportation and emergency living allowances
.
Even if the commissions were in the form of incentives or encouragement, so that the salesman
would be inspired to put a little more industry on jobs particularly assigned to them, still these c
ommissions are direct remunerations for services rendered which contributed to the increase of i
ncome of the employee. Commission is the recompense compensation or reward of an agent, s
alesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a p
ercentage on the amount of his transactions or on the profit to the principal. The nature of the
work of a salesman and the reason for such type of remuneration for services rendered demons
trate that commissions are part of Songco, et al's wage or salary.

The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, b
ut depend on commissions and allowances or commissions alone, although an employer-employ
ee relationships exists.
If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, th
en in effect, we will be saying that this kind of salesmen do not receive any salary and, therefor
e, not entitled to separation pay in the event of discharge from employment. This narrow interp
retation is not in accord with the liberal spirit of the labor laws, and considering the purpose of s
eparation pay which is, to alleviate the difficulties which confront a dismissed employee thrown t
o the streets to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the employ
ee (override commission plus net deposit incentive) are not properly includible in such base figu
re since such commissions must be earned by actual market transactions attributable to the peti
tioner [salesman]. Since the commissions in the present case were earned by actual transaction
s attributable to Song, et al., these should be included in their separation pay. In the computati
on thereof, what should be taken into account is the average commission earned during their la
st year of employment.
Fortuno Wages and Salary
RUGA ET AL. AL. VS. NLRC

G.R. No. L-72654-61 January 22, 1990
FERNAN, C.J.:
FACTS:
Petitioners were the fishermen-crew members of 7/B Sandyman II, Petitioners rendered
service aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma
patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin,
master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin,
fishermen.
For services rendered in the conduct of private respondent's regular business of "trawl"
fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de
Guzman, cashier of private respondent. As agreed upon, they received thirteen percent (13%) of
the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil
consumed during the fishing trip, otherwise, they received ten percent (10%) of the total
proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum
income of P350.00 per week while the assistant engineer, second fisherman, and fisherman-
winchman received a minimum income of P260.00 per week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de
Guzman, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the
report that they sold some of their fish-catch at midsea to the prejudice of private respondent.
Petitioners denied the charge claiming that the same was a countermove to their having formed
a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations
and General Workers Union (DIALOGWU) on September 3, 1983.
On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S.
Coralde rendered a joint decision dismissing all the complaints of petitioners on a finding that a

"joint fishing venture" and not one of employer-employee relationship existed between private
respondent and petitioners.
From the adverse decision against them, petitioners appealed to the National Labor
Relations Commission.
ISSUE:
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II
are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether or not
they were illegally dismissed from their employment
RULING:
Yes, While tenure or length of employment is not considered as the test of employment,
nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual
business or trade of private respondent for a period of 8-15 years since 1968 qualify them as
regular employees within the meaning of Article 281 of the Labor Code as they were indeed
engaged to perform activities usually necessary or desirable in the usual fishing business or
occupation of private respondent.
Aside from performing activities usually necessary and desirable in the business of private
respondent, it must be noted that petitioners received compensation on a percentage commission
based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds
exceeded the cost of the crude oil consumed during the fishing trip, otherwise only 10% of the
proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage"
as defined under Article 97(f) of the Labor Code, thus:
(f) "Wage" paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether fixed
or ascertained on a time, task, piece or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and included 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. . . .
The claim of private respondent, which was given credence by public respondent that
petitioners get paid in the form of share in the fish-catch which the patron/pilot as head of the
team distributes to his crew members in accordance with their own understanding is not
supported by recorded evidence. Except that such claim appears as an allegation in private
respondent's position paper, there is nothing in the records showing such a sharing scheme as
preferred by private respondent.
Furthermore, the fact that on mere suspicion based on the reports that petitioners
allegedly sold their fish-catch at midsea without the knowledge and consent of private
respondent, petitioners were unjustifiably not allowed to board the fishing vessel on September
11, 1983 to resume their activities without giving them the opportunity to air their side on the
accusation against them unmistakably reveals the disciplinary power exercised by private

respondent over them and the corresponding sanction imposed in case of violation of any of its
rules and regulations. The virtual dismissal of petitioners from their employment was
characterized by undue haste when less extreme measures consistent with the requirements of
due process should have been first exhausted. In that sense, the dismissal of petitioners was
tainted with illegality.
Minimum Wage
Maghirang Minimum Wage
ATOK-BIG WEDGE MINING CO. INC. VS. ATOK BIG WEDGE MUTUAL BENEFITS ASSN
GR No. L-5276 March 3, 1953
LABRADOR, J.
FACTS:
On September 4, 1950, a demand was submitted to petitioner by respondent union through its
officers for various concessions, among which were (a) an increase of P0.50 in wages, (b)
commutation of sick and vacation leave if not enjoyed during the year, (c) various privileges, such
as free medical care, medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e)
no dismissal without prior just cause and with a prior investigation, etc. Some of the demands
were granted by the petitioner, and the others were rejected, and so hearings were held and
evidence submitted on the latter. A decision had reached wherein fixing the minimum wage for
the laborers at P3.20 and declaring that additional compensation representing efficiency bonus
should not be included as part of the wage, to be effective starting September 4, 1950. It is
against these portions of the decision that this appeal is taken.
ISSUE/S:
1. Whether or not fixing Php3.20 as the minimum wage is conscionable.

2. Whether or not bonus forms part of wages.
RULING:
A person’s needs increase as his means increase. This is true not only as to food but as to
everything else — education, clothing, entertainment, etc. The law guarantees the laborer a fair
and just wage. The minimum must be fair and just. The "minimum wage" can by no means imply
only the actual minimum. Some margin or leeway must be provided, over and above the
minimum, to take care of contingencies, such as increase of prices of commodities and increase
in wants, and to provide means for a desirable improvement in his mode of living. Where the
Court of Industrial Relations, after hearing, found that P2.58 is the minimum amount actually
needed by the laborer and his family, the amount of P3.20 fixed by said court as the minimum
wage payable to the laborer is not excessive. That the P3 minimum wage fixed in Republic Act
No. 602 is still far below what is considered a fair and just minimum is shown by the fact that this
amount is only for the year after the law takes effect, as thereafter the law fixes it at P4. There
is therefore no reason or ground for disturbing the finding contained in the decision of the Court
of Industrial Relations fixing the amount of P3.20 as the minimum wage.

On the other hand, whether or not bonus forms part of wages depends upon the circumstances
and conditions for its payment. If it is an additional compensation which the employer promised
and agreed to give without any conditions imposed for its payment, such as success of business
or greater production or output, then it is part of the wage. But if it is paid only if profits are
realized on a certain amount of productivity achieved, it cannot be considered part of the wages.
Where it is not payable to all but only to laborers and only when the labor becomes more efficient
or more productive, it is only an inducement or efficiency, a prize therefor, not a part of the wage.
Mascariñas Minimum Wage
DE RACHO VS. MUNICIPALITY OF ILLIGAN

G.R. NO. L-23542 JANUARY 2, 1968
BENGZON, J.P., J.
FACTS:
Plaintiff Juana T. Vda. de Racho and the decedent, Manuel Racho, were spouses and
had five minor children. On July 1, 1954 the decedent was appointed as market cleaner in the
Municipality of Ilagan, Isabela, at the rate of P660.00 per annum (P55.00 monthly) which amount
he received up to June 30, 1958. On July 1, 1958, decedent's salary was increased to P720.00
per annum (P60.00 monthly) by virtue of a promotional appointment extended to him by the
Municipal Mayor. Decedent was then paid the money value of his accumulated leaves. Decedent
died intestate at Ilagan. Plaintiff then filed on December 9, 1960 a claim for salary differentials
with the Regional Office of the Department of Labor, which dropped the case later for lack of
jurisdiction. Based on the foregoing facts, the Court of First Instance of Isabela ruled that
defendant Municipality of Ilagan must pay P1,766.00 to plaintiff representing the wage
differentials and adjusted terminal leave of the decedent from December 9, 1957 to May 23, 1960,
based on the monthly wage rate of P120.00 pursuant to the Minimum Wage Law.
ISSUE:
Whether or not the shortage and lack of available funds and expected revenue of a
municipality validly exempt from complying with the Minimum Wage Law.
RULING:
The appealed judgment is affirmed. Lack of funds of a municipality does not excuse it
from paying the statutory minimum wages to its employees, which, after all, is a mandatory
statutory obligation of the municipality. To uphold such defense of lack of available funds would
render the Minimum Wage Law futile and defeat its purpose. This also disposes of the implication
appellant is trying to make that its duty to pay minimum wages is not a statutory obligation which
would command preference in the municipal budget and appropriation ordinance.
Moreover, we cannot sanction appellant's proposition that it would eventually and

gradually implement the Minimum Wage Law, "if and when its revenues can afford." The law —
insofar as it affects government employees — took effect in 1952. It should have been
implemented — or at least steps to implement it should have been taken — right then. To excuse
the defendant municipality now would be to permit it to benefit from its non-feasance. It would
also make the effectivity of the law dependent upon the will and initiative of said municipality

without statutory sanction. Defendant's remedy, therefore, is not to seek an excuse from
implementing the law but, as the lower court suggested, to upgrade and improve its tax collection
machinery with a view towards realizing more revenues. Or, it could for the present forego all
non-essential expenditures.
Monton Minimum Wage
C. PLANAS COMMERCIAL VS. NLRC

GR No. 144619 November 11, 2005
Austria-Martinez, J.
FACTS:
In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for
underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave pay,
and premium pay for rest day and holiday and night shift differential against petitioners in the
Arbitration Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic
products and fruits of different kinds with more than 24 employees. Respondents were hired on
January 1990, May 1990 and July 19991 as laborers and were paid below the minimum wage for
the past 3 years. They were required to work for more than 8 hours a day and never enjoyed the
minimum benefits. Petitioners filed their comment stating that the respondents were their helpers.
The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal
with the NLRC where it granted the money claims of Ofialda, Morente and Allaguian. Petitioners
appealed with the CA but it was denied. It said that the company having claimed of exemption
of the coverage of the minimum wage shall have the burden of proof to the claim. In the present
petition, the Petitioners insist that C. Planas Commercial is a retail establishment principally
engaged in the sale of plastic products and fruits to the customers for personal use, thus
exempted from the application of the minimum wage law; that it merely leases and occupies a
stall in the Divisoria Market and the level of its business activity requires and sustains only less
than ten employees at a time. Petitioners contend that private respondents were paid over and
above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in
ruling that private respondents’ claim for underpayment has no factual and legal basis. Petitioners
claim that since private respondents alleged that petitioners employed 24 workers, it was
incumbent upon them to prove such allegation which private respondents failed to do.
ISSUE:
Whether or not petitioner is exempted from the application of minimum wage law.
RULING:
The contention of the petitioners that they are exempted by the law must be proven. The
petitioners have not successfully shown that they had applied for the exemption. R.A. No. 6727
known as the Wage Rationalization Act provides for the statutory minimum wage rate of all
workers and employees in the private sector. Section 4 of the Act provides for exemption from
the coverage, thus: Sec. (c) Exempted from the provisions of this Act are household or domestic
helpers and persons employed in the personal service of another, including family drivers. Also,
retail/service establishments regularly employing not more than ten (10) workers may be

exempted from the applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by the
Commission. Whenever an application for exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged non-compliance with this Act shall be deferred
pending resolution of the application for exemption by the appropriate Regional Board. In the
event that applications for exemptions are not granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus interest of one percent (1%) per month
retroactive to the effectivity of this Act. 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.
Rillera Article 100: Elimination or Diminution of Benefits
DAVAO INTEGRATED ORTS STEVEDORING SERVICES VS. ABARQUEZ

G.R. No. 102132 March 19, 1993
ROMERO, J
FACTS:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private

respondent ATU-TUCP, entered into a collective bargaining agreement (CBA) on October 16,
1985. Under sections 1 and 3, Article VIII thereof, sick leave with pay benefits shall be provided
for employees who have rendered at least one (1) year of service with the company. During the
effectivity of the CBA until three (3) months after its renewal on April 15, 1989, or until July1989
(a total of three (3) years and nine (9) months), all the field workers of petitioner who are
members of the regular labor pool and the present regular extra labor pool who had rendered at
least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any unused portion
thereof at the end of the current year was converted to cash and paid at the end of the said one-
year period pursuant to Sections 1 and 3, Article VIII of the CBA. The commutation of the unused
portion of the sick leave with pay benefits of the intermittent workers or its conversion to cash
was, however, discontinued or withdrawn when the petitioner hired a new assistant manager,
Mr. Benjamin Marzo who stopped the payment of its cash equivalent on the ground that they are
not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA. The union alleges that
the discontinuation of the benefits being granted would violate the principle in labor laws that
benefits already extended shall not be taken away and that it would result indiscrimination
between the non-intermittent and the intermittent workers of the petitioner-company.
ISSUE:
Whether or not the benefits given by the petitioner have not yet ripened into an
established company practice and can therefore be withdrawn.
RULING:
No, the benefits given by the petitioner to its employees have already ripened into an
established company practice and therefore cannot be withdrawn.
The employer cannot unilaterally withdraw the existing privilege of commutation orconversion to

cash, given to the said workers and as also noted that the employer had in fact granted and paid
said cash equivalent of the unused portion of the sick leave benefits to some intermittent workers.
Well-settled is it that the said privilege of commutation or conversion to cash, being an existing
benefit, the petitioner may not diminish such benefits. Under the circumstances, these may be
deemed to have ripened into company practice or policy which cannot be peremptorily withdrawn.
Robles Food or Meal Allowance
CEBU AUTOBUS COMPANY VS. UNITED CEBU AUTOBUS EMPLOYEES ASSN.

GR. No. L-9742 October 27, 1955
FACTS:
Petitioner used to provide additional food allowance for its drivers and conductors, aside
from their regular salary. However, that privilege was stopped consequent the effectivity of the
Minimum Wage Law. Petitioners contends that’s the Congress already took into account the fair
and reasonable value of boards customarily furnished by the employer to the employee when it
stated “wage”.
ISSUE:
Whether or not “wage” includes the fair and reasonable value of boards customarily
furnished by the employer to the employees.
RULING:
No. If the Court is to follow the theory of the herein petitioners, then a crew member,
who used to receive a monthly wage of P100.00, before August 4, 1951, with no deduction for
meals, after said date, would receive only P86.00 monthly (after deducting the cost of his meals
at P.40 per meal), which would be very much less than the P122.00 monthly minimum wage,
fixed in accordance with the Minimum Wage Law. Instead of benefiting him, the law will
adversely affect said crew member. Such interpretation does not conform with the avowed
intention of Congress in enacting the said law.
Savellano Monthly Emergency Allowance
R. TIANGCO AND V. TIANGCO VS. HON. VICENTE LEOGARDO, JR.

G.R. No. 57636 May 16, 1983
Concepcion, Jr., J
FACTS:
The petitioner, Reynaldo Tiangco, is a fishing operator who owns the ReynaldoTiangco
Fishing Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from
Navotas, Rizal.

His business is capitalized at P2,000,000.00, while the petitioner, Victoria Tiangco, is a

fish broker whose business is capitalized at P100,000.00.
Some of the private respondents were engaged by Reynaldo Tiangco as batillos,who were
tasked to unload the fish catch from the vessels and take them to the Fish Stall of the petitioner
Victoria Tiangco. The other private respondents were batillos engaged by Victoria Tiangco. They
were all working as part-time since their work were limited to days of arrival ofthe fishing vessels
and their working days in a month are comparatively few. Their working hours average four (4)
hours a day.
The private respondents filed a complaint against the petitioners with the Ministry of Labor
and Employment for non-payment of their legal holiday pay and service incentive leave pay, as
well as underpayment of their emergency cost of living allowances which used to be paid in full
irrespective of their working days, but which were reduced effective February, 1980, in
contravention of Article 100 of the new Labor Code which prohibits the elimination or diminution
of existing benefits.
ISSUE:
Whether the Deputy Minister of Labor and Employment erred in deciding that there is
diminution of benefits in the discontinuance of giving of allowance.
RULING:
NO, the ruling of the Deputy Minister of Labor and Employment was right. Since the
petitioners had been paying the private respondents a fixed monthly emergency allowance since
November, 1976 up to February, 1980, as a matter of practice and/or verbal agreement between
the petitioners and the private respondents, the discontinuance of the practice and/or agreement
unilaterally by the petitioners contravened the provisions of the Labor Code, particularly Article
100 thereof which prohibits the elimination or diminution of existing benefits. Section 15 of the
Rules on P.D. 525 and Section 16 pf the Rules on P.D. 1123 also prohibits the diminution of any
benefit granted to the employees under existing laws, agreements and voluntary employer
practice. The decision of the Deputy Minister of Labor was modified, taking into consideration
that the respondent employees are employed by different individuals with varying capitalization.
Silverio Exceptions
GLOBE MACKAY-CABLE VS. NLRC

G.R. NO. 74156 JUNE 29, 1988
MELENCIO-HERRERA, J.
FACTS:
Wage Order No. 6 increased the cost-of -living allowance of non-Agricultural workers in
the private sector. Petitioner corporation complied with the said Wage Order by paying its
monthly-paid employees the mandated P3.00 per day COLA. However, in computing said COLA,
GMCR multiplied the P3.00 daily COLA by 22days, which is the number of working days in the
company. Respondent Union disagreed with the computation of the monthly COLA claiming that

the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate.
The union alleged furthermore that prior to the effectivity of Wage Order No. 6, petitioner
corporation had been computing and paying the monthly COLA on the basis of thirty (30) days
per month and that this constituted an employer practice, which should not be unilaterally
withdrawn.
ISSUE:
Whether or not petitioner, in computing COLA based on the number of working days of
the company , violated Article100 of the Labor Code of the Philippines?
RULING:
There is no violation of Article 100 of the Labor Code on prohibition of wage diminution.
The primordial consideration for entitlement to COLA is that basic wage is being paid. In other
words, the payment of COLA is mandated only for the days that the employees are paid their
basic wage, even if said days are un worked. So that, on the days that employees are not paid
their basic wage, the payment of COLA is not mandated. Peculiar to this case, however, is the
circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner and
Respondent Union, the monthly basic pay is computed on the basis of five (5) days a week, or
twenty two(22) days a month. In determining the hourly rate of monthly paid employees for
purposes of computing overtime pay, the monthly wage is divided by the number of actual work
days in a month and then, by eight (8) working hours. If a monthly-paid employee renders
overtime work, he is paid his basic salary rate plus one-half thereof. Thus, where the company
observes a 5-day work week, it will have to be held that the COLA should be computed on the
basis of twenty two (22) days, which is the period during which the employees of petitioner
receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be
the subject of future re-negotiation.
Payment in full by petitioner of the COLA before the execution of the CBA incompliance
with Wage Orders Nos. 1 to 5, should not be construed as constitutive of voluntary employer
practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it
should have been practiced over a long period of time, and must be shown to have been
consistent and deliberate. Adequate proof is wanting in this respect. The test of long practice has
been enunciated in Oceanic Pharmaceutical Employees Union vs. Inciong such that “respondent
company agreed to continue giving holiday pay knowing fully well that said employees are not
covered by the law requiring payment of holiday pay."Absent clear administrative guidelines,
petitioner cannot be faulted for erroneous application of the law. Payment may be said to have
been made by reason of a mistake in the construction or application of a "doubtful or difficult
question of law."Since it is a past error that is being corrected, no vested right may be said to
have arisen nor any diminution of benefit under Article 100 of the Labor Code may be said to
have resulted by virtue of the correction.
Angeles Exceptions
SAMAHAN NG MANGGAGAWA SA TOPFORM MANUFACTURING VS. NLRC

G.R. No. 113856 September 7, 1998

Romero, J.
FACTS:
The collective bargaining negotiation where the parties agreed to discuss unresolved economic
issues where they specifically talked about Article VII of the collective bargaining agreement. The
management requested the union to retain the provision on wages since their sincerity was already
proven when the 25.00 php wage increase was granted across-the-board. The union acknowledges
management’s sincerity but they are worried that in case there is a new set of management, they can
just show their collective bargaining agreement. The union decided to defer the provision. In their joint
affidavit, union members affirmed that at the subsequent collective bargaining negotiations, the union
insisted on the incorporation in the collective bargaining agreement of the union proposal on “automatic
across-the-board wage increase”. The union requested the implementation of said wage orders. They
demanded that the increase be on an across-the-board basis. Private respondent refused to accede to
that demand. Instead, it implemented a scheme of increases purportedly to avoid wage distortion. The
union through its legal counsel, wrote private respondent a letter demanding that it should “fulfill its
pledge of sincerity to the union by granting an across-the-board wage increases to all employees under
the wage orders.” The union reiterated that it had agreed to “retain the old provisions of the collective
bargaining agreement” on the strength of private respondent’s “promise and assurance” of an across-
the-board salary increase should the government mandate salary increases. The union filed a complaint
with the NCR NLRC alleging that private respondent’s act of “reneging on its undertaking/promise clearly
constitutes act of unfair labor practice through bargaining in bad faith.” It charged private respondent
with acts of unfair labor practices. Private respondent contended that in implementing Wage Orders
Nos. 01 and 02, it had avoided “the existence of a wage distortion” that would arise from such
implementation.
ISSUE:
Whether or not the employer committed an unfair labor practice by bargaining in bad
faith and discriminating against its employees
RULING:
The basic premise of this argument is definitely untenable. To start with, if there was indeed a
promise or undertaking on the part of private respondent to obligate itself to grant an automatic across-
the-board wage increase, petitioner union should have requested or demanded that such "promise or
undertaking" be incorporated in the CBA. After all, petitioner union has the means under the law to
compel private respondent to incorporate this specific economic proposal in the CBA. It could have
invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes "executing a
contract incorporating such agreements if requested by either party." Petitioner union's assertion that
it had insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that
the duty to bargain "does not compel any party to agree to a proposal or make any concession." Thus,
petitioner union may not validly claim that the proposal embodied in the Minutes of the negotiation
forms part of the CBA that it finally entered into with private respondent.
The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant
across-the-board wage increases, private respondent violated the provisions of Section 5, Article VII of
the existing CBA as well as Article 100 of the Labor Code.

We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed
by petitioner union and the other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent had granted an across-the-
board increase pursuant to Republic Act No. 6727, that single instance may not be considered an
established company practice. Petitioner union's argument in this regard is actually tied up with its claim
that the implementation of Wage Orders Nos. 01 and 02 by private respondent resulted in wage
distortion.
Borja Exceptions
PAG-ASA STEEL WORKS VS. CA, ET. AL.

GR No. 166647 March 31, 2006
Callejo, Sr., J.
FACTS:
Petitioner is engaged in the manufacture of steel bars and wire rods while Pag-Asa Steel
Workers Union is the duly authorized bargaining agent of the rank-and-file employees. RTWPB of
NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum
wages. The Petitioner and the union negotiated on said increase. Petitioner forwarded a letter to
the union with the list of adjustments involving rank and file employees. In September 1999, the
petitioner and union entered into a collective bargaining agreement where it provided wage
adjustments namely P15, P25, P30 for three succeeding year.
On the first year, the increase provided were followed until RTWPB issued another wage
order where it provided for a P25.50 per day increase in the salary of employees receiving the
minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50
per day increase to all of its rank-and-file employees.
On November 2000, Wage Order No. NCR-08 was issued where it provided the increase
of P26.50 per day. The union president asked that the wage order be implemented but the
petitioner rejected the request claiming that there was no wage distortion and it was not obliged
to grant the wage increase. The union submitted the matter for voluntary arbitration where it
favored the position of the company and dismissed the complaint. The matter was elevated to
CA where it favored the respondents.
ISSUE:
Whether or not the company was obliged to grant the wage increase under the Wage
Order as a matter of practice.
RULING:
No. The Company is not obliged to grant the wage increase. It is submitted that
employers, unless exempted, are mandated to implement the said wage order but limited to those
entitled thereto. A perusal of the record shows that the lowest paid employee before the
implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50
minimum. This could only mean that the union can no longer demand for any wage distortion

adjustment. The provision of wage order # 8 and its implementing rules are very clear as to who
are entitled to the P26.50/ day increase, i.e., "private sector workers and employees in the
National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive
an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid
is P250.00/ day the company is not obliged to adjust the wages of the workers.
Wage Order No. NCR-08 clearly states that only those employees receiving salaries below
the prescribed minimum wage are entitled to the wage increase provided therein, and not all
employees across-the-board as respondent Union would want petitioner to do. Considering
therefore that none of the members of respondent Union are receiving salaries below the P250.00
minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen
into a company practice that is demandable as a matter of right, the giving of the increase should
not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on
the part of the employer. Hence, even if the company continuously grants a wage increase as
mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a
company practice.
Santos Exceptions
LEXAL LABORATORIES VS. COURT OF INDUSTRIAL RELATIONS ET. AL.

G.R. No. L-24632. October 26, 1968
FACTS:
The Court of Industrial Relations (CIR) of June 29, 1963 implemented its decision directing
petitioner Lexal Laboratories (Lexal) to reinstate Guillermo Ponseca, a dismissed employee, to his
former position "with full back wages from the day of his dismissal up to the time he is actually
reinstated without loss of his seniority rights and of such other rights and privileges enjoyed by
him prior to his lay-off."
CIR, confirming the report of its Chief Examiner and Economist, ruled in its order of
February 16, 1965 that Ponseca was entitled to back wages from November 5, 1958 when he
ceased reporting for work, to November 24, 1963 a day prior to his reinstatement on November
25, 1963; and that for the number of days that he was supposed to be in Manila, he was to earn
P4.50 a day, and during the periods when he should have been in the provinces, P4.50 a day
plus a per diem of P4.00 or a total of P8.50 daily. This order was subsequently modified by CIR's
resolution of May 22, 1965 which directed the deduction of P5,000.00 previously paid Ponseca
under the judgment and P610.00 which Ponseca earned from other sources during his layoff.
Petitioners vigorously objected to the inclusion of the P4.00 per diem in the computation
of Ponseca's back wages because the latter "did not actually spend for his meals and lodgings for
he was all the time in Manila, his station." CIR brushed this contention aside. Whereupon,
petitioners appealed to this Court from the order of February 16, 1965 and the resolution of May
22, 1965.
ISSUE:
Whether or not per diems must be included in the backpay

RULING:
Lexal concedes that whenever its employee, Guillermo Ponseca, was out of Manila, he was
allowed a per diem of P4.00 broken down as follows: P1.00 for breakfast; P1.00 for lunch; P1.00
for dinner; and P1.00 for lodging. Ponseca — during the period involved — did not leave Manila.
Therefore, he spent nothing for meals and lodging outside of Manila. Because he spent nothing,
there is nothing to be reimbursed. Since per diems are in the nature of reimbursement, Ponseca
should not be entitled to per diems.
Besides, back wages are what an employee has lost "in the way of wages" due to his
dismissal. So that, because Ponseca earned P4.50 a day, "then that is the amount which he lost
daily by reason of his dismissal, nothing more nothing less."
The Court, accordingly, rule that CIR erred in including per diems in the back wages due
and payable to Guillermo Ponseca.
Abello Exceptions
AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION VS. AMERICAN
WIRE AND CABLE, CO., AND THE COURT OF APPEALS
G.R. No. 155059 April 29, 2005
CHICO-NAZARIO, J.
FACTS:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires
and cables. There are two unions in this company, the American Wire and Cable Monthly-Rated
Employees Union and the American Wire and Cable Daily-Rated Employees Union.
On 16 February 2001, an original action was filed before the NCMB of the Department of
Labor and Employment by the two unions for voluntary arbitration. They alleged that the private
respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits
and entitlements which they have long enjoyed. These are Service Award, 35% premium pay of
an employee’s basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy
Wednesday, December 23, 26, 27, 28 and 29, Christmas Party and Promotional Increase.
ISSUE:
Whether or not the respondent company violated Article 100 of the Labor Code.
RULING:
The Court ruled that company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. –
Nothing in this Book shall be construed to eliminate or in any way diminish

supplements, or other employee benefits being enjoyed at the time of

promulgation of this Code.
The certain benefits and entitlements are considered bonuses. A bonus can only be
enforceable and demandable if it has ripened into a company practice. It must also be expressly
agreed by the employer and employee or it must be on a fixed amount. The assailed benefits
were never subjects of any agreement between the union and the company. It was never
incorporated in the CBA. Since all these benefits are in the form of bonuses, it is neither
enforceable nor demandable.
Alarkon Exceptions
L.G. MARCOS ET. AL. VS. NLRC AND INSULAR LIFE ASSURANCE CO., LTD.
G.R. No. 111744 September 8, 1995
J. REGALADO
FACTS:
 Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd.,
but they were dismissed on November 1, 1990 when their positions were
declared redundant.
 A special redundancy benefit was paid to them, which included payment of accrued
vacation leave and fifty percent (50%) of unused current sick leave, special redundancy
benefit, equivalent to three (3) months salary for every year of service; and additional
cash benefits, in lieu of other benefits provided by the company or required by law.
 Before the termination of their services, petitioner Marcos had been in the employ of
private respondent for more than twenty (20) years, from August 26, 1970; petitioner
Andrada, more than twenty-five (25) years, from July 26, 1965; petitioner Lopez, exactly
thirty (30) years, from October 31, 1960; and petitioner Cruz, more than twenty (20)
years, from March 1, 1970.
 Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to
respondent company questioning the redundancy package
o She claimed that they should receive their respective service awards and other
prorated bonuses which they had earned at the time they were dismissed. In
addition, Lopez argued that "the cash service awards have already been budgeted
in a fund distinct and apart from redundancy fund.
 Thereafter, private respondent required petitioners to execute a "Release and
Quitclaim,"and petitioners complied but with a written protest reiterating their previous
demand that they were nonetheless entitled to receive their service awards.
 On March 21, 1991, petitioners inquired from the Legal Service of the Department of Labor
and Employment, whether respondent corporation could legally refuse the payment of
their service awards as mandated in their Employee's Manual.
 About three months later, DOLE issued its opinion:
o The Department deems the service award to be part of the benefits of the
employees of Insular Life. Company policies and practices are fertile sources of
employee's rights.
o We find solace in the cases of Liberation Steamship Co., Inc. vs. CIR and National
Development Company vs. Unlicensed Crew members of Three Dons vessels (23

SCRA 1105) where the Supreme Court held that a gratuity or bonus, by reason of
its long and regular concession indicating company practice, may become regarded
as part of regular compensation and thus demandable.
o The award is earned at the pertinent anniversary date. At this time, entitlement to
the award becomes vested. The anniversary date is the only crucial determining
factor. Since the award accrues on that date, it is of no moment that the entitled
employee is separated from service (for whatever cause) before the awards are
physically handed out.
o Even if the award has not accrued — as when an employee is separated from
service because of redundancy before the applicable 5th year anniversary, the
material benefits of the award must be given, prorated, by Insular Life
o The fact that you were required to sign "Release and Quitclaim" does not affect
your right to the material benefits of the service award.
 Meanwhile, in the same year, private respondent celebrated its 80th anniversary wherein
the management approved the grant of an anniversary bonus equivalent to one (1) month
salary only to permanent and probationary employees as of November 15, 1990.
 On March 26, 1991, respondent company announced the grant of performance bonus to
both rank and file employees and supervisory specialist grade and managerial staff
equivalent to two (2) months salary and 2.75 basic salary, respectively, as of December
30, 1990. The performance bonus, however, would be given only to permanent employees
as of March 30, 1991.
 Despite the aforequoted opinion of the Department of Labor and Employment, private
respondent refused to pay petitioners service awards. This prompted the latter to file a
consolidated complaint, which was assigned to NLRC Labor Arbiter Lopez, for payment of
their service awards, including performance and anniversary bonuses.
 In their complaint, petitioners contended that they are likewise entitled to the performance
and anniversary bonuses because, at the time the performance bonus was announced to
be given, they were only short of two (2) months service to be entitled to the full amount
thereof as they had already served the company for ten (10) months prior to the
declaration of the grant of said benefit. Also, they lacked only fifteen (15) days to be
entitled to the full amount of the anniversary bonus when it was announced to be given
to employees as of November 15, 1990.
 In a decision dated October 8, 1992, the labor arbiter ordered respondent company to
pay petitioners their service awards, anniversary bonuses and prorated performance
bonuses, including ten percent (10%) thereof as attorney's fees.
 Respondent company appealed to public respondent NLRC claiming grave abuse of
discretion committed by the labor arbiter in holding it liable to pay said service award,
performance and anniversary bonuses, and in not finding that petitioners were estopped
from claiming the same as said benefits had already been given to them.
ISSUE:
 W/N the Petitioners are entitled to the bonuses
RULING:
 The Supreme Court rules in favor of the petitioners.

o the fact that an employee has signed a satisfaction receipt for his claims does not
necessarily result in the waiver thereof. The law does not consider as valid any
agreement whereby a worker agrees to receive less compensation than what he

is entitled to recover. A deed of release or quitclaim cannot bar an employee from

demanding benefits to which he is legally entitled.
o We have heretofore explained that the reason why quitclaims commonly frowned
upon as contrary to public policy, and why they are held to be ineffective to bar
claims for the full measure of the workers' legal rights, is the fact that the employer
and the employee obviously do not stand on the same footing.
o Along this line, we have more trenchantly declared that quitclaims and/or complete
releases executed by the employees do not estop them from pursuing their claims
arising from unfair labor practices of the employer. The basic reason for this is that
such quitclaims and/or complete releases are against public policy and, therefore,
null and void. The acceptance of termination does not divest a laborer of the right
to prosecute his employer for unfair labor practice acts. While there may be
possible exceptions to this holding, we do not perceive any in the case at bar.
o The element of total voluntariness in executing that instrument is negated by the
fact that they expressly stated therein their claim for the service awards, a
manifestation equivalent to a protest and a disavowal of any waiver thereof.
o Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the
quitclaim obligates the workers concerned to forego their benefits while at the
same time exempting the employer from any liability that it may choose to reject.
This runs counter to Art. 22 of the Civil Code which provides that no one shall be
unjustly enriched at the expense of another. (Veloso, et al., vs. Department of
Labor and Employment, et al.)
 A bonus is not a gift or gratuity, but is paid for some services or consideration
and is in addition to what would ordinarily be given. The term "bonus" as used in
employment contracts, also conveys an idea of something which is gratuitous, or which
may be claimed to be gratuitous, over and above the prescribed wage which the employer
agrees to pay.
 The decision of Labor Arbiter is REINSTATED.
Dagaerag Thirteenth Month Pay
UNIVERSAL CORN PRODUCTS VS. NLRC

G.R. No. L-60337 August 21, 1987
J.: SARMIENTO,
FACTS:
Sometime in May, 1972, the petitioner and the Universal Corn Products Workers Union
entered into a collective bargaining agreement in which it was provided, among other things,
that: The COMPANY agrees to grant all regular workers within the bargaining unit with at least
one (1) year of continuous service, a Christmas bonus equivalent to the regular wages for seven
(7) working days, effective December, 1972. The bonus shall be given to the workers on the
second week of December. In the event that the service of a worker is not continuous due to
factory shutdown, machine breakdown or prolonged absences or leaves, the Christmas bonus
shall be prorated in accordance with the length of services that worker concerned has served
during the year . The agreement had a duration of three years, effective June 1, 1971, or until
June 1, 1974.On account however of differences between the parties with respect to certain
economic issues, the collective bargaining agreement in question expired without being renewed.

On June 1,1979, the parties entered into an "addendum" stipulating certain wage increases
covering the years from 1974 to 1977. Simultaneously, they entered into a collective bargaining
agreement for the years from 1979 to 1981. Like the "addendum," the new collective bargaining
agreement did not refer to the "Christmas bonus" theretofore paid but dealt only with salary
adjustments. According to the petitioner, the new agreements deliberately excluded the grant of
Christmas bonus with the enactment of Presidential Decree No. 851 on December 16, 1975. It
further claims that since 1975, it had been paying its employees 13th-month pay pursuant to the
Decree. For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978
inclusive, in accordance with the 1972 CBA, the union went to the labor arbiter for relief. In his
decision, the labor arbiter ruled that the payment of the 13th month pay precluded the payment
of further Christmas bonus. The union appealed to the National Labor Relations Commission
(NLRC).The NLRC set aside the decision of the labor arbiter appealed from and entered another
one, "directing respondent company [now the petitioner] to pay the members concerned of
complainants [sic] union their 7-day wage bonus in accordance with the 1972 CBA from 1975
to1978.
ISSUE:
WHETHER OR NOT ADDITIONAL BONUSES SHALL CONSTITUTE 13TH MONTH

PAYBENEFITS
RULING:
No, the seven-day bonus here demanded "to be in addition to the legal requirement."
Although unlike the Valenzuela CBA, which took effect after the promulgation of Presidential
DecreeNo.851 in 1975, the subject agreement was entered into as early as 1972, that is no bar
to our application of Valenzuela. What is significant for us is the fact that, like the Valenzuela,
agreement, the Christmas bonus provided in the collective bargaining agreement accords a
reward, in this case, for loyalty, to certain employees. This is evident from the stipulation granting
the bonus in question to workers "with at least one (1) year of continuous service."
Martin Thirteenth Month Pay
FRAGMANLIS FARMS INC. VS. MINISTER OF LABOR

GR. 72616-17 March 8, 1989
FACTS:
Eighteen (18) employees of Framanlis Farms, Inc. filed against their employer two labor
standard cases alleging that in 1911 TO 1979 they were not paid emergency cost of living
allowance (ECOLA) minimum wage, 13th month pay, holiday pay, and service incentive leave
pay. In their answer, Framanlis Farms alleged that the employees were not regular workers on
their hacienda but were migratory (sacadas) or pakyaw workers who worked on-and-off and were
hired seasonally, or only during the milling season, to do piece-work on the farms, hence, they
were not entitled to the benefits claimed by them. The Minister of Labor directed Framanlis Farms

to pay the deficiency payment of emergency living allowance and service incentive leave pay,
holiday pay and social amelioration bonus for (3) years for 1977 TO 1979. Upon the petitioners
appeal of that order, the Deputy Minister of Labor modified it by ordering the employer to pay all
non-pakyaw workers their claim for holiday and incentive leave pay for the years 1977 TO 1978
all “pakyaw” workers their pay differentials for the same period on days they worked for at least
eight (8) hours and earned below P8.06 daily, and all complainants their 13th month pay for the
years 1978 to 1979. The Deputy Minister clarified that pakyaw workers were excluded from
holiday and service incentive leave pay.
ISSUE:
Whether awarding pay differentials, holiday and service incentive leave for pakyaw
workers who are not regular employees but are merely paid on piece-rate, contrary to Art 82 of
the Labor Code.
RULING:
In 1976, PD No. 928 fixed a minimum wage of P7.00 for agricultural workers in any
plantation or agricultural enterprise irrespective of whether or not the worker was paid on a piece-
rate basis. However, effective July 1, 1978 the minimum wage was increased to P8.00 (Sec. 1 PD
1389). Subsequently, PD 1614 provided for a P2.00 increase in the daily wage of all workers
effective on April 1, 1979. The petitioners admit that those were the minimum rates prevailing
then.
Masukat Thirteenth Month Pay
SAN MIGUEL CORPORATION VS. INCIONG
FACTS:
On January 3, 1977, Cagayan Coca-Cola Free Workers Union, private respondent herein, filed a
complaint against San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein, alleging
failure or refusal of the latter to include in the computation of 13th- month pay such items as
sick, vacation or maternity leaves, premium for work done on rest days and special holidays,
including pay for regular holidays and night differentials.
An Order dated February 15, 1977 was issued by Regional Office No. X where the complaint was
filed requiring herein petitioner San Miguel Corporation (Cagayan Coca-Cola Plant) "to pay the
difference of whatever earnings and the amount actually received as 13th month pay excluding
overtime premium and emergency cost of living allowance. "
Herein petitioner appealed from that Order to the Minister of Labor in whose behalf the Deputy
Minister of Labor Amado G. Inciong issued an Order dated June 7, 1978 affirming the Order of
Regional Office No. X and dismissing the appeal for lack of merit. Petitioner's motion for
reconsideration having been denied, it filed the instant petition.
ISSUE:

Whether or not the computation of the 13th month pay under Presidential decree 851, payment
for sick, vacation or maternity leaves, premium for work don on rest days and special holidays,
including pay for regular holidays and night differentials should be considered.
RULING:
No, The provision in dispute is Section 1 of Presidential Decree 851 and provides: All employers
are hereby required to pay all their employees receiving a basic salary of not more than Pl, 000
a month, regardless of the nature of the employment, a 13th-month pay not later than December
24 of every year.
Section 2 of the Rules and Regulations for the implementation of Presidential Decree 851
provides:
a) Thirteenth-month pay shall mean one twelfth (1/12) of the basic salary of an employee within
a calendar year
b) Basic salary shall include all remunerations on earnings paid by an employer to an employee
for services rendered but may not include cost-of-living allowances granted pursuant to
Presidential Decree No. 525 or Letter of Instructions No. 174, profit sharing payments and all
allowances and monetary benefits which are not considered or integrated as part of the regular
or basic salary of the employee at the time of the promulgation of the Decree on December 16,
1975.
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
that are deemed not part of the basic pay are excluded as basis in the computation of the
mandatory bonus.
The all-embracing phrase "earnings and other remuneration" which are deemed not part of the
basic salary includes within its meaning payments for sick, vacation, or maternity leaves.
Maternity premium for works performed on rest days and special holidays pays for regular
holidays and night differentials. As such they are deemed not part of the basic salary and shall
not be considered in the computation of the 13th-month 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.
Mirande Thirteenth Month Pay
PHILIPPINE DUPLICATORS INC. VS. NLRC

GR 110068 February, 15, 1995
Feliciano, J.
FACTS:
Productivity bonuses are generally tied to the productivity or profit generation of

the employer corporation. Productivity bonuses are not directly dependent on the extent
an individual employee exerts himself. A productivity bonus is something extra for which
no specific additional services are rendered by any particular employee and hence not
legally demandable, absent a contractual undertaking to pay it.

Sales commissions are intimately related to or directly proportional to the extent

or energy of an employee's endeavours. Commissions are paid upon the specific results
achieved by a salesman-employee. It is a percentage of the sales closed by a salesman
and operates as an integral part of such salesman's basic pay.
ISSUE:
1. WON The commissions received by the salesmen were part of the

”wages” to be considered for their 13th month pay. - Yes
2. WON Productivity bonus shall be considered as part of wages in 13 th month pay -
No
RULING:
1. The commissions were an integral part of the pay of the workers, considering that
the fixed wage was only 30% of what they were normally receiving.
2. Productivity bonuses are generally tied to the productivity, or capacity for revenue
production, of a corporation; such bonuses closely resemble profit-sharing
payments and have no clear director necessary relation to the amount of work
actually done by each individual employee. More generally, a bonus is an amount
granted and paid ex gratia to the employee; its payment constitutes an act of
enlightened generosity and self-interest on the part of the employer, rather than
as a demandable or enforceable obligation. Since productivity bonus is not
demandable, then it cannot be considered part of basic salary when time comes
to compute 13th month pay.
Additional payments made to employees, to the extent they partake of the nature of
profit-sharing payments, are properly excluded from the ambit of the term "basic salary"
for purposes of computing the 13th month pay due to employees. Such additional
payments are not "commissions" within the meaning of the second paragraph of Section
5 (a) of the Revised Guidelines Implementing 13th Month Pay.
The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently
issued by former Labor Minister Ople sought to clarify the scope of items excluded in the
computation of the 13th month pay; viz.:
Sec. 4. Overtime pay, earnings and other remunerations which are not part of the
basic salary shall not be included in the computation of the 13th month pay.
Montero Thirteenth Month Pay
ISALAMA MACHINE WORKS VS. NLRC, ET. AL.
FACTS:

This petition for certiorari assails the Decision, [1] dated 09 June 1989, of the National
Labor Relations Commission ("NLRC"), Fifth Division, Cagayan de Oro City, ordering the
reinstatement, without back salaries, of private respondents, with the exception of Henry Baygan,
and the Resolution [2] of 30 April 1991 of the same division denying the motion for
reconsideration and, consistent with the decision, requiring petitioner corporation to pay private
respondents, in case the latter have not been reinstated actually or by payroll, back salaries,
without qualification or deductions, from 25 July 1989 until their reinstatement (RABX Case No.
10-02-00107 88).
On 25 March 1987, petitioner Isalama Machine Works Corporation and private respondent
Isalama Machine Works Corporation Labor Union-Workers Alliance Trade Union entered into a
collective bargaining agreement ("CBA") covering the period from 01 November 1986 to 03
October 1989. Following the signing of the CBA, the union made repeated demands on the
corporation, allegedly to no avail, for it to comply with the CBA provisions, i.e., to furnish the
workers with safety shoes and free company laminated IDs and, in general, to improve the
employees' working conditions.
The corporation filed a motion for the reconsideration of the NLRC decision. On 30 April 1991,
the NLRC resolved said motion thusly:
ISSUE:
Whether or not NLRC erred in its decision
HELD:
The Motion for Reconsideration is DENIED for lack of merit. No further motion for
reconsideration shall henceforth be entertained.
"Consistent with the disposition in the challenged resolution of June 9, 1989, the
immediate reinstatement without backwages of the 16 afore-named respondents to their former
positions sans loss of seniority rights is hereby ordered. The cut-off date for the forbearance in
the payment of backwages is up to July 24, 1989 which on record is the date of receipt of said
disputed Resolution. Henceforth, in the event the afore-named respondents have not been
reinstated actually or by payroll, appellee is directed to pay backwages without qualifications or
deductions from July 25, 1989 until they are reinstated.
Mortel Thirteenth Month Pay
ALLIANCE OF GOVERNMENT WORKERS ET AL. VS. MINISTER OF LABOR AND

EMPLOYMENT
G.R. No. L-60403 August 3, 1983
Gutierrez, Jr., J.
FACTS:
According to the petitioners, P.D. No. 851 requires all employers to pay the 13th-month
pay to their employees with one sole exception found in Section 2 which states that "Employers

already paying their employees a 13th month pay or its equivalent are not covered by this
Decree." The petitioners contend that Section 3 of the Rules and Regulations Implementing
Presidential Decree No. 851 included other types of employers not exempted by the decree. They
state that nowhere in the decree is the secretary, now Minister of Labor and Employment,
authorized to exempt other types of employers from the requirement.
The petitioners assail this rule as ultra vires and void. The petitioners argue that regulations
adopted under legislative authority must be in harmony with the provisions of the law and for the
sole purpose of carrying into effect its general provisions. They state that a legislative act cannot
be amended by a rule and an administrative officer cannot change the law. Section 3 is challenged
as a substantial modification by rule of a Presidential Decree and an unlawful exercise of
legislative power.
ISSUE:
Whether the branches, agencies, subdivisions, and instrumentalities of the Government,
including government owned or controlled corporations included among the 4 "employers" under
P.D. No. 851 which are required to pay their employees receiving a basic salary of not more than
P1,000.00 a month, a thirteenth (13th) month pay not later than December 24 of every year.
RULING:
The Solicitor General states: "Presidential Decree No. 851 is a labor standard law which
requires covered employers to pay their employees receiving not more than P1,000.00 a month
an additional thirteenth-month pay. Its purpose is to increase the real wage of the worker as
explained in the 'whereas' claus. This could only refer to the private sector, and not to those in
the government service because at the time of the enactment of Presidential Decree No. 851 in
1975, only the employees in the private sector had not been given any increase in their minimum
wage. The employees in the government service had already been granted in 1974 a ten percent
across-the-board increase on their salaries as stated in P.D. No. 525, Section 4. Thus, had the
intention been to include government employees under the coverage of Presidential Decree No.
851, said Decree should have expressly so provided and there should have been accompanying
yearly appropriation measures to implement the same. That no such express provision was
provided and no accompanying appropriation measure was passed clearly to show the intent to
exclude government employees from the coverage of P. D. No. 851.We agree. It is an old rule of
statutory construction that restrictive statutes and acts which impose burdens on the public
treasury or which diminish rights and interests, no matter how broad their terms do not embrace
the Sovereign, unless the Sovereign is specifically mentioned.
Navarrp Article 101: Payment by Results
TAN VS. LAGRAMA

G.R. No. 151228 15 August 2002
Mendoza, J.
FACTS:
Lagrama works for Tan as painter of billboards and murals for the motion pictures shown
at the theaters managed by Tan for more than 10years. He was dismissed for having urinated in
his working area. Aggrieved, Lagrama filed a complaint for illegal dismissal and non payment of
benefits. Tan asserted that Lagrama was an independent contractor as he was paid in piece-work
basis

ISSUE:
Whether or not Lagrama is an independent contractor or an employee of Tan?
RULING:
Yes. Lagrama is an employee, not an independent contractor. To determine that

Lagrama is indeed an employee, we must use the Four Fold Test.
Power of Control - Evidence shows that the Lagrama performed his work as painter and under
the supervision and control of Tan. Lagrama worked in a designated work area inside the theater
of Tan for the use of which petitioner prescribed rules, which rules included the observance of
cleanliness and hygiene and prohibition against urinating in the work area and any other place
other than rest rooms and Tan's control over Lagrama's work extended not only the use of work
area but also the result of Lagrama;s work and the manner and means by which the work was to
be accomplished. Lagrama is not an independent contractor because he did not enjoy
independence and freedom from the control and supervision of Tan and he was subjected to
Tan's control over the means and methods by which his work is to be performed and
accomplished.
Payment of Wages - Lagrama worked for Tan on a fixed piece work basis is of no moment.
Payment by result is a method of compensation and does not define the essence of the relation.
That Lagrama was not reported as an employee to the SSS is not conclusive, on the question
whether he was an employee, otherwise Tan would be rewarded for his failure or even neglect
to perform his obligation.
Power of Dismissal - By Tan stating that he had the right to fire Lagrama, Tan in
effect acknowledged Lagrama to be his employee.
Power of Selection and Engagement of Employees– Tan engaged the services of

Lagrama without the intervention of third party.
Ortega Piece Rate Workers
MAKATI HABERDASHERY VS. NLRC

G.R. Nos. 83380-81 November 15, 1989
Fernan, J.
FACTS:
This is a petition assailing the decision of NLRC affirming the decision of Labor Arbiter
finding Haberda guilty of illegal dismissal and ordering him to reinstate the dismissed
workers and in concluding that there is employer-employee relationship between workers
and Haberda.

The complainants were working for Haberda as tailors, seamstress, sewers, basters and
plantsadoras. Paid on a piece-rate basis with allowance when they report for work before
9:30am everyday.(MON-SAT).
July 1984, the labor organization where the complainants are members filed a complaint
for underpayment of basic wage, living allowance, non-payment of overtime work, non-
payment of holiday pay, non-payment of service incentive pay ad other benefits under
wage orders.
During the pendency, Haberda dismiss the workers for the alleged job acceptance from
another, which was denied by the workers and countered by filing a complaint for illegal
dismissal. Which was granted by NLRC. Hence, this petition raising the issues on:
ISSUES:
(1) employer-employee relationship?

(2) workers entitled to monetary claims?
(3) were respondents illegally dismissed?
RULING:
(1) There is employer-employee relationship. The facts at bar indubitably reveal that the most
important requisite of control is present. As gleaned from the operations of petitioner,
when a customer enters into a contract with the haberdashery or its proprietor, the latter
directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take
the customer's measurements, and to sew the pants, coat or shirt as specified by the
customer. Supervision is actively manifested in all these aspects — the manner and quality
of cutting, sewing and ironing.
(2) (2) Because the workers were proven to be regular employees, they shall be entitled to
minimum wages. Plus the respondents didn't appealed when the Labor Arbiter granted
the minimum wage award to the workers in the first place. But workers are not entitled
to incentive pay and other benefits because piece-rate workers are paid at fixed amount
for performing work irrespective of the time consumed.
(3) (3) There was no illegal dismissal to the two workers accused of the copied Barong
Tagalog design, because when they were asked to explain to their employer, the workers
did not but instead go AWOL. Imposing disciplinary sanctions upon an employee for just
and valid cause is within the rights of the employer.
Pascasio Piece Rate Workers
LABOR CONGRESS OF THE PHILIPPINES VS. NLRC AND EMPIRE FOOD PRODUCTS
G.R. No. 123938 May 21, 1988
Davide, Jr., J.:
FACTS:

The 99 persons named as petitioners in this proceeding were rank-and-file employees of

respondent Empire Food Products. Petitioners filed against private respondents a complaint for
payment of money claim[s] and for violation of labor standard[s] laws
RULING:
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.
Payment of Wages
Samson Proof of Wage Payment
JIMINEZ ET. AL. VS. NLRC AND JUANATAS

G.R. NO. 116960 APRIL 2, 1996
FACTS:
On June 29, 1990, private respondents Pedro and Fredelito Juanatas, father and son, filed
aclaim for unpaid wages/commissions, separation pay and damages against JJ's Trucking
and/or Dr. Bernardo Jimenez. Said respondents, as complainants therein, alleged that in
December,1987, they were hired by herein petitioner Bernardo Jimenez as driver/mechanic and
helper,respectively, in his trucking firm, JJ Trucking. They were assigned to a ten-wheeler truck
to haulsoft drinks of Coca-Cola Bottling Company and paid on commission basis, initially fixed
at 17%but later increased to 20% in 1988.
Private respondents further alleged that for the years 1988 and 1989 they received only a
partialcommission of P84,000.00 from petitioners' total gross income of almost P1,000,000.00
for thesaid two years. Consequently, with their commission for that period being computed at
20% of said income, there was an unpaid balance to them of P106,211.86; that until March,
1990 whentheir services were illegally terminated, they were further entitled to P8,050.00 which
added upto a grand total of P114,261.86 due and payable to them.
Disputing the complaint, petitioners contend that respondent Fredelito Juanatas was not
anemployee of the firm but was merely a helper of his father Pedro; that all commissions for
1988and 1989, as well as those up to March, 1990, were duly paid; and that the truck driven
byrespondent Pedro Juanatas was sold to one Winston Flores in 1991 and, therefore,
privaterespondents were not illegally dismissed.
After hearings duly conducted, and with the submission of the parties' position/supportingpapers,
Labor Arbiter Rogue B. de Guzman rendered a decision ordering respondents JJ'sTrucking
and/or Dr. Bernardo Jimenez to pay jointly and severally complainant Pedro Juanatasa
separation pay of P15,050.00, plus attorney's fee equivalent to 10% of the award. Thecomplaint
of Fredelito Juanatas is hereby dismissed for lack of merit.On appeal filed by private
respondents, the NLRC modified the decision of the labor arbiter declaring Fredelito Juanatas
as respondents' employee and shares in the commission andseparation pay awarded to
complainant Pedro Juanatas, his father. Further, respondent JJ'sTrucking and Dr. Bernardo
Jimenez are jointly and severally liable to pay complainants their unpaid commissions in the total
amount of P84,387.05. Hence, this petition for certiorari, seeking the annulment of the decision
of respondent NLRCdenying petitioners' motion for reconsideration.
ISSUE:
Whether or not respondent NLRC committed grave abuse of discretion in ruling

(a) that private respondents were not paid their commissions in full, and (b) that
respondent Fredelito Juanatas was an employee of JJ's Trucking.
RULING:
On the first issue, there is no reason to disturb the findings of respondent NLRC that the
entire amount of commissions was not paid, because of the evident failure of petitioners to
present evidence that full payment thereof has been made.
As a general rule, one who pleads payment has the burden of proving it. Even where the
plaintiff (herein private respondent) must allege non-payment, the burden of evidence rests on
the defendant (herein petitioners) to prove payment, rather than on the plaintiff to prove non-
payment.
In the instant case, the right of respondent Pedro Juanatas to be paid a commission
equivalent to 17%, later increased to 20%, of the gross income is not disputed by petitioners.
Although private respondents admit receipt of partial payment, petitioners still have to present
proof of full payment.
The testimony of petitioners which merely denied the claim of private respondents,
unsupported by documentary evidence, is not sufficient to establish payment. Although
petitioners submitted a notebook showing the alleged vales of private respondents for the year
1990, the same is inadmissible and cannot be
given probative value considering that it is not properly accomplished, is undated and unsigned,
and is thus uncertain as to its origin and authenticity.
Hence, for failure to present evidence to prove payment, petitioners defaulted in their
defenseand in effect admitted the allegations of private respondents.With respect to the second
issue, NLRC erred in holding that the son, Fredelito, was an employee of petitioners. In the case
at bar, the elements of an employer-employee relationship, are not present. The agreement was
between petitioner JJ's Trucking and respondent Pedro Juanatas. The hiring of a helper was
discretionary on the part of Pedro. Hence, Fredelito was not an employee of petitioners.
WHEREFORE, the judgment of respondent National Labor Relations Commission is

AFFIRMED, with the MODIFICATION that declaring Fredelito Juanatas is not an employee of
petitioners and not entitled to share in the award for commission and separation pay.
Sandoval Article 106: Labor-Only Contracting
NERI VS. NLRC, FAR EAST BANK AND TRUST CO.

224 SCRA 717 JULY 23, 1993
FACTS:
Petitioners instituted complaints against FEBTC and BCC to compel the bank to accept
them as regular employeesand for it to pay the differential between the wages being paid them
by BCC and those received by FEBTC employeeswith similar length of service. They contended
that BCC in engaged in labor-only contracting because it failed toadduce evidence purporting to
show that it invested in the form of tools, equipment, machineries, work premisesand other

materials which are necessary in the conduct of its business. Moreover, petitioners argue that
they performduties which are directly related to the principal business or operation of FEBTC.
ISSUE:
Whether or not BCC was engaged in labor-only contracting.
RULING:
It is well-settled that there is labor-only contracting where: (a) the person supplying
workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others; and, (b) the workers recruited and placed
by such person are performing activities which are directly related o the principal business of the
employer. BCC need not prove that it made investments in the form of tools, equipment,
machineries, work premises, among others, because it has established that it has sufficient
capitalization. This fact was both determined by the Labor Arbiter and the NLRC as BCC had a
capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized
venture and cannot be deemed engaged in labor-only contracting. While there may be no
evidence that it has investment in the form of tools, equipment, machineries, work premises,
among others, it is enough that it has substantial capital, as was established before the Labor
Arbiter as well as the NLRC. The law does not require both substantial capital and investment in
the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or"
instead of ‚and‛. Having established that it has substantial capital, it was no longer necessary for
BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only"
contracting. There is even no need for it to refute petitioners' contention that the activities they
perform are directly related to the principal business of respondent bank. On the other hand, the
Court has already taken judicial notice of the general practice adopted in several government and
private institutions and industries of hiring independent contractors to perform special services.
These services range from janitorial, security and even technical or other specific services such
as those performed by petitioners Neri and Cabelin. While these services may be considered
directly related to the principal business of the employer, nevertheless, they are not necessary in
the conduct of the principal business of the employer.
Tejares Article 106: Labor-Only Contracting
SAN MIGUEL CORP. VS. ABALLA

G.R. No. 149011 June 28, 2005
CARPIO-MORALES, J.:
FACTS:
Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose

Cooperative(Sunflower) entered into a one-year Contract of Service commencing on January 1,
1993, to be renewed on a month to month basis until terminated by either party. Pursuant to
this, respondent Prospero Aballa rendered services to SMC. After one year of service, private
respondents filed a complaint before the NLRC, Regional Arbitration Branch No. VI, Bacolod City,
praying to be declared as regular employees of SMC, with claims for recovery of all benefits and
privileges enjoyed by SMC rank and file employees. On the other hand, SMC filed before the DOLE

a Notice of Closure due to serious business losses. Hence, the labor arbiter dismissed the
complaint and ruled in favor of SMC. Aballa then appealed before the NLRC. The NLRC dismissed
the appeal finding that Sunflower is an independent contractor. On appeal, the Court of Appeals
reversed NLRC·s decision on the ground that the agreement between SMC and Sunflower showed
a clear intent to abstain from establishing an employer-employee relationship
ISSUE:
Whether or not Aballa and other employees of Sunflower are employees of SMC?
RULING:
The test to determine the existence of independent contractorship is whether one claiming
to be an independent contractor has contracted to do the work according to his own methods
and without being subject to the control of the employer, except only as to the results of the
work.
In legitimate labor contracting, the law creates an employer-employee relationship for a

limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer
becomes jointly and severally liable with the job contractor, only for the payment of the
employees wages whenever the contractor fails to pay the same. Other than that, the principal
employer is not responsible for any claim made by the employees.[
In labor-only contracting, the statute creates an employer-employee relationship for a

comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered
merely an agent of the principal employer and the latter is responsible to the employees of the
labor-only contractor as if such employees had been directly employed by the principal employer.
The Contract of Services between SMC and Sunflower shows that the parties clearly
disavowed the existence of an employer-employee relationship between SMC and private
respondents. The language of a contract is not, however, determinative of the parties
relationship; rather it is the totality of the facts and surrounding circumstances of the case. A
party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character
of its business, i.e., whether as labor-only contractor or job contractor, it being crucial that its
character be measured in terms of and determined by the criteria set by statute
What appears is that Sunflower does not have substantial capitalization or investment in the
form of tools, equipment, machineries, work premises and other materials to qualify it as an
independent contractor. On the other hand, it is gathered that the lot, building, machineries and
all other working tools utilized by Aballa et al. in carrying out their tasks were owned and provided
by SMC. And from the job description provided by SMC itself, the work assigned to Aballa et al.
was directly related to the aquaculture operations of SMC. As for janitorial and messengerial
services, that they are considered directly related to the principal business of the employer has
been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent
business or undertake the performance of its service contract according to its own manner and
method, free from the control and supervision of its principal, SMC, its apparent role having been
merely to recruit persons to work for SMC.
All the foregoing considerations affirm by more than substantial evidence the existence of
an employer- employee relationship between SMC and Aballa. Since Aballa who were engaged in
shrimp processing performed tasks usually necessary or desirable in the aquaculture business of

SMC, they should be deemed regular employees of the latter and as such are entitled to all the
benefits and rights appurtenant to regular employment. They should thus be awarded differential
pay corresponding to the difference between the wages and benefits given them and those
accorded SMC·s other regular employee.
Alquiza Article 106: Labor-Only Contracting
PHILIPPINES BANK OF COMMUNICATIONS VS. NLRC

G.R. No. L-66598 December 19, 1986
FELICIANO, J.
FACTS:
Petitioner PBC and the Corporate Executive Search Inc. (CESI) entered into a letter
agreement under which CESI undertook to provide "Temporary Services" to petitioner consisting
of the "temporary services" of eleven (11) messengers. Ricardo Orpiada, one of the messengers,
was thus assigned to work with the petitioner bank.
As such, he rendered services to the bank, within the premises of the bank and alongside other
people also rendering services to the bank. But later on, Orpiada was withdrawn from PBC as his
services were no longer needed. Orpiada filed a complaint against petitioner for illegal dismissal
and failure to pay the 13th month pay. The labor arbiter rendered a decision ordering the
reinstatement of the former with full back wages and 13th month pay.
Upon appeal, the NLRC affirmed the decision. Hence, this petition for certiorari.
ISSUE:
Whether the relationship between PBC and CESI, by virtue of the contractual agreement,
was one of employer and “labor-only” contractor
RULING:
YES. CESI was engaged in "labor-only" contracting vis-a-vis the petitioner bank and in
respect of Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if he had
been directly employed not only by CESI but also by the bank.
Under the general rule set out in the first and second paragraphs of Article 106, an
employer who enters into a contract with a contractor for the performance of work for the
employer, does not thereby create an employer-employee relationship between himself and the
employees of the contractor. Nonetheless, when a contractor fails to pay the wages of his
employees in accordance with the Labor Code, the employer who contracted out the job to the
contractor becomes jointly and severally liable with his contractor to the employees of the latter
"to the extent of the work performed under the contract" as if such employer were the employer
of the contractor's employees.
A similar situation obtains where there is "labor only" contracting. The “labor-only"
contractor — i.e. “the person or intermediary" — is considered "merely as an agent of the

employer." The employer is made by statute responsible to the employees of the "labor only"
contractor as if such employees had been directly employed by the employer.
Section 9 of Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code
provides as follows:
Sec. 9. Labor-only contracting.— (a) Any person who undertakes to

supply workers to an employer shall be deemed to be engaged in labor-
only contracting where such person:
(1) Does not have substantial capital or investment x x x;

(2) The workers recruited and placed by such person are performing
activities which are directly related x x x;
(b) Labor-only contracting as defined herein is hereby prohibited and the
person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by
him.
xxx
In contrast, job contracting out a particular job to an independent contractor is defined

by the Implementing Rules as follows:
Sec. 8. Job contracting. — There is job contracting permissible under the Code if the
following conditions are met:
(1) The contractor carries on an independent business and undertakes

the contract
work on his own account under his own responsibility according to his
own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of
the work except as to the results thereof ; and
(2) The contractor has substantial capital or investment x x x;
The bank and CESI urge that CESI is not properly regarded as a "labor-only" contractor
upon the ground that CESI is possessed of substantial capital or investment in the form of office
equipment, tools and trained service personnel. We are unable to agree with the bank and CESI
on this score. The undertaking given by CESI in favor of the bank was not the performance of a
specific job — for instance, the carnage and delivery of documents and parcels to the addresses
thereof. Orpiada utilized the premises and office equipment of the bank and not those of CESI.
Messengerial work — the delivery of documents to designated persons whether within the bank
premises or not — is of course directly related to the day-to-day operations of the bank. Section
9(2) quoted above does not require for its applicability that the petitioner must be engaged in
the delivery of items as a distinct and separate line of business.
Succinctly put, CESI is not a parcel delivery company: as its name indicates, it is a
recruitment and placement corporation placing bodies, as it were, in different client companies
for longer or shorter periods of time.

Moreover, the letter agreement itself merely required CESI to furnish the bank with eleven
messengers for “a contract period from January 19, 1976 — "The eleven messengers were thus
supposed to render "temporary" services for an indefinite or unstated period of time. Assuming
that Orpiada could properly be regarded as a casual (as distinguished from a regular) employee
of the bank, he became entitled to be regarded as a regular employee of the bank, as soon as
he had completed one year of service to the bank. Employers may not terminate the service of a
regular employee except for a just cause or when authorized under the Labor Code (Article 280,
Labor Code). It is not difficult to see that to uphold the contractual arrangement between the
bank and CESI would in effect be to permit employers to avoid the necessity of hiring regular or
permanent employees and to enable them to keep their employees indefinitely on a temporary
or casual status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code
is precisely designed to prevent such a result. Petition denied.
Biyo Independent Contractor
MAFINCO TRADING CORPORATION VS. OPLE, NLRC ET. AL

GR No. L-37790 25 March 1976
FACTS:
Cosmos Aerated Water Factory, Inc., hereinafter called Cosmos, a firm based at Malabon,
Rizal, appointed Mafinco as its sole distributor of Cosmos soft drinks in Manila. On May 31, 1972
Rodrigo Repomanta and Mafinco executed a peddling contract whereby Repomanta agreed to
"buy and sell" Cosmos soft drinks. Rey Moralde entered into a similar contract. The contracts
were to remain in force for one year unless sooner terminated by either party upon five days
notice to the other. On December 7, 1972 Mafinco terminated the same. Repomanta and Moralde,
through their union, the FOITAF, filed a complaint with the NLRC, charging the general manager
of Mafinco with having violated Presidential Decree No. 21which created the NLRC and which was
intended "to promote industrial peace, maximize productivity and secure social justice for all".
Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no jurisdiction
because Repomanta and Moralde were not its employees but were independent contractors. It
stressed that there was termination of the contract, not a dismissal of an employee. In
Repomanta's case, it pointed out that he was registered with the Social Security System as an
employer who, as a peddler, paid premiums for his employees; that he secured the mayor's
permit to do business and the corresponding peddler's license and paid the privilege tax and that
he obtained workmen's compensation insurance for his own employees or helpers. It alleged that
Moralde was in the same situation as Repomanta.
ISSUE:
Whether Repomanta and Morale are independent contractors or employees.
RULING:
Yes. They were distributors of Cosmos soft drinks with their own capital and employees.
Ordinarily, an employee or a mere peddler does not execute a formal contract of employment.
He is simply hired and he works under the direction and control of the employer. Repomanta and
Moralde voluntarily executed with Mafinco formal peddling contracts which indicate the manner

in which they would sell Cosmos soft drinks. That Circumstance signifies that they were acting as
independent businessmen. They were to sign or not to sign that contract. If they did not want to
sell Cosmos products under the conditions defined in that contract; they were free to reject it.
But having signed it, they were bound by its stipulations and the consequences thereof under
existing labor laws. One such stipulation is the right of the parties to terminate the contract upon
five days' prior notice (Par. 9). Whether the termination in this case was an unwarranted dismissal
of an employee, as contended by Repomanta and Moralde, is a point that cannot be resolved
without submission of evidence. Using the contract itself as the sole criterion, the termination
should perforce be characterized as simply the exercise of a right freely stipulated upon by the
parties. an independent contractor is "one who exercises independent employment and contracts
to do a piece of work according to his own methods and without being subject to control of his
employer except as to the result of the work".
Custodio Independent Contractor
INSULAR LIFE INSURANCE CO, LTD. VS. NLRC

G.R. No. 84484 November 15, 1989
Narvasa, J.
FACTS:
In 1968, Insular Life Assurance Co., Ltd. and Melecio T. Basiao entered into a contract
wherein he was authorized by Insular Life Assurance to solicit within the Philippines applications
for insurance policies and annuities in accordance with its existing rules and regulations. He would
then receive compensation, in the form of commissions.
The contract also contained, among others, provisions governing the relations of the parties, the
duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement.
In 1972, the parties entered into another contract, an Agency Manager's Contract and to
implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao
and Associates, while concurrently fulfilling his commitments under the first contract with the
Company.
In 1979, Insular Life Assurance terminated the Agency Manager's Contract. After vainly
seeking a reconsideration, Basiao sued the Insular Life Assurance in a civil action. This prompted
the latter to terminate also his engagement under the first contract and to stop payment of his
commissions.
ISSUE:
Whether or not Melecio Basiao is an employee or an independent contractor of Insular

Life Assurance Co., Ltd.
RULING:
There is no dearth of authority holding persons similarly placed as respondent Basiao to

be independent contractors, instead of employees of the parties for whom they worked.The
respondents limit themselves to pointing out that Basiao's contract with the Insular Life Assurance
bound him to observe and conform to such rules and regulations as the latter might from time to

time prescribe. No showing has been made that any such rules or regulations were in fact
promulgated, much less that any rules existed or were issued which effectively controlled or
restricted his choice of methods, or the methods themselves of selling insurance. Absent such
showing, the Court will not speculate that any exceptions or qualifications were imposed on the
express provision of the contract leaving Basiao "free to exercise his own judgment as to the
time, place and means of soliciting insurance."
The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose claim for
unpaid commissions should have been litigated in an ordinary civil action.
De Leon Independent Contractor
RHONE-POULENE AGROCHEMICALS PHILIPPINES, INC. VS. NLRC

G.R. Nos. 102633-35 January 19, 1993
Gutierrez, Jr. J.
FACTS:
The petitioner is a domestic corporation engaged in the manufacturing of agro-chemicals,

which business operations involve the formulation, production, distribution and sale in the local
market of its agro-chemical products. On January 1, 1988, as a consequence of the sale by Union
Carbide, Inc. of all its agricultural-chemical divisions worldwide in favor of Rhone-Poulenc
Agrochemie,France, the petitioner's mother corporation, the petitioner acquired from Union
Carbide Philippines Far East, Inc. the latter's agro-chemical formulation plant in Namayan,
Mandaluyong, Metro Manila.
In 1987, prior to the sale, Union Carbide had entered into a contract with CSI for the
latter's supply of janitorial services. During the transition period, Union Carbide continued to avail
itself of CSI's janitorial services. Thus, petitioner Rhone-Poulenc found itself sharing the Namayan
plant with Union Carbide while the factory was being serviced and maintained by janitors supplied
by CSI. Midway through the transition period, Union Carbide instructed CSI to reduce the number
of janitors working at the plant from eight (8) to seven (7).
Private respondent Paulino Roman, one of the janitors, was recalled by CSI on February
15, l988 for reassignment. However, Roman refused to acknowledge receipt of the recall
memorandum. On March 9, 1988, Union Carbide formally notified CSI of the termination of their
janitorial service agreement, effective April 1, 1988, citing as reason the global buy-out by Rhone-
Poulenc, Agrochemie, France of Union Carbides Inc.'s agro-chemical business. CSI thereafter
issued a memorandum dated March 20, 1988 to the seven remaining janitors assigned to the
Namayan plant, including respondent Urcisio Orain, recalling and advising them to report to the
CSI office for reassignment. Like Roman, the janitors refused to acknowledge receipt of the recall
memorandum.
Meanwhile, in anticipation of the March 31, 1988 pull-out by Union Carbide, the petitioner
started screening proposals by prospective service contractors. Rhone-Poulenc likewise invited
CSI to submit to its Bidding Committee a cost quotation of its janitorial services. However, another
contractor, the Marilag Business and Industrial Services, Inc. passed the bidding committee's
standards and obtained the janitorial services contract. On April 1, 1988, the eight janitors

reported for work at the Namayan plant but were refused admission and were told that another
group of janitors had replaced them. These janitors then filed separate complaints for illegal
dismissal, payment of 13th month salary, service leave and overtime pay against Union Carbide,
Rhone-Poulenc and CSI.
ISSUES:
1. Whether or not the janitors were employees of Union Carbide

2. Whether or not the CSI is a labor only contractor
3. Whether or not petitioner absorbed the janitors in its workforce
RULING:
The court held that the petition is meritorious. In determining the existence of employer-
employee relationship, the following elements are generally considered, namely: (1) the selection
and engagement of employees (2) the payment of wages; (3) the power of dismissal; and (4)
the power to control the employee's conduct — although the latter is the most important element.
There is no employer-employee relationship between Union Carbide and the respondent janitors.
The respondents themselves admitted that they were selected and hired by CSI and were
assigned to Union Carbide. CSI likewise acknowledged that the two janitors were its employees.
The janitors drew their salaries from CSI and not from Union Carbide. CSI exercised control over
these janitors through Richard Barroga, also a CSI employee, who gave orders and instructions
to CSI janitors assigned to the Namayan.
Evangelista Independent Contractor
ESCARIO ET. AL. VS. NLRC

G.R. No. 160302 September 27, 2010
FACTS:
The petitioners were among the regular employees of respondent Pinakamasarap

Corporation (PINA), a corporation engaged in manufacturing and selling food seasoning.
They were members of petitioner Malayang Samahan ng mga Manggagawa sa Balanced
Foods (Union). At 8:30 in the morning of March 13, 1993, all the officers and some 200
members of the Union walked out of PINA’s premises and proceeded to the barangay
office to show support for an employee and officer of the union who was charged with
oral defamation by a manager of the company. All officers and members of the union
went back to work afterwards.
As a result of the walkout, PINA preventively suspended all officers of the Union because
of the March 13, 1993 incident. PINA terminated the officers of the Union after a month.
On April 14, 1993, PINA filed a complaint for unfair labor practice (ULP) and damages.
LA ruled that the incident was an illegal walkout constituting ULP; and that all the Union’s
officers, except Cañete, had thereby lost their employment. Union filed a notice of strike,
claiming that PINA was guilty of union busting through the constructive dismissal of its
officers. Union held a strike vote, at which a majority of 190 members of the Union voted

to strike. PINA retaliated by charging the petitioners with ULP and abandonment of work,
stating that they had violated provisions on strike of the collective bargaining agreement
(CBA). On September 30, 1994, the Third Division of the National Labor Relations
Commission (NLRC) issued a temporary restraining order (TRO). On November 29, 1994,
the NLRC granted the writ of preliminary injunction.
The LA rendered decision declaring the strike as illegal. NLRC sustained, but held that
there was no abandonment on the part of the employees.
CA sustained the NLRC and explained that they were not entitled to full back wages as
only instance under Article 264 when a dismissed employee would be reinstated with full
backwages was when he was dismissed by reason of an illegal lockout; that Article 264
was silent on the award of backwages to employees participating in a lawful strike; and
that a reinstatement with full backwages would be granted only when the dismissal of
the petitioners was not done in accordance with Article 282 (dismissals with just causes)
and Article 283 (dismissals with authorized causes) of the Labor Code.
ISSUE:
WON they are entitled to back wages during the illegal strike
HELD:
Petitioners not entitled to backwages despite their reinstatement. A fair day’s wage for a
fair day’s labor.
Back-wages are not granted to employees participating in an illegal strike simply accords
with the reality that they do not render work for the employer during the period of the
illegal strike. With respect to backwages, the principle of a “fair day’s wage for a fair day’s
labor” remains as the basic factor in determining the award thereof. If there is no work
performed by the employee there can be no wage or pay unless, of course, the laborer
was able, willing and ready to work but was illegally locked out, suspended or dismissed
or otherwise illegally prevented from working. Under the principle of a fair day’s wage for
a fair day’s labor, the petitioners were not entitled to the wages during the period of the
strike (even if the strike might be legal), because they performed no work during the
strike. Verily, it was neither fair nor just that the dismissed employees should litigate
against their employer on the latter’s time.
Prohibition Regarding Wages
Flores Wage deduction
RADIO COMMUNICATIONS OF THE PHILIPPINES VS. SECRETARY OF LABOR

FACTS:
This petition for certiorari seeks the annulment of the orders issued by public responden
ts in NWC Ref. No. W01-13, viz: (1) the order of May 7, 1986 of respondent Regional Director r
equiring petitioner Radio Communications of the Philippines, Inc. (hereinafter, RCPI) and its em
ployees represented by Buklod ng Manggagawa sa RCPI-NFL (BMRCPI-NFL, for brevity) to pay
private respondent United RCPI Communications Labor Association (URCPICLA-FUR for short) it
s 15% union service fee of P427,845.60, jointly and severally, and accordingly directing the issu
ance of a writ of execution and garnishment of RCPI's bank account for the satisfaction of said f
ee; (2) the order of August 16, 1986 of respondent Secretary of Labor and Employment modifyi
ng the foregoing order by reducing the union service fee to 10% of the awarded amounts and h
olding petitioner solely liable for the payment of such fee; and (3) the order, dated March 20, 1
987, of respondent Secretary denying petitioner's motion for reconsideration.
ISSUE:
Whether or not the petition of Radio Communicatiins of the Philippines in seeking the a
nnulment of the orders issued by the Secretary of Labor and Employment
HELD:
No, the court held that the decision made by the Secretary of Labor and Employment iss
uing orders to petitioner to pay union service fee of private respondeny. petitioner cannot invok
e the lack of an individual written authorization from the employees as a shield for its fraudulent
refusal to pay the service fee of private respondent. Prior to the payment made to its employee
s, petitioner was ordered by the Regional Director to deduct the 15% attorney's fee from the to
tal amount due its employees and to deposit the same with the Regional Labor Office. Petitioner
failed to do so allegedly because of the absence of individual written authorizations. Be that as i
t may, the lack thereof was remedied and supplied by the execution of the compromise agreem
ent whereby the employees, expressly approved the 10% deduction and held petitioner RCPI fr
ee from any claim, suit or complaint arising from the deduction thereof. When petitioner was th
ereafter again ordered to pay the 10% fees to respondent union, it no longer had any legal basi
s or subterfuge for refusing to pay the latter.
Lindain Wage distortion
NATIONAL FEDERATION OF LABOR VS. NLRC, ET. AL.

G.R. No. 127718 March 2, 2000
FACTS:
Petitioners are bona fide members of the National Federation of Labor (NFL), a legitimate
labor organization duly registered with the Department of Labor and Employment. They were
employed by private respondents Charlie Reith and Susie Galle Reith, general manager and
owner, respectively, of the 354-hectare Patalon Coconut Estate located at Patalon, Zamboanga
City. Patalon Coconut Estate was engaged in growing agricultural products and in raising
livestock.

In 1988, Congress enacted into law Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), which mandated the compulsory acquisition of all
covered agricultural lands for distribution to qualified farmer beneficiaries under the so-called
Comprehensive Agrarian Reform Programme (CARP).
Pursuant to R.A. No. 6657, the Patalon Coconut Estate was awarded to the Patalon Estate
Agrarian Reform Association (PEARA), a cooperative accredited by the Department of Agrarian
Reform (DAR), of which petitioners are members and co-owners.
As a result of this acquisition, private respondents shut down the operation of

the Patalon Coconut Estate and the employment of the petitioners was severed on
July 31, 1994. Petitioners did not receive any separation pay.
Subsequently, the cooperative took over the estate. Being beneficiaries of the Patalon
Coconut Estate pursuant to the CARP, the petitioners became part-owners of the land.
Petitioners, thereafter, filed individual complaints before the Regional Arbitration Branch
(RAB) of the National Labor Relations Commission (NLRC) in Zamboanga City, praying for their
reinstatement with full backwages on the ground that they were illegally dismissed.
RAB dismissed the complaints for lack of merit. However, ordered respondents thru [sic]
its owner-manager or its duly authorized representative to pay complainants’ separation pay in
view of the latter’s cessation of operations or forced sale, and for 13th month differential pay.
NLRC on appeal, set aside the decision of RAB ordering respondents to pay separation
pay and 13th month differentials stating that, the severance of employer-employee relationship
between the parties came about INVOLUNTARILY, as a result of an act of the State. MR Denied.
Hence, this petition.
ISSUE:
Whether or not an employer that was compelled to cease its operation because of the
compulsory acquisition by the government of its land for purposes of agrarian reform, is liable
to pay separation pay to its affected employees
HELD:
NO. Petitioners contend that they are entitled to separation pay citing Article 283 of the
Labor Code. (see codal) It is clear that Article 283 of the Labor Code applies in cases of
closures of establishment and reduction of personnel.1âwphi1 The peculiar
circumstances in the case at bar, however, involves neither the closure of an
establishment nor a reduction of personnel as contemplated under the aforesaid
article. When the Patalon Coconut Estate was closed because a large portion of the estate was
acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely
transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot
beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench.
In other words, Article 283 of the Labor Code does not contemplate a situation where
the closure of the business establishment is forced upon the employer and ultimately

for the benefit of the employees. Capital and management sectors must also be protected
under a regime of justice and the rule of law. PETITION DENIED.
Maghirang Wage deduction
MANILA MANDARIN EMPLOYEES UNION VS. NLRC

GR No. 108556 November 19, 1996
NARVASA, C.J.
FACTS:
On October 30, 1986, the Manila Mandarin Employees Union, as exclusive bargaining agent of
the rank-and-file employees of the Manila Mandarin Hotel, Inc., filed with the NLRC Arbitration
Branch a complaint in its members behalf to compel MANDARIN to pay the salary differentials of
the individual employees concerned because of wage distortions in their salary structure allegedly
created by the upward revisions of the minimum wage pursuant to various Presidential Decrees
and Wage Orders, and the failure of MANDARIN to implement the corresponding increases in the
basic salary rate of newly-hired employees.
On January 15, 1987, the Union filed its Position Paper amplifying the allegations of its complaint
and setting forth the legal bases of its demands against MANDARIN; and on March 25, 1987, it
filed an Amended Complaint presenting an additional claim for payment of salary differentials to
the union members affected, allegedly resulting from underpayment of wages.
The Labor Arbiter eventually ruled in favor of the UNION, holding that there were in fact wage
distortions entitling its members to salary adjustments totalling P26,173,601.25 -- for 541
employees -- as well as underpayments amounting to P1,978,296.18 -- 182 employees.
The Union filed with NLRC Arbitration Branch a complaint on wage distortions. The Labor Arbiter
ruled in favor of the Union while the NLRC Commissioner Zapanata reversed the same.
The Union contends that the Mandarin hotel file its appeal three days beyond the reglementary
period.
ISSUE:
Whether or not the NLRC had jurisdiction to take cognizance of MANDARINS appeal from the
Labor Arbiters decision.
RULING:
The court rules that the Commission acted correctly in accepting and acting on Mandarin’s appeal.
The employee who was authorized to receive payment so the respondent was allowed to pay
docketing fee on the next business day which was February 4, 1991. In review of the
considerations and in the interest of justice was quite served when Mandarin’s appeal was given
due course despite delayed payment of fees, the reglementary period confers a directory, not a
mandatory, power to dismiss an appeal.
Mascariñas Wage fixing

Wage Studies, Wage Agreements and Wage Determination
CAGAYAN SUGAR MILLING CO. VS. SECREATARY OF LABOR, ET. AL.

G.R. NO. 128399 JANUARY 15, 1998
FACTS:
On November 16, 1993, Regional Wage Order No. RO2-02 was issued by the Regional
Tripartite Wage and Productivity Board, Regional Office No. II of the Department of Labor and
Employment (DOLE). It provided, inter alia, that: Sec. 1. Upon effectivity of this Wage Order, the
statutory minimum wage rates applicable to workers and employees in the private sector in
Region II shall be increased as follows: P 14.00 per day . . . Cagayan. On September 12 and 13,
1994, labor inspectors from the DOLE Regional Office examined the books of petitioner to
determine its compliance with the wage order. They found that petitioner violated the wage order
as it did not implement an across the board increase in the salary of its employees.
ISSUE:
Whether or not the petitioner violates the Wage Oder that mandates the increase of
minimum wage, and Regional Wage Order No. RO2-02 is valid, and violates Article 123 of the
Labor Code?
RULING:
No, Article 123 of the Labor Code provides: Wage Order. - Whenever conditions in the
region so warrant, the Regional Board shall investigate and study all pertinent facts, and, based
on the standards and criteria herein prescribed, shall proceed to determine whether a Wage
Order should be issued. Any such Wage Order shall take effect after (15) days from its
complete publication in at least one (1) newspaper of general circulation in the region. In the
performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations giving notices to employees' and employers' groups and other
interested parties. In sum, we hold that RO2-02-A is invalid for lack of public consultations and
hearings and non-publication in a newspaper of general circulation, in violation of Article 123
of the Labor Code. We likewise find that public respondent Secretary of Labor committed grave
abuse of discretion in upholding the findings of Regional Director Ricardo S. Martinez, Sr. that
petitioner violated Wage Order RO2-02. Decision of the Secretary of Labor, dated October 8,
1996, is set aside for lack of merit.
Monton Wage fixing
ECOP VS. NWPC

September 24, 1991 GR. No. 96169
Sarmiento, J.
FACTS:
Petitioners ECOP questioned the validity of the wage order issued by the RTWPB dated
October 23, 1990 pursuant to the authority granted by RA 6727. The wage order increased the

minimum wage by P17.00 daily in the National Capital Region. The wage order is applied to all
workers and employees in the private sector of an increase of P 17.00 including those who are
paid above the statutory wage rate. ECOP appealed with the NWPC but dismissed the petition.
The Solicitor General in its comment posits that the Board upon the issuance of the wage order
fixed minimum wages according to the salary method. Petitioners insist that the power of RTWPB
was delegated, through RA 6727, to grant minimum wage adjustments and in the absence of
authority; it can only adjust floor wages.
ISSUE:
Whether or not the wage order issues by RTWPB dated October 23, 1990 is valid.
RULING:
The Court agrees with the Solicitor General. It noted that there are two ways in the
determination of wage; these are floor wage method and salary ceiling method. The floor wage
method involves the fixing of determinate amount that would be added to the prevailing statutory
minimum wage while the salary ceiling method involves where the wage adjustment is applied to
employees receiving a certain denominated salary ceiling. RA 6727 gave statutory standards for
fixing the minimum wage. The Commission noted that the increasing trend is toward the salary-
cap method, which has reduced disputes arising from wage distortions (brought about,
apparently, by the floor-wage method). Precisely, Republic Act No. 6727 was intended to
rationalize wages, first, by providing for full-time boards to police wages round-the-clock, and
second, by giving the boards enough powers to achieve this objective. The Court is of the opinion
that 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.
The petition is DENIED.
Administration and Enforcement
Rillera Subjects of Enforcement
MEYCAUAYAN COLLEGE VS. DRILON

G.R. No. 81122 May 7, 1990
FERNAN, C.J.
FACTS:
Petitioner is a private educational institution duly organized and existing under Philippine
laws, and operating in Meycauayan, Bulacan. On January 16, 1987, its board of trustees
recognized the Meycauayan College Faculty and Personnel Association as the employees' union
in the Meycauayan College.
Prior to said recognition or on July 17, 1983, petitioner and the union, then headed by
Mrs. Teresita V. Lim, entered into a collective bargaining agreement for 1983-1986. Article IV
thereof provides:

SALARY SCALE
IV. 4.0 ANG ANTAS NG PAGPAPASUWELDO SA MGA GURO SA MATAAS NG PAARALAN AY
UMAALINSUNOD SA PARAAN NG PAGRARANGGONG KALAKIP NITO BILANG "TAKDA" AT
AYON PA RIN SA SUMUSUNOD NA HALAGA NG PAGPAPASUWELDO (IPATUTUPAD SA
AÑO-ESCOLAR 1983-1986):
PAGSUBOK A (1-3 TAON) P51.50
KLASE 1 (4-5 TAON) P52.00
(6-8 TAON) P53.00
KLASE II (9-12 TAON) P54.00
KLASE III (13-14 TAON) P57.00
KLASE IV (15-17 TAON) P60.00
KLASE V (18-21 TAON) P63.00
(22 PATAAS) P70.00
When the collective bargaining agreement was entered into, the following presidential
decrees were in effect: (a) P.D No. 1389 dated May 29, 1978 adjusting the existing statutory
minimum wages; (b) P.D. No. 1713 dated August 18, 1980 providing for an increase in the
minimum daily wage rates and for additional mandatory living allowances, and (c) P.D. No. 1751
dated May 14, 1980 increasing the statutory daily minimum wage at all levels by P4.00 after
integrating the mandatory emergency living allowance under P.D. Nos. 525 and 1123 into the
basic pay of all covered workers. Wage Order No. 2 increasing the mandatory basic minimum
wage and living allowance was also issued on July 6, 1983 just before the collective bargaining
agreement herein involved was entered into.
During the lifetime of the collective bargaining agreement, the following were issued: (a)
Wage Order No. 3 dated November 7, 1983 increasing the minimum daily living allowance in the
private sector; (b) Wage Order No. 4 dated May 1, 1984 integrating as of said date the emergency
cost of living allowances under P.D. Nos. 1614, 1634 and 1713 into the basic pay of covered
workers in the private sector; (c) Wage Order No. 5 dated June 11, 1984 increasing the cost of
living allowance of workers in the private sector whose basic salary or wage is not more than
P1,800 a month; and (d) Wage Order No. 6 dated October 26, 1984 increasing the daily living
allowances.
The union admits herein that its members were paid all these increases in pay mandated
by law. It appears, however, that in 1987, shortly after union president Mrs. Teresita V. Lim, who
held the managerial position of registrar of the college, had turned over the presidency of the
union to Mrs. Fe Villarico, the latter unintentionally got a copy of the collective bargaining
agreement and discovered that Article IV thereof had not been implemented by the petitioner. 1
Consequently, on March 27, 1987, the union filed with the Department of Labor and Employment,
Regional Office No. III in San Fernando, Pampanga, a notice of strike on the ground of unfair
labor practice alleging therein violation of the collective bargaining agreement particularly the
provisions of Article IV thereof on salary scale.
ISSUE:
WON increase in employees’ salaries resulting from the implementation of presidential

decrees and wage orders, which are over and above the agreed salary scale contracted for
between the employer and the employees in the collective bargaining agreement, preclude the
employees from claiming the difference between their old salaries and those provided for under
said salary scale.

RULING:
"Non-compliance with the mandate of a standards law or decree may give rise to an
ordinary action for recovery while violation of a collective bargaining agreement may even give
rise to a criminal action for unfair labor practice. And while the relief sought for violation of a
standards law or decree is primarily for restitution of (an) unpaid benefits, the relief sought for
violating a CBA is ordinarily for compliance and desistance. Moreover, there is no provision in the
aforecited Presidential Decrees providing that compliance thereto is sufficient compliance with a
provision of a collective bargaining agreement and vice-versa." The dispositive portion of the
Secretary's order of September 9, 1987 states:
WHEREFORE, the Management of Meycauayan College is hereby ordered to:
1) Strictly effect the payment of salaries of the union members in accordance with
the provisions of the collective bargaining agreement;
2) Pay the covered union members salary differential computed by subtracting the
salary actually paid and received by them per period provided in the collective
bargaining agreement for school years 1983-1984; 1984-1985 and 1985-1986
including the differential for the 13th month pay for the same period.
The petition has no merit.
As correctly ruled by public respondent, a collective bargaining agreement is a contractual

obligation. It is distinct from an obligation imposed by law. The terms and conditions of a collective
bargaining contract constitute the law between the parties. Beneficiaries thereof are therefore,
by right, entitled to the fulfillment of the obligation prescribed therein. 8 Consequently, to deny
binding force to the collective bargaining agreement would place a premium on a refusal by a
party thereto to comply with the terms of the agreement. Such refusal would constitute an unfair
labor practice.
Nevertheless, as the key to the interpretation of contracts, including collective bargaining

agreements, is the intention of the parties, 13 we examined the record and found the undisputed
allegation of private respondent that the collective bargaining agreement herein involved was
entered into by the parties to improve the plight of the teachers by increasing their salary. The
parties increased the teachers' salary or rate per period, by drafting a salary scale "based on the
length of service" of the teachers and eventually came up with Article IV aforequoted. From this
unrebutted allegation, it is clear that the parties wanted to attain one goal increase the salaries
of the teachers on the basis of their length of service. Hence, it is immaterial that the means by
which said goal is achieved is through the alteration of the salary scale.

On the issue of prescription, Article 291 (now Art. 290) of the Labor Code herein invoked
by petitioner, provides:
Offenses. — Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three (3) years.
All unfair labor practices arising from Book V shall be filed with the appropriate
agency within one (1) year from accrual of such unfair labor practice; otherwise,
they shall be forever barred.
The one-year prescriptive period is inapplicable in this case because of peculiar factual
circumstances which petitioner has not denied. Although the collective bargaining agreement
covers school years 1983 to 1986, a copy of the agreement was only made available to the union
in 1987. Immediately thereafter, the union sought its implementation. The union members might
have been aware of the existence of the collective bargaining agreement but that fact that their
president was actually a management employee being petitioner's registrar, they must have been
deterred from demanding its implementation earlier. Hence, to apply the provisions of Article 290
(Art. 291) would be unfair and prejudicial to the union members particularly those who have
served petitioner for a number of years who stand to benefit most from the salary scale.
Article 264(g), now Article 263(g) of the Labor Code is broad enough to give the Secretary
of Labor the power to take jurisdiction over what appears at first blush to be an ordinary money
claim. Claims for pay differentials may have that character but, as earlier stated, if they arise out
of a violation of a collective bargaining agreement, they assume the character of an unfair labor
practice and are, therefore, well within the ambit of the jurisdiction of the Secretary of Labor to
decide.
WHEREFORE, the decision of the Secretary of Labor is hereby AFFIRMED and the
temporary restraining order of February 15,1989 is LIFTED.
This decision is immediately executory. Costs against the petitioner.
Robles Subjects of Enforcement
ST. JOSEPH’S COLLEGE VS. ST. JOSEPH’S COLLEHE WORKERS’ ASSN

G.R. No. 155609 January 17, 2005
FACTS:
Petitioner is a non-stock, non-profit Catholic educational institution while respondent is a

legitimate labor organization and currently the official bargaining representative of all employees
of petitioner. Respondent had an existing Collective Bargaining Agreement (CBA) with petitioner.
Petitioner increased its tuition fees for all its departments. Thus, in accordance with Article VII,
Section 1 of its CBA with respondent, providing for the 85% allocation of incremental proceeds
from every tuition fee increase for the adjustments of salary and benefits of employees,
respondents arrived at a computation and presented it to the petitioner, which the latter averred
by presenting a different computation based on the school’s income, not merely on the categorical
increase in tuition fee.
ISSUE:

Whether or not the incremental proceeds from a tuition fee increase is based on the
schools’ income and not on the categorical fee increase.
RULING:
The Petition has no legal merit. First, Section 5(2) of Republic Act (RA) 6728 allows a
tuition fee increase only under the condition that at least 70 percent of the increase shall be
disbursed as salaries, wages, allowances and other benefits for teaching and nonteaching
personnel. The law imposes this requirement without exceptions or qualifications. Second, the
question of whether to increase tuition fees within the parameters of the law lies within the
discretion and power of the school, not the personnel thereof. Hence, employees should not be
held responsible for its consequent ill effects. Third, Petitioner has failed to present evidence
showing it actually suffered bottom line losses as a direct and necessary consequence of the
tuition fee increase. Fourth, if the law is indeed disadvantageous to the educational system and
grossly harmful to private schools, the remedy lies not in this Court but in Congress.
Savellano Subjects of Enforcement
CEBU OXYGEN AND ACETYLENE CO., INC. VS. DRILON

G.R. No. 82849 August 2, 1989
FACTS:
Petitioner and the union of its rank and file employees, Cebu Oxygen, Acetylene and Central
Visayas Employees Association (COAVEA) entered into a collective bargaining agreement (CBA)
covering the years 1986 to 1988.
1) For the first year which will be paid on January 14, 1986 - P200 to each covered employee.
2) For the second year which will be paid on January 16, 1987 - P 200 to each covered employee.
3) For the third year which will be paid on January 16, 1988 - P300 to each covered employee.
On December 14, 1987, Republic Act No. 6640 was passed increasing the minimum wage, in
sum, Section 8 of the implementing rules prohibits the employer from crediting anniversary wage
increases negotiated under a collective bargaining agreement against such wage increases
mandated by Republic Act No. 6640.
On February 22, 1988, a Labor and Employment Development Officer, pursuant to Inspection
Authority No. 058-88, commenced a routine inspection of petitioner's establishment. Upon
completion of the inspection on March 10, 1988, and based on payrolls and other records, he
found that petitioner committed violations of the above-mentioned law.
ISSUE:
Whether or not an Implementing Order of the Secretary of Labor and Employment (DOLE) can
provide for a prohibition not contemplated by the law it seeks to implement.
HELD:
NO, DOLE cannot provide for such prohibition.

The provisions of Republic Act No. 6640, do not prohibit the crediting of CBA anniversary wage
increases for purposes of compliance with it. The implementing rules cannot provide for such a
prohibition not contemplated by the law. Administrative regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and
should be for the sole purpose of carrying into effect its general provisions. The law itself cannot
be expanded by such regulations. An administrative agency cannot amend an act of Congress.
Thus petitioner's contention that the salary increases granted by it pursuant to the existing CBA
including anniversary wage increases should be considered in determining compliance with the
wage increase mandated by Republic Act No. 6640, is correct. However, the amount that should
only be credited to petitioner is the wage increase for 1987 under the CBA when the law took
effect. The wage increase for 1986 had already accrued in favor of the employees even before
the said law was enacted.
Silverio Subjects of Enforcement
ODIN SECURITY AGENCY VS. HON. DIONISIO DELA SERNA, ET. AL.
G.R. NO. 87439 FEB. 21, 1990
GRIÑO-AQUINO, J.
FACTS:
The private respondents (employees) filed with the DOLE a complaint charging the
petitioner (employer) with underpayment of wages, illegal deductions, non-payment of night
shift differential, overtime pay, premium for holiday work, rest days and Sundays, service
incentive leaves, vacation and sick leaves, and 13th month pay. When conciliation efforts failed,
the parties were required to submit their position papers. Based on the position papers, the
Regional Director issued an order directing the employer to pay the employees the benefits
prayed for.
Claiming that he was denied due process, the petitioner filed a motion for
reconsideration which was treated as an appeal. The Undersecretary affirmed with
modification the order of the Regional Director.
Hence, this petition for certiorari and prohibition. In the petition for certiorari, the
petitioner alleges:
1. that it was deprived of due process of law, both substantive and procedural;
2. that the Order dated March 20, 1987 is contrary to law and that respondent Luna C.
Piezas acted with grave abuse of discretion amounting to lack or excess of jurisdiction;
and
3. that the Orders dated March 23, 1988 and March 13, 1989, affirming and modifying
the Order dated March 20, 1987 are contrary to law and that respondent Dionisio C. De
la Serna acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
On April 17, 1989, as prayed for in the petition, the Court issued a temporary restraining
order upon a bond of P50,000 enjoining the respondents from enforcing or executing the orders

dated March 20, 1987, March 23, 1988 and March 13, 1989 of the Department of Labor and
Employment.
ISSUE:
Whether or not the herein petitioner was denied due process and the public respondents
lack jurisdiction over the case at bar?
RULING:
The petition has no merit.

The petitioner was not denied due process for several hearings were in fact conducted by
the hearing officer of the Regional Office of the DOLE and the parties submitted position papers
upon which the Regional Director based his decision in the case. There is abundant jurisprudence
to the effect that the requirements of due process are satisfied when the parties are given an
opportunity to submit position papers
The court said that, what the fundamental law abhors is not the absence of previous
notice but rather the absolute lack of opportunity to be heard. There is no denial of due process
where a party is given an opportunity to be heard and present his case. Since petitioner herein
participated in the hearings, submitted a position paper, and filed a motion for reconsideration of
the March 23, 1988 decision of the Labor Undersecretary, it was not denied due process.
The petitioner is estopped from questioning the alleged lack of jurisdiction of the Regional
Director over the private respondents' claims. Petitioner submitted to the jurisdiction of the
Regional Director by taking part in the hearings before him and by submitting a position paper.
When the Regional Director issued his March 20, 1987 order requiring petitioner to pay the private
respondents the benefits they were claiming, petitioner was silent. Only the private respondents
filed a motion for reconsideration. It was only after the Undersecretary modified the order of the
Regional Director on March 23, 1988 that the petitioner moved for reconsideration and questioned
the jurisdiction of the public respondents to hear and decide the case. The principle of jurisdiction
by estoppel bars it from doing this. In a case decided by the Supreme Court, it has been held
that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his
opponent and, after obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction. And by way of explaining the rules, it was further said that the question whether the
court had jurisdiction either of the subject-matter of the action or of the parties was not important
in such cases because the party is barred from such conduct not because the judgment or order
of the court is valid and conclusive as an adjudication, but for the reason that such a practice
cannot be tolerated obviously for reasons of public policy. Furthermore, it has also been held that
after voluntarily submitting a cause and encountering an adverse decision on the merits, it is too
late for the loser to question the jurisdiction or power of the court. And the Court said that it is
not right for a party who has affirmed and invoked the jurisdiction of a court in a particular matter
to secure an affirmative relief, to afterwards deny that same jurisdiction to escape a penalty. The
fact is, the Regional Director and the Undersecretary did have jurisdiction over the private
respondents' complaint which was originally for violation of labor standards (Art. 128[b], Labor
Code). Only later did the guards ask for backwages on account of their alleged "constructive
dismissal". Once vested, that jurisdiction continued until the entire controversy was decided.
The jurisdiction of public respondents over the complaints is clear from a reading of Article
128(b) of the Labor Code, as amended by Executive Order No. 111, thus:

"(b) The provisions of Article 217 of this Code to the contrary notwithstanding and in cases
where the relationship of employer-employee still exists, the Minister of Labor and
Employment or his duly authorized representatives shall have the power to order and
administer, after due notice and hearing, compliance with the labor standards provisions
of this Code and other labor legislation based on the findings of labor regulation officers
or industrial safety engineers made in the course of inspection, and to issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor regulation officer and raises issues
which cannot be resolved without considering evidentiary matters that are not verifiable
in the normal course of inspection."
Again, in a jurisprudence, the court said that, to recapitulate, under EO 111, the Regional
Directors, in representation of the Secretary of Labor and notwithstanding the grant of exclusive
original jurisdiction to Labor Arbiters by Article 217 of the Labor Code, as amended have power
to hear cases involving violations of labor standards provisions of the Labor Code or other
legislation discovered in the course of normal inspection, and order compliance therewith,
provided that:
"1) the alleged violations of the employer involve persons who are still his employees, i.e.,
not dismissed; and
"2) the employer does not contest the findings of the labor regulations officer or raise
issues which cannot be resolved without considering evidentiary matters that are not
verifiable in the normal course of inspection."
Under the present rules, a Regional Director exercises both visitorial and enforcement
power over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the findings of
the regional office is not contested by the employer concerned.
The petition was dismissed and the orders of Undersecretary of Labor were affirmed.
Employment of Women
Borja Employment
ZIALCITA VS. PAL

Case No. RO4-3-3398-76 February 20, 1977
FACTS:
Complainant Zialcita, an international stewardess of Philippine Airlines, Inc. (PAL), was

discharged from the service on account of her marriage. In separating Zialcita, PAL invoked its
policy which stated that flight attendants must be single, and shall be automatically separated
from employment in the event they subsequently get married. They claimed that this policy was
in accordance with the provision of the Labor Code, Article 132. On the other hand, Zialcita
questioned her termination on account of her marriage, invoking Article 136 of the same law.
ISSUE:

Whether or not Zialcita was validly terminated on account of her marriage.
RULING:
No, the termination was improper. When Presidential Decree No. 148, otherwise known
as the Women and Child Labor Law, was promulgated in March 13, 1973, PAL’s policy had met
its doom. However, since no one challenged its validity, the said policy was able to obtain a
momentary reprieve. Section 8 of PD 148 is exactly the same provision reproduced verbatim in
Article 136 pf the Labor Code, which was promulgated on May 1, 1974 and took effect six months
later.
Although Article 132 enjoins the Secretary of Labor to establish standards that will ensure
the safety and health of women employees and in appropriate cases shall by regulations require
employers to determine appropriate minimum age and other standards for termination in special
occupations, such as those of flight attendants, it is logical to presume that, in the absence of
said standards or regulations which are yet to be established, the policy of PAL against marriage
is patently illegal.
Article 136 is not intended to apply only to women employed in ordinary occupations, or
it should have categorically expressed so. The sweeping intendment of the law, be it on special
or ordinary occupations, is reflected in the whole text and supported by Article 135 of non-
discrimination on the employment of women.
Santos Employment
OLYMPIA GUALBERTO VS. MARINDUQUE MINING INDUSTRIAL CORPORATION
FACTS:
The company employed plaintiff Olympia Gualberto as a dentist in 1971 while she was still
single. She married Roberto, another employee (electrical engineer) of the company, in 1972.
The company informed her that she was regarded to have resigned her office, invoking the firm’s
policy that stipulated that female employees were regarded to automatically terminate their
employment the moment they got married. Olympia filed a claim for compensation.
The Court of Appeals not only upheld her claim for damages but also awarded exemplary
damages, and held, inter alia: ‘No employer may require female applicants for jobs to enter into
pre-employment arrangements that they would be dismissed once they get married and
afterwards expect the Courts to sustain such an agreement.’
ISSUE:
Whether or not an employer may terminate an employee by reason of marriage.
RULING:
No. The Court made references to the Civil Code, the Woman and Child Labor Act and the
1935 Constitution of the Philippines. In light of this the Court further stated: ‘The agreement
which the appellants want this Court to sustain on appeal is an example of discriminatory

chauvinism. Acts which deny equal employment opportunities to women because of their sex are
inherently odious and must be struck down.
Healthy, Safety and Social Welfare Benefits
Abello Medical, Dental and Occupational Safety
PHILIPPINE GLOBAL COMMUNICATIONS, INC.

G.R. No. 157214 June 7, 2005
Garcia, J.
FACTS:
De Vera and petitioner company entered into a contract where respondent was to
attend to the medical needs of petitioner’s employees while being paid a retainer fee of P4,000
per month. Later, De Vera was informed y petitioner that the retainership will be discontinued.
Respondent filed a case for illegal dismissal.
ISSUE:
Whether or not de Vera is an employee of PhilComm or an independent Contractor.
HELD:
Applying the fourfold test, de Vera is not an employee. There are several indicators apart
from the fact that the power to terminate the arrangement lay on both parties: from the time he
started to work with petitioner, he never was included in its payroll; was never deducted any
contribution for remittance to the Social Security System (SSS); he was subjected by petitioner
to the ten (10%) percent withholding tax for his professional fee, in accordance with the National
Internal Revenue Code, matters which are simply inconsistent with an employer-employee
relationship; the records are replete with evidence showing that respondent had to bill petitioner
for his monthly professional fees. It simply runs against the grain of common experience to
imagine that an ordinary employee has yet to bill his employer to receive his salary. Finally, the
element of control is absent. Petition granted.
Payment of Wages
Alarkon Cases
JOSE B. SARMIENTO VS. EMPLOYEES COMPENSATION COMMISSION, ET. AL

GR No. L – 65680 May11, 1989
J. GUTIERREZ, JR.
FACTS:

 This is a petition for review of the decision rendered by the Employees' Compensation
Commission in ECC Case No. 2134 on August 25, 1983 which affirmed the decision of
the Government Service Insurance System (GSIS) denying the petitioner's claim for
death benefits as surviving spouse of the late Flordeliza Sarmiento.
 The record shows that the late Flordeliza Sarmiento was employed by the National
Power Corporation in Quezon City as accounting clerk in May 1974.
o At the time of her death on August 12, 1981 she was manager of the budget
division.
o History of the deceased's illness showed that symptoms manifested as early as
April 1980 as a small wound over the external auditory canal and mass over the
martoid region. Biopsy of the mass revealed cancer known as "differentiated
squamous cell carcinoma."
 Believing that the deceased's fatal illness having been contracted by her during
employment was service-connected, appellant herein filed a claim for death benefits.
 On August 25, 1983, the respondent Commission affirmed the GSIS' decision. It found
that the deceased's death causation by parotid carcinoma is not compensable
because she did not contract nor suffer from the same by reason of her work but by
reason of embryonic rests and epithelial growth.
 It may be noted that the petitioner was earlier paid GSIS benefits in the amount of
P142,285.03 but the claim for employee's compensation was disallowed.
ISSUE:
 Petitioner now challenges PD 626: the law on employees' compensation which superseded
the Labor Code and the of the Workmen's Compensation Act.
o that provisions of the said law infringes upon the guarantees of promotion
of social justice, substantive due process, and equal protection of laws,
and also permits unjust discrimination and amounts to class legislation in
its enforcement
RULING:
 The Supreme Court through Justice Gutierrez said that they cannot give serious
consideration to the petitioner's attack against the constitutionality of the new law on
employee's compensation. It must be noted that the petitioner filed his claim
under the provisions of this same law. It was only when his claim was rejected
that he now questions the constitutionality of this law on appeal by certiorari.
 The Court has recognized the validity of the present law and has granted and rejected
claims according to its provisions. We find in it no infringement of the worker's
constitutional rights. It is now settled jurisprudence that the new law discarded
the concepts of "presumption of compensability" and "aggravation" to restore
what the law believes is a sensible equilibrium between the employer's
obligation to pay workmen's compensation and the employees' rights to
receive reparation for work-connected death or disability. (refer to Sulit v.
Employees' Compensation Commission, 98 SCRA 483; Armena v. Employees'
Compensation Commission, 122 SCRA 851; Erese v. Employees' Compensation
Commission, 138 SCRA 192; De Jesus v. Employees' Compensation Commission, 142
SCRA 92)
 The petitioner's challenge is really against the desirability of the new law. These is no
serious attempt to assail it on constitutional grounds.

 The wisdom of the present scheme of workmen's compensation is a matter that

should be addressed to the President and Congress, not to this Court.
 Given the preceding medical evaluations, the Court affirm the findings of the public
respondents which found no proof that the deceased's working conditions have indeed
caused or increased the risk of her contracting her illness.
 Thus, the petition is dismissed.
Masukat Cases
ILOILO DOCK AND ENGINEERING CORPORATION VS. WCC, ET. AL

FACTS:
This is an appeal by the Iloilo Dock and Engineering Company (hereinafter referred to as the
IDECO) from the decision dated February 28, 1966 of the Workmen's Compensation Commission
(hereinafter referred to as the Commission) affirming the decision of the Regional Office VII in
Iloilo City, and ordering the IDECO to pay to the widow and children of Teodoro G. Pablo (Irenea
M. Pablo and the minors Edwin, Edgar and Edna, all surnamed Pablo) the sum of P4,000, to pay
to the widow P89 as reimbursement for burial expenses and P300 as attorney's fees, and to pay
to the Commission the amount of P46 as fees pursuant to section 55 of the Workmen's
Compensation Act, as amended.
Teodoro Pablo and Rodolfo Galopez, had just finished overtime work at 5:00 pm and was going
home. At around 5:02 pm, while Pablo and Galopez were walking along the IDECO road, about20
meters from the IDECO main gate, Pablo was shot by Martin Cordero. The motive for the crime
was and still unknown since Martin Cordero was himself killed before he could be tried for Pablo’s
death.
ISSUES:
1. Whether or not Pablo’s death occurred in the course of employment and arising out of the
employment.
2. Whether the PROXIMITY RULE should apply in this case.
3. Whether the death of Pablo was an accident within the purview of the Workmen’s
Compensation Act.
RULING:
1. YES. Workmen’s compensation is granted if the injuries result from an accident which
arises out of and in the course of employment. Both the “arising” factor and the “course”
factor must be present. If one factor is weak and the other is strong, the injury is
compensable but not where both factors are weak. Ultimately, the question is whether
the accident is work connected. The words “arising out of” refer to the origin or cause of
the accident and are descriptive of its character, while the words “in the course” refer to
the time, place and circumstances under which the accident takes place. The presumption
that the injury arises out of and in the course of employment prevails where the injury
occurs on the employer’s premises. While the IDECO does not own the private road, it
cannot be denied that it was using the same as the principal means of ingress and egress.

The private road leads directly to its main gate. Its right to use the road must then perforce
proceed from either an easement of right of way or a lease. Its right therefore is either a
legal one or a contractual one. In either case the IDECO should logically and properly be
charged with security control of the road.
2. YES. The general rule in workmen’s compensation law known as going and coming rule
provides that in the absence of special circumstances, an employee injured in going to, or
coming from his place of work is excluded from the benefits of workmen’s compensation
acts. The following are the exceptions: a. Where the employee is proceeding to or from
his work on the premises of his employer b. Where the employee is about to enter or
about to leave the premises of his employer by way of exclusive or customary means of
ingress and egress. Where the employee is charged while on his way to or from his place
of employment or at his home or during his employment, with some duty or special errand
connected with his employment. Where the employer, as an incident of the employment
provides the means of transportation to and from the place of employment. The second
exception is known as the “proximity rule.” The place where the employee was injured
being immediately proximate to his place of work, the accident in question must be
deemed to have occurred within the zone of his employment and therefore arose out of
or in the course thereof.
3. YES. An “assault” although resulting from a deliberate act of the slayer, is considered
an “accident” within the meaning of the Workmen’s Compensation Act since the word
accident is intended to indicate that the act causing the injury shall be casual or
unforeseen, an act for which the injured party is not legally responsible.
Mortel Cases
MENEZ VS. ECC

G.R. No. L-48488 April 25, 1980
Makasiar, J.
FACTS:
Petitioner, Gloria D. Menez, was employed by the Department (now Ministry) of
Education & Culture as a school teacher. She retired under the disability retirement plan
at the age of 54 years after 32 years of teaching, due to rheumatoid arthritis and
pneumonitis. Before her retirement, she was assigned at Raja Soliman High School in
Tondo-Binondo, Manila near a dirty creek. Thereafter, petitioner filed a claim for disability
benefits under Presidential Decree No. 626, as amended, with respondent Government
Service Insurance System. The respondent GSIS denied said claim on the ground that
petitioner's ailments, rheumatoid arthritis and pneumonitis, are not occupational diseases
taking into consideration the nature of her particular work. In denying said claim,
petitioner requested for reconsideration but the GSIS reaffirmed its stand on the case
and elevated the entire records thereof to the Employees’ Compensation Commission.
Then, petitioner now filed this petition seeking a review of aforesaid decision of
respondent Commission.

ISSUE:
Whether or not the petitioner’s ailments are causally related to her duties and
conditions of work, hence, she is entitled to disability benefit from the GSIS.
RULING:
Republic Act 4670, otherwise known as the Magna Charta for Public School
Teachers, recognized the enervating effects of these factors (duties and activities of a
school teacher certainly involve physical, mental and emotional stresses) on the health
of school teachers when it directed in one of its provisions that "Teachers shall be
protected against the consequences of employment injury in accordance with existing
laws. The effects of the physical and nervous strain on the teachers' health shall be
recognized as compensable occupational diseases in accordance with laws" (Pantoja vs.
Republic, et al., G.R. No. L-43317,December 29, 1978).
Navarro ECC
MABUHAY SHIPPING SERVICES AND SKIPPERS MARITIME CO VS. NLRC

G.R. No. 94167 21 January 1991
Gancayco, J.
FACTS:
Romulo Sentina was hired as a 4th Engineer by petitioner Mabuhay Shipping Services,
Inc.(MSSI) for andin behalf of co-petitioner, Skippers Maritime Co., Ltd. to work aboard the M/V
Harmony I for a period ofone year. He reported for duty aboard said vessel on July 13, 1987.On
January 16, 1988 at about 3 pm while the vessel was docked alongside Drapetona Pier, Piraeus,
Greece, Sentina arrived aboard the ship from shore leave visibly drunk. He went to the mess
hall and took a fire axe and challenged those eating herein. He was pacified by his shipmates
who led him to his cabin. However, later he went out of his cabin and proceeded to the mess
hall. He became violent. He smashed and threw a cup towards the head of an oiler Emmanuel
Ero, who was then eating. Ero touched his head and noticed blood. This infuriated Ero which led
to a fight between the two. After the shipmates broke the fight, Sentina was taken to the hospital
where he passed away on January 17, 1988. Ero was arrested by the Greek authorities and was
jailed in Piraeus. On October 26, 1988, private respondents filed a complaint against petitioners
with the Philippine Overseas Employment Administration (POEA) for payment of death benefits,
burial expenses, unpaid salaries on board and overtime pay with damages docketed as POEACase
No. (M) 88-10-896. POEA rendered a decision favoring Sentina. A motion for reconsideration
and/or appeal was filed by petitioners which the respondent First Division of the National Labor
Relations Commission (NLRC) disposed of in a resolution dated March 31, 1990 dismissing the
appeal and affirming the appealed decision.
ISSUE:
Whether or not an employer is required to pay death benefits to an employee who ran
amuck that resulted his death
RULING:

The mere death of the seaman during the term of his employment does not automatically
give rise to compensation. The circumstances which led to the death as well as the provisions of
the contract, and the right and obligation of the employer and seaman must be taken into
consideration, in consonance with the due process and equal protection clauses of the
Constitution. There are limitations to the liability to pay death benefits. When the death of the
seaman resulted from a deliberate or willful act on his own life, and it is directly attributable to
the seaman, such death is not compensable. No doubt a case of suicide is covered by this
provision. By the same token, when as in this case the seaman, in a state of intoxication, ran
amuck, or committed an unlawful aggression against another, inflicting injury on the latter, so
that in his own defense the latter fought back and in the process killed the seaman, the
circumstances of the death of the seaman could be categorized as a deliberate and willful act on
his own life directly attributable to him. First he challenged everyone to a fight with an axe.
Thereafter, here turned to the mess hall picked up and broke a cup and hurled it at an oiler Ero
who suffered injury. Thus provoked, the oiler fought back The death of seaman Sentina is
attributable to his unlawful aggression and thus is not compensable.
Pascasio ECC
YSMAEL MARITIME CORPORATION VS. AVELINO

G.R. No. 43674 June 30, 1987
Fernan, J.:
FACTS:
December 22, 1971. Rolando G. Lim, a licensed second mate, was on board the vessel
M/S Rajah, owned by petitioner Ysmael Maritime Corporation, when the same ran ground and
sank near Sabtan Island, Batanes. Rolando perished as a result of that incident.
Claiming that Rolando's untimely death at the age of twenty- five was due to the
negligence of petitioner, his parents, respondents Felix Lim and Consorcia Geveia, sued petitioner
in the Court of First Instance on January 28, 1972 for damages
Petitioner-defendant alleged by way of affirmative defenses [1] that the complaint stated
no cause of action; [2] that respondent-plaintiffs had received P4,160 from petitioner and had
signed release papers discharging petitioner from any liability arising from the death of their son,
and [3] that most significantly, the respondents had already been compensated by the Workmen's
Compensation Commission [NCC] for the same incident, for which reason they are now precluded
from seeking other remedies against the same employer under the Civil Code.
ISSUE:
Whether the compensation remedy under the Workmen's Compensation Act [WCA], and
now under the Labor Code, for work-connected death or injuries sustained by an employee, is
exclusive of the other remedies available under the Civil Code?
RULING:

At issue is the exclusory provision of Section 5 of the Workmen's Compensation Act

reiterated in Article 173 of the Labor Code:
Art. 173 Exclusive of liability. — Unless other wise provided, the liability of
the State Insurance Fund under this Title shall be exclusive and in place of
all other liabilities of the employer to the employee, his dependents or anyone
otherwise entitled to receive damages on behalf of the employee or his
dependents. The payment of compensation under this Title shall bar the
recovery of benefits as provided for in Section 699 of the Revised
Administrative Code, Republic Act No. 1161, as amended, Commonwealth
Act No. 186, as amended, Republic Act No. 610, as amended, Republic Act
No. 4864, as amended, and other laws whose benefits are administered by
the System, during the period of such payment for the same disability or
death, and conversely.
The action is selective and the employee or his heirs have a choice of availing themselves
of the benefits under the WCA or of suing in the regular courts under the Civil Code for higher
damages from the employer by reason of his negligence. But once the election has been
exercised, the employee or his heirs are no longer free to opt for the other remedy. In other
words, the employee cannot pursue both actions simultaneously. This latter view was adopted
by the majority (SC Justices).
As thus applied to the case at bar, respondent Lim spouses cannot be allowed to maintain
their present action to recover additional damages against petitioner under the Civil Code. In
open court, respondent Consorcia Geveia admitted that they had previously filed a claim for death
benefits with the WCC and had received the compensation payable to them under the WCA. It is
therefore clear that respondents had not only opted to recover under the Act but they had also
been duly paid. At the very least, a sense of fair play would demand that if a person entitled to a
choice of remedies made a first election and accepted the benefits thereof, he should no longer
be allowed to exercise the second option.
Disability Benefits
Sandoval Disability defined
ABAYA VS. ECC

G.R. No 64255 August 1989
FACTS:
After serving the government in various capacities for 38-1/2 years, Evaristo Abaya, Jr.
retired as a principal teacher at the age of 60 on October 15, 1975. Thereafter, pursuant to PD
No. 626, he applied with the Government Service Insurance System for medical services,
appliance and supplies and permanent total disability benefits. The basis of his application was
his claimed service-connected ailment, initially diagnosed as cardio-vascular disease and
aggravating later for cerebral encephalopathy secondary to hypertension.
GSIS rejected his application on the ground that his ailment was not an occupational disease.

ISSUE:
Whether the petitioner's ailment is permanent total or permanent partial
RULING:
A disability is partial permanent if as a result of the injury or sickness the employee suffers
a permanent partial loss of the use of any part of his body.
We find that this case is similar to Gonzaga v. Employees' Compensation

Commission, where the petitioner was forced to retire from her work as a teacher, at the age of
49, "as a direct consequence of her hypertension and ametropia," or dimness of vision.
When an employee is forced to ask for retirement ahead of schedule, not because of old
age, but primarily of his weakened bodily condition due to illness contracted in the course of her
employment, she should be given compensation for her inability to work during the remaining
days before her scheduled retirement, aside from the benefit a received by her (Villaflor v.
Republic of the Philippines, 98 SCRA 383 [1980]; Almaiz v. WCC, 85 SCRA 144 [1978]; Bello v.
WCC, 80 SCRA 153 [1977]; Marcelino v. Seven-Up Bottling Co. of the Philippines, supra).
There is no reason to digress from this ruling. In fact, the herein petitioner's ailments are
even more serious than in Gonzaga, and he has even worked longer for the government.
We hold, therefore, that the petitioner is entitled to permanent total compensation

benefits to be determined in accordance with Section 5, Rule XI of the Amended Rules on
Employees' Compensation.
Tejares Article 192-192: Permanent Disability Benefits
VICENTE CS. ECC

G.R. No. 85024 January 23, 1991
SARMIENTO, J.:
FACTS:
Petitioner was formerly employed as a nursing attendant at the Veterans Memorial Medical
Center in Quezon City. At the age of forty-five, and after having rendered more than twenty-five
years of government service, he applied for optional retirement under the provisions of Section
12(c) of Republic Act No. 1616, giving as reason therefor his inability to continue working as a
result of his physical disability. The petitioner likewise filed with the Government Service
Insurance System (GSIS) an application for “income benefits claim for payment” under
Presidential Decree (PD) No. 626, as amended. Both applications were accompanied by the
necessary supporting papers, among them being a “Physician’s Certification” issued by the
petitioner’s attending doctor. The petitioner’s application for income benefits claim payment was
granted but only for permanent partial disability (PPD) compensation or for a period of nineteen
months
ISSUE:

Whether or not the petitioner suffers from permanent total disability.
RULING:
Yes. The decision of the respondent Employees’ Compensation Commission (ECC) was set
aside. The petitioner's permanent total disability is established beyond doubt by several factors
and circumstances.1âwphi1 Noteworthy is the fact that from all available indications, it appears
that the petitioner's application for optional retirement on the basis of his ailments had been
approved. The decision of the respondent Commission even admits that the petitioner "retired
from government service at the age of 45."Considering that the petitioner was only 45 years old
when he retired and still entitled, under good behavior, to 20 more years in service, the approval
of his optional retirement application proves that he was no longer fit to continue in his
employment. For optional retirement is allowed only upon proof that the employee-applicant is
already physically incapacitated to render sound and efficient service.
Further, the appropriate physicians of the petitioner's employer, the Veterans Memorial
Medical Center, categorically certified that the petitioner was classified under permanent total
disability. On this score, "the doctor's certification as to the nature of the claimant's disability may
be given credence as he normally would not make a false certification." And, "[N]o physician in
his right mind and who is aware of the far-reaching and serious effect that his statements would
cause on a money claim filed with a government agency, would issue certifications
indiscriminately without even minding his own interests and protection
The court takes this occasion to stress once more its abiding concern for the welfare of
government workers, especially the humble rank and file, whose patience, industry, and
dedication to duty have often gone unheralded, but who, in spite of very little recognition, plod
on dutifully to perform their appointed tasks. It is for this reason that the sympathy of the law on
social security is toward its beneficiaries, and the law, by its own terms,18 requires a construction
of utmost liberality in their favor.
Alquiza Article 192-192: Permanent Disability Benefits
GSIS VS. CA AND R. BALAIS

GR No 117572 January 29, 1998
ROMERO, J
FACTS:
Private respondent started working as an emergency employee of the National Housing Authority
(NHA) in 1952.
Medical records disclose that, private respondent suddenly experienced chills, followed by loss of
consciousness. She was brought to the Capitol Medical Center. Later, on the same day, however,
she vomited several times and suffered from parie-occipital pains. She was again rushed to
U.E.R.M. Medical Center where she underwent a thorough medical examination. She was
diagnosed to be suffering from Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm.
Despite her operation, private respondent could not perform her duties as efficiently as she had
done prior to her illness. This forced her to retire early from the government service on March 1,
1990 at the age of sixty-two (62) years.

Private respondent filed a claim for disability benefits with the GSIS for the above-described
ailment. The GSIS granted her temporary total disability (TTD) benefits for the period starting
from December 17, 1989 to January 31, 1990 and subsequently, permanent partial disability
(PPD) benefits for nine months starting on March 2, 1990.
Private respondent requested the GSIS for the conversion of the classification of her disability
benefits from permanent partial disability (PPD) to permanent total disability (PTD). Such plea,
however, was denied by the GSIS on the ground that her claim found no basis to alter its findings.
She was informed that the results of the physical examination conducted did not satisfy the
criteria for permanent total disability.Private respondent to file a request for reconsideration,
explaining that since the time of her operation she continued to suffer from dizziness, headaches,
loss of memory and inability to properly sleep. She further stated that she was required to take
medication for life. The GSIS, however, denied reconsideration which denial was later affirmed
on appeal by the ECC. Then filed a petition to CA which rendered a decision favourable to her.
ISSUE:
Whether private respondent is entitled to conversion of her benefits from permanent partial
disability to permanent total disability.
RULING:
While it is true that the degree of private respondent’s physical condition at the time of her
retirement was not considered as permanent total disability, yet, it cannot be denied that her
condition subsequently worsened after her head operation and consequent retirement. A person’s
disability may not manifest fully at one precise moment in time but rather over a period of time.
It is possible that an injury which at first was considered to be temporary may later on become
permanent or one who suffers a partial disability becomes totally and permanently disabled from
the same cause.
This Court has ruled that disability should not be understood more on its medical significance but
on the loss of earning capacity. Private respondents persistent illness indeed forced her to retire
early which, in turn, resulted in her unemployment, and loss of earning capacity. Judicial
precedents likewise show that disability is intimately related to one’s earning capacity. It has been
a consistent pronouncement of this Court that permanent total disability means disablement of
an employee to earn wages in the same kind of work, or work of a similar nature that she was
trained for or accustomed to perform, or any kind of work which a person of her mentality and
attainment could do.It does not mean state of absolute helplessness, but inability to do
substantially all material acts necessary to prosecution of an occupation for remuneration or profit
in substantially customary and usual manner.
The denial of the claim for permanent total disability benefit of private respondent who, for 38
long years during her prime had rendered her best service with an unblemished record and who
was compelled to retire on account of her worsening condition, would indeed subvert the salutary
intentions of the law in favor of the worker. The Court, therefore, affirms the decision of the
respondent Court of Appeals decreeing conversion of private respondent’s disability from
permanent partial disability to permanent total disability.

Death Benefits
Biyo Cases
MANZUNO VS. ECC

GR No. 88573 25 June 1990
FACTS:
Petitioner requested the GSIS for a continued pension considering that her husband died of a
lingering illness which was found to be work connected by the GSIS and that her husband became
paralyzed while in service. Her husband was granted monthly pension, but it stopped in 1985.
She was granted additional pension up to January of 1988 only. The case was appealed to the
Employees' Compensation Commission.
ISSUE:
Whether or not a proper interpretation of Article 194(b) of Presidential Decree No. 626 will entitle
her dead husband to death benefits in favor of primary beneficiaries.
RULING:
Yes. The term "covered employee" refers to an employee who, at the time of his death, is still an
employee covered by GSIS. We cannot ignore the implementing Rules and Regulations of the
Employees Compensation Commission that to be entitled to death benefits, the employee need
not be an actual employee of the public or private sector at the time of his death; he can be a
retired employee whose retirement was brought about by permanent disability. We agree that a
permanent and totally disabled employee who is receiving pension cannot work. He was
compelled to retire from the service because of disability that was work-oriented. Permanent total
disability means an incapacity to perform gainful work which is expected to be permanent. The
covered employee referred to in Section 194(b) Presidential Decree No. 626, as amended,
includes an employee who has retired from work because of permanent and total disability and
who subsequently dies.
Provisions Common to Income Benefits
Custodio Cases
ECC VS. E. SANICO

G.R. No. 134028 December 17, 1999
Kapunan, J.
FACTS:

Edmund Sanico was a former employee of John Gotamco and Sons. He worked in the said
company as "wood filer" from 1986 until he was separated from employment in 1991 due to his
illness. His medical evaluation report showed that he was suffering from pulmonary tuberculosis.
In 1994, Sanico filed with the Social Security System (SSS) a claim for compensation benefits
under the Labor Code, as amended. In 1996, SSS denied Sanico’s claim on the ground of
prescription. SSS ruled that under the Labor Code, a claim for compensation shall be given due
course only when the same is filed with the System three years from the time the cause of action
accrued. In Sanico’s case, SSS reckoned the three-year prescriptive period on 21 September 1991
when his pulmonary tuberculosis first became manifest. When he filed his claim on 9 November
1994, the claim had allegedly already prescribed.
ISSUE:
Whether or not Edmund Sanico’s claim for compensation benefit had already prescribed when he
filed his claim on 9 November 1994.
HELD:
Permanent total disability means disablement of an employee to earn wages in the same kind of
work, or work of similar nature that he was trained for or accustomed to perform, or any kind of
work which a person of his mentality and attainment could do.
This Court has also held that in disability compensation, it is not the injury which is compensated,
but rather it is the incapacity to work resulting in the impairment of one's earning capacity.
The prescriptive period for filing compensation claims should be reckoned from the time the
employee lost his earning capacity, i.e., terminated from employment, due to his illness and not
when the same first became manifest.
Indeed, a person's disability might not emerge at one precise moment in time but rather over a
period of time. In this case, Sanico’s employment was terminated on 31 December 1991 due to
his illness, he filed his claim for compensation benefits on 9 November 1994. Accordingly, Sanico’s
claim was filed within the three-year prescriptive period under the Labor Code.
In conclusion, the Court takes this opportunity to once again remind SSS that the Labor Code, is
a social legislation whose primordial purpose is to provide meaningful protection to the working
class against the hazards of disability, illness and other contingencies resulting in the loss of
income. Thus, as an official agent charged by law to implement social justice guaranteed and
secured by the Constitution, the Employee’s Compensation Commission should adopt a liberal
attitude in favor of the employee in deciding claims for compensability especially where there is
some basis in the facts for inferring a work connection with the incident.
De Leon Cases
SUANES VS. WORKMEN’S COMPENSATION COMMISSION

G.R. No. 42808 January 31, 1989
Feliciano, J.
FACTS:

Artemio Suanes, a government employee, was a construction capataz of the Bureau of

Public Highways, Batangas Provincial Office (BPH) from January 2, 1964 until June 30, 1970.
From July 1, 1970 up to the time of his death on June 21, 1973, he was a capataz in the Office
of the Provincial Engineer, Batangas Province. His death was attributed to ‘cardio-respiratory
arrest due to cerebrovascular accident’.
On March 5, 1975, petitioner, the surviving spouse of Artemio, filed a claim for
compensation under the applicable provisions of the Workmen’s Compensation Act (Act No.
3428), which was referred to the BPH. BPH asserted however that there was lack of causative
relation between the illness of the decedent and the nature of his employment. Further, BPH
avers that the claim has been filed against the wrong party, as it should have been filed against
the Provincial Engineer’s Office, being the employer at the time of Artemio’s death.
On February 29, 1985, the Court issued a Resolution stating that Artemio Suanes was an
employee of the Provincial Engineer’s Office of Batangas and not an employee of respondent
Bureau of Public Highways. Thus, it resolved to consider the Provincial Engineer of Batangas as
impleaded party respondent.
ISSUE:
Whether or not Provincial Engineer of Batangas Province may be held liable on petitioner’s
claim.
HELD:
YES. Respondent asserts that petitioner’s claim against his office has prescribed. The
ordinary rule is that the statutory right to compensation under the Workmen's Compensation Act
prescribes in ten (10) years 8 counted from the time of accrual of the claim, in this case from the
time of the death of Artemio Suanes. Artemio Suanes died, as noted earlier, on 21 June 1973;
the court impleaded the Office of the Provincial Engineer of Batangas Province on 29 February
1985, i.e., about twelve (12) years later. The Court does not, however, believe that petitioner's
claim may be so cavalierly defeated, given the circumstances of this case. In the first place,
petitioner's original claim was filed, again as already noted, on 5, March 1975. While this original
claim designated the wrong employer, we believe that, given the insistent demands of substantial
justice in this case, such original claim should be regarded, as we hereby so regard it, as having
effectively tolled the running of the prescriptive period. We note that the petitioner lost no time
in filing her Petition for Review with this Court on 15 March 1976 when her claim was denied by
the respondent Commission on 13 December 1975. This Court was able formally to rectify the
erroneous designation of the respondent BPH only after almost nine (9) years from filing of the
Petition for Review. Under the principle of nunc pro tunc, we do not believe that this failure to
act earlier on the part on the Court itself may be allowed to prejudice the petitioner. The defense
of prescription must, therefore, be rejected.
Further, there is no dispute about the fact that Artemio's ailment supervened in the course
of his employment either with the BPH or the Office of the Batangas Provincial Engineer. It is well
settled that, under the Workmen's Compensation Act, petitioner is accordingly relieved of the
burden of proving causation between the illness and the employment in view of the legal
presumption that said illness arose out of the decedent's employment. The burden of proving
non-compensability of the cause of death is shifted to the employer. Respondent Batangas
Provincial Engineer had failed to discharge this burden. Indeed, none of the respondents even
attempted to present any evidence to rebut the presumption of compensability; all of them chose
to rely upon the formal defenses discussed above. But those defenses do not constitute evidence
to overthrow the statutory presumption. In legal effect, no evidence was introduced by the

respondents to offset that legal presumption. The Court, therefore, is left with no alternative but
to rule in favor of petitioner's claim.


LABOR STANDARDS FRAM EWORK DEAN PORFIRIO DG. PANGANIBAN, JR.

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LABOR STANDARDS FRAMEWORK DEAN PORFIRIO DG. PANGANIBAN, JR.

Labor Law in General

Abello Labor Law Defined

MATERNITY CHILDREN’S HOSPITAL VS. SECRETARY OF LABOR

Petitioner is a semi-government hospital, managed by the Board of Directors of the

Arellano University School of Law 1

Alarkon Social Justice as the aim of Labor Laws

MAXIMO CALALANG VS. A. D. WILLIAMS

Arellano University School of Law 2

 PETITIONER’S CONTENTION: C.A.548 UNCONSTITUTIONAL

ASSAILED LAW/ STATUTE

Arellano University School of Law 3

exercise of powers underlying the existence of all governments on the time-honored

Police Power as the basis of Labor

PEOPLE OF THE PHILIPPINES VS. VERA REYES

Arellano University School of Law 4

Police Power as the basis of Labor Laws

PEOPLE OF THE PHILIPPINES VS. POMAR

Arellano University School of Law 5

Arellano University School of Law 6

Dagaerag Police Power as the basis of Labor Laws

PHIL ASSOCIATION OF SERVICE EXPORTERS INC. VS. DRILON

Petitioner, Phil association of Service Exporters, Inc., is engaged principally in

Arellano University School of Law 7

1. Such classification rests on substantial distinctions

Diambulang, Roldan Significance of Foreign Desicions

CLARA CEREZO VS. THE ATLANTIC GULF & PACIFIC COMPANY

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Martin, Alvin Jae I. Laborer’s Welfare: Liberal Approach

ABELLA VS. NATIONAL RELATIONS COMMISSION

Arellano University School of Law 9

G.R No. 71812 July 20, 1987

Whether or not private respondents are entitled to separation pay.

It is well-settled that in the implementation and interpretation of the provisions of the

Laborer’s Welfare: Liberal Approach

EURO-LINES, PHILIPPINES INC. VS. NLRC

Arellano University School of Law 10

employed by Fitscher Manufacturing Corporation also as shipping expediter. On 4 February 1984,

It must be emphasized that the prerogative of management to dismiss or lay-off an

Miranda Laborer’s Welfare; Liberal Approach

MANILA ELECTRIC COMPANY VS. NLRC

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Montero, Joseph Brilliant A. Management Rights

MANUEL SOSITO VS. AGUINALDO DEVELOPMENT CORPORATION

Arellano University School of Law 12

Whether or not petitioner was entitled to the benefits?

Mortel Management Rights

COLGATE PALMOLIVE PHILIPPINES VS. OPLE

Petitioner contends as to the preventive suspensions of salesmen Peregrino Sayson,

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Navarro, Bryan Christopher L. Management Rights

ELMER MENDOZA VS. RURAL BANK OF LUCBAN

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GELMART INDUSTRIES PHILIPPINES, INC. VS. NLRC

Private respondent Felix Francis started working as an auto-mechanic for petitioner

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We find no merit in this petition.

To reiterate, be it of big or small commercial value, intended to be re-used or altogether

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Right to Prescribe Rules

LAGATIC VS. NLRC

Petitioner Romeo Lagatic was employed in May 1986 by Cityland. As a marketing