1 I.

THE APPLICABLE LAWS

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS VS TORRES 212 SCRA 298 [1992]

Facts:

DOLE Secretary Ruben D. Torres issued Department Order No. 16 Series of 1991 temporarily suspending the recruitment by private employment agencies of Filipino domestic helpers going to Hong Kong. As a result of the department order DOLE, through the POEA took over the business of deploying Hong Kong bound workers.

The petitioner, PASEI, the largest organization of private employment and recruitment agencies duly licensed and authorized by the POEA to engage in the business of obtaining overseas employment for Filipino land-based workers filed a petition for prohibition to annul the aforementioned order and to prohibit implementation.

Issues: 1. Whether or not respondents acted with grave abuse of discretion and/or in excess of their rule-making authority in issuing said circulars; 2. Whether or not the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair and oppressive; and 3. Whether or not the requirements of publication and filing with the Office of the National Administrative Register were not complied with. SC Ruling: First, the respondents acted well within in their authority and did not commit grave abuse of discretion. This is because Article 36 (LC) clearly grants the Labor Secretary to restrict and regulate recruitment and placement activities, to wit: Art.36 Regulatory Power.The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this title [Regulation of Recruitment and Placement Activities] and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this title. Second, the vesture of quasi-legislative and quasi-judicial powers in administrative bodies is constitutional. It is necessitated by the growing complexities of modern society. Third, the orders and circulars issued are however, invalid and unenforceable. The reason is the lack of proper publication and filing in the Office of the National Administrative Registrar as required in Article 2 of the Civil Code to wit:

2 Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette, unless it is otherwise provided; Article 5 of the Labor Code to wit: Art. 5 Rules and Regulations.The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation; and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide: Sec. 3. Filing.(1) Every agency shall file with the University of the Philippines Law Center, three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months shall not thereafter be the basis of any sanction against any party or persons. (Chapter 2, Book VII of the Administrative Code of 1987.) Sec.4. Effectivity.In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them. (Chapter 2, Book VII of the Administrative Code 1987). Prohibition granted.

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION VS. NLRC 282 SCRA 316 [1997] Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association, sent on July 08, 1991, a "four (4)page letter requesting and pleading for the expeditious implementation and payment by respondent" Juan De Dios Hospital "of the '40-HOURS/5-DAY WORKWEEK' with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor's Policy Instructions No. 54 dated April 12, 1988." Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their "claims for statutory benefits under the above-cited law and policy issuance". On February 26, 1992, the Labor Arbiter dismissed the complaint. Petitioners appealed before public respondent National Labor Relations Commission (NLRC) which affirmed the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was denied; hence, this petition under Rule 65 of the Rules of Court ascribing grave abuse of discretion on the part of NLRC in concluding that Policy Instructions No. 54 "proceeds from a wrong interpretation of RA 5901" and Article 83 of the Labor Code.

3 Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary Franklin M. Drilon is valid or not. SC Ruling: Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as "An Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel", enacted on June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, has long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which explicitly provides: "All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders, decree, rules and regulations inconsistent herewith are likewise repealed." Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter's validity may be gauged. Article 83 of the Labor Code betrays petitioners' position that "hospital employees" are entitled to "a full weekly salary with paid two (2) days' off if they have completed the 40-hour/5-day workweek". What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labor's assertion that "personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek". Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute. Indeed, even if we were to subscribe with petitioners' erroneous assertion that Republic Act No. 5901 has neither been amended nor repealed by the Labor Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No. 5901 reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two days off with pay. Policy Instructions No. 54 unduly extended the statute. The Secretary of Labor moreover erred in invoking the "spirit and intent" of Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule of statutory construction that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. No additions or revisions may be permitted. Policy Instructions No. 54 being inconsistent with and repugnant to the provision of Article 83 of the Labor Code, as well as to Republic Act No. 5901, should be, as it is hereby, declared void. WHEREFORE, the decision appealed from is AFFIRMED.

LETRAN CALAMBA FACULTY and EMPLOYEES ASSOCIATION VS. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 156225, January 29, 2008 Facts: On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. Petitioner alleged, among others, in its Position Paper that in the computation of the 13th month pay of its academic personnel, respondent does not include as basis their compensation for overloads. It only takes into account the pay the faculty members receive for their teaching loads not exceeding eighteen (18) units. The teaching overloads are rendered within eight (8) hours a day. Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending resolution of NLRC respondent filed with Regional Arbitration Branch No. IV of the NLRC a petition to declare as illegal a strike staged by petitioner in January 1994. Subsequently, these three cases were consolidated. On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendered a Decision dismissing the money claims cases for lack of merit as well as the petition to declare strike illegal , but the officers of the Union, particularly its President, Mr. Edmundo F. Marifosque, Sr., are hereby reprimanded and sternly warned that future conduct similar to what was displayed in this case will warrant a more severe sanction from this Office. Both parties appealed to the NLRC; however, both were denied. Petitioner then filed a special civil action for certiorari assailing the abovementioned NLRC Decision and Resolution and a Motion for Reconsideration with the CA but both were dismissed. Hence, herein petition for review on Certiorari. Issues: 1. Whether the CA gravely erred in holding that the factual findings of the NLRC cannot be reviewed in certiorari proceedings. 2. Whether the CA gravely erred in refusing to rule squarely on the issue of whether or not the pay of faculty members for teaching overloads should be included as basis in the computation of their 13th month pay. 3. Whether the CA gravely erred in holding that the decision of the NLRC is supported by substantial evidence and in not granting petitioners monetary claim. SC Ruling: This Court held in Odango v. National Labor Relations Commission14 that: The appellate courts jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the writ of certiorari is

5 the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of the NLRCs evaluation of the evidence or of its factual findings. Such findings are generally accorded not only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie.15 Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous.16 It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below.17 In a petition for review on certiorari, this Courts jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous.18 Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality. The petitioners claim that the DOLE Order should not be made to apply to the present case because said Order was issued only in 1996, approximately four years after the present case was initiated before the Regional Arbitration Branch of the NLRC, is not without basis. The general rule is that administrative rulings and circulars shall not be given retroactive effect. Nevertheless, it is a settled rule that when an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means. In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load. The peculiarity of an overload lies in the fact that it may be performed within the normal eight-hour working day. This is the only reason why the DOLE, in its explanatory bulletin, finds it proper to include a teacher's overload pay in the determination of his or her 13th-month pay. However, the DOLE loses sight of the fact that even if it is performed within the normal eight-hour working day, an overload is still an additional or extra teaching work which is performed after the regular teaching load has been completed. Hence, any pay given as compensation for such additional work should be considered as extra and not deemed as part of the regular or basic salary. Moreover, petitioner failed to refute private respondent's contention that excess teaching load is paid by the hour, while the regular teaching load is being paid on a monthly basis; and that the assignment of overload is subject to the availability of teaching loads. This only goes to show that overload pay is not integrated with a teacher's basic salary for his or her regular teaching load. In addition, overload varies from one semester to another, as it is dependent upon the availability of extra teaching loads. As such, it is not legally feasible to consider payments for such overload as part of a teacher's regular or basic salary. Verily, overload pay may not be included as basis for determining a teacher's 13th-month pay. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

ASUNCION VS. NLRC 362 SCRA 56 [2001] GR 129329 July 31, 2001

Facts: On August 16, 1993, petitioner Ester M. Asuncion was employed as an accountant/bookkeeper by the respondent Mabini Medical Clinic. Sometime in May 1994, certain officials of the NCR-Industrial Relations Division of the Department of Labor and Employment conducted a routine inspection of the premises of the respondent company and discovered upon the disclosure of the petitioner of (documents) violations of the labor standards law such as the noncoverage from the SSS of the employees. Consequently, respondent Company was made to correct these violations. On August 9, 1994, the private respondent, Medical Director Wilfrido Juco, issued a memorandum to petitioner charging her with a number of offenses: chronic absenteeism, habitual tardiness as shown on the record book, loitering and wasting of company time, getting salary of an absent employee without acknowledging or signing it, and disobedience and insubordination. Petitioner was required to explain within two days why she should not be terminated based on the above charges. Three days later, in the morning of August 12, 1994, petitioner submitted her response to the memorandum. On the same day, respondent Dr. Juco, through a letter, dismissed the petitioner on the ground of disobedience of lawful orders and for her failure to submit her reply within the two-day period. This prompted petitioner to file a case for illegal termination before the NLRC. In a decision, the Labor Arbiter declared that the petitioner was illegally dismissed on the ground that the private respondents were unable to prove the allegation of chronic absenteeism as it failed to present in evidence the time cards, logbooks or record book which complainant signed recording her time in reporting for work, and which were in the possession of the private respondents. Moreover, the Labor Arbiter ruled that the petitioners absences were with the conformity of the private respondents as both parties had agreed beforehand that petitioner would not report to work on Saturdays. The handwritten listing of the days when complainant was absent from work or late in reporting for work was not signed by the one who made the same and even the computerized print-out, do not suffice to prove that petitioners absences were unauthorized as they could easily be manufactured as the entries of time and other annotations were again handwritten and unsigned. On appeal, public respondent NLRC rendered the assailed decision which set aside the Labor Arbiters ruling. Insofar as finding the private respondents as having failed to present evidence relative to petitioners absences and tardiness, the NLRC agrees with the Labor Arbiter. However, the NLRC ruled that petitioner had admitted the tardiness and absences though offering justifications for the infractions. Hence, this petition filed before this Court by petitioner Asuncion praying that the Decision and the Resolution of the public respondent NLRC which reversed the decision of the Labor Arbiter be set aside. Issue: Whether or not public respondent, NLRC, erred in finding that the petitioner was dismissed by the private respondent, Mabini Medical Clinic, for a just or authorized cause.

7 SC Ruling:

The petition is impressed with merit. A disharmony between the factual findings of the Labor Arbiter and those of the NLRC opens the door to a review thereof by this Court. The employee must also be given an opportunity to be heard and defend himself. It is the employer who has the burden of proving that the dismissal was with just or authorized cause. As held in Uichico v. NLRC: "It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings before the NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. x x x" In the case at bar, both the handwritten listing and computer print-outs being unsigned, the authenticity thereof is highly suspect and devoid of any rational probative value especially in the light of the existence of the official record book of the petitioners alleged absences and tardiness in the possession of the employer company. Ironically, in the memorandum charging petitioner and notice of termination, private respondents referred to the record book as its basis for petitioners alleged absenteeism and tardiness. Interestingly, however, the record book was never presented in evidence. Private respondents had possession thereof and the opportunity to present the same. Being the basis of the charges against the petitioner, it is without doubt the best evidence available to substantiate the allegations. The purpose of the rule requiring the production of the best evidence is the prevention of fraud, because if a party is in possession of such evidence and withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally arises that the better evidence is withheld for fraudulent purposes which its production would expose and defeat. Thus, private respondents unexplained and unjustified non-presentation of the record book, which is the best evidence in its possession and control of the charges against the petitioner, casts serious doubts on the factual basis of the charges of absenteeism and tardiness. We do not subscribe to the findings of the NLRC that the letter of petitioner amounted to an admission of her alleged absences. As explained by petitioner, her alleged absences were incurred on Saturdays. According to petitioner, these should not be considered as absences as there was an arrangement between her and the private respondents that she would not be required to work on Saturdays. Private respondents have failed to deny the existence of this arrangement. Hence, the decision of the NLRC that private respondent had sufficient grounds to terminate petitioner as she admitted the charges of habitual absences has no leg to stand on. The Labor Arbiter found that actually petitioner tried to submit her explanation on August 11, 1994 or within the two-day period given her, but private respondents prevented her from doing so by instructing their staff not to accept complainants explanation, which was the reason why her explanation was submitted a day later. The law mandates that every opportunity and assistance must be

8 accorded to the employee by the management to enable him to prepare adequately for his defense. In Ruffy v. NLRC, the Court held that what would qualify as sufficient or "ample opportunity," as required by law, would be "every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense." In the case at bar, private respondents cannot be gainsaid to have given petitioner the ample opportunity to answer the charges leveled against her. From the foregoing, there are serious doubts in the evidence on record as to the factual basis of the charges against petitioner . These doubts shall be resolved in her favor in line with the policy under the Labor Code to afford protection to labor and construe doubts in favor of labor. These policies are embodied in Articles 3 and 4 of the Labor Code, which read: ART. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. x x x [Emphasis supplied]. ART. 4. Construction in favor of labor. 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 employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. Not having satisfied its burden of proof, we conclude that the petitioner has been illegally terminated, she is necessarily entitled to reinstatement to her former previous position without loss of seniority and the payment of backwages. WHEREFORE, the Decision of the National Labor Relations Commission and the Resolution are REVERSED and SET ASIDE, and the Decision of the Labor Arbiter is REINSTATED.

II.

BASIC PRINCIPLES SINGER SEWING MACHINE COMPANY vs. HON. FRANKLIN DRILON [193 SCRA 271]

Facts: Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of Singer Sewing Machine. The company opposed the petition mainly because the union

9 members are not employees but independent contractors as evidenced by the collection agency agreement which they signed. Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election which was affirmed by Sec. Drilon. The company files the present petition on the determination of the relationship. The union insists that the provisions of the Collection Agreement belie the companys position that the union members are independent contractors. Issue: Whether or not there exists an employer-employee relationship between the parties. SC Ruling: The present case calls for the application of the control test, which if not satisfied, would lead to the conclusion that no employee-employer relationship exists. If the union members are not employees, no right to organize for the purpose of bargaining or as a bargaining agent cannot be recognized. The following elements are generally considered in the determination of the relationship: the selection and engagement of the employee, payment of wages, power of dismissal and the power to control the employees conduct which is the most important element. The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The agreement confirms the status of the collecting agents as independent contractor. The requirement that collection agents utilize only receipt forms and report forms issued by the company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job collection is to be performed. Even if report requirements are to be called control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of service. The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the applicant is to be considered at all times as an independent contractor. The court finds that since private respondents are not employees of the company, they are not entitled to the constitutional right to form or join a labor organization for the purposes of collective bargaining. There is no constitutional and legal basis for their union to be granted their petition for direct certification. MANILA GOLF CLUB, INC. VS. INTERMEDIATE APPELLATE COURT [237 SCRA 207] Facts: This is originally filed with the Social Security Commission (SSC) via petition of 17 persons who styled themselves as Caddies of Manila Golf and

10 Country Club-PTCCEA for the coverage and availment of benefits of the Social Security Act as amended, PTCCEA (Philippine Technical, Clerical, Commercial Employees Association) a labor organization where which they claim for membership. The same time two other proceedings were filed and pending. These are certification election case filed by PTCCEA on behalf of the same caddies of Manila Golf and Country club which was in favor of the caddies and compulsory arbitration case involving PTCCEA and Manila Golf and Country Club which was dismissed and ruled that there was no employer-employee relationship between the caddies and the club. Issue: Whether or not rendering caddying services for members of golf clubs and their guests in said clubs courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS). SC Ruling: The Court does not agree that the facts logically point to the employeremployee relationship. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do work in. They work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like. These considerations clash frontally with the concept of employment. It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work elsewhere. Under such circumstances, the caddy may leave the premises and to go to such other place of work that he wishes. These are things beyond the control of the petitioner. The caddy (LLamar) is not an employee of petitioner Manila Golf and Country Club and the petitioner is under no obligation to report him for compulsory coverage of SSS.

ENCYCLOPAEDIA BRITANNICA (Philippines), INC. vs. NLRC [264 SCRA 4]

11

Facts: Limjoco was a Sales Divison of Encyclopaedia Britannica and was in charge of selling the products through some sales representatives. As compensation, he would receive commissions from the products sold by his agents. He was also allowed to use the petitioners name, goodwill and logo. It was agreed that office expenses would be deducted from Limjocos commissions. In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner for alleged non-payment of separation pay and other benefits and also illegal deduction from sales commissions. Petitioner alleged that Limjoco was not an employee of the company but an independent dealer authorized to promote and sell its products and in return, received commissions therein. Petitioner also claims that it had no control and supervision over the complainant as to the manners and means he conducted his business operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner and was assigned in the sales department. The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the decision and opined that there was no evidence supporting allegation that Limjoco was an independent contractor or dealer. Issue: Whether or not there was an employee-employer relationship between the parties. SC Ruling: There was no employee-employer relationship. In determining the relationship, the following elements must be present: selection and engagement of the employee, payment of wages, power of dismissal and power to control the employees conduct. The power of control is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employeeemployer relationship. Under the control test, an employee-employer 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 manner and means to be employed in reaching that end. The issuance of guidelines by the petitioner was merely guidelines on company policies which sales managers follow and impose on their respective agents. Limjoco was not an employee of the company since he had the free rein in the means and methods for conducting the marketing operations. He was merely an agent or an independent dealer of the petitioner. He was free to conduct his work and he was free to engage in other means of livelihood. In ascertaining the employee-employer relationship, the factual circumstances must be considered. The element of control is absent where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated in

12 according to the result of his efforts and not the amount thereof. Hence, there was no employee-employer relationship.

SUSAN CARUNGCONG vs. NLRC [283 SCRA 319] Facts: Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life Assurance Company of Canada. She signed an Agent Agreement with Sun Life. In virtue of which she was designated the latters agent to solicit applications for its insurance and annuity policies. This contract was superseded some five years later when she signed two (2) new agreements. The first, denominated Career Agents or Unit Managers Agreement, dealt with such matters as the agents commissions, his obligations, limitations on his authority, and termination of the agreement by death, or by written notice with or without cause. The second was titled, Managers Supplementary Agreement. It explicitly described as a further agreement. Carungcong and Sun Life executed another Agreement named New Business Manager with the function generally to manage a New Business Office established. This latest Agreement stressed that the New Business Manager in performance of his duties defined herein, shall be considered an independent contractor and not an employee of Sun Life, and that under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life. Ms. Eleizer Sibayan, Manager of Sun Lifes Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong and other New Business Managers. Respondent Lance Kemp, had been receiving reports of anomalies in relation thereto from unit managers and agents. Thereafter, on January 1990, Carungcong was confronted with and asked to explain the discrepancies set out in Sibayans report. She was given a letter signed by Metron V. Deveza, CLU, Director, Marketing, which advised of the termination of her relationship with Sun Life. Carungcong promptly instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commissions on January 16, 1990. There she succeeded in obtaining a favorable judgment. Labor Arbiter found that there existed an employer-employee relationship between her and Sun Life. On appeal, the National Labor Relations Commission reversed the Arbiters judgment. It affirmed that no employment relationship existed between Carungcong and Sun Life. Issue: Whether or not there petitioner was an employee subject to control and supervision by Sun Life. SC Ruling: Noteworthy is that this last agreement which emphasized, like the Career Agents or Unit Managers Agreement first signed by her, that in performance of her duties defined herein. Carungcong would be considered an independent

13 contractor and not an employee of Sun Life, and that under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life. Carungcong is an independent contractor. It was indicated in the very face of the contract. The rules and regulations of the company is not sufficient to establish an employer-employee relationship. It does not necessarily create any employer-employee relationship where the employers controls have to interfere in the methods and means by which employee would like employ to arrive at the desired results. Carungcong admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so. She was not paid to a fixed salary and was mainly paid by commissions depending on the volume of her performance. She was not an employee of Sun Life Co. ROGELIO RAMOS and ERLINDA RAMOS vs. CA [380 SCRA 467] Facts: Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted to the medical center the day before the operation. On the following day, she was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the scheduled operation. Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she died. The family of Ramos sued them for damages. Issue: Whether or not there was an employee-employer relationship that existed between the medical center and Drs. Hosaka and Guiterrez. SC Ruling: Private Hospitals hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not technically employees, the control exercised, the hiring and the right to terminate consultants fulfill the hallmarks of an employer-employee relationship with the exception of payment of wages. The control test is determining. In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors. It has been consistently held that in determining whether an employer-employee relationship exists between the parties, the following elements must be present: (1) selection and engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only the end to be achieved, but the means to be used in reaching such an end.

14 The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient who pays the consultants. The hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospitals obligation is limited to providing the patient with the preferred room accommodation and other things that will ensure that the doctors orders are carried out. The court finds that there is no employer-employee relationship between the doctors and the hospital.

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION [G.R. No. 138051. June 10, 2004] Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza, as President and general manager, and Tiangco as its EVP and treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and third year. On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events concerning his program and career. After the said letter, Sonza filed with the Department of Labor and Employment a complaint alleging that ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month pay, signing bonus, travel allowance and amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended that no employee-employer relationship existed between the parties. However, ABS-CBN continued to remit Sonzas monthly talent fees but opened another account for the same purpose. The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of NLRC. Issue: Whether or not there was employer-employee relationship between the parties. SC Ruling:

15 Case law has consistently held that the elements of an employeeemployer relationship are selection and engagement of the employee, the payment of wages, the power of dismissal and the employers power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called "control test", is the most important element. Sonzas services to co-host its television and radio programs are because of his peculiar talents, skills and celebrity status. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. For violation of any provision of the Agreement, either party may terminate their relationship. Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent contractor. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. ABS-CBN did not instruct SONZA how to perform his job. ABSCBN merely reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. A radio broadcast specialist who works under minimal supervision is an independent contractor. Sonzas work as television and radio program host required special skills and talent, which SONZA admittedly possesses. ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like Sonza as independent contractors. The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee relationship under labor laws. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor.

ANGELITO LAZARO vs. SOCIAL SECURITY COMMISSION

16 [435 SCRA 472 (2004)]

Facts: Respondent Rosalina M. Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro, proprietor of Royal Star Marketing (Royal Star), which is engaged in the business of selling home appliances. Lazaro denied that Laudato was an employee but instead claimed that she was an agent of the company. Lazaro also maintained that she was not mandated to work of definite work hours and thus not deemed to be a regular employee of Royal Star Marketing, the company of Lazaro. SSC promulgated a decision rendering that Laudato is a regular employee of Royal Star Marketing and entitled to social security contributions. Lazaro filed a petition for review before the CA where CA ruled that Laudato was an employee of Royal Star Marketing. This petition before the Court assails same arguments raised by Lazaro in SSC. She raised that Laudato was not an employee of Royal Star Marketing since Royal Star had no control over the activities of Laudato. Issue: Whether or not Laudato was a regular employee of Royal Star Marketing and thus, entitled to social security contributions. SC Ruling: It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The SSC, applying the control test found that Laudato was an employee of Royal Star. The Court agrees with the findings of the SSC and the CA. The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. In the case of Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person insured. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. In the case of Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employer-employee relationship, as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was an employer-

17 employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes.

ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO et al. [G.R. No. 164156. September 26, 2006]

Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the National Telecommunications Commission. Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA. On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner as such, they were awarded monetary benefits. NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it. Issue: Whether or not the respondents were considered regular employees of ABS-CBN. SC Ruling: The respondents are regular employees of ABS-CBN. It was held that where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. In Universal Robina Corporation v. Catapang, the Court states that the primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the

18 employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of 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 a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration and scope of the project were determined or specified at the time of their engagement. In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioners personnel department just like any ordinary employee. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Respondents are highly dependent on the petitioner for continued work. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors. The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA . Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer.

ANGELINA FRANCISCO vs. NLRC [500 SCRA 690 (2006)]

Facts: Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated as accountant and corporate secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liason Officer to the City of Manila to secure permits for the operation of the company. In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei

19 Corporation reduced her salary to P2,500 per month which was until September. She asked for her salary but was informed that she was no longer connected to the company. She did not anymore report to work since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter. The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while CA reversed it. Issue: Whether or not there was an employer-employee relationship. SC Ruling: The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business. There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her

20 continued employment in that line of business. Her main job function involved accounting and tax services rendered to Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to control petitioner with the means and methods by which the work is to be accomplished.

ROGELIO NOGALES vs. CAPITOL MEDICAL CENTER et al. [G.R. No. 142625. December 19, 2006]

Facts: Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada") beginning on her fourth month of pregnancy or as early as December 1975. Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical Center ("CMC"). t 6:13 a.m., Corazon started to experience convulsionsAt 6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue was allegedly torn.At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post partum. Issue: Whether or not CMC is vicariously liable for the negligence of Dr. Estrada. SC Ruling: Private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the former's responsibility under a relationship of patria potestas. In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority. For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. In the instant case, CMC impliedly held out Dr.

21 Estrada as a member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC.

COCA-COLA BOTTLERS PHILS., INC., vs. DR. DEAN CLIMACO [G.R. No. 146881. February 15, 2007]

Facts: Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer agreement. The agreement states that there is no employeremployee relationship between the parties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993. Despite of the nonrenewal of the agreement, respondent continued to perform his functions as company doctor until he received a letter in March 1995 concluding their retainer agreement. Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the petitioner company and prayed for the payment of all benefits of a regular employee. In the decision of the Labor Arbiter, the company lacked control over the respondents performance of his duties. Respondent appealed where it rendered that no employer-employee relationship existed between the parties. The CA ruled that an employer-employee relationship existed. Issue: Whether or not there exists an employer-employee relationship between the parties. SC Ruling : The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the so-called control test, considered to be the most important element. The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no employer-employee relationship exists between the parties. The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. In addition, the Court finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent.

22

CALAMBA MEDICAL CENTER vs. NLRC GR No. 176484 November 25, 2008

Facts:

The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly retainer of P4,800.00 each. It appears that resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioners medical director Dr. Raul Desipeda (Dr.Desipeda). And they were issued identification cards by petitioner and were enrolled in the Social Security System (SSS). Income taxes were withheld from them.

On March 7, 1998 Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently overheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscala were discussing the low census or admission of patients to the hospital.

Inexplicably, petitioner did not give respondent Dr. Meceditha, who was not involved in the said incident, any work schedule after sending her husband Dr. Lanzanas the memorandum, nor inform her the reason therefor, albeit she was later informed by the Human Resource Department (HRD) officer that that was part of petitioners cost-cutting measures.

Responding to the memorandum, Dr. Lanzanas, by letter of March 9, 1998, admitted that he spoke with Miscala over the phone but that their conversation was taken out of context by Dr. Trinidad.

23 On March 14, 1998, the rank-and-file employees union of petitioner went on strike due to unresolved grievances over terms and conditions of employment.

On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension before the National Labor Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Meceditha subsequently filed a complaint for illegal dismissal.

In the meantime, then Sec. Cresenciano Trajano of the Department of Labor and Employment (DOLE) certified the labor dispute to the NLRC for compulsory arbitration and issued on April 21, 1998 return-to-work Order to the striking union officers and employees of petitioner pending resolution of the labor dispute.

Labor Arbiter Antonio R. Macam dismissed the spouses complaints for want of jurisdiction upon a finding that there was no employer-employee relationship between the parties, the fourth requisite or the control test in the determination of an employment bond being absent.

On appeal, the NLRC, by Decision of May 3, 2002, reversed the Labor Arbiters findings.

Issue:

Whether or not there is the existence of an employer-employee relationship between the parties in the instant case.

SC Ruling:

Under the control test, an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task.

Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the element of control is absent.

As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its medical director, which consisted of 24hour shifts totaling forth-eight (48) hours each week and which were strictly to be observed under pain of administrative sanctions.

24

That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough that it has the right to wield the power.

With respect to respondents sharing in some hospital fees, this scheme does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation or incentive similar to what commission-based employees receive as contemplated in Article 97(f) of Labor Code, thus:

Wage paid to any employee shall mean the remuneration or earning, however designated , capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.

III.

RIGHT TO HIRE WILLIAM OLLENDORF vs. IRA ABRAHAMSON

25 [38 Phil. 585] Facts: The record discloses that Ollendorf is and for a long time past has been engaged in the city of Manila and elsewhere in the Philippines in the business of manufacturing ladies' embroidered underwear for export. Ollendorf imports the material from which this underwear is made and adopts decorative designs which are embroidered upon it by Filipino needle workers from patterns selected and supplied by him. Most of the embroidery work is done in the homes of the workers. The embroiderers employed by plaintiff are under contract to work for plaintiff exclusively. On September 1915, plaintiff and defendant entered into a contract. Under the terms of this, agreement defendant entered the employ of plaintiff and worked for him until April 1916, when defendant, on account of ill health, left plaintiff's employ and went to the United States. While in plaintiff's employ defendant had access to all parts of plaintiff's establishment, and had full opportunity to acquaint himself with plaintiff's business methods and business connections. The duties performed by him were such as to make it necessary that he should have this knowledge of plaintiff s business. Defendant had a general knowledge of the Philippine embroidery business before his employment by plaintiff, having been engaged in similar work for several years. Some months after his departure, defendant returned to Manila as the manager of the Philippine Underwear Company, a corporation. This corporation does not maintain a factory in the Philippine Islands, but sends material and embroidery designs from New York to its local representative here who employs Filipino needle workers to embroider the designs and make up the garments in their homes. The only difference between plaintiff's business and that of the firm by which the defendant is employed, is the method of doing the finishing work the manufacture of the embroidered material into finished garments. Shortly after defendant's return to Manila and the commencement by him of the discharge of the duties of his position as local manager of the Philippine Embroidery Company, plaintiff commenced this action, the principal purpose of which is to prevent, by injunction, any further breach of that part of defendant's contract of employment by plaintiff, by which he agreed that he would not "enter into or engage himself directly or indirectly . . . in a similar or competitive business to that of (plaintiff) anywhere within the Philippine Islands for a period of five years . . ." from the date of the agreement. Issue: Whether or not the said contract is valid. SC Ruling: The contract is a valid one. The only limitation upon the freedom of contractual agreement is that the pacts established shall not be contrary to "law, morals or public order." (Civil Code, art. 1255.) Public welfare is first considered, and if it be not involved, and the restraint upon one party is not greater than protection to the other party requires, the contract may be sustained. The question is whether, under the particular circumstances of the case and the nature of the particular contract involved in it the contract is, or is not, unreasonable.

26 The Courts adopt the modern rule that the validity of restraints upon trade or employment is to be determined by the intrinsic reasonableness of the restriction in each case, rather than by any fixed rule, and that such restrictions may be upheld when not contrary to the public welfare and not greater than is necessary to afford a fair and reasonable protection to the party in whose favor it is imposed. A business enterprise may and often does depend for its success upon the owner's relations with other dealers, his skill in establishing favorable connections, his methods of buying and selling a multitude of details, none vital if considered alone, but which in the aggregate constitute the sum total of the advantages which are the result of the experience or individual aptitude and ability of the man or men by whom the business has been built up. Failure or success may depend upon the possession of these intangible but all-important assets, and it is natural that their possessor should seek to keep them from falling into the hands of his competitors. It is with this object in view that such restrictions as that now under consideration are written into contracts of employment. Their purpose is the protection of the employer, and if they do not go beyond what is reasonably necessary to effectuate this purpose they should be upheld. We are of the opinion, and so hold, that in the light of the established facts the restraint imposed upon defendant by his contract is not unreasonable.

ALFONSO DEL CASTILLO vs. SHANNON RICHMOND [45 Phil. 679]

Facts: The case was instituted to declare the contract of services entered into by Alfonso del Castillo as null and void. Del Castillo alleges that the provisions and conditions contained in the third paragraph of said contract constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to public policy, and are unnecessary in order to constitute a just and reasonable protection to the defendant; and asked that the same be declared null and void and of no effect. The said contract constituted an illegal and unreasonable restriction upon the right of the plaintiff to contract and was contrary to public policy. It will be noted that the restrictions placed upon the plaintiff are strictly limited (a) to a limited district or districts, and (b) during the time while the defendant or his heirs may own or have open a drugstore, or have an interest in any other one within said limited district. Issue: Whether or not the said restriction contrary to public policy. SC Ruling:

27 The restriction is reasonable and not contrary to public policy. The law concerning contracts which tend to restrain business or trade has gone through a long series of changes from time to time with the changing conditions of trade and commerce. With trifling exceptions, said changes have been a continuous development of a general rule. The early cases show plainly a disposition to avoid and annul all contract which prohibited or restrained any one from using lawful trade " at any time or at any place," as being against the benefit of the state. Later, however, the rule became well established that if the restraint was limited to "a certain time" and within "a certain place", such contracts were valid and not "against the benefit of the state." Later cases, and we think the rule is now well established, have held that contract in restraint of trade is valid providing there is a limitation upon either time or place. A contract, however, which restrains a man entering into a business or trade without either a limitation as to time or place, will be held in valid. As stated in the case of Ollendorf vs. Abrahamson, The public welfare of course must always be considered, and if it be not involved and the restraint upon one party is not greater than protection to the other requires, contracts like the one we are discussing will be sustained. The general tendency, we believe, of modern authority, is to make the test whether the restraint is reasonably necessary for the protection of the contracting parties. If the contract is reasonably necessary to protect the interest of the parties, it will be upheld. In that case we held that a contract by which an employee agrees refrain a given length of time, after the expiration of the term of his employment, from engaging in business, competitive with that of his employer, is not void as being in restraint of trade if the restraint imposed is not greater than that which is necessary to afford a reasonable protection.

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY vs. NLRC [272 SCRA 596 (1997)]

Facts: Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever Agreement which she signed with Petitioner Company, her employment was to be immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondents services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated. It now appears that private respondent had made the s representation, that she was single eventhough she contracted marriage months before, in the

28 two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor sent to private respondent a memorandum requiring her to explain the discrepancy. In that memorandum, she was reminded about the companys policy of not accepting married women for employment. Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT&T. Issue: Whether or not discrimination merely by reason of the marriage of a female employee is expressly prohibited by Article 136. SC Ruling: An employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, from hiring to firing, except in cases of unlawful discrimination or those which may be provided by law. Petitioners policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Respondents act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows: ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of an employee are categorized as a sex-plus discrimination where it is imposed on one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by federal job discrimination laws. Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the

29 freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO vs. GLAXO PHILS. [G.R. No.162994. September 17, 2004] Facts: Petitioner Pedro A. Tecson was hired by respondent Glaxo Wellcome Philippines, Inc.) as medical representative on October 1995, after Tecson had undergone training and orientation. Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employees employment with the company, the management and the employee will explore the possibility of a transfer to another department in a non-counterchecking position or preparation for employment outside the company after six months. Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. Despite of warnings, Tecson married Bettsy. The superiors of Tecson reminded him of the company policy and suggested that either him or Bettsy shall resign from their respective companies. Tecson requested more time to resolve the issue. In November of 1999, Glaxo transferred Tecson to Mindanao area involving the provinces of Butuan, Surigao and Agusan del Sur. Tecson did not agree to the reassignment and referred this matter to the grievance committee. It was resolved and was submitted to voluntary arbitration. The NCMB rendered decision that Glaxos policy was a valid one. Aggrieved, Tecson filed a petition to the CA where CA held that Glaxos policy prohibiting its employees from having personal relationships with employees of competitor companies is a valid exercise of its management prerogatives. Hence, this petition.

30 Issue: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company is valid. SC Ruling: There is no error to the Court of Appeals when it ruled that Glaxos policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

STAR PAPER CORPORATION vs. RONALDO SIMBOL, et al. [G.R. No.164774. April 12, 2006]

Facts: Petitioner Star Paper Corporation is a corporation engaged in trading, principally of paper products. Josephine Ongsitco is its Manager of the Personnel and Administration Department while Sebastian Chua is its Managing Director. Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. Simbol was employed by the company on October 1993 and met Alma Dayrit, also an employee of the company, whom he married on June 1998. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy. Simbol resigned on June 20, 1998 pursuant to the company policy. Comia was hired by the company on February 1997. She met Howard Comia, a co-employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company policy, one must resign should they decide to get married. Comia resigned on June 30, 2000.

31 Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker. Petitioners stated that Zuiga, a married man, got Estrella pregnant. The company allegedly could have terminated her services due to immorality but she opted to resign on December 21, 1999. The respondents signed a Release and Confirmation Agreement and stated therein that they have no money and property accountabilities in the company. Respondents offer a different version of their dismissal. Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorneys fees. They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code. Labor Arbiter dismissed the complaint and states that the company policy was decreed pursuant to what the respondent corporation perceived as management prerogative. On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter. In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC decision. Issue: Whether or not the questioned policy is a valid exercise of management prerogative.

SC Ruling: The case at bar involves Article 136 of the Labor Code which provides: It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. With more women entering the workforce, employers are also enacting employment policies specifically prohibiting spouses from working for the same company. We note that two types of employment policies involve spouses: policies banning only spouses from working in the same company (no-spouse employment policies), and those banning all immediate family members, including spouses, from working in the same company (anti-nepotism employment policies). It utilizes two theories of employment discrimination: the disparate treatment and the disparate impact. Under the disparate treatment analysis, the plaintiff must prove that an employment policy is discriminatory on its face. Nospouse employment policies requiring an employee of a particular sex to either quit, transfer, or be fired are facially discriminatory. On the other hand, to establish disparate impact, the complainants must prove that a facially neutral policy has a disproportionate effect on a particular class. The courts that have broadly construed the term marital status rule that it encompassed the identity, occupation and employment of one's spouse. They hold that the absence of such a bona fide occupational qualification invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office. Thus, they rule that unless the employer can prove that the reasonable demands of the business require a distinction based

32 on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an employer may not discriminate against an employee based on the identity of the employees spouse. This is known as the bona fide occupational qualification exception. We note that since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice. To justify a bona fide occupational qualification, the employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. The court does not find a reasonable business necessity in the case at bar. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the legislatures silence that married persons are not protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid exercise of management prerogative.

ROLANDO RIVERA vs. SOLID BANK CORPORATION [G.R. No.163269. April 19, 2006]

Facts: Petitioner Rolando Rivera had been working for Solidbank Corporation since July 1977. He was initially employed as an Audit Clerk, then as Credit Investigator, Senior Clerk, Assistant Accountant, and Assistant Manager. Prior to his retirement, he became the Manager of the Credit Investigation and Appraisal Division of the Consumers Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry business in Cavite. In December 1994, Solidbank offered two retirement programs to its employees: (a) the Ordinary Retirement Program (ORP), under which an employee would receive 85% of his monthly basic salary multiplied by the number of years in service; and (b) the Special Retirement Program (SRP), under which a retiring employee would receive 250% of the gross monthly salary multiplied by the number of years in service. Since Rivera was only 45 years old, he was not qualified for retirement under the ORP. Under the SRP, he was entitled to receive P1,045,258.95 by way of benefits. Deciding to devote his time and attention to his poultry business in Cavite, Rivera applied for retirement under the SRP. Subsequently, Solidbank required

33 Rivera to sign an undated Release, Waiver and Quitclaim, which was notarized on March 1, 1995. Rivera acknowledged receipt of the net proceeds of his separation and retirement benefits and promised that [he] would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers, directors, agents or employees, and their successors-in-interest and will not disclose any information concerning the business of Solidbank, its manner or operation, its plans, processes, or data of any kind. On May 1995, the Equitable Banking Corporation employed Rivera as Manager of its Credit Investigation and Appraisal Division of its Consumers Banking Group. Upon discovering this, Solidbank First Vice-President for Human Resources Division (HRD) wrote a letter informing Rivera that he had violated the Undertaking and demanded the return of all the monetary benefits he received in consideration of the SRP within five days from receipt; otherwise, appropriate legal action would be taken against him. When Rivera refused to return the amount demanded within the given period, Solidbank filed a complaint. Petitioner avers that the prohibition incorporated in the Release, Waiver and Quitclaim barring him as retiree from engaging directly or indirectly in any unlawful activity and disclosing any information concerning the business of respondent bank, as well as the employment ban contained in the Undertaking he executed, is oppressive, unreasonable, cruel and inhuman because of its overbreath. Issue: Whether or not the post-retirement competitive employment ban is reasonable. Ruling of the Court: The post-retirement competitive employment ban is unreasonable because it has no geographical limits. The respondent is barred from accepting any kind of employment in any competitive bank within the proscribed period. Retirement plans, in light of the constitutional mandate of affording full protection to labor, must be liberally construed in favor of the employee, it being the general rule that pension or retirement plans formulated by the employer are to be construed against it. Retirement benefits, after all, are intended to help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his financial support, and are a form of reward for being loyal to the employer. Respondent is burdened to establish that a restrictive covenant barring an employee from accepting a competitive employment after retirement or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant to public policy In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive employment as against public policy, the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employers legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employees legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy.

34 Consideration must be given to the employees right to earn a living and to his ability to determine with certainty the area within which his employment ban is restituted. A provision on territorial limitation is necessary to guide an employee of what constitutes as violation of a restrictive covenant and whether the geographic scope is co-extensive with that in which the employer is doing business. In considering a territorial restriction, the facts and circumstances surrounding the case must be considered.

YRASUEGI vs. PHIL. AIRLINES GR No. 168081 October 17, 2008

Facts: Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) with a large body frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual. Petitioners weight steadily climbed to over 200 pounds. PAL, gave him ample chances for over 5 years to trim down his weight, to no avail. He was given leaves for months to accomplish this task. Later on, he was mandated to undergo weight checks which he disregarded. On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately. Petitioner advanced that the dismissal was illegal and that he was discriminated by PAL since other overweight employees were either tolerated or promoted.

Issue: Whether or not respondents dismissal from employment was legal.

SC Ruling: The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code. A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight

35 standards. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code. As explained by the CA: x x x [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an employees position. In this sense, the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal. The failure to meet the employers qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) the other causes analogous to the foregoing. By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply because he no longer qualifies for his job irrespective of whether or not the failure to qualify was willful or intentional. xxx Petitioner, though, advances a very interesting argument. He claims that obesity is a physical abnormality and/or illness. In the case at bar, the evidence on record militates against petitioners claims that obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner himself claimed that [t]he issue is could I bring my weight down to ideal weight which is 172, then the answer is yes. I can do it now. In fact, he repeatedly failed to report when required to undergo weight checks, without offering a valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness. Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and Hospitals, decided by the United States Court of Appeals,which held that morbid obesity is a disability under the Rehabilitation Act and that respondent discriminated against Cook based on perceived disability. The evidence included expert testimony that morbid obesity is a physiological disorder. It involves a dysfunction of both the metabolic system and the neurological appetite suppressing signal system, which is capable of causing adverse effects within the musculoskeletal, respiratory, and cardiovascular systems. Notably, the Court stated that mutability is relevant only in determining the substantiality of the limitation flowing from a given impairment, thus mutability only precludes those conditions that an individual can easily and quickly reverse by behavioral alteration. Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the District of Rhode Island, Cook was sometime before 1978 at least one hundred pounds more than what is considered appropriate of her height. According to the Circuit Judge, Cook weighed over 320 pounds in

36 1988. Clearly, that is not the case here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight. In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it, [v]oluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d). The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification is called a bona fide occupational qualification (BFOQ), which allows an employer to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise. The Meiorin Test is used in determining whether an employment policy is justified. Under this test, (1) the employer must show that it adopted the standard for a purpose rationally connected to the performance of the job; (2) the employer must establish that the standard is reasonably necessary to the accomplishment of that work-related purpose; and (3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose. Similarly, in Star Paper Corporation v. Simbol, this Court held that in order to justify a BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ. BFOQ is valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. In holding that the weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports. It is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier. The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order to achieve this, it must necessarily

37 rely on its employees, most particularly the cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its employees. In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline companies, just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding public, expect no less than that airline companies transport their passengers to their respective destinations safely and soundly. A lesser performance is unacceptable. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the agility to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight schedules. On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent that [w]hether the airlines flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination; and that the weight standards has nothing to do with airworthiness of respondents airlines, must fail. Given the cramped cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would certainly have difficulty navigating the cramped cabin area. In short, there is no need to individually evaluate their ability to perform their task. That an obese cabin attendant occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without introduction of evidence. It would also be absurd to require airline companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner. The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the passengers out of the aircraft safely. Being overweight necessarily impedes mobility. Indeed, in an emergency situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are not remote. Petitioner failed to substantiate his claim that he was discriminated against by PAL. There is nothing on the records which could support the finding of discriminatory treatment. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly

38 situated and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees. Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner miserably failed to indicate their respective ideal weights; weights over their ideal weights; the periods they were allowed to fly despite their being overweight; the particular flights assigned to them; the discriminating treatment they got from PAL; and other relevant data that could have adequately established a case of discriminatory treatment by PAL. In the words of the CA, PAL really had no substantial case of discrimination to meet. Petitioner is entitled to separation pay. Exceptionally, separation pay is granted to a legally dismissed employee as an act social justice, or based on equity. In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee.

IV.

WAGE AND THE WAGE RATIONALIZATION ACT

ILAW AT BUKLOD NG MANGGAGAWA (IBM) vs. NLRC [198 SCRA 586 (1991)]

Facts: The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of San Miguel Corporation, more or less, working at the various plants, offices, and warehouses located at the National Capital Region presented to the company a "demand" for correction of the significant distortion in the workers' wages. In that demand, the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows: Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission having jurisdiction over the workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the wage rates prescribed under this Section.

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

EMPLOYEES CONFEDERATION OF THE PHILIPPINES (ECOP) vs. NWPC [201 SCRA 759 (1991)]

40 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. SC 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. ART. 124. Standards/Criteria for Minimum Wage Fixing The regional minimum wages to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the framework of the national economic and social development program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following: (a) The demand for living wages;

(b)

Wage adjustment vis-a-vis the consumer price index;

(c)

The cost of living and changes or increases therein;

(d)

The needs of workers and their families;

(e)

The need to induce industries to invest in the countryside;

(f)

Improvements in standards of living;

41

(g)

The prevailing wage levels;

(h)

Fair return of the capital invested and capacity to pay of employers;

(i)

Effects of employment generation and family income; and

(j) The equitable distribution of income and wealth along the imperatives of economic and social development."

The wage order was not acted in excess of boards authority. The law gave reasonable limitations to the delegated power of the board.

NORMA MABEZA VS. NLRC, PETER NG/HOTEL SUPREME [271 SCRA 670]

Facts: Petitioner Norma Mabeza contends that on the first week of May 1991, she and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law. Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. The affidavit was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE apparently adverse to the private respondent. After she refused to proceed to the City Prosecutor's Office, petitioner states that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 1991, the hotel's cashier informed her that she should not report to work and, instead, continue with her unofficial leave of absence.

42 Consequently, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, nonpayment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter that petitioner surreptitiously left her job without notice to the management and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees. Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its assailed Resolution affirming the Labor Arbiter's decision. Issue: Whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment constitutes unfair labor practice. SC Ruling: The Court ruled that there was unfair labor practice. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty. Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's wages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value. These requirements were not met in the instant case. More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. Considering that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel.

43

JOY BROTHERS INC., vs. NWPC [273 SCRA 622 (1997)]

Facts: Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector workers and employees in the National Capital Region receiving one hundred fifty-four pesos (P154.00) and below daily, was approved November 29, 1993. On February 1994, petitioner applied for exemption from said wage order on the ground that it was a distressed establishment. The RTWPB denied petitioner's application for exemption after holding that the corporation accumulated profits amounting to P38,381.80 for the period under review. Petitioner's motion for reconsideration was likewise denied by the Wages and Productivity Board on January 5, 1995. On appeal to the National Wages and Productivity Commission, petitioner was again denied relief. More specifically, petitioner contends that the interim period to be reckoned with is from January 1, 1993 to December 15, 1993 and not merely up to September 30, 1993 as held by respondent Commission. Significantly, the period up to December 31, 1993 will reflect losses in petitioner corporation's books, but not if the covered interim period is only up to September 30, 1993. Issue: Whether or not Petitioner Corporation falls within the exemption for distressed establishments. SC Ruling: The petitioner company is not entitled to exemption of the wage order since it is not a distressed establishment. Under Section 5 of Wage Order No. NCR-03, distressed firms may be exempted from the provisions of the Order upon application with and due determination of the Board. NWPC Guidelines No. 01, Series of 1992, providing for the Revised Guidelines on Exemption indicate the criteria to qualify for exemption as follows: For Distressed Establishments: In the case of a stock corporation, partnership, single proprietorship, non-stock, non-profit organization or cooperative engaged in a business activity or charging fees for its services When accumulated losses for the last 2 full accounting periods and interim period, if any, immediately preceding the effectivity of the Order have impaired by at least 25 percent the: Paid-up capital at the end of the last full accounting

44 period preceding the effectivity of the Order, in the case of corporations: Total invested capital at the beginning of the last full accounting period preceding the effectivity of the Order in the case of partnerships and single proprietorships. Establishments operating for less than two (2) years may be granted exemption when accumulated losses for said period have impaired by at least 25% the paid-up capital or total invested capital, as the case may be." Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR03 provides that exemption from compliance with the wage increase may be granted to distressed establishments whose paid-up capital has been impaired by at least twenty-five percent (25%) or which registers capital deficiency or negative net worth. The Guidelines expressly require interim quarterly financial statements for the period immediately preceding December 16, 1993. The last two full accounting periods here are 1991 and 1992, for which years petitioner incurred net profits of P53,607.00 and P60,188.00, respectively.

PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK AND TRUST COMPANY [302 SCRA 74 (1999)]

Facts: On November, the RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who had rendered service for at least three (3) months before its effectivity, and for the same period thereafter, in the following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas in the Bicol Region. On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 503, and integrated the P150.00 per month COLA into the basic pay of its rankand-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03.

45 On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the implementation of the said wage orders. It demanded in the Labor Management Committee meetings that the petitioner extend the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates of petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration. Issue: Whether or not a wage distortion resulted from respondent's implementation of the Wage Orders. SC Ruling: The court ruled that there is no wage distortion since the wage order implementation covers all the branches of the bank. The hierarchy of positions was still preserved. The levels of different pay classes was not eliminated. The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727, which reads: Standards/Criteria for Minimum Wage Fixing . . ."As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3)The elimination of the distinction between the two levels and (4) The existence of the distortion in the same region of the country. A disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought to be preserved by the concept of wage distortion.

LIDUVINO MILLARES, et al. vs. NLRC [305 SCRA 501]

Facts: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division

46 Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials. Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence. SC Ruling: The allowances are not part of the wages of the employees. Wage is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." Customary is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue Audit Memo Order No. 1-87 pertinently provides 3.2 transportation, representation or entertainment expenses shall not constitute taxable compensation if: (a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter

47 except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income. The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS QUISUMBING [333 SCRA 13 (2000)]

VS.

HON.

Facts: International School, Inc., pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: (a) What is one's domicile? (b) Where is one's home economy? (c) To which country does one owe economic allegiance? (d) Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines? Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local- hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two

48 "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. Issue: Whether or not local hire teachers shall enjoy same salary as foreign hire teachers where they perform the same work. This calls for the applicability of the principle of equal pay for equal work. SC Ruling: Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work, which ensure, in particular: ( a) Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to the School. The School contends that petitioner has not adduced evidence that localhires perform work equal to that of foreign-hires. The Court finds this argument a little inconsiderate. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. Thus the employees are entitled to same salary for performance of equal work.

BANKARD EMPLOYEES UNION vs. NLRC [G.R. No.140689. February 17, 2004]

49

Facts: Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industrys labor market. The New Salary Scale increased the hiring rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted to reach such rates under their levels. This made Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to request for the increase in the salary of its old, regular employees. Bankard insisted that there was no obligation on the part of the management to grant to all its employees the same increase in an across-the-board manner. Petioner filed a notice of strike. The strike was averted when the dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. NLRC finding no wage distortion dismissed the case for lack of merit. Petitioners motion for reconsideration of the dismissal of the case was denied. Issue: Whether the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees without increasing the salary rates of old employees resulted in wage distortion within the contemplation of Article 124 of the Labor Code. SC Ruling The Court will not interfere in the management prerogative of the petitioner. The employees are not precluded to negotiate through the provisions of the CBA. Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article 124 of the Labor Code), the term "wage distortion" was explicitly defined as... a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four elements of wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of the distortion in the same region of the country. Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases.

50 Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each of the existing classes of employees reflects this classification. Put differently, the entry of new employees to the company ipso facto places them under any of the levels mentioned in the new salary scale which private respondent adopted retroactive to April 1, 1993. While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases where the nature of their work differs. Moreover, for purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary. The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage adjustments, then the language of the law should have been broad, not restrictive as it is currently phrased: Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage fixing, the intention of the law being that in the event of an increase in minimum wage, the distinctions embodied in the wage structure based on skills, length of service, or other logical bases of differentiation will be preserved. If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of Bankards hiring rate. An employer would be discouraged from adjusting the salary rates of a particular group of employees for fear that it would result to a demand by all employees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase. Wage distortion is a factual and economic condition that may be brought about by different causes. The mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification.

CESAR ODANGO vs. NLRC and ANTIQUE ELECTRIC COOPERATIVE, INC.

51 [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 attorneys 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 attorneys fees of 10%. ANTECO appealed the Decision to the NLRC where it reversed the Labor Arbiters 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. SC 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 Codes provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion. Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. Petitioners line of reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal protection clause.

C. PLANAS COMMERCIAL AND/OR MARCIAL COHU vs. NLRC [G.R. No. 144619. November 11, 2005]

52 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. SC 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. 4. (c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another, including family drivers. Also, retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-

53 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.

EJR CRAFTS CORPORATION vs. HON. COURT OF APPEALS et. al. [G.R. No. 154101. March 10, 2006] Facts: Sometime in 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave pay against petitioner before the Regional Office, NCR of the DOLE. Acting on the complaint, an inspection was conducted on the premises of petitioners offices on August 22, 1997 wherein violations of labor standards law were discovered. Petitioner argued that the Regional Director has no jurisdiction over the case as private respondents were allegedly no longer connected with petitioner corporation at the time of the filing of the complaint and when the inspection was conducted, and that private respondents claims are within the exclusive and original jurisdiction of the Labor Arbiters. Issue: Whether or not public respondent Regional Director has jurisdiction over the case. SC Ruling: This Court not being a trier of facts, it has to rely on findings of facts by the lower courts and regard it with great respect. As found by both Undersecretary of Labor and the Court of Appeals, the said quitclaim and release forms are unreliable and do not correspond to other documents on record which would prove that private respondents were working for the petitioner up to August 1997. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, this Court rules with the

54 Undersecretary of Labor and the appellate court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code which states that: Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. Hence, the petition is denied.

PAG-ASA STEEL WORKS, INC. vs. CA AND PAG-ASA STEEL WORKERS UNION [G.R. No.166647. March 31, 2006]

Facts: Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees. RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a letter to the union with the list of adjustments involving rank and file employees. In September 1999, the petitioner and union entered into an collective bargaining agreement where it provided wage adjustments namely P15, P25, P30 for three succeeding year. On the first year, the increase provided were followed until RTWPB issued another wage order where it provided for a P25.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rankand-file employees.

55 On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per day. The union president asked that the wage order be implemented where petitioner rejected the request claiming that there was no wage distortion and it was not obliged to grant the wage increase. The union submitted the matter for voluntary arbitration where it favored the position of the company and dismissed the complaint. The matter was elevated to CA where it favored the respondents. Hence, this petition. Issue: Whether or not the company was obliged to grant the wage increase under Wage Order No. NCR-08 as a matter of practice. SC Ruling: The Court favors the petitioner that wage increase shall not be granted by virtue of CBA or matter of practice by the company. It is submitted that employers unless exempt are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the workers. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in support of an across-theboard increase. If such were the intentions of this provision, then the company could have simply accepted the original demand of the union for such acrossthe-board implementation, as set forth in their original proposal. The fact that the company rejected this proposal can only mean that it was never its intention to agree, to such across-the-board implementation. Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein, and not all employees across-the-board as respondent Union would want petitioner to do. Considering therefore that none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company practice.

EQUITABLE-PCI BANK vs. RICARDO SADAC

56 [G.R. No.164772. June 8, 2006]

Facts: Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine lawyers of petitioner Banks Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership of the department. On the ground of lack of confidence in Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, Sadac was removed from his office Labor Arbiter rendered decision that Sadacs termination was illegal and entitled to reinstatement and payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for execution of judgment where it gave its computation which amounted to P 6.03 M representing his back wages and the increases he should have received during the time he was illegally dismissed. The Bank opposed to Sadacs computation. The Labor Arbiter favor Sadacs computation. NLRC, upon appeal by the bank, reversed the decision. CA reversed the decision of NLRC. Hence, this petition. Issue: Whether or not the computation of back wages shall include the general increases. SC Ruling: To resolve the issue, the court revisits its pronouncements on the interpretation of the term backwages. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the formers unlawful act or bad faith. In the case of Bustamante v. National Labor Relations Commission, It said that the Court deems it appropriate to reconsider such earlier ruling on the computation of back wages by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, back wages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the

57 employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. There is no vested right to salary increases. Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. The conclusion is that Sadacs computation of his full backwages which includes his prospective salary increases cannot be permitted.

METROPOLITAN BANK AND TRUST COMPANY VS. NWPC and RTWPB [G.R. No.144322. February 6, 2007]

Facts: On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment are granted an across-the-board increase of P15.00 daily. The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order. Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage of the wage order since the members bank are paying more than the regular wage. NWPC replied that the member banks are covered by the wage order and does not fall with the exemptible categories. In another letter inquiry, Metrobank asked for the interpretation of the applicability of the wage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region 2 are covered by the wage order. Petitioner filed a petition with the CA and denied the petition. Issue: Whether or not the wage order is void thus it has no legal effect and the RTWPB acted in excess of its jurisdiction.

58 SC Ruling: The Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the separability clause of the Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage rate. The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. - The Commission shall have the following powers and functions: (d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; (g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards. R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industrial dispersal; and to allow business and industry reasonable returns on investment, expansion and growth. In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage rates applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by the NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates, based on the standards or criteria set by Article 124 of the Labor Code. The Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salaryceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase. In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-theboard wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits not contemplated by R.A. No. 6727. SIP Food House et al., vs Batolina [G.R. No. 192473, October 11, 2010] Facts:

59 The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by theemployees of the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP ), owned by the spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents)worked as waiters and waitresses in the canteen. In February 2004, GMPC terminated SIPs "contract as GMPC concessionaire," because of GMPCs decision "to take direct investment in and management of the GMPC canteen;" SIPs continued refusal to heed GMPCs directives for service improvement; and the alleged interference of the Pablos two sons with the operation of the canteen. The termination of the concession contract caused the termination of the respondents employment, prompting them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. Issue: Whether or not there exist an employer-employee relationship. Held: We affirm the CA ruling that SIP was the respondents employer. The NLRC decision, which the CA affirmed, states: Respondents have been the concessionaire of GMPC canteen for nine (9)years (Annex "A" of Complainants Sur-Rejoinder., Records, 302). During this period, complainants were employed at the said canteen (Sinumpaang Salaysay of complainants, Records, p.156). On February 29,2004, respondents concession with GMPC was terminated (Annex "C" of Respondents Answer and Position Paper, Records, p. 77). When respondents were prevented from entering the premises as a result of the termination of their concession, they sent a protest letter dated April 14,2004 to GMPC thru their counsel. Pertinent portion of the letter: We write this letter in behalf of our client Mr. & Mrs. Alejandro C. Pablo, the concessionaires who used to occupy and/or rent the area for a cafeteria/canteen at the 2nd Floor of the GSIS Building for the past several years. Last March 12, 2004, without any court writ or order, and with the aid of your armed agents, you physically barred our clients & their employees/helpers from entering the said premises and from performing their usual duties of serving the food requirements of GSIS personnel and others. Clearly, no less than respondents, thru their counsel, admitted that complainants herein were their employees. That complainants were employees of respondents is further bolstered by the fact that respondents do not deny that they were the ones who paid complainants salary. When complainants charged them of underpayment, respondents even interposed the defense of file (sic) board and lodging given to complainants. Furthermore, these IDs issued to complainants bear the signature of respondent Alejandro C. Pablo (Annexes "J", "K", "M" to "M-2" o complainants Reply. . ., Records, pp. 285to 290). Likewise, the memoranda issued to complainants regarding their absences without leave were signed by respondent Alejandro C. Pablo (Annexes A, C, E, & G,Ibid., Records, pp. 274, 276, 279, 282). All these pieces of evidence clearly show that respondents are the employer of complainants. (Rollo,pp. 87-88.)x x x x The CA ruled out SIPs claim that it was a labor-only contractor or a mere agent of GMPC. We agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC because they exercised the essential elements of an employment relationship with the respondents such as hiring, payment of wages and the power of control, not to mention that SIP operated the canteen on its own account as it paid a fee for the use of the building and for the privilege of running the canteen. The fact that the respondents applied with GMPC in

60 February 2004 when it terminated its contract with SIP, is another clear indication that the two entities were separate and distinct from each other. SLL International Cables Specialist vs NLRC [G.R. No. 172161, March 2, 2011] Facts: Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and Danilo Caete (Caete for brevity), and Edgardo Zuiga (Zuiga for brevity) respectively, were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. After their training, Zuiga, Caete and Lopez were engaged as project employees by the petitioners in their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also terminated. Private respondents received the amount ofP145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage Board (RWB) and in October of the same year, the latter was increased to P155.00. Sometime in March 1998, Zuiga and Caete were engaged again by Lagon as project employees for its PLDT Antipolo, Rizal project, which ended sometime in (sic) the late September 1998. As a consequence, Zuiga and Caetes employment was terminated. For this project, Zuiga and Caete received only the wage of P145.00 daily. The minimum prescribed wage for Rizal at that time wasP160.00. Sometime in late November 1998, private respondents re-applied in the Racitelcom project of Lagon in Bulacan. Zuiga and Caete were re-employed. Lopez was also hired for the said specific project. For this, private respondents received the wage of P145.00. Again, after the completion of their project in March 1999, private respondents went home toCebu City. On May 21, 1999, private respondents for the 4th time worked with Lagons project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00.

Issue: Whether or not there is evidence on record to support the findings of the LA, the NLRC and the CA that private respondents were project or regular employees and that their salary differentials had been paid. SC ruling: As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been paid are not in

61 the possession of the worker but in the custody and absolute control of the employer. In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi. Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular or non-regular employees. Section 3, Rule VII of the Rules to Implement the Labor Code specifically enumerates those who are not covered by the payment of minimum wage. Project employees are not among them. On whether the value of the facilities should be included in the computation of the wages received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization of the employees concerned. Moreover, before the value of facilities can be deducted from the employees wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value.Mere availment is not sufficient to allow deductions from employees wages. These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employees salaries. It also failed to provide proof of the employees written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities. The Court, at this point, makes a distinction between facilities and supplements. It is of the view that the food and lodging, or the electricity and water allegedly consumed by private respondents in this case were not facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., the two terms were distinguished from one another in this wise: Supplements, therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborers and his familys existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects.

62 For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of dismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners to comply with the payment of the prescribed minimum wage. The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

V.

VIOLATION OF WAGE ORDERS

VI.

WAGE ENFORCEMENT AND RECOVERY

RAJAH HUMABON HOTEL, INC. vs. HON. CRESENCIANO TRAJANO et. al [G.R. No. 100222-23. September 14, 1993] Facts: Subsequent to the initial pleading filed by respondent-employees before the regional director of DOLE for redress in regard to underpaid wages and nonpayment of benefits, petitioners were instructed to allow the inspection of the employment records of respondents on April 4, 1989. However, no inspection could be done on that date on account of the picket staged by other workers. At the re-scheduled examination after closure of petitioners' business on April 16, 1989, instead of presenting the payrolls and daily time records of private respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director has no jurisdiction over the case because the employer-employee relationship had been served as a result of the closure of petitioners' business, apart from the fact that each of the claims of private respondents exceeded the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or the New Labor Relations Law. Issue: Who between the regional director of DOLE and the labor arbiter has jurisdictional competence over the complaint of private respondents? To answer this will be to evaluate what will be the applicable law to the complaint, Executive Order No. 111 or Republic Act No. 6715? SC Ruling: Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the Labor Code gives concurrent jurisdiction to both the Secretary of Labor (or the various regional directors) and the labor arbiters over money claims among the other cases mentioned by Article 217 of the Labor Code. This provision merely confirms/reiterates the enforcement/adjudication authority of the Regional Director over uncontested money claims in cases where an employer-employee relationship still exists. However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven days after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were amended, there is no doubt that the regional directors can try money claims only if the following requisites concur: (1) the claim is presented by an employee or person employed in domestic or household service, or househelper under the code; (2) the

63 claimant, no longer being employed, does not seek reinstatement; and (3) the aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00). Thus, the power to hear and decide employees' claims arising from employer-employee relations, exceeding P5,000.00 for each employee should be left to the Labor Arbiter as the exclusive repository of the power to hear and decide such claims. In the instant case, a simple examination of the labor arbiter's impugned order dated September 25, 1989 readily shows that the aggregate claims of each of the twenty-five employees of petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over the case. Hence, the petition is granted and the public respondent is directed to refer the workers' money claims to the appropriate Labor Arbiter for proper disposition.

FRANCISCO GUICO vs. HON. LEONARDO QUISIMBING et. al. [G.R. No. 131750. November 16, 1998] Facts: The case started when the Office of the Regional Director, Department of Labor and Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized representative under Article 128 of the Labor Code, as amended, inspections were conducted at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following violations involving twenty-one (21) employees who are copier operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no service incentive leave with pay. Issue: Whether or not the Regional Director has jurisdiction over the labor standards case. SC Ruling: The petition was dismissed. The Court sustained the jurisdiction of the respondent Secretary. As the respondent correctly pointed out, this Court's ruling in Servando case that the visitorial power of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code. Moreover, the records of the House of Representatives show that Congressmen Alberto S. Veloso and Eriberto V. Loreto sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared that "this bill seeks to do away with the jurisdictional limitations imposed through said ruling (referring to Servando) and to finally settle any lingering doubts on the visitorial and enforcement powers of the Secretary of Labor and Employment." Thus, petitioner's reliance on Servando is untenable.

64 EJR CRAFTS CORPORATION vs. HON. COURT OF APPEALS et. al. [G.R. No. 154101. March 10, 2006] Facts: Sometime in 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave pay against petitioner before the Regional Office, NCR of the DOLE. Acting on the complaint, an inspection was conducted on the premises of petitioners offices on August 22, 1997 wherein violations of labor standards law were discovered. Petitioner argued that the Regional Director has no jurisdiction over the case as private respondents were allegedly no longer connected with petitioner corporation at the time of the filing of the complaint and when the inspection was conducted, and that private respondents claims are within the exclusive and original jurisdiction of the Labor Arbiters. Issue: Whether or not public respondent Regional Director has jurisdiction over the case. SC Ruling: This Court not being a trier of facts, it has to rely on findings of facts by the lower courts and regard it with great respect. As found by both Undersecretary of Labor and the Court of Appeals, the said quitclaim and release forms are unreliable and do not correspond to other documents on record which would prove that private respondents were working for the petitioner up to August 1997. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, this Court rules with the Undersecretary of Labor and the appellate court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code which states that: Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. Hence, the petition is denied.

EX-BATAAN VETERANS SECURTY AGENCY, INC. vs. SEC. OF LABOR et. al. [G.R. No. 152396. November 20, 2007]

65

Facts: Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of providing security services while private respondents are EBVSAI's employees assigned to the National Power Corporation at Ambuklao Hydro Electric Plant, Bokod, Benguet (Ambuklao Plant). On 20 February 1996, private respondents led by Alexander Pocding (Pocding) instituted a complaint for underpayment of wages against EBVSAI before the Regional Office of the Department of Labor and Employment (DOLE). On 7 March 1996, the Regional Office conducted a complaint inspection at the Ambuklao Plant where some violations were noted. Issue: Whether or not the Secretary of Labor or his duly authorized representatives acquired jurisdiction over EBVSAI. Corollary to this is whether the Secretary of Labor or his duly authorized representatives have jurisdiction over the money claims of private respondents which exceed P5,000. SC Ruling: The petition has no merit. On the Regional Director's jurisdiction over EBVSAI, the he validly acquired jurisdiction over EBVSAI after receiving the notices of hearing. Thus, EBVSAI cannot question the jurisdiction after appearing before the Regional Director. More importantly, on the Regional Director's jurisdiction over the money claims, this Court made reference to and affirm the ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where this Court sustained the jurisdiction of the DOLE Regional Director and held that the visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000. However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause. The Court also notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. Hence, the petition was denied.

CATHOLIC VICARIATE BAGUIO CITY VS. HON. STO. TOMAS G.R. No. 167334, March 07, 2008 Facts:

66 Petitioner contracted Kunwha Luzon Construction (KUNWHA) to construct the retaining wall of the Baguio Cathedral. KUNWHA, in turn, subcontracted CEREBA Builders (CEREBA) to do the formworks of the church. The contract between KUNWHA and CEREBA lasted up to the completion of the project or on 8 September 2000. KUNWHA failed to pay CEREBA. Consequently, the latter failed to pay its employees. On August 29, 2000, respondent George Agbucay, along with 81 other employees, lodged a complaint against CEREBA, KUNWHA and petitioner before the DOLE-CAR Regional Office for nonpayment of wages, special and legal holiday premium pay. An inspection of the premises resulted in the discovery of violations of labor standards law, such as nonpayment of wages and holiday pay from 28 June 2000 to 5 September 2000, non-presentation of employment records, and others. Petitioner, KUNWHA and CEREBA were given five (5) days from receipt of the notice of inspection results to rectify its violations. Despite the notice, the parties failed to comply. A hearing was set wherein CEREBA manifested its willingness to pay the affected employees on the condition that KUNWHA would pay its obligation to CEREBA. Petitioner meanwhile manifested that the retention fee due to KUNWHA was sufficient to pay the deficiencies due the affected employees. On March 12, 2001, the DOLE-CAR Regional Director issued an Order holding CEREBA, KUNWHA and petitioner jointly and severally liable to the 82 affected workers in the amount of P1,029,952.80 or P12,560.40 for each employee. During the pendency of its motion for reconsideration, KUNWHA voluntarily settled the deficiencies due the 23 affected workers amounting to P84,544.00. On May 21, 2001, the Regional Director dismissed the complaint by reason of the said settlement and the non-existence of employer-employee relationship between the parties. On appeal, the Secretary of Labor set aside and vacated the Order dated May 21, 2001 of the Regional Director. The Secretary of Labor ruled, however, that there existed an employer-employee relationship between the parties since the records show that the subcontracting agreement was terminated only on 28 September 2000, almost a month after the complaint was filed on 29 August 2000. The settlement with respect to the 23 workers was declared unconscionable and the Order of the Regional Director dated 12 March 2001 was reinstated with modification ordering CEREBA BUILDERS, KUNWHA LUZON CONSTRUCTION and the CATHOLIC VICARIATE, pursuant to Articles 106 and 107 of the Labor Code, to pay jointly and severally, the eighty-two (82) affected workers the amount of ONE MILLION TWENTY-NINE THOUSAND NINE HUNDRED FIFTY-TWO & 80/100 (P1,029,952.80) Pesos. On September 28, 2004, the Court of Appeals affirmed the order of the Secretary of Labor with the modification that payments made in favor of the 23 workers amounting to P84,544.00 be deducted from whatever amount still due each of them. In ruling further, the appellate court held that petitioner was estopped from questioning the jurisdiction of the Secretary of Labor, it having attended the initial hearing and therein manifested that it had in its possession the retention fee of KUNWHA sufficient to answer for the deficiencies due the affected workers. The appellate court noted that it was only when the judgment imposed joint and several liability that petitioner began to question the jurisdiction of the Secretary of Labor. The appellate court further sustained the finding of the Secretary of Labor that the settlement is not legally acceptable as it defied public policy for being unconscionable. Moreover, the appellate court

67 succinctly stated that parties who did not appeal may be benefited by the judgment of said court insofar as it is favorable and applicable to them. Hence, this Petition for Review filed by petitioner Catholic Vicariate of Baguio City, seeking the annulment of the Decision and Resolution issued by the Court of Appeals. ISSUES: (1) whether the Secretary of Labor acquired jurisdiction over the appeal considering that this case falls within the exception stated in Article 128(b) of the Labor Code; (2) whether the quitclaims signed by affected employees are valid; and (3) whether the appeal interposed by petitioner inures to the benefit of the other affected employees. SC Rulings: In resolving this jurisdictional issue, the Secretary of Labor relied on the limitations set forth by the Labor Code in Article 128(b) on visitorial and enforcement power. It provides that: (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. The power granted to Regional Director by Article 128 of the Labor Code, as amended, only two (2) limitations are set forth: first, where the employer contests the findings of the labor regulations officer, and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection, and second, where the employeremployee relationship no longer exists. Both of the above-stated limitations are wanting in this case. Records show that, when this case was filed on August 29, 2000, complainants were still employed with the respondent. There was no proof that the subcontracting agreement between the parties involved was terminated as of July 2000. The letters showing the poor performance of CEREBA Builders cannot be considered as a notice of termination of the Subcontracting Agreement for the same do not state so. Considering this, when the complainants filed this case on August 29, 2000, the Regional Director validly acquired jurisdiction over the case. And, jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is terminated. Also, during the initial hearing of this case at the Regional Office, the respondents failed to contest the findings of the Labor Employment and Enforcement Officer and to present employment records and any evidence to controvert the findings despite the reasonable period of time afforded them. Anent the issue on the validity of the quitclaims signed by 22 out of the 23 affected employees, the Supreme Court held that not all quitclaims

68 are per se invalid or against public policy. A quitclaim is said to be invalid and against public policy (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In such cases, the law will step in to annul the questionable transaction. The second exception obtains in the case at bar. As succinctly put by the Secretary of Labor: As to the claim that this Office failed to show why the Quitclaims and Releases were unconscionable, despite the fact that it was executed before the DOLE-CAR Regional Office, the same is totally misplaced. Clear from the record is that, except for the quitclaim signed by complainant Felix Padilla, the monetary considerations indicated in the 22 Quitclaims and Releases were way below the total claims of each complainants. The presence and assistance of the representatives of the DOLE-CAR Regional Office in the execution and consummation of the same is of no moment. This Office, pursuant to its administrative supervision and control over the Regional Offices and the power to review actions and decisions of her subordinates, can exercise corrective measures, where the circumstances warrant and to prevent injustice. Indeed, as ordered by the Regional Director, the 23 affected workers are entitled to receive P12,560.40 each or a total of P288,889.20 for unpaid wages and special and regular holiday premium pay.25 KUNWHA however paid them only P84,544.00,26 less than half of what they are entitled to as computed by the Regional Director. Therefore, this Court is not inclined to sustain the validity of the quitclaims although apparently they were signed voluntarily and in the presence of the Regional Director. Finally, while as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. In the case of Maternity Childrens Hospital v. Secretary of Labor , this Court explained, thus: The justification for the award to this group of employees who were not signatories to the complaint is that the visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable over establishments, not over the individual members/employees, because what is sought to be achieved by its exercise is the observance of, and/or compliance by, such firm/establishment with the labor standards regulations. Necessarily, in case of an award resulting from a violation of labor legislation by such establishment, the entire members/employees should benefit therefrom. WHEREFORE, finding no reversible error in the questioned Decision of the Court of Appeals, the instant petition for review is DENIED.

VIRGILIO SAPIO vs. UNDALOC CONSTRUCTION [G.R. No. 155034. May 22, 2008]

69 Facts: The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was assigned to was already finished, he being allegedly a project employee. But petitioner asserted that he was a regular employee having been engaged to perform works which are "usually necessary or desirable" in respondents' business. Issue: (1) Whether or not the petitioner is a project employee and (2) whether or not he is entitled to salary differential apart from attorneys fees. SC Ruling: That petitioner was a project employee became a non-issue beginning with the decision of the Labor Arbiter. Contested still is his entitlement to salary differential, apart from attorney's fees. With regards to this issue, the court said that the conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. The claim that the December 1995 payroll sheet was written in pencil and was thus rendered it prone to alterations or erasures is clearly non sequitur. The same is true with respect to the typewritten payroll sheets. In fact, neither the Labor Arbiter nor the NLRC found any alteration or erasure or traces thereat, whether on the pencil-written or typewritten payroll sheets. Indeed, the most minute examination will not reveal any tampering. Furthermore, if there is any adverse conclusion as regards the December 1995 payroll sheet, it must be confined only to it and cannot be applied to the typewritten payroll sheets. Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims rests on the employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and convincing evidence in support of his claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to overcome the disputable presumption of regularity. While we adhere to the position of the appellate court that the "tendency" to alter the entries in the payrolls was not substantiated, we cannot however subscribe to the total deletion of the award of salary differential and attorney's fees, as it so ruled. The award of attorney's fees is warranted under the circumstances of this case. Thus, the petition is partially granted. Petitioner is awarded the salary differential in the reduced amount of P13,156.00 and respondents are directed to pay the same, as well as ten percent (10%) of the award as attorney's fees.

HON. SECRETARY OF LABOR vs. PANAY VETERANS SECURITY AND INVESTIGATION AGENCY

70 GR No. 167708, August 22, 2008

Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay Veterans Security and Investigation Agency, Inc. as security guards sometime in 1988. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with respondent security agency on July 6, 2000. They were not given new assignments and their benefits (including 13th month pay, overtime pay and holiday pay as well as wage differentials due to underpayment of wages) were withheld by respondent security agency. This prompted them to file a complaint for violation of labor standards in the regional office of the Department of Labor and Employment in the National Capital Region (DOLE-NCR). Acting on the complaint, Manuel M. Cayabyab, a labor employment officer of the DOLE-NCR, conducted an inspection of respondent security agency on October 30, 2000. During the inspection, respondent security agency failed to present its payroll as well as the daily time records submitted by petitioners Agapay and Alonso, Jr. Such failure was noted as a violation. After conducting his inspection, Cayabyab issued a notice of inspection to respondent security agency. Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor employment officers findings. Thus, in his May 10, 2001 order, the Regional Director of the DOLE-NCR adopted the findings and computation of Cayabyab as to the unpaid benefits due to petitioners Agapay and Alonso, Jr. Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it. Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary of Labor and Employment found that respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. Thus, the appeal was dismissed and the DOLE-NCR Regional Directors May 10, 2001 order was declared final and executory. On appeal, the Court of Appeals initially dismissed the petition for lack of merit, however amended its decision and granted reconsideration. Issue: Whether or not the cash or surety bond can be reduced in appeals to the Secretary of Labor.

SC Ruling: We uphold the Secretary of Labor and Employment. The rule is that, to perfect an appeal of the Regional Directors order involving a monetary award in cases which concern the visitorial and

71 enforcement powers of the Secretary of Labor and Employment, the appeal must be filed and the cash or surety bond equivalent to the monetary award must be posted within ten calendar days from receipt of the order. Failure either to file the appeal or post the bond within the prescribed period renders the order final and executory. The legislative intent to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word only makes it clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employers appeal may be perfected. Motion to reduce appeal bond is not allowed in appeals to the Secretary of Labor. The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and Employment. In the exercise of their respective jurisdictions, each agency is governed by its own rules of procedure. In other words, the rules of procedure of the NLRC are different from (and do not apply in) cases cognizable by the Secretary of Labor and Employment. Unlike the New Rules of Procedure of the NLRC, no provision in the Rules on the Disposition of Labor Standards Cases governs the filing of a motion for the reduction of the amount of the bond. However, on matters that are not covered by the Rules on the Disposition of Labor Standards Cases, the suppletory application of the Rules of Court is authorized. In other words, the Rules on the Disposition of Labor Standards Cases does not sanction the suppletory resort to the rules of procedure of the NLRC. The posting of a cash or surety bond to perfect an appeal of an order involving a monetary award has a two-fold purpose: (1) to assure the employee that, if he finally prevails in the case, the monetary award will be given to him upon dismissal of the employers appeal and (2) to discourage the employer from using the appeal to delay or evade payment of his obligations to the employee. WHEREFORE, the petition is hereby GRANTED. The November 25, 2004 amended decision of the Court of Appeals in CA-G.R. SP No. 72713 is REVERSED and SET ASIDE. The July 9, 2002 order of the Secretary of Labor and Employment affirming the May 10, 2001 order of the DOLE-NCR Regional Director is hereby REINSTATED with the modification that the monetary award shall earn 6% legal interest per annum from October 30, 2000 until the finality of the May 10, 2001 order of the DOLE-NCR Regional Director and, thereafter, 12% legal interest per annum until the full satisfaction thereof.

72

NATIONAL MINES AND ALLIED WORKERS UNION vs. MARCOPPER MINING CORP. GR No. 174641, November 11, 2008

Facts: On April 1, 1996, the Department of Environment and Natural Resources (DENR) ordered the indefinite suspension of MARCOPPERs operations for causing damage to the environment of the Province of Marinduque by spilling the companys mine waste or tailings from an old underground impounding area into the Boac River. NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. On April 10, 1996, it filed a complaint with the Regional Arbitration Branch No. IV of the NLRC against MARCOPPER for nonpayment of wages, separation pay, damages, and attorneys fees; the case is hereinafter referred to as the environmental incident case. NAMAWU claimed that due to the indefinite suspension of MARCOPPERs operations, its members were not paid the wages due them for six months (from April 12, 1996 to October 12, 1996). Labor Arbiter Pedro C. Ramos ruled in NAMAWUs favor in a decision dated March 14, 2000 and ordered to pay jointly and severally the rank-and-file workers represented by NAMAWU and other employees similarly situated. MARCOPPER appealed the decision to the NLRC. In this appeal, it also moved that it be allowed not to post an appeal bond for 615 NAMAWU members former MARCOPPER employees who had been dismissed effective March 7, 1995 due to an earlier illegal strike. MARCOPPER, however, posted the required bond for three non-striking employees. This appeal was denied. Marcopper then sought relief from the Court of Appeals, which granted its petition. The CAs denial of NAMAWUs motion for reconsideration of its decision cleared the way for the present petition. Issue: Whether the CA erred in ruling that there was no need for MARCOPPER to post an appeal bond, and in ordering the NLRC to give due course to MARCOPPERs appeal SC Ruling: The employment of the NAMAWU officers and members had been declared terminated on March 7, 1995 as a result of their failure to return to work after their strike of February 27, 1995. This was declared illegal by the NLRC and was subsequently affirmed by the Court of Appeals. The CA decision in turn was affirmed by this Court in its Resolution of July 12, 2000.

73 The environmental incident referred to in this illegal strike ruling is the same environmental incident that gave rise to the present complaint (In Re: Dispute in Marcopper Mining, NLRC Case No. 106-95) that NAMAWU filed on April 10, 1996. While the NLRC had not yet ruled on the illegal strike case when the present environmental incident complaint was filed, the Labor Arbiters ruling on the latter complaint came very much later, in fact long after both the NLRC and the CA had ruled on the illegal strike case. The NLRC denied the motion for reconsideration of its November 11, 1996 decision in the illegal strike case on June 11, 1997, while the CA issued its decision on the same case on May 28, 1999. The Labor Arbiter issued his decision on the present environmental incident case only on March 14, 2000. Under this sequence of rulings, the Labor Arbiter effectively restored in the environmental incident case the same separation pay award that the CA struck off from the NLRC decision in the illegal strike case. In effect, the Labor Arbiter disregarded the CA ruling and actually reversed it. In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with respect to the NAMAWU members who were no longer company employees. The CA decision decreeing the termination of employment of those involved in the illegal strike case had already been issued at that time. We subsequently ruled on the same issue during the time the environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed MARCOPPERs appeal for failure to file the requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a settled matter that the NLRC was in no position to disregard. In this light, the CA was correct in reversing the dismissal of MARCOPPERs appeal for failure to file an appeal bond. Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWUs complaint with respect to its 615 previously dismissed members. We find from the pleadings filed that the environmental incident that gave rise to NAMAWUs April 1996 complaint to be undisputed; MARCOPPER caused the spillage of mine waste and tailings into the Boac River. Neither is it disputed that the company had to suspend its operations by order of the DENR, and that the companys indefinite cessation of operations lasted beyond the 6month temporary suspension of operations that Article 286 of the Labor Code allows. Separately from this Order, the DENR Secretary ordered on June 21, 1996 the cancellation of MARCOPPERs ECC without which MARCOPPER could not continue to undertake its mining operations. Thus, as of that date (June 21, 1996), the temporary suspension of operations that started on April 12, 1996 became permanent so that MARCOPPER did not have to wait for the end of the six-month suspension of operations before the services of the three employees were deemed terminated. In Labor Code terms, the cancellation of the ECC on June 21, 1996 amounted to a company closure governed by Article 283 of the Labor Code the provision that governs the relationship of employers and employees in closure situations. The rule that NAMAWU cites in its claim for wages is Rule X, Book III, Section 3(b) of the Rules and Regulations implementing the Labor Code. This rule, however, specifically relates to suspension of operations due to health and safety concerns. It states: Enforcement power on health and safety of workers. (a) The Regional Director may likewise order stoppage of work or suspension of operation of any unit or department of an establishment when non-compliance with the law, safety order or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. (b) x x x In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or

74 wages during the period of such stoppage of work or suspension of operation. While the mine tailing leakage and pollution of the Boac River cannot but affect the health and safety of those in the MARCOPPER vicinity, particularly its employees, we find that the Department of Labor and Employment (DOLE) Regional Director at whose initiative a suspension of operation must originate for the above-quoted provision to apply did not act as envisioned by the above rule. Specifically, there was no ruling or directive from the DOLE that the environmental incident was a workplace health and safety concern that required a suspension of operation. There is likewise nothing in the laws applicable to pollution, specifically, P.D. No. 984 and P.D. No. 1586 and their implementing rules, that speak of the consequences of a DENR-ordered suspension of operations on employment relationships. Neither does the CBA between MARCOPPER and NAMAWU provide for the consequences of a suspension of operation due to environmental causes. Under the circumstances, we can only conclude that the general no work, no pay rule should prevail with respect to employees wages during the suspension period, subject to existing CBA terms on leave credits and similar benefits of employees. Because the initial suspension of operations that the DENR imposed eventually turned into an involuntary closure as discussed above, Article 283 of the Labor Code comes into play entitling the three remaining employees the payment of separation pay computed under the terms of that Article. June 21, 1996 must be the closure date as it is from this date that MARCOPPER, by law, ceased to have any authority to conduct its mining operations. WHEREFORE, premises considered, we hereby PARTIALLY GRANT NAMAWUs petition with respect to the payment of separation pay to Apollo V. Saet, Rogelio Regencia and Jose Romasanta. MARCOPPER is hereby ORDERED to PAY them separation pay pursuant to Article 283 of the Labor Code. The claim under the petition for the payment of wages during the suspension of operation period is hereby DENIED for lack of merit. We hereby DISMISS the petition with respect to the remaining 615 NAMAWU members who were no longer MARCOPPER employees at the time MARCOPPER suspended its operations in April 1996.

PEOPLES BROADCASTING vs. SEC OF DOLE GR NO. 179652, May 8, 2009

Facts: The present controversy concerns the determination of the demarcation line between the prerogative of the DOLE Secretary and his duly authorized representatives, on the one hand, and the jurisdiction of the National Labor Relations Commission, on the other, under Article 128 (b) of the Labor Code in an instance where the employer has challenged the jurisdiction of the DOLE at the very first level on the ground that no employer-employee relationship ever existed between the parties. A complaint was filed by Jandeleon Juezan (respondent) against Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment

75 of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the DOLE Regional Office No. VII, Cebu City. On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form, the Labor Inspector wrote under the heading Findings/Recommendations non-diminution of benefits and Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results. Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers. In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting to P203,726.30. On Motion for Reconsideration and later appeal, petitioner denied the existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit. Petitioner elevated the case to the Court of Appeals, claiming that it was denied due process when the DOLE Secretary disregarded the evidence it presented and failed to give it the opportunity to refute the claims of respondent. Petitioner maintained that there is no employer-employee relationship had ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter because respondents claim exceeded P5,000.00. Before this Court, petitioner argues that the National Labor Relations Commission (NLRC), and not the DOLE Secretary, has jurisdiction over respondents claim, in view of Articles 217 and 128 of the Labor Code. It adds that the Court of Appeals committed grave abuse of discretion when it dismissed petitioners appeal without delving on the issues raised therein, particularly the claim that no employer-employee relationship had ever existed between petitioner and respondent. Finally, petitioner avers that there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of law available to it. SC Ruling: The extent of the visitorial and enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as amended by Republic Act 7730 is quite explicit that the visitorial and enforcement power of the DOLE comes into play only in cases when the relationship of employer-employee still exists. It also underscores the avowed objective underlying the grant of power to the DOLE which is to give effect to the labor standard provision of this Code and other labor legislation. Of course, a persons entitlement to labor standard benefits under the labor laws presupposes the existence of employer-employee relationship in the first place. The clause in cases where the relationship of employer-employee still exists signifies that the employer-employee relationship must have existed

76 even before the emergence of the controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such relationship has ever existed. In the recent case of Bay Haven, Inc. v. Abuan, this Court recognized the first situation and accordingly ruled that a complainants allegation of his illegal dismissal had deprived the DOLE of jurisdiction as per Article 217 of the Labor Code. In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the termination of the employeremployee relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of employer-employee relationship between the evidentiary parties from the start. Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationship demand that the level of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found in the employers office are the primary source materials, what may prove decisive are factors related to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. The determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause in cases where the relationship of employer-employee still exists in Art. 128 (b). Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government.

77 This decision should not be considered as placing an undue burden on the Secretary of Labor in the exercise of visitorial and enforcement powers, nor seen as an unprecedented diminution of the same, but rather a recognition of the statutory limitations thereon. A mere assertion of absence of employeremployee relationship does not deprive the DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power. Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its employee. Certainly, a preliminary determination, based on the evidence offered, and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer respondent to the NLRC for the proper dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by the Regional Director in his order are mere self-serving declarations of respondent, and hence cannot be relied upon as proof of employer-employee relationship. Aside from lack of jurisdiction, there is another cogent reason to to set aside the Regional Directors 27 February 2004 Order. A careful study of the case reveals that the said Order, which found respondent as an employee of petitioner and directed the payment of respondents money claims, is not supported by substantial evidence, and was even made in disregard of the evidence on record. In the instant case, save for respondents self-serving allegations and selfdefeating evidence, there is no substantial basis to warrant the Regional Directors finding that respondent is an employee of petitioner. Had there been other proofs of employment, such as respondents inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee relationship. The Regional Director, therefore, committed grievous error in ordering petitioner to answer for respondents claims. Moreover, with the conclusion that no employer-employee relationship has ever existed between petitioner and respondent, it is crystal-clear that the DOLE Regional Director had no jurisdiction over respondents complaint. Thus, the improvident exercise of power by the Secretary of Labor and the Regional Director behooves the court to subject their actions for review and to invalidate all the subsequent orders they issued. WHEREFORE, the petition is GRANTED. Jethro Intelligence and Security Group vs. SOLE et al. [G.R. No. 172537, August 14, 2009] Facts: Petitioner Jethro is a security service contractor with a security service contract agreement with co-petitioner Yakult. On the basis of a complaint filed by respondent Garcia , one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day,

78 13th month pay, and night shift differential, the Department of Labor and Employment (DOLE)- Regional Office No. IV conducted an inspection at Yakult's premises in Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and nonregistration with the DOLE as required under Department Order. By order of the DOLE Regional Director, noting petitioners' failure to rectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of P809,210.16 representing their wage differentials, regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium. Jethro appealed to SOLE and having been denied by SOLE and CA, petitioner comes to SC under Rule 45. Issue: Whether or not Jethro is liable. SC ruling: In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128 (b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakult's premises in Calamba, as Jethro's offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law. Jethro's failure to keep payrolls and daily time records in Yakult's premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law. WHEREFORE, the petition is DENIED.

79

PHILIPPINE HOTELIERS, INC., ET AL., vs. NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT, AND ALLIED INDUSTRIES-DUSIT HOTEL NIKKO CHAPTER G.R. No. 181972, August 25, 2009

Facts:

WO No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and workers of all private sectors, identified as follows in Section 1 thereof: Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of THIRTY PESOS (P30.00) per day. The ECOLA was to be implemented in two tranches: P15.00/day beginning 5 November 2001; and the full amount of P30.00/day beginning 1 February 2002.

On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing, sent a letter to Director Alex Maraan of the DOLE-NCR, reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory arbitration before the NLRC due to a bargaining deadlock between the Union and Dusit Hotel; and requesting immediate assistance on this

80 matter. On 24 May 2002, Rasing sent Dir. Maraan another letter following-up his previous request for assistance. Acting on Rasings letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad to conduct an inspection of Dusit Hotel premises on 24 April 2002. By virtue of Rasings request for another inspection, LSO Natividad conducted a second inspection of Dusit Hotel premises on 29 May 2002. In her Inspection Results Report dated 29 May 2002, LSO Natividad noted: Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09-> ECOLA covering the periods from Nov.5/01 to present. Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or correction of the noted violations within five days from receipt of the Notice, and to submit any question on the findings of the labor inspector within the same period, otherwise, an order of compliance would be issued. The NLRC rendered a Decision in the compulsory arbitration involving the CBA deadlock between Dusit Hotel and the Union granting the hotel employees wage increases, in accord with the CBA: Effective January 1, 2001- P500.00/month; Effective January 1, 2002- P550.00/month; Effective January 1, 2003- P600.00/month. Based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR issued the Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188. Dusit Hotel filed a Motion for Reconsideration arguing that with the increase in the salaries of the hotel employees ordered by the NLRC, along with the hotel employees share in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order, would already be receiving salaries beyond the coverage of WO No. 9. Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution setting aside its earlier Order for being moot and academic and dismissing the complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit. The Union appealed before the DOLE Secretary maintaining that the wage increases granted by the NLRC Decision should not be deemed as compliance by Dusit Hotel with WO No. 9. The DOLE issued an Order granting the appeal of the Union. The DOLE Secretary reasoned that the NLRC Decision categorically declared that the wage increase under the CBA finalized between Dusit Hotel and the Union shall not be credited as compliance with WOs No. 8 and No. 9. Furthermore, Section 1 of Rule IV of the Rules Implementing WO No. 9, which provides that wage increases granted by an employer in an organized establishment within three months prior to the effectivity of said Wage Order shall be credited as compliance with the ECOLA prescribed therein, applies only when an agreement to this effect has been forged between the parties or a provision in the CBA allowing such crediting exists. Hence, the DOLE Secretary held Dusit Hotel Nikko Manila liable to pay its 144 employees the aggregate amount Php1,218,240.00 representing their ECOLA under Wage Order No. NCR-09 and the penalty of double indemnity under Republic Act. No. 8188, as amended. Dusit Hotel sought reconsideration of the Order of the DOLE Secretary. In an Order, the DOLE Secretary granted the Motion for Reconsideration of Dusit Hotel and reversed his Order his earlier Order. He admitted that he had disregarded therein that the wage increase granted by the NLRC retroacted to 1

81 January 2001. The said wage increase, taken together with the hotel employees share in the service charges of Dusit Hotel, already constituted compliance with the WO No. 9. The Union appealed the Orders with the Court of Appeals via a Petition for Review. The Court of Appeals promulgated its Decision ruling in favor of the Union. Referring to Section 13 of WO No. 9, the Court of Appeals declared that wage increases/allowances granted by the employer shall not be credited as compliance with the prescribed increase in the same Wage Order, unless so provided in the law or the CBA itself; and there was no such provision in the case at bar. The appellate court also found that Dusit Hotel failed to substantiate its position that receipt by its employees of shares in the service charges collected by the hotel was to be deemed substantial compliance by said hotel with the payment of ECOLA required by WO No. 9. The Court of Appeals adjudged that Dusit Hotel should be liable for double indemnity for its failure to comply with WO No. 9 within five days from receipt of notice. Hence, Dusit Hotel sought recourse from this Court by filing the instant Petition. Issues: 1. Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC. 2. Whether the receipt by said 82 hotel employees of their shares in the service charges already constituted substantial compliance with the prescribed payment of ECOLA under WO No. 9. 3. Whether Dusit Hotel is liable for double indemnity. SC Rulings: Dusit Hotel is not contending creditability of the hotel employees salary increases as compliance with the ECOLA mandated by WO No. 9. The position of Dusit Hotel is merely that the salary increases should be taken into account in determining the employees entitlement to ECOLA. The retroactive increases could raise the hotel employees daily salary rates above P290.00, consequently, placing said employees beyond the coverage of WO No. 9. The Court agrees with Dusit Hotel that the increased salaries of the employees should be used as bases for determining whether they were entitled to ECOLA under WO No. 9. For the Court to rule otherwise would be to sanction unjust enrichment on the part of the hotel employees, who would be receiving increases in their salaries, which would place them beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA under the very same provision. After applying the salary increases retroactive to 1 January 2001, 82 hotel employees still had daily salary rates between P250.00 and P290.00, thus, entitling them to receive the first tranch of ECOLA, equivalent to P15.00 per day, beginning 5 November 2001, the date of effectivity of WO No. 9, until 31 December 2001. Following the second round of salary increases retroactive to 1 January 2002, all the hotel employees were already receiving daily salary rates above P290.00, hence, leaving no one qualified to receive ECOLA. Receipt by the 82 hotel employees of their shares from the service charges collected by Dusit Hotel shall not be deemed payment of their ECOLA from 5 November 2001 to 31 December 2001. Pursuant to Article

82 96 of the Labor Code of 1991, the hotel employees have a right to their share in the service charges collected by Dusit Hotel, to wit: Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eightyfive percent (85%) for all covered employees management. The share of and fifteen percent (15%) for

employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA. The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2(m) of DOLE Department Order No. 10, Series of 1998, the Notice of Inspection Result "shall specify the violations discovered, if any, together with the officers recommendation and computation of the unpaid benefits due each worker with an advice that the employer shall be liable for double indemnity in case of refusal or failure to correct the violation within five calendar days from receipt of notice." The Notice of Inspection Result, issued by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double indemnity. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. WHEREFORE, premises considered, the Decision and the Resolution of the Court of Appeals are hereby AFFIRMED WITH THE FOLLOWING MODIFICATIONS: (1) Dusit Hotel Nikko is ORDERED to pay its 82 employees who, after applying the salary increases for 1 January 2001, had daily salaries of

83 P250.00 to P290.00 the first tranch of Emergency Cost of Living Allowance, equivalent to P15.00 per day, from 5 November 2001 to 31 December 2001, within ten (10) days from finality of this Decision; and (2) the penalty for double indemnity is DELETED. Tiger Construction and Development Corp. vs Abay et al. [G.R. No. 164141, February 26, 2010] Facts: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record keeping, non-compliance with various wage orders, nonpayment of holiday pay, and underpayment of 13th month pay. The case was then set for summary hearing. However, before the hearing could take place, the Director of Regional Office No. V, Ma. Glenda A. Manalo (Director Manalo), issued an Order on July 25, 2002, which reads: Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the same Code, this instant case should be referred back to the National Labor Relations Commission (NLRC) Sub-Arbitration Branch V, Naga City, on the ground that the aggregate money claim of each worker exceeds the jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00). WHEREFORE, in view of the foregoing, this case falls under the original and exclusive jurisdiction of the National Labor Relations Commission as provided under Article 217 of the Labor Code of the Philippines.[5] Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas), in an apparent reversal of Director Manalos endorsement, issued another inspection authority on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials conducted another investigation of petitioners premises and the same violations were discovered. The DOLE officials issued a Notice of Inspection Results to petitioner directing it to rectify the violations within five days from notice. For failure to comply with the directive, the case was set for summary hearing on August 19, 2002. On even date, petitioner allegedly questioned the inspectors findings and argued that the proceedings before the regional office had been rendered moot by the issuance of the July 25, 2002 Order endorsing the case to the NLRC. According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office after July 25, 2002 were null and void for want of jurisdiction. On September 30, 2002, Director Manalo issued an Order directing TCDC to pay P2,123,235.90 to its employees representing underpayment of salaries, 13th month pay, and underpayment of service incentive leave pay and regular holiday pay. TCDC filed a Motion for Reconsideration on October 17, 2002 and a Supplemental Pleading to the Motion for Reconsideration on November 21, 2002,

84 reiterating the argument that Director Manalo had lost jurisdiction over the matter. Issue: Whether petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution stage. SC ruling: While it is true that orders issued without jurisdiction are considered null and void and, as a general rule, may be assailed at any time, the fact of the matter is that in this case, Director Manalo acted within her jurisdiction. Under Article 128 (b) of the Labor Code, as amended by Republic Act (RA) No. 7730,the DOLE Secretary and her representatives, the regional directors, have jurisdiction over labor standards violations based on findings made in the course of inspection of an employers premises. The said jurisdiction is not affected by the amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial and enforcement powers of the DOLE Secretary, are concerned. The last sentence of Article 128(b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE Secretary and her representatives, but such exception is neither an issue nor applicable here. Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was within the latters jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore retained the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by law and not by the interested parties, much less by one of them, and should be exercised precisely by the person in authority or body in whose hands it has been placed by the law. Well-settled is the rule that perfection of an appeal in the manner and within the reglementary period allowed by law is not only mandatory but also jurisdictional. Thus, if no appeal is perfected on time, the decision becomes final and executory by operation of law after the lapse of the reglementary period of appeal. Being final and executory the decision in question can no longer be altered, modified, or reversed by the trial court nor by the appellate court. Accordingly, the prevailing party is entitled as a matter of right to a writ of execution the issuance of which is a ministerial duty compelled by mandamus. It is actually within this context that the Court ruled that the appellate court, in reviewing a judgment that is already final and executory, acts without jurisdiction, and its decision is thus void and can be assailed at any time. In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no longer be questioned (as it is final and executory), we can no longer entertain petitioners half-hearted and unsubstantiated arguments that the said Order was allegedly based on erroneous computation and included nonemployees. Likewise, we find no more need to address petitioners contention that the CA erred in dismissing its petition on the ground of its belated compliance with the requirement of certification against forum-shopping. WHEREFORE, the instant petition is DENIED.

85

VII.

WAGE PROTECTION PROVISIONS AND PROHIBITIONS REGARDING WAGES

ROSARIO GAA vs. COURT OF APPEALS [140 SCRA 304]

Facts: It appears that respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator. On December 12, 1973, Europhil Industries commenced an action (in the Court of First Instance of Manila for damages against petitioner for having perpetrated certain acts that Europhil Industries considered a trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees", On June 28, 1974, said court rendered judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. The said decision having become final and executory, a writ of garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said garnishment on the ground that her "salaries, commission and or remuneration" are exempted from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower Court. Court of Appeals dismissed the petition. In dismissing the petition, the Court of Appeals held that petitioner is not a mere laborer as contemplated under Article 1708 as the term laborer does not apply to one who holds a managerial or supervisory position like that of petitioner, but only to those laborers occupying the lower strata. Issue: Whether or not the Petitioner is covered by Article 1708 of the New Civil Code. SC Ruling: The Court ruled that petitioner is not covered by Article 1708 since she does not fall with in the criteria of laborer. Article 1708 of the Civil Code provides: The laborer's wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance." It is beyond dispute that petitioner is not an ordinary or rank and file laborer but a responsibly place employee, of El Grande Hotel, responsible for planning, directing, controlling, and coordinating the activities of all

86 housekeeping personnel so as to ensure the cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or supervisory position. We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. Petitioner is definitely not within that class. NESTLE PHILIPPINES, INC. vs. NLRC [193 SCRA 504]

Facts: Four (4) collective bargaining agreements separately covering the petitioner's employees in its Alabang/Cabuyao factories; Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were represented by the respondent, Union of Filipro Employees [UFE]);Cagayan de Oro Factory represented by WATU; and Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services (TUPAS), all expired on June 30, 1987. UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office. In August 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective bargaining negotiations between the parties ensued. On September 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the union officers and members of the negotiating panel who participated in the illegal strike. The NLRC affirmed the dismissals on November 2, 1988. On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union assailed the validity of those agreements and filed a case of unfair labor practice against the company on November 16, 1988. After conciliation efforts of the NCMB yielded negative results, the dispute was certified to the NLRC. The NLRC issued a resolution on June 5, 1989, whose pertinent disposition regarding the union's demand for liberalization of the company's retirement plan for its workers. the NLRC issued a resolution denying the motions for reconsideration. With regard to the Retirement Plan, the NLRC held that Anent management's objection to the modification of its Retirement Plan, the plan is specifically mentioned in the previous bargaining agreements thereby integrating or incorporating the

87 provisions thereof to the agreement. By reason of its incorporation, the plan assumes a consensual character which cannot be terminated or modified at will by either party. Consequently, it becomes part and parcel of CBA negotiations. Petitioner alleged that since its retirement plan is non-contributory, Nestle has the sole and exclusive prerogative to define the terms of the plan because the workers have no vested and demandable rights, the grant thereof being not a contractual obligation but merely gratuitous. At most the company can only be directed to maintain the same but not to change its terms. It should be left to the discretion of the company on how to improve or modify the same. Issue: Whether or not the workers have vested and demandable rights over the retirement plan. SC Ruling: The Court ruled that employees have a vested and demandable right over the retirement plan. The inclusion of the retirement plan in the collective bargaining agreement as part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual character" to the plan so that it may not be terminated or modified at will by either party. The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA salary increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue. The petitioner's contention, that employees have no vested or demandable right to a non-contributory retirement plan, has no merit for employees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits.

FIVE J TAXI AND/OR JUAN ARMAMIENTO VS. NLRC [235 SCRA 556] Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi drivers and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the daily boundary of P700.00 for airconditioned taxi or P450.00 for non-air-conditioned taxi, they were also required

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

89 Clearly, the same does not apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his boundary. On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent the issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to restore the unit he has given to the same clean condition when he took it out, and as claimed by the respondents (petitioners in the present case), complainant(s) (private respondents herein) were made to shoulder the expenses for washing, the amount doled out was paid directly to the person who washed the unit, thus we find nothing illegal in this practice, much more (sic) to consider the amount paid by the driver as illegal deduction in the context of the law." Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments they made. It will be noted that there was nothing to prevent private respondents from cleaning the taxi units themselves, if they wanted to save their P20.00. Also, as the Solicitor General correctly noted, car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play.

MANILA ELECTRIC COMPANY VS. SECRETARY OF LABOR [G.R. No. 130439. October 26, 1999]

Facts: MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years starting from December 1, 1995 to November 30, 1997. MERALCO signified its willingness to re-negotiate through its letter dated October 17, 1995 and formed a CBA negotiating panel for the purpose. On November 10, 1995, MEWA submitted its proposal to MERALCO, which, in turn, presented a counterproposal. Thereafter, collective bargaining negotiations proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable to both of them. On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was docketed as NCMBNCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices. The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement. MERALCO filed a petition to let the Secretary of DOLE to assume jurisdiction over the case which was granted. Issue: Whether the members of MEWA are entitled to benefits given as bonuses, being negotiated in the CBA.

90 SC Ruling: The members of MEWA are entitled to the benefits although in the form of benefits which is a subject of the negotiation of CBA. As a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless be granted on equitable consideration as when the giving of such bonus has been the companys long and regular practice. To be considered a regular practice, the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The ruling in National Sugar Refineries Corporation vs. NLRC: The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. In this case, the record shows the MERALCO, aside from complying with the regular 13th month bonus, has further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988. While the special bonuses differed in amount and bore different titles, it can not be denied that these were given voluntarily and continuously on or about Christmas time. The considerable length of time MERALCO has been giving the special grants to its employees indicates a unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not required by law. Indeed, a company practice favorable to the employees has been established and the payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the employees. Consequently, the giving of the special bonus can no longer be withdrawn by the company as this would amount to a diminution of the employees existing benefits.

PHILIPPINE VETERANS BANK vs. NLRC [G.R. No.130439. October 26, 1999]

Facts: In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko Sentral). Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina, were terminated from work and given their respective separation pay and other benefits. To assist in the liquidation, some of petitioners former employees were rehired, among them Molina, whose re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA filed a complaint against members of the liquidation team. The complaint demanded the implementation of Wage Orders Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral damages and attorneys fees in the amount of P300,000. Meanwhile, W.O. 1 took effect on November 1990, prescribing a P17-

91 increase in the daily wage of employees whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2 became mandated a P12-increase in the daily wage of employees whose monthly salary did not exceed P4,319.16. Molina claimed that his salary should have been adjusted in compliance with said wage orders. The liquidation team countered that MOLINA was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60. Labor Arbiter rejected the 26.16 factor used by the liquidators in computing the daily wage of MOLINA, adopting instead the factor of 365 days. Consequently, they were ordered to pay Molina the wage differentials due him under W.O. 1 and W.O. 2. On appeal, the NLRC sustained the labor arbiters ruling after concluding that Molina was a regular employee of petitioner with a basic monthly salary of P3,754.60 at the time of his dismissal on 31 January 1992. He was, therefore, entitled to the wage increases mandated by the aforesaid wage orders. Issue: Whether Molina is entitled to wage increase computation that used the 365 days factor. SC Ruling: Molina is entitled to the wage increase computation using the 365 days as factor. The documents attached show that the Bank has been consistently using the factor of 365 days in computing your equivalent monthly salary prior to its being placed under receivership by the Central Bank. This is evident in the wage and allowance increases granted under previous Presidential Decrees and Wage Orders, which were given by the Bank on monthly basis, i.e., where the rest days are unworked but paid. This is also indicated in the appointment and service records of bank personnel who started out as daily paid employees and were eventually promoted as permanent employees with fixed monthly salaries. However, when R.A. 6640 went into force, the Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was the practice/policy long before the effectivity of the Act. And when R.A 6727 took effect, the Bank reverted to the old practice/policy of using factor 365 days in computing your equivalent monthly rate salary. May we add that the old practice of the bank in using factor 365 days in a year in determining equivalent monthly salary cannot unilaterally be changed by your employer without the consent of the employees, such practice being now a part of the terms and conditions of your employment. An employment agreement, whether written or unwritten, is a bilateral contract and as such either party thereto cannot change or amend the terms thereof without the consent of the other party thereto. It is clear that respondent is entitled to the wage increase under R.A. 6440 computed on the basis of 365 paid days and to the corresponding salary differentials as a result of the application of this factor. Evidently, the use of the 365 factor is binding and conclusive, forming as it did part of the employment contract. To abandon such policy and revert to its old practice of using the 26.16 factor would be a diminution of a labor benefit, which is prohibited by the Labor Code. It cannot be doubted that the 365 factor favors petitioners employees because it results in a higher determination of their monthly salary.

PHILIPPINE APPLIANCE CORPORATION (PHILCOR) VS. CA

92 [G.R. No.149434. June 3, 2004]

Facts: Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators, freezers and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly elected collective bargaining representative of the rank-and-file employees of petitioner. During the collective bargaining negotiations between petitioner and respondent union in 1997, petitioner offered the amount of P4, 000.00 to each employee as an early conclusion bonus. Petitioner claims that this bonus was promised as a unilateral incentive for the speeding up of negotiations between the parties and to encourage respondent union to exert their best efforts to conclude a CBA. Upon conclusion of the CBA negotiations, petitioner accordingly gave this early signing bonus. In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to negotiate a new CBA. Petitioner and respondent union began their negotiations. On October 22, 1999, after eleven meetings, respondent union expressed dissatisfaction at the outcome of the negotiations and declared a deadlock. A few days later, on October 26, 1999, respondent union filed a Notice of Strike with the NCMB, Region IV in Calamba, Laguna, due to the bargaining deadlock. The conciliation meetings started with eighteen unresolved items between petitioner and respondent union. At the meeting, respondent union accepted petitioners proposals on fourteen items, leaving the following items unresolved: wages, rice subsidy, signing, and retroactive bonus. Petitioner and respondent union failed to arrive at an agreement concerning these four remaining items. On January 2000, respondent union went on strike at the petitioners plant. The strike lasted for eleven days and resulted in the stoppage of manufacturing operations as well as losses for petitioner, which constrained it to file a petition before the Department of Labor and Employment. Labor Secretary assumed jurisdiction over the dispute and, on January 2000, ordered the striking workers to return to work within twenty-four hours from notice and directed petitioner to accept back the said employees. It rendered decision fixing the amount of wage increase and directed to conclude a CBA to include the items granted in the conference. Petitioner contested on the awarding of signing bonus. Issue: Whether the signing bonus is covered under the maintenance of existing benefits. SC Ruling: The payment of signing bonus is not covered under the existing benefits. The Court has consistently ruled that a bonus is not a demandable and enforceable obligation. True, it may nevertheless be granted on equitable considerations as when the giving of such bonus has been the companys long and regular practice. To be considered a regular practice, however, the giving of the bonus should have been done over a long period of time, and must be shown to have

93 been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. Respondent does not contest the fact that petitioner initially offered a signing bonus only during the previous CBA negotiation. Previous to that, there is no evidence on record that petitioner ever offered the same or that the parties included a signing bonus among the items to be resolved in the CBA negotiation. Hence, the giving of such bonus cannot be deemed as an established practice considering that the same was given only once, that is, during the 1997 CBA negotiation.

SPECIAL STEEL PRODUCTS vs. LUTGARDO VILLAREAL & FREDERICK SO [G.R. No.143304. July 8, 2004]

Facts: Special Steel Products, Inc., is a domestic corporation engaged in the principal business of importation, sale, and marketing of BOHLER steel products. Respondents worked for petitioner as assistant manager and salesman. Villareal obtained a car loan from Bank of Commerce with petitioner as surety wherein they are jointly and severally agreed to pay the bank in installment basis. In January 1997, Villareal resigned and joined Hi-Grade Industrial and Technical Products as Executive vice-president. Respondent So was sponsored by petitioner to attend a training course in Kapfenberg, Austria conducted by BOHLER. It rewarded Sos outstanding sales performance. When So returned, the petitioner asked respondent So to sign a memorandum to work for the company for three years. After 2 years and 4 months, So resigned from the company. Petitioner ordered respondents an accounting of the various Christmas giveaways they received. In return, respondents also demanded payment of their separation benefits, commissions, monetary benefits but petitioner refused and withheld the 13th month pay and other benefits. Issue: Whether or not the employer can withhold its employees wages and benefits as lien to protect its interest as surety in the car loan and for expenses in the training abroad. SC Ruling: The employer cannot withhold respondents 13th month pay and other monetary benefits. Article 116 of the Labor Code, as amended, provides: Withholding of wages and kickbacks prohibited. It shall be

94 unlawful for any person, directly or indirectly, to withhold any amount from the wages (and benefits) of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent. The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal authority to withhold respondents 13 th month pay and other benefits. What an employee has worked for, his employer must pay. Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he has either defaulted in paying a loan guaranteed by his employer; or violated their memorandum of agreement; or failed to render an accounting of his employers property.

JENNY AGABON & VIRGILIO AGABON vs. NLRC [G.R. No.158693. November 17, 2004]

Facts: Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. Issue: Whether or not respondents dismissal is illegal and if not, entitles them benefits. SC Ruling: The Court ruled that the dismissal is legal and entitles them of payment of benefits. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full back wages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on

95 authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. Thus, it should be held liable for noncompliance with the procedural requirements of due process. The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay and 13th month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same so as to further protect the level of real wages from the ravages of world-wide inflation. Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code. An employer is prohibited under Article 113 of the same Code from making any deductions without the employees knowledge and consent.

AMERICAN WIRE & CABLE DAILY RATED EMPLOYEES UNION vs. AMERCAN WIRE & CABLE CO., INC., & THE COURT OF APPEALS [G.R. No.155059. April 29, 2005]

Facts: American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union 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

96 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 employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29, Christmas Party and Promotional Increase. Issue: Whether or not the respondent company violated Article 100 of the Labor Code. SC 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.

HONDA PHILIPPINES., MANGGAGAWA SA HONDA

INC.,

VS.

SAMAHAN

NG

MALAYANG

[G.R. No.145561. June 15, 2005]

Facts: The case stems from the collective bargaining agreement between Honda and the respondent union that it granted the computation of 14th month pay as the same as 13th month pay. Honda continues the practice of granting financial assistance covered every December each year of not less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock. DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking employees were ordered to return to work and management to accept them back under the same terms prior to the strike

97 staged. Honda issued a memorandum of the new computation of the 13th month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for purpose of computing the said benefits. The amount equivalent to of the employees basic salary shall be deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda shall pay the amount. The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary arbitration where it ruled that the companys implementation of the pro-rated computation is invalid. Issue: Whether or not the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid and lawful. SC Ruling: The Court ruled that the pro-rated computation is invalid. The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was the first time they implemented such practice. The payment of the 13th month pay in full month payment by Honda has become an established practice. The length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code. The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall constitute a violation of Article 100 of the Labor Code.

PRODUCERS BANK OF THE PHILIPPINES vs. NLRC [355 SCRA 506]

Facts: Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a conservator for the purpose of protecting its assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to uniform allowance, the acting conservator of the petition expressed objection resulting an impasse between the petitioner

98 bank and respondent union. The deadlock continued for at least six months. The private respondent, to resolve the issue filed a case against petitioner for unfair labor practice and flagrant violation of the CBA. The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the implementation of the CBA. Issue: Whether or not the employees who have retired have no personality to file an action since there is no longer an employer-employee relationship. SC Ruling: The Court rules that employees who have retired still have the personality to file a complaint. Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees to sever his employment with the former. The very essence of retirement is the termination of employer-employee relationship. Retirement of the employee does not in itself affect his employment status especially when it involves all rights and benefits due to him, since these must be protected as though there had been no interruption of service. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted as it were a continuing consideration of services rendered as well as an effective inducement foe remaining with the corporation. It is intended to help the employee enjoy the remaining years of his life. When the retired employees were requesting that their retirement benefits be granted, they were not pleading for generosity but merely demanding that their rights, embodied in the CBA, be recognized. When an employee has retired but his benefits under the law or CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the status of an employee entitled to the protection of the Labor Code, one of which is the protection of the labor union.

ANGEL JARDIN VS. NATIONAL LABOR RELATIONS COMMISSIONS [G.R. No.119268. February 23, 2000] Facts: Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondents taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.

99 Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. Issue: Whether or not the deduction for the washing of taxi units is illegal. SC Ruling: The Court ruled that the deduction made for the car wash is not illegal. In Five J Taxi vs. NLRC, the court views that it is not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to reimbursement of washing charges.

MANILA JOCKEY CLUB EMPLOYEES LABOR UNION vs. MANILA JOCKEY CLUB [G.R. No.167601. March 7, 2007]

Facts: Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The CBA governed the economic rights and obligations of respondents regular monthly paid rank-and-file employees. In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20, 1999, the hours of work of regular monthlypaid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days. On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict arising therefrom shall be referred to a voluntary arbitrator for resolution.

100 Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation Board (NCMB), petitioner questioned the above office memorandum as violative of the prohibition against non-diminution of wages and benefits guaranteed under Section 1, Article IV, of the CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a result of the memorandum, the employees are precluded from rendering their usual overtime work from 5:00 p.m. to 9:00 p.m. The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld respondent's prerogative to change the work schedule of regular monthly-paid employees under Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the motion. Issue: Whether or not the respondent violated the non-diminution of benefits under Article 100 of the Labor Code. SC Ruling: The Court ruled that the respondent did not violate the principle of nondiminution of benefits. The provision of the CBA also grants respondent the prerogative to relieve employees from duty because of lack of work. Petitioners argument, therefore, that the change in work schedule violates Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by regular monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but merely provides that "all work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such." Respondent was not obliged to allow all its employees to render overtime work everyday for the whole year, but only those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay was not given to each employee consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of benefits.

SAN MIGUEL CORP ET AL., VS. NUMERIANO LAYOC, JR., ET AL. [G.R. No. 149640. October 19, 2007.]

Facts: Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel Corporation. They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on different

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

102 Hence, the petition is granted.

SAN MIGUEL CORPORATION VS. ANGEL PONTILLAS [G.R. No.155178. May 7, 2008]

Facts: On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily wage company guard. In 1984, respondent became a monthly-paid employee which entitled him to yearly increases in salary. On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article 100 of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential and backwages, against petitioner. Respondent questioned the rate of salary increase given him by petitioner. On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioners Vice President and VisMin Operations Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not receive any written order from Capt. Fortich, his immediate superior. In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation.In a letter dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company rules and regulations, particularly for Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior. Issue: Whether or not respondents dismissal from employment is legal. SC Ruling: Respondent was dismissed for a just cause. An employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties

103 which he had been engaged to discharge. The records show that respondent was not singled out for the transfer. Respondents transfer was the effect of the integration of the functions of the Mandaue Brewery Materials Management and the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations. Moreover, the employer exercises the prerogative to transfer an employee for valid reasons and according to the requirements of its business, provided the transfer does not result in demotion in rank or diminution of the employees salary, benefits, and other privileges. In this case, we found that the order of transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer but he refused to receive the notices on the pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and other privileges. Respondents persistent refusal to obey petitioners lawful order amounts to willful disobedience under Article 282 of the Labor Code. The petition was granted.

Arco Metal vs. Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco-Metal-NAFLU [G.R. No. 170734, May 14, 2008] Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13 th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code. SC Ruling: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code,

104 including its implementing rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employers act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head. Hence, petition was denied.

GENESIS TRANSPORT SERVICE, INC. and RELY L. JALBUNA, vs UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT (UMMGT), and JUAN TAROY [G.R. No. 182114, April 5, 2010] Facts: Respondent Juan Taroy was hired as driver by petitioner GENESIS on a commission basis (9% of gross revenue tip). Taroy was then terminated from employment after an accident where he was said to have been driving recklessly. Taroy filed a complaint for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because of his union activities. He also added as grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay. Respecting the claim for refund of illegal deductions, Taroy alleged that petitioner started deducting from his weekly earnings sums of money representing toll fees, without his consent and written authorization as required under Article 113 of the Labor Code and contrary to company practice; and that there were double deductions. Genesis Transport countered that Taroy committed several violations of company rules for which he was given warnings or disciplined accordingly; and that Taroys dismissal was on a valid cause and after affording him due process.

105 The Labor Arbiter found that the dismissal was on a valid cause; that while Taroys past infractions cannot be used against him, still, they showed habituality; and that Genesis complied with the twin requirements of notice and hearing, hence, Taroys dismissal was effected with due process. The NLRC affirmed the Labor Arbiters decision with modification (deleted Attorneys fees). On respondents appeal, the Court of Appeals partly granted the same, ruling that petitioner violated Taroys statutory right to due process when he was preventively suspended for more than thirty (30) days, in violation of the Labor Code. Issues: (1) Whether or not the principle of res judicata is applicable in herein case by virtue of the above stated ruling of the NLRC involving the refund of the underpayment. Whether or not the Court can take judicial notice on petitioners claims. (2) Whether or not the deductions made by Petitioner are considered illegal and constitute diminution of benefits. (3) Whether or not the dismissal was on a valid cause and whether or not due process was afforded to herein respondent Taroy. SC Ruling: The petition is partly meritorious. Absent proof that the NLRC cases cited by petitioners have attained finality, the Court may not consider them to constitute res judicata on petitioners claim for refund of the underpayment due Taroy. Neither may the Court take judicial notice of petitioners claim that the deduction of tollgate fees from the gross earnings of drivers is an accepted and long-standing practice in the transportation industry. Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no constructive knowledge. None of the material requisites for the Court to take judicial notice of a particular matter was established by petitioners. Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroys 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroys written consent or authorization, the deduction is considered illegal. Besides, the invocation of the rule on company practice is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits. Respecting the issue of statutory due process, the Court holds that Taroys right thereto was not violated. The propriety of Taroys preventive suspension was raised by respondents for the first time on appeal, however. The well-settled rule, which also applies in labor cases, is that issues not raised below

106 cannot be raised for the first time on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by the reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of due process impel the adoption of this rule. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employees wages and benefits are paid in the interim. In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport. Aguanza vs. Asian Terminal, Inc. [G.R. No. 163505, August 14, 2009] Facts: Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator and was assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the port of Manila. Aside from his basic pay, he received meal allowance, fixed overtime pay and out-of port allowance [when the barge is assigned outside Metro Manila]. Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned at the Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20, 1997, respondent James Keith issued a memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 and because of that, its crew would no longer be entitled to out of port benefits of 16 hours overtime and P200 a day out-of port allowance. Because of the said development, Aguanza questioned the diminution of his benefits. Aguanza insisted on reporting to work in Manila although his barge, Bismark IV, and its other crew were already permanently based in Mariveles, Bataan. [Aguanza] was not allowed to time in in Manila because his work was in Mariveles, Bataan. He therefore was not able to render his services, and was accordingly not paid for doing nothing. Issue: Was Aguanza constructively dismissed? Ruling: No. The transfer of operations is a valid exercise of management prerogative. Aguanza asserts that his transfer constituted constructive dismissal, while ATI asserts that Aguanzas transfer was a valid exercise of management prerogative. ATIs transfer of Bismark IVs base from Manila to Bataan was, contrary to Aguanzas assertions, a valid exercise of management prerogative. The transfer of employees has been traditionally among the acts identified as a management prerogative subject only to limitations found in law, collective bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of

107 management to conduct its own business affairs to achieve its purpose cannot be denied. On the other hand, the transfer of an employee may constitute constructive dismissal "when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee." Aguanzas situation is not within the purview of this discussion.

VIII.

PAYMENT OF WAGES

DOMINICO CONGSON vs. NATIONAL LABOR RELATIONS COMMISSIONS [243 SCRA 260 (1995)]

Facts: Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates 3 by petitioner as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement. They worked seven (7) days a week. During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna movement due to the scarcity of tuna. Private respondents resisted petitioner's proposed rate reduction. When they reported for work the next day, they were informed that they had been replaced by a new set of workers. On June 1990, private respondents filed a case against petitioner before the NLRC for underpayment of wages (non-compliance with Rep. Act Nos. 6640 and 6727) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal. With respect to their monetary claims, private respondents charged petitioner with violation of the minimum wage law, alleging that with petitioner's rates and the scarcity of tuna catches, private respondents' average monthly earnings each did not exceed ONE THOUSAND PESOS (P1,000.00). In addition to the amount of P1.00 per 'bariles' per movement herein complainants get the intestines and liver of the tuna as part of their salary. That for every tuna delivered, herein complainants extract at least three (3) kilos of intestines and liver. That the minimum prevailing price of tuna intestine and liver in 1986 to 1990 range from P15.00 to P20.00/kilo. The value of the tuna intestine and liver should be computed in arriving at the daily wage of herein complainants because the very essence of the agreement between complainants and respondent is: complainants shall be paid only P1.00 per tuna per

108 movement BUT the intestines and liver of the tuna delivered shall go to the herein complainants. It should be noted that tuna intestines and liver are easily disposed of in any public market. What they are after, in truth and in fact is the tuna intestines and liver which they can easily convert into cash." Quite clearly, petitioner admits that the P1.00-per-tuna movement is the actual wage rate applied to private respondents as expressly agreed upon by both parties. Petitioner further admits that private respondents were entitled to retrieve the tuna intestines and liver as part of their compensation. Finally, petitioner does not refute Labor Arbiter when the latter fixed private respondents' individual monthly wage at P2,670 computed at the mandatory daily wage of P89.00. Petitioner therefore argues that the combined value of private respondents' cash wage and the monetary value of the tuna liver and intestines clearly exceeded the minimum wage fixed by law.

Issue: Whether or not the means of payment of the wage is valid.

SC Ruling: The Court does not agree with the petitioner. The Labor Code expressly provides: "Article 102. Forms of Payment. No employer shall pay the wages of an employee by means of, promissory notes vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee. Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is necessary because as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining agreement." Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to the abovecited provision of the Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

NORTH DAVAO MINING CORP. & ASSET PRIVATIZATION TRUST vs. NLRC

109 [254 SCRA 721 (1996)]

Facts: Petitioner North Davao Mining Corporation was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which later turned them over to petitioner Asset Privatization Trust As of December 31, 1990 the national government held 81.8% of the common stock and 100% of the preferred stock of said company. Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the companys closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos per year, for each of the five years prior to its closure. All told five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty days pay for every year of service. Moreover, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other seperated employees for additional separation pay; back wages; transportation allowance; hazard pay; etc., amounting to P58,022,878.31. Issue: Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. SC Ruling: It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages. Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity

110 rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the time in collecting complainants salaries, would justify the granting of backwages equivalent to 2 days in a month.

HOUSE OF SARA LEE vs. CYNTHIA REY [G.R. No.149013. August 31, 2006]

Facts: The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as Independent Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on whether they sell individually or through their own group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell the same products to their own customers at fixed prices also determined by the petitioner. In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late remittances, the petitioner imposes a Credit Administration Charge, or simply, a penalty charge, on the value of the unremitted payment. The dealers under this system earn income through a profit margin between the discounted purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs through the employment of Credit Administration Supervisors (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with control systems through which data is readily generated. Under

111 this organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM). Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch. Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the petitioner who happens to be respondents sister-in-law, from the 52-day limit to an unauthorized term of 60 days. The respondent made the instruction just before the computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions. Respondent received a favorable decision from the Labor Arbiter granting her payment of 13th month pay and other monetary benefits. Issue: Whether or not respondent is entitled to 13th month pay. SC Ruling: The award of 13th month pay must be deleted. Respondent is not a rankand-file employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to award 14 th and 15th month pay as well as the monthly salary increase of 10 percent per year for two years based on her latest salary rate. The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the companys fiscal situation, the employees future performance on the job, or the employees continued stay in a position. In short, absent any proof, there is no vested right to salary increases.

112

EQUITABLE BANKING CORPORATION vs. RICARDO SADAC [G.R. No. 164772. June 8, 2006.]

Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981. On 26 June 1989, nine lawyers of petitioner Bank's Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent Sadac of abusive conduct, inter alia, and ultimately, petitioned for a change in leadership of the department. On the ground of lack of confidence in respondent Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. Issue: Whether or not general salary increases should be included in the base figure to be used in the computation of backwages. SC Ruling: Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former's unlawful act or bad faith. The Supreme Court had consistently held that payment of full backwages is the price or penalty that the employer must pay for having illegally dismissed an employee. Thus, the Supreme Court no longer regarded equity as a basis when dealing with illegal dismissal cases because it is not equity at play in illegal dismissals but rather, it is employer's obligation to pay full back wages. The backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived from him during the period of his illegal dismissal. It is the obligation of the employer to pay an illegally dismissed employee the whole amount of his salaries plus all other benefits, bonuses and general increases to which he would have been normally entitled had he not been dismissed and had not stopped working. The same holds true in case of retrenched employees. Attention must be called to Article 279 of the Labor Code of the Philippines, as amended by Section 34 of Rep. Act No. 6715. The law provides as follows: ART. 279. Security of Tenure. In cases of regular employment, the

113 employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Article 279 mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do not see that a salary increase can be interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. The term "allowances" is sometimes used synonymously with "emoluments," as indirect or contingent remuneration, which may or may not be earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are added to the employee's salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not separate grants by themselves but once granted, they are deemed part of the employee's salary. To extend the coverage of an allowance or a benefit to include salary increases would be to strain both the imagination of the Court and the language of law. Indeed, if the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits. The weight of authority leans in petitioner Bank's favor and against respondent Sadac's claim for the inclusion of general increases in the computation of his backwages. We stressed in Paramount that an unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal. And the Court has declared that the base figure to be used in the computation of backwages due to the employee should include not just the basic salary, but also the regular allowances that he had been receiving, such as the emergency living allowances and the 13th month pay mandated under the law. Furthermore, the award of salary differentials is not allowed, the established rule being that upon reinstatement, illegally dismissed employees are to be paid their backwages without deduction and qualification. "The term 'backwages without qualification and deduction' means that the workers are to be paid their backwages fixed as of the time of the dismissal or strike without deduction for their earnings elsewhere during their layoff and without qualification of their wages as thus fixed; i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers who are not dismissed or did not go on strike. Awards including salary differentials are not allowed. The salary base properly used should, however, include not only the basic salary but also the emergency cost of living allowances and also transportation allowances if the workers are entitled thereto. Moreover, there is no vested right to salary increases. That respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadac's computation

114 of his full backwages which includes his prospective salary increases cannot be permitted. Hence, the petition is partially granted in the sense that in the computation of the backwages, respondent Sadac's claimed prospective salary increases, check-up benefit, clothing allowance, and cash conversion of vacation leaves are excluded. IX. CONDITIONS OF EMPLOYMENT

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW vs. NLRC [282 SCRA 316 (1997)]

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association sent a four (4)-page letter with attached support signatures requesting and pleading for the expeditious implementation and payment by respondent Juan De Dios Hospital of the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labors Policy Instructions No. 54 dated April 12, 1988. Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their claims for statutory benefits under the abovecited law and policy issuance. On February 26, 1992, the Labor Arbiter dismissed the complaint. Petitioners appealed before public respondent National Labor Relations Commission which affirmed the Labor Arbiters decision. Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is valid or not. SC Ruling: The policy instruction is not valid. This issuance clarifies the enforcement policy of this Department on the working hours and compensation of personnel employed by hospital/clinics with a bed capacity of 100 or more and those located in cities and municipalities with a population of one million or more. Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, and has long been repealed with the passage of the Labor Code on May 1, 1974. Article 302 of which explicitly provide: All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders, decrees, rules and regulations inconsistent herewith are likewise repealed. Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latters validity may be gauged. Article 83 of the Labor Code states: Normal Hours of Work. -- The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least

115 one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, health personnel shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. A cursory reading of Article 83 of the Labor Code betrays petitioners position that hospital employees are entitled to a full weekly salary with paid two (2) days off if they have completed the 40-hour/5-day workweek. What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labors assertion that personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek. Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute.

SIME DARBY PILIPINAS, INC. vs. NLRC [289 SCRA 86 (1998)]

Facts: Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break. On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus 7:45 A.M. 4:45 P.M. (Mon to Fri) 7:45 A.M. 11:45 P.M. (Sat). Coffee break time will be ten minutes only anytime between:

116 9:30 A.M. 10:30 A.M. and 2:30 P.M. 3:30 P.M. Lunch break will be between: 12:00 NN 1:00 P.M. (Mon to Fri). Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break time schedules will be maintained as it is now. Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid on call lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8) hours.

Issue: Whether or not the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice? SC Ruling: The Court ruled that the revision of work schedule is a management prerogative and does not amount to unfair labor practice in discarding the paid lunch break. The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were on call. Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. The Court agrees with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not.

117

PHILIPPINE AIRLINES, INC., VS. NLRC [302 SCRA 582 (1999)]

Facts: Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him. Finding private respondents explanation unacceptable, the management charged private respondent with abandonment of post while on duty. He was given ten days to submit a written answer to the administrative charge. In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency. After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for three months effective December 16, 1994. Issue: Whether or not being a full-time employee is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals. SC Ruling: The Court does not agree with the petitioner. Articles 83 and 85 of the

118 Labor Code read: Normal hours of workThe normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, health personnel shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee; (a) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (b) Where the establishment regularly operates not less than sixteen hours a day; (c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and (d) Where the work is necessary to prevent serious loss of perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time. Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to their posts on time. Private respondents act of going home to take his dinner does not constitute abandonment.

LINTON COMMERCIAL CO., vs. ALEX A. HELLERA et al. [G.R. No. 163147. October 10, 2007.]

119 Facts: Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its by-products. Petitioner Desiree Ong is Linton's vice president. On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the company's decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected its business operations. Linton submitted an establishment termination report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering the said period. The company's operation was to resume on 6 January 1998. On 7 January 1997, Linton issued another memorandum informing them that effective 12 January 1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation basis for three working days only instead for six days a week. On the same day, Linton submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays. Issue: Whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six to three the number of working days with the employees working on a rotation basis. SC Ruling: The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of working hours that the company was suffering from losses. Petitioners attempt to justify their action by alleging that the company was suffering from financial losses owing to the Asian currency crisis. Was petitioners' claim of financial losses supported by evidence? A close examination of petitioners' financial reports for 1997-1998 shows that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State's policy to afford protection to labor and provide full employment.

120 Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the employer's operation of a business or undertaking for a period not exceeding six (6) months. Records show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these standards. All taken into account, the compressed workweek arrangement was unjustified and illegal. Thus, petitioners committed illegal reduction of work hours. Petitioners are ordered to pay respondents, except the aforementioned 21 workers who executed waivers and quitclaims, the monetary award as computed, pursuant to the decision of the Labor Arbiter with interest at the rate of 6% per annum from 12 December 2003, the date of promulgation of the Court of Appeals' decision, until the finality of this decision, and thereafter at the rate of 12% per annum until full payment.

BISIG MANGGAGAWA SA TRYCO vs. NLRC GR No. 151309, October 15, 2008

121

Facts: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees. Tryco and the petitioners signed separate Memorand[a] of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. Petitioners filed their separate complaints for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President. The Labor Arbiter dismissed the case for lack of merit. This was affirmed by the NLRC, and later on by the CA. Issue: Whether or not the CA erred in affirming the ruling of the Labor Arbiter and the NLRC SC Ruling: Petitioners mainly contend that the transfer orders amount to a constructive dismissal. We do not agree. Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business. Management's prerogative of transferring and

122 reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme: 1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement; 2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees; 3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA); 4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement. 5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties. Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.

123

X.

MINIMUM LABOR STANDARD BENEFITS UNION OF FILIPRO EMPLOYEES (UFE) vs. BENIGNO VIVAR [205 SCRA 203 (1992)]

Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay. Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. However,the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986. Issue: Whether or not sales personnel are excluded in the payment of holiday pay. SC Ruling: The Court ruled that field personnel are not entitled to such pay. Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty." The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty. The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining

124 whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work. The Court concurs with the arbitrator when it disposed that the requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of determination on the actual field work of the employees which can be reasonably ascertained. Actual field work begins after 8:00 a.m. when the sales personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of which are subject to their individual capacity and industry and which 'cannot be determined with reasonable certainty.' This is the reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay. Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: "Rule IV Holidays with Pay. SECTION 1. Coverage. This rule shall apply to all employees except: (e) Field personnel and other employees whose time and performance is unsupervised by the employer The Court finds that the rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer. The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of work in the field can be determined with reasonable certainty. The Court thinks otherwise. 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.

125

The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination. In San Miguel Brewery, Inc. v. Democratic Labor Organization, the Court had occasion to discuss the nature of the job of a salesman. It states that : "The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day."

NATIONAL SUGAR REFINERIES CORPORATION vs. NLRC [220 SCRA 452 (1993)]

Facts: Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads which was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary

126 adjustments and increases in benefits commensurate to their actual duties and functions. The Courts glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. Issue: Whether or not the members of respondent union are entitled to overtime, rest day and holiday pay. SC Ruling: The members of the union are not entitled to overtime, rest and holiday pay since they fall within the classification of managerial employees which makes them a part of the exempted employees. It must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book." Article 82 of the Labor Code states: The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations. As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff.

127 'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: (b) namely: Managerial employees, if they meet all of the following conditions, (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: They customarily and regularly direct the work of two or more employees therein: 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.

(2) (3)

(c)

Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) (2) (3) The primary duty consists of the performance of work directly related to management policies of their employer; Customarily and regularly independent judgment; exercise discretion and

(i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or

(iii) execute under general supervision special assignments and tasks; (4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above."

They are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to

128 the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto. The union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee: 1) assists the department superintendent in the following: a) planning of systems and procedures relative to department activities; b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement; c) decision making by providing relevant information data and other inputs; d) attaining the company's set goals and objectives by giving his full support; e) selecting the appropriate man to handle the job in the department; and f) preparing annual departmental budget; 2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates; 3) trains and guides subordinates on how to assume responsibilities and become more productive; 4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement; 5) represents the superintendent or the department when appointed and authorized by the former; 6) coordinates and communicates with other inter and intra department supervisors when necessary; 7) recommends disciplinary actions/promotions; 8) recommends measures to improve work methods, performance, quality of service and working conditions; equipment

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and

129 initiates and prepares reports for any observed abnormality within the refinery; 10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and 11) performs other related tasks as may be assigned by his immediate superior. From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a workweek to activities which are not directly and clearly related to the performance of their work hereinbefore described. Under the facts obtaining in this case, The Court is constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

130

ENGR. LEONICIO SALAZAR vs. NLRC [256 SCRA 273 (1996).]

Facts: On April 1990, private respondent employed petitioner as construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after completion of the project and that petitioner's services in excess of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour. On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991. On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila. Issue: Whether or not petitioner is entitled to separation pay. SC Ruling: The petitioner is not entitled to separation pay. Petitioner admitted that his job was to supervise the laborers in the construction project. Hence, although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the Labor Code, and sec. 2(b), Rule 1, Book III of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely under another exempt category "officers or members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules: SECTION 2. Exemption. The provisions of this Rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: (c) Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment;

131 (3) [i] Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or [ii] execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or [iii] execute under general supervision special assignments and tasks; and (4) who do not devote more than 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above. The petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As previously determined petitioner falls under the exemptions and therefore has no legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime services. However, this does not translate into a right on the part of petitioner to demand additional payment when, under the law, petitioner is clearly exempted there from.

LABOR CONGRESS OF THE PHILIPPINES vs. NLRC [G.R. No. 1239381. May 21, 1998]

Facts: The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of money claims and for violation of labor standards laws They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative. In an Order dated October 24, 1990, Mediator Arbiter approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment". On November 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining. On January 1991, petitioners filed a complaint against private respondents for Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting thru Harassments [sic], threats, and interfering with the rights of employees to self-

132 organization; Violation of the Memorandum of Agreement dated October 23, 1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board; Actual, Moral and Exemplary Damages." Issue: Whether or not the petitioners are entitled to labor standard benefits considering they are paid by piece rate worker. SC Ruling: The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th month pay and service incentive leave. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners' tasks were necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, and third, the length of time that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their employment was that of regular employees. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, "field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay. SEC. 8. Holiday pay of certain employees. (b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 2. EXEMPTED EMPLOYERS The following employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing

133 specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay.

MERCIDAR FISHING CORPORATION vs. NLRC & FERMIN AGAO, JR. [G.R. No. 1112574. October 8, 1998.]

Facts: This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive leave for 1990. Private respondent had been employed as a "bodegero" or ship's quartermaster on February 12, 1988. He complained that he had been constructively dismissed by petitioner when the latter refused him assignments aboard its boats after he had reported to work on May 28, 1990. Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990. However, when he came back for the certificate on September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises. Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. Issue: Whether or not the fishing crew members are considered field personnel as classified in Art. 82 of the Labor Code.

134 SC Ruling: Art. 82 of the Labor Code provides: The provisions of this title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner's business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's patron or master.

SAN MIGUEL CORPORATION vs. COURT OF APPEALS [G.R. No. 146775. January 30, 2002.]

Facts: On 17 October 1992, the Department of Labor and Employment conducted a routine inspection in the premises of San Miguel Corporation in Sta. Filomena, Iligan City. In the course of the inspection, it was discovered that there was underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it was received by and explained to its personnel officer Elena dela Puerta. SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. Hence, Director IV of DOLE Iligan District Office issued a compliance order directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from the receipt of the order. SMC appealed but it was dismissed. Issue: Whether or not the employees are entitled with regular Muslim holiday pay. SC Ruling:

135 The employees are entitled to regular Muslim holiday pay. Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states: Official Muslim holidays. The following are hereby recognized as legal Muslim holidays: (a) 'Amun Jadd (New Year), which falls on the first day of the first lunar month of Muharram; (b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar month of Rabi-ul-Awwal, (c) Lailatul Isr Wal Mi'rj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the twenty-seventh day of the seventh lunar month of Rajab: (d) 'd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal, commemorating the end of the fasting season; and (e) 'd-ul-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dh'l-Hijja. Art. 170 provides the provinces and cities where officially observed. (1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created; (2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities. The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides: Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; However, there should be no distinction between Muslims and nonMuslims as regards payment of benefits for Muslim holidays. The Court reminds the respondent-appellant that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker's faith or religion. 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 nonMuslim." In addition, the 1999 Handbook on Workers' Statutory Benefits states 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.

136 ROLANDO TAN vs. LEOVIGILDO LAGRAMA & COURT OF APPEALS [G.R. No. 151228. August 15, 2002.]

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get out.") Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. It declared that the dismissal illegal and order the payment of monetary benefits. Tan appealed to the NLRC and reversing the decision of the Labor Arbiter.

Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits provided by law. SC Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without due process.

137 In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work. Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that the relationship between the employer and employee has been so strained that the latter's reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate. This is of course in addition to the payment of backwages which, in accordance with the ruling in Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any deduction or qualification. The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work.

AVELINO LAMBO vs. NATIONAL LABOR RELATIONS COMMISSION [317 SCRA 420.]

Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of

138 private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims. On appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work. Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law. SC Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the employers control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised employees. In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship.

139 As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter applied the rule in the Mercury Drug case, according to which the recovery of back wages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess. The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year. The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis.

R&E TRANSPORT, INC. & HONORIO ENRIQUEZ vs. AVELINA LATAG [G.R. No. 155214. February 13, 2004.]

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag. Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim. SC Ruling: The respondent is entitled to retirement benefits despite of the waiver of quitclaims. There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. The findings of the NLRC that Pedro must be credited only with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two

140 different entities. After a careful and painstaking review of the evidence on record, the court supports the NLRC's findings.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary. It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.

ASIAN TRANSMISSION CORPORATION vs. COURT OF APPEALS [425 SCRA 478 (2004).]

Facts: The Department of Labor and Employment (DOLE) issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which apart from being Good Friday is also Araw ng Kagitingan, both legal holidays.

141 The bulletin reads: "On the correct payment of holiday compensation on April 9, 1993 which apart from being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on the same day, this Department is of the view that the covered employees are entitled to at least two hundred percent (200%) of their basic wage even if said holiday is unworked. The first 100% represents the payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the payment of holiday pay for the same date as Araw ng Kagitingan. Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan. Despite the explanatory bulletin, [Asian Transmission Corporation opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between petitioner and BATLU, the controversy was submitted for voluntary arbitration. On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees "200% and not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday." Issue: Whether or not the employees are entitled to the computation embodied in the bulletin clarification. SC Ruling: The employees are entitled to the computation given in the bulletin clarification. Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads: Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general election, which was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are now: 1. 2. 3. 4. 5. 6. 7. 8. New Year's Day January 1

Maundy Thursday Movable Date Good Friday Movable Date

Araw ng KagitinganApril 9 (Bataan and Corregidor Day) Labor Day May 1

Independence Day June 12 National Heroes Day Bonifacio Day Last Sunday of August November 30

142 9. 10. Christmas Day Rizal Day December 25 December 30

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

AUTOBUS TRANSPORT SYSTEM vs. ANTONIO BAUTISTA [G.R. No. 156364. May 16, 2005.]

Facts:

143 Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus. On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter decided that the complaint be dismissed where the respondent must pay to the complainant.

Issue: Whether or not respondent is entitled to service incentive leave. SC Ruling: The respondent is entitled to service incentive leave. The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all employees except: (d)Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; A careful examination of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel."

144 The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty." The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel. According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association 10 which states that: As a general rule, field personnel are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee's performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the employer. Respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly, respondent is entitled to the grant of service incentive leave. The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "every

145 employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.

SAN MIGUEL CORPORATION VS. CAROLINE DEL ROSARIO [G.R. No. 168194. December 13, 2005.]

Facts: On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9, 2001, petitioner informed respondent that her probationary employment will be severed at the close of the business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioner's premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of monetary benefits. Respondent alleged that petitioner feigned an excess in manpower because after her dismissal, it hired new recruits and re-employed two of her batch mates. On the other hand, petitioner claimed that respondent was a probationary employee whose services were terminated as a result of the excess manpower that could no longer be accommodated by the company. The Labor Arbiter declared respondent a regular employee because her employment exceeded six months and holding that she was illegally dismissed as there was no authorized cause to terminate her employment. On appeal to NLRC, it modified the previous decision. Issue: Whether or not the respondent was an employee and was illegally terminated. If so, is she entitled to monetary benefits? SC Ruling: In termination cases, the burden of proving the circumstances that would justify the employee's dismissal rests with the employer. The best proof that petitioner should have presented to prove the probationary status of respondent is her employment contract. None, having been presented, the continuous employment of respondent as an account specialist for almost 11 months, from

146 April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary reliever or a probationary employee. And while it is true that by way of exception, the period of probationary employment may exceed six months when the parties so agree, such as when the same is established by company policy, or when it is required by the nature of the work, none of these exceptional circumstance were proven in the present case. Thus, respondent whose employment exceeded six months is undoubtedly a regular employee of petitioner. Her termination from employment must be for a just or authorized cause, otherwise, her dismissal would be illegal. Petitioner tried to justify the dismissal of respondent under the authorized cause of redundancy. It thus argued in the alternative that even assuming that respondent qualified for regular employment, her services still had to be terminated because there are no more regular positions in the company. Undoubtedly, petitioner is invoking a redundancy which allegedly resulted in the termination not only of the trainees, probationers but also of some of its regular employees. Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The criteria in implementing a redundancy are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. What further militated against the alleged redundancy advanced by petitioner is their failure to refute respondent's assertion that after her dismissal, it hired new recruits and re-employed two of her batch mates. The Court finds that petitioner was not able to discharge the burden of proving that the dismissal of respondent was valid. Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to payment of full back wages, computed from the time her compensation was actually withheld from her on March 13, 2001, up to her actual reinstatement. She is likewise entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed from such date also up to her actual reinstatement. Respondent is not entitled to holiday pay because the records reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by the month, irrespective of the number of working days therein, shall be presumed to be paid for all the days in the month whether worked or not.

CHARLITO PEARANDA vs. NATIONAL LABOR RELATIONS COMMISSION [G.R. No. 159577. May 3, 2006.]

Facts:

147 Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC. After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit supporting documents. Pearanda alleges that he was employed by respondent Baganga on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. he alleges that his services were terminated without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claimed for payment of damages and attorney's fees having been forced to litigate the present complaint. Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and is represented herein by its General Manager HUDSON CHUA, the individual respondent. Respondents allege that complainant's separation from service was done pursuant to Art. 283 of the Labor Code. The respondent BPC was on temporary closure due to repair and general maintenance and it applied for clearance with the Department of Labor and Employment, Regional Office No. XI, to shut down and to dismiss employees. And due to the insistence of herein complainant he was paid his separation benefits. Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed to reapply. The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature because he was still employed by BPC. Petitioners money claims for illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay. Issue: Whether or not Pearanda is a regular, common employee entitled to monetary benefits under Art. 82 of the Labor Code and is entitled to the payment of overtime pay and other monetary benefits. SC Ruling: The petitioner is not entitled to overtime pay and other monetary benefits. The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and member of the managerial staff are not entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities:

148 (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 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."

(4)

The petitioners work involves: 1. 2. 3. 4. 5. 6. 7. action. 8. 9. 10. To supply the required and continuous steam to all consuming units at minimum cost. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories. To evaluate performance of machinery and manpower. To follow-up supply of waste and other materials for fuel. To train new employees for effective and safety white working. Recommend parts and suppliers purchases. acEHSI To recommend personnel actions such as: promotion, or disciplinary To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit. Implement Chemical Dosing. Perform other task as required by the superior from time to time."

The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules. Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff. Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. The term foreman implies that he was the representative of management over the workers and the operation of the department. Petitioner's

149 evidence also showed that he was the supervisor of the steam plant. His classification as supervisors is further evident from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees who were paid on a monthly basis; the others were paid only on a daily basis.

HOUSE OF SARA LEE vs. CYNTHIA REY [G.R. No.149013. August 31, 2006]

Facts: The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as Independent Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on whether they sell individually or through their own group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell the same products to their own customers at fixed prices also determined by the petitioner. In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late remittances, the petitioner imposes a Credit Administration Charge, or simply, a penalty charge, on the value of the unremitted payment. The dealers under this system earn income through a profit margin between the discounted purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs through the employment of Credit Administration Supervisors (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with control systems through which data is readily generated. Under this organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM).

150 Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch. Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the petitioner who happens to be respondents sister-in-law, from the 52-day limit to an unauthorized term of 60 days. The respondent made the instruction just before the computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions. Respondent received a favorable decision from the Labor Arbiter granting her payment of 13th month pay and other monetary benefits. Issue: Whether or not respondent is entitled to 13th month pay. SC Ruling: The award of 13th month pay must be deleted. Respondent is not a rankand-file employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to award 14 th and 15th month pay as well as the monthly salary increase of 10 percent per year for two years based on her latest salary rate. The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the companys fiscal situation, the employees future performance on the job, or the employees continued stay in a position. In short, absent any proof, there is no vested right to salary increases.

151 LEYTE IV ELECTRIC COOPERATIVE, INC., VS. LEYECO IV EMPLOYEES UNION-ALU [G.R. No. 157775. October 19, 2007.]

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays. Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.

SC Ruling: The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper that the employees were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees' salaries gains significance. This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees. It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of

152 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days. In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the computation of their monthly salaries. Hence, the petition is granted.

SAN MIGUEL CORP ET AL., VS. NUMERIANO LAYOC, JR., ET AL. [G.R. No. 149640. October 19, 2007.]

Facts: Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel Corporation. They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on different dates until such time that they were promoted as supervising security guards. From the commencement of their employment, the private respondents were required to punch their time cards for purposes of determining the time they would come in and out of the company's work place. Corollary, the private respondents were availing the benefits for overtime, holiday and night premium duty through time card punching. However, in the early 1990's, the San Miguel Corporation embarked on a Decentralization Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more efficient and effective management of their respective operations. As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation implemented on January 1, 1993 a "no time card policy" whereby the Supervisory I and II composing of the supervising security guards of the Beer Division were no longer required to punch their time cards. Consequently, on January 16, 1993, without prior consultation with the private respondents, the time cards were ordered confiscated and the latter were no longer allowed to render overtime work. However, in lieu of the overtime pay and the premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected by the "No Time Card Policy" were given a 10% across-the-board increase on their basic pay while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from P2,000.00 to P2,500.00 a month.

153 Hence, this complaint filed for unfair labor practice, violation of Article 100 of the Labor Code of the Philippines, and violation of the equal protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of the New Civil Code of the Philippines. Issue: Whether the circumstances in the present case constitute an exception to the rule that supervisory employees are not entitled to overtime pay. SC Ruling: Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not apply to managerial employees. The other provisions in the Title include normal hours of work (Article 83), hours worked (Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article 87), undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and computation of additional compensation (Article 90). It is thus clear that, generally, managerial employees such as respondents are not entitled to overtime pay for services rendered in excess of eight hours a day. Respondents failed to show that the circumstances of the present case constitute an exception to this general rule. Aside from their allegations, respondents were not able to present anything to prove that petitioners were obliged to permit respondents to render overtime work and give them the corresponding overtime pay. Even if petitioners did not institute a "no time card policy," respondents could not demand overtime pay from petitioners if respondents did not render overtime work. The requirement of rendering additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code. Hence, the petition is granted.

BAHIA SHIPPING SERVICES, INC., vs.REYNALDO CHUA [G.R. No. 162195. April 8, 2008.]

Facts: Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned to work. On February 15, 1997, the private respondent reported for his working station one and one-half hours late.

154 On February 17, 1997, the master of the vessel served to the private respondent an official warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice. On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary claims. The private respondent alleged that he was paid only US$300.00 per month as monthly salary for five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. Private respondent argued that it was his first offense committed on board the vessel. He adverted further that the petitioner has no proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the said union dues [from] his monthly salary. Issue: Whether or not reporting for work one and one-half hours late and abandoning his work are valid grounds for dismissal. SC Ruling: It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled to payment of his salary for the unexpired portion of his contract, as provided under Republic Act (R.A.) No. 8042, considering that his employment was pre-terminated on March 9, 1997 or four months prior to the expiration of his employment contract on July 17, 1997. Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages. Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee and, thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be defeated by mere procedural lapses. Substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. The order of the Court of Appeals to award backwages being a mere legal consequence of the finding that respondents were illegally dismissed by petitioners, there was no error in awarding the same. The Court has consistently applied the foregoing exception to the general rule. It does so yet again in the present case. Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to "his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less." The CA correctly applied the interpretation of the Court in Marsaman Manning Agency, Inc. v. National Labor Relations Commission that the second option which imposes a three months salary cap applies only when the term of the overseas contract is fixed at one year or longer; otherwise, the first option applies in that the overseas

155 worker shall be entitled payment of all his salaries for the entire unexpired period of his contract.

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION vs. PNCC SKYWAY CORPORATION G.R. No. 171231, February 17, 2010 Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of the laws of the Philippines. Petitioner and respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses for security license provisions. In a Memorandum, respondent's Head of the Traffic Management and Security Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the year 2004. Petitioner objected to the implementation of the said memorandum. It insisted that the individual members of the union have the right to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004. Petitioner also demanded that the expenses for the required in-service training of its member security guards, as a requirement for the renewal of their license, be shouldered by the respondent. However, the respondent did not accede to petitioner's demands and stood firm on its decision to schedule all the vacation leave of petitioner's members. Issues: 1) Whether or not the management has the sole discretion to schedule the vacation leave of the workers. 2) Whether or not the management is liable for the in-service training of the security guards.

SC Rulings: 1) YES. Where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a different sense.

156 In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. The preference requested by the employees is not controlling because respondent retains its power and prerogative to consider or to ignore said request. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the law between the parties. The parties cannot be allowed to change the terms they agreed upon on the ground that the same are not favorable to them. It must be noted the grant to management of the right to schedule vacation leaves is not without good reason. Indeed, if union members were given the unilateral discretion to schedule their vacation leaves, the same may result in significantly crippling the number of key employees of the petitioner manning the toll ways on holidays and other peak seasons, where union members may wittingly or unwittingly choose to have a vacation. Although the preferred vacation leave schedule of petitioner's members should be given priority, they cannot demand, as a matter of right, that their request be automatically granted by the respondent. If the petitioners were given the exclusive right to schedule their vacation leave then said right should have been incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA giving respondent the right to schedule the vacation leave of its employees, compliance therewith is mandated by law. In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee. Thus, it is well within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the same. Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can compel its employees to exhaust all their vacation leave credits. Of course, any vacation leave credits left unscheduled by the employer, or any scheduled vacation leave that was not enjoyed by the employee upon the employer's directive, due to exigencies of the service, must be converted to cash, as provided in the CBA. Moreover, the vacation leave privilege was not intended to serve as additional salary, but as a non-monetary benefit. To give the employees the option not to consume it with the aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave, which is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him additional salary and bounty. 2) YES. Although it is a rule that a contract freely entered into between the parties should be respected, since a contract is the law between the parties, there are, however, certain exceptions to the rule, specifically Article 1306 of the Civil Code, which provides: The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

157 Moreover, the relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good x x x. The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts; they are imbued with public interest and therefore are subject to the police power of the state. If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. In the present case, Article XXI, Section 6 of the CBA provides that All expenses of security guards in securing /renewing their licenses shall be for their personal account. A reading of the provision would reveal that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew his license. In-service training is a requirement for the renewal of a security guards license. Hence, following the aforementioned CBA provision, the expenses for the same must be on the personal account of the employee. However, the 1994 Revised Rules and Regulations Implementing Republic Act No. 5487 provides that it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel. Hence, it follows that the expenses to be incurred therein shall be for the personal account of the company.

158 XI. OTHER SPECIAL BENEFITS PANTRANCO NORTH EXPRESS, INC., vs. NLRC & URBANO SUIGA [259 SCRA 161 (1996)]

Facts: Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association-PTGWO. He continued in petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the aforenamed union. On February 1990, private respondent filed a complaint for illegal dismissal against petitioner with NLRC. The complaint was consolidated with two other cases of illegal dismissal having similar facts and issues, filed by other employees, non-union members. Labor Arbiter rendered his decision finding that the three complainants were illegally and unjustly dismissed and order the respondent to reinstate them to their former or substantially equivalent positions without loss of seniority rights with full back wages and other benefits. Petitioner appealed to public respondent, which issued the questioned Resolution affirming the labor arbiter's decision in toto. Issue: Whether or not the CBA stipulation on compulsory retirement after twenty-five years of service is legal and enforceable. SC Ruling: The Court rules that the CBA stipulation is legal and enforceable. The bone of contention in this case is the provision on compulsory retirement after 25 years of service. Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement 8 between petitioner company and the union states: Section 1. The COMPANY shall formulate a retirement plan with the following main features: (e) The COMPANY agrees to grant the retirement benefits herein provided to regular employees who may be separated from the COMPANY for any of the following reasons: (5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the COMPANY, whichever comes first, and the employee shall be compulsory retired and paid the retirement benefits herein provided." The said Code provides: Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the Collective Bargaining Agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as

159 he may have earned under existing laws and any collective bargaining or other agreement." The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee to reap the fruits of his labor particularly retirement benefits, whether lump-sum or otherwise at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer. As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on be put to productive and profitable uses by way of incomegenerating investments, thereby affording a more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early retirement provisions. And the same cannot be considered a diminution of employment benefits. Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to be beneficial to the employees-union members, including herein private respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision on compulsory retirement was applied to his case. Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law", which went into effect on January 7, 1993. Although passed many years after the compulsory retirement of herein private respondent, nevertheless, the said statute sheds light on the present discussion when it amended Art. 287 of the Labor Code, to make it read as follows: Retirement. Any employee may be retired upon reaching the retirement age establish in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment may retire . . ." The aforequoted provision makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA. The law presumes that employees know what they want and what is good for them absent any showing that fraud or intimidation was employed to secure their consent thereto.

160

R&E TRANSPORT, INC. & HONORIO ENRIQUEZ vs. AVELINA LATAG [G.R. No. 155214. February 13, 2004.]

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag. Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim. SC Ruling: The respondent is entitled to retirement benefits despite of the waiver of quitclaims. There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. The findings of the NLRC that Pedro must be credited only with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two different entities. After a careful and painstaking review of the evidence on record, the court supports the NLRC's findings. As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.

161 Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary. It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.

MARILYN ODCHIMAR GERLACH vs. REUTERS LIMITED, PHILS. [G.R. No. 148542. January 17, 2005.]

Facts: On February 15, 1982, respondent Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices worldwide, hired Marilyn Odchimar Gerlach as its local correspondent. On October 1983, respondent Reuters implemented a local Retirement Benefit Plan (Plan) for its Philippinehired employees. The Plan is funded by the company, but an employeeparticipant may volunteer to contribute a percentage of his basic monthly salary to the fund. Petitioner was automatically covered by the Plan by reason of her age and length of service. However, she opted not to contribute to the fund. She worked in Reuters Philippines up to December 23, 1983. On October 12, 1988, she was directed to return to Manila and resume her post by December 15, 1988. On March 1, 1991, petitioner received her retirement benefits under the Plan in the amount of P79,228.04, which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. The computation was based on her notional salary. However, she

162 questioned the amount she received as well as her entitlement to a disturbance grant, contending that her retirement benefits must be computed on the basis of her actual salary abroad, not on her notional salary. Eventually, petitioner filed with the Office of the Labor Arbiter, NCR, a money claim against respondent, docketed. On March 1994, the Labor Arbiter rendered its first Decision ordering respondent to pay petitioner additional retirement benefits in the sum of P436,000.00, which amount was based on her actual salary abroad, not on her notional salary; a disturbance grant in the sum of Stg 1,750 or its equivalent in pesos; and attorney's fees. On appeal, the National Labor Relations Commission (NLRC), rendered its Decision setting aside the appealed Decision and remanding the case to the Labor Arbiter for trial on the merits. Issue: Whether or not petitioner is allowed to claim for additional retirement benefits. SC Ruling: The petitioner is not entitled to the additional retirement benefits. There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. The third type is one that is voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. 28 It is this third type of retirement scheme which covers respondent's Plan. Article 287 of the Labor Code reads: Article 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements." The first paragraph of the above provisions deals with the retirement age of an employee established in (a) a collective bargaining agreement or (b) other applicable employment contract. The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing law, (b) a collective bargaining or (c) other agreements. Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code, provides: "Sec. 14. Retirement benefits. (a) An employee who is retired pursuant to a bona fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein.

163 Thus, in the instant case, respondent based petitioner's retirement benefits on its Plan and established policy, which is in accord with the above provision. Consequently, petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. The Court ruled that petitioner's retirement benefits must be based on her notional Philippine salary. It is very clear that from the very start of her first assignment overseas, respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. In fact, under the Plan, the company's contribution to the fund is 10% of the basic monthly salary of each participant. Respondent also informed petitioner of the amount of her notional Philippine salary whenever she was transferred to her next overseas assignment or when there were increases in her salary, both actual and notional. Significantly, respondent was able to prove that it has been its practice worldwide that the notional salary of an employee is its basis in computing its contribution to the retirement plan for a local employee detailed abroad. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary.

HONDA PHILIPPINES., INC., VS. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA [G.R. No.145561. June 15, 2005]

Facts: The case stems from the collective bargaining agreement between Honda and the respondent union that it granted the computation of 14th month pay as the same as 13th month pay. Honda continues the practice of granting financial assistance covered every December each year of not less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock. DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking employees were ordered to return to work and management to accept them back under the same terms prior to the strike staged. Honda issued a memorandum of the new computation of the 13th month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for purpose of computing the said benefits. The amount equivalent to of the employees basic salary shall be deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda shall pay the amount. The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary arbitration where it ruled that the companys implementation of the pro-rated computation is invalid.

164 Issue: Whether or not the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid and lawful.

SC Ruling: The Court ruled that the pro-rated computation is invalid. The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was the first time they implemented such practice. The payment of the 13th month pay in full month payment by Honda has become an established practice. The length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code. The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall constitute a violation of Article 100 of the Labor Code.

ALPHA JACULBE VS. SILLIMAN UNIVERSITY [G.R. No. 156934. March 16, 2007.]

Facts: Sometime in 1958, petitioner began working for respondents university medical center as a nurse. In a letter in December 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondents retirement plan for its employees which provided that its members could be automatically retired upon reaching the age of 65 or after 35 years of uninterrupted service to the university. Respondent required certain documents in connection with petitioners impending retirement. A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing company policy.

165 On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for termination of service with preliminary injunction and/or restraining order. On November 18, 1993, respondent compulsorily retired petitioner. The labor arbiter rendered a decision finding respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full back wages. On appeal, the NLRC reversed the labor arbiters decision and dismissed the complaint. the CA affirmed the NLRC. Issue: Whether or not the respondents retirement plan imposing automatic retirement after 35 years of service contravenes the security of tenure clause in the 1987 Constitution and the Labor Code. SC Ruling: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. The rules and regulations of the plan show that participation therein was not voluntary at all. Rule III of the plan, on membership, stated: SECTION 1 MEMBERSHIP, All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that those who have retired from the University, even if rehired, are no longer eligible for membership in the Plan. A member who continues to serve the University cannot withdraw from the Plan. SECTION 2 EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is hired on a full-time basis by the University. SECTION 3 TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employees contract by the University, or retirement from the University. Meanwhile, Rule IV, on contributions, stated: The Plan is contributory. The University shall set aside an amount equivalent to 3% of the basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff. A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay should pay his contributions to the Plan. However, a member, who has been on leave without pay should pay his contributions based on his salary plus the Universitys contributions while on leave or the full amount within one month immediately after the date of his reinstatement. Provided[,] further that if a member has

166 no sufficient source of income while on leave may pay within six months after his reinstatement. It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word shall ineluctably pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on leave). Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former. The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance. An employer is free to impose a retirement age less than 65 for as long as it has the employees consent. Stated conversely, employees are free to accept the employers offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented by the employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal. Rufina Patis Factory vs Alusitain GR 146202 Facts: In 1948, Alusitain was hired as a laborer at the Rufina Patis Factory owned and operated by petitioner Lucas. After close to 43 years or no February 1991, Alusitain admittedly tendered his resignation letter. On May of the same year, he executed a duly notarized affidavit of separation from employment and submitted the same on even date to the Pensions Department of the SSS. On 1993, RA 7641 took effect which provided a retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment.

In 1995, Alusitain verbally demanded from petitioner Lucas for the payment of his retirement benefits claiming that he retired from the company on January 1995 amounting to: Retirement Benefits = month salary for every year of service One-half month salary = P1,885.00 Years of Service = 47 years Retirement Benefits = P86,710.00 Lucas refused to pay the retirement benefits and having failed to arrive at an amicable settlement, Alusitain filed on November 1995 a complaint before the NLRC against petitioners for non-payment of retirement benefits. Petitioners

167 Rufina Patis Factory and Lucas maintained that Alusitain had resigned from the company on February 1991 per his resignation letter and affidavit of separation dated May 1991. Alusitain, while admitting that he had indeed submitted a resignation letter and an affidavit of separation, he nevertheless continued to work for petitioners until January 1995, the date of actual retirement due to illness and old age, and that he merely accomplished the foregoing documents in compliance with the requirements of the SSS in order to avail of his retirement benefits. Labor Arbiter ruled in favor of Alusitain which was affirmed by NLRC on appeal. Issue: Whether or not Alusitain is entitled to retirement benefits SC Ruling: Petitioners assert that the Affidavit of Separation, being a public document, is entitled to full faith and credit upon its face, and proof is required to assail and controvert the same. Petitioners further assert that the appellate court erred in applying retroactively R.A. 7641 as said law does not expressly provide for such retroactive application and to do so would defeat the clear intent of Congress. According to various jurisprudence, Republic Act 7641 may be given retroactive effect where: (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility under the statute for such retirement benefits. It is thus clear that in order for respondent to claim retirement benefits from petitioner Rufina Patis Factory, he has to prove that he was its employee at the time R.A. 7641 took effect. In the case at bar, it was incumbent on Alusitain to prove that he retired on January 31, 1995 and not on February 20, 1991 as indicated on his letter of resignation. While these two documents (resignation letter and affidavit of separation) may have facilitated the release of Alusitain's retirement benefits from the SSS, hence, beneficial to him at that time, they may still be considered admissions against interest since the disserving quality of the admission is judged as of the time it is used or offered in evidence and not when such admission is made. Thus, it matters not that the admission is self-serving when it was made, so long as it is against respondent's present claim. No doubt, admissions against interest may be refuted by the declarant. It bears stressing, however, that Alusitain's Affidavit of Separation filed with the SSS is a notarial document, hence, prima facie evidence of the facts expressed therein. In order for a declarant to impugn a notarial document which he himself executed, it is not enough for him to merely execute a subsequent notarial document. What the law requires in order to contradict the facts stated in a notarial document is clear and convincing evidence. The subsequent notarial documents executed by respondent and his daughter fall short of this standard. The case of Reyes v. Zaballero is instructive. In said case, the creditor executed on December 1, 1944 a notarial document stating that he was releasing a real

168 estate mortgage as the debtor had already paid his debt. On even date, the creditor subsequently executed an affidavit without the debtor's knowledge stating that he had accepted the payment under protest and "obligado por las circunstancias actuales." This Court held that the creditor's statement in his affidavit that he received the money "obligado por las circunstancias actuales" is self-serving evidence. A contrary rule would undermine the confidence of the public in the integrity of notarial documents. In Dequito v. Llamas, this Court held: After executing the affidavit voluntarily wherein he made admissions and declarations against his own interest under the solemnity of an oath, he cannot be allowed to spurn them and undo what he has done. He cannot, even "with great repentance, retrieve the body he forsook and now wishes to live." Neither is the sworn statement of Alusitain's daughter sufficient to prove that he indeed retired on Alusitain's daughter did not state that her father worked for petitioner Rufina Patis Factory until his alleged retirement on January 31, 1995. All she said was that the last time she brought him food at the factory was in January 1995. To conclude that Alusitain was still employed on January 1995 from the mere fact that his daughter brought him food at the Rufina Patis Factory is non sequitur. In the case at bar, Alusitain's retraction is highly suspect. Other than his bare and self-serving allegations and the sworn statement of his daughter which, as reflected above, cannot be relied upon, he has not shown any scintilla of evidence that he was employed with petitioner Rufina Patis Factory at the time R.A. 7641 took effect. He did not produce any documentary evidence such as pay slips, income tax return, his identification card, or any other independent evidence to substantiate his claim. In fine, Alusitain having failed to prove that he was an employee of petitioner at the time R.A. 7641 took effect, his claim for retirement benefits thereunder must be disallowed.

WHEREFORE, the petition is GRANTED. The Court of Appeals June 23, 2000 Decision and December 6, 2000 Resolution in CA-G.R. SP No. 54722 are REVERSED and SET ASIDE. INTERCONTINENTAL BROADCASTING CORPORATION VS. NOEMI AMARILLA [G.R. No. 162775. October 27, 2006.]

Facts: On various dates, petitioner employed the following persons at its Cebu station: Candido C. Quiones, Jr, Corsini R. Lagahit, as Studio Technician, Anatolio G. Otadoy, as Collector and Noemi Amarilla, as Traffic Clerk. On March 1986, the government sequestered the station, including its properties, funds and other assets, and took over its management and operations from its owner, Roberto Benedicto. However, in December 1986, the government and Benedicto entered into a temporary agreement under which the latter would retain its management and operation. On November 1990, the Presidential Commission

169 on Good Government (PCGG) and Benedicto executed a Compromise Agreement, where Benedicto transferred and assigned all his rights, shares and interests in petitioner station to the government. In the meantime, the four employees retired from the company and received, on staggered basis, their retirement benefits under the 1993 Collective Bargaining Agreement between petitioner and the bargaining unit of its employees. In the meantime, a P1,500.00 salary increase was given to all employees of the company, current and retired, effective July 1994. However, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter that their differentials would be used to offset the tax due on their retirement benefits in accordance with the National Internal Revenue Code (NIRC). The four retirees filed separate complaints against IBC TV-13 Cebu and Station Manager Louella F. Cabaero for unfair labor practice and non-payment of backwages before the NLRC. Issue: Whether or not the retirement benefits of respondents are part of their gross income. SC Ruling: The Court agrees with petitioner that under the CBA, it is not obliged to pay for the taxes on the respondents' retirement benefits. CBA did not provide a provision where petitioner obliged itself to pay the taxes on the retirement benefits of its employees. The Court also agrees with petitioner that, under the NIRC, the retirement benefits of respondents are part of their gross income subject to taxes. Section 28 (b) (7) (A) of the NIRC of 1986 23 provides: Gross Income. (b) Exclusions from gross income. The following items shall not be included in gross income and shall be exempt from taxation under this Title: (7) Retirement benefits, pensions, gratuities, etc. A.) Retirement benefits received by officials and employees of private firms whether individuals or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement: Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or employee only once. For purposes of this subsection, the term "reasonable private benefit plan" means a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his officials or employees, where contributions are made by such employer for officials or employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said official and employees.

Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides: (b) Pensions, retirements and separation pay. Pensions,

170 retirement and separation pay constitute compensation subject to withholding tax, except the following: (1) Retirement benefit received by official and employees of private firms under a reasonable private benefit plan maintained by the employer, if the following requirements are met: (i) The retirement plan must be approved by the Bureau of Internal Revenue; (ii) The retiring official or employees must have been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of retirement; and (iii) The retiring official or employee shall not have previously availed of the privilege under the retirement benefit plan of the same or another employer. Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the concurrence of the following elements: (1) a reasonable private benefit plan is maintained by the employer; (2) the retiring official or employee has been in the service of the same employer for at least 10 years; (3) the retiring official or employee is not less than 50 years of age at the time of his retirement; and (4) the benefit had been availed of only once. Article VIII of the 1993 CBA provides for two kinds of retirement plans compulsory and optional. Thus: ARTICLE VIII RETIREMENT Section 1: Compulsory Retirement Any employee who has reached the age of Fifty Five (55) years shall be retired from the COMPANY and shall be paid a retirement pay in accordance with the following schedule: LENGTH OF SERVICE RETIREMENT BENEFITS

1 year-below 5 yrs. 15 days for every year of service 5 years-9 years 30 days for every year of service

10 years-14 years 50 days for every year of service 15 years-19 years 65 days for every year of service 20 years or more 80 days for every year of service

A supervisor who reached the age of Fifty (50) may at his/her option retire with the same retirement benefits provided above. Section 2: Optional Retirement Any covered employee, regardless of age, who has rendered at least five (5) years of service to the COMPANY may voluntarily retire and the COMPANY agrees to pay Long Service Pay to said covered employee in accordance with the following schedule: LENGTH OF SERVICE 5-9 years 10-14 years 15-19 years 20 years or more RETIREMENT BENEFITS

15 days for every year of service 30 days for every year of service 50 days for every year of service 60 days for every year of service

Section 3: Fraction of a Year In computing the retirement under Section 1 and 2 of this Article, a fraction of at least six (6) months shall be considered as one whole year. Moreover, the COMPANY may exercise the option of extending the employment of an employee.

171 Section 4: Severance of Employment Due to Illness When a supervisor suffers from disease and/or permanent disability and her/his continued employment is prohibited by law or prejudicial to her/his health of the health of his coemployees, the COMPANY shall not terminate the employment of the subject supervisor unless there is a certification by a competent public health authority that the disease is of such a nature or at such stage that it can not be cured within a period of six (6) months even with proper medical treatment. The supervisor may be separated upon payment by the COMPANY of separation pay pursuant to law, unless the supervisor falls within the purview of either Sections 1 or 2 hereof. In which case, the retirement benefits indicated therein shall apply, whichever is higher. Section 5: Loyalty Recognition The COMPANY shall recognize the services of the supervisor/director who have reached the following number of years upon retirement by granting him/her a plaque of appreciation and any lasting gift: 10 years but below 15 years (P3,000.00) worth; 15 years but below 20 year (P7,000.00) worth; 20 years and more (P10,000.00) worth. Respondents were qualified to retire optionally from their employment with petitioner. there is no record that the 1993 CBA had been approved or was ever presented to the BIR. Hence, the retirement benefits of respondents are taxable. Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxes on said benefits and remit the same to the BIR. Section 80. Liability for Tax. (A) Employer. The employer shall be liable for the withholding and remittance of the correct amount of tax required to be deducted and withheld under this Chapter. If the employer fails to withhold and remit the correct amount of tax as required to be withheld under the provision of this Chapter, such tax shall be collected from the employer together with the penalties or additions to the tax otherwise applicable in respect to such failure to withhold and remit.

ROGELIO REYES vs. NLRC et al. [G.R. No. 160233. August 8, 2007.]

Facts: Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12, 1977. He was eventually appointed as unit manager of Sales Department-South Mindanao District, a position he held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation of his separation pay. Insisting that his retirement benefits and 13th month pay must be based on the average monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner refused to accept the check issued by private respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC for retirement benefits, 13th month pay, tax

172 refund, earned sick and vacation leaves, financial assistance, service incentive leave pay, damages and attorney's fees. Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned by salesmen form part of their basic salary. Private respondent counters that petitioner knew that the overriding commission is not included in the basic salary because it had not been considered as such for a long time in the computation of the 13th month pay, leave commissions, absences and tardiness.

Issue: Whether or not the average monthly sales commission of thirty one thousand eight hundred forty six and 97/100 (Php31,846.97) should be included in the computation of his retirement benefits and 13th month pay. SC Ruling: This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-determined percentage of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing the 13th month pay. The salesmen's commission are not overtime payments, nor profit-sharing payments nor any other fringe benefit but a portion of the salary structure which represents an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term basic salary because these were paid to the medical representatives and rank-and-file employees as productivity bonuses, which are generally tied to the productivity, or capacity for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or necessary relation to the amount of work actually done by each individual employee. Further, commissions paid by the Boie-Takeda Company to its medical representatives could not have been sales commissions in the same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all. In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for its payment, which indubitably are factual in nature for they will require a re-examination and calibration of the evidence on record. As to the main issue whether petitioner's commissions be considered in the computation of his retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract In

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

LETRAN CALAMBA FACULTY & EMPLOYEES ASSOCIATION vs. NLRC et al. [G.R. No. 156225. January 29, 2008.]

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Facts: On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due to its members. Some of the allegations of the petitioners in its Position Paper are: (1) In the computation of the thirteenth month pay of its academic personnel, respondent does not include as basis therefor their compensation for overloads. It only takes into account the pay the faculty members receive for their teaching loads not exceeding eighteen (18) units; (2) respondent has not paid the wage increases required by Wage Order No. 5 to its employees who qualify thereunder; (3) respondent has not also paid its employees the holiday pay for the ten (10) regular holidays as provided for in Article 94 of the Labor Code. Respondent has refused without justifiable reasons and despite demands to pay its obligations. As to the inclusion of the overloads of respondent's faculty members in the computation of their 13th-month pay, petitioner argues that under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, promulgated by the Secretary of Labor on November 16, 1987, the basic pay of an employee includes remunerations or earnings paid by his employer for services rendered, and that excluded therefrom are the cash equivalents of unused vacation and sick leave credits, overtime, premium, night differential, holiday pay and cost-of-living allowances. Petitioner claims that since the pay for excess loads or overloads does not fall under any of the enumerated exclusions and considering that the said overloads are being performed within the normal working period of eight hours a day, it only follows that the overloads should be included in the computation of the faculty members' 13th-month pay. Issue: Whether or not a teacher's overload pay should be considered in the computation of his or her 13th-month pay. SC Ruling: It is a settled rule that when an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a preexisting law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means. In the present case, while the DOLE Order may not be applicable, the Court finds that overload pay should be excluded from the computation of the 13th-month pay of petitioner's members. In resolving the issue of the inclusion or exclusion of overload pay in the computation of a teacher's 13th-month pay, it is decisive to determine what "basic salary" includes and excludes. In this respect, the Court's disquisition in San Miguel Corporation v. Inciong is instructive, to wit: Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary: a) Cost-of-living allowances granted pursuant to

175 Presidential Decree 525 and Letter of Instruction No. 174; b) Profit sharing payments; c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as "fringe" benefits. Likewise, the catch-all exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary" shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or "fringe" benefits. Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay. While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary. The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose. This conclusion finds strong support under the Labor Code of the Philippines. To cite a few provisions: Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, additional compensation equivalent to his regular wage plus at least twenty-five (25%) percent thereof. It is clear that overtime pay is an additional compensation other than and added to the regular wage or basic salary, for reason of which such is categorically excluded from the definition of basic salary under the Supplementary Rules and Regulations Implementing Presidential Decree 851. In Article 93 of the same Code, paragraph c.) work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the employee." It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional compensation other than and added to the

176 regular wage or basic salary. For similar reason it shall not be considered in the computation of the 13th-month pay. In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load. Moreover, petitioner failed to refute private respondent's contention that excess teaching load is paid by the hour, while the regular teaching load is being paid on a monthly basis; and that the assignment of overload is subject to the availability of teaching loads. This only goes to show that overload pay is not integrated with a teacher's basic salary for his or her regular teaching load. In addition, overload varies from one semester to another, as it is dependent upon the availability of extra teaching loads. As such, it is not legally feasible to consider payments for such overload as part of a teacher's regular or basic salary. Verily, overload pay may not be included as basis for determining a teacher's 13th-month pay.

PHILIPPINE AIRLINES v. PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION G. R. No. 142399. March 12, 2008 Facts: The present petition arose from a labor complaint filed by respondent PALEA against petitioners PAL and one Mary Anne del Rosario, Director of Personnel of petitioner PAL, on 1 March 1989. The labor complaint charged both petitioners with unfair labor practice for the alleged non-payment of the 13th month pay of petitioner PALs employees who had not been regularized as of the 30 of April 1988, allegedly in contravention of the Collective Bargaining Agreement (CBA) entered into by petitioner PAL and respondent PALEA. On 6 February 1987, petitioner PAL and respondent PALEA entered into a CBA covering the period of 1986-1989. Respondent PALEA assailed the implementation of the guideline on the ground that all employees of PAL, regular or non-regular, must be paid their 13th month pay. In fact, in a letter dated 16 December 1988, respondent PALEA, through Herbert C. Baldovino informed petitioner PAL that there were several employees who failed to receive their 13th Month Pay as of the date of the correspondence. In response thereto, petitioner PAL informed respondent PALEA that rank and file employees who were regularized after 30 April 1988 were not entitled to the 13th month pay as they were already given their Christmas bonuses on 9 December 1988 per the Implementing Rules of Presidential Decree No. 851. Disagreeing with petitioner PAL, respondent PALEA filed a labor complaint for unfair labor practice against petitioner PAL before the NLRC on 1 March 1989. The complaint interposed that the cut-off period for regularization should not be used as the parameter for granting 13th month pay considering that the law does not distinguish the status of employment instead the law covers all employees.

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In its Position Paper submitted before the Labor Arbiter, petitioner PAL countered that those rank and file employees who were not regularized by 30 April of a particular year are, in principle, not denied their 13th month pay considering they receive said mandatory bonus in the form of the Christmas Bonus; that the Christmas Bonus given to all its employees is deemed a compliance with Presidential Decree No. 851 and the latters implementing rules; and that the foregoing has been the practice formally adopted in previous CBAs as early as 1970. Issue: Whether or not the Court of Appeals committed reversible error in affirming the order of the NLRC for the payment of the 13th month pay or mid-year bonus to its employees regularized after 30 April 1988. SC Ruling: In a Resolution dated 19 June 2007, We resolved to suspend the proceedings of the case at bar in view of the on-going rehabilitation of petitioner PAL as mandated by the Securities and Exchange Commission. On 28 September 2007, however, the SEC issued an Order granting petitioner PALs request to exit from rehabilitation after successfully stabilizing its financial operations. Hence, the suspension earlier issued by this Court is hereby lifted, making the present Petition ripe for resolution. A cursory reading of the 1986-1989 CBA of the parties herein will instantly reveal that Art. I, Sec. 3 of said agreement made its provision applicable to all employees in the bargaining unit. The particular section specifically defined the scope of application of the CBA, thus: Section 3 Application. All the terms and conditions of employment of employees within the bargaining unit are embodied in this Agreement, and the same shall govern the relationship between the Company and such employees. On the other hand, all such benefits and/or privileges as are not expressly provided for in this Agreement but which are now being accorded in accordance with the PAL Personnel Policies and Procedures Manual, shall be deemed also part and parcel of the terms and conditions of employment, or of this Agreement. Without distinguishing between regular and non-regular employees. As succinctly put by respondent PALEA in its Memorandum: All employees in PAL are entitled to the same benefit as they are within the same collective bargaining unit and the entitlement to such benefit spills over to even non-union members. It is a well-settled doctrine that the benefits of a CBA extend to the laborers and employees in the collective bargaining unit, including those who do not belong to the chosen bargaining labor organization. Otherwise, it would be a clear case of discrimination. Hence, to be entitled to the benefits under the CBA, the employees must be members of the bargaining unit, but not necessarily of the labor organization designated as the bargaining agent. A bargaining unit has been defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicates to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. There is no showing that the non-regular status of the concerned employees by said cut-off date sufficiently distinguishes their interests from those of the regular employees so as to exclude them from the collective bargaining unit and the benefits of the CBA.

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Having ruled that the benefits provided by the subject CBA are applicable even to non-regular employees who belong to the bargaining unit concerned, the next and crucial query to be addressed is whether the 13th month pay or midyear bonus can be equated to the Christmas bonus. As far as non-regular employees are concerned, petitioner PAL alleges that their 13th month pay shall be the same as their Christmas bonus and will be paid according to the terms governing the latter. We do not agree. From the facts of the present Petition, it is crystal clear that petitioner PAL is claiming an exemption from payment of the 13th month pay or mid-year bonus provided in the CBA under the guise of paying the Christmas bonus which it claims to be the equivalent of the 13th month pay under Presidential Decree No. 851. Presidential Decree No. 851 mandates that all employers must pay all their employees receiving a basic salary of not more than P1,000.00 a month, regardless of the nature of the employment, a 13th month pay not later than 24 December of every year. While employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of the issuance of Presidential Decree No. 851 are already exempted from the mandatory coverage of said law, petitioner PAL cannot escape liability in this case by virtue thereof. It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its employees 1) the 13th month pay or the mid-year bonus, and 2) the Christmas bonus. The 13th month pay, guaranteed by Presidential Decree No. 851, is explicitly covered or provided for as the mid-year bonus in the CBA, while the Christmas bonus is evidently and distinctly a separate benefit. Petitioner PAL may not be allowed to brush off said distinction, and unilaterally and arbitrarily declare that for non-regular employees, their Christmas bonus is the same as or equivalent to the 13th month pay. Presidential Decree No. 851 mandates the payment of the 13th month pay to uniformly provide the low-paid employees with additional income. It but sets a minimum requirement that employers must comply with. It does not intend, however, to preclude the employers from voluntarily granting additional bonuses that will benefit their employees. A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity of the employer for which the employee ought to be thankful and grateful. It is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. We deem that the Christmas bonus in this case is of this nature, although, by virtue of its incorporation into the CBA, it has become more than just an act of generosity on the part of petitioner PAL, but a contractual obligation it has undertaken. The inclusion of a provision for the continued payment of the Christmas bonus in the 1986-1989 CBA between respondent PALEA and petitioner PAL contradicts the companys claim that the grant of such benefit was intended to be credited as compliance with the statutory mandate to give the 13th month pay. Memorandum Order No. 28, extending Presidential Decree No. 851 to all employees regardless of the amount of their monthly salaries, was issued on 13 August 1986. As early as said date, therefore, petitioner PAL was already fully aware that it was lawfully compelled to accord all its employees a 13th month pay. Accordingly, if petitioner PAL truly intended that the Christmas bonus be treated as the equivalent of the 13th month pay required by law, then said intention should have been expressly declared in their 1986-1989 CBA, or the

179 separate provision therein on the Christmas bonus should have been removed because it would only be superfluous. In the case under consideration, the provision for the payment of the Christmas bonus, apart from the 13th month pay, was incorporated into the 1986-1989 CBA between respondent PALEA and petitioner PAL without any condition. The Christmas bonus, payable in December of every year, is distinguished from the 13th month pay, due yearly in May, for which reason it was denominated as the mid-year bonus. Such being the case, the only logical inference that could be derived therefrom is that petitioner PAL intended to give the members of the bargaining unit, represented by respondent PALEA, a Christmas bonus over and above its legally mandated obligation to grant the 13th month pay. The non-regular rank and file employees of petitioner PAL as of 30 April 1988, are not actually seeking more benefits than what the other memberemployees of the same bargaining unit are already enjoying. They are only requesting that all members of the bargaining unit be treated equally and afforded the same privileges and benefits as agreed upon between respondent PALEA and petitioner PAL in the CBA. A collective bargaining agreement refers to a negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all other contracts, the parties to a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties, and compliance therewith is mandated by the express policy of the law.

ARCO METAL vs. PRODUCTS CO., INC., ET AL., vs. SAMAHAN NG MGA MANGGAGAWA SA ARCO-METAL-NAFLU [G.R. No. 170734, May 14, 2008] Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13 th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code.

180 SC Ruling: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employers act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head. Hence, petition was denied.

UNIVERSAL ROBINA SUGAR MILLING CORP. (URSUMCO) vs. CABALLEDA GR No. 156644, July 28, 2008

Facts: Petitioner URSUMCO is a domestic corporation engaged in the sugar milling business. Respondent Agripino worked as a welder while respondent Cadalin worked for URSUMCO as crane operator. On April 24, 1991, John Gokongwei, President of URSUMCO, issued a Memorandum establishing the company policy on Compulsory Retirement of its employees. The memorandum provides: All employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered retired on May 31, 1991.

181

Henceforth, any employee shall be considered retired 30 days after he attains age 60. xxxxxxxxxxxxxxxxxxxxx Subsequently, on December 9, 1992, R.A No. 7641 was enacted into law, and it took effect on January 7, 1993, amending Article 287 of the Labor Code, to read: Art. 287. Retirement. -- Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. xxxx Retail, service and agricultural establishments or operations employing not more than (10) employees or workers are exempted from the coverage of this provision. Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate labor organization and the recognized sole and exclusive bargaining representative of all the monthly and daily paid employees of URSUMCO, of which Alejandro was a member, entered into a Collective Bargaining Agreement (CBA). Article XV of the said CBA particularly provided that the retirement benefits of the members of the collective bargaining unit shall be in accordance with law. Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced to retire by URSUMCO. Both averred that URSUMCO illegally dismissed him from employment on June 24, 1997 when they were forced to retire upon reaching the age of sixty (60) years old. Upon the termination of his

182 employment, they accepted their separation pays and applied for retirement benefits with the Social Security System (SSS). Alejandro turned 60 years old. On May 28, 1997, he filed his application for retirement with URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997, he accepted his retirement benefits and executed a quitclaim in favor of URSUMCO. Thereafter, both filed a complaint for illegal dismissal in view that their compulsory retirement was in violation of the RA 7641. Petitioners argued that Alejandro voluntarily retired from the service and as proof, he executed a valid quitclaim in favor of petitioners; that R.A. 7641 cannot be given retroactive effect since there is an existing CBA that covers the retirement benefits of the employees; that the Memorandum was no longer being implemented at the time of respondents' retirement since R.A. 7641 was already in effect at the time, thus, the CA erred when it ruled that respondents were forced to retire pursuant to said Memorandum; that the CBA entered into by URSUMCO and the NFL of which Alejandro is a member, is proof that URSUMCO stopped implementing the Memorandum and that, assuming the said Memorandum was still implemented despite the advent of R.A. 7641 and the CBA, retirement notices should have been served to the respondents as directed by the Memorandum or, at most, a collective action should have been taken against URSUMCO by NFL. With respect to Agripino, petitioners claim that he is merely a seasonal or project worker and not a casual worker since the sugar milling business is seasonal in nature; that as such, Agripino was not forced to retire, rather the termination of his employment was essentially based on the fact that the period stated in his contract with URSUMCO had already lapsed. On the other hand, respondents argued that they were forced to retire at the age of 60 by virtue of the Memorandum which the employees did not ratify or freely agree upon, hence, respondents' dismissal from work was without valid cause and due process, amounting to illegal dismissal; that the Memorandum which unilaterally directed the compulsory retirement of employees reaching the age of 60 is contrary to the security of tenure guaranteed in the Constitution, Art. 287 of the Labor Code as amended by R.A. 7641, pertinent Labor and Civil Code provisions, public policy and good customs; and that the respondents were merely compelled to sign the prepared retirement forms and comply with the other retirement requirements because they were no longer given any work assignment and they could only receive their retirement benefits if they sever their employment relations with URSUMCO and comply with the latter's directives. Respondents submit that they were given no option but to follow URSUMCO's orders regarding their retirement, hence, the same was not voluntary. Issues: 1.) Whether R.A.7641 can be given retroactive effect 2.) Whether respondents were illegally terminated on account of compulsory retirement or the same voluntarily retired. SC Rulings: The petition lacks merit.

183 First. The issue of the retroactive effect of R.A. 7641 on prior existing employment contracts has long been settled. In Enriquez Security Services, Inc. v. Cabotaje, we held: RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that -- absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer -can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute. It is evident from the records that when respondents were compulsorily retired from the service, R.A. 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case. Third. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. The age of retirement is primarily determined by the existing agreement between the employer and the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee. Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his application for retirement, submitted all the

184 documentary requirements, accepted the retirement benefits and executed a quitclaim in favor of URSUMCO. Respondents claim otherwise, contending that they were merely forced to comply as they were no longer given any work assignment and considering that the severance of their employment with URSUMCO is a condition precedent for them to receive their retirement benefits. We rule in favor of respondents. Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits therefrom does not amount to estoppel. The reason is laid down in Lopez Sugar Corporation v. Federation of Free Workers: The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of the job, he had to face harsh necessities of life. He thus found himself in no position to resist money proferred. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim. They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur. In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. In this case, petitioners failed to establish all the foregoing requisites. Moreover, the petitioners, not the respondents, have the burden of proving that the quitclaim was voluntarily entered into. In previous cases, we have considered, among others, the educational attainment of the employees concerned in upholding the validity of the quitclaims which they have executed in favor of their employers. However, in Becton Commission,we held: Dickinson Phils., Inc. v. National Labor Relations

There is no nexus between intelligence, or even the position which the employee held in the company when it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the same dilemma of whether signing a release and quitclaim and accept what the company offers them, or refusing to sign and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle starting from the labor

185 arbiter level, all the way to this Court, can he receive anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be entitled to based on company practice and policy or by law. It is worth mentioning that the respondents are rank-and-file employees. They are simple folks who rely on their work for the daily sustenance of their respective families. Absent any convincing proof of voluntariness in the submission of the documentary requirements and in the execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same pressure mentioned in Becton. Furthermore, the fact that respondents filed a complaint for illegal dismissal against petitioners completely negates their claim that respondents voluntarily retired. To note, respondents vigorously pursued this case against petitioners, all the way up to this Court. Without doubt, this is a manifestation that respondents had no intention of relinquishing their employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired. We find no reversible error and, thus, sustain the ruling of the CA that respondents did not voluntarily retire but were rather forced to retire, tantamount to illegal dismissal. WHEREFORE, the instant Petition is DENIED.

XII.

2005 REVISED RULES OF PROCEDURE OF THE NLRC EFFECTIVE JANUARY 7, 2006

ALDORA LARKINS vs. NATIONAL LABOR RELATIONS COMMISSION, ET AL. [G.R. No. 92432. February 23, 1995]

Facts: Petitioner was a member of the United States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga. On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the dormitories with the De Guzman Custodial Services. The employees thereof, including private respondents, were allowed to continue working for 3 AGS. It was left to the new contractor, the JAC Maintenance Services owned by Joselito Cunanan, to decide whether it would retain their services. Joselito Cunanan, however, chose to bring in his own workers. As a

186 result, the workers of the De Guzman Custodial Services were requested to surrender their base passes to Lt. Col. Frankhauser or to petitioner. It is petitioner's contention that the questioned resolutions are null and void because respondent Labor Arbiter did not acquire jurisdiction to entertain and decide the case. Petitioner alleges that she never received nor was served, any summons or copies of the original and amended complaints, and therefore the Labor Arbiter had no jurisdiction over her person under Article XIV of the R.P. ? U.S. Military Bases Agreement. Issue: Whether or not the Labor Arbiter acquires jurisdiction over the respondent. SC Ruling: The "Agreement Between the Republic of the Philippines and the United States of America Concerning Military Bases," otherwise known as the R.P. ? U.S. Military Bases Agreement, governed the rights, duties, authority, and the exercise thereof by Philippine and American nationals inside the U.S. military bases in the country. Article XIV thereof, governing the procedure for service of summons on persons inside U.S. military bases, provides that: . . . [N]o process, civil or criminal, shall be served within any base except with the permission of the commanding officer of such base; but should the commanding officer refuse to grant such permission he shall forthwith take the necessary steps . . . . to serve such process, as the case may be, and to provide the attendance of the server of such process before the appropriate court in the Philippines or procure such server to make the necessary affidavit or declaration to prove such service as the case may require. Summonses and other processes issued by Philippine courts and administrative agencies for United States Armed Forces personnel within any U.S. base in the Philippines could be served therein only with the permission of the Base Commander. If he withholds giving his permission, he should instead designate another person to serve the process, and obtain the server's affidavit for filing with the appropriate court. Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col. Frankhauser and not the Base Commander (Rollo, p. 11). Respondents do not dispute petitioner's claim that no summons was ever issued and served on her. They contend, however, that they sent notices of the hearings to her (Rollo, pp. 12-13). Notices of hearing are not summonses. The provisions and prevailing jurisprudence in Civil Procedure may be applied by analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served with summons (cf. Vda. de Macoy v. Court of Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co., Inc. v. Intermediate Appellate Court, 149 SCRA 193 [1987]). In the absence of service of summons or a valid waiver thereof, the hearings and judgment rendered by the Labor Arbiter are null and void (cf. Vda. de Macoy v. Court of Appeals, supra.)

187 Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the said body. This, however, does not constitute a waiver of the lack of summons and a voluntary submission of her person to the jurisdiction of the Labor Arbiter. (De los Santos v. Montera, 221 SCRA 15 [1993]). Be that as it may, on the assumption that petitioner validly waived service of summons on her, still the case could not prosper. There is no allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner were being sued in their personal capacities for tortious acts (United States of America v. Guinto, 182 SCRA 644 [1990]). However, private respondents named 3 AGS as one of the respondents in their complaint (Rollo, p. 10). Under the "Agreement Between the Government of the Republic of the Philippines and the Government of the United States of America Relating to the Employment of Philippine Nationals in the United States Military Bases in the Philippines" otherwise known as the Base Labor Agreement of May 27, 1968, any dispute or disagreement between the United States Armed Forces and Filipino employees should be settled under grievance or labor relations procedures established therein (Art. II) or by the arbitration process provided in the Romualdez-Bosworth Memorandum of Agreement dated September 5, 1985. If no agreement was reached or if the grievance procedure failed, the dispute was appealable by either party to a Joint Labor Committee established in Article III of the Base Labor Agreement. Unquestionably therefore, no jurisdiction was ever acquired by the Labor Arbiter over the case and the person of petitioner and the judgment rendered is null and void (Filmerco Commercial Co. v. Intermediate Appellate Court, supra.; Sy v. Navarro, 81 SCRA 458 [1978]). The petition for certiorari is GRANTED.

UERM-MEMORIAL MEDICAL CENTER, ET AL. vs. NLRC ET AL. [G.R. No. 110419. March 3, 1997]

Facts: A complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortion and the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54. Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion. Respondents are directed to pay the 517 individual complainants a total of P17,082,448.56 plus exemplary damages of P2,000 each. Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650. 2 The private

188 respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was also denied by the NLRC in a resolution 3 dated 7 June 1993. Issue: Whether or not in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond ? cash or surety ? as enumerated in Article 223 of the Labor Code. SC Ruling: The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides: In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC 4 we ruled: . . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing requirement of the law should be given a liberal interpretation. Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission 5 we held: The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed. We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive merit and not on strict technical rules. In the

189 case at bar, the judgment involved is more than P17 million and its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial authorities. We are also confident that the real property bond posted by the petitioners sufficiently protects the interests of private respondents should they finally prevail. It is not disputed that the real property offered by petitioners is worth P102,345,650. The judgment in favor of private respondent is only a little more than P17 million.

PHILTRANCO SERVICE ENTERPRISES, INC. vs. NLRC [G.R. No. 124100. April 1, 1998] Facts: Nieva was employed as a driver by petitioner assigned to the Legaspi CityPasay City route. Nieva sideswiped an owner-type jeep and a criminal complaint was filed against him. Philtranco posted a bail bond for Nieva. After having been suspended, he was told to wait until his case was settled. The case was finally settled he was requested to file a new application as he was no longer considered an employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989. Nieva filed a complaint for illegal dismissal and demanded for 13th month pay with the NLRCs National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismiss on the ground of improper venue, stating that the complaint should have been lodged with the NLRCs Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was hired, assigned, and based in Legaspi City. Issue: Whether or not NLRCs NCR Arbitration Branch in Manila was a proper venue for the filing of Nievas complaints for illegal dismissal SC Ruling: The filing of the complaint with the National Capital Region Arbitration Branch was proper, Manila being considered as part of Nievas workplace by reason of his plying the Legaspi City-Pasay City route. In fact, Section 1(a), Rule IV of the New Rules of Procedure of the NLRC is merely permissive. Provisions on venue are intended to assure convenience for the employee and his witnesses and to promote the ends of justice provided that it is not oppressive to the employer.

ST. MARTIN FUNERAL HOME vs. NLRC [G.R. No. 130866. September 16, 1998]

190 Facts: Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. When the mother of Amelita passed away, the latter then took over the management of the business and made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment. The labor arbiter rendered a decision in favor of petitioner declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case. On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit Issue: Whether or not the Court has the power to review decisions of the NLRC. SC Ruling: When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably avail of the special civil action of certiorari under Rule 65, for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65. Sec. 9. Jurisdiction. The Court of Appeals shall exercise: (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security 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.

191 LUDO & LUYM CORPORATION vs. SAORNIDO [G.R. No. 140960. January 20, 2003] Facts: LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by LUDO. These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees of LUDO every time the latter needed additional manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of the rank-and-file employees. Respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of which vary according to the length of service rendered by the availing employee. Thereafter, the union requested LUDO to include in its members period of service the time during which they rendered arrastre services to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration. Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-only contractor of petitioner. The Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator. Petitioner contends that the appellate court erred when it upheld the award of benefits which were beyond the terms of submission agreement and that the arbitrator must confine its adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in excess of jurisdiction. Issue: Whether or not the appellate court gravely erred when it upheld the award of benefits which were beyond the terms of submission agreement. SC Ruling: Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of disputes. 13 The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus: In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonable assume that his powers extended beyond giving a yesor-no answer and included the power to reinstate him with or without back pay.

HANJIN ENGINEERING AND CONSTRUCTION CO. LTD. vs. CA [G.R. No. 165910. April 10, 2006] Facts:

192 Hanjin is a construction company that had been contracted by the Philippine Government for the construction of various foreign-financed projects. Hanjin and the Philippine Government entered into contracts for the construction of the Malinao Dam at Pilar, Bohol, with a projected completion period of 1,050 calendar days, including main canal and lateral projects for 750 days. From August 1995 to August 1996, Hanjin contracted the services of 712 carpenters, masons, truck drivers, helpers, laborers, heavy equipment operators, leadmen, engineers, steelmen, mechanics, electricians and others. In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against petitioners, before the NLRC. The complainants averred that they were regular employees of Hanjin and that they were separated from employment without any lawful or just cause. Only 521 of the complainants affixed their signatures in the complaints. Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation Project and that 2 of the worekers were charged with qualified theft before the RTC. Some of the complainants had already migrated to USA or had died, while 117 of them were still under the employ of Hanjin. Petitioner stated that some of the complainants had voluntarily resigned; 14 were absent without prior approved leave; 15 had signed a Motion to Withdraw from the complaint; and many of the complainants were separated on account of the completion of the project. However, petitioners failed to append any document to support their claim. Labor Arbiter rendered judgment in favor of the 428 complainants, granting separation pay and attorney's fees to each of them stating that the complainants were regular employees of petitioner and their claims for underpayment, holiday pay, premium pay for holiday and rest day, 13th month pay, and service incentive leave would be computed after sufficient data were made available. Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor Arbiter's ruling. Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct clarificatory hearings) NLRC partially granted petitioners' motion. Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA. CA dismissed the petition and affirmed the NLRC's ruling that the dismissed employees were regular employees. The CA stressed that petitioners failed to refute the claim of the respondents that they were regular employees. Petitioners moved to reconsider the decision, which the CA denied. Issue: Whether or not respondents are project empoloyees SC Ruling: While respondent alleged that "complainants all signed a contract of employment at the time they were hired indicating therein the particular project they will be working on, the period and other conditions provided in their contracts which complainants fully knew and understood," nowhere in the records can the said contracts be found. Moreover, let it be stressed that under DO No. 19, Series of 1993 on project employment, six (6) indicators are enumerated therein and one of which is that: "(T)he termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work x x x." In this particular case, the records do not show that a similar report was ever made by respondent to the Department of Labor and Employment. Such failure of respondent employer to report to the nearest employment office of the

193 Department of Labor, the termination of the workers it claimed as project employees at the time it completed the project, is proof that complainants were not project employees. The principal test for determining whether particular employees are properly characterized as project employees is: whether or not the project employees were assigned to carry out a specific project or undertaking, the duration of which were specified at the time the employees were engaged for that project. Predetermination of the duration or period of project employment is essential in resolving whether one is a project employee or not. In the instant case, the completion of the project for which the complainants were hired was not determined at the start of their employment, there being no substantial proof thereof. The fact that complainants had rendered more than one year of service at the time of their dismissal and there being no substantial evidence to support that they were engaged to work on a specific project or undertaking, overturns respondents allegation that complainants were project employees hired for a specific fixed project for a limited period of time. Complainants herein were, therefore, non-project employees, but regular employees. Admittedly, being a duly licensed contractor firm in the Philippines, respondent is the awardee of several construction projects and in many occasions it has been given the priority in the awarding of subsequent projects. In the light of the above facts and circumstances, the respondent's main defense that completion of the project worked on by the complainants constitute a valid cause of termination is unsustainable. To repeat, there is no substantial evidence on record to sustain this contention. The mere allegation of the respondents that under their employment contracts the complainants were made to understand that they were project employees is definitely not persuasive or unworthy of credence. The best evidence of which would have been the alleged contracts. These employees signed duly notarized waivers/quitclaims and who did not recant later. In the absence of evidence showing the contrary, said quitclaims were executed voluntarily and without any force or intimidation. Petitioners submitted to the NLRC dubious machine copies of only some of respondents? contracts, including alleged employment termination reports submitted to the DOLE. The NLRC found the contracts barren of probative weight and utterly insufficient to buttress the contention of petitioners that respondents were only project employees. Contary to the representation of respondent's counsel, the original copies of the reports made to DOLE were never produced and submitted to this Commission. Neither were they presented for comparison with the machine copies. These machine copies were not also certified as true copies by the DOLE. The actual continuous employment of complainants by respondent Hanjin since 1991 until 1995 overcomes the piecemeal "appointments" covering for periods of six (6) months or less. From these short term but repeated "appointments," it is apparent that the periods have been imposed to preclude the acquisition of tenurial security by the employee and which kind of employment contracts should be disregarded for being contrary to public policy. The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents were not project employees, and in sustaining respondents' claim of illegal dismissal due to petitioners? failure to adduce contrary evidence. Well-settled is the rule that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but at times even finality if such findings are supported by substantial evidence. Such findings of facts can only be set aside upon showing of grave abuse of discretion, fraud or error of law, none of which have been shown in this case.

194

PHIL. JOURNALIST INC. vs. NLRC [G.R. No. 166421. September 5, 2006]

Facts: The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in the publication and sale of newspapers and magazines. The exclusive bargaining agent of all the rank-and-file employees in the company is the Journal Employees Union (Union for brevity). Sometime in April 2005, the Union filed a notice of strike before the National Conciliation and Mediation Board (NCMB), claiming that PJI was guilty of unfair labor practice. PJI was then going to implement a retrenchment program due to over-staffing or bloated work force and continuing actual losses sustained by the company for the past three years resulting in negative stockholders equity of P127.0 million. The Secretary of the Department of Labor and Employment (DOLE) certified the labor dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Article 263 (g) of the Labor Code. The parties were required to submit their respective position papers. PJI filed a motion to dismiss, contending that the Secretary of Labor had no jurisdiction to assume over the case and thus erred in certifying it to the Commission. The NLRC denied the motion. PJI, thereafter, filed a Motion to Defer Further Proceedings, alleging, among others, that the filing of its position paper might jeopardize attempts to settle the matter extrajudicially, which the NLRC also denied. The case was, thereafter, submitted for decision wherein it adjudged PJI liable in the total amount of P6,447,008.57. Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss of seniority rights and benefits; 17 of them who were previously retrenched were agreed to be given full and complete payment of their respective monetary claims, while 14 others would be paid their monetary claims minus what they received by way of separation pay. The agreement stated that the parties entered the agreement [i]n a sincere effort at peace and reconciliation as well as to jointly establish a new era in labor management relations marked by mutual trust, cooperation and assistance, enhanced by open, constant and sincere communication with a view of advancing the interest of both the company and its employees. The compromise agreement was submitted to the NLRC for approval. All the employees mentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. They

195 likewise signed the Joint Manifesto and Declaration of Mutual Support and Cooperation. Issue: Whether or not an NLRC Resolution, which includes a pronouncement that the members of a union had been illegally dismissed, is abandoned or rendered moot and academic by a compromise agreement subsequently entered into between the dismissed employees and the employer; this, in turn, raises the question of whether such a compromise agreement constitutes res judicata to a new complaint later filed by other union members-employees, not parties to the agreement, who likewise claim to have been illegally dismissed. SC Ruling: The petition is denied. The nature of a compromise is spelled out in Article 2028 of the New Civil Code: it is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. Parties to a compromise are motivated by the hope of gaining, balanced by the dangers of losing. It contemplates mutual concessions and mutual gains to avoid the expenses of litigation, or, when litigation has already begun, to end it because of the uncertainty of the result. Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes. As the Court held in Reformist Union of R.B. Liner, Inc. v. NLRC, the provision bestows finality to unvitiated compromise agreements, particularly if there is no allegation that either party did not comply with what was incumbent upon them under the agreement. The provision reads: ART. 227 Compromise Agreements. Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion. Thus, a judgment rendered in accordance with a compromise agreement is not appealable, and is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake, or duress, in which case an appeal may be taken against the order denying the motion. Under Article 2037 of the Civil Code, a compromise has upon the parties the effect and authority of res judicata, even when effected without judicial approval; and under the principle of res judicata, an issue which had already been laid to rest by the parties themselves can no longer be relitigated. In AFP Mutual Benefit Association, Inc. v. Court of Appeals, the Court spelled out the distinguishing features of a compromise agreement that is basically intended to resolve a matter already in litigation, or what is normally

196 termed as a judicial compromise. The Court held that once approved, the agreement becomes more than a mere contract binding upon the parties, considering that it has been entered as the courts determination of the controversy and has the force and effect of any other judgment. The Court went on to state: Adjective law governing judicial compromises annunciate that once approved by the court, a judicial compromise is not appealable and it thereby becomes immediately executory but this rule must be understood to refer and apply only to those who are bound by the compromise and, on the assumption that they are the only parties to the case, the litigation comes to an end except only as regards to its compliance and the fulfillment by the parties of their respective obligations thereunder. The reason for the rule, said the Court in Domingo v. Court of Appeals [325 Phil. 469], is that when both parties so enter into the agreement to put a close to a pending litigation between them and ask that a decision be rendered in conformity therewith, it would only be natural to presume that such action constitutes an implicit waiver of the right to appeal against that decision. The order approving the compromise agreement thus becomes a final act, and it forms part and parcel of the judgment that can be enforced by a writ of execution unless otherwise enjoined by a restraining order. Thus, contrary to the allegation of petitioners, the execution and subsequent approval by the NLRC of the agreement forged between it and the respondent Union did not render the NLRC resolution ineffectual, nor rendered it moot and academic. The agreement becomes part of the judgment of the court or tribunal, and as a logical consequence, there is an implicit waiver of the right to appeal. In any event, the compromise agreement cannot bind a party who did not voluntarily take part in the settlement itself and gave specific individual consent. It must be remembered that a compromise agreement is also a contract; it requires the consent of the parties, and it is only then that the agreement may be considered as voluntarily entered into. The case of Golden Donuts, Inc. v. National Labor Relations Commission, which petitioners erroneously rely upon, is instructive on this point. The Court therein was confronted with the following questions: x x x (1) whether or not a union may compromise or waive the rights to security of tenure and money claims of its minority members, without the latters consent, and (2) whether or not the compromise agreement entered into by the union with petitioner company, which has not been consented to nor ratified by respondents minority members has the effect of res judicata upon them. Speaking through Justice Reynato C. Puno, the Court held that pursuant to Section 23, Rule 138 of the then 1964 Revised Rules of Court, a special authority is required before a lawyer may compromise his clients litigation; thus, the union has no authority to compromise the individual claims of members who did not consent to the settlement. The Court also stated that the authority to compromise cannot lightly be presumed and should be duly established by evidence, and that a compromise agreement is not valid when a party in the case has not signed the same or when someone signs for and in behalf of such party without authority to do so; consequently, the affected employees may still pursue their individual claims against their employer. The Court went on to state that a judgment approving a compromise agreement cannot have the effect of res judicata upon non-signatories since the requirement of identity of parties is

197 not satisfied. A judgment upon a compromise agreement has all the force and effect of any other judgment, and, conclusive only upon parties thereto and their privies, hence, not binding on third persons who are not parties to it. A careful perusal of the wordings of the compromise agreement will show that the parties agreed that the only issue to be resolved was the question of the monetary claim of several employees. The agreement was later approved by the NLRC. The case was considered closed and terminated and the Resolution dated May 31, 2001 fully implemented insofar as the employees mentioned in paragraphs 2c and 2d of the compromise agreement were concerned. Hence, the CA was correct in holding that the compromise agreement pertained only to the monetary obligation of the employer to the dismissed employees, and in no way affected the Resolution in NCMB-NCR-NS-03-087-00 dated May 31, 2001 where the NLRC made the pronouncement that there was no basis for the implementation of petitioners retrenchment program. To reiterate, the rule is that when judgment is rendered based on a compromise agreement, the judgment becomes immediately executory, there being an implied waiver of the parties right to appeal from the decision. The judgment having become final, the Court can no longer reverse, much less modify it.

BALAGTAS MULTI-PURPOSE COOPERATIVE, INC. vs. COURT OF APPEALS [G.R. No. 159268. October 27, 2006]

Facts: Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time manager in its office. Subsequently, Josefina made known of her intention to take a leave of absence. Her proposal was immediately approved. However, after the lapse of her leave of absence, Josefina did not report for work anymore. Later on, she filed her resignation. Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She also prayed for reinstatement and paid backwages as well as moral damages. The Labor Arbiter rendered judgment in favor of complainant and against respondents and ordered the latter to pay the former 13 th month pay, backwages and separation pay. Aggrieved, herein petitioners appealed the

198 decision to NLRC but failed to post either a cash or surety bond as required by Article 223 of the Labor Code. They filed a manifestation and motion instead, stating, that under Republic Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from the decision of the inferior court. NLRC ordered respondents to post a cash or surety bond in the amount of P218,000.00, within 10 inextendible days from receipt of the Order, failure of which shall constitute a waiver and nonperfection of the appeal. Balagtas appealed to CA, which dismissed the petition holding that the exemption from putting up a bond by a cooperative applies to cases decided by inferior courts only. Issues: 1. Whether cooperatives are exempted from filing a cash or surety bond required to perfect an employers appeal under Section 223 of Presidential Decree No. 442 (the Labor Code); and, 2. Whether a certification issued by the Cooperative Development Authority constitutes substantial compliance with the requirement for the posting of a bond. SC Ruling: 1. No. Petitioners argue that there are certain benefits and privileges expressly granted to cooperative under the Cooperative Code. It invoked the provision on Article 62 regarding the exemption from payment of an appeal bond, to wit: (7)All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond. However, it is only one among a number of such privileges which appear under the article entitled Tax and Other Exemptions of the code. The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety. Exceptions are to be strictly but reasonably construed; they extend only so far as their language warrants, and all doubts should be resolved in favor of the general provision rather than the exceptions. 2. No. Article 119 of the Cooperative Code itself expressly embodies the legislative intention to extend the coverage of labor statutes to cooperatives. For this reason, petitioners must comply with the requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the employee under the judgment if the latter is subsequently affirmed. Therefore, no error can be ascribed to the CA for holding that the phrase

199 inferior courts appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to quasi-judicial agencies and that, petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code.

ST. MARTIN FUNERAL HOMES vs. NLRC [G.R. No. 142351 November 22, 2006]

Facts: The owner of petitioner St. Martin Funeral Homes, Inc. (St. Martin) is Amelita Malabed. Prior to January 1996, Amelitas mother managed the funeral parlor. In 1995, Aricayos was granted financial assistance by Amelitas mother. As a sign of appreciation, respondent extended assistance in managing St. Martin without compensation and no written employment contract between Amelitas mother and respondent Aricayos; furthermore, respondent Aricayos was not even listed as an employee in the Companys payroll. When Amelitas mother died in January 1996, Amelita took over as manager of St. Martin. Much to her chagrin, she found out that St. Martin had arrearages in the payment of BIR taxes and other fees owing to the government, but company records tended to show that payments were made thereon. As a result, Amelita removed the authority from respondent Aricayos and his wife from taking part in managing St. Martins operations. Aggrieved, respondent Aricayos accused St. Martin of his illegal dismissal as Operations Manager of the company. He believed that the cause of his termination was Amelitas suspicion that he pocketed PhP 38,000.00 which was set aside for payment to the BIR of St. Martins valued added taxes.On October 25, 1996, the Labor Arbiter rendered a Decision, in favor of petitioner declaring that his office had no jurisdiction over the case. NLRC issued a Resolution annulling the Arbiters Decision and remanded the case to him for appropriate proceedings, to determine the factual issue of the existence of employer-employee relationship between the parties. When its motion for reconsideration was rejected by the NLRC, petitioner filed a petition for certiorari under Rule 65 before this Court, docketed as G.R. No. 130866. On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmark Decision in this case then docketed as G.R. No. 130866, holding for the first time that all petitions for certiorari under Rule 65 assailing the decisions of the NLRC should henceforth be filed with the CA Issue: Whether or not a petitioner can file his petition for certiorari under Rule65 to assail the decision of a lower court like NLRC. SC Ruling:

200 A petition for certiorari under Rule65 must first be filed @ the Court of Appeals. Said court has a concurrent jurisdiction on petitions for certiorari, mandamus, prohibitions. This is in consonance with the hierarchy of courts.

DOLE PHILIPPINES vs. ESTEVA [G.R. No. 161115. November 30, 2006] Facts: Petitioner is a corporation engaged principally in the production and processing of pineapple for the export market. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. Pursuant to the Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. DOLE organized a Task Force that conducted an investigation into the alleged labor-only contracting activities of the cooperatives. The Task Force identified six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. In this case, respondents alleged that they started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner, others were put on stay home status on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint with the NLRC for illegal dismissal, regularization, wage differentials, damages and attorneys fees. Petitioner denied that respondents were its employees. It explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers. Issues: 1. Whether or not the court of appeals was correct when it made its own factual findings and disregarded the factual findings of the labor arbiter and the NLRC. 2. Whether or not CAMPCO was a mere labor-only contractor.

SC Ruling: The Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this

201 Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC. On the second issue, CAMPCO was a mere labor-only contractor. First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years following its establishment. In 1993, when CAMPCO was established and the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered substantial. It only managed to increase its capitalization and assets in the succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE officials as labor-only contracting. Second, CAMPCO did not carry out an independent business from petitioner. It was precisely established to render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these were mainly used for administrative purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering services to the petitioner belonged to the latter. Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for permissible job contracting that the contractor undertakes the contract work on his account, under his own responsibility, according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions and pass the training provided by petitioners personnel. It was petitioner who determined and prepared the work assignments of the CAMPCO members. CAMPCO members worked within petitioners plantation and processing plants alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a labor-only contractorship. Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only, CAMPCO clearly conducted itself as a labor-only contractor. Lastly, CAMPCO members, including respondents, performed activities directly related to the principal business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly related, but were very vital to petitioners business of production and processing of pineapple products for export. The declaration that CAMPCO is indeed engaged in the

202 prohibited activities of labor-only contracting, then consequently, an employeremployee relationship is deemed to exist between petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner. Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of their employment. In consideration of all the attendant circumstances in this case, this Court concludes that respondents are regular employees of petitioner. As such, they are entitled to security of tenure. They could only be removed based on just and authorized causes as provided for in the Labor Code, as amended, and after they are accorded procedural due process. Therefore, petitioners acts of placing some of the respondents on stay home status and not giving them work assignments for more than six months were already tantamount to constructive and illegal dismissal.

INTERCONTINENTAL BROADCASTING CORP vs. PANGANIBAN [G.R. No. 151407, February 06, 2007]

Facts: Ireneo Panganiban (respondent) was employed as Assistant General Manager of the Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988. On April 12, 1989, respondent filed a civil case with the RTC of Quezon City, Branch 93 against the members of the Board of Administrators (BOA) of petitioner alleging, among others, non-payment of his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent's claim was a labor money claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari with the CA which granted Santiago's petition for lack of jurisdiction and set aside the RTC's Orders. Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and damages. The Labor Arbiter (LA) ordered respondent's reinstatement with full backwages, and the payment of his unpaid commission, damages and attorney's fees. Petitioner appealed to the NLRC but due to petitioner's failure to post a bond, the appeal was dismissed. The decision was deemed final and executory. Issue: Whether or not respondent's claim for unpaid commissions has already prescribed. SC Ruling:

203 Yes. Respondent's claim had already prescribed as of September 1991. In addition, the claims of private respondent for reinstatement, backwages and benefits in conjunction with his employment from 1986 to 1988 have prescribed. The applicable law in this case is Article 291 of the Labor Code which provides that "all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred." The term "money claims" covers all money claims arising from an employer-employee relation the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor. On this point, the Court ruled that although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. Hence, while the filing of Civil Case could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA due to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly the same position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of Civil Case respondent's cause of action had already prescribed on September 2, 1991, three years after his cessation of employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

FAR EAST AGRICULTURAL SUPPLY, INC. vs. LEBATIQUE [G.R. No. 162813, February 12, 2007]

Facts: Petitioner Far East Agricultural Supply hired private respondent Jimmy Lebatique as truck driver tasked to deliver animal feeds. On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches. That same day Lebatique was suspended apparently for illegal use of company vehicle. He reported for work the next day but was prohibited from entering the company premises. On January 26, 2000, Lebatique sought assistance concerning the nonpayment of his overtime pay. According to him, two days later, he received a telegram from petitioners requiring him to report for work. He reported for work on January 29, 2000 and was asked to explain why he was claiming overtime pay. Later, Lebatique was terminated and was told to look for another

204 job. On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. Issue: What is the prescriptive period for money claims? SC Ruling: All money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred (Article 291, LC). If it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years before the filing of the complaint. Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in managements control to determine the correct payment due to him. It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by managements unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for work, and his filing was well within the prescriptive period allowed under the law.

LETRAN CALAMBA FACULTY and EMPLOYEES ASSOCIATION vs. NLRC [G.R. NO. 156225. January 29, 2008] Facts: On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. On January 29, 1993, respondent filed its Position Paper denying all the allegations of petitioner. On March 10, 1993, petitioner filed its Reply. Prior to the filing of the above-mentioned complaint, petitioner filed a

205 separate complaint against the respondent for money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending resolution of the NLRC Case, respondent filed with NLRC Regional Arbitration Branch No. IV a petition to declare as illegal a strike staged by petitioner in January 1994. Issue: Whether or not the factual findings of the NLRC can be reviewed in Certiorari Proceedings. SC Ruling: This Court held in Odango v. National Labor Relations Commission that: The appellate courts jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of the NLRCs evaluation of the evidence or of its factual findings. Such findings are generally accorded not only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie. In the instant case, the Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact. Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below. In a petition for review on certiorari, this Courts jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous. Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality. They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record. We find none of these exceptions in this case. In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.

206 METRO TRANSIT ORGANIZATION, INC., vs. PIGLAS NFWU-KMU, et al. [G.R. No. 175460. April 14, 2008]

Facts: Petitioner Metro Transit Organization, Inc. (MTO) is a government owned and controlled corporation which entered into a Management and Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the operation of the LRT Baclaran-Monumento Line. For purposes of CBA, petitioner MTO's rank and file employees formed the Pinag-isang Lakas ng Manggagawa sa Metro, Inc.National Federation of Labor (PIGLAS). Meanwhile, its managerial and supervisory employees created their own union bearing the name Supervisory Employees Association of Metro (SEAM). Petitioners MTO and PIGLAS entered into a CBA. SEAM similarly negotiated with petitioner MTO under a separate CBA. Allegedly disgruntled with PIGLAS, some rank and file employees formed another union under the umbrella of the PTGWO-TUCP, which negotiated with management for certification as the new bargaining agent. The intra-union dispute was settled through a certification election which PIGLAS won. Thereafter, PIGLAS renegotiated the CBA demanding higher benefits. Due to a bargaining deadlock, PIGLAS filed a Notice of Strike before the NCMB and staged a strike. Consequently, Hon. Bienvenido E. Laguesma, then Secretary of DOLE, issued an Order of Assumption of Jurisdiction/Return to Work, directing the striking employees to immediately return to work, and petitioner MTO to take them back under the same terms and conditions of employment prevailing prior to the strike. The striking PIGLAS members refused to accede to the Return to Work Order. Following their continued non-compliance, the LRTA formally informed petitioner MTO that it had issued a Board Resolution which: (1) allowed the expiration of LRTA's MOA with petitioner MTO; and (2) directed the LRTA to take over the operations and maintenance of the LRT Line. By virtue of said Resolution, petitioner MTO sent termination notices to its employees. Resultantly, respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for illegal dismissal, unfair labor practice for union busting, moral and exemplary damages; and attorney's fees. The Labor Arbiter rendered judgment in favor of respondents. Petitioners appealed to the NLRC, which dismissed petitioners' appeal for non-perfection since it failed to post the required bond. Without filing a Motion for Reconsideration, petitioners filed a Petition for Certiorari with the Court of Appeals, which dismissed the Resolution. Petitioners moved for the reconsideration of the appellate court's dismissal of its Petition. The Court of Appeals, however, found no cogent reason to disturb its original conclusions. Hence, petitioners come to this Court. SC Ruling: In cases involving a monetary award, an employer seeking to appeal the decision of the Labor Arbiter to the NLRC is unconditionally required by Article 223 of the Labor Code to post a cash or surety bond equivalent to the amount of the monetary award adjudged. It should be stressed that the intention of lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an

207 employer's appeal may be perfected. Moreover, it bears stressing that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to conform to the rules will render the judgment sought to be reviewed final and unappealable. It cannot be overemphasized that the NLRC Rules, akin to the Rules of Court, promulgated by authority of law, have the force and effect of law. As borne by the records, petitioners filed a property bond which was conditionally accepted by the NLRC subject to the some conditions specified in its Order. In it, the NLRC warned that failure of the petitioners to comply with the conditions would result in the dismissal of the appeal for non-perfection thereof. Petitioners were directed to comply with its given conditions within 10 days from receipt of the Order with a caveat that their failure will result in the dismissal of the appeal. Subsequently, in its 19 May 2006 Resolution, the NLRC finally made a factual finding that petitioners failed to comply with the conditions attached to their posting of the property bond. Thus, the NLRC dismissed petitioners' appeal for non-perfection thereof. Essentially, the failure of petitioners to comply with the conditions for the posting of the property bond is tantamount to a failure to post the bond as required by law. What is even more salient is the fact that the NLRC had stressed that petitioners had, for more than a month from receipt of its 24 February 2006 Order, to comply with the conditions set forth therein for the posting of the property bond. It cannot be gainsaid that the NLRC had given petitioners a period of 10 days from receipt of the Order with a warning that noncompliance would result in the dismissal of their appeal for failure to perfect the same. Petitioners therefore disregarded the rudiments of the law in the perfection of their appeal. We are without recourse but to take petitioners' failure against their interest. The Petition is denied.