Maternity Children’s Hospital vs.

Secretary of Labor
G.R. No. 78909 June 30, 1989

EN BANC: MEDIALDEA, J.:

Facts:

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

Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover
President. The hospital derives its finances from the club itself as well as from paying patients,
averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes
Office and the Cagayan De Oro City government.

Petitioner has forty-one (41) employees. Aside from salary and living allowances, the
employees are given food, but the amount spent therefor is deducted from their respective
salaries

On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions
filed a complaint with the Office of the Regional Director of Labor and Employment, Region X,
for underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-
71-86.

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare
Officers to inspect the records of the petitioner to ascertain the truth of the allegations in the
complaints. Based on their inspection report and recommendation, the Regional Director issued
an Order dated August 4, 1986, directing the payment of P723,888.58, representing
underpayment of wages and ECOLAs to all the petitioner's employees.

Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S.
Sanchez, who rendered a Decision on September 24, 1986, modifying the said Order in that
deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986,

On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the
Secretary of Labor in his Order dated May 13, 1987, for lack of merit.

Issue:

Whether or not the Regional Director had jurisdiction over the case and if so, the extent of
coverage of any award that should be forthcoming, arising from his visitorial and enforcement
powers under Article 128 of the Labor Code.

Held:

This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended
by E.O. No. 111. Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to adjudicate
money claims, provided there still exists an employer-employee relationship, and the findings of
the regional office is not contested by the employer concerned.

1
Labor standards refer to the minimum requirements prescribed by existing laws, rules, and
regulations relating to wages, hours of work, cost of living allowance and other monetary and
welfare benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules
on the Disposition of Labor Standards Cases in the Regional Office, dated September 16,
1987).

Decision:

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all

persons still employed in the Hospital at the time of the filing of the complaint, but GRANTED as
regards those employees no longer employed at that time. SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes,
Griño-Aquino and Regalado, JJ., concur

2
 Calalang vs. Williams
G.R. No. 47800 2 December 1940

FIRST DIVISION, LAUREL (J): 4 CONCUR

Facts:

A resolution by the National Traffice Commission that animal drawn vehicles be prohibited from
passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street,
from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., for a
period of one year from the date of the opening of the Colgante Bridge to traffic was approved
and adopted by the Secretary of Public Works and Communications upon indorsement by the
Director of Public Works pursuant to Commonwealth Act 548 with modifications that Rosario
Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and
during the hours as indicated.

The Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be
enforced the rules and regulations thus adopted. Maximo Calalang, in his capacity as a private
citizen and as a taxpayer of Manila, brought before the Supreme Court the petition for a writ of
prohibition against A. D. Williams, as Chairman of the National Traffic Commission; Vicente
Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and
Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as
Acting Chief of Police of Manila.

Issue:

Whether the rules and regulations promulgated by the Director of Public Works infringe upon
the constitutional precept regarding the promotion of social justice to insure the well-being and
economic security of all the people.

Held:

The promotion of social justice is to be achieved not through a mistaken sympathy towards any
given group.

Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally justifiable,
or extra-constitutionally, through the exercise of powers underlying the existence of all
governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of

interdependence among divers and diverse units of a society and of the protection that should
be equally and evenly extended to all groups as a combined force in our social and economic
life, consistent with the fundamental and paramount objective of the state of promoting the

3
health, comfort, and quiet of all persons, and of bringing about "the greatest good to the
greatest number."

Decision:

IN VIEW OF THE FOREGOING, the Writ of Prohibition Prayed for is hereby denied, with costs
against the petitioner. So ordered.

Avanceña, C.J., Imperial, Diaz and Horrilleno, JJ., concur.

4
 People vs. Vera Reyes
G.R. No. L-45748 April 5, 1939

EN BANC, IMPERIAL, J.:

Facts:

The defendant was charged in the Court of First Instance of Manila by the assistant city fiscal
with a violation of Act No. 2549, as amended by Acts Nos. 3085 and 3958. The information
alleged that from September 9 to October 28, 1936, and for the some time after, the accused, in
his capacity as president and general manager of the Consolidated Mines, having engaged the
services of Severa Velasco de Vera as stenographer, at an agreed salary of P35 a month
willfully and illegally refused to pay the salary of said stenographer corresponding to the above-
mentioned period of time, which was long due and payable, in spite of her repeated demands.

The accused interposed a demurrer on the ground that the facts alleged in the information do
not constitute any offense, and that even if they did, the laws penalizing it are unconstitutional.
After the hearing, the court sustained the demurrer, declaring unconstitutional the last part of
section 1 of Act No. 2549 as last amended by Act No. 3958 for the reason that it violates the
constitutional prohibition against imprisonment for debt, and dismissed the case.

The last part of Section 1 of Act No. 2549, as last amended by section 1 of Act No. 3958
considers as illegal the refusal of an employer to pay when he can do so, the salaries of
his employers or laborers on the 15th or last day of every month or on Saturday of every
week, with only two days extension, and the non-payment of the salary within the period
specified is considered as a violation of the law. The same act exempts from criminal
responsibility the employer who, having failed to pay the salary, should prove
satisfactorily that it was impossible to make such payment.

The fiscal appealed from said order. In this appeal the Solicitor-General contends that the court
erred in declaring Act No. 3958 unconstitutional, and in dismissing the cause.

Issue:

Whether or not the last part of Sec. 1 of Act No. 2594 as amended by Act No. 3958 is
constitutional and valid.

Held:

We hold that the last part of section 1 of Act No. 2549, as last amended by section 1 of Act No.
3958, is valid. We do not believe that this constitutional provision has been correctly applied in
this case. A close perusal of the last part of section 1 of Act No. 2549, as amended by section 1
of Act No. 3958, will show that its language refers only to the employer who, being able to make
payment, shall abstain or refuse to do so, without justification and to the prejudice of the laborer
or employee. An employer so circumstanced is not unlike a person who defrauds another, by
refusing to pay his just debt. In both cases the deceit or fraud is the essential element
constituting the offense. The first case is a violation of Act No. 3958, and the second is estafa
punished by the Revised Penal Code. In either case the offender cannot certainly invoke the
constitutional prohibition against imprisonment for debt.

5
Police power is the power inherent in a government to enact laws, within constitutional limits, to
promote the order, safety, health, morals, and general welfare of society. In the exercise of this
power the Legislature has ample authority to approve the disputed portion of Act No. 3958
which punishes the employer who, being able to do so, refuses to pay the salaries of his
laborers or employers in the specified periods of time. Undoubtedly, one of the purposes of the
law is to suppress possible abuses on the part of employers who hire laborers or employees
without paying them the salaries agreed upon for their services, thus causing them financial
difficulties. Without this law, the laborers and employees who earn meager salaries would be
compelled to institute civil actions which, in the majority of cases, would cost them more than
that which they would receive in case of a decision in their favor.

Decision:

We hold that the last part of section 1 of Act No. 2549, as last amended by section 1 of Act No.
3958, is valid, and we reverse the appealed order with instructions to the lower court to proceed
with the trial of the criminal case until it is terminated, without special pronouncement as to costs
in this instance. So ordered.

Avanceña, C. J., Villa-Real, Diaz, Laurel, Concepcion, and Moran, JJ., concur

6
 People vs. Pomar
G.R. No. L-22008 November 3, 1924

EN BANC, JOHNSON, J.:

Facts:

On the 26th day of October, 1923, the prosecuting attorney of the City of Manila presented a
complaint in the Court of First Instance, accusing the defendant of a violation of section 13 in
connection with section 15 of Act No. 3071 of the Philippine Legislature. The complaint alleged
that the defendant being the manager and person in charge of La Flor de la Isabela (a tobacco
factory) failed and refused to pay Macaria Fajardo (employed as cigar maker) the sum of P80 to
which she was entitled as her regular wages on time of delivery and confinement by reason of
pregnancy depite and over the demands to do so.

To said complaint, the defendant demurred, alleging that the facts therein contained did not
constitute an offense. The demurrer was overruled, whereupon the defendant answered and
admitted at the trial all of the allegations contained in the complaint, and contended that the
provisions of said Act No. 3071, upon which the complaint was based were illegal,
unconstitutional and void.

Upon a consideration of the facts charged in the complaint and admitted by the defendant, the
Honorable C. A. Imperial, judge, found the defendant guilty of the alleged offense described in
the complaint, and sentenced him to pay a fine of P50, in accordance with the provisions of
section 15 of said Act, to suffer subsidiary imprisonment in case of insolvency, and to pay the
costs. From that sentence the defendant appealed.

Issue:

Whether or not the provisions of sections 13 and 15 of Act No. 3071 are a reasonable and
lawful exercise of the police power of the state.

Held:

The provisions of section 13, of Act No. 3071 of the Philippine Legislature, are unconstitutional
and void, in that they violate and are contrary to the provisions of the first paragraph of section 3
of the Act of Congress of the United States of August 29, 1916.

Said section 13 was enacted by the Legislature of the Philippine Islands in the exercise of its
supposed police power, with the praiseworthy purpose of safeguarding the health of pregnant
women laborers in "factory, shop or place of labor of any description," and of insuring to them,
to a certain extent, reasonable support for one month before and one month after their delivery.
It has been said that the particular statute before us is required in the interest of social justice for
whose end freedom of contract may lawfully be subjected to restraint.

The right to liberty includes the right to enter into contracts and to terminate contracts. One
citizen cannot be compelled to give employment to another citizen, nor can anyone be
compelled to be employed against his will. The Act of 1893, now under consideration, deprives
the employer of the right to terminate his contract with his employee. Clearly, therefore, the law
has deprived, every person, firm, or corporation owning or managing a factory, shop or place of

7
labor of any description within the Philippine Islands, of his right to enter into contracts of
employment upon such terms as he and the employee may agree upon. The law creates a term
in every such contract, without the consent of the parties. Such persons are, therefore, deprived
of their liberty to contract. The constitution of the Philippine Islands guarantees to every citizen
his liberty and one of his liberties is the liberty to contract.

Every law for the restraint and punishment of crimes, for the preservation of the public peace,
health, and morals, must come within this category. But the state, when providing by legislation
for the protection of the public health, the public morals, or the public safety, is subject to and is
controlled by the paramount authority of the constitution of the state, and will not be permitted to
violate rights secured or guaranteed by that instrument or interfere with the execution of the
powers and rights guaranteed to the people under their law — the constitution.

The police power of the state is a growing and expanding power. But that power cannot grow
faster than the fundamental law of the state, nor transcend or violate the express inhibition of
the people's law — the constitution. If the people desire to have the police power extended and
applied to conditions and things prohibited by the organic law, they must first amend that law.

It will also be noted from an examination of said section 13, that it takes no account of contracts
for the employment of women by the day nor by the piece. The law is equally applicable to each
case. It will hardly be contended that the person, firm or corporation owning or managing a
factory, shop or place of labor, who employs women by the day or by the piece, could be
compelled under the law to pay for sixty days during which no services were rendered.

Decision:

The rule in this jurisdiction is, that the contracting parties may establish any agreements, terms,
and conditions they may deem advisable, provided they are not contrary to law, morals or public
policy. (Art. 1255, Civil Code.)

Therefore, the sentence of the lower court is hereby revoked, the complaint is hereby
dismissed, and the defendant is hereby discharged from the custody of the law, with costs de
oficio. So ordered.

Street, Malcolm, Avanceña, Villamor, Ostrand and Romualdez, JJ., concur

8
 Philippine Association of Service Expporters, Inc. vs. Drilon
G.R. No. 81958 June 30, 1988

EN BANC, SARMIENTO, J:

Facts:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI), a firm

"engaged principally in the recruitment of Filipino workers for overseas placement," challenges
the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of
Labor and Employment, in the character of "GUIDELINES GOVERNING THE TEMPORARY
SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS,"
and specifically assailed for "discrimination against males or females;" 2 that it "does not apply
to all Filipino workers but only to domestic helpers and females with similar skills;" 3 and that it is
violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking
power, police power being legislative, and not executive, in character.

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor
and Administrator of the Philippine Overseas Employment Administration, filed a Comment
informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the
deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy,
Norway, Austria, and Switzerland. In submitting the validity of the challenged "guidelines," the
Solicitor General invokes the police power of the Philippine State.

Issue:

Whether the challenged Department Order is a valid regulation in the nature of a police power
measure under the Constitution.

Held:

The concept of police power is well-established in this jurisdiction. It has been defined as the
"state authority to enact legislation that may interfere with personal liberty or property in order to
promote the general welfare." 5 As defined, it consists of (1) an imposition of restraint upon
liberty or property, (2) in order to foster the common good. It is not capable of an exact definition
but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future
where it could be done, provides enough room for an efficient and flexible response to
conditions and circumstances thus assuring the greatest benefits.

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of
statehood and sovereignty. It is a fundamental attribute of government that has enabled it to
perform the most vital functions of governance. The police power of the State ... is a power
coextensive with self- protection. It may be said to be that inherent and plenary power in the
State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society.

As a general rule, official acts enjoy a presumed validity. 13 In the absence of clear and
convincing evidence to the contrary, the presumption logically stands.

9
The petitioner has shown no satisfactory reason why the contested measure should be nullified.
There is no question that Department Order No. 1 applies only to "female contract workers," 14
but it does not thereby make an undue discrimination between the sexes. It is well-settled that
"equality before the law" under the Constitution 15 does not import a perfect Identity of rights
among all men and women.

"Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and
humane. Under these circumstances, the Government is duty-bound to insure that our toiling
expatriates have adequate protection, personally and economically, while away from home. In
this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of
the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an
indefinite ban on deployment.

This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of
Government regulation. The interest of the State is to provide a decent living to its citizens.

Decision:

The Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief
prayed for.

WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.

Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Cortes and Griño-Aquino, JJ., concur.

Gutierrez, Jr. and Medialdea, JJ., are on leave

10
 Cerezo vs. Atlantic Gulf & Pacific Company
G.R. No. L-10107 February 4, 1916

EN BANC: TRENT, J.:

Facts:

Jorge Ocumen (plaintiff’s son and only means of support) was an employee of the defendant as
a day laborer on the 8th of July, 1913, assisting in laying gas pipes on Calle Herran in the City
of Manila. The digging of the trench was completed both ways from the cross-trench in Calle
Paz, and the pipes were laid therein up to that point. The men of the deceased's gang were
filling the west end, and there was no work in the progress at the east end of the trench. Shortly
after the deceased entered the trench at the east end to answer a call of nature, the bank caved
in, burying him to his neck in dirt, where he died before he could be released. It has not been
shown that the deceased had received orders from the defendant to enter the trench at this
point; nor that the trench had been prepared by the defendant as a place to be used as a water-
closet; nor that the defendant acquiesced in the using of this place for these purposes. At the
time of the accident the place where the deceased's duty of refilling the trench required him to
be was at the west end. There is no contention that there was any danger whatever in the
refilling of the trench.

The plaintiff insists that the defendant was negligent in failing to shore or brace the trench at the
place where the accident occurred. While, on the other hand, the defendant urges (1) that it was
under no obligation, in so far as the deceased was concerned, to brace the trench, in the
absence of a showing that the soil was of a loose character or the place itself was dangerous,
and (2) that although the relation of master and servant may not have ceased, for the time
being, to exist, the defendant was under no duty to the deceased except to do him no intentional
injury, and to furnish him with a reasonably safe place to work.

Judgment was entered in a favor of the plaintiff for the sum of P1,250, together with interest and
costs. Defendant appealed.

Issue:

Whether or not the plaintiff has the right to recover based on the Employers' Liability Act (Act
No. 1874) or the Civil Code.

Held:

Act No. 1874 is essentially a copy of the Massachusetts Employers' Liability Act, it having been
originally enacted in that jurisdiction in 1887. The Massachusetts statute was "copied verbatim,
with some variations of detail, from the English statute.

We agree with the Supreme Court of Massachusetts that the Act should be liberally construed in
favor of employees. The main purpose of the Act was to extend the liability of employers and to
render them liable in damages for certain classes of personal injuries for which it was thought
they were liable under the law prior to the passage of the Act.

We do not doubt that it was, prior to the passage of Act No. 1874 and still is, the duty of the
employer in this jurisdiction to perform those duties, in reference to providing reasonably safe

11
places, and safe and suitable ways, works, and machinary, etc., So, to this extent, the first
subsection of section 1 of the Act is simply declaratory of the law as it stood previous to the
enactment. Standing in this form, it is quite clear that it was not intended that all rights to
compensation and of action against employers by injured employees or their representatives
must be brought under be governed by the Act.

Assuming that the excavation for the gas pipe is within the category of "ways, works, or
machinery connected with the used in the business of the defendant, " we are of the opinion
that recovery cannot be had under the Act for the reason that, as we have indicated, the
deceased was at a place where he had no right to be at the time he met his death. His work did
not call him there, nor is it shown that he was permitted there tacitly or otherwise. Under the
Anglo-American law the applicable to such a set of facts is that the master is not responsible,
under the Employers' Liability Act, for accidents to his employees when they are outside the
scope of their employment for purpose of their own.

The case under consideration does not fall within the exceptions of Art 1105 of the Civil code.
Mentioned. After providing a reasonably safe place in and about which the deceased was
required to work, the defendant's liability was then limited to those events which could have
been foreseen. Article 1902 provides that a person who, by an act or omission causes damage
to another when there is fault or negligence shall be obliged to repair the damage so done.
Article 1903 after providing for the liability of principals for the acts of their employees, agents,
or these for whom they are otherwise responsible, provides that such liability shall cease when
the persons mentioned therein prove that they employed all the diligence of a good father of a
family to avoid the damage. We have then, on the one hand, nonliability of an employer for
events which could not be foreseen (article 1105), and where he has exercised the care of a
good father of a family (article 1903), and, on the other hand, his liability where fault or
negligence may be attributed to him (article 1902).

The cause of Ocumen's death was not the weight of the earth which fell upon him, but was due
to suffocation. The accident was of a most unusual character. Experience and common sense
demonstrate that ordinarily no danger to employees is to be anticipated from such a trench as
that in question. The fact that the walls had maintained themselves for a week, without
indication of their giving way, strongly indicates that the necessity for bracing or shoring the
trench was remote. To require the company to guard against such an accident as the one in
question would virtually compel it to shore up every foot of the miles of trenches dug by it in the
city of Manila for the gas mains. Upon a full consideration of the evidence, we are clearly of the
opinion that ordinary care did not require the shoring of the trench walls at the place where the
deceased met his death. The event properly comes within the class of those which could not be
foreseen; and, therefore, the defendant is not liable under the Civil Code.

Effect upon the Law in this country

The act was not intended to curtail the any of the rights which an employee had under the pre-
existing law. Under the act, the defense of contributory negligence would defeat an action for
damages.

Decision:

Having reached the conclusions above set forth, it is unnecessary to inquire into the right of the
plaintiff to bring and maintain this action.

12
For the foregoing reasons the judgment appealed from is reversed and the complaint dismissed,
without costs. So ordered.

Arellano, C.J., Torres, Johnson and Araullo, JJ., Concur

13
 Abella vs. NLRC
G.R. No. 71813 July 20, 1987

EN BANC: PARAS (J), 13 CONCUR

Facts:

Ricardo Dionele, Sr. (private respondent) has been a regular farm worker since 1949 in
Hacienda Danao-Ramona located in Ponteverde, Negros Occidential. Said farm land was
leased to Rosalina Abella (petitioner) for a period of ten (10) years, renewable for another ten
years.

Upon the expiration of her leasehold rights, petitioner dismissed Ricardo and another co-
employee.

Private respondents filed a complaint against the petitioner at the Ministry of Labor and
Employment for overtime pay, illegal dismissal and reinstatement with backwages. After
presenting their respective evidence, the Labor Arbiter ruled that the dismissal is warranted by
the cessation of business, but granted the private respondents’ separation pay.

Petitioner filed a motion for reconsideration but the same was denied. Hence, the present
petition.

Issue:

Whether or not private respondents are entitled to separation pay.

Held:

The petition is devoid of merit.

Article 284 of the Labor code provides that “the employer may also terminate the employment of
any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this title, by serving a
written notice on the workers and the Ministry of Labor and Employment at least month before
the intended date thereof. In case of termination due to the installation of labor-saving devices
or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at
least his one month pay or to at least one month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closure or cessation of
operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one month pay or at least one-half month
pay for every year of service whichever is higher. A fraction of at least six months shall be
considered one whole year."

The purpose of the said article is obvious: the protection of the workers whose employment is
terminated because of the closure of establishment and reduction of personnel. Without said
law, employees like private respondents in the case at bar will lose the benefits to which they
are entitled for the number of years served. Although they were absorbed by the new
management of the hacienda, in the absence of any showing that the latter has assumed the
responsibilities of the former employer, they will be considered as new employees and the years

14
of service behind them would amount to nothing.

In any event, it is well-settled that in the implementation and interpretation of the provisions of
the Labor Code and its implementing regulations, the workingman’s welfare should be the
primordial and paramount consideration.

Decision:
The instant petition is hereby dismissed and the decision of the Labor Arbiter and the Resolution
of the Ministry of Labor and Employment are hereby affirmed.

15
 Euro-Linea Phil, Inc. vs. NLRC
G.R. No. 78782 December 1, 1987

FIRST DIVISION, PARAS, (J):

Facts:

Petitioner Euro-Linea Phil, Inc hired private respondent Pastoral as shipping expediter on a
probationary basis for a period of six months. Prior to hiring by petitioner, Pastoral had been
employed by Fitscher Manufacturing Corporation also as shipping expediter. On 4 February
1984, Pastoral received a memorandum terminating his probationary employment in view of his
failure “to meet the performance standards set by the company”. Pastoral filed a complaint for
illegal dismissal against petitioner. On 19 July 1985, the Labor Arbiter found petitioner guilty of
illegal dismissal. Petitioner appealed the decision to the NLRC on 5 August 1985 but the appeal
was dismissed. Hence the petition for review seeking to reverse and set aside the resolution of
public respondent NLRC, affirming the decision of the Labor Arbiter, which ordered the
reinstatement of complainant with six months backwages.

Issue:

Whether or not the National Labor Relations Commission acted with grave abuse of discretion
amounting to excess of jurisdiction in ruling against the dismissal of the respondent, a
temporary or probationary employee, by his employer.

Held:

Although a probationary or temporary employee has a limited tenure, he still enjoys the
constitutional protection of security of tenure.

Furthermore, what makes the dismissal highly suspicious is the fact that while petitioner claims
that respondent was inefficient, it retained his services until the last remaining two weeks of the
six months probationary employment. No less important is the fact that private respondent had
been a shipping expediter for more than one and a half years before he was absorbed by
petitioner. It therefore appears that the dismissal in question is without sufficient justification.

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

must be done without abuse of discretion, for what is at stake is not only petitioner's position but
also his means of livelihood. The right of an employer to freely select or discharge his
employees is subject to regulation by the State, basically in the exercise of its paramount police
power.

Decision:

In the instant case, it is evident that the NLRC correctly applied Article 282 in the light of the
foregoing and that its resolution is not tainted with unfairness or arbitrariness that would amount
to grave abuse of discretion or lack of jurisdiction (Rosario Brothers Inc. v. Ople, 131 SCRA 73
[1984]).

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, and the resolution of
the NLRC is affirmed. SO ORDERED.

16
 Meralco vs. NLRC
G.R. No. 7876 July 12,1989

FIRST DIVISION: MEDIALDEA, J.:

Facts:

Private respondent Signo was employed in petitioner company as supervisor-leadman since

January 1963 up to the time when his services were terminated on May 18, 1983.

In 1981, a certain Fernando de Lara filed an application with the petitioner company for
electrical services at his residence at Peñafrancia Subdivision, Marcos Highway, Antipolo, Rizal.
Private respondent Signo facilitated the processing as well as the required documentation for
said application at the Municipality of Antipolo, Rizal. In consideration thereof, private
respondent received from Fernando de Lara the amount of P7,000.00. Signo thereafter filed the
application for electric services with the Power Sales Division of the company.

It was established that the area where the residence of de Lara was located is not yet within the
serviceable point of Meralco. But In order to expedite the electrical connections at de Lara's
residence, certain employees of the company, including respondent Signo, made it appear in
the application that the sari-sari store located in the entrance to the subdivision, is applicant de
Lara's establishment, which, in reality is not owned by the latter.

As a result of this scheme, the electrical connections to de Lara's residence were installed.
However, due to the fault of the Power Sales Division of petitioner company, Fernando de Lara
was not billed for more than a year.

Petitioner company conducted an investigation of the matter and found respondent Signo
responsible for the said irregularities in the installation. Thus, the services of the latter were
terminated on May 18, 1983 which prompted him to file a complaint for illegal dismissal, unpaid
wages, and separation pay.

Labor Arbiter rendered a decision based on position papers submitted directing the petitioner to
reinstate private respondent to his former position without backwages. Both parties appealed
from the decision to the respondent Commission but were dismissed for lack of merit and who in
turn affirmed in toto the decision of the Labor Arbiter. Hence, this petition.

Issue:

Whether or not private respondent’s dismissal from petitioner company is valid on grounds of
serious misconduct and loss of trust and confidence.

Held:

This Court has held time and again, in a number of decisions, that notwithstanding the existence
of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal

17
should not be imposed, as it is too severe a penalty if the latter has been employed for a
considerable length of time in the service of his employer.

The power to dismiss is the normal prerogative of the employer. An employer, generally, can
dismiss or lay-off an employee for just and authorized causes enumerated under Articles 282
and 283 of the Labor Code. However, the right of an employer to freely discharge his
employees is subject to regulation by the State.

There is no question that herein respondent Signo is guilty of breach of trust and violation of
company rules, the penalty for which ranges from reprimand to dismissal depending on the
gravity of the offense. However, as earlier stated, the respondent Commission and the Labor
Arbiter found that dismissal should not be meted to respondent Signo considering his twenty
(20) years of service in the employ of petitioner, without any previous derogatory record, in
addition to the fact that petitioner company had awarded him in the past, two (2)
commendations for honesty. If ever the petitioner suffered losses resulting from the unlisted
electric consumption of de Lara, this was found to be the fault of petitioner's Power Sales
Division.

Further, in carrying out and interpreting the Labor Code's provisions and its implementing
regulations, the workingman's welfare should be the primordial and paramount consideration.
This kind of interpretation gives meaning and substance to the liberal and compassionate spirit
of the law as provided for in Article 4 of the New Labor Code which states that "all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing
rules and regulations shall be resolved in favor of labor" .

Decision:

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, but
without the award of backwages, considering the good faith of the employer in dismissing the
respondent.

ACCORDINGLY, premises considered, the petition is hereby DISMISSED and the assailed
decision of the National Labor Relations Commission dated March 12, 1987 is AFFIRMED. The
temporary restraining order issued on August 3, 1987 is lifted. SO ORDERED.

Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur

18
 Sosito vs. Aguinaldo Development Corp.
G.R. No. L-48926 December 14, 1987

FIRST DIVISION: CRUZ, J.:

Facts:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company,
and was in charge of logging importation, with a monthly salary of P675.00, 1 when he went on
indefinite leave with the consent of the company on January 16, 1976.

On July 20, 1976, the private respondent, through its president, announced a retrenchment
program and offered separation pay to employees in the active service as of June 30, 1976,
who would tender their resignations not later than July 31, 1976. The petitioner decided to
accept this offer and so submitted his resignation on July 29, 1976, "to avail himself of the
gratuity benefits" promised. However, his resignation was not acted upon and he was never
given the separation pay he expected. The petitioner complained to the Department of Labor,
where he was sustained by the labor arbiter. The company was ordered to pay Sosito the sum
of P 4,387.50, representing his salary for six and a half months. On appeal to the National Labor
Relations Commission, this decision was reversed and it was held that the petitioner was not
covered by the retrenchment program.

Issue:

Whether or not the petitioner is covered by the retrenchment program and thus entitled to
separation benefits.

Held:

It is clear from the memorandum that the offer of separation pay was extended only to those
who were in the active service of the company as of June 30, 1976. It is equally clear that the
petitioner was not eligible for the promised gratuity as he was not actually working with the
company as of the said date. Being on indefinite leave, he was not in the active service of the
private respondent although, if one were to be technical, he was still in its employ. Even so,
during the period of indefinite leave, he was not entitled to receive any salary or to enjoy any
other benefits available to those in the active service.

We note that under the law then in force the private respondent could have validly reduced its
work force because of its financial reverses without the obligation to grant separation pay. This
was permitted under the original Article 272(a), of the Labor Code, which was in force at the
time. To its credit, however, the company voluntarily offered gratuities to those who would agree
to be phased out pursuant to the terms and conditions of its retrenchment program, in
recognition of their loyalty and to tide them over their own financial difficulties. The Court feels
that such compassionate measure deserves commendation and support but at the same time
rules that it should be available only to those who are qualified therefore. We hold that the
petitioner is not one of them.

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

19
enforcement in the interest of simple fair play. Out of its concern for those with less privileges in
life, this Court has inclined more often than not toward the worker and upheld his cause in his
conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice
is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.

Decision:

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs
against the petitioner. SO ORDERED.

Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.

20
 Colgate Palmolive Philippines, Inc., vs. Ople
G.R. No. 73681 June 30, 1988

SECOND DIVISION: PARAS, J.:

Facts:

On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor
Relations (BLR) on ground of unfair labor practice consisting of alleged refusal to bargain,
dismissal of union officers/members; and coercing employees to retract their membership with
the union and restraining non-union members from joining the union.

After efforts at amicable settlement proved unavailing, the Office of the MOLE, upon petition of
petitioner assumed jurisdiction over the dispute pursuant to Article 264 (g) of the Labor Code.

In its position paper, the petitioner pointed out that the infractions committed by the three
salesmen fully convinced the company, after investigation of the existence of just cause for their
dismissal, that their dismissal was carried out pursuant to the inherent right and prerogative of
management to disciplne erring employees. Moreover, the petitioner refuted the union’s charge
that the membership in union and refusal to retract precipitated their dismissal was totally false
and amounted to malicious imputation of union busting. Thre respondent union on hte other
hand assailed its answers to the petitioner’s position paper.

On August 9,1985, respondent Minister rendered a decision whichfound no merit in the Union's
Complaint for unfair labor practice allegedly committed by petitioner and that the the three
salesmen, Peregrino Sayson, Salvador Reynante & Cornelio Mejia, "not without fault" hence
"the company has grounds to dismiss above named salesmen".

At the same time respondent Minister directly certified the respondent Union as the collective
bargaining agent for the sales force in petitioner company and ordered the reinstatement of the
three salesmen to the company on the ground that the employees were first offenders.

Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in his
assailed Order, dated December 27, 1985. Hence, this petition.

Issue:

Whether the respondent Minister committed a grave abuse of discretion when, notwithstanding
his very own finding that there was just cause for the dismissal of the three (3) salesmen, he
nevertheless ordered their reinstatement.

Held:

The respondent Minister has the power to decide a labor dispute in a case assumed by him
under Art. 264 (g) of the Labor Code.

21
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt
on their part is not in conformity with law. Reinstatement is simply incompatible with a finding of
guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees
the law warrants their dismissal without making any distinction between a first offender and a
habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and
respect not only the labor or workers' side but also the management and/or employers' side.
The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction
of the employer. To order the reinstatement of the erring employees would in effect encourage
unequal protection of the laws as a managerial employee of petitioner company involved in the
same incident was already dismissed and was not ordered to be reinstated. As stated by Us in
the case of San Miguel Brewery vs. National Labor Union, "an employer cannot legally be
compelled to continue with the employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and whose continuance in the service of the
latter is patently inimical to his interest."

Decision:

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Order of
the respondent Minister, dated December 27, 1985 for grave abuse of discretion. However, in
view of the fact that the dismissed employees are first offenders, petitioner is hereby ordered to
give them separation pay. The temporary restraining order is hereby made permanent.

SO ORDERED.

Yap, C.J., Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

22
 Mendoza vs. Rural Bank of Lucban
G.R. No. 155421 July 7, 2004

FIRST DIVISION: PANGANIBAN, J.:

Facts:

On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, providing that “in line with the policy of the bank to familiarize
bank employees with the various phases of bank operations and further strengthen the existing
internal control system, all officers and employees are subject to reshuffle of assignments” and
that those” affected branch employees are reshuffled to their new assignments without changes
in their compensation and other benefits.”

On May 3, 1999, in an undated letter addressed to Daya, the Bank’s Board Chairman, petitioner
Elmer Mendoza expressed his opinion on the reshuffle alleging that "his reshuffling is deemed
to be a demotion without any legal basis and thus asking to be allowed to remain in his position.

On May 10, 1999, Daya replied reitirating that “it was never the intention (of the management) to
downgrade his position in the bank considering that due compensation is maintained and no
future reduction was intended. It was further reiterated that the “conduct of reshuffle is also a
prerogative of bank management.".

On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter in which
he applied for a leave of absence from work.

On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for
twenty days effective on the same date.

On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before
Arbitration Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint --
for illegal dismissal, underpayment, separation pay and damages -- was filed against the Rural
Bank of Lucban and/or its president, Alejo B. Daya; and its Tayabas branch manager, Briccio V.
Cada. The case was docketed as NLRC Case SRAB-IV-6-5862-99-Q.The labor arbiter's June
14, 2000 Decision upheld petitioner's claims.

On appeal, the NLRC reversed the labor arbiter. In its July 18, 2001 Resolution. After the NLRC
denied his Motion for Reconsideration, petitioner brought before the CA a Petition for Certiorari
assailing the foregoing Resolution.

Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision
ruled in favor of the private respondent rural bank.

Issue:

23
Whether or not the the petitioner was constructively dismissed from employment and that the
reshuffling pursuant to Board Res. Nos. 99-52 and 99-53 is a valid exercise of management
prerogative.

Held:

The Petition has no merit.

Constructive dismissal is defined as an involuntary resignation resorted to when continued

employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank
or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee.

Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts
often decline to interfere in legitimate business decisions of employers. Indeed, labor laws
discourage interference in employers' judgments concerning the conduct of their business. The
law must protect not only the welfare of employees, but also the right of employers.

In the pursuit of its legitimate business interest, management has the prerogative to transfer or
assign employees from one office or area of operation to another -- provided there is no
demotion in rank or diminution of salary, benefits, and other privileges; and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause. This privilege is inherent in the right of employers to control and
manage their enterprise effectively. The right of employees to security of tenure does not give
them vested rights to their positions to the extent of depriving management of its prerogative to
change their assignments or to transfer them.

Managerial prerogatives, however, are subject to limitations provided by law, collective

bargaining agreements, and general principles of fair play and justice.

Decision:

WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25,
2002 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner. SO
ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

24
 Gelmart Industries Phils., Inc. vs. NLRC
G.R. No. 85668 August 10, 1989

FIRST DIVISION: GANCAYCO, J.:

Facts:

Private respondent Felix Francis started working as an auto-mechanic for petitioner Gelmart
Industries Phils., Inc. (GELMART) sometime in 1971. As such, his work consisted of the repair
of engines and underchassis, as well as trouble shooting and overhauling of company vehicles.
He is likewise entrusted with some tools and spare parts in furtherance of the work assigned to
him.

On April 11, 1987, private respondent was caught by the security guards taking out of
GELMART's premises one (1) plastic container filled with about 16 ounces of "used' motor oil,
without the necessary gate pass to cover the same as required under GELMART's rules and
regulations which provides that theft and/or pilferage of company property merits an outright
termination from employment. By reason thereof, petitioner was placed under preventive
suspension pending investigation for violation of company rules and regulations on April 13,
1987.

After due investigation, or on May 20, 1987, private respondent was found guilty of theft of
company property. As a consequence, his services were severed.

Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a
decision dated February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private
respondent was illegally dismissed and, accordingly, ordered the latter's reinstatement with full
backwages from April 13, 1987 up to the time of actual reinstatement.

From this decision, GELMART interposed an appeal with the NLRC. In its decision dated
October 21, 1988, the NLRC affirmed with modification the ruling of Labor Arbiter Diosana.

On December 12, 1988, GELMART filed before this Court a special civil action for certiorari with
a prayer for the issuance of a temporary restraining order.

On January 18, 1989, this Court, without necessarily giving due course to the petition, issued a
temporary restraining order enjoining respondents from enforcing the assailed decision.

Issue:

Whether or not the NLRC committed a grave abuse of discretion for rendering a decision that is
contrary to law and existing jurisprudence in ordering the reinstatement of private respondent to
his former position with payment of backwages.

Held:

We find no merit in this petition.

25
Consistent with the policy of the State to bridge the gap between the underprivileged
workingmen and the more affluent employers, the NLRC rightfully tilted the balance in favor of
the workingmen — and this was done without being blind to the concomitant right of the
employer to the protection of his property.

On the other hand, without being too harsh to the employer, and naively liberal to labor, on the
other, the NLRC correctly pointed out that private respondent cannot totally escape liability for
what is patently a violation of company rules and regulations.

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

disposed of or wasted, the "used" motor oil still remains, in legal contemplation, the property of
GELMART. As such, to take the same out of GELMART's premises without the corresponding
gate pass is a violation of the company rule on theft and/or pilferage of company property.

In this score, it is very difficult for this Court to discern grave abuse of discretion on the part of
the NLRC in modifying the appealed decision. The suspension imposed upon private
respondent is a sufficient penalty for the misdemeanor committed.

Considering that private respondent herein has no previous derogatory record in his fifteen (15)
years of service with petitioner GELMART the value of the property pilfered (16 ounces of used
motor oil) is very minimal, plus the fact that petitioner failed to reasonably establish that non-
dismissal of private respondent would work undue prejudice to the viability of their operation or
is patently inimical to the company's interest, it is more in consonance with the policy of the
State, as embodied in the Constitution, to resolve all doubts in favor of labor.

Thus, the penalty of preventive suspension was sufficient punishment for the violation under the
circumstance and that complainant-appellee’s dismissal unwarranted.

Decision:

WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit. The,
restraining order issued by this Court on January 18, 1989 enjoining the enforcement of the
questioned decision of the National Labor Relations Commission is hereby lifted. No
pronouncement as to costs. SO ORDERED.

Narvasa, Cruz, Griñ;o-Aquino and-in Medialdea, JJ., concur.

26
 Lagatic vs. NLRC
G.R. No. 121004 January 28, 1998

THIRD DIVISION: ROMERO, J.:

Facts:

Petitioner Romeo Lagatic was employed in May 1986 by Cityland. As a marketing specialist, he
was tasked with soliciting sales for the company, with the corresponding duties of accepting
call-ins, referrals, and making client calls and cold calls (the practice of prospecting for clients
through the telephone directory). Cityland, believing that the same is an effective and cost-
efficient method of finding clients, requires all its marketing specialists to make cold calls but
nonetheless requires submission of daily progress reports on the same in order to assess to
determine the results thereof.

On November 1992, petitioner was suspended for three days for failing to submit cold call
reports on various dates of September and October 1992 notwithstanding a written reprimand
for infraction of the same committed a year earlier and a warning that further non-compliance
would result to termination.

Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call
reports for five (5) days of February 1993. He was verbally reminded to submit the same and
was even given up to February 17, 1993 to do so. Instead of complying with said directive,
Petitioner, on February 16, 1993, wrote a note, TO HELL WITH COLD CALLS! WHO CARES?
and exhibited the same to his co-employees. To worsen matters, he left the same lying on his
desk where everyone could see it.

On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland
should not make good its previous warning for his failure to submit cold call reports, as well as
for issuing the written statement aforementioned. On February 24, 1993, he sent a letter-reply
alleging that his failure to submit cold call reports should not be deemed as gross
insubordination. He denied any knowledge of the damaging statement, TO HELL WITH COLD
CALLS!

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him
on February 26, 1993. Aggrieved by such dismissal, petitioner filed a complaint against Cityland
for illegal dismissal, illegal deduction, underpayment, overtime and rest day pay, damages and
attorneys fees. The labor arbiter dismissed the petition for lack of merit. On appeal, the same
was affirmed by the NLRC; hence the present recourse.

Issue:

Whether or not the respondent NLRC gravely abused its discretion in not finding the petitioner
illegally dismissed.

Held:

The petition lacks merit.

27
To constitute a valid dismissal from employment, two requisites must be met, namely: (1) the
employee must be afforded due process, and (2) the dismissal must be for a valid cause.

Petitioner loses sight of the fact that except as provided for, or limited by, special laws, an
employer is free to regulate, according to his discretion and judgment, all aspects of
employment. Employers may, thus, make reasonable rules and regulations for the government
of their employees, and when employees, with knowledge of an established rule, enter the
service, the rule becomes a part of the contract of employment. It is also generally recognized
that company policies and regulations, unless shown to be grossly oppressive or contrary to
law, are generally valid and binding on the parties and must be complied with.

Corollarily, an employee may be validly dismissed for violation of a reasonable company rule or
regulation adopted for the conduct of the company business. An employer cannot rationally be
expected to retain the employment of a person whose x x x lack of regard for his employers
rules x x x has so plainly and completely been bared. Petitioners continued infraction of
company policy requiring cold call reports, as evidenced by the 28 instances of non-submission
of aforesaid reports, justifies his dismissal. He cannot be allowed to arrogate unto himself the
privilege of setting company policy on the effectivity of solicitation methods. To do so would be
to sanction oppression and the self-destruction of the employer.

More than that, his written statement shows his open defiance and disobedience to lawful rules
and regulations of the company. Likewise, said company policy of requiring cold calls and the
concomitant reports thereon is clearly reasonable and lawful, sufficiently known to petitioner,
and in connection with the duties which he had been engaged to discharge. There is, thus, just
cause for his dismissal.

Decision:

WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is
hereby DISMISSED for lack of merit. Costs against petitioner. SO ORDERED.

Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.

28
 China Banking Corp., vs. Borromeo
G.R. No. 156515 October 19, 2004

SECOND DIVISION: CALLEJO, SR., J.:

Facts:

Respondent Mariano M. Borromeo joined the petitioner Bank on June 1, 1989 as Manager
Level 1 assigned at the latter’s Regional Office in Cebu City. Subsequently, the respondent was
laterally transferred to Cagayan de Oro City as Branch Manager of the petitioner Bank’s branch
thereat.

For the years 1989-1995 he was promoted from Manager Level I to Senior Manager Level II
having consistently received a "highly satisfactory" performance rating (1989-1990) and a "very
good" performance rating (1991-1995). Finally, in 1996, with a "highly satisfactory" performance
rating, the respondent was promoted to the position of Assistant Vice-President, Branch
Banking Group for the Mindanao area effective October 16, 1996.

However, prior to his last promotion and then unknown to the petitioner Bank, the respondent,
without authority from the Executive Committee or Board of Directors, approved several
DAUD/BP (Drawn Against Uncollected Deposits/Bills Purchased) accommodations amounting
to P2,441,375 in favor of certain Joel Maniwan. Such checks, which are not sufficiently funded
by cash, are generally not honored by banks. Further, such accommodations may be granted
only by a bank officer upon express authority from its Executive Committee or Board of
Directors.

Upon knowing of this by the bank authorities, Samuel L. Chiong, First Vice-President and Head-
Visayas Mindanao Division of the petitioner bank issued a memorandum seeking clarification on
issues relative thereto. In reply, the respondent answered the queries but nonetheless,
accepted full responsibility for committing an error in judgment, lapses in control and abuse of
discretion. However, respondent vehemently denied benefiting therefrom. Apology was
accorded by the respondent in relation to this and subsequently tendered his irrevocable
resignation effective May 31, 1997.

His acts having constituted a violation of the Bank’s Code of Ethics, respondent was directed to
restitute the amount of P1,507,736.79 representing 90% of the total loss of P1,675,263.10
incurred by the petitioner Bank. However, in view of his resignation and considering the years of
service in the petitioner Bank, the management earmarked only P836,637.08 from the
respondent’s total separation benefits or pay. The said amount would be released upon
recovery of the sums demanded from Maniwan in a civil case.

Consequently, the respondent, through counsel, made a demand on the petitioner Bank for the
payment of his separation pay and other benefits but the petitioner Bank maintained its position
to withhold the sum earmarked. Thus, the respondent filed with the National Labor Relations
Commission (NLRC), the complaint for payment of separation pay, mid-year bonus, profit share
and damages against the petitioner Bank. The Labor Arbiter ruled in favor of the bank.
Respondent appealed to the NLRC but it affirmed in toto the findings of the Labor Arbiter.
However, the CA upon petition set aside the NLRC decision and alleged that repondent was
denied his rights to due process. Hence, this petition.

29
Issue:

Whether the bank has the prerogative/right to impose the withholding of respondent’s benefits
as what it considered the appropriate penalty under the circumstances pursuant to its company
rules and regulations.

Held:

The petition is meritorious. The petitioner Bank was left with no other recourse but to impose the
ancillary penalty of restitution in view of his voluntary separation from the petitioner Bank. It was
certainly within the petitioner Bank’s prerogative to impose on the respondent what it considered
the appropriate penalty under the circumstances pursuant to its company rules and regulations.

It is well recognized that company policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and valid on the parties and must be complied
with until finally revised or amended unilaterally or preferably through negotiation or by
competent authority. Moreover, management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers pursuant to company rules and
regulations.

The petitioner Bank’s business is essentially imbued with public interest and owes great fidelity
to the public it deals with. It is expected to exercise the highest degree of diligence in the
selection and supervision of their employees. As a corollary, and like all other business
enterprises, its prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations must be respected. The law, in
protecting the rights of labor, authorized neither oppression nor self-destruction of an employer
company which itself is possessed of rights that must be entitled to recognition and respect.

Significantly, the respondent ids not wholly deprived of his separation benefits but were merely
withheld and will be released without delay as soon as the bank has satisfied a judgment in the
civil case.

Decision:

WHEREFORE, the petition is GRANTED. The Decision dated July 19, 2002 of the Court of
Appeals and its Resolution dated January 6, 2003 in CA-G.R. SP No. 57365 are REVERSED
AND SET ASIDE. The Resolution dated October 20, 1999 of the NLRC, affirming the Decision
dated February 26, 1999 of the Labor Arbiter, is REINSTATED. SO ORDERED.

Puno, Austria-Martinez, Tinga, and Chico-Nazario*, JJ., concur.

30
 Associated Watchmen and Security Union (PTWO) vs. Lanting
G.R. No. L-14120 February 29, 1960

EN BANC: LABRADOR, J.:

Facts:

Three agencies (K. Tagle Ship Watchmen Agency, City Watchmen and Security Agency and
Republic Ships Security Agency) were employed by certain shipping agencies in the City of
Manila and private respondent Macondray and Company Inc., in guarding ships or vessels
arriving at the port of Manila. and in discharging cargo on its piers. Thirty-eight affiliates of the
Republic Ships Security Agency belong to the petitioner labor union.

On or about February 18, 1956, petitioner union and its members declared a strike against 19
shipping firms in the City of Manila. Attempts were made by the Court of Industrial Relations to
settle the strike.

On April 6, 1956, a petition was filed before the Court of Industrial Relations asking for
reinstatement of 47 strikers who belong to the petitioner Associated Watchmen and Security
Union (PTWO).

The manager of respondent Macondray and Company, Inc. expressed willingness to employ the
strikers belonging to the petitioner union under the condition that the agency to which they
belong file a bond in the sum of P5,000 in favor of Macondray and Company, Inc. to respond for
any negligence, misfeasance or malfeasance of any of the watchmen of petitioner. This
requirement of filing a bond was also demanded of the other two security agencies, the K. Tagle
Ship Watchmen Agency and the City Watchmen and Security Agency. However, the Republic
Ships Security Agency, to which most of the members of the petitioner union belonged, failed to
comply with the demands of Macondray and Company, Inc. that they furnish such a bond..
Because of the failure of the Republic Ships Security Agency to furnish a bond, Macondray and
Company, Inc. refused to employ watchmen from the said agency. Some of the members of the
agency transferred to the other two agencies that had furnished a bond and after having joined
the said agencies they were employed as watchmen by the respondent Macondray and
Company, Inc.

On November 15, 1956, Macondray and Company, Inc. was charged with unfair labor practice.
Macondray and Company, Inc. answered the complaint.

The judge of the Court of Industrial held that defendant-respondent is guilty of unfair labor
practice in view of the circumstances of the case and ordered the members of the union to be
reinstated with full back wages from February 18, 1956 up to their actual reinstatement and
prohibited the respondent from committing further acts of unfair labor practice. The respondent
appealed this decision to the court in banc. On the appeal, three of the judges of the court,
Judges Lanting, Martinez and Tabigne, voted to reverse the decision of the trial judge and to
dismiss the petition for lack of merit. The other two judges voted for the affirmance of the
decision.

Issue:

31
Whether or not Macondray and Co. Committed unfair labor practice for having dismissed and
refused to employ 38 members of the petitioner in relation to the failure of the Republic Ships
Security Agency to furnish a bond required by herein respondent.

Held:

On the whole, therefore, we find that the majority decision is fully supported by the evidence and
by the documents and papers on the record, insofar as it declares that respondent has not been
guilty of unfair labor practice.

The refusal of the respondent to employ guards affiliated with a security or watchmen agency
that does not furnish bond can not constitute an unfair labor practice. Such refusal is merely the
exercise of respondent's legitimate right to protect its own interests, especially as the members
of the petitioner had abandoned a ship they were guarding without previous notice and exposed
the ship losses due to theft and pilferage. It is to be noted that the requirement of filing of a bond
was not demanded from any of the labor unions, or from the petitioner union herein. We cannot
conclude that because the respondent company refused to employ the guards affiliated with the
Republic Ships Security Agency, which affiliates are members of the petitioner union,
respondent committed an unfair labor practice or a discrimination against petitioner union.

Decision:

Wherefore, we find no sufficient reasons for disturbing the findings of the majority of the judges
of the court below to the effect that the acts of the respondent Macondray and Company, Inc. do
not constitute an unfair labor practice, and we, therefore, affirm the decision of the said majority,
with costs against the petitioner herein.

Bengzon, Montemayor, Bautista Angelo, Concepcion, J.B.L. Reyes, Endencia, and Gutierrez
David, JJ., Concur.

32
 Pampanga Bus Company, INC., vs. PAMBUSCO Employees' Union, Inc.
G.R. No. 46739 September 23, 1939

EN BANC: MORAN, J.:

Facts:

On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner
herein, Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco Employees'
Union, Inc., new employees or laborers it may need to replace members of the union who may
be dismissed from the service of the company, with the proviso that, if the union fails to provide
employees possessing the necessary qualifications, the company may employ any other
persons it may desire. This order, in substance and in effect, compels the company, against its
will, to employ preferentially, in its service, the members of the union.

Issue:

Whether or not the said order issued by the CIR valid and not violative of the right of the
employer to select employees.

Held:

We hold that the court has no authority to issue such compulsory order.

The general right to make a contract in relation to one's business is an essential part of the
liberty of the citizens protected by the due-process clause of the Constitution. The right of the
laborer to sell his labor to such person as he may choose is, in its essence, the same as the
right of an employer to purchase labor from any person whom it chooses. The employer and the
employee have thus an equality of right guaranteed by the Constitution.

Section of Commonwealth Act No. 213 confers upon labor organizations the right "to collective
bargaining with employers for the purpose of seeking better working and living conditions, fair
wages, and shorter working hours for laborers, and, in general, to promote the material, social
and moral well-being of their members." This provision in granting to labor unions merely the
right of collective bargaining, impliedly recognizes the employer's liberty to enter or not into
collective agreements with them. Indeed, we know of no provision of the law compelling such
agreements. Such a fundamental curtailment of freedom, if ever intended by law upon grounds
of public policy, should be effected in a manner that is beyond all possibility of doubt. The
supreme mandates of the Constitution should not be loosely brushed aside. As held by the
Supreme Court of the United States in Hitchman Coal & Co. vs. Mitchell (245 U. S., 229; 62
Law. ed., 260, 276):

Decision:

Thus considered, the order appealed from is hereby reversed, with costs against the respondent
Pambusco Employees' Union, Inc.

33
 Pampanga Bus Company, INC., vs. PAMBUSCO Employees' Union, Inc.
G.R. No. 46739 September 23, 1939

EN BANC: MORAN, J.:

Facts:

On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner
herein, Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco Employees'
Union, Inc., new employees or laborers it may need to replace members of the union who may
be dismissed from the service of the company, with the proviso that, if the union fails to provide
employees possessing the necessary qualifications, the company may employ any other
persons it may desire. This order, in substance and in effect, compels the company, against its
will, to employ preferentially, in its service, the members of the union.

Issue:

Whether or not the said order issued by the CIR valid and not violative of the right of the
employer to select employees.

Held:

We hold that the court has no authority to issue such compulsory order.

The general right to make a contract in relation to one's business is an essential part of the
liberty of the citizens protected by the due-process clause of the Constitution. The right of the
laborer to sell his labor to such person as he may choose is, in its essence, the same as the
right of an employer to purchase labor from any person whom it chooses. The employer and the
employee have thus an equality of right guaranteed by the Constitution.

Section of Commonwealth Act No. 213 confers upon labor organizations the right "to collective
bargaining with employers for the purpose of seeking better working and living conditions, fair
wages, and shorter working hours for laborers, and, in general, to promote the material, social
and moral well-being of their members." This provision in granting to labor unions merely the
right of collective bargaining, impliedly recognizes the employer's liberty to enter or not into
collective agreements with them. Indeed, we know of no provision of the law compelling such
agreements. Such a fundamental curtailment of freedom, if ever intended by law upon grounds
of public policy, should be effected in a manner that is beyond all possibility of doubt. The
supreme mandates of the Constitution should not be loosely brushed aside. As held by the
Supreme Court of the United States in Hitchman Coal & Co. vs. Mitchell (245 U. S., 229; 62
Law. ed., 260, 276):

Decision:

Thus considered, the order appealed from is hereby reversed, with costs against the respondent
Pambusco Employees' Union, Inc.

34
 People v Panis
142 SCRA 664 1986

Facts:Four informations were filed on January 9, 1981, in the Court of First Instance of
Zambales and Olongapo City alleging that SerapioAbug, private respondent herein, "without
first securing a license from the Ministry of Labor as a holder of authority to operate a fee-
charging employment agency, did then and there wilfully, unlawfully and criminally operate a
private fee-charging employment agency by charging fees and expenses (from) and promising
employment in Saudi Arabia" to four separate individuals named therein, in violation of Article
16 in relation to Article 39 of the Labor Code.

Abug filed a motion to quash on the ground that the informations did not charge an offense
because he was accused of illegally recruiting only one person in each of the four informations.
Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever
two or more persons are in any manner promised or offered any employment for a fee."

The posture of the petitioner is that the private respondent is being prosecuted under Article 39
in relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as
the first two cited articles penalize acts of recruitment and placement without proper authority,
which is the charge embodied in the informations, application of the definition of recruitment and
placement in Article 13(b) is unavoidable.

Issue:Whether or not the petitioner is guilty of violating Article 13(b) of P. D. 442, otherwise
known as the Labor Code.

Held:Article 13(b) of P. D. 442, otherwise known as the Labor Code, states that, "(b)
'Recruitment and placement' refers to any act of canvassing, 'enlisting, contracting, transporting,
hiring, or procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement."

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with
two or more persons to whom, in consideration of a fee, an offer or promise of employment is
made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers."

At any rate, the interpretation here adopted should give more force to the campaign against
illegal recruitment and placement, which has victimized many Filipino workers seeking a better
life in a foreign land, and investing hard-earned savings or even borrowed funds in pursuit of
their dream, only to be awakened to the reality of a cynical deception at the hands of their own
countrymen.

35
 People vs Goce
GR No 113161 August 29, 1995

Parties:
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY D.
AGUSTIN,accused-appellant.

Regalado, J.

Facts:
On January 12, 1988, an information for illegal recruitment committed by a syndicate
and in large scale, punishable under Articles 38 and 39 of the Labor Code as amended by
Section 1(b) of Presidential Decree No. 2018, was filed against spouses Dan and Loma Goce
and herein accused-appellant Nelly Agustin in the Regional Trial Court of Manila, Branch 5.
On January 21, 1987, a warrant of arrest was issued against the three accused but not
one of them was arrested. Hence, on February 2, 1989, the trial court ordered the case archived
but it issued a standing warrant of arrest against the accused.Thereafter, on learning of the
whereabouts of the accused, at around midday of February 26, 1993, Nelly Agustin was
apprehended by the Parañaque police.
On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a
principal in the crime of illegal recruitment in large scale, and sentencing her to serve the
penalty of life imprisonment, as well as to pay a fine of P100,000.00.

In her appeal, appellant Agustin raises the following arguments:

(1) her act of introducing complainants to the Goce couple does not fall within the
meaning of illegal recruitment and placement under Article 13(b) in relation to Article 34
of the Labor Code;
(2) there is no proof of conspiracy to commit illegal recruitment among appellant and the
Goce spouses; and
(3) there is no proof that appellant offered or promised overseas employment to the
complainants.

Appellant counsel agreed to stipulate that she was neither licensed nor authorized to
recruit applicants for overseas employment. Appellant, however, denies that she was in any way
guilty of illegal recruitment.

It is appellant's defensive theory that all she did was to introduce complainants to the
Goce spouses. Being a neighbor of said couple, and owing to the fact that her son's overseas
job application was processed and facilitated by them, the complainants asked her to introduce
them to said spouses. Allegedly out of the goodness of her heart, she complied with their
request.

Issues:
Whether or not appellant Agustin actions in relation with the Goce couple constitute illegal
recruitment.

Held:
Appellant is accused of violating Articles 38 and 39 of the Labor Code. Article 38 of the Labor
Code, as amended by Presidential Decree No. 2018, provides that any recruitment activity,

36
including the prohibited practices enumerated in Article 34 of said Code, undertaken by non-
licensees or non-holders of authority shall be deemed illegal and punishable under Article 39
thereof. The same article further provides that illegal recruitment shall be considered an offense
involving economic sabotage if any of these qualifying circumstances exist, namely,
(a) when illegal recruitment is committed by a syndicate,i.e., if it is carried out by a group
of three or more persons conspiring and/or confederating with one another; or
(b) when illegal recruitment is committed in large scale, i.e., if it is committed against
three or more persons individually or as a group.

Recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; provided, that any
person or entity which, in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement. On the other hand, referral is
the act of passing along or forwarding of an applicant for employment after an initial interview of
a selected applicant for employment to a selected employer, placement officer or bureau.

There is illegal recruitment when one gives the impression of having the ability to send a worker
abroad." It is undisputed that appellant gave complainants the distinct impression that she had
the power or ability to send people abroad for work such that the latter were convinced to give
her the money she demanded in order to be so employed.

Decision:
WHEREFORE, the appealed judgment of the court a quo is hereby AFFIRMED in toto, with
costs against accused-appellant Nelly D. Agustin.

37
 Darvin vs. CA and People of the Philippines

G.R. No. 125044, July 13, 1998

FACTS:

Maria Toledo convinced by the petitioner that she has the authority to recruit workers for
abroad and that she can facilitate the necessary papers, gave Darvin Php150,000 for airfare
and US visa. However, she was not given a work permit to validly work in the US.

Issue:
Whether or not the petitioner is guilty of illegal recruitment?

Held:
There is lack of evidence that accused offered Toledo a job. Procuring of an airfare ticket
and a US visa does not qualify illegal recruitment.

38
 Eastern Shipping Lines vs. POEA G.R. No. 76633, Oct. 18, 1988

Facts: Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accident in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order
No. 797 and Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel,
argued that the complaint was cognizable not by the POEA but by the Social Security System
and should have been filed against the State Insurance Fund. The POEA nevertheless
assumed jurisdiction and after considering the position papers of the parties ruled in favor of the
complainant. The award consisted of P180,000.00 as death benefits and P12,000.00 for burial
expenses.
The petitioner immediately came to this Court, prompting the Solicitor General to move for
dismissal on the ground of non-exhaustion of administrative remedies.

Issue: Is Saco an overseas worker or a domestic employee?

Decision: We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was
an overseas employee of the petitioner at the time he met with the fatal accident in Japan in
1985.
Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is
defined as "employment of a worker outside the Philippines, including employment on board
vessels plying international waters, covered by a valid contract. A contract worker is described
as "any person working or who has worked overseas under a valid employment contract and
shall include seamen" or "any person working overseas or who has been employed by another
which may be a local employer, foreign employer, principal or partner under a valid employment
contract and shall include seamen." These definitions clearly apply to Vitaliano Saco for it is not
disputed that he died while under a contract of employment with the petitioner and alongside the
petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country.
It is worth observing that the petitioner performed at least two acts which constitute implied or
tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is
its submission of its shipping articles to the POEA for processing, formalization and approval in
the exercise of its regulatory power over overseas employment under Executive Order NO. 797.
The second is its payment of the contributions mandated by law and regulations to the Welfare
Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing
social and welfare services to Filipino overseas workers."
WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary
restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered.

39
 PHILSA INTERNATIONAL PLACEMENT and SERVICES CORPORATION, V.S,
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, VIVENCIO DE MESA, RODRIGO
MIKIN and CEDRIC LEYSON

FACTS:

Petitioner Philsa is a domestic corporation engaged in the recruitment of workers for overseas
employment. Sometime in January 1985, private respondents, who were recruited by petitioner
for employment in Saudi Arabia, were required to pay placement fees in the amount of
P5,000.00 for private respondent Rodrigo L. Mikin and P6,500.00 each for private respondents
Vivencio A. de Mesa and Cedric P. Leyson.

After the execution of their respective work contracts, private respondents left for Saudi Arabia
on January 29, 1985. They then began work for Al-Hejailan Consultants A/E, the foreign
principal of petitioner.

While in Saudi Arabia, private respondents were allegedly made to sign a second contract on
February 4, 1985 which changed some of the provisions of their original contract resulting in the
reduction of some of their benefits and privileges. On April 1, 1985, their foreign employer
allegedly forced them to sign a third contract which increased their work hours from 48 hours to
60 hours a week without any corresponding increase in their basic monthly salary. When they
refused to sign this third contract, the services of private respondents were terminated by Al-
Hejailan and they were repatriated to the Philippines.

Upon their arrival in the Philippines, private respondents demanded from petitioner Philsa the
return of their placement fees and for the payment of their salaries for the unexpired portion of
their contract. When petitioner refused, they filed a case before the POEA against petitioner
Philsa and its foreign principal, Al-Hejailan., with the following causes of action:

1. Illegal dismissal;
2. Payment of salary differentials;
3. Illegal deduction/withholding of salaries;
4. Illegal exactions/refund of placement fees; and
5. Contract substitution.

Several hearings were conducted before the POEA Hearing Officer on the two aspects of
private respondents' complaint. During these hearings, private respondents supported their
complaint with the presentation of both documentary and testimonial evidence. When it was its
turn to present its evidence, petitioner failed to do so and consequently, private respondents
filed a motion to decide the case on the basis of the evidence on record.

In line with this August 29, 1988 Order, petitioner deposited the check equivalent to the claims
of private respondents and paid the corresponding fine under protest. From the said Order,
petitioner filed a Motion for Reconsideration which was subsequently denied in an Order dated
October 10, 1989.

Under the POEA Rules and Regulations, the decision of the POEA thru the LRO suspending or
canceling a license or authority to act as a recruitment agency may be appealed to the Ministry
(now Department) of Labor and Employment. 15 Accordingly, after the denial of its motion for
reconsideration, petitioner appealed the August 21, 1988 Order to the Secretary of Labor and

40
Employment. However, in an Order dated September 13, 1991,16 public respondent Secretary of
Labor and Employment affirmed in toto the assailed Order. Petitioner filed a Motion for
Reconsideration but this was likewise denied in an Order dated November 25, 1991.

ISSUE:

1. Whether or not petitioner charge private respondents placement fees in excess of that
allowed by law. and;
2. Whether or not the public respondent committed grave abuse of discretion in holding
petitioner liable for illegal deductions/withholding of salaries considering that the
Supreme Court itself has already absolved petitioner from this charge.

HELD:

To summarize, petitioner should be absolved from the three (3) counts of illegal exaction as
POEA Administrative Circular No. 2, Series of 1983 could not be the basis of administrative
sanctions against petitioner for lack of publication. However, we affirm the ruling of the POEA
and the Secretary of Labor and Employment that petitioner should be held administratively liable
for two (2) counts of contract substitution and one (1) count of withholding or unlawful deduction
of salary.

Under the applicable schedule of penalties imposed by the POEA, the penalty for each count of
contract substitution is suspension of license for two (2) months or a fine of P10,000.00 while
the penalty for withholding or unlawful deduction of salaries is suspension of license for two (2)
months or fine equal to the salary withheld but not less than P10,000.00 plus restitution of the
amount in both instances.36 Applying the said schedule on the instant case, the license of
petitioner should be suspended for six (6) months or, in lieu thereof, it should be ordered to pay
fine in the amount of P30,000.00. Petitioner should likewise pay the amount of SR1,000.00 to
private respondent Vivencio A. de Mesa as restitution for the amount withheld from his salary.

WHEREFORE, premises considered, the September 13, 1991 and November 25, 1991 Orders
of public respondent Secretary of Labor and Employment are hereby MODIFIED. As modified,
the license of private respondent Philsa International Placement and Services Corporation is
hereby suspended for six (6) months or, in lieu thereof, it is hereby ordered to pay the amount of
P30,000.00 as fine. Petitioner is likewise ordered to pay the amount of SR1,000.00 to private
respondent Vivencio A. d e Mesa. All other monetary awards are deleted.

41
 Douglas Millares and Rogelio Lagda
vs
National Labor Relations Commission, Trans-Global Maritime Agency, Inc. and Esso
International Shipping Co., L.td.

Facts:
Douglas Millares was employed by ESSO International through its local manning
agency, Trans-Global, in 1968 as a machinist. In 1975, he was promoted as Chief Engineer
which position he occupied until he opted to retire in 1989.
In 1989, petitioner Millares filed a leave of absence and applied for optional retirement
plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he had already
rendered more than twenty years of continuous service.
Esso International denied Millares’ request for optional retirement on the following
grounds, to wit: (1) he was employed on a contractual basis; (2) his contract of enlistment
(COE) did not provide for retirement before the age of sixty years; and (3) he did not comply
with the requirement for claiming benefits under the CEIP, i.e., to submit a written advice to the
company of his intention to terminate his employment within thirty days from his last
disembarkation date.
Subsequently, after failing to return to work after the expiration of his leave of absence,
Millares was dropped from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by Esso International as wiper/oiler in
1969. He was promoted as Chief Engineer in 1980, a position he continued to occupy until his
last COE expired in 1989.
In 1989, Lagda likewise filed a leave of absence and applied to avail of the optional early
retirement plan in view of his twenty years continuous service in the company.
Trans-global similarly denied Lagda’s request for availment of the optional early
retirement scheme on the same grounds upon which Millares request was denied.
Unable to return for contractual sea service after his leave of absence expire, Lagda was
also dropped from the roster of crew members effective September 1, 1989.
Millares and Lagda filed a complaint-affidavit for illegal dismissal and non-payment
of employee benefits against private respondents Esso International and Trans-Global before
the POEA.
The POEA rendered a decision dismissing the complaint for lack of merit. On appeal,
NLRC affirmed the decision of the POEA dismissing the complaint.
NLRC ratiocinated that Millares and Lagda, as seamen and overseas contract workers
are not covered by the term “regular employment” as defined under Article 280 of the Labor
Code. The POEA, which is tasked with protecting the rights of the Filipino workers for overseas
employment to fair and equitable recruitment and employment practices and to ensure their

42
welfare, prescribes a standard employment contract for seamen on board ocean-going vessels
for a fixed period but in no case to exceed twelve months.

Issue:
Whether or not seafarers are considered regular employees under Article 280 of the
Labor Code.

Ruling:

The court ruled that Seafarers are considered contractual employees. They can not be
considered as regular employees under Article 280 of the Labor Code. Their employment is
governed by the contracts they sign everytime they are rehired and their employment is
terminated when the contract expires. Their employment is contractually fixed for a certain
period of time. They fall under the exception of Article 280 whose employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined
at the time of engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

43
 Tierra International Construction Corporation vs NLRC, POEA, Manuel S. Cruz,
Raymundo G. Nepa and Rolando F. Carino
April 2, 1996 GR No. 101825, 256 SCRA 36

Mendoza, J.:

Facts
Private respondents Manuel Cruz, Raymundo Nepa and Rolando Carino were recruited
by the petitioner Tierra International Construction to work as a transit mixer, truck driver and
batch plant operator. Private respondents had barely started work in the foreign assignment
when they had a disagreement with the plant supervisor, Engr. Terrance Filby. What exactly
they had been ordered to do which they refused to execute – whether to dig and excavate
canals and to haul bags of cement, cement pipes, heavy plumbing equipments and large
electric cables, as they claimed, or only to do household chores consisting of keeling the
workplace clean, as the company alleges. The fact is that the private respondents refused to
work as ordered and for this, they were dismissed and sent back to the Philippines. The
company offered to pay the final fees representing their salaries but private respondents
demanded as well as the payment of their salaries corresponding to the balance of their
employment contracts. Private respondents made their formal demand, claiming that, in
violation of their contract of employment, they had been required to perform work not related to
the jobs for which they had been hired. As their demand was denied, private respondents filed a
complaint for illegal dismissal with the POEA. They sought recovery of unpaid salaries and
salaries corresponding to the unexpired portion of their employment contracts. Petitioners
denied the allegations of private respondents and claimed that the latter’s dismissal was for a
cause. Petitioners claimed that, private respondents were merely requested by the plant
supervisor to do housekeeping job since they were idle for the rest of the day.
The POEA dismissed private respondents’ claim that they had been required to do work
other than that for which they had been hired. POEA said no evidence had been presented to
support this allegation, but finding that private respondents had not been paid their salaries, it
order petitioners their salaries. Private respondents appealed to the NLRC and in its decision
found that the private respondents to have been illegally dismissed.

Issue
Whether private respondents were dismissed because they refuse to do work not
according to their job description, and whether the NLRC had jurisdiction over the case.

Held
The private respondents are fully justified in refusing to do assignments not connected
with the nature of their engagements. The NLRC had jurisdiction, therefore the basis for the
finding of the NLRC that private respondents had been required to dig canals, make
excavations, and haul construction materials. It is not disputed that to make them do this would
require them to do work not connected to their employment as transit mixer, truck driver and
batch operator. They were therefore fully justified in refusing to do the assignment.

44
ANDRES E. DITAN, petitioner, vs. PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION,
ASIAWORLD RECRUITMENT, INC., AND/OR INTRACO SALES CORPORATION,
respondents.

G.R. No. 79560

December 3, 1990

Facts:

Andres E. Ditan was recruited by private respondent Intraco Sales Corporation, through its local
agent, Asia World, the other private respondent, to work in Angola as a welding supervisor. The
contract was for nine months, at a monthly salary of US$1,100.00 or US$275.00 weekly, and
contained the required standard stipulations for the protection of our overseas workers.

Arriving on November 30, 1984, in Luanda, capital of Angola, the petitioner was assigned as an
ordinary welder in the INTRACO central maintenance shop from December 2 to 25, 1984. On
December 26, 1984, he was informed, to his distress that would be transferred to Kafunfo, some
350 kilometers east of Luanda. This was the place where, earlier that year, the rebels had
attacked and kidnapped expatriate workers, killing two Filipinos in the raid. Naturally, Ditan was
reluctant to go. However, he was assured by the INTRACO manager that Kafunfo was safe and
adequately protected by government troops; moreover — and this was more persuasive — he
was told he would be sent home if he refused the new assignment. In the end, with much
misgiving, he relented and agreed.

On December 29, 1984, his fears were confirmed. The Unita rebels attacked the diamond
mining site where Ditan was working and took him and sixteen other Filipino hostages, along
with other foreign workers. The rebels and their captives walked through jungle terrain for 31
days to the Unita stronghold near the Namibian border.

They trekked for almost a thousand kilometers. They subsisted on meager fare. Some of them
had diarrhea. Their feet were blistered. It was only on March 16, 1985, that the hostages were
finally released after the intercession of their governments and the International Red Cross. Six
days later, Ditan and the other Filipino hostages were back in the Philippines.
The repatriated workers had been assured by INTRACO that they would be given priority in re-
employment abroad, and eventually eleven of them were taken back. Ditan having been
excluded, he filed in June 1985 a complaint against the private respondents for breach of
contract and various other claims. Specifically, he sought the amount of US$4,675.00,
representing his salaries for the unexpired 17 weeks of his contract; US$25,000.00 as war risk
bonus; US$2,196.50 as the value of his lost belongings; US$1,100 for unpaid vacation leave;
and moral and exemplary damages in the sum of US$50,000.00, plus attorney's fees.

All these claims were dismissed by POEA Administrator Tomas D. Achacoso in a decision
dated January 27, 1987. 2 This was affirmed in toto by respondent NLRC in a resolution dated
July 14, 1987, 3 which is now being challenged in this petition.

Issue:

Whether or not Ditan is entitled to any relief and his case is under the jurisdiction of NLRC?

Held:

45
Yes. The fact that stands out most prominently in the record is the risk to which the petitioner
was subjected when he was assigned, after his reluctant consent, to the rebel-infested region of
Kafunfo. This was a dangerous area.

The petitioner had gone to that foreign land in search of a better life that he could share with his
loved ones after his stint abroad. That choice would have required him to come home empty-
handed to the disappointment of an expectant family.

It is not explained why the petitioner was not paid for the unexpired portion of his contract which
had 17 more weeks to go. The hostages were immediately repatriated after their release,
presumably so they could recover from their ordeal. The promise of INTRACO was that they
would be given priority in re-employment should their services be needed. In the particular case
of the petitioner, the promise was not fulfilled. It would seem that his work was terminated, and
not again required, because it was really intended all along to assign him only to Kafunfo.

The private respondents stress that the contract Ditan entered into called for his employment in
Angola, without indication of any particular place of assignment in the country. This meant he
agreed to be assigned to work anywhere in that country, including Kafunfo. When INTRACO
assigned Ditan to that place in the regular course of its business, it was merely exercising its
rights under the employment contract that Ditan had freely entered into. Hence, it is argued, he
cannot now complain that there was a breach of that contract for which he is entitled to
monetary redress.

The private respondents also reject the claim for war risk bonus and point out that POEA
Memorandum Circular No. 4, issued pursuant to the mandatory war risk coverage provision in
Section 2, Rule VI, of the POEA Rules and Regulations on Overseas Employment, categorizing
Angola as a war risk took effect only on February 6, 1985"after the petitioner's deployment to
Angola on November 27, 1984." Consequently, the stipulation could not be applied to the
petitioner as it was not supposed to have a retroactive effect.

The paramount duty of this Court is to render justice through law. The law in this case allows
two opposite interpretations, one strictly in favor of the employers and the other liberally in favor
of the worker. The choice is obvious. We find, considering the totality of the circumstances
attending this case, that the petitioner is entitled to relief. The petitioner went to Angola prepared
to work as he had promised in accordance with the employment contract he had entered into in
good faith with the private respondents. Over his objection, he was sent to a dangerous
assignment and as he feared was taken hostage in a rebel attack that prevented him from
fulfilling his contract while in captivity. Upon his release, he was immediately sent home and
was not paid the salary corresponding to the unexpired portion of his contract. He was
immediately repatriated with the promise that he would be given priority in re-employment,
which never came. To rub salt on the wound, many of his co-hostages were re-employed as
promised. The petitioner was left only with a bleak experience and nothing to show for it except
dashed hopes and a sense of rejection.

Under the policy of social justice, the law bends over backward to accommodate the interests of
the working class on the humane justification that those with less privileges in life should have
more privileges in law.

WHEREFORE, the challenged resolution of the NLRC is hereby MODIFIED. The private
respondents are hereby DIRECTED jointly and severally to pay the petitioner: a) the current

46
equivalent in Philippine pesos of US$4,675.00, representing his unpaid salaries for the balance
of the contract term; b) nominal damages in the amount of P20,000.00; and c) 10% attorney's
fees. No costs.
SO ORDERED.

47
 Vinta Maritime Co., Inc. vs. NLRC

(G.R. No. 113911 January 23, 1998)

Facts:

On April 20, 1987, Leonides C. Basconcillo, herein private respondent, filed a complaint with the
Philippine Overseas Employment Administration (POEA) Workers' Assistance and Adjudication
Office for illegal dismissal against Vinta Maritime Co., Inc. and Elkano Ship Management, Inc.,
herein petitioners. In their answer, petitioners alleged that private respondent was dismissed for
his gross negligence and incompetent performance as chief engineer of the M/V Boracay.

March 9, 1990, POEA Administrator Tomas D. Achacoso ruled that private respondent was
illegally dismissed. The NLRC affirmed the decision of the POEA.

Issue:

Whether the Commission erred in affirming the decision of the POEA.

Held:

Using these legal criteria, we hold that private respondent was illegally dismissed. No notice
was ever given to him prior to his dismissal. This fact alone disproves petitioners' allegation that
"private respondent was given fair warning and enough opportunity to explain his side
[regarding] the incidents that led to his dismissal." These requisites cannot be replaced as they
are not mere technicalities, but requirements of due process to which every employee is entitled
to ensure that the employer's prerogative to dismiss is not exercised arbitrarily.

Illegally dismissed workers are entitled to the payment of their salaries corresponding to the
unexpired portion of their employment where the employment is for a definite period.
Conformably, the administrator and the Respondent Commission properly awarded private
respondent salaries for the period beginning April 9, 1987, the date of his illegal dismissal, until
February 18, 1988, the expiration of his contract.

WHEREFORE, the petition is hereby DISMISSED. The challenged Decision and Resolution are
AFFIRMED. Costs against petitioners.

SO ORDERED.

48
MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES MARITIME, INC., petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION and WILFREDO T. CAJERAS,
Respondents.

BELLOSILLO, J.

MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its foreign principal DIAMANTIDES
MARITIME, INC. (DIAMANTIDES) assail the Decision of public respondent National Labor
Relations Commission dated 16 September 1996 as well as its Resolution dated 12 November
1996 affirming the Labor Arbiter's decision finding them guilty of illegal dismissal and ordering
them to pay respondent Wilfredo T. Cajeras salaries corresponding to the unexpired portion of
his employment contract, plus attorney's fees.

Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning
agent of petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and
operated by DIAMANTIDES, for a contract period of ten (10) months with a monthly salary of
US$600.00, evidenced by a contract between the parties dated 15 June 1995. Cajeras started
work on 8 August 1995 but less than two (2) months later, or on 28 September 1995, he was
repatriated to the Philippines allegedly by mutual consent.

On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against
petitioners with the NLRC National Capital Region Arbitration Branch alleging that he was
dismissed illegally, denying that his repatriation was by mutual consent, and asking for his
unpaid wages, overtime pay, damages, and attorneys fees.[1] Cajeras alleged that he was
assigned not only as Chief Cook Steward but also as assistant cook and messman in addition to
performing various inventory and requisition jobs. Because of his additional assignments he
began to feel sick just a little over a month on the job constraining him to request for medical
attention. He was refused at first by Capt. Kouvakas Alekos, master of the MV Prigipos, who
just ordered him to continue working. However a day after the ships arrival at the port of
Rotterdam, Holland, on 26 September 1995 Capt. Alekos relented and had him examined at the
Medical Center for Seamen. However, the examining physician, Dr. Wden Hoed, neither
apprised private respondent about the diagnosis nor issued the requested medical certificate
allegedly because he himself would forward the results to private respondents superiors. Upon
returning to the vessel, private respondent was unceremoniously ordered to prepare for
immediate repatriation the following day as he was said to be suffering from a disease of
unknown origin.

MARSAMAN and DIAMANTIDES, on the other hand, denied the imputation of illegal dismissal.
They alleged that Cajeras approached Capt. Alekos on 26 September 1995 and informed the
latter that he could not sleep at night because he felt something crawling over his body.
Furthermore, Cajeras reportedly declared that he could no longer perform his duties and
requested for repatriation. The following paragraph in the vessel's Deck Log was allegedly
entered by Capt. Alekos, to wit:

Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he
was examined by Dr. Wden Hoed whose diagnosis appeared in a Medical Report as paranoia
and other mental problems.[5] Consequently, upon Dr. Hoeds recommendation, Cajeras was
repatriated to the Philippines on 28 September 1995.

49
WHEREFORE, judgment is hereby rendered declaring the repatriation and dismissal of
complaint Wilfredo T. Cajeras as illegal and ordering respondents Marsaman Manning Agency,
Inc. and Diamantides Maritime, Inc. to jointly and severally pay complainant the sum of USD
5,100.00 or its peso equivalent at the time of payment plus USD 510.00 as 10% attorneys fees
it appearing that complainant had to engage the service of counsel to protect his interest in the
prosecution of this case.

1. The employment of the seaman shall cease upon expiration of the contract period indicated
in the Crew Contract unless the Master and the Seaman, by mutual consent, in writing, agree to
an early termination x x x x (underscoring ours).

Clearly, under the foregoing, the employment of a Filipino seaman may be terminated prior to
the expiration of the stipulated period provided that the master and the seaman (a) mutually
consent thereto and (b) reduce their consent in writing.

The Labor Arbiter, rationalizing that the aforesaid law did not apply since it became effective
only one (1) month after respondent's overseas employment contract was entered into on 15
June 1995, simply awarded private respondent his salaries corresponding to the unexpired
portion of his employment contract, i.e., for 8.6 months. The NLRC affirmed the award and the
Office of the Solicitor General (OSG) fully agreed. But petitioners now insist that Sec. 10, RA
8042 is applicable because although private respondents contract of employment was entered
into before the law became effective his alleged cause of action, i.e., his repatriation on 28
September 1995 without just, valid or authorized cause, occurred when the law was already in
effect. Petitioners' purpose in so arguing is to invoke the law in justifying a lesser monetary
award to private respondent, i.e., salaries for three (3) months only pursuant to the last portion
of Sec. 10 as opposed to the salaries for 8.6 months awarded by the Labor Arbiter and affirmed
by the NLRC.

HELD:
the questioned Decision and Resolution dated 16 September 1996 and 12 November 1996,
respectively, of public respondent National Labor Relations Commission are AFFIRMED.
Petitioners MARSAMAN MANNING AGENCY, INC., and DIAMANTIDES MARITIME, INC., are
ordered, jointly and severally, to pay private respondent WILFREDO T. CAJERAS his salaries
for the unexpired portion of his employment contract or USD$5,100.00, reimburse the latter's
placement fee with twelve percent (12%) interest per annum conformably with Sec. 10 of RA
8042, as well as attorney's fees of ten percent (10%) of the total monetary award. Costs against
petitioners.

SO ordered

50
 [G.R. No. 131656. October 12, 1998]
ASIAN CENTER FOR CAREER AND EMPLOYMENT SYSTEM AND SERVICES, INC.
(ACCESS), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and IBNO
MEDIALES, respondents.
PUNO, J.:

FACTS:

Petitioner hired respondent IBNO MEDIALES to work as a mason in Jeddah, Saudi Arabia,
with a monthly salary of 1,200 Saudi Riyals (SR) with a term of contract for two (2) years, from
February 28, 1995 until February 28, 1997.
On May 26, 1996, respondent applied with petitioner for vacation leave with pay which he
earned after working for more than a year. His application for leave was granted. While en
route to the Philippines, his co-workers informed him that he has been dismissed from service.
The information turned out to be true.
On June 17, 1996, respondent filed a complaint with the labor arbiter for illegal dismissal,
non-payment of overtime pay, refund of transportation fare, illegal deductions, non-payment of
13th month pay and salary for the unexpired portion of his employment contract.
On March 17, 1997, the labor arbiter found petitioner guilty of illegal dismissal. In the
dispositive portion or the fallo, the Labor Arbiter ordered the respondent ACCESS and/or
ABDULLAH LELINA to pay the complainant the amount of SR 13,200 representing
complainant’s payment for the unexpired portion of his contract, refund of the illegality deducted
amount less P5,000.00, the legally allowed placement fee and attorney’s fees equivalent to ten
percent (10%) of the judgment award or the amount of SR 1,320.
It is noteworthy, however, that in the body of his decision, the labor arbiter applied Section
10 R.A. 8042,i[2] the law relative to the protection of Filipino overseas-workers, and computed
private respondent’s salary for the unexpired portion of his contract as follows: SR1,200 x 3
months = SR3,600.
On appeal by petitioner, the NLRC affirmed the factual findings of the labor arbiter but
modified the appealed decision by DELETING the order of refund of excessive placement fee
for lack of jurisdiction.
Petitioner moved for reconsideration with respect to the labor arbiter’s award of SR13,200
in the dispositive portion of the decision, representing respondent’s salary for the unexpired
portion of his contract invoking Section 10 R.A. 8042. Petitioner urged that its liability for
respondent’s salary is for only three (3) months. Petitioner claimed that it should pay only SR
3.600 (SR 1,200 x 3 months) for the unexpired portion of respondent’s employment and SR360
(10% of SR3,600) for attorney’s fees.
The NLRC DENIED petitioner’s motion. It ruled that R.A. 8042 does NOT apply as
respondent’s employment which started in February 1995 occurred prior to its effectivity on July
15, 1995.
Hence, this petition for certiorari.

ISSUE:

51
 Whether or not R.A. 8042 applies to the case of the respondent and in case of conflict
between the dispositive portion or the fallo and the body of the decision, which one shall prevail.

HELD:
As a rule, jurisdiction is determined by the law at the time of the commencement of the
action. In the case at bar, private respondent’s cause of action did not accrue on the date of his
date of his employment or on February 28, 1995. His cause of action arose only from the-time
he was illegally dismissed by petitioner from service in June 1996, after his vacation leave
expired. It is thus clear that R.A. 8042 which took effect a year earlier in July 1995 APPLIES to
the case at bar.
Under Section 10 of R.A. 8042, a worker dismissed from overseas employment without just,
valid or authorized cause is entitled to his salary for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.
In the case at bar, the unexpired portion of private respondent’s employment contract is
eight (8) months. Private respondent should therefore be paid his basic salary corresponding to
three (3) months or a total of SR3,600, which is the same computation was made by the labor
arbiter in the body of his decision. Despite said computation in the body of the decision,
however, the labor arbiter awarded higher sum (SR13,200) in the dispositive portion.
The general rule is that where there is a CONFLICT between the dispositive portion or the
fallo and the body of the decision, the FALLO CONTROLS. This rule rests on the theory that
the fallo is the final order while the opinion in the body is merely a statement ordering nothing.
However, where the inevitable conclusion from the body of the decision is so clear as to
show that there was a mistake in the dispositive portion, the body of the decision will prevail. As
in this case, the labor arbiter’s award of a higher amount in the dispositive portion was clearly an
error for there is nothing in the text of the decision which support the award of said higher
amount. Hence, the correct award to private respondent for the unexpired portion of his
employment contract is SR3,600.

The decision of the public respondent National Labor Relations Commission, dated October 14,
1997, is AFFIRMED with modifications: petitioner is ordered to pay private respondent IBNO
MEDIALES the peso equivalent of the amounts of SR3,600 for the unexpired portion of his
employment contract, and SR360 for attorney’s fees. No costs.

52
ATHENNA INTERNATIONAL MANPOWER SERVICES, INC., petitioner, vs. NONITO
VILLANOS, respondent.

G.R. No. 151303. April 15, 2005

R.A. 8042 Migrant Workers Act

QUISUMBING,J:

Facts:

The petitioner is a domestic corporation engaged in recruitment and placement of workers for
overseas employment. Respondent applied to work overseas as caretaker thru petitioner. The
petitioner asked for a placement fee amounting to P100,000 but the respondent begged to
reduced the fee and it was reduced to P94,000 with the petitioner paying only P30,000 and the
remaining will be paid through salary deductions. Upon arrival on Taiwan, he was assigned to a
mechanical shop, owned by Hsien, as a hydraulic installer/repairer for car lifters, instead of the
job for which he was hired. He did not, however, complain because he needed money to pay for
the debts he incurred back home. Barely a month after his placement, he was terminated by
Hsien and received his salary and instructed for departure to the Philippines. Upon arrival, the
respondent went to petitioner’s office and demanded for the reimbursement of P30,000 but
instead the petitioner gave him a summary of expenses relating his deployment. The
respondent filed a complaint before Adjudication Office of the POEA. However, because of
financial constraints, he had to go home to Polanco, Zamboanga del Norte and filed a complaint
against petitioner for illegal dismissal, violation of contract, and recovery of unpaid salaries and
other benefits before the NLRC Sub-Regional Arbitration Branch No. 9, Dipolog City. In its
defense, petitioner alleged that under the employment contract, respondent was to undergo a
probationary period of forty (40) days. However, at the job site, respondent was found to be unfit
for his work, thus he resigned from his employment and requested for his repatriation signing a
statement to that effect. The Labor Arbiter rendered a Decision holding petitioner and Wei Yu
Hsien solidarily liable for the wages representing the unserved portion of the employment
contract, the amount unlawfully deducted from respondent’s monthly wage, moral damages,
exemplary damages and attorney’s fees. On appeal, the NLRC reversed the Labor Arbiter and
dismissed the complaint for lack of merit. It found that respondent was not at all dismissed,
much less illegally. Respondent seasonably filed a motion for reconsideration, which the NLRC
denied in its second resolution. respondent appealed to the Court of Appeals and granted the
petition and reversing the questioned resolutions of the NLRC.

Issue:

1. Did the respondent voluntarily resign or was he illegally dismissed?

2. Assuming that the respondent was illegally dismissed, was it proper for the Court of Appeals
to affirm in toto the monetary awards in the Decision of the Labor Arbiter?

Held:

The SC denied the petition and affirmed with modification the resolution by the Court of
Appeals. On the first issue, An employee voluntarily resigns when he finds himself in a situation
where he believes that personal reasons cannot be sacrificed in favor of the exigency of the
service; thus, he has no other choice but to disassociate himself from his employment. In this

53
case respondent avers that petitioner did not explain why he was unqualified nor inform of any
qualifications needed for the job prior to his deployment as mandated by Art 281[9] of the Labor
Code and failed to prove the legality of the dismissal, despite the fact that the burden of proof
lies on the employment and recruitment agency. On the second issue, the SC declared the
petitioner solidarily liable with Wei Yu Hsien to pay the unexpired portion based on Sec 10 RA
8042. Lastly, because of the breach of contract and bad faith alleged against the employer and
the petitioner, we must sustain the award of P50,000 in moral damages and P50,000 as
exemplary damages, in addition to attorney’s fees of ten percent (10%) of the aggregate
monetary awards.

54
 EASTERN SHIPPING LINES, INC., vs. PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION (POEA)

G.R. No. 76633 October 18, 1988

FACTS:

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

ISSUE:

Whether Saco was an overseas worker or a domestic worker.

RULING:

We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an
overseas employee of the petitioner at the time he met with the fatal accident in Japan in 1985.

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is
defined as "employment of a worker outside the Philippines, including employment on board
vessels plying international waters, covered by a valid contract. A contract worker is described
as "any person working or who has worked overseas under a valid employment contract and
shall include seamen" or "any person working overseas or who has been employed by another
which may be a local employer, foreign employer, principal or partner under a valid employment
contract and shall include seamen." These definitions clearly apply to Vitaliano Saco for it is not
disputed that he died while under a contract of employment with the petitioner and alongside the
petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country.

It is worth observing that the petitioner performed at least two acts which constitute implied or
tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is
its submission of its shipping articles to the POEA for processing, formalization and approval in
the exercise of its regulatory power over overseas employment under Executive Order NO.
797. The second is its payment of the contributions mandated by law and regulations to the
Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of
providing social and welfare services to Filipino overseas workers."

It is not denied that the private respondent has been receiving a monthly death benefit pension
of P514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by the
Social Security System. In addition, as already observed, she also received a P5,000.00 burial
gratuity from the Welfare Fund for Overseas Workers. These payments will not preclude

55
allowance of the private respondent's claim against the petitioner because it is specifically
reserved in the standard contract of employment for Filipino seamen under Memorandum
Circular No. 2, Series of 1984.

Said provisions are manifestations of the concern of the State for the working class, consistently
with the social justice policy and the specific provisions in the Constitution for the protection of
the working class and the promotion of its interest.

56
G.R. No. L-63535 May 27, 1985

PHILIPPINE INTERNATIONAL SHIPPING CORPORATION, petitioner,

vs.
HONORABLE NATIONAL LABOR RELATIONS COMMISSION AND BRIGIDO SAMSON,
represented by wife, NORMA S. SAMSON, respondents.

FACTS

The case at bar stems from a claim for disability compensation benefits and hospitalization
expenses under employment contract, filed by private respondent herein, Brigido Samson,
against the petitioner before the National Seaman's Board (NSB).

On April 2, 1981, a decision was rendered on by the Executive Director of the NSB, ordering
petitioner herein to pay US $3,800 for disability compensation benefits. Petitioner argued that
there was already a previous payment to satisfy such claims for a total of 18,000 Php.

ISSUE:

WHETHER OR NOT THERE WAS ERROR IN ORDERING PAYMENT OF AWARD FOR

DAMAGES IN DOLLARS.

HELD:

While it is true that Republic Act No. 529 makes it unlawful to require payment of domestic
obligations in foreign currency, this particular statute is not applicable to the case at bar. A
careful reading of the decision rendered by the Executive Director of the NSB dated April 2,
1981 and which led to the Writ of Execution protested to by petitioner, will readily disclose that
the award to the private respondent does not compel payment in dollar currency but in fact
expressly allows payment of "its equivalent in Philippine currency." Moreover, as pointed out by
public respondent, without any subsequent controversion interposed by petitioner, the fixing of
the award in dollars was based on the parties employment contract, stipulating wages and
benefits in dollars since private respondent was engaged in an overseas seaman on board
petitioner's foreign vessel. (Comment of respondent NLRC to the Petition, pg. 10, Rollo, 49)

57
 VIR-JEN Shipping and Marine Services, Inc., vs. NLRC
G.R. No. L-58011 & L-58012 November 18, 1983

EN BANC, GUTIERREZ, JR., J.:

Facts:

Certain seamen entered into a contract of employment for a 12-month period. Some three
months after the commencement of their employment, the seamen demanded a 50 % increase
of their salaries and benefits. The seamen demanded this increase while their vessel was en
route to a port in Australia controlled by thye International Transport Workers’ Federation (ITF),
a militant international labor organization with affiliates in different ports of the world, which
reputedly can tie a vessel in a port by preventing its loading and unloading unless it paid its
seamen their prescribed ITF rates.

In reply, the agent of the owner of the vessel agreed to pay a 25% increase, but when the
vessel arrived in Japan shortly afterwards, the seamen were repatriated to Manila and their
contract terminated. There is no showing that the Seamen were given the opportunity to at least
comment for the cancellation of their contracts, although they had served only three (3) out of
the twelve (12) months' duration of their contracts.

The private respondents filed a complaint for illegal dismissal and non-payment of earned
wages with the National Seamen Board (NSB). The Vir-jen Shipping and Marine Services Inc. in
turn filed a complaint for breach of contract and recovery of excess salaries and overtime pay
against the private respondents. On July 2, 1980, the NSB rendered a decision declaring that
the seamen breached their employment contracts when they demanded and received from Vir-
jen Shipping wages over and above their contracted rates. The dismissal of the seamen was
declared legal and the seamen were ordered suspended.

The seamen appealed the decision to the NLRC which reversed the decision of the on the
ground that the termination of the contract by the petitioner was without valid cause. Hence, the
petition.

Issue:

Whether or not the findings of the NSB is more credible than the NLRC that the seamen did not
violate their contract.

Held:

The decision sought to be reconsidered appears to be a deviation from the Court's decision,
speaking through the First Division, in Wallem Shipping, Inc. v. Hon. Minister of Labor (102
SCRA 835). Faced with two seemingly conflicting resolutions of basically the same issue by its
two Divisions, the Court. therefore, resolved to transfer the case to the Court en banc.

We sustain the decision of the respondent National labor Relations Commission.

The contention that manning industries in the Philippines would not survive if the instant case is
not decided in favor of the petitioner is not supported by evidence. The Wallem case was
decided on February 20, 1981. There have been no severe repercussions, no drying up of

58
employment opportunities for seamen, and none of the dire consequences repeatedly
emphasized by the petitioner. Why should Vir-jen be all exception?

Filipino seamen are admittedly as competent and reliable as seamen from any other country in
the world. Otherwise, there would not be so many of them in the vessels sailing in every ocean
and sea on this globe. It is competence and reliability, not cheap labor that makes our seamen
so greatly in demand. Filipino seamen have never demanded the same high salaries as seamen
from the United States, the United Kingdom, Japan and other developed nations. But certainly
they are entitled to government protection when they ask for fair and decent treatment by their
employer.-, and when they exercise the right to petition for improved terms of employment,
especially when they feel that these are sub-standard or are capable of improvement according
to internationally accepted rules. In the domestic scene, there are marginal employers who
prepare two sets of payrolls for their employees — one in keeping with minimum wages and the
other recording the sub-standard wages that the employees really receive, The reliable
employers, however, not only meet the minimums required by fair labor standards legislation but
even go way above the minimums while earning reasonable profits and prospering. The same is
true of international employment. There is no reason why this Court and the Ministry of Labor
and. Employment or its agencies and commissions should come out with pronouncements
based on the standards and practices of unscrupulous or inefficient shipowners, who claim they
cannot survive without resorting to tricky and deceptive schemes, instead of Government
maintaining labor law and jurisprudence according to the practices of honorable, competent,
and law-abiding employers, domestic or foreign.

Prescinding from the above, we now hold that neither the National Seamen Board nor the
National Labor Relations Commission should, as a matter of official policy, legitimize and
enforce cubious arrangements where shipowners and seamen enter into fictitious contracts
similar to the addendum agreements or side contracts in this case whose purpose is to deceive.
The Republic of the Philippines and its ministries and agencies should present a more
honorable and proper posture in official acts to the whole world, notwithstanding our desire to
have as many job openings both here and abroad for our workers. At the very least, such as
sensitive matter involving no less than our dignity as a people and the welfare of our
workingmen must proceed from the Batasang Pambansa in the form of policy legislation, not
from administrative rule making or adjudication

Decision:

WHEREFORE, the motions for reconsideration are hereby GRANTED. The petition is
DISMISSED for lack of merit. The decision of the National Labor Relations Commission is
AFFIRMED. No costs. SO ORDERED.

Fernando, C.J., Guerrero, Abad Santos, Plana, Escolin and Relova, JJ., concur.

59
 Suzara vs. Benipayo
G.R. No. 57999 VS. NLRC

Facts: A group of Filipino seamen entered into separate contracts of employment with
Magsaysay lines at specified salary rates. When vessel reached Manila Magsaysay Lines
demanded from Seamen over payment made to them in Canada the seamen demanded and
received additional wages prescribed by the International Transport workers Federation (ITF) in
amounts over and above the rates appearing in their contract approved earlier by the National
Seamen Board .
Issue: Whether the Seaman demanded and received additional wages prescribes International
Transport Workers Federation.
When the vessel docked at Nagoya , an NSB representative boarded the vessel He
called a meeting among seamen, an urged them to sign an agreement, which they did. It turned
out that in the agreement the following statement was inserted the amounts were received and
held by crew members in trust for ship owners when reached Manila Magsaysay Lines
demanded from seamen the overpayments made to them in Canada. When they refused, it filed
charges against them before the NSB.
NSB declared the seamen guilty of breach of their employment contracts suspended the
seamen for three years, prompting the workers to bring the case up to the Supreme Court
Ruling: The Supreme Court reversed and set aside the decision of NSB-National seamen Board
and the NLRC, it held that Seamen were not guilty of the offense for which they were charged
and order Magsaysay Lines to pay the seamen their earned but unpaid wages overtime pay
Special Agreement that the parties entered into Vancouver. The criminal cases were ordered
dismissed. The Court reiterate the Vir-jen pronouncements.
Decision: The Supreme Court By Justice Guitterez

60
 CHAVEZ VS. BONTO-PEREZ, RAYALA et Al.
G.R. No. 109808

PUNO, J.:

Facts:
Petitioner entered into a standard employment contract for overseas employment as an
entertainer in Japan. The contract, as approved by POEA, had a duration of two to six months
and the stipulated monthly compensation was $1500. However, a side agreement was entered
into by Petitioner with the foreign employer through her local manager. Such agreement
stipulated a lesser compensation and other deductions. Petitioner pushed through with her
foreign employment and worked for six months. Two years upon her return, Petitioner filed a
complaint of underpayment of wages.

Issue:
Whether or not the side agreement entered into by the petitioner superseded the
employment contract previously entered into?

Held:

It was expressly stated in the employment contract that any changes or alterations made
to any part of said contract without prior approval from the POEA shall be null and void
notwithstanding the fact the employee had agreed to said contract.

61
 Finman General Assurance vs. Innocencio

{G.R. No. 90273-75, Nov. 15, 1989

FACTS:

Pan Pacific Overseas Recruiting Services, Inc. ("Pan Pacific") is a private, fee-charging,
recruitment and employment agency. In accordance with the requirements of Section 4, Rule II,
Book II of the Rules and Regulations of the Philippine Overseas Employment Administration
(POEA), Pan Pacific posted a surety bond issued by petitioner Finman General Assurance
Corporation ("Finman") and was granted a license to operate by the POEA.

Private respondents William Inocencio, Perfecto Palero, Jr., Edwin Cardones and one Edwin
Hernandez filed with the POEA separate complaints against Pan Pacific for violation of Articles
32 and 34 (a) of the Labor Code, as amended and for refund of placement fees paid to Pan
Pacific. The complainants alleged that Pan Pacific charged and collected such fees from them
but did not secure employment for them.

Acting on the complaints, the POEA Administrator motuproprioimpleaded petitioner Finman as

party respondent in its capacity as surety for Pan Pacific. Separate summonses were served
upon Finman and Pan Pacific.

Finman filed an answer denying liability and pleading, by way of special and affirmative
defenses, that: (1) the POEA had no "jurisdiction over surety bonds," that jurisdiction being
vested in the Insurance Commission or the regular courts; (2) it (Finman) had not violated
Articles 32 and 34 (a) of the Labor Code and complainants' claims had accrued during the
suspension of the principal obligor, Pan Pacific; (3) complainants had no cause of action against
Finman, since it was not privy to the transactions between them and Pan Pacific and had not
received any moneys from them; and (4) the amounts claimed by complainants had been paid
by them as deposits and not as placement fees.

ISSUE:
Whether or not POEA has jurisdiction over surety bonds.

HELD:
Yes the POEA has jurisdiction over surety bonds. The Supreme Court held“We believe and so
hold that to compel the POEA and private respondents the beneficiaries of Finman's bond-to go
to the Insurance Commissioner or to a regular court of law to enforce that bond, would be to
collide with the public policy which requires prompt resolution of claims against private
recruitment and placement agencies.

62
 Eastern Assurance and Surety Corp. vs Sec. of Labor
GR No L-79436-50 January 17, 1990

Parties:
EASTERN ASSURANCE & SURETY CORPORATION, petitioner,
vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION,
ELVIRA VENTURA, ESTER TRANGUILLAN, et al., respondents.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for petitioner.

Narvasa, J.

Facts:
In connection with the application with the Philippine Overseas Employment Administration
(POEA) of J & B Manpower Specialist, Inc. for a license to engage in business as a recruitment
agency, a surety bond was filed on January 2, 1985 by the applicant and the Eastern Assurance
and Surety Corporation, herein petitioner, in virtue of which they both held themselves —
. . . firmly bound unto (said) Philippine Overseas Employment Administration, Ministry of
Labor in the penal sum of PESOS ONE HUNDRED FIFTY THOUSAND ONLY . . .
(Pl50,000.00) for the payment of which will and truly to be made, . . . (they bound
themselves, their) heirs, executors, administrators, successors and assigns, jointly and
severally . .

The bond stipulated that:

a) it was "conditioned upon the true and faithful performance and observance of the . . .
principal (J & B Manpower Specialist, Inc.) of its duties and obligations in accordance
with all the rules and regulations promulgated by the Ministry of Labor Philippine
Overseas Employment Administration and with the terms and conditions stipulated in the
License;

b) the liability of the . . . Surety (petitioner) shall in no case exceed the sum of PESOS
ONE HUNDRED FIFTY THOUSAND (P150,000.00) ONLY, PHILIPPINE CURRENCY;

c) notice to the Principal is also a notice to the Surety; and

d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986 and this bond shall be
automatically cancelled ten (10) days after its expiration and the surety shall not be liable
for any claim not discovered and presented to it in writing within said period of . . . from
expiration and the obligee hereby expressly waives the rights to file any court action
against the Surety after termination of said period of . . . . above cited.

Issues:
EASCO essentially disclaimed liability on the ground that the claims were not expressly covered
by the bond, that POEA had no jurisdiction to order forfeiture of the bond, that some of the
claims were paid beyond or prior to the period of effectivity of the bond.

Held:
EASCO's liability for the refund, jointly and severally with its principal, was limited to 19
named complainants (in contrast to verdicts of the POEA and the Deputy Minister which both

63
ordered payment to no less than 33 complainants) and was correspondingly reduced from
P308,751.75 and US $ 400.00 to the aggregate amount of P 140,817.75.

The penalties of suspension and cancellation of license or authority are prescribed for
violations of the above quoted provisions, among others. And the Secretary of Labor has the
power under Section 35 of the law to apply these sanctions, as well as the authority, conferred
by Section 36, not only, to "restrict and regulate the recruitment and placement activities of all
agencies," but also to "promulgate rules and regulations to carry out the objectives and
implement the provisions" governing said activities. Pursuant to this rule-making power thus
granted, the Secretary of Labor gave the POEA "on its own initiative or upon filing of a
complaint or report or upon request for investigation by any aggrieved person, . . . (authority to)
conduct the necessary proceedings for the suspension or cancellation of the license or authority
of any agency or entity" for certain enumerated offenses including —
1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or
services, or any fee or bond in excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other relevant laws,
rules and regulations.

The Administrator was also given the power to "order the dismissal of the case or the
suspension of the license or authority of the respondent agency or contractor or recommend to
the Minister the cancellation thereof."

EASCO's claim that it had not been properly served with summons as regards a few of the
complaints must be rejected, the issue being factual, and the Court having been cited to no
grave error invalidating the respondent Secretary's conclusion that summons had indeed been
duly served.

EASCO's half-hearted argument that its liability should be limited to the maximum amount set in
its surety bond, i.e., P150,000.00, is palpably without merit, since the aggregate liability imposed
on it, P140,817.75, supra, does not in fact exceed that limit.

Decision:
WHEREFORE, the petition is DISMISSED for lack of merit, and this decision is declared to be
immediately executory. Costs against petitioner.

64
 Salazar vs. Achacoso and Marquez

G.R. No. 81510, March 14, 1990

FACTS:

A complaint against the petitioner Salazar was filed for withholding the complainant’s
PECC Card, it was further alleged that Salazar did not posses a license to operate as a
recruitment agency. POEA through its Director on Licensing and Regulation, issued a warrant of
arrest and seizure against the petitioner.

ISSUE:

Whether or not the power of the Secretary of Labor to issue warrants of arrest and
seizure is valid?

HELD:

Under the new Constitution, "no search warrant or warrant of arrest shall issue except
upon probable cause to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly describing
the place to be searched and the persons or things to be seized. It is only a judge who may
issue warrants of search and arrest." Mayors may not exercise this power. Neither may it be
done by a mere prosecuting body. The Secretary of Labor, not being a judge, may no longer
issue search or arrest warrants. Hence, the authorities must go through the judicial process.

65
 Soriano vs. Offshore Shipping and Marketing Corp.
G.R. No. 78409, Sept. 14, 1989

Facts: In search for better opportunities and higher income, petitioner Norberto Soriano, a
licensed Second Marine Engineer, sought employment and was hired by private respondent
Knut Knutsen O.A.S. through its authorized shipping agent in the Philippines, Offshore Shipping
and Manning Corporation. As evidenced by the Crew Agreement, petitioner was hired to work
as Third Marine Engineer on board Knut Provider" with a salary of US$800.00 a month on a
conduction basis for a period of fifteen (15) days. He admitted that the term of the contract was
extended to six (6) months by mutual agreement on the promise of the employer to the
petitioner that he will be promoted to Second Engineer. Thus, while it appears that petitioner
joined the aforesaid vessel on July 23, 1985 he signed off on November 27, 1985 due to the
alleged failure of private respondent-employer to fulfill its promise to promote petitioner to the
position of Second Engineer and for the unilateral decision to reduce petitioner's basic salary
from US$800.00 to US$560.00. Petitioner was made to shoulder his return airfare to Manila.
In the Philippines, petitioner filed with the Philippine Overseas Employment Administration
(POEA for short), a complaint against private respondent for payment of salary differential,
overtime pay, unpaid salary for November, 1985 and refund of his return airfare and cash bond
allegedly in the amount of P20,000.00 contending therein that private respondent unilaterally
altered the employment contract by reducing his salary of US$800.00 per month to US$560.00,
causing him to request for his repatriation to the Philippines.
In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment
Administration or POEA found that petitioner-complainant's total monthly emolument is
US$800.00 inclusive of fixed overtime as shown and proved in the Wage Scale submitted to the
Accreditation Department of its Office which would therefore not entitle petitioner to any salary
differential; that the version of complainant that there was in effect contract substitution has no
grain of truth because although the Employment Contract seems to have corrections on it, said
corrections or alterations are in conformity with the Wage Scale duly approved by the POEA;
that the withholding of a certain amount due petitioner was justified to answer for his repatriation
expenses which repatriation was found to have been requested by petitioner himself as shown
in the entry in his Seaman's Book; and that petitioner deposited a total amount of P15,000.00
only instead of P20,000.00 cash bond.

Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National
Labor Relations Commission. Complainant-petitioner's appeal was dismissed for lack of merit
while respondents' appeal was dismissed for having been filed out of time.
Petitioner's motion for reconsideration was likewise denied. Hence this recourse.
Issue: Whether or not POEA acted in excess of its jurisdiction?

Decision: As clearly explained by respondent NLRC, the correction was made only to specify
the salary and the overtime pay to which petitioner is entitled under the contract. It was a mere
breakdown of the total amount into US$560.00 as basic wage and US$240.00 as overtime pay.
Otherwise stated, with or without the amendments the total emolument that petitioner would
receive under the agreement as approved by the POEA is US$800.00 monthly with wage
differentials or overtime pay included.

66
Moreover, the presence of petitioner's signature after said items renders improbable the
possibility that petitioner could have misunderstood the amount of compensation he will be
receiving under the contract. Nor has petitioner advanced any explanation for statements
contrary or inconsistent with what appears in the records. The purpose of Article 34, paragraph
1 of the Labor Code is clearly the protection of both parties. In the instant case, the alleged
amendment served to clarify what was agreed upon by the parties and approved by the
Department of Labor. To rule otherwise would go beyond the bounds of reason and justice.

Finally, it is well-settled that factual findings of quasi-judicial agencies like the National Labor
Relations Commission which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but at times even finality if such
findings are supported by substantial evidence.

WHEREFORE, the instant petition is DENIED. The assailed decision of the National Labor
Relations Commission is AFFIRMED in toto.
SO ORDERED.

67
NERRY D. BALATONGAN, NATIONAL LABOR RELATIONS COMMISSION AND
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION,
G.R. No. 82252 February 28, 1989

FACTS:

On November 2, 1982, a "crew Agreement" was entered into by private respondent Nerry D.
Balatongan and Philimare Shipping and Equipment Supply (hereinafter called Philimare)
whereby the latter employed the former as able seaman on board its vessel "Santa Cruz"
(renamed "Turtle Bay") with a monthly salary of US $ 300.00. Said agreement was processed
and approved by the National Seaman's Board (NSB) on November 3, 1982. While on board
said vessel the said parties entered into a supplementary contract of employment on December
6, 1982 which provides that the employer shall be obliged to insure the employee during his
engagement against death or permanent invalidity caused by accident on board up to:US $
40,000 - for death caused by accident and US $ 50,000 - for permanent total disability caused
by accident.

Balatongan demanded payment for his claim for total disability insurance in the amount of US $
50,000.00 as provided for in the contract of employment but his claim was denied for having
been submitted to the insurers beyond the designated period for doing so.

Thus, Balatongan filed on June 21, 1985 a complaint against Philimare and Seagull Maritime
Corporation (hereinafter called Seagull) in the Philippine Overseas Employment Administration
(POEA) for non-payment of his claim for permanent total disability with damages and attorney's
fees.

After the parties submitted their respective position papers with the corresponding documentary
evidence, the officer-in-charge of the Workers Assistance and Adjudication Office of the POEA
rendered a decision on May 2, 1986, the dispositive part of which reads as follows:

Seagull and Philimare appealed said decision to the National Labor Relations Commission
(NLRC) on June 4, 1986. Pending resolution of their appeal because of the alleged transfer of
the agency of Seagull to Southeast Asia Shipping Corporation, Seagull filed on April 28, 1987 a
Motion For Substitution/Inclusion of Party Respondent which was opposed by
Balatongan. 5 This was followed by an ex-parte motion for leave to file third party complaint on
June 4, 1987 by Seagull. A decision was promulgated on December 7, 1987 denying both
motions and dismissing the appeal for lack of merit. 6 A motion for reconsideration of said
decision was denied for lack of merit in a resolution dated February 26, 1988.

Petitioners stress that while public respondents upheld the applicability of said supplementary
contract insofar as it increased the benefits to private respondent, public respondents
considered the provision on the waiver against all claims by private respondent to be contrary to
public policy.

In its questioned decision dated December 7, 1987, the respondent NLRC made the following
disquisition:

The focal issue for determination is the validity and enforceability of the second
contract of employment entered into by and between complainant and
respondents on board the vessel where the former had served as a member of

68
 its complement despite the absence of NSB verification or approval. With respect
to the findings of facts in the appealed decision, We consider the same as duly
supported by substantial evidence and the admissions of the parties in their
pleadings.

Much stress and emphasis are made by the respondents in their appeal that this
claim has no legal basis or footing inasmuch as the second contract of
employment containing a total disability insurance benefit of US $ 50,000.00,
much more than that embodied in the first contract of employment which was
approved by the defunct NSB, was not verified or approved by the latter.
Accordingly, the respondents posit the argument that subject claim may not
prosper pursuant to the provisions of Art. 34(i) of the Labor Code, as amended,
which provides that it shall be unlawful for any individual, entity, licensee, or
holder of authority '(T)o substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual signing thereof by the
parties up to and including the period of expiration of the same without the
approval of the Department of Labor.

Did the POEA commit a reversible error when it considered the second contract
of employment as validsans any verification or approval thereof by the NSB? Our
answer to this query is in the negative. Apparently, the intention of the law when
Art. 34 of the Labor Code was enacted is to provide for the prohibited and
unlawful practices relative to recruitment and placement. As shown in the
'Explanatory Note' of Parliamentary Bill No. 4531, pertaining to Art. 34 (supra),
thus:

Many of the provisions are already existing and were simply restated. Some
however were restated with modifications and new ones were introduced to
reflect what in the past have been noted to be pernicious practices which tend
to place workers at a disadvantage.'

In this case, the private respondent met the accident on October 6, 1983. Since then, he was
hospitalized at the Suez Canal Authority Hospital and thereafter be was repatriated to the
Philippines wherein he was also hospitalized from October 22, 1983 to March 27, 1984. It was
only on August 19, 1985 that he was issued a medical certificate describing his disability to be
permanent in nature. It was not possible for private respondent to file a claim for permanent
disability with the insurance company within the one-year period from the time of the injury, as
his disability was ascertained to be permanent only thereafter. Petitioners did not exert any
effort to assist private respondent to recover payment of his claim from the insurance company.
They did not even care to dispute the finding of the insurer that the claim was not flied on
time. 14 Petitioners must, therefore, be held responsible for its omission, if not negligence, by
requiring them to pay the claim of private respondent.

ISSUE: Whether or not the public respondent commit a grave abuse of discretion in denying
petitioners, motion for leave to file third party complaint and substitution inclusion of party
respondent.

HELD:

69
The Court finds that the respondent NLRC did not commit a grave abuse of discretion in
denying petitioners, motion for leave to file third-party complaint and substitution inclusion of
party respondent. Such motion is largely addressed to the discretion of the said Commission.
Inasmuch as the alleged transfer of interest took place only after the POEA had rendered its
decision, the denial of the motion so as to avoid further delay in the settlement of the claim of
private respondent was well-taken. At any rate, petitioners may pursue their claim against their
alleged successor-in-interest in a separate suit.

WHEREFORE, the petition is hereby DISMISSED for lack of merit and the temporary restraining
order issued by this Court on March 21, 1988 is hereby LIFTED. No costs. This decision is
immediately executory.

70
Manuela S. Catan/M.S. Catan Placement Agency v. The NLRC and Francisco Reyes

G.R. No. 77279 April 15, 1988

Ponente: Cortes. J.

FACTS:
Petitioner Catan, a duly licensed recruitment agency, as agent of Ali and Fahd
Shabokshi Group, a Saudi Arabian firm recruited private respondent Francisco D. Reyes to
work in Saudi Arabia. The term of contract is for one (1) year, however, the contract provided for
automatic renewal.
Said contract was automatically renewed when private respondent was not repatriated
by hi Saudi employer but instead was assigned to work as a crusher plant operator.
On March 30, 1983 while he was working as a crusher plant operator, his ankle was
crushed under the machine he was operating.
On May 15, 1983 after expiration of renewed term, private respondent returned to the
Philippines. His ankle was operated on at the Sta. Mesa Heights Medical Center for which he
incurred expenses.
On September 9, 1983, he returned to Saudi and resume to his work and on May 15,
1984, he was repatriated. And upon his return, he had ankle treated for which he incurred
further expenses.
Private respondent filed a claim against Catan placement agency on the basis of the
provision in the employment contract that the employer shall compensate the employee if he is
injured or permanently disabled in the course of employment.
POEA rendered judgment in favor of the complainant. Ordering the respondent placement
agency to pay SEVEN THOUSAND NINE HUNDRED EIGHTY FIVE and 60/100 (P7, 985.60),
TWENTY FIVE THOUSAND NINTY SIX 20/100 (P29, 096.20) and 10% for attorney’s fees.
On appeal, respondent NLRC affirmed the decision of the POEA.

ISSUE:
Whether or not the Placement Agency is liable for disability benefits to private
respondent, since the time he was injured his original contract had already expired?

HELD:
Yes, Catan Placement Agency is liable for disability benefits to private respondent.
Private respondents contract of employment can not be said to have expired on May 14, 1982
as it was automatically renewed since no notice of its termination was given by either or both
parties at a month before its termination. As stipulated in their contract.
M. S. Catan Agency was at the time of complainant's accident resulting in his permanent partial
disability was (sic) no longer the accredited agent of its foreign principal, foreign respondent
herein, yet its responsibility over the proper implementation of complainant's
employment/service contract and the welfare of complainant himself in the foreign job site, still
existed, the contract of employment in question not having expired yet. This must be so,
because the obligations covenanted in the recruitment agreement entered into by and between
the local agent and its foreign principal are not coterminus with the term of such agreement so
that if either or both of the parties decide to end the agreement, the responsibilities of such
parties towards the contracted employees under the agreement do not at all end, but the same
extends up to and until the expiration of the employment contracts of the employees recruited
and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory
the very purpose for which the law governing the employment of workers for foreign jobs abroad
was enacted.

71
ROYAL CROWN INTERNATIONALE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSI0N and VIRGILIO P.
NACIONALES, respondents
Facts:
In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private
respondent for employment with ZAMEL as an architectural draftsman in Saudi Arabia.
On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground
that his performance was below par. For three (3) successive days thereafter, he was detained
at his quarters and was not allowed to report to work until his exit papers were ready. On
February 16, 1984, he was made to board a plane bound for the Philippines.

Private respondent then filed on April 23, 1984 a complaint for illegal termination against
petitioner and ZAMEL.

Based on a finding that petitioner and ZAMEL failed to establish that private respondent was
terminated for just and valid cause, the Workers' Assistance and Adjudication Office of the
POEA issued a decision ordering the former to pay, jointly and severally, the complainant.
Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor
Relations Commission (NLRC) which affirmed a decision of the Philippine Overseas
Employment Administration (POEA) holding it liable to pay, jointly and severally with Zamel-
Turbag Engineering and Architectural Consultant (ZAMEL), private respondent Virgilio P.
Nacionales' salary and vacation pay corresponding to the unexpired portion of his employment
contract with ZAMEL.

Issue:
I. Whether or not petitioner as a private employment agency may be held jointly
and severally liable with the foreign-based employer for any claim which may arise in
connection with the implementation of the employment contracts of the employees
recruited and deployed abroad;
II. Whether or not sufficient evidence was presented by petitioner to establish the
termination of private respondent's employment for just and valid cause.

Ruling:
I. In applying for its license to operate a private employment agency for overseas
recruitment and placement, petitioner was required to submit, among others, a
document or verified undertaking whereby it assumed all responsibilities for the proper
use of its license and the implementation of the contracts of employment with the
workers it recruited and deployed for overseas employment [Section 2(e), Rule V, Book
1, Rules to Implement the Labor Code (1976)]. It was also required to file with the
Bureau a formal appointment or agency contract executed by the foreign-based
employer in its favor to recruit and hire personnel for the former, which contained a
provision empowering it to sue and be sued jointly and solidarily with the foreign
principal for any of the violations of the recruitment agreement and the contracts of

72
 employment [Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor
Code (1976)].

II. The NLRC upheld the POEA finding that petitioner's evidence was insufficient to
prove termination from employment for just and valid cause. And a careful study of the
evidence thus far presented by petitioner reveals to this Court that there is legal basis for
public respondent's conclusion.

The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to
lack or excess of jurisdiction in upholding the POEA's finding of insufficiency of evidence to
prove termination for just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.

73
 Facilities Management Corporation, J.S Dreyer and J.V. Catuira vs. Leonardo Dela Osa
March 26, 1979 GR L-38649

Makasiar, J:

Facts
Leonardo De La Osa sought his reinstatement, with full backwages, as well as the
recovery of his overtime compensation, swing shift and graveyard shift differentials. He alleged
that he was employed by Facilities Management as a painter, a houseboy, and a cashier. The
respondents filed their letter-answer without substantially denying the material allegations, but
interposed that Facilities Management and J.S. Dreyer are domiciled in Wake Island which is
beyond territorial jurisdiction of the Philippine Government, and that J.V. Catuira, though an
employee of Facilities presently stationed in Manila, is without power and authority of legal
representation, and that the employment contract between De La Osa and the Facilities carries
the approval of the Department of Labor of the Philippines.

Issue
Is the mere act by a non-resident foreign corporation of recruiting Filipino workers for its
own use abroad, in law doing business in the Philippines? And whether or not the respondent
can sue the foreign corporation.

Held
A foreign corporation not doing business in the Philippines can be sued here for acts
done against persons in the Philippines. If a foreign corporation, not engaged in business in the
Philippines, is not banned from seeking redress from courts in the Philippines, a fortiori, that
same corporation cannot claim exemption from being sued in Philippine courts for acts done
against a person or persons in the Philippines.

74
 PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FRANCISCO HERNANDEZ (at large), KARL REICHL, and YOLANDA GUTIERREZ DE
REICHL, accused,
KARL REICHL and YOLANDA GUTIERREZ DE REICHL, accused-appellants

PUNO, J.:

FACTS:

In April 1993, eight (8) informations for syndicated and large scale illegal recruitment and
eight (8) informations for estafa were filed against accused-appellants, spouses Karl and
Yolanda Reichl, together with Francisco Hernandez. Only the Reichl spouses were tried and
convicted by the trial court as Francisco Hernandez remained at large.1âwphi1.nêt

ISSUE:

Whether or not the respondents are guilty of illegal recruitment.

HELD:

In the case at bar, the prosecution was able to prove beyond reasonable doubt that
accused-appellants engaged in activities that fall within the definition of recruitment and
placement under the Labor Code. The evidence on record shows that they promised overseas
employment to private complainants and required them to prepare the necessary documents
and to pay the placement fee, although they did not have any license to do so. There is illegal
recruitment when one who does not possess the necessary authority or license gives the
impression of having the ability to send a worker abroad.

Accused-appellants assert that they merely undertook to secure Austrian visas for
private complainants, which act did not constitute illegal recruitment. They cite the document
marked at Exhibit "J" stating that they promised to obtain Austrian tourist visas for private
complainants. We are not convinced. Private complainants Narcisa Hernandez, Leonora Perez
and Charito Balmes categorically stated that Karl and Yolanda Reichl told them that they would
provide them overseas employment and promised them that they would be able to leave the
country on a specified date. We do not see any reason to doubt the truthfulness of their
testimony. The defense has not shown any ill motive for these witnesses to falsely testify
against accused-appellants if it were not true that they met with the Reichl spouses and the
latter represented themselves to have the capacity to secure gainful employment for them
abroad. The minor lapses in the testimony of these witnesses pointed out by accused-
appellants in their brief do not impair their credibility, especially since they corroborate each
other on the material points, i.e., that they met with the three accused several times, that the
three accused promised to give them overseas employment, and that they paid the
corresponding placement fee but were not able to leave the country. It has been held that truth-
telling witnesses are not always expected to give error-free testimonies considering the lapse of
time and the treachery of human memory. Moreover, it was shown that Karl Reichl signed a
document marked as Exhibit "C" where he promised to refund the payments given by private

75
complainants for the processing of their papers. We are not inclined to believe Mr. Reichl's
claim that he was forced by Francisco Hernandez to sign said document. There is no showing,
whether in his testimony or in that of his wife, that private complainants threatened to harm them
if he did not sign the document. Mr. Reichl is an educated man and it cannot be said that he did
not understand the contents of the paper he was signing. When he affixed his signature
thereon, he in effect acknowledged his obligation to ensure the departure of private
complainants and to provide them gainful employment abroad. Such obligation arose from the
promise of overseas placement made by him and his co-accused to private complainants. The
admission made by accused-appellants in Exhibit "J" that they promised to obtain Austrian visas
for private complainants does not negate the fact that they also promised to procure for them
overseas employment. In fact, in Exhibit "J", accused-appellants admitted that each of the
private complainants paid the amount of P50,000.00. However, in Exhibit "C", which was
executed on a later date, accused-appellants promised to refund to each complainant an
amount exceeding P150,000.00. This is an acknowledgment that accused-appellants received
payments from the complainants not only for securing visas but also for their placement abroad.

Accused-appellants' defense of denial and alibi fail to impress us. The acts of recruitment were
committed from June 1992 until January 1993 in Batangas City. Karl Reichl was in Manila from
July 29, 1992 until September 19, 1992, and then he returned to the Philippines and stayed in
Batangas from October 21, 1992. Yolanda Reichl, on the other hand, claimed that he was in
Manila on the dates alleged in the various informations. It is of judicial notice that Batangas City
is only a few hours' drive from Manila. Thus, even if the spouses were staying in Manila, it does
not prevent them from going to Batangas to engage in their recruitment business. Furthermore,
it appears that the three accused worked as a team and they conspired and cooperated with
each other in recruiting domestic helpers purportedly to be sent to Italy. Francisco Hernandez
introduced Karl and Yolanda Reichl to the job applicants as his business partners. Karl and
Yolanda Reichl themselves gave assurances to private complainants that they would seek
employment for them in Italy. Francisco Hernandez remitted the payments given by the
applicants to the Reichl spouses and the latter undertook to process the applicants' papers.
There being conspiracy, each of the accused shall be equally liable for the acts of his co-
accused even if he himself did not personally take part in its execution.

76
 G.R. Nos. 138431-36 September 12, 2001

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
DIOSCORA M. ARABIA and FRANCISCA L. TOMAS, accused-appellants.

ISSUE:

This is an appeal from the decision1 of the Regional Trial Court of Quezon City, Branch 102,
finding accused-appellants Dioscora M. Arabia and Francisca L. Tomas both guilty of illegal
recruitment in large scale and sentencing them to each suffer the penalty of life imprisonment
and to each pay a fine of P100,000.00; and five (5) counts each of estafa for which both were
sentenced to suffer an indeterminate prison term of one (1) year, eight (8) months and twenty-
one (21) days of prision correccional as minimum, to five (5) years, five (5) months and eleven
(11) days of prision correccional as maximum for each of the four counts. In another count of
estafa, they were each sentenced to suffer an indeterminate prison term of two (2) years, eleven
(11) months and eleven (11 ) days of prision correccional as minimum, to six (6) years, eight (8)
months and twenty-one (21) days of prision correccional as maximum. They were further
ordered to solidarily pay the complainants the following amounts by way of actual damages: (1)
P3,000.00 to Rolando Rustia; (2) P16,000.00 to Noel de la Cruz; (3) P16,000.00 to Teresita
Julva Lorenzo; (4) P16,000.00 to Violeta S. de la Cruz; and (5) P16,000.00 to Remelyn Nona
Jacinto.

Appellants argued that receipts were never presented to prove the allegations against them.
Hence this appeal.

ISSUE:

WHETHER OR NOT LARGE-SCALE ILLEGAL RECRUITMENT EXIST

HELD:

Large-scale illegal recruitment has the following essential elements:

(1) The accused undertook [a] recruitment activity defined under Article 13 (b) or any
prohibited practice under Art. 34 of the Labor Code.

(2) He did not have the license or the authority to lawfully engage in the recruitment and
placement of workers.

(3) He committed the same against three or more persons, individually or as a group.8

Article 13 (b) of the Labor Code defines recruitment and placement as follows:

77
 ". . . [A]ny act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers [which] includes referrals, contact services, promis[es] or advertising
for employment, locally or abroad, whether for profit or not: Provided, That any person or
entity which, in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engagement in recruitment and placement."

There is no doubt as to accused-appellants' guilt for all the essential elements of the crime of
Illegal Recruitment in Large Scale have been established beyond reasonable doubt. Accused-
appellants recruited at least four persons, giving them the impression that they had the
capability to send them to Taiwan for employment. They collected various amounts allegedly for
recruitment and placement fees without license or authority to do so. It is settled that "the fact
that an accused in an illegal recruitment case did not issue the receipts for amounts received
from the complainants has no bearing on his culpability so long as complainants show through
their respective testimonies and affidavits that the accused was involved in the prohibited
recruitment. It has also been held that "the Statute of Frauds and the rules of evidence do not
require the presentations of receipts in order to prove the existence of a recruitment agreement
and the procurement of fees in illegal recruitment cases. The amounts may consequently be
proved by the testimony of witnesses."

78
 People of the Philippines vs. Espanol
Criminal Case No. Q-88 4444

Facts:

In or about February and August 1988, at Quezon City, accused J. Espanol canvassed,
enlisted, contracted and promised employment to 14 persons, exacting a total of P21,500.00 as
recruitment fees, without authority or license from the POEA. Accused introduced himself to the
14 private complainants as one who had rich and influential relatives in California, U.S.A. The
positions promised were for a dressmaker, cook, dishwasher, driver and housemaid, and
accused exacted payments for processing of travel documents in amounts ranging from P1,000
– P3,000.

On September 3, 1988, the birthday of accused, he informed the 14 applicants that a certain
Atty. Dizon, who was working for their documents, would definitely be coming and would advise
them to their departure. The lawyer never appeared. The birthday turned out to be a grand
affair, applicants donating pigs, dogs, goats, and some other items. After the party,
complainants became apprehensive.

On several occasions, complainants talked to the accused, who kept promising that he could
send them abroad. When the complainants sensed that they were deceived, they demanded
return of their money, but accused failed and started hiding. They chanced on him and forcibly
took him to the police station where they gave their sworn statements. Accused’s defense was
that he did not know the applicants except one, that he had no brother or sister in California,
U.S.A. and that the house where he celebrated his birthday was owned by one de la Pasion,
who shouldered all the expenses.

Issue:

Whether or not the accused committed illegal recruitment.

Held:

The accused is a dangerous member of society who feels happy and comfortable victimizing the
poor, innocent and the gullible, of their hard-earned money. Evidence woven together proves
the pattern for illegal recruitment, hence, mere denial must necessarily fall.

Decision:
The Court found the accused guilty beyond reasonable doubt of the crime charged and
sentenced him to suffer eight years imprisonment and to pay a fine of P50,000 and the costs.
The accused was likewise ordered to reimburse the amount of P21,500.00 to the 14 private
complainants listed in the criminal information

79
 People of the Philippine vs. Roxas, Criminal Case N0. 87-52583(Violation of Article 32 of
P.D. No.442 ,as amended)

Facts: Accused F.C. Roxas, doing business under the and style of F.c. Roxas Construction,
with office address at Rm. 212 Manufacturer Building. Sta. Cruz, Manila was a licensed private
recruitment entity (service contractor) whose authority was issued on February 20, 1984 and
expired on march 25, 1988, (a Service contractor acts as employer of its recruits with respect
to project it contracted to service abroad).
Issue: Whether or not the accused is guilty beyond reasonable doubt of violation Article 32 of
P.D. 442 as amended.
As a service contractor, is not allowed to charge, directly or indirectly, any fee from the
workers except the authorized documentation fee of P1,500.00
During the period from January 1984 to July 1986, the accused F.C. construction co.
demanded and received from its applicants, herein private complainants numbering about 22,
various sums of money ranging from P1,500.00. in excess of the limits set forth by law. The
complainants, furthermore. Were not able to work abroad, were not issued any travel
documents, and despite efforts, were not refunded the money paid to and received by the
accused.
The accused Roxas did not deny the receipts covering the different sums of money
paid by private complainants. He resorted out that the amounts paid to and received by him
were for pass-porting and ticketing of the private complainants.
Ruling: The court found the excuse of accused to be highly unjustified and definitely
unconvincing. Besides, the accused has jumped bail. And despite the issuance of a warrant of
arrest, he has not been apprehended. As a matter of fact, he was tried in absentia. The
fundamental rule that the plight of the accused is consistent with his guilt was made applicable
in his case.
Accused Roxas is guilty beyond reasonable doubt of violation of Article 32 of P.D. No.
442,as amended and its implanting rules and regulations, as charged in the information and was
sentenced of suffer a penalty of imprisonment for a period of five years and to pay a fine of fifty
thousand pesos (P50,000.00)
The accused was further ordered to refunded to the herein private complainants the
amounts paid by each of them plus legal enters of 12% per annum for the filing of this case until
the above amounts are paid in full, and also to pay the cost of this suit.
Decision: By Judge Lorenzo B. Veneracion –RTC- NCJR 47 Manila August 8, 1989.

80
 People vs. Remullo
G.R. No. 124443 – 36
J. Quisumbing

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

81
 G.R. No. 132376, April 11, 2002PEOPLE OF THE PHILIPPINESvs. SAMINA ANGELES
YCALMA

FACTS: Maria TolosaSardeña was working in Saudi Arabia when she received a call from her
sister, Priscilla Agoncillo, who was in Paris, France. Priscilla advised Maria to return to the
Philippines and await the arrival of her friend, accused-appellant Samina Angeles, who will
assist in processing her travel and employment documents to Paris, France.
AnalynOlpindo met accused-appellant in Belgium. At that time, Analyn was working in Canada
but she went to Belgium to visit her in-laws. After meeting accused-appellant, AnalynOlpindo
called up her sister, PrecilaOlpindo, in the Philippines and told her to meet accused-appellant
upon the latter’s arrival in the Philippines because accused-appellant can help process her
documents for employment in Canada.
In both instance accused appellant promised to help process their papers for travel abroad but
never made a promise of employment.

Accused-appellant told PrecilaOlpindo and VilmaBrina that it was easier to complete the
processing of their papers if they start from Jakarta, Indonesia rather than from Manila.
PrecilaOlpindo, VilmaBrina and accused-appellant flew to Jakarta, Indonesia. However,
accused-appellant returned to the Philippines after two days, leaving behind Precila and Vilma.
They waited for accused-appellant in Jakarta but the latter never returned. Precila and Vilma
eventually came home to the Philippines. They started looking for her but they could not reach
her.

ISSUE: Whether or not Angeles is guilty of illegal recruitment.

HELD: Angeles was acquitted for failure of the prosecution to prove illegal recruitment ( he was
however found guilty of 4 counts of fraud.) since he did not offer any kind of promise of work
only the processing of their travel documents. To prove illegal recruitment, it must be shown that
the accused-appellant gave complainants the distinct impression that he had the power or ability
to send complainants abroad for work such that the latter were convinced to part with their
money in order to be employed. To be engaged in the practice of recruitment and placement, it
is plain that there must at least be a promise or offer of an employment from the person posing
as a recruiter whether locally or abroad.

82
 GR No 100641 June 14, 1993

Parties:
FARLE P. ALMODIEL, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), RAYTHEON PHILS.,
INC.,respondents.
Apolinario Lomabao, Jr. for petitioner.
Vicente A. Cruz, Jr., for private respondent.

Nocon, J.

Facts:
Petitioner Farle P. Almodiel is a certified public accountant who was hired in October,
1987 as Cost Accounting Manager of respondent Raytheon Philippines, Inc. through a reputable
placement firm, John Clements Consultants, Inc. with a starting monthly salary of P18,000.00.
Before said employment, he was the accounts executive of Integrated Microelectronics, Inc. for
several years. He left his lucrative job therein in view of the promising career offered by
Raytheon. He started as a probationary or temporary employee. As Cost Accounting Manager,
his major duties were: (1) plan, coordinate and carry out year and physical inventory; (2)
formulate and issue out hard copies of Standard Product costing and other cost/pricing analysis
if needed and required and (3) set up the written Cost Accounting System for the whole
company. After a few months, he was given a regularization increase of P1,600.00 a month. Not
long thereafter, his salary was increased to P21,600.00 a month.
On August 17, 1988, he recommended and submitted a Cost Accounting/Finance
Reorganization, affecting the whole finance group but the same was disapproved by the
Controller. However, he was assured by the Controller that should his position or department
which was apparently a one-man department with no staff becomes untenable or unable to
deliver the needed service due to manpower constraint, he would be given a three (3) year
advance notice.
In the meantime, the standard cost accounting system was installed and used at the Raytheon
plants and subsidiaries worldwide. It was likewise adopted and installed in the Philippine
operations. As a consequence, the services of a Cost Accounting Manager allegedly entailed
only the submission of periodic reports that would use computerized forms prescribed and
designed by the international head office of the Raytheon Company in California, USA.
On January 27, 1989, petitioner was summoned by his immediate boss and in the
presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition of his position on
the ground of redundancy. He pleaded with management to defer its action or transfer him to
another department, but he was told that the decision of management was final and that the
same has been conveyed to the Department of Labor and Employment. Thus, he was
constrained to file the complaint for illegal dismissal before the Arbitration Branch of the National
Capital Region, NLRC, Department of Labor and Employment.

Issues:
Whether the public respondent committed grave abuse of discretion amounting to (lack of) or in
excess of jurisdiction in declaring as valid and justified the termination of petitioner on the
ground of redundancy in the face of clearly established finding that petitioner's termination was
tainted with malice, bad faith and irregularity.

Petitioner claims that the functions of his position were absorbed by the Payroll/Mis/Finance
Department under the management of Danny Ang Tan Chai, a resident alien without any

83
working permit from the Department of Labor and Employment as required by law thus raising
the issue whether bad faith, malice and irregularity crept in the abolition of petitioner's position
of Cost Accounting Manager on the ground of redundancy.

Held:
Petitioner held a position which was definitely managerial in character, Raytheon had a broad
latitude of discretion in abolishing his position. An employer has a much wider discretion in
terminating employment relationship of managerial personnel compared to rank and file
employees. The reason obviously is that officers in such key positions perform not only
functions which by nature require the employer's full trust and confidence but also functions that
spell the success or failure of an enterprise.

Termination of an employee's services because of redundancy is governed by Article 283 of the

Labor Code which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. — The employer may
also terminate the employment of any employee due to installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the worker and
the Department of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to at least one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered as one (1) whole year.

There is no dispute that petitioner was duly advised, one (1) month before, of the
termination of his employment on the ground of redundancy in a written notice by his immediate
superior, Mrs. Magdalena B.D. Lopez sometime in the afternoon of January 27, 1989. He was
issued a check for P54,863.00 representing separation pay but in view of his refusal to
acknowledge the notice and the check, they were sent to him thru registered mail on January
30, 1989. The Department of Labor and Employment was served a copy of the notice of
termination of petitioner in accordance with the pertinent provisions of the Labor Code and the
implementing rules.

Petitioner relies on the testimony of Raytheon's witness to the effect that corollary
functions appertaining to cost accounting were dispersed to other units in the Finance
Department. And granting that his department has to be declared redundant, he claims that he
should have been the Manager of the Payroll/Mis/Finance Department which handled general
accounting, payroll and encoding. As a B. S. Accounting graduate, a CPA with M.B.A. units, 21
years of work experience, and a natural born Filipino, he claims that he is better qualified than
Ang Tan Chai, a B.S. Industrial Engineer, hired merely as a Systems Analyst Programmer or its
equivalent in early 1987, promoted as MIS Manager only during the middle part of 1988 and a
resident alien.

Raytheon insists that petitioner's functions as Cost Accounting Manager had not been absorbed
by Ang Tan Chai, a permanent resident born in this country. It claims to have established below
that Ang Tan Chai did not displace petitioner or absorb his functions and duties as they were

84
occupying entirely different and distinct positions requiring different sets of expertise or
qualifications and discharging functions altogether different and foreign from that of petitioner's
abolished position.

An objection founded on the ground that one has better credentials over the appointee is
frowned upon so long as the latter possesses the minimum qualifications for the position. In the
case at bar, since petitioner does not allege that Ang Tan Chai does not qualify for the position,
the Court cannot substitute its discretion and judgment for that which is clearly and exclusively
management prerogative. To do so would take away from the employer what rightly belongs to
him as aptly explained in National Federation of Labor Unions v. NLRC.

Decision:
Finding no grave abuse of discretion on the part of the National Labor Relations Commission in
reversing and annulling the decision of the Labor Arbiter and that on the contrary, the
termination of petitioner's employment was anchored on a valid and authorized cause under
Article 283 of the Labor Code, the instant petition for certiorari must fail.

85
 General Milling Corporation vs. Torres

G.R No. 9366, April 22, 1991

FACTS:

Earl Timothy Cone is a US citizen, who was hired by General Milling as a sports
consultant and assistant coach. He possessed an alien employment permit which was changed
to pre-arranged employee by the Board of Special Inquiry of the Commission on Immigration
and Deportation. GMC requested that Cone’s employment permit be changed to a full-fledged
coach, which was contested by The Basketball Coaches Association of the Philippines. Alleging
that GMC failed to show that there is no competent person in the Philippines to do the coaching
job. Secretary of Labor cancelled Cone’s employment permit.

ISSUE:

Whether or not the Secretary of Labor act with grave abuse of discretion in revoking
Cone’s Alien Employment Permit?

HELD:

The Secretary of Labor did not act with grave abuse of discretion in revoking Cone’s
Alien Employment Permit. GMC’s claim that hiring of a foreign coach is an employer’s
prerogative has no legal basis. Under Section 40 of the Labor Code, an employer seeking
employment of an alien must first obtain an employment permit from the Department of labor.
GMC’s right to choose whom to employ is limited by the statutory requirement of an
employment permit.

The Labor Code empowers the Labor Secretary to determine as to the availability of the
services of a “person in the Philippines who is competent, able and willing at the time of the
application to perform the services for which an alien is desired.”

86
 NITTO ENTERPRISES,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI,
G.R. No. 114337 September 29, 1995

FACTS:

Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products,
hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker
as evidenced by an apprenticeship agreement for a period of six (6) months from May 28, 1990
to November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable
minimum wage.

At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which
he was working on, accidentally hit and injured the leg of an office secretary who was treated at
a nearby hospital.

Later that same day, after office hours, private respondent entered a workshop within the office
premises which was not his work station. There, he operated one of the power press machines
without authority and in the process injured his left thumb. Petitioner spent the amount of
P1,023.04 to cover the medication of private respondent. On August 3, 1990 private respondent
executed a Quitclaim and Release in favor of petitioner for and in consideration of the sum of
P1,912.79. Three days after, or on August 6, 1990, private respondent formally filed before the
NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal and payment
of other monetary benefits. On October 9, 1991, the Labor Arbiter rendered his decision finding
the termination of private respondent as valid and dismissing the money claim for lack of merit.

Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto
Capilian was valid. First, private respondent who was hired as an apprentice violated the terms
of their agreement when he acted with gross negligence resulting in the injury not only to
himself but also to his fellow worker. Second, private respondent had shown that "he does not
have the proper attitude in employment particularly the handling of machines without authority
and proper training.

On July 26, 1993, the NLRC issued an order reversing the decision of the Labor Arbiter the
appealed decision is hereby set aside. The respondent is hereby directed to reinstate
complainant to his work last performed with backwages computed from the time his wages were
withheld up to the time he is actually reinstated. The Arbiter of origin is hereby directed to further
hear complainant's money claims and to dispose them on the basis of law and evidence
obtaining.

On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private
respondent's representative was present.

On April 22, 1994, a Writ of Execution was issued, finding merit in [private respondent's] Motion
for Issuance of the Writ, The private respondent is being commanded to proceed to the
premises of [petitioner] Nitto Enterprises and Jovy Foster located at No. l 74 Araneta Avenue,
Portero, Malabon, Metro Manila or at any other places where their properties are located and

87
effect the reinstatement of herein [private respondent] to his work last performed or at the option
of the respondent by payroll reinstatement.

He is also entitled to collect the amount of P122,690.85 representing his backwages as called
for in the dispositive portion, and turn over such amount to this Office for proper
disposition.Petitioner filed a motion for reconsideration but the same was denied.

ISSUE:

1. WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF

DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE.

2. WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF

DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN
THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE
RESPONDENT.

HELD:

There is an abundance of cases wherein the Court ruled that the twin requirements of due
process, substantive and procedural, must be complied with, before valid dismissal
exists. Without which, the dismissal becomes void.

The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three
days after he was made to sign a Quitclaim, a clear indication that such resignation was not
voluntary and deliberate.

Private respondent averred that he was actually employed by petitioner as a delivery boy
("kargador" or "pahinante").

He further asserted that petitioner "strong-armed" him into signing the aforementioned
resignation letter and quitclaim without explaining to him the contents thereof. Petitioner made it
clear to him that anyway, he did not have a choice.

Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the
latter's alleged resignation and subsequent execution of a Quitclaim and Release. A judicious
examination of both events belies any spontaneity on private respondent's part.

The court finds no abuse of discretion committed by public respondent National Labor Relations
Commission, the appealed decision is hereby AFFIRMED.

88
 FILAMER CHRISTIAN INSTITUTE v. IAC
G.R. No. 75112 August 17, 1992
Ponente: GUTIERREZ, JR., J

FACTS:
Funtecha is a part time janitor and student, while Allan Masa is a driver. Both employed
in Filamer Christian Institute. Funtecha having a student driver’s license requested Allan, and
was allowed to take over the vehicle while the latter in on his way home. Negotiating a sharp
dangerous curb, a fast moving truck with glaring lights nearly hit them so that they have to
swerve to the right to avoid the collision. As a result, Potenciano Kapunan who was walking in
his lane was hit by the vehicle driven by Funtecha. Kapunan died on the said accident. The
heirs of Kapunan instituted an action for damages. The lower court rendered judgment in favor
of the heirs of Potenciano, ordering Filamer liable for the acts of Funtecha as their employee.
The Intermediate Appellate Court affirmed the decision of the lower court.

ISSUE:
Whether or not there exists an employer-employee relationship between Funtecha who
was a part time Janitor of Filamer?

RULING:
The Supreme Court held that there exist an employer-employee relationship between
Funtecha who was a part time Janitor of Filamer. The Fact that Funtecha was not the school
driver or was acting within the scope of his janitorial duties does not relieve the petitioner of the
burden of rebutting the presumption Juris tantum that there was negligence on its part either in
the selection of a servant or employee, or in the supervision over him.

89
 “Brotherhood” Labor Unity Movement of the Philippines vs. Zamora
G.R. No. 48645, Jan. 7, 1987

Facts:

Petitioners have been reporting as loaders for San Miguel Parola Glass Factory under the
supervision of a certain Camahort. Job orders for work came from Camahort and petitioners
were also supplied with tools and other equipment for the fulfillment of their duties. With the job
orders being dependent on the volume of production of the factory, work was not necessarily 8
hours but at times petitioners would be asked to work more than 8 hours and at times also on
Saturdays and Sundays They were not paid for their overtime and rendered work during
Saturdays and Sundays.
Petitioners organized and held union activities to push management to pay for their
overtime and holiday compensation as well as other grievances. Some members were then
dismissed from work due to their membership with the union. Due to this, Petitioners filed a
notice of strike on the Bureau of Labor Relations and a meeting was held between the parties
wherein petitioners gave proposals for recognition and collective bargaining.
San Miguel refused to bargain with petitioners alleging that there was no employer –
employee relationship.
The NLRC heard the dispute and the arbiter decided in favor of the Petitioners to receive
one year salary. Upon appeal of SMC, the Secretary stressed upon the decision that there was
no employer – employee relationship.
Thus the appeal of the petitoners.

Issue:
Whether or not the employer – employee relationship exists between the “Brotherhood”
Labor Union Movement and San Miguel Corporation?

Ruling:
The petition is granted. SMC was ordered to reinstate petitioners, with three (3) years
backwages. However, if reinstatement is no longer possible, SMC is ordered to pay separation
pay equivalent to one (1) month pay for every year of service.

Ratio:
The question of whether an employer – employee relationship exists in a certain
situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of
an employer – employee relationship in their enterprises because that judicial relation spawns
obligations connected with workmen’s compensation, social security, medicare, termination pay,
and unionism.

90
 Tabas, et., al, vs. California Manufacturing Company Inc., et., al.
G.R. No. L-80680 January 26, 1989

SECOND DIVISION, SARMIENTO, J.:

Facts:

On July 21, 23, and 28, 1986, the petitioners petitioned the NLRC for reinstatement and
payment of various benefits, including minimum wage, overtime pay, holiday pay, thirteen-
month pay, and emergency cost of living allowance pay, against the respondent.

On October 7, 1986, after the cases had been consolidated, the respondent filed a motion to
dismiss as well as a position paper denying the existence of an employer-employee relation
between the petitioners and the respondents and, consequently, any liability for payment of
money claims.

It appears that the petitioners were, prior to their stint with respondents, employees of Livi,
which subsequently assigned them to work as "promotional merchandisers" 3 for the former firm
pursuant to a manpower supply agreement. The petitioners were made to sign employment
contracts with durations of six months, upon the expiration of which they signed new
agreements with the same period, and so on. The petitioners now allege that they had become
regular California employees and demand, as a consequence whereof, similar benefits. They
likewise claim that pending further proceedings below, they were notified by California that they
would not be rehired. As a result, they filed an amended complaint charging California with
illegal dismissal.

California admits having refused to accept the petitioners back to work but deny liability therefor
for the reason that it is not, to begin with, the petitioners' employer and that the "retrenchment"
had been forced by business losses as well as expiration of contracts. 9

Issue:

Whether there exist an employer-employee relation between the petitioners and the
respondents based on the manpower supply contract agreement between repondent California
and Livi.

Held:

The existence of an employer-employees relation is a question of law and being such, it cannot
be made the subject of agreement. Hence, the fact that the manpower supply agreement
between Livi and California had specifically designated the former as the petitioners' employer
and had absolved the latter from any liability as an employer, will not erase either party's
obligations as an employer, if an employer-employee relation otherwise exists between the
workers and either firm. At any rate, since the agreement was between Livi and California, they
alone are bound by it, and the petitioners cannot be made to suffer from its adverse
consequences.

This Court has consistently ruled that the determination of whether or not there is an employer-
employee relation depends upon four standards:

91
(1) the manner of selection and engagement of the putative employee;
(2) the mode of payment of wages;
(3) the presence or absence of a power of dismissal; and
(4) the presence or absence of a power to control the putative employee's conduct. 14
Of the four, the right-of-control test has been held to be the decisive factor. 15

The Court need not therefore consider whether it is Livi or California which exercises control
over the petitioner vis-a-vis the four barometers referred to earlier, since by fiction of law, either
or both shoulder responsibility.

The records show that the petitioners bad been given an initial six-month contract, renewed for
another six months. Accordingly, under Article 281 of the Code, they had become regular
employees-of-California-and had acquired a secure tenure. Hence, they cannot be separated
without due process of law.

Decision:

WHEREFORE, the petition is GRANTED. Judgment is hereby RENDERED: (1): SETTING

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

92
 G.R. No. L-41182-3 April 16, 1988

DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,

vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA, respondents-appellees.

On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees) entered into
on Oct. 19, 1960 by and between Mrs. Segundina Noguera, party of the first part; the Tourist
World Service, Inc., represented by Mr. Eliseo Canilao as party of the second part, and
hereinafter referred to as appellants, the Tourist World Service, Inc. leased the premises
belonging to the party of the first part at Mabini St., Manila for the former-s use as a branch
office. In the said contract the party of the third part held herself solidarily liable with the party of
the part for the prompt payment of the monthly rental agreed on. When the branch office was
opened, the same was run by the herein appellant Una 0. Sevilla payable to Tourist World
Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to
go to Lina Sevilla and 3% was to be withheld by the Tourist World Service, Inc.

On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to have
been informed that Lina Sevilla was connected with a rival firm, the Philippine Travel Bureau,
and, since the branch office was anyhow losing, the Tourist World Service considered closing
down its office. This was firmed up by two resolutions of the board of directors of Tourist World
Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing the office of the
manager and vice-president of the Tourist World Service, Inc., Ermita Branch, and the
second,authorizing the corporate secretary to receive the properties of the Tourist World
Service then located at the said branch office. It further appears that on Jan. 3, 1962, the
contract with the appellees for the use of the Branch Office premises was terminated and while
the effectivity thereof was Jan. 31, 1962, the appellees no longer used it. As a matter of fact
appellants used it since Nov. 1961. Because of this, and to comply with the mandate of the
Tourist World Service, the corporate secretary Gabino Canilao went over to the branch office,
and, finding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the
premises on June 4, 1962 to protect the interests of the Tourist World Service. When neither the
appellant Lina Sevilla nor any of her employees could enter the locked premises, a complaint
wall filed by the herein appellants against the appellees with a prayer for the issuance of
mandatory preliminary injunction. Both appellees answered with counterclaims. For apparent
lack of interest of the parties therein, the trial court ordered the dismissal of the case without
prejudice. Trial court ruled in favor of the respondent, hence this petition.

ISSUE:

WHETHER OR NOT THERE IS AN EMPLOYER-EMPLOYEE RELATIONSHIP EXIST.

No, there was no employer-employee relationship. The records will show that the petitioner,
Lina Sevilla, was not subject to control by the private respondent Tourist World Service, Inc.,
either as to the result of the enterprise or as to the means used in connection therewith. In the
first place, under the contract of lease covering the Tourist Worlds Ermita office, she had bound
herself in solidum as and for rental payments, an arrangement that would be like claims of a

93
master-servant relationship. True the respondent Court would later minimize her participation in
the lease as one of mere guaranty, that does not make her an employee of Tourist World, since
in any case, a true employee cannot be made to part with his own money in pursuance of his
employer's business, or otherwise, assume any liability thereof. In that event, the parties must
be bound by some other relation, but certainly not employment.

94
G.R. No. L-43825 May 9, 1988

CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO
and RODITO NASAYAO, respondents.

Benito P. Fabie for petitioners.

Narciso C. Parayno, Jr. for respondents.

PADILLA, J.:

Facts:
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the ground that the
decision of the voluntary arbitrator is final, unappealable, and immediately executory; 3 and, on
23 March 1976, he filed a motion for the issuance of a writ of execution. 4

Acting on the motions, the respondent Commission, in a resolution dated 7 May 1976,
dismissed the appeal on the ground that the decision appealed from is final, unappealable and
immediately executory, and ordered the herein petitioners to comply with the decision of the
voluntary arbitrator within 10 days from receipt of the resolution. 5

The petitioners are before the Court in the present recourse. As prayed for, the Court issued a
temporary restraining order, restraining herein respondents from enforcing and/or carrying out
the questioned decision and resolution. 6

Issue:
for resolution is whether or not the private respondent Rodito Nasayao was employed as plant
manager of petitioner Continental Marble Corporation with a monthly salary of P3,000.00 or
25% of its monthly income, whichever is greater, as claimed by said respondent, or entitled to
receive only an amount equivalent to 25% of net profits, if any, that the company would realize,
as contended by the petitioners.

The respondent arbitrator found that the agreement between the parties was for the petitioner
company to pay the private respondent, Rodito Nasayao, a monthly salary of P3,000.00, and,
consequently, ordered the company to pay Rodito Nasayao the amount of P9,000.00 covering a
period of three (3) months, that is, May, June and July 1974.

The petitioners, upon the other hand, maintain that "where there is patent and manifest abuse of
discretion, the rule on unappealability of awards of a voluntary arbitrator becomes flexible and it
is the inherent power of the Courts to maintain the people's faith in the administration of justice."
The question of the finality and unappealability of a decision and/or award of a voluntary
arbitrator had been laid to rest in Oceanic Bic Division (FFW) vs. Romero, 7 and reiterated in
Mantrade FMMC Division Employees and Workers Union vs. Bacungan. 8 The Court therein
ruled that it can review the decisions of voluntary arbitrators, thus-

95
We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. This is especially
true where the arbitrator chosen by the parties enjoys the first rate credentials of Professor
Flerida Ruth Pineda Romero, Director of the U.P. Law Center and an academician of
unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable, and executory except where the money
claims exceed P l 00,000.00 or 40% of paid-up capital of the employer or where there is abuse
of discretion or gross incompetence refers to appeals to the National Labor Relations
Commission and not to judicial review.

Inspite of statutory provisions making 'final' the decisions of certain administrative agencies, we
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention. There is no provision for appeal in the
statute creating the Sandiganbayan but this has not precluded us from examining decisions of
this special court brought to us in proper petitions. ...

While the Court has accorded great respect for, and finality to, findings of fact of a voluntary
arbitrator 11 and administrative agencies which have acquired expertise in their respective
fields, like the Labor Department and the National Labor Relations Commission, 12 their
findings of fact and the conclusions drawn therefrom have to be supported by substantial
evidence. ln that instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an
employee of the petitioner corporation is not supported by the evidence or by the law.

In determining the existence of an employer-employee relationship, the elements that are

generally considered are the following: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee with respect to the means and methods by which the work is to be accomplished. It is
the so-called "control test" that is the most important element (Investment Planning Corp. of the
Phils. vs. The Social Security System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra, and
Rosario Brothers, Inc. v. Ople, 131 SCRA 72)

Absent the power to control the employee with respect to the means and methods by which his
work was to be accomplished, there was no employer-employee relationship between the
parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.

WHEREFORE, the decision rendered by the respondent Jose T. Collado in NLRC Case No.
LR-6151, entitled: "Rodito Nasayao, complainant, versus Continental Marble Corp. and Felipe
David, respondents," on 29 December 1975, and the resolution issued by the respondent
National Labor Relations Commission in said case on 7 May 1976, are REVERSED and SET
ASIDE and another one entered DISMISSING private respondent's complaints. The temporary
restraning order heretofore isued by the Court is made permanent. Without costs.

96
 Dy Keh Beng vs. International Labor and Marine Union et. Al.
L-32245, May 25, 1979

FACTS:

A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory,
for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic
Act No. 875, 3 by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and
Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case
was filed in the Court of Industrial Relations for in behalf of the International Labor and Marine
Union of the Philippines and two of its members, Solano and Tudla In his answer, Dy Keh Beng
contended that he did not know Tudla and that Solano was not his employee because the latter
came to the establishment only when there was work which he did on pakiaw basis, each piece
of work being done under a separate contract. Moreover, Dy Keh Beng countered with a special
defense of simple extortion committed by the head of the labor union, Bienvenido Onayan.

After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by
the Court of Industrial Relations. An employee-employer relationship was found to have existed
between Dy Keh Beng and complainants Tudla and Solano, although Solano was admitted to
have worked on piece basis.

According to the Hearing Examiner, the evidence for the complainant Union tended to show that
Solano and Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955, 5
respectively, and that except in the event of illness, their work with the establishment was
continuous although their services were compensated on piece basis. Evidence likewise
showed that at times the establishment had eight (8) workers and never less than five (5);
including the complainants, and that complainants used to receive P5.00 a day. sometimes less.

According to Dy Keh Beng, however, Solano was not his employee for the following reasons:

(1) Solano never stayed long enought at Dy's establishment;

(2) Solano had to leave as soon as he was through with the order given him by Dy;

(3) When there were no orders needing his services there was nothing for him to do;

(4) When orders came to the shop that his regular workers could not fill it was then that
Dy went to his address in Caloocan and fetched him for these orders; and

(5) Solano's work with Dy's establishment was not continuous. ,

According to petitioner, these facts show that respondents Solano and Tudla are only piece
workers, not employees under Republic Act 875, where an employee 8 is referred to as shall
include any employee and shag not be limited to the employee of a particular employer unless
the Act explicitly states otherwise and shall include any individual whose work has ceased as a
consequence of, or in connection with any current labor dispute or because of any unfair labor
practice and who has not obtained any other substantially equivalent and regular employment.

97
while an employer includes any person acting in the interest of an employer, directly or indirectly
but shall not include any labor organization (otherwise than when acting as an employer) or
anyone acting in the capacity of officer or agent of such labor organization.

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

on the control test. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del
Rosario, et al., L-13130, October 31, 1959, where the Court ruled that:

The test ... of the existence of employee and employer relationship is whether there is an
understanding between the parties that one is to render personal services to or for the benefit of
the other and recognition by them of the right of one to order and control the other in the
performance of the work and to direct the manner and method of its performance.

ISSUE:

1. Whether there existed an employee employer relation between petitioner Dy Keh Beng
and the respondents Solano and Tudla .

RULING:

While this Court upholds the control test under which an employer-employee relationship exists
"where the person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end, " it finds no merit with
petitioner's arguments as stated above. It should be borne in mind that the control test calls
merely for the existence of the right to control the manner of doing the work, not the actual
exercise of the right. Considering the finding by the Hearing Examiner that the establishment of
Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, it is natural to expect
that those working under Dy would have to observe, among others, Dy's requirements of size
and quality of the kaing. Some control would necessarily be exercised by Dy as the making of
the kaing would be subject to Dy's specifications. Parenthetically, since the work on the baskets
is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise
control on the men he employed.

Nevertheless, considering that about eighteen (18) years have already elapsed from the time
the complainants were dismissed, and that the decision being appealed ordered the payment of
backwages to the employees from their respective dates of dismissal until finally reinstated, it is
fitting to apply in this connection the formula for backwages worked out by Justice Claudio
Teehankee in "cases not terminated sooner." The formula cans for fixing the award of
backwages without qualification and deduction to three years, "subject to deduction where there
are mitigating circumstances in favor of the employer but subject to increase by way of
exemplary damages where there are aggravating circumstances. Considering there are no such
circumstances in this case, there is no reason why the Court should not apply the
abovementioned formula in this instance.

WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein
modified to an award of backwages for three years without qualification and deduction at the
respective rates of compensation the employees concerned were receiving at the time of
dismissal. The execution of this award is entrusted to the National Labor Relations Commission.
Costs against petitioner.

98
 GR No 100665 February 13, 1995

Parties:
ZANOTTE SHOES/LEONARDO LORENZO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. BENIGNO C. VILLARENTE, JR.,
JOSEPH LLUZ, LOLITO LLUZ, NOEL ADARAYAN, ROGELIO SIRA, VIRGINIA HERESANO,
GENELITO HERESANO and CARMELITA DE DIOS, respondents.

Vitug, J.

Facts:
Private respondents filed a complaint for illegal dismissal and for various monetary
claims, including the recovery of damages and attorney's fees, against petitioners. In their
supplemental position paper, the complainants subsequently confined themselves to the illegal
dismissal charge and abandoned the monetary claims.
Private respondents averred that they worked for a minimum of twelve hours daily,
including Sundays and holidays when needed; that they were paid on piece-work basis; that it
"angered" petitioner Lorenzo when they requested to be made members of the Social Security
System ("SSS"); and that, when they demanded an increase in their pay rates, they were
prevented (starting 24 October 1988) from entering the work premises.
Petitioners, in turn, claimed that their business operations were only seasonal, normally
twice a year, one in June (coinciding with the opening of school classes) and another in
December (during the Christmas holidays), when heavy job orders would come in. Private
respondents, according to petitioners, were engaged on purely contractual basis and paid the
rates conformably with their respective agreements.

Issues:
Whether the employer-employee relationship exists between petitioner and respondents
and whether there is illegal dismissal or abandonment warranting separation pay.

Held:
The work of private respondents is clearly related to, and in the pursuit of, the principal
business activity of petitioners. The indicia used for determining the existence of an employer-
employee relationship, all extant in the case at bench, include
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control the employee with respect to the result of the work to
be done and to the means and methods by which the work to be done and to the means
and methods by which the work is to be accomplished.

The Labor Arbiter, sustained by the NLRC concluded that during the conciliation stage,
petitioner had repeatedly indicated that they were willing to accept back all complainants aside
from denying complainants allegation. It is clear that there was no dismissal to talk about in the
first place which would have to be determined whether legal or not. Also in consideration of
complainants' desire to be given separation pay instead of being ordered back to work, all these
factors the Labor Arbiter rule that there was neither dismissal nor abandonment but
complainants are simply out of job for reasons not attributable to either party.

99
 Petitioners have repeatedly indicated their willingness to accept private respondents but
the latter have steadfastly refused the offer. For being without any clear legal basis, the award
of separation pay must be set aside. There is nothing, however, that prevents petitioners from
voluntarily giving private respondents some amounts on ex gratia basis.

Decision:
WHEREFORE, the questioned findings and resolutions of respondents Labor Arbiter and NLRC
are MODIFIED by deleting the award of separation pay and the corresponding attorney's fees.
No costs.

10
G.R. No. 111870 June 30, 1994

AIR MATERIAL WING SAVINGS AND LOAN ASSOCIATION, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

Jerry D. Banares for petitioner.

Perdrelito Q. Aquino for private respondent.

CRUZ, J.:

Facts: Private respondent Luis S. Salas was appointed "notarial and legal counsel" for the
petitioner. The appointment was renewed for three years.

The petitioner issued an order reminding Salas of the approaching termination of his legal
services under their contract. This prompted Salas to lodge a complaint against AMWSLAI for
separation pay, vacation and sick leave benefits, cost of living allowances, refund of SSS
premiums, moral and exemplary damages, payment of notarial services, and attorney's fees.

AMWSLAI moved to dismiss for lack of jurisdiction. It averred that there was no employer-
employee relationship between it and Salas and that his monetary claims properly fell within the
jurisdiction of the regular courts.

It was there held that Salas was not illegally dismissed and so not entitled to collect separation
benefits. His claims were rejected on the ground that he was a managerial employee. He was
also denied moral and exemplary damages for lack of evidence of bad faith on the part of
AMWSLAI. Neither was he allowed to collect his notarial fees because the claim therefor had
already prescribed. However, the petitioner was ordered to pay Salas his notarial fees, and
attorney's fee equivalent to 10% of the judgment award.

On appeal, the decision was affirmed in toto by the respondent Commission

Issue: Whether or not Salas can be considered an employee of the petitioner company.

Held: We have held in a long line of decisions that the elements of an employer-employee
relationship are: (1) selection and engagement of the employee; (2) payment of wages; (3)
power of dismissal; and (4) employer's own power to control employee's conduct. 3

The existence of such a relationship is essentially a factual question.

The terms and conditions set out in the letter-contract entered into by the parties on, clearly
show that Salas was an employee of the petitioner. His selection as the company counsel was
done by the board of directors in one of its regular meetings. The petitioner paid him a monthly
compensation/retainer's fee for his services. Though his appointment was for a fixed term of
three years, the petitioner reserved its power of dismissal for cause or as it might deem
necessary for its interest and protection. No less importantly, AMWSLAI also exercised its
power of control over Salas by defining his duties and

10
We hold, therefore, that the public respondent committed no grave abuse of discretion in ruling
that an employer-employee relationship existed between the petitioner and the private
respondent.

The public respondents agreed that Salas was entitled to collect notarial fees from 1987 to 1990
by virtue of his having been assigned as notarial officer. We feel, however, that there is no
substantial evidence to support this finding.

The letter-contract, does not contain any stipulation for the separate payment of notarial fees to
Salas in addition to his basic salary. On the contrary, it would appear that his notarial services
were part of his regular functions and were thus already covered by his monthly compensation.
It is true that the notarial fees were paid by members-borrowers of the petitioner for its own
account and not of Salas. However, this is not a sufficient basis for his claim to such fees in the
absence of any agreement to that effect.

ACCORDINGLY, the appealed judgment of the NLRC is AFFIRMED, with the modification that
the award of notarial fees and attorney's fees is disallowed. It is so ordered.

10
 HYDRO RESOURCES CONTRACTORS CORP. Vs. PAGALILAUAN and NLRC
G.R. No. L-62909 April 18, 1989
GUTIERREZ, JR., J.:

FACTS: On October 24, 1978, petitioner corporation hired the private respondent Aban as
its "Legal Assistant." He received a basic monthly salary of Pl,500.00 plus an initial living
allowance of P50.00 which gradually increased to P320.00.On September 4, 1980, Aban
received a letter from the corporation informing him that he would be considered terminated
effective October 4, 1980 because of his alleged failure to perform his duties well.On October 6,
1980, Aban filed a complaint against the petitioner for illegal dismissal. The labor arbiter ruled
that Aban was illegally dismissed. This ruling was affirmed by the NLRC on appeal.

The petitioner questions the jurisdiction of the public respondents considering the
alleged absence of an employer-employee relationship. The petitioner contends that its
relationship with Aban is that of a client with his lawyer. It is its position that "(a) lawyer as long
as he is acting as such, as long as he is performing acts constituting practice of law, can never
be considered an employee. His relationship with those to whom he renders services, as such
lawyer, can never be governed by the labor laws. For a lawyer to so argue is not only
demeaning to himself (sic), but also his profession and to his brothers in the profession." Thus,
the petitioner argues that the labor arbiter and NLRC have no jurisdiction over the instant case.

Hence, this present petition.

ISSUE: Whether or not there was an employer-employee relationship between the petitioner
corporation and Aban?

HELD: A lawyer, like any other professional, may very well be an employee of a private
corporation or even of the government. It is not unusual for a big corporation to hire a staff of
lawyers as its in-house counsel, pay them regular salaries, rank them in its table of organization,
and otherwise treat them like its other officers and employees. At the same time, it may also
contract with a law firm to act as outside counsel on a retainer basis. The two classes of lawyers
often work closely together but one group is made up of employees while the other is not. A
similar arrangement may exist as to doctors, nurses, dentists, public relations practitioners, and
other professionals.

This Court has consistently ruled that the determination of whether or not there is an
employer-employee relation depends upon four standards: (1) the manner of selection and
engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or
absence of a power of dismissal; and (4) the presence or absence of a power to control the
putative employee's conduct. Of the four, the right-of-control test has been held to be the
decisive factor.

Aban was employed by the petitioner to be its Legal Assistant as evidenced by his appointment
paper. The petitioner paid him a basic salary plus living allowance. Thereafter, Aban was
dismissed on his alleged failure to perform his duties well. Aban worked solely for the petitioner
and dealt only with legal matters involving the said corporation and its employees. He also
assisted the Personnel Officer in processing appointment papers of employees. This latter duty
is not an act of a lawyer in the exercise of his profession but rather a duty for the benefit of the
corporation.

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

10
ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents.
YNARES-SANTIAGO, J.:

FACTS: In 1995, petitioner was hired by Kasei Corporation during its incorporation stage.
She was designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer to the City of
Makati to secure business permits, construction permits and other licenses for the initial
operation of the company. 5
Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared
any legal document and never represented the company as its Corporate Secretary. However,
on some occasions, she was prevailed upon to sign documentation for the company. 6

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as
accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management administration functions; represent the
company in all dealings with government agencies, especially with the Bureau of Internal
Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation. 7

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her
salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation. 8

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that
she was required to sign a prepared resolution for her replacement but she was assured that
she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei Corporation and announced that nothing had
changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to
Seiji Kamura and in charge of all BIR matters. 9

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up
to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not
paid her mid-year bonus allegedly because the company was not earning well. On October
2001, petitioner did not receive her salary from the company. She made repeated follow-ups
with the company cashier but she was advised that the company was not earning well. 10

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but
she was informed that she is no longer connected with the company. 11

Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.

Private respondents averred that petitioner is not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of its technical consultants on accounting
matters and act concurrently as Corporate Secretary. As technical consultant, petitioner
performed her work at her own discretion without control and supervision of Kasei Corporation.
Petitioner had no daily time record and she came to the office any time she wanted. The

10
company never interfered with her work except that from time to time, the management would
ask her opinion on matters relating to her profession. Petitioner did not go through the usual
procedure of selection of employees, but her services were engaged through a Board
Resolution designating her as technical consultant. The money received by petitioner from the
corporation was her professional fee subject to the 10% expanded withholding tax on
professionals, and that she was not one of those reported to the BIR or SSS as one of the
company’s employees. 12

Petitioner’s designation as technical consultant depended solely upon the will of management.
As such, her consultancy may be terminated any time considering that her services were only
temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted
a list of employees for the years 1999 and 2000 duly received by the BIR showing that petitioner
was not among the employees reported to the BIR, as well as a list of payees subject to
expanded withholding tax which included petitioner. SSS records were also submitted showing
that petitioner’s latest employer was Seiji Corporation. 13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainant’s dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position without loss of seniority
rights and jointly and severally pay complainant her money claims in accordance with the
following computation:
a. Backwages 10/2001 – 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 – 09/2001) 22,500.00
c. Housing Allowance (01/2001 – 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorney’s fees 87,076.50
P957,742.50
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor
Relations Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new
one is hereby rendered dismissing the complaint filed by private respondent against Kasei
Corporation, et al. for constructive dismissal.
SO ORDERED. 16
The appellate court denied petitioner’s motion for reconsideration, hence, the present recourse.

ISSUES:
(1) whether there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally
dismissed.

Considering the conflicting findings by the Labor Arbiter and the National Labor Relations
Commission on one hand, and the Court of Appeals on the other, there is a need to reexamine
the records to determine which of the propositions espoused by the contending parties is
supported by substantial evidence. 17

10
We held in Sevilla v. Court of Appeals 18 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.
However, in certain cases the control test is not sufficient to give a complete picture of the
relationship between the parties, owing to the complexity of such a relationship where several
positions have been held by the worker. There are instances when, aside from the employer’s
power to control the employee with respect to the means and methods by which the work is to
be accomplished, economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee, independent
contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer’s power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship
between the parties. This is especially appropriate in this case where there is no written
agreement or terms of reference to base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities given to the worker over the
period of the latter’s employment.
The control test initially
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the extent of the worker’s
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that
line of business. 23
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. 24 In the United States,
the touchstone of economic reality in analyzing possible employment relationships for purposes
of the Federal Labor Standards Act is dependency. 25 By analogy, the benchmark of economic
reality in analyzing possible employment relationships for purposes of the Labor Code ought to
be the economic dependence of the worker on his employer.

Held:
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate
Secretary, with substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for the proper
operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.

10
Under the broader economic reality test, the petitioner can likewise be said to be an employee
of respondent corporation because she had served the company for six years before her
dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as deductions and Social Security contributions from August
1, 1999 to December 18, 2000. 26 When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioner’s
membership in the SSS as manifested by a copy of the SSS specimen signature card which
was signed by the President of Kasei Corporation and the inclusion of her name in the on-line
inquiry system of the SSS evinces the existence of an employer-employee relationship between
petitioner and respondent corporation. 27

It is therefore apparent that petitioner is economically dependent on respondent corporation for

her continued employment in the latter’s line of business.

Based on the foregoing, there can be no other conclusion that petitioner is an employee of
respondent Kasei Corporation. She was selected and engaged by the company for
compensation, and is economically dependent upon respondent for her continued employment
in that line of business. Her main job function involved accounting and tax services rendered to
respondent corporation on a regular basis over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation, with the power to dismiss her for
cause. More importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.

The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a
month from January to September 2001. This amounts to an illegal termination of employment,
where the petitioner is entitled to full backwages. Since the position of petitioner as accountant
is one of trust and confidence, and under the principle of strained relations, petitioner is further
entitled to separation pay, in lieu of reinstatement. 34
In affording full protection to labor, this Court must ensure equal work opportunities regardless
of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile
relationship between employees and employers, we are mindful of the fact that the policy of the
law is to apply the Labor Code to a greater number of employees. This would enable employees
to avail of the benefits accorded to them by law, in line with the constitutional mandate giving
maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary
social economic force in furtherance of social justice and national development.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals
dated October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No. 78515 are
ANNULLED and SET ASIDE. The Decision of the National Labor Relations Commission dated
April 15, 2003 in NLRC NCR CA No. 032766-02, is REINSTATED. The case is REMANDED to
the Labor Arbiter for the recomputation of petitioner Angelina Francisco’s full backwages from
the time she was illegally terminated until the date of finality of this decision, and separation pay
representing one-half month pay for every year of service, where a fraction of at least six
months shall be considered as one whole year.

10
 OPULENCIA ICE PLANT AND STORAGE AND/OR DR. MELCHOR OPULENCIA, vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), LABOR ARBITER
NUMERIANO VILLENA AND MANUEL P. ESITA,

G.R. No. L-98368 December 15, 1993

FACTS:

MANUEL P. ESITA was hired as compressor operator-mechanic for the ice plants of petitioner
Dr. Melchor Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially assigned
at the ice plant in Tanauan, Esita would work from seven o'clock in the morning to five o'clock in
the afternoon receiving a daily wage of P35.00. In 1986, Esita was transferred to the ice plant in
Calamba, which was then undergoing overhauling. For less than a month, Esita helped in the
construction-remodeling of Dr. Opulencia's house.

For demanding the correct amount of wages due him, Esita was dismissed from service.
Consequently, he filed a complaint for illegal dismissal, underpayment, non-payment for
overtime, legal holiday, premium for holiday and rest day, 13th month, separation/retirement pay
and allowances against petitioners.

Petitioners deny that Esita is an employee. They claim that Esita could not have been employed
in 1980 because the Tanauan ice plant was not in operation due to low voltage of electricity and
that Esita was merely a helper/peon of one of the contractors they had engaged to do major
repairs and renovation of the Tanauan ice plant in 1986. Petitioners further allege that when
they had the Calamba ice plant repaired and expanded, Esita likewise rendered services in a
similar capacity, and thus admitting that he worked as a helper/peon in the repair or remodeling
of Dr. Opulencia's residence in Tanauan.

Labor Arbiter rendered a decision finding the existence of an employer-employee relationship

between petitioners and Esita and accordingly directed them to pay him P33,518.02
representing separation pay, underpayment of wages, allowances, 13th month, holiday,
premium for holiday, and rest day pays.

ISSUE: Whether there exists employer-employee relation between the petitioners and the
private respondent Esita.
RULING:

No particular form of evidence is required to prove the existence of an employer-employee

relationship. Any competent and relevant evidence to prove the relationship may be admitted.
For, if only documentary evidence would be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as no employer would wish to come
out with any trace of the illegality he has authored considering that it should take much weightier
proof to invalidate a written instrument. Thus, as in this case where the employer-employee
relationship between petitioners and Esita was sufficiently proved by testimonial evidence, the
absence of time sheet, time record or payroll has become inconsequential.

The petitioners' reliance on Sevilla v. Court of Appeals is misplaced. In that case, we did not
consider the inclusion of employer's name in the payroll as an independently crucial evidence to

10
prove an employer-employee relation. Moreover, for a payroll to be utilized to disprove the
employment of a person, it must contain a true and complete list of the employees. But, in this
case, the testimonies of petitioners' witnesses admit that not all the names of the employees
were reflected in the payroll.

In their Consolidated Reply, petitioners assert that "employees who were absent were naturally
not included in the weekly payrolls." But this simply emphasizes the obvious. Petitioners'
payrolls do not contain the complete list of the employees, so that the payroll slips cannot be an
accurate basis in determining who are and are not their employees. In addition, as the Solicitor
General observes: ". . . the payroll slips submitted by petitioners do not cover the entire period
of nine years during which private respondent claims to have been employed by them, but only
the periods from November 2 to November 29, 1986 and April 26 to May 30, 1987 . . . . It should
be noted that petitioners repeatedly failed or refused to submit all payroll slips covering the
period during which private respondent claims to have been employed by them despite
repeated directives from the Labor Arbiter . . . ." In this regard, we can aptly apply the disputable
presumption that evidence willfully suppressed would be adverse if produced.

Petitioners further contend that the claim of Esita that he worked from seven o'clock in the
morning to five o'clock in the afternoon, which is presumed to be continuous, is hardly credible
because otherwise he would not have had the time to tend his crops. As against this positive
assertion of Esita, it behooves petitioners to prove the contrary. It is not enough that they raise
the issue of probability, nay, improbability, of the conclusions of public respondents based on
the facts bared before them, for in case of doubt, the factual findings of the tribunal which had
the opportunity to peruse the conflicting pieces of evidence should be sustained.

The petitioners point out that even granting arguendo that Esita was indeed a mechanic, he
could never be a regular employee because his presence would be required only when there
was a need for repair. We cannot sustain this argument. This circumstance cannot affect the
regular status of employment of Esita. An employee who is required to remain on call in the
employer's premises or so close thereto that he cannot use the time effectively and gainfully for
his own purpose shall be considered as working while on call.

In sum, the determination of regular and casual employment is not affected by the fact that the
employee's regular presence in the place of work is not required, the more significant
consideration being that the work of the employee is usually necessary or desirable in the
business of the employer. More importantly, Esita worked for 9 years and, under the Labor
Code, "any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to that activity in
which he is employed . . . ."

The petitioners would give the impression that the repair of the ice plant and the renovation of
the residence of Dr. Opulencia were voluntarily extended by Esita because "[r]espondent did it
on their (sic) own." Unfortunately for petitioners, we cannot permit these baseless assertions to
prevail against the factual findings of public respondents which went through the sanitizing
process of a public hearing. The same observation may be made of the alleged inconsistencies
in Esita's testimonies. Moreover, on the claim that Esita's construction work could not ripen into
a regular employment in the ice plant because the construction work was only temporary and
unrelated to the ice-making business, needless to say, the one month spent by Esita in
construction is insignificant compared to his nine-year service as compressor operator in

10
determining the status of his employment as such, and considering further that it was Dr.
Opulencia who requested Esita to work in the construction of his house.

In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to
augment his income, there is no doubt that petitioners should be commended; however, in view
of the existence of an employer-employee relationship as found by public respondents, we
cannot treat humanitarian reasons as justification for emasculating or taking away the rights and
privileges of employees granted by law. Benevolence, it is said, does not operate as a license to
circumvent labor laws. If petitioners were genuinely altruistic in extending to their employees
privileges that are not even required by law, then there is no reason why they should not be
required to give their employees what they are entitled to receive. Moreover, as found by public
respondents, Esita was enjoying the same privileges granted to the other employees of
petitioners, so that in thus treating Esita, he cannot be considered any less than a legitimate
employee of petitioners.

WHEREFORE, there being no grave abuse of discretion on the part of public respondents, the
instant petition is DISMISSED. Accordingly, the restraining order we issued on 13 May 1991 is
LIFTED.

SO ORDERED.

11
 Domasig vs. NLRC
(G.R. No 118101, September 16, 1996)

Facts: The Complaint was instituted by Eddie Domasig against respondent Cata Garments
Corporation, Accompany engaged in garments business and its owner/ Manager Otto Ong
and Catalina Co. for Illegal dismissal, unpaid commission and other monetary claims.
Complaint alleged that he started working with the respondent on July 6, 1986 as
Salesman when the company was still named Cata Garments Corporation, that three (3 years
ago, because of complaint against respondent by its workers, it changed its name to Cata
Garments Corporation, and that on August 29, 1992, he was dismissed when respondent
learned that he was being pirated by rival corporation which offer he refused . Prior to his
dismissal complaint alleged that he was receiving a salary of P1, 500 a month plus commission.

Issue: whether or not complaint was commission agent was not fully resolved in the assailed
decision.

Held: The Labor arbiter held that complainant was illegally dismissed and entitled to
reinstatement and back wages as well as under payment of salary . 13th month pay service
incentive leave and legal holiday. The arbiter also awarded complainant his claim for unpaid
commission in the amount of P143, 955.
Decision : Bellosillo, Vitug, Kapunan and Hermosisisima, Jr., JJ.,concur. Resolution set aside,
judgment of Labor Arbiter reinstated and affirmed with modification.

11
 Efren P. Paguio v. NLRC, Metromedia Times Corporation, Robina Y. Gokongwei, Liberto
Gomez, Jr., Yolanda E. Aragon, Frederick D. Go, and Alda Iglesia

May 9, 2003 G.R. No. 147816

Vitug, J.:

Facts:
On 22 June, 1992, respondent Metro Media Times Corporation entered into an
agreement with petitioner, Efren P. Paguio, appointing the latter to be an account executive of
the firm. The petitioner was to solicit advertisements for the “Manila Times”, a newspaper
published by the respondent company.
On 15 August, 1992, barely two months after the renewal of his contract, petitioner
received a notice of termination from the respondent firm. There was no given definite cause for
the petitioner’s termination. Aggrieved, Paguio filed a case before the labor arbiter, asking that
his dismissal be declared unlawful and prayed that respondent company officials be held
accountable for acts of unfair labor practices, P500,000.0 moral damages, and for P20,000.0
exemplary damages.
The Labor arbiter found for petitioner and declared his dismissal illegal. The arbiter
ordered respondent company and its officers to reinstate Paguio to his former position and to
pay him his commissions and other remunerations. He likewise adjudged that the general
manager of the respondent corporation be held liable to Paguio for moral damages in the
amount of P20,000.0.
On appeal, NLRC reversed the ruling of the labor arbiter and declared the contractual
relationship between the parties as a fixed-term employment.
Petitioner Paguio appealed the ruling of the NLRC before the Court of Appeals.

Issues:
Whether or not there is an employer-employee relationship, petitioner’s contract with
private respondent company is for a fixed period and whether or not petitioner’s dismissal is
legal.

Held:
As defined in Article 280 of the Labor Code, a regular employee is one who is engaged
to perform activities which are necessary and desirable in the usual business or trade of the
employer as against those which are undertaken for a specific project or are seasonal. Even in
these latter cases, where such person has rendered at least one year of service, regardless of
the nature of the activity performed or of whether it is continuous or intermittent, the employment
is considered regular as long as the activity exists, it not being indispensable that he be first
issued a regular appointment or be formally declared as such before acquiring a regular status.
The law in defining their contractual relationship, does not necessarily or exclusively
upon the terms of their written or oral contract, but also on the basis of the nature of the work
petitioner has been called upon to perform.
A lawful dismissal must meet both substantive and procedural requirements; in fine, the
dismissal must be for a just or authorized cause and must comply with the rudimentary due
process of notice and hearing. It is not shown that respondent company has fully bothered itself
with either of these requirements in terminating the services of petitioner. The notice of
termination recites no valid or just cause for the dismissal of petitioner nor does it appear that
he has been given an opportunity to be heard in his defense.

11
 GREAT PACIFIC LIFE ASSURANCE v. JUDICO
G.R. No. 73887 December 21, 1989
Ponente: PARAS. J

FACTS:
Honorato Judico filed a complaint against Grepalife insurance for award of money claims
consisting of separation pay, unpaid salary and 13th month pay.
Judico entered into an agreement of agency with Grepalife to become a debit agent attached to
the Industrial Life Agency in Cebu City. He had definite work assignments including but not
limited to collection of premiums from policy holders and selling insurance to prospective clients.
He received a definite minimum amount per week as his wage known as “Sales Reserve”
wherein the failure to maintain the same would bring him back to the beginner’s employment
with fixed weekly wage of P200 for 13 weeks regardless of production. He was assigned a
definite a definite place in the office to work on when he is not in the field; and in addition to his
canvassing work he was burdened with the job collection. In both cases he was required to
make a regular report to the company regarding their duties. He was then promoted to Zone
Supervisor with additional allowance. On June 28, 1982 he was dismissed by way of
Termination of his agency contract.

ISSUE:
Whether or not there is an employer-employee relationship between insurance agents
and their principal?

HELD:
Yes, there is an employer-employee relationship between Grepalife and Judico because
the element of control by Grepalife over Judico is Present.
The facts shows that Judico was controlled by Grepalife insurance company not only as to the
kind of work; that amount of results, the kind of performance but also the power of dismissal.
Judico by nature and his position and work has been a regular employee and therefore entitled
to the protection of the law and not to be terminated without valid and justifiable cause.

11
 Feati University v. Bautista, 18 SCRA 1191 [1966]
Facts:
On January 14, 1963, the President of the respondent Feati University Faculty Club-
PAFLU — hereinafter referred to as Faculty Club — wrote a letter to Mrs. Victoria L. Araneta,
President of petitioner Feati University — hereinafter referred to as University — informing her
of the organization of the Faculty Club into a registered labor union. The Faculty Club is
composed of members who are professors and/or instructors of the University. On January 22,
1963, the President of the Faculty Club sent another letter containing twenty-six demands that
have connection with the employment of the members of the Faculty Club by the University, and
requesting an answer within ten days from receipt thereof. The President of the University
answered the two letters, requesting that she be given at least thirty days to study thoroughly
the different phases of the demands. Meanwhile counsel for the University, to whom the
demands were referred, wrote a letter to the President of the Faculty Club demanding proof of
its majority status and designation as a bargaining representative. On February 1, 1963, the
President of the Faculty Club again wrote the President of the University rejecting the latter's
request for extension of time, and on the same day he filed a notice of strike with the Bureau of
Labor alleging as reason therefor the refusal of the University to bargain collectively. The parties
were called to conferences at the Conciliation Division of the Bureau of Labor but efforts to
conciliate them failed. On February 18, 1963, the members of the Faculty Club declared a strike
and established picket lines in the premises of the University, resulting in the disruption of
classes in the University. Despite further efforts of the officials from the Department of Labor to
effect a settlement of the differences between the management of the University and the striking
faculty members no satisfactory agreement was arrived at. On March 21, 1963, the President of
the Philippines certified to the Court of Industrial Relations the dispute between the
management of the University and the Faculty Club pursuant to the provisions of Section 10 of
Republic Act No. 875. FEATI University Faculty Club held a strike against FEATI University
upon the latter’s failure to comply with its demands. Since they were not able to settle, the case
was brought to the Court of Industrial Relations (CIR) which ordered the faculty members to
return to work. FEATI filed a motion to dismiss maintaining that the CIR Did not have jurisdiction
over the case because (1) the Industrial Peace Act is not applicable to the University, it being
an educational institution, nor to the members of the Faculty Club, they being independent
contractors; (2) the presidential certification is violative of Section 10 of the Industrial Peace
Act, as the University is not an industrial establishment, and there was no industrial dispute
which could be certified to the CIR; and (3) that since it is not an industrial establishment,
hence, it is not an “employer” in contemplation of the Industrial Peace Act.

Issue: Whether FEATI University is not an employer and the members of the Faculty Club, are
not employers within the purview of the Industrial Peace Act.

Decision: The Court of Industrial Relations has jurisdiction over unfair labor practice charges
against educational institutions that are organized, operated and maintained for profit. Industrial
Peace Act is applicable to any organization or entity — whatever may its purpose when it was
created — that is operated for profit or gain. Congress, in the Industrial Peace Act, did not
intend to give a complete definition of “employer”, but rather that the definition in Section 2 (c) of
the law to be complementary to what is commonly understood as employer.
Educational institutions, that are operated for profit, are included within the term
“employer” as contemplated in the Industrial Peace Act, since they are not among the
seceptions metioned in Section 2 (c) of the law. An employer is one who employs the services
of others; one for whom employees work and who pays their wages or salaries. A University

11
that engaged the services of the professors, provided them work, and paid them compensation
or salary for their services, even if it considers itself as a mere “lessee” of services under a
contract between it and the members of said professors. For the purposes of the Industrial
Peace Act the University is an industrial establishment because it is operated for profit and it
employs persons who work to earn a living. The term “industry”, for the purposes of the
application of our labor laws should be given a broad meaning so as to cover all enterprises
which are operated for profit and which engage the services of persons who work to earn a
living. Professors and instructors, who are under contract to teach particular courses and are
paid for their services, are employees under the Industrial Peace Act. Striking professors and/or
instructors of the University are employees because striking employees retain their status as
employees. Professors and instructors are not independent contractors. The Court takes judicial
notice that a university controls the work of the members of its faculty; that a university
prescribes the courses or subjects that professors teach, and when and where to teach; that the
professors’ work is characterized by regularity and continuity for a fixed duration; that professors
are compensated for their services by wages and salaries, rather than by profits; that the
professors and/or instructors cannot substitute others to do their work without the consent of the
university; and that the professors can be laid off if their work is found not satisfactory.
IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with preliminary
injunction in Case G.R. No. L-21278 is dismissed and the writs prayed for therein are denied.
The writ of preliminary injunction issued in Case G.R. No. L-21278 is dissolved. The orders and
resolutions appealed from, in Cases Nos. L-21462 and L-21500, are affirmed, with costs in
these three cases against the petitioner-appellant Feati University. It is so ordered.

11
 Villamaria vs. CA and Bustamante
G.R. No. 165881, April 19, 2006
CALLEJO, SR., J.:

Facts:

Petitioner Villamaria and respondent Bustamante executed a contract entitled

“Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog”
Under the “Kasunduan”, respondent was required to remit P550 daily to petitioner, with
the amount representing the “boundary” and the partial payment for the purchase of the
jeepney. Any excess would be kept by the driver as his daily wage. Under the “Kasunduan”, the
petitioner retained ownership with the material possession vested in the driver. Also in the
“Kasunduan” if the driver failed to remit P550 for a week, the agreement would be of no force
and effect with the driver to return the jeepney to the owner. If still allowed to drive, owner and
driver would revert to a daily P550 Boundary only.
Sometime in 1999, petitioner issued a “Paalala” to all their drivers reminding them about
the “Kasunduan”
July 24, 2000, respondent Bustamante was barred by petitioner to drive the vehicle that
was already taken back.
Respondent filed an illegal dismissal complaint. Villamaria countered that there was no
dismissal because the “Kasunduan” transformed the employer – employee relationship to that of
a buyer – seller.
The Labor Arbiter decided in favor of petitioner with the reason that the “Kasunduan”
was in effect between the parties and with the “Paalala” it was shown that respondent had
violated the terms of the contract and is not entitled to damages.
Respondent appealed to NLRC which then was then dismissed not because of the
arbiter’s decision but because of jurisdictional issues pertaining to the “Kasunduan” which gives
way to the juridical relationship as vendor – vendee meaning that the Labor Arbiter had no
jurisdiction over the case. Respondent’s motion for reconsideration was also denied.

Issue:
Whether or not the employer – employee relationship exists even with the “Kasunduan”?

Ruling:
The juridical relationship of employer – employee was not negated by the “Kasunduan”,
considering that the petitioner retained control of respondent’s conduct as driver of the vehicle.

11
 Sy et. Al. vs. COURT OF APPEALS
G.R. No. 142293 February 27, 2003

SECOND DIVISION, QUISUMBING, J.:

Facts:

Sometime in 1958, private respondent Jaime Sahot5 started working as a truck helper for
petitioners’ family-owned trucking business. In 1965, he became a truck driver of the same
family business. Throughout all for 36 years, private respondent continuously served the
trucking business of petitioners. However, starting in April 1994, Sahot had been incurring
absences as he was suffering from various ailments which greatly affected the performance of
his task as a driver. He inquired about his medical and retirement benefits with the Social
Security System (SSS) on April 25, 1994, but discovered that his premium payments had not
been remitted by his employer. And due to his absences, he was dismissed from work.

On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for
illegal dismissal praying for the recovery of separation pay and attorneys fees against herein
petitioners.

For their part, petitioners admitted they had a trucking business in the 1950s but denied
employing helpers and drivers. They contend that private respondent was not illegally dismissed
as a driver because he was in fact petitioner’s industrial partner. They add that it was not until
the year 1994, when SBT Trucking Corporation was established, and only then did respondent
Sahot become an employee of the company, with a monthly salary that reached P4,160.00 at
the time of his separation.

Issue: Whether an employer-employee relationship existed between petitioners and private

respondent Sahot.

Held:

We agree with complainant that there was error committed by the Labor Arbiter when he
concluded that complainant was an industrial partner prior to 1994. A computation of the age of
complainant shows that he was only twenty-three (23) years when he started working with
respondent as truck helper. How can we entertain in our mind that a twenty-three (23) year old
man, working as a truck helper, be considered an industrial partner. Hence we rule that
complainant was only an employee, not a partner of respondents from the time complainant
started working for respondent.17

The elements to determine the existence of an employment relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer’s power to control the employee’s conduct. The most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it.19

As found by the appellate court, petitioners owned and operated a trucking business since the
1950s and by their own allegations, they determined private respondent’s wages and rest day.20
Records of the case show that private respondent actually engaged in work as an employee.
During the entire course of his employment he did not have the freedom to determine where he

11
would go, what he would do, and how he would do it. He merely followed instructions of
petitioners and was content to do so, as long as he was paid his wages. Indeed, said the CA,
private respondent had worked as a truck helper and driver of petitioners not for his own
pleasure but under the latter’s control.

Time and again this Court has said that "if doubt exists between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter."25 Here, we
entertain no doubt. Private respondent since the beginning was an employee of, not an
industrial partner in, the trucking business.

Decision:

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated February
29, 2000 is AFFIRMED. Petitioners must pay private respondent Jaime Sahot his separation
pay for 36 years of service at the rate of one-half monthly pay for every year of service,
amounting to P74,880.00, with interest of six per centum (6%) per annum from finality of this
decision until fully paid.

Costs against petitioners. SO ORDERED.

Bellosillo, (Chairman), Mendoza, and Callejo, Sr., JJ., concur.

Austria-Martinez, J., no part.

11
 G.R. Nos. 83380-81 November 15, 1989

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO,

petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter,
Department of Labor and Employment, National Capital Region), SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO GARCIANO,
ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES,
BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY,
LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES,
respondents.

Individual complainants, private respondents herein, have been working for petitioner Makati
Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They
are paid on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a
monthly basis. In addition to their piece-rate, they are given a daily allowance of three (P 3.00)
pesos provided they report for work before 9:30 a.m. everyday.

Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from
Monday to Saturday and during peak periods even on Sundays and holidays.

On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the
respondent workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-84 for (a)
underpayment of the basic wage; (b) underpayment of living allowance; (c) non-payment of
overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive pay; (f)
13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1

ISSUE:

WHETHER OR NOT EMPLOYER EMPLOYEE RELATIONSHIP EXIST.

Yes there was employer-employee relationship that existed. The first issue which is the pivotal
issue in this case is resolved in favor of private respondents. The test of employer-employee
relationship is four-fold: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. It is the
so called "control test" that is the most important element. This simply means the determination
of whether the employer controls or has reserved the right to control the employee not only as to
the result of the work but also as to the means and method by which the same is to be
accomplished.

The facts at bar indubitably reveal that the most important requisite of control is present. As
gleaned from the operations of petitioner, when a customer enters into a contract with the
haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern
maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat
or shirt as specified by the customer. Supervision is actively manifested in all these aspects —
the manner and quality of cutting, sewing and ironing.

11
CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR.
in his capacity as union president, petitioner, vs. UNDERSECRETARY BIENVENIDO E.
LAGUESMA and CORFARM GRAINS, INC., respondents.
[G.R. No. 114911. February 24, 1998]

CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P.

COSTALES, JR., president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
CORFARM GRAINS, INC. and/or TEODY C. RAPISORA and HERMINIO RABANG,
respondents.

DECISION
PANGANIBAN, J.:

The Facts

In his Consolidated Memorandum, the solicitor general recited the following pertinent facts,
which we find amply supported by the records:[10]

“Petitioner union has ninety-two (92) members who worked as ‘cargador’ at the warehouse and
ricemills of private respondent [referring to Respondent Corfarm] at Umingan, Pangasinan since
1982. As cargadores, they loaded, unloaded and piled sacks of palay from the warehouse to
the cargo trucks and those brought by cargo trucks for delivery to different places. They were
paid by private respondent on a piece rate basis. When private respondent denied some
benefits to these cargadores, the latter organized petitioner union. Upon learning of its
formation, private respondent barred its members from working with them and replaced [them]
with non-members of the union sometime in the middle of 1992.

On July 9, 1992, petitioner filed [a petition] for certification election before the Regional Office
No. I of the Department of Labor and Employment, San Fernando, La Union docketed as
RO100-9207-RU-001.

While this petition for certification election was pending, petitioner also filed on November 16,
1992, a complaint for illegal dismissal, unfair labor practice, refund of illegal deductions,
payment of wage differentials, various pecuniary benefits provided by laws, damages, legal
interest, reinstatement and attorney’s fees, against private respondent before the Regional
Arbitration Branch No. 1 of Dagupan City, docketed as NLRC RAB Case No. 01-117-0184-92.

On November 24, 1992, Labor Arbiter Ricardo Olairez in NLRC Case No. Sub-Rab 01-117-
0184-92, directed the parties to submit position paper on or before December 14, 1992, and to
appear for hearing on the said date. Only the complainant petitioner submitted its position
paper on December 3, 1992.

Likewise in the scheduled hearing on December 14, 1992, private respondent did not appear[;]
thus Labor Arbiter Olairez allowed the president of petitioner union Juanito Costales to testify
and present its evidence ex-parte.

The Issues

12
In its Consolidated Memorandum dated September 19, 1995 filed before us, petitioner raises
the following “grounds” in support of its petition:[17]

issues are as follows:

1. Whether Respondent Laguesma acted with grave abuse of discretion in ordering the
dismissal of the petition for certification election

2 Whether Respondent NLRC acted with grave abuse of discretion in remanding the illegal
dismissal case to the labor arbiter for further proceedings.

The present controversy hinges on whether an employer-employee relationship between the

CPWU members and Respondent Corfarm has been established by substantial evidence.

The Court’s Ruling

The two petitions are meritorious.

Main Issue: Employer-Employee Relationship

First Case: Certification Election

Petitioner contends that Respondent Laguesma committed grave abuse of discretion in

dismissing the petition for certification election by relying on private respondent’s bare
allegation, in its motion for reconsideration, of lack of employer-employee relationship.[18]
According to petitioner, Respondent Laguesma cannot reverse his Decision in the absence of a
concomitant change in his factual findings.[19] Petitioner insists that all its members were
employees of private respondent, viz.:[20]

“The 92 workers, who are all union members of petitioner herein, have been rendering actual
manual services as ‘cargadores’ in the warehouse and rice mills of private respondent,
performing activities usually related to or desirable by [sic] the business or trade of private
respondent who is engaged in the buy and sell of palay as well as warehousing of said
commodity and milling the same for sale to customers in the form of milled rice. The 92 workers
have performed their activities for the last ten (10) years prior to their having been illegally
dismissed from employment on June 18, 1992 or thereabouts.”

Petitioner adds that many of its members received Christmas bonuses from private respondent.
[21]

On the other hand, Respondent Corfarm describes the contentions of petitioner as

“off-tangent, if not irrelevant. --

First, the authority of the DOLE Secretary to decide appeals in representation cases is
undeniable (see e.g., Sections 9 and 10 of Rule V, Book V, of the Implementing Rules and
Regulations of the Labor Code; also Art. 259, appeal from certification election orders, labor
code). Second, petitioner completely misses the point that the granting and denial of a motion
for reconsideration involves the exercise of discretion. As submitted by the Public Respondent

12
in its Comment, ‘among the ends to which a Motion for Reconsideration is addressed, one is
precisely to convince the court that its ruling is erroneous and improper, contrary to law or the
evidence’, x x x” (Emphasis found in the original.)

Corfarm insists that the challenged Order of Respondent Laguesma dated January 4, 1994
rests on “solid findings of fact” which should be accorded respect and finality.[22] It attacks the
petitioner’s allegation -- that it has “92” workers who worked as “cargador” at its warehouses --
as “gratuitous and not supported by any evidence x x x [because] as late as this time of day in
the litigation of this case, who exactly are those 92 workers cannot be known from the
records.”[23] (Emphasis in original.)

Private respondent further argues that RJL Martinez Fishing Corp. vs. NLRC,[24] cited by the
solicitor general, has a factual situation different from the case at bar. “Waiting time,” unlike that
in RJL Martinez Fishing Corp., does not obtain here.[25] Likewise allegedly inapplicable are the
rulings in Villavilla vs. Court of Appeals[26] and in Brotherhood Labor Unity Movement vs.
Zamora.[27]

Respondent Corfarm denies that it had the power of control, rationalizing that petitioner’s
members “were ‘street-hired’ workers engaged from time to time to do loading and unloading
work x x x[;] [t]here [was] no superintendent-in-charge x x x to give orders x x x[;] [and] there
[were] no gate passes issued, nor tools, equipment and paraphernalia issued by Corfarm for
loading/unloading x x x.”[28] It attributes error to the solicitor general’s reliance on Article
280[29] of the Labor Code. Citing Brent School, Inc. vs. Zamora,[30] private respondent asserts
that a literal application of such article will result in “absurdity,” where petitioner’s members will
be regular employees not only of respondents but also of several other rice mills, where they
were allegedly also under service. Finally, Corfarm submits that the OSG’s position is negated
by the fact that “petitioner’s members contracted for loading and unloading services with
respondent company when such work was available and when they felt like it x x x.”[31]

To determine the existence of an employer-employee relation, this Court has consistently

applied the “four-fold” test which has the following elements: (1) the power to hire, (2) the
payment of wages, (3) the power to dismiss, and (4) the power to control -- the last being the
most important element.[38]

Procedural Due Process Observed

Private respondent had been duly informed of the pendency of the illegal dismissal case, but it
chose not to participate therein without any known justifiable cause. The labor arbiter sent
notices of hearing or arbitration to the parties, requiring them to submit position papers at 1:30
p.m. on November 14, 1992.[60] Respondent Corfarm did not attend the hearing. According to
Respondent NLRC, there was no proof that Respondent Corfarm received such notice. In any
case, petitioner filed a Motion to Admit Amended Complaint on December 23, 1992. Again,
another notice for hearing or arbitration on January 7, 1993 was sent to the parties.[61] This
was received by petitioner’s counsel as evidenced by the registry return receipt duly signed by
private respondent’s counsel, Atty. Alfonso Bince, Jr. It was only on January 28, 1993,
however, that Atty. Bince entered his appearance as counsel for Respondent Corfarm.[62] On
May 10, 1993, Corfarm was again given a new period of ten (10) days within which to submit its

12
position paper and documentary evidence; “otherwise, [the labor arbiter] will be constrained to
resolve this case based on available evidence on record.”[63] As evidenced by a registry return
receipt, a copy of said directive was received by respondent’s counsel on May 25, 1993. Still
and all, Corfarm failed to file its position paper. Clearly, private respondent was given an
opportunity to present its evidence, but it failed or refused to avail itself of this opportunity
without any legal reason. Due process is not violated where a person is given the opportunity to
be heard, but chooses not to give his side of the case.[64]

Labor Arbiter’s Decision Based

on Credible, Competent and Substantial Evidence

Contrary to the conclusions of the NLRC and the arguments of private respondent, the findings
of the labor arbiter on the question of illegal dismissal were based on credible, competent and
substantial evidence.

It is to be borne in mind that proceedings before labor agencies merely require the parties to
submit their respective affidavits and position papers. Adversarial trial is addressed to the
sound discretion of the labor arbiter. To establish a cause of action, only substantial evidence is
necessary, i.e., such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds equally reasonable might conceivably opine
otherwise.[65] As ruled in Manalo vs. Roldan-Confesor:[66]

“Clear and convincing proof is ‘x x x more than mere preponderance, but not to extent of such
certainty as is required beyond reasonable doubt as in criminal cases x x x’ (fn: Black’s Law
Dictionary, 5th Ed., p. 227, citing Fred C. Walker Agency, Inc. v. Lucas, 215 Va. 535, 211 S.E.
2d 88, 92) while substantial evidence ‘x x x consists of more than a mere scintilla of evidence
but may be somewhat less than a preponderance x x x x’ (fn: Ibid., p. 1281, citing Marker v.
Finch, D.C. Del., 322 F. Supp. 905, 910) Consequently, in the hierarchy of evidentiary values,
We find proof beyond reasonable doubt at the highest level, followed by clear and convincing
evidence, preponderance of evidence, and substantial evidence, in that order.”

Evidence to determine the validity of petitioner’s claims, which the labor arbiter relied upon, was
available to Respondent NLRC. These pieces of evidence are in the case records, as aptly
pointed out by the solicitor general:[67]

It must be stressed that labor laws mandate the speedy administration of justice, with least
attention to technicalities but without sacrificing the fundamental requisites of due process. In
this light, the NLRC, like the labor arbiter, is authorized to decide cases based on the position
papers and other documents submitted, without resorting to the technical rules of evidence.[68]
Verily, Respondent NLRC noted several documentary evidence sufficient to arrive at a just
decision. Indeed, the evidence on record clearly supports the conclusion of the labor arbiter
that the petitioners were employees of respondent, and that they were illegally dismissed.[69]

“The last issue: Instead of sitting down with the individual complainants or the union officers to
discuss their demands, respondents resorted to mass lay-off of all the members of the union
and replaced them with outsiders. This is clearly a case of union busting which Art. 248 of the
Labor Code prohibits. Art. 248 provides that ‘It shall be unlawful for an employer to commit any

12
of the following unfair labor practice (a) To interfere with, restrain or coerce employees in the
exercise of their right to self-organization; (b) x x x (c) To contract out service or functions being
performed by union members when such will interfere with, restrain or coerce employees in the
exercise of their rights to self-organization.’”

WHEREFORE, both petitions are GRANTED. In G.R. No. 113542, Respondent Laguesma’s
Orders dated January 4, 1994 and January 27, 1994 are REVERSED and SET ASIDE; whereas
his Order dated September 7, 1993 is REINSTATED. In G.R. No. 114911, Respondent NLRC’s
Resolutions promulgated on February 16, 1994 and March 28, 1994 are likewise REVERSED
AND SET ASIDE. The Labor Arbiter’s decision dated September 14, 1993 is reinstated with
MODIFICATIONS as set out in this Decision. Respondent NLRC is ORDERED to COMPUTE
the monetary benefits awarded in accordance with this Decision and to submit its compliance
thereon within thirty days from notice of this Decision.

SO ORDERED.

12
Ruga et. Al. vs. NLRC (G.R. No. L-72654-61 January 22, 1990)

Facts:

Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II, one
of several fishing vessels owned and operated by private respondent De Guzman Fishing
Enterprises which is primarily engaged in the fishing business with port and office at Camaligan,
Camarines Sur.

For services rendered in the conduct of private respondent's regular business of "trawl" fishing,
petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman,
cashier of private respondent.

On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de
Guzman, president of private respondent, to proceed to the police station at Camaligan,
Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea
to the prejudice of private respondent. Petitioners denied the charge claiming that the same was
a countermove to their having formed a labor union and becoming members of Defender of
Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on
September 3, 1983.

On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S.
Coralde rendered a joint decision dismissing all the complaints of petitioners on a finding that a
"joint fishing venture" and not one of employer-employee relationship existed between private
respondent and petitioners.

Issue:

The issue to be resolved in the instant case is whether or not the fishermen-crew members of
the trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman
Fishing Enterprises, and if so, whether or not they were illegally dismissed from their
employment.

Held:

Fishermen crew members who were recruited by one master fisherman locally known as
"maestro" in charge of recruiting others to complete the crew members are considered
employees, not industrial partners, of the boat-owners. Also, there existed an employer-
employee relationship between the boat-owner and the fishermen crew members not only
because they worked for and in the interest of the business of the boat-owner but also because
they were subject to the control, supervision and dismissal of the boat-owner.

WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of
the National Labor Relations Commission dated May 30,1985 is hereby REVERSED and SET
ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any
equivalent positions with 3-year backwages and other monetary benefits under the law. No
pronouncement as to costs.

12
ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of
Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and
Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA
FIMS, respondents.

FACTS:

The parties present conflicting sets of facts.

Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on
18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months
later, he was designated Assistant Electrician with a weekly salary of P400.00, which was
increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician
with a weekly salary of P475.00, which was increased to P539.00 in September 1991.

Petitioner Paulino Enero, on his part, claims that private respondents employed him in June
1990 as a member of the shooting crew with a weekly salary of P375.00, which was increased
to P425.00 in May 1991, then to P475.00 on 21 December 1991.

Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the
shooting area as instructed by the cameraman, returning the equipment to Viva Films'
warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the
cameraman and/or director may assign.

Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria
Cesario, to facilitate their request that private respondents adjust their salary in accordance with
the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario
would agree to increase their salary only if they signed a blank employment contract. As
petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then
refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot
was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June
1992. He was again asked to sign a blank employment contract, and when he still refused,
private respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal
dismissal before the Labor Arbiter.

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:

WHEREFORE, judgment is hereby rendered declaring that complainants were illegally

dismissed.

Respondents are hereby ordered to reinstate complainant to their former positions without loss
[of] seniority rights and pay their backwages starting July 21, 1992 to December 31, 1993
temporarily computed in the amount of P38,000.00 for complainant Paulino Enero and
P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.

Respondents are ordered to pay also attorney's fees equivalent to ten (10%) and/or P8,400.00
on top of the award.

12
Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its
decision of 10 February 1995, the NLRC found the following circumstances of petitioners' work
"clearly established:"

1. Complainants [petitioners herein] were hired for specific movie projects

and their employment was co-terminus with each movie project the
completion/termination of which are pre-determined, such fact being
made known to complainants at the time of their engagement.

xxx xxx xxx

2 Each shooting unit works on one movie project at a time. And the work
of the shooting units, which work independently from each other, are not
continuous in nature but depends on the availability of movie projects.

3. As a consequence of the non-continuous work of the shooting units,

the total working hours logged by complainants in a month show extreme
variations. . . For instance, complainant Maraguinot worked for only 1.45
hours in June 1991 but logged a total of 183.25 hours in January 1992.
Complainant Enero logged a total of only 31.57 hours in September 1991
but worked for 183.35 hours the next month, October 1991.

4. Further shown by respondents is the irregular work schedule of

complainants on a daily basis. Complainant Maraguinot was supposed to
report on 05 August 1991 but reported only on 30 August 1991, or a gap
of 25 days. Complainant Enero worked on 10 September 1991 and his
next scheduled working day was 28 September 1991, a gap of 18 days.

5. The extremely irregular working days and hours of complainants' work

explain the lump sum payment for complainants' services for each movie
project. Hence, complainants were paid a standard weekly salary
regardless of the number of working days and hours they logged in.
Otherwise, if the principle of "no work no pay" was strictly applied,
complainants' earnings for certain weeks would be very negligible.

6. Respondents also alleged that complainants were not prohibited from

working with such movie companies like Regal, Seiko and FPJ
Productions whenever they are not working for the independent movie
producers engaged by respondents . . . This allegation was never
rebutted by complainants and should be deemed admitted.

The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken
together, indicated that complainants (herein petitioners) were "project employees."

After their motion for reconsideration was denied by the NLRC in its Resolution of 6 April 1995,
petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees;
(2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor
Arbiter.

12
To support their claim that they were regular (and not project) employees of private
respondents, petitioners cited their performance of activities that were necessary or desirable in
the usual trade or business of private respondents and added that their work was continuous,
i.e., after one project was completed they were assigned to another project. Petitioners thus
considered themselves part of a work pool from which private respondents drew workers for
assignment to different projects. Petitioners lamented that there was no basis for the NLRC's
conclusion that they were project employees, while the associate producers were independent
contractors; and thus reasoned that as regular employees, their dismissal was illegal since the
same was premised on a "false cause," namely, the completion of a project, which was not
among the causes for dismissal allowed by the Labor Code.

Private respondents reiterate their version of the facts and stress that their evidence supports
the view that petitioners are project employees; point to petitioners' irregular work load and work
schedule; emphasize the NLRC's finding that petitioners never controverted the allegation that
they were not prohibited from working with other movie companies; and ask that the facts be
viewed in the context of the peculiar characteristics of the movie industry.

The Office of the Solicitor General (OSG) is convinced that this petition is improper since
petitioners raise questions of fact, particularly, the NLRC's finding that petitioners were project
employees, a finding supported by substantial evidence; and submits that petitioners' reliance
on Article 280 of the Labor Code to support their contention that they should be deemed regular
employees is misplaced, as said section "merely distinguishes between two types of employees,
i.e., regular employees and casual employees, for purposes of determining the right of an
employee to certain benefits."

The OSG likewise rejects petitioners' contention that since they were hired not for one project,
but for a series of projects, they should be deemed regular employees. Citing Mamansag v.
NLRC, the OSG asserts that what matters is that there was a time-frame for each movie project
made known to petitioners at the time of their hiring. In closing, the OSG disagrees with
petitioners' claim that the NLRC's classification of the movie producers as independent
contractors had no basis in fact and in law, since, on the contrary, the NLRC "took pains in
explaining its basis" for its decision.

As regards the propriety of this action, which the Office of the Solicitor General takes issue with,
we rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper
remedy for one who complains that the NLRC acted in total disregard of evidence material to or
decisive of the controversy. 15 In the instant case, petitioners allege that the NLRC's conclusions
have no basis in fact and in law, hence the petition may not be dismissed on procedural or
jurisdictional grounds.

ISSUE:

1. Whether an employer-employee relationship existed between petitioners and private

respondents or any one of private respondents.
2. Whether petitioners were illegally dismissed.

RULING:

The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening
the labor sector, but, we stress, not at the expense of management. Lest it be misunderstood,

12
this ruling does not mean that simply because an employee is a project or work pool employee
even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we
hold today is that once a project or work pool employee has been:

(1) continuously, as opposed to intermittently, re-hired by the same employer for the same
tasks or nature of tasks; and

(2) these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee,pursuant to Article 280 of the
Labor Code and jurisprudence.

To rule otherwise would allow circumvention of labor laws in industries not falling within the
ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of
acquisition of tenurial security by project or work pool employees who have already gained the
status of regular employees by the employer's conduct.

In closing then, as petitioners had already gained the status of regular employees, their
dismissal was unwarranted, for the cause invoked by private respondents for petitioners'
dismissal, viz.: completion of project, was not, as to them, a valid cause for dismissal under
Article 282 of the Labor Code. As such, petitioners are now entitled to back wages and
reinstatement, without loss of seniority rights and other benefits that may have accrued.
Nevertheless, following the principles of "suspension of work" and "no pay" between the end of
one project and the start of a new one, in computing petitioners' back wages, the amounts
corresponding to what could have been earned during the periods from the date petitioners
were dismissed until their reinstatement when petitioners' respective Shooting Units were not
undertaking any movie projects, should be deducted.

Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already
in effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the
Philippines and Bustamante v. NLRC, petitioners are entitled to receive full back wages from the
date of their dismissal up to the time of their reinstatement, without deducting whatever earnings
derived elsewhere during the period of illegal dismissal, subject however, to the above
observations.

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor
Relations Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its
Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been
rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR
Case No. 00-07-03994-92 is REINSTATED, subject, however, to the modification above
mentioned in the computation of back wages.No pronouncement as to costs.

12
Orlando Farm Groves Association vs NLRC
299 SCRA 364
GR No 129076 November 25, 1998

Parties:

ORLANDO FARMS GROWERS ASSOCIATION/GLICERIO AÑOVER, petitioner,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION),
ANTONIO PAQUIT, ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO,
REBECCA MOREN, MARCELINA HONTIVEROS, MARTIN ORDONO, TITO ORDONO, FE
ORDONO, ERNIE COLON, EUSTIQUIO GELDO, DANNY SAM, JOEL PIAMONTE,
FEDERICO PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN, JR.
and BERNARDO OPERIO, respondents.

Romero, J.

Facts:
Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Añover as its
President, is an association of landowners engaged in the production of export quality bananas
located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole purpose of dealing
collectively with Stanfilco on matters concerning technical services, canal maintenance,
irrigation and pest control, among others. Respondents, on the other hand, were hired as farm
workers by several member-landowners but; nonetheless, were made to perform functions as
packers and harvesters in the plantation of petitioner association.
After respondents were dismissed on various dates from January 8, 1993 to July 30,
1994, several complaints were filed against petitioner for illegal dismissal and monetary
benefits.

Issues:
Petitioner alleged that the NLRC erred in finding that respondents were its employees
and not of the individual landowners which fact can easily be deduced from the payments made
by the latter of respondent's Social Security System (SSS) contributions. Moreover, it could
have never exercised the power of control over them with regard to the manner and method by
which the work was to be accomplished, which authority remain vested with the landowners
despite becoming members thereof.

Held:
Held in the case of Filipinas Broadcasting Network, Inc. v. NLRC, 3 the following are generally
considered in the determination of the existence of an employer-employee relationship;

(1) the manner of selection and engagement;

(2) the payment of wages;
(3) the presence or absence of the power of dismissal;
(4) the presence or absence of the power of control;

During the subsistence of the association, several circulars and memoranda were issued
concerning, among other things, absences without formal request, loitering in the work area and
disciplinary measures with which every worker is enjoined to comply. Furthermore, the
employees were issued identification cards which the Court, in the case of Domasig v.

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NLRC, construed, not only as a security measure but mainly to identify the holder as a bonafide
employee of the firm. However, what makes the relationship explicit is the power of the
petitioner to enter into compromise agreements involving money claims filed by three of its
employees, namely: Lorna Paquit, Lovella Dorlones and Jasmine Espanola

In spite of the overwhelming evidence sufficient to justify a conclusion that respondents

were indeed employees of petitioner, the latter, nevertheless, maintain the preposterous claim
that the ID card, circulars and memoranda were issued merely to facilitate the efficient use of
common resources, as well as to promote uniform rules in the work establishment.

The observations made by the NLRC when it ruled that, while the original purpose of the
formation of the association was merely to provide the landowners a unified voice in dealing
with Stanfilco, petitioner however exceeded its avowed intentions when its subsequent actions
reenforced only too clearly its admitted role of employer.

Factual findings of the NLRC, particularly when they coincide with those of the Labor
Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings
are supported by substantial evidence.

It is settled that in termination disputes, the employer bears the burden of proving that
the dismissal is for just cause, failing which it would mean that the dismissal is not justified and
the employer is entitled to reinstatement. The dismissal of employees must be made within the
parameters of the law and pursuant to the basic tenets of equity, justice and fair play. In Brahm
Industries, Inc. v. NLRC, the Court explained that there are two (2) facets of valid termination of
employment;
(a) the legality of the act of dismissal, i.e., the dismissal must be under any of the just
causes provided under Art. 282 of the Labor Code; and
(b) the legality of the manner of dismissal, which means that there must be observance
of the requirements of due process, otherwise known as the two-notice rule.

Thus, "the employer is required to furnish the employee with a written notice containing a
statement of the cause for termination and to afford said employee ample opportunity to be
heard and to defend himself with the assistance of his representative, if he so desires. The
employer is also required to notify the worker in writing of the decision to dismiss him, stating
clearly the reasons therefore."

Decision:
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of
the National Labor Relations Commission dated September 6, 1995 is AFFIRMED subject to
the deletion of the award of moral damages and attorney's fees. The Court, however, is
remanding this case to Labor Arbiter Newton R. Sancho to specify in the dispositive portion of
his decision the names of the respondents and the amount that each is entitled to.

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G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP,
respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruz for private respondent.

DECISION

REGALADO, J p:

Facts: Petitioner National Sugar Refineries Corporation, 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.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all
employees, from rank-and-file to department heads. As a result, all positions were re-evaluated,
and all employees including the members of respondent union were granted salary adjustments
and increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of
respondent union were treated in the same manner as rank-and file employees. As such, they
used to be paid overtime, rest day and holiday pay. With the implementation of the JE Program,
the following adjustments were made: (1) the members of respondent union were re-classified
under levels S-5 to S-8 which are considered managerial staff for purposes of compensation
and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay
prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per
month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was
increased on top of alignment adjustments; (4) they were entitled to increased company COLA
of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work.

Two years after the implementation of the JE Program, 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.

Executive Labor Arbiter decided in favour of labor.

Respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor
arbiter on the ground that the members of respondent union are not managerial employees, as
defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime,
rest day and holiday pay. Respondent NLRC declared that these supervisory employees are
merely exercising recommendatory powers subject to the evaluation, review and final action by

13
their department heads; their responsibilities do not require the exercise of discretion and
independent judgment; they do not participate in the formulation of management policies nor in
the hiring or firing of employees; and their main function is to carry out the ready policies and
plans of the corporation

Issue: Whether supervisory employees, should be considered as officers or members of the

managerial staff, and hence are not entitled to overtime rest day and holiday pay.

Held: 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:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, 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."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and
holiday pay, and in ruling that the latter are not managerial employees, adopted the definition
stated in the aforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of
respondent union are entitled to overtime, rest day and holiday pay, said employees should be
considered as "officers or members of the managerial staff" as defined under Article 82, Book III
of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I,
Book III of the Rules to Implement the Labor Code, to wit:

"Art. 82 Coverage. — The provisions of this title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in Appropriate regulations.

"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff." (Emphasis supplied.)

xxx xxx xxx

'Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if they
qualify for exemption under the condition set forth herein:

xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions, namely:

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(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:

(2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change of
status of other employees are given particular weight.

(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:

(1) The primary duty consists of the performance of work directly related to management
policies of their employer;

(2) Customarily and regularly exercise discretion and independent judgment;

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

(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."

It is the submission of petitioner that while the members of respondent union, as supervisors,
may not be occupying managerial positions, 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. In other words, for purposes of
forming and joining unions, certification elections, collective bargaining, and so forth, the union
members are supervisory employees. In terms of working conditions and rest periods and
entitlement to the questioned benefits, however, they are officers or members of the managerial
staff, hence they are not entitled thereto.

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. Out of its concern for those with less privileges in
life, this Court has inclined more often than not toward the worker and upheld his cause in his
conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice
is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine. 5

The question whether a given employee is exempt from the benefits of the law is a factual one
dependent on the circumstances of the particular case, In determining whether an employee is
within the terms of the statutes, the criterion is the character of the work performed, rather than
the title of the employee's position.

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A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily
show that these supervisory employees are under the direct supervision of their respective
department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling communicating and in making decisions in attaining the company's
set goals and objectives. These supervisory employees are likewise responsible for the effective
and efficient operation of their respective departments. More specifically, their duties and
functions include, among others, the following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee
shifting scheduled and manning complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary
action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more
productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends

necessary action for their development/advancement;

5) represents the superintendent or the department when appointed and authorized by the
former;

6) coordinates and communicates with other inter and intra department supervisors when
necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service

and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed
by all NASUREFCO employees, recommends revisions or modifications to said rules when
deemed necessary, and initiates and prepares reports for any observed abnormality within the
refinery;

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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.

Under the facts obtaining in this case, we are 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.

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations
Commission, are hereby ANNULLED and SET ASIDE for having been rendered and adopted
with grave abuse of discretion, and the basic complaint of private respondent union is
DISMISSED.

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 AUTO BUS TRANSPORT SYSTEMS, INC. vs. ANTONIO BAUTISTA
G.R. No. 156367 May 16, 2005

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio,
Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on
commission basis, 7% of the total gross income per travel, on a twice a month basis. While he
was driving he accidentally bumped the rear portion of Autobus No. 124. 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 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. Bautista instituted
a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and
service incentive leave pay against Autobus.

Issue: Whether or not Bautista, who is paid on purely commission basis, is entitled to the grant
of service incentive leave pay.

Held: Employees engaged on task or contract basis or purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the
classification of field personnel.

“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. They 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.

The 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. It is of judicial notice that along the
routes that are plied by these bus companies, there are its inspectors assigned at strategic
places who board the bus and inspect the passengers, xxxx. There is also the mandatory once-
a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical
xxx. They too, must be at specific place at specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In each and every
depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its
crew leave the premises at specific times and arrive at the estimated proper time. These, are
present in the case at bar. The driver, the complainant herein, was therefore under constant
supervision while in the performance of this work. He cannot be considered a field personnel.

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 UNION OF FILIPRO EMPLOYEES vs. BENIGNO VIVAR, JR.
G.R. No. 79255 January 20, 1992

Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with
the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a
ruling on its rights and obligations respecting claims of its monthly paid employees for holiday
pay in the light of the Court's decision in Chartered Bank Employees Association v. Ople.

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On
January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid
employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal restrictions as are provided for in the
Code.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years,
(2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives from the award of the holiday pay, and (3) deduction from the holiday pay award
of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of
251 divisor. Petitioner UFE answered that the award should be made effective from the date of
effectivity of the Labor Code, that their sales personnel are not field personnel and are therefore
entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit
which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of
the Labor Code. He adjudged, however, that the company's sales personnel are field personnel
and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days'
holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration.
Respondent Arbitrator treated the two motions as appeals and forwarded the case to the NLRC
which issued a resolution remanding the case to the respondent arbitrator on the ground that it
has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of
the Labor Code. However, in a letter 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.

Issue: Whether or not Nestle's sales personnel are entitled to holiday pay.

Held: Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agritultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty."

The Court finds that the clause "whose time and performance is unsupervised by the
employer" did not amplify but merely interpreted and expounded the clause "whose actual hours
of work in the field cannot be determined with reasonable certainty." The former clause is still

13
within the scope and purview of Article 82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such employee's time and
performance is constantly supervised by the employer.

The respondent arbitrator's order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition on non-diminution of benefits
found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted
to 261 days, then the dividend, which represents the employee's annual salary, should
correspondingly be increased to incorporate the holiday pay. There is thus no merit in
respondent Nestle's claim of overpayment of overtime and night differential pay and sick and
vacation leave benefits, the computation of which are all based on the daily rate, since the daily
rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use
of 251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations,
shall be resolved in favor of labor." (Article 4). Nevertheless, in order to fully settle the issues,
the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle.

Applying the “operative fact”aforementioned doctrine to the case at bar, it is not far-
fetched that Nestle, relying on the implicit validity of the implementing rule and policy instruction
before this Court nullified them, and thinking that it was not obliged to give holiday pay benefits
to its monthly paid employees, may have been moved to grant other concessions to its
employees, especially in the collective bargaining agreement. This possibility is bolstered by the
fact that respondent Nestle's employees are among the highest paid in the industry. With this
consideration, it would be unfair to impose additional burdens on Nestle when the non-payment
of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date
of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code,
but from the date of promulgation of the IBAA case.

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 SAN MIGUEL BREWERY, INC., vs. DEMOCRATIC LABOR ORGANIZATION, ET AL.,

G.R. No. L-18353 July 31, 1963

FACTS:

Where after the morning roll call the outside or field sales personnel leave the plant of the
company to go on their respective sales routes and they do not have a daily time record but the
sales routes are so planned that they can be completed within 8 hours at most, and they
received monthly salaries and sales commissions in variable amounts, so they are made to
work beyond the required eight hours similar to piece-rate work, pakiao, or commission basis
regardless of the time employed, and the employees participation depends on their industry, it is
held that the Eight Hour Labor Law has no application to said outside or field sales personnel
and that they are not entitled to overtime compensation.

ISSUE:

Whether the Eight Hour Labor Law has application to Outside or Field Sales Personnel and
whether they are entitled to overtime compensation.

RULING:

The Eight-Hour Labor Law only has application where an employee or laborer is paid on a
monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made
to work beyond the requisite period of 8 hours, he should be paid the additional compensation
prescribed by law. This law has no application when the employee or laborer is paid on a piece-
work, "pakiao", or commission basis, regardless of the time employed. The philosophy behind
this exemption is that his earnings in the form of commission based on the gross receipts of the
day. His participation depends upon his industry so that the more hours he employs in the work
the greater are his gross returns and the higher his commission. This philosophy is better
explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, as follows:

The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a
greater extent, works individually. There are no restrictions respecting the time he shall
work and he can earn as much or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as extra compensation.
He works away from his employer's place of business, is not subject to the personal
supervision of his employer, and his employer has no way of knowing the number of
hours he works per day.

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 Manuel L. Lara, et al. vs Petronilo Del Rosario, Jr.
April 20, 1954 GR No. L-6339

Montemayor, J.:

On 1950, Petronilo Del Rosario Jr, defendant, owner of the twenty five taxi cabs,
operated a taxi business, of which he employed three mechanics and 49 chauffeurs. On
September 4, 1950, without giving the said mechanics and chauffeurs 30 days advance notice,
Del Rosario sold his 25 cabs to another transportation company which resulted to
unemployment to the three mechanics and 49 chauffeurs. They brought this action against Del
Rosario to recover compensation for overtime work rendered beyond eight and on Sundays and
legal holidays, and one month salary. Subsequently, the three mechanics withdrew their claims,
so only the 49 chauffeurs remained as plaintiffs. The defendant filed a motion for dismissal of
the complaint on the ground that it stated no cause of action and the trial court for the time being
denied the motion saying that it will be considered when the case was heard on the merits. After
trial the complaint was dismissed. Plaintiffs appealed from the order of dismissal to the Court of
Appeals.
The parties are agreed that the plaintiffs as chauffeurs received no fixed compensation
based on the hours or the period of time that they worked. Rather, they were paid on the
commission basis, that is to say, each driver received 20 per cent of the gross returns or
earnings from the operation of his taxi cab. Plaintiffs claim that as a rule, each drive operated a
taxi 12 hours a day with gross earnings ranging from P20 to P25, receiving therefrom the
corresponding 20 per cent share ranging from P4 to P5, and that in some cases, especially
during Saturdays, Sundays, and holidays when a driver worked 24 hours a day he grossed from
P40 to P50, thereby receiving a share of from P8 to P10 for the period of twenty-four hours.
The reason given by the trial court in dismissing the complaint is that the defendant
being engaged in the taxi or transportation business which is a public utility, came under the
exception provided by the Eight-Hour Labor Law (Commonwealth Act No. 444); and because
plaintiffs did not work on a salary basis, that is to say, they had no fixed or regular salary or
remuneration other than the 20 per cent of their gross earnings "their situation was therefore
practically similar to piece workers.
As to the month pay (mesada) under article 302 of the Code of Commerce, article 2270
of the new Civil Code (Republic Act 386) appears to have repealed said Article 302 when it
repealed the provisions of the Code of Commerce governing Agency. This repeal took place on
August 30, 1950, when the new Civil Code went into effect, that is, one year after its publication
in the Official Gazette. The alleged termination of services of the plaintiffs by the defendant took
place according to the complaint on September 4, 1950, that is to say, after the repeal of Article
302 which they invoke. Moreover, said Article 302 of the Code of Commerce, assuming that it
were still in force speaks of "salary corresponding to said month." commonly known as
"mesada." If the plaintiffs herein had no fixed salary either by the day, week or month, then
computation of the month's salary payable would be impossible. Article 302 refers to employees
receiving a fixed salary. Dr. Arturo M. Tolentino in his book entitled "Commentaries and
Jurisprudence on the Commercial Laws of the Philippines," Vol. 1, 4th edition, p. 160, says that
article 302 is not applicable to employees without fixed salary

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 MANILA TERMINAL CO. INC. v. CIR
G.R. No. L-4148 July 16, 1952

Ponente: PARAS, C. J.:

FACTS: Manila Terminal Company, Inc. undertook the arrastre service in some of the piers in
Manila's Port Area at the request and under the control of the United States Army. The
petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation of P3 per
day for the day shift and P6 per day for the night shift.

The watchmen of the petitioner continued in the service with a number of substitutions and
additions, their salaries having been raised during the month of February to P4 per day for the
day shift and P6.25 per day for the nightshift. The private respondent sent a letter to Department
of Labor requesting that the matter of overtime pay be investigated. But nothing was done by
the Dept of Labor.

Later on, the petitioner instituted the system of strict eight-hour shifts.

The private respondent filed an amended petition with the CIR praying, among others, that the
petitioner be ordered to pay its watchmen or police force overtime pay from the commencement
of their employment.

By virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President
of the Philippines, the entire police force of the petitioner was consolidated with the Manila
Harbor Police of the Customs Patrol Service, a Government agency under the exclusive control
of the Commissioner of Customs and the Secretary of Finance The Manila Terminal Relief and
Mutual Aid Association will hereafter be referred to as the Association.

Judge V. Jimenez Yanson of the CIR in his decision ordered the petitioner to pay to its police
force but regards to overtime service after the watchmen had been integrated into the Manila
Harbor Police, the has no jurisdiction because it affects the Bureau of Customs, an
instrumentality of the Government having no independent personality and which cannot be sued
without the consent of the State.
The petitioner filed a motion for reconsideration. The Association also filed a motion for
reconsideration in so far its other demands were dismissed. Both resolutions were denied.

The public respondent decision was to pay the private respondents their overtime on regular
days at the regular rate and additional amount of 25 percent, overtime on Sundays and legal
holidays at the regular rate only, and watchmen are not entitled to night differential pay for past
services. The petitioner has filed a present petition for certiorari.

ISSUES: 1.) Whether or not the CIR has no jurisdiction to render a money judgment involving
obligation in arrears?
2.) Whether or not the agreement under which its police force were paid certain
specific wages for twelve-hour shifts, included overtime compensation.

3.) Whether or not the nullity or invalidity of the employment contract precludes any
recovery by the Association.

14
 4.) Whether or not the Commonwealth Act No. 4444 does not authorize recovery of
back overtime pay.

HELD: The Supreme Court affirmed the appealed decision that the petitioner's watchmen is
entitled to extra compensation only from the dates they respectively entered the service of the
petitioner, hereafter to be duly determined by the Court of Industrial Relations.

1.) The Court of Industrial Relations has no jurisdiction to award a money judgment was already
overruled by this Court on the case of Detective & protective Bureau, Inc. vs. Court of Industrial
Relations and United Employees Welfare Association that under Commonwealth Act No. 103
the Court is empowered to make the order for the purpose of settling disputes between the
employer and employee.

2.) Based on the case of Detective & Protective Bureau, Inc. vs. Court of Industrial Relations
and United Employees Welfare Association, the law gives them the right to extra compensation.
And they could not be held to have impliedly waived such extra compensation, since it can not
expressly be waived.

3.) The employee in rendering extra service at the request of his employer has a right to
assume that the latter has complied with the requirement of the law, and therefore has obtained
the required permission from the Department of Labor. This was based on the case of Gotamo
Lumber Co. vs. Court of Industrial Relations, wherein both parties are in pari delicto. Moreover,
the Eight-Hour Law, in providing that "any agreement or contract between the employer and the
laborer or employee contrary to the provisions of this Act shall be null avoid ab initio.”

4.) Based on Fair Labor Standards Act of the United States which provides that "any employer
who violates the provisions of section 206 and section 207 of this title shall be liable to the
employee or employees affected in the amount of their unpaid minimum wages or their unpaid
overtime compensation as the case may be," — a provision not incorporated in Commonwealth
Act No. 444, our Eight-Hour Labor Law.

We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444
expressly provides for the payment of extra compensation in cases where overtime services are
required, with the result that the employees or laborers are entitled to collect such extra
compensation for past overtime work. To hold otherwise would be to allow an employer to
violate the law by simply, as in this case, failing to provide for and pay overtime compensation.

14
 Interphil Laboratories Employees Union- FFW, et. al vs. Interphil Laboratories
{G.R. No. 142824, December 19, 2001

Facts: Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent
of the rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the
business of manufacturing and packaging pharmaceutical products. They had a Collective
Bargaining Agreement (CBA) effective from 01 August 1990 to 31 July 1993.

Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1 Vice-
President-Human Resources Department of respondent company, was approached by Nestor
Ocampo, the union president, and Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration of the CBA which was set to
expire in a few months. Salazar told the union officers that the matter could be best discussed
during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more
about the CBA status and received the same reply from Salazar. In April 1993, Ocampo
requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and
a meeting was held on 15 April 1993 where the union officers asked whether Salazar would be
amenable to make the new CBA effective for two (2) years, starting 01 August 1993. Salazar,
however, declared that it would still be premature to discuss the matter and that the company
could not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-
and-file employees of the company refused to follow their regular two-shift work schedule of
from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m.,
respectively, the employees stopped working and left their workplace without sealing the
containers and securing the raw materials they were working on. When Salazar inquired about
the reason for their refusal to follow their normal work schedule, the employees told him to "ask
the union officers." To minimize the damage the overtime boycott was causing the company,
Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico
Gonzales, a union director, told Salazar that the employees would only return to their normal
work schedule if the company would agree to their demands as to the effectivity and duration of
the new CBA. Salazar again told the union officers that the matter could be better discussed
during the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the
answer of the company, the overtime boycott continued. In addition, the employees started to
engage in a work slowdown campaign during the time they were working, thus substantially
delaying the production of the company.2
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and
the latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations
Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work
slowdown" which, according to respondent company, amounted to illegal strike. The case,
docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R.
Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November
1993, respondent company filed with the Office of the Secretary of Labor and Employment a
petition for assumption of jurisdiction.

14
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union staged a
strike.

On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over
the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to "immediately accept all striking workers, including the fifty-three (53) terminated
union officers, shop stewards and union members back to work under the same terms and
conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its
employees in 1993."
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and
adopted the report in his Order, dated 13 August 1997.
Hence, the present recourse where petitioner alleged

Issue: Whether or not the Honorable Fifth Division of Court of Appeals committed grave abuse?

Decision: On the matter of the authority and jurisdiction of the Secretary of Labor and
Employment to rule on the illegal strike committed by petitioner union, it is undisputed that the
petition to declare the strike illegal before Labor Arbiter Caday was filed long before the
Secretary of Labor and Employment issued the assumption order on 14 February 1994.
However, it cannot be denied that the issues of "overtime boycott" and "work slowdown"
amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute
before the Labor Secretary. In fact, on 16 March 1994, petitioner union even asked Labor
Arbiter Caday to suspend the proceedings before him and consolidate the same with the case
before the Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and
Employment's jurisdiction over labor and labor-related disputes was already settled in
International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union
(ALU).
Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that
the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record,
must be accorded due respect by the Supreme Court.12 Here, the report and recommendation
of Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was
likewise affirmed by the Court of Appeals. We see no reason to depart from their findings.

WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of
the Court of Appeals is AFFIRMED.
SO ORDERED.

14
Pan American World Airways System Vs. Pan American Employees Association

G.R. No. L-16275 February 23, 1961

Facts:

The employees of Pan American World Airways System alleges that the company does
not provide them of a one-hour break period. The employees were asked to wait in case of any
emergencies while having their break or they will be reprimanded, thus the petition of the
employees to ask the court for a proper compensation from the employers. The employees
allege that the said one-hour break actually constitutes working over time.

Issue:

Whether or not the time given to the employees for break is considered an over time?

Held:

The Industrial Court's order for permanent adoption of a straight 8-hour shift including
the meal period was but a consequence of its finding that the meal hour was not one of
complete rest, but was actually a work hour, since for its duration, the laborers had to be on
ready call. Of course, if the Company practices in this regard should be modified to afford the
mechanics a real rest during that hour (f. ex., by installing an entirely different emergency crew,
or any similar arrangement), then the modification of this part of the decision may be sought
from the Court below. As things now stand, we see no warrant for altering the decision.

The judgment appealed from is affirmed. Costs against appellant.

14
 University of Pangasinan Faculty Union vs. University of Pangasinan
G.R. No. L-63122 Feburuary 20, 1984

Facts:

The petitioner’s members are full time professors, instructors, and teachers of the respondent
University. The teachers in the college level teach for a normal duration of ten (10) months in a
school year, divided into two (2) semesters of five months each, excluding the two-month
summer vacation. These teachers are paid their salaries on a regular monthly basis.

In November and December, 1981, the petitioner’s members were fully paid their regular
monthly salaries. However, from November 7 to December 5, during the semestral break, they
were not paid their emergency cost of living allowance(ECOLA). The University claims that the
teachers are not entitled thereto because the semestral break is not an integral part of the
school year and there being no actual services rendered by the teachers during said period, the
principle of “No work, no pay” appllies.

Issue:

Whether or not petitioner members are not entitled to ECOLA under “No work, no pay” principle.

Held:

The “No work, no pay” does not apply in the instant case. The petitioner’s members received
their regular salaries during this period. It is clear from the aforeqouted provision of the law that
it contemplates a “no work” situation where the employees voluntarily absent themselves.
Petitioners, in the case at bar certainly do not, ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained to take mandatory leave from work. For this,
they cannot be faulted nor can they be begrudged that which is due them under the law. To a
certain extent, the private respondent can specify dates when no classes would be held..
Surely, it was no the intention of the framers of the law to allow employers to withhold employee
benefits by simple expedient of unilaterally imposing “no work” days and consequently avoiding
compliance with the mandate of the law for these days.

Thus, the legal principles of “No work, no pay; No pay, no ECOLA” must necessarily give way to
the purpose of the law to augment the income of the employees to enable them to cope with the
harsh living conditions brought about by inflation; and to protect employees and their wages
against the ravages brought by these conditions.

14
G.R. No. L-9265 April 29, 1957

LUZON STEVEDORING CO., INC., petitioner,

vs.
LUZON MARINE DEPARTMENT UNION and THE HON. MODESTO CASTILLO, THE HON.
JOSE S. BAUTISTA, THE HON. V. JIMENEZ YANSON and THE HON. JUAN L. LANTING,
Judges of the Court of Industrial Relations, respondents.

FACTS:

On June 21, 1948, herein respondent Luzon Marine Department Union filed a petition with the
Court of Industrial Relations containing several demands against herein petitioner Luzon
Stevedoring Co., Inc., among which were the petition for full recognition of the right of
COLLECTIVE bargaining, close shop and check off. However, on July 18, 1948, while the case
was still pending with the CIR, said labor union declared a strike which was ruled down as illegal
by this Court in G.R. No. L-2660 promulgated on May 30, 1950.

After the parties had submitted exhaustive memoranda, the trial Judge rendered a decision on
February 10, 1955, finding that the company gave said employees 3 free meals every day and
about 20 minutes rest after each mealtime; that they worked from 6:00 am. to 6:00 p.m. every
day including Sundays and holidays, and for work performed in excess of 8 hours, the officers,
patrons and radio operators were given overtime pay in the amount of P4 each and P2 each for
the rest of the crew up to March, 1947, and after said date, these payments were increased to
P5 and P2.50, respectively, until the time of their separation or the strike of July 19, 1948; that
when the tugboats underwent repairs, their personnel worked only 8 hours a day excluding
Sundays and holidays; that although there was an effort on the part of claimants to show that
some had worked beyond 6:00 p.m., the evidence was uncertain and indefinite and that
demand was, therefore, denied; that respondent Company, by the nature of its business and as
defined by law (Section 18-b of Commonwealth Act as amended) is considered a public service
operator by the Public Service Commission in its decision in case No. 3035-C entitled
"Philippine Shipowners. Association vs. Luzon Stevedoring Co., Inc., et al."(Exh. 23), and,
therefore, exempt from paying additional remuneration or compensation for work performed on
Sundays and legal holidays, pursuant to the provisions of section 4 of Commonwealth Act No.
444 (Manila Electric Co. vs. Public Utilities Employees Association, 79 Phil., 408. 44 Off. Gaz.,
1760); and ruled that:

The Luzon Marine Department Union, through counsel, therefore, filed a motion for
reconsideration praying that the decision of February 10, 1955, be modified so as to declare and
rule that the members of the Union who had rendered services from 6:00 a.m. to 6:00 p.m. were
entitled to 4 hours' overtime pay; that allotted to the taking of their meals should not be
deducted from the 4 hours of overtime rendered by said employees, that the amounts of P3 and
P2 set aside for the daily meals of the employees be considered as part of their actual
compensation in determining the amount due to said employees separated from the service
without just cause be paid their unearned wages and salaries from the date of their separation
up to the time the decision in case L-2660 became final; and for such other relief as may be just
and equitable in the premises.

14
Luzon Stevedoring Co., Inc. also sought for the reconsideration of the decision only in so far as
it interpreted that the period during which a seaman is aboard a tugboat shall be considered as
"working time" for the purpose of the Eight-Hour-Labor Law.

In pursuance of Section 1 of Commonwealth Act No. 103, as amended by Commonwealth Act

No. 254 and further amended by Commonwealth Act No. 559, the motions for reconsideration
were passed upon by the Court en banc, and on June 6, 1955, a resolution modifying the
decision of February 10, 1955, was issued, in the sense that the 4 hours of overtime work
included in the regular daily schedule of work from 6:00 a.m. to 6:00 p.m. should be paid
independently of the so-called "coffee-money", after making a finding that said extra amounts
were given to crew members of some tugboats for work performed beyond 6:00 p.m. over a
period of some 16 weeks. The Company's motion for reconsideration was denied.

From this resolution, the Luzon Stevedoring Co., Inc. filed the present petition for certiorari and
when the Court of Industrial Relations, acting upon said Company's motion for clarification,
ruled that the 20 minutes' rest given the claimants after mealtime should not be deducted from
the 4 hours of overtime worked performed by said claimants, petitioner filed a supplemental
petition for certiorari dated September 5, 1955, and both petitions were given due course by this
Court.

ISSUE:

WHETHER OR NOT TIME SPENT BY A SEAMAN ON THE SHIP SHALL BE CONSIDERED

HOURS WORKED

The rule is that a seaman is not required to leave the premises of the boat in order of period of
rest shall not be counted, it being enough that he ceases to work, mar rest completely and leave
at his will the spot where he actually stas while working, go somewhere else, whether within or
outside the premises of said boat. If these requisites are complied with, the period of rest shall
not be counted.

14
G.R. No. Nos. 85122-24 March 22, 1991

JULIO N. CAGAMPAN, SILVINO C. VICERA, JORGE C. DE CASTRO, JUANITO R. DE

JESUS, ARNOLD J. MIRANDA, , MAXIMO O. ROSELLO ANICETO L. BETANA, Petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, ACE MARITIME AGENCIES, INC.,
Respondents.

PARAS, J.:
Fatcs:

Petitioners were deployed on May 7, 1985, and discharged on July 26,1986

Thereafter, petitioners collectively and/or individually filed complaints for non-payment of

overtime pay, vacation pay and terminal pay against private respondent. In addition, they
claimed that they were made to sign their contracts in blank. Likewise, petitioners averred that
although they agreed to render services on board the vessel Rio Colorado managed by Golden
Light Ocean Transport, Ltd., the vessel they actually boarded was MV "SOIC I" managed by
Columbus Navigation. Two (2) petitioners, Jorge de Castro and Juanito de Jesus, charged that
although they were employed as ordinary seamen (OS), they actually performed the work and
duties of Able Seamen (AB).

Private respondent was furnished with copies of petitioners' complaints and summons, but it
failed to file its answer within the reglementary period. Thus, on January 12, 1987, an Order was
issued declaring that private respondent has waived its right to present evidence in its behalf
and that the cases are submitted for decision .

IN VIEW OF THE FOREGOING, judgment is hereby rendered ordering respondent (private

respondent) Ace Maritime Agencies, Inc. to pay the following complainants (petitioners) in the
amounts opposite their names:

Private respondent appealed from the POEA's Decision to the NLRC on August 24, 1987. On
March 16, 1988, the NLRC promulgated a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET
ASIDE and another one entered dismissing these cases for lack of merit. (p. 144, Records)

On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of the NLRC's Decision
(p. 210, Records), but the same was denied by the NLRC for lack of merit in its Resolution
dated September 12, 1988 (p. 212, Records).

1. Respondent NLRC overlooked the fact that private respondent company had repeatedly
failed and refused to file its answer to petitioners' complaints with their comments.

2. Respondent Commission erred in reversing and setting aside the POEA decision and
correspondingly dismissing the appeal of petitioners, allegedly in contravention of law and
jurisprudence.

Private respondent maritime company disclaims the aforesaid allegations of petitioners through
these arguments:

15
1. As borne out by the records, its former counsel attended all the hearings before the POEA
wherein he raised the basis objection that the complaint of petitioners was so generally couched
that a more detailed pleading with supporting documents was repeatedly requested for the latter
.

2. The NLRC never abused its discretion in arriving at assailed decision considering that the
same was based on the Memorandum on Appeal dated August 14, 1987 filed .

3. In the hearings conducted by respondent Commission, all the arguments of both parties were
properly ventilated and considered by said Commission in rendering its decision.

4. The Labor Code basically provides that the rules of evidence prevailing in courts of law or
equity shall not be controlling and it is the spirit and intention of the Code that the Commission
and its members and Labor Arbiters should use every and an reasonable means to ascertain
the facts in each case speedily and objectively and without regard to technicalities of law and
procedure, all in the interest of due process.chanroblesvirtuallawlibrary chanrobles virtual law
library

5. Petitioners' motion for reconsideration of the NLRC decision did not invoke the merits of the
case but merely raised purely technical and procedural matters. Even assuming that private
respondent, technically speaking, waived the presentation of evidence, its appeal to the NLRC
was valid since it involved merely a correct interpretation and clarification of certain provisions of
the contract the validity of which has never questioned.

The Solicitor General, arguing for public respondent NLRC, contends:

1. Petitioners' assumption that a party who is declared to have waived his right to present
evidence also loses his right to appeal from an adverse judgment made against him is a falsity
for, although the technical rules of evidence prevailing in the courts of law or equity do not bind
labor tribunals, even the Rules of Court allows a party declared in default to appeal from said
judgment by attaching the propriety of the relief awarded therein.l

2. The NLRC did not abuse its discretion in the rendition of subject decision because the
evidence presented by petitioners in support of their complaint is by itself sufficient to back up
the decision. The issue of the disallowance of overtime pay stems from an interpretation of
particular provisions

Petitioners' manifest pursuit of their claims before the POEA in the absence of the answer
produced the effect of condoning the failure of private respondent to submit the said answer.
Their submission to the POEA's authority without questioning its jurisdiction to continue the
hearings further strengthens the fact that the alleged technical defect had already been cured.

Notably, it was only when private respondent appealed the NLRC decision to this Court that
petitioners suddenly unearth the issue of private respondent's default in the POEA case. Had
the decision favoring them not been reversed by the NLRC, petitioners could have just clammed
up. They resorted to bringing up a technical, not a substantial, defect in their desperate attempt
to sway the Court's decision in their favor.

15
Issue:
whether or not petitioners should be entitled to terminal pay, We sustain the finding of
respondent NLRC that petitioners were actually paid more than the amounts fixed in their
employment contracts. The pertinent portion of the NLRC decision reads as follows.

On this award for leave pay to the complainants (petitioners), the (private) respondent maintains
that the actually they were paid much more than what they were legally entitled to under their
contract. This fact has not been disputed by the complainants (petitioners.) Thus, as mentioned
in (private) respondent's Memorandum on Appeal dated 14 August 1987, their overpayment is
more than enough and sufficient to offset whatever claims for leave pay they filed in this case
and for which the POEA favorably considered in their favor. For complainant (petitioner) Aniceto
Betana, it appears that under the crew contract his monthly salary was US$400 while he was
overpaid by US$100 as he actually received US$500. In fine, Betana had received at least
US1,400 excess salary for a period of fourteen (14) months which was the period of his
employment. In the case of complainant (petitioner) Jorge C. de Castro his stipulated monthly
pay was US$160 but he actually received a monthly pay of US$200 or an overpayment of
US$560 for the same period of service. For complainant (petitioner) Juanito R. de Jesus, his
overpayment is US$1120. Complainant (petitioner) Arnold J. Miranda has also the same
amount of excess payment as de Jesus. Indeed, We cannot simply ignore this material fact. It is
our duty to prevent a miscarriage of justice for if We sustain the award for leave pay in the face
of undisputed facts that the complainants (petitioners) were even paid much more than what
they should receive by way of leave pay, then they would be enriching themselves at the
expense of others. Accordingly, justice and equity compel Us to deny this award.

We can not agree with the Court below that respondent Malondras should be paid overtime
compensation for every hour in excess of the regular working hours that he was on board his
vessel or barge each day, irrespective of whether or not he actually put in work during those
hours. Seamen are required to stay on board their vessels by the very nature of their duties, and
it is for this reason that, in addition to their regular compensation, they are given free living
quarters and subsistence allowances when required to be on board.

The aforequoted ruling is a reiteration of Our resolution in Luzon Stevedoring Co., Inc. vs. Luzon
Marine Department Union, et al. (G.R. No. 9265, April 29, 1957).

WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the modification that
petitioners Cagampan and Vicera are awarded their leave pay according to the terms of the
contract.

SO ORDERED.

Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur

15
 National Development Company vs. CIR

(G.R. No. L-15422. November 30, 1962)

Facts:

At the National Development Co., a government-owned and controlled corporation, there were
four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6
a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there
was a one-hour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between
6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.

The records disclose that although there was a one-hour mealtime, petitioner nevertheless
credited the workers with eight hours of work for each shift and paid them for the same number
of hours. However, since 1953, whenever workers in one shift were required to continue
working until the next shift, petitioner instead of crediting them with eight hours of overtime work,
has been paying them for six hours only, petitioner that the two hours corresponding to the
mealtime periods should not be included in computing compensation.

After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19, 1959,
holding that mealtime should be counted in the determination of overtime work and accordingly
ordered petitioner to pay P101,407.96 by way of overtime compensation. Petitioner filed a
motion for reconsideration but the same was dismissed by the CIR en banc on the ground that
petitioner failed to furnish the union a copy of its motion.

Issue:

Whether the CIR have jurisdiction and correct in deciding the case.

Held:

The CIR correctly concluded that work in petitioner company was continuous and therefore the
mealtime breaks should be counted as working time for purposes of overtime compensation.

Also, petitioner's motion for reconsideration having been dismissed for its failure to serve a copy
of the same on the union, there is no decision of the CIR en banc that petitioner can bring to this
Court for review.

WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby
affirmed and the appeal is dismissed, without pronouncement as to costs.

15
SIME DARBY PILIPINAS, INC. petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY
SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.

FACTS:

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 —

TO: ALL FACTORY-BASED EMPLOYEES

RE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule of the factory office will
be as follows:

7:45 A.M. — 4:45 P.M. (Monday to Friday)

7:45 A.M. — 11:45 A.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. — 10:30 A.M. and

2:30 P.M. — 3:30 P.M.

Lunch break will be between:

12:00 NN — 1:00 P.M. (Monday to Friday).

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 in Sime Darby International Tire Co., Inc. v. NLRC.
However, 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.

The Labor Arbiter further held that the factory workers would be unjustly enriched if they
continued to be paid during their lunch break even if they were no longer "on call" or required to

15
work during the break. He also ruled that the decision in the earlier Sime Darby case was not
applicable to the instant case because the former involved discrimination of certain employees
who were not paid for their 30-minute lunch break while the rest of the factory workers were
paid; hence, this Court ordered that the discriminated employees be similarly paid the additional
compensation for their lunch break.

Private respondent appealed to respondent National Labor Relations Commission (NLRC)

which sustained the Labor Arbiter and dismissed the appeal. However, upon motion for
reconsideration by private respondent, the NLRC, this time with two (2) new commissioners
replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as the
decision of the Labor Arbiter. The NLRC considered the decision of this Court in the Sime Darby
case of 1990 as the law of the case wherein petitioner was ordered to pay "the money value of
these covered employees deprived of lunch and/or working time breaks." The public respondent
declared that the new work schedule deprived the employees of the benefits of a time-honored
company practice of providing its employees a 30-minute paid lunch break resulting in an unjust
diminution of company privileges prohibited by Art. 100 of the Labor Code, as amended. Hence,
this petition alleging that public respondent committed grave abuse of discretion amounting to
lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor practice in the
implementation of the change in the work schedule of its employees from 7:45 a.m. — 3:45 p.m.
to 7:45 a.m. — 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding
that there was diminution of benefits when the 30-minute paid lunch break was eliminated; (c) in
failing to consider that in the earlier Sime Darby case affirming the decision of the NLRC,
petitioner was authorized to discontinue the practice of having a 30-minute paid lunch break
should it decide to do so; and, (d) in ignoring petitioner's inherent management prerogative of
determining and fixing the work schedule of its employees which is expressly recognized in the
collective bargaining agreement between petitioner and private respondent.

The Office of the Solicitor General filed in a lieu of comment a manifestation and motion
recommending that the petitioner be granted, alleging that the 14 August 1992 memorandum
which contained the new work schedule was not discriminatory of the union members nor did it
constitute unfair labor practice on the part of petitioner.

ISSUE:

1. Whether the change of work schedule, which management deems necessary to

increase production, constitutes unfair labor practice.

RULING:

Every business enterprise endeavors to increase its profits. In the process, it may devise means
to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly management prerogatives. Thus,
management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and discipline, dismissal and recall of workers.
Further, management retains the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. So long as such prerogative is exercised in good
faith for the advancement of the employer's interest and not for the purpose of defeating or

15
circumventing the rights of the employees under special laws or under valid agreements, this
Court will uphold such exercise.

WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations
Commission dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter
dated 26 November 1993 dismissing the complaint against petitioner for unfair labor practice is
AFFIRMED.

15
 GR No L-30452 September 30, 1982

Parties:
MERCURY DRUG CO., INC., petitioner,
vs.
NARDO DAYAO, ET AL., respondents,
Caparas & Ilagan for petitioner.
Gerardo P. Cabo Chan and Elias Banzali for respondents.

Gutierrez, Jr., J.

Facts:

Issues:

Held:

After the passage of Republic Act 875, this Court has not only upheld the industrial court's
assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers
Union (NLU) vs. City Automotive Co., et al., G.R. No. L- 11655, April 29, 1959; Prisco vs. CIR,
et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for work
rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R. No. L9055,
November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L-
8738, May 31, 1957] but has also supported such court's ruling that work performed at night
should be paid more than work done at daytime, and that if that work is done beyond the
worker's regular hours of duty, he should also be paid additional compensation for overtime
work. [Naric vs. Naric Workers' Union. et al., G. R No. L-12075, May 29, 1959, citing Shell Co.
vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case for extra compensation
now falls beyond the powers of the industrial court to decide, would amount to a further
curtailment of the jurisdiction of said court to an extent which may defeat the purpose of the
Magna Carta to the prejudice of labor.' [Luis Recato Dy, et al v-9. CIR, G.R. No. L-17788, May
25,1962]"

The petitioner's contention that its employees fully understood what they signed when they
entered into the contracts of employment and that they should be bound by their voluntary
commitments is anachronistic in this time and age.

The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the
week and, for some stores, up to very late at night because of the nature of the pharmaceutical
retail business. The respondents knew that they had to work Sundays and holidays and at night,
not as exceptions to the rule but as part of the regular course of employment. Presented with
contracts setting their compensation on an annual basis with an express waiver of extra
compensation for work on Sundays and holidays, the workers did not have much choice. The
private respondents were at a disadvantage insofar as the contractual relationship was
concerned. Workers in our country do not have the luxury or freedom of declining job openings
or filing resignations even when some terms and conditions of employment are not only onerous
and inequitous but illegal. It is precisely because of this situation that the framers of the
Constitution embodied the provisions on social justice (Section 6, Article 11) and protection to
labor (Section 9, Article I I) in the Declaration of Principles and State Policies.

15
It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the
rights of workers who are placed in contractually disadvantageous positions and who sign
waivers or provisions contrary to law and public policy.

Decision:
WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from are
affirmed with costs against the petitioner.

15
 G.R. No. L-17068 December 30, 1961

NATIONAL SHIPYARDS AND STEEL CORPORATION, Petitioner, vs. COURT OF

INDUSTRIAL RELATIONS and DOMINADOR MALONDRAS, Respondents.

REYES, J.B.L., J.:

The petitioner NASSCO, a government-owned and controlled corporation, is the owner of

several barges and tugboats used in the transportation of cargoes and personnel in connection
with its business of shipbuilding and repair. In order that its bargeman could immediately be
called to duty whenever their services are needed, they are required to stay in their respective
barges, for which reason they are given living quarters therein as well as subsistence allowance
of P1.50 per day during the time they are on board. However, upon prior authority of their
superior officers, they may leave their barges when said barges are idle.

The 39 crew members of petitioner's tugboat service, including therein respondent Dominador
Malondras, filed a complaint for the payment of overtime compensation .In the course of the
proceeding, the parties entered into a stipulation of facts wherein the NASSCO recognized and
admitted -

4. That to meet the exigencies of the service in the performance of the above work,
petitioners have to work when so required in excess of eight (8) hours a day and/or
during Sundays and legal holidays (actual overtime service is subject to determination
on the basis of the logbook of the vessels, time sheets and other pertinent records of the
respondent).

6. The petitioners are paid by the respondent their regular salaries and subsistence
allowance, without additional compensation for overtime work;

On February 20, 1960, the Court ordered the examiner to make a re-examination of the records
with a view to determining Malondras' overtime service from January 1, 1954 to December 31,
1956, and from January 1, 1957 to April 30, 1957, but without deducting from the compensation
to be paid to him his subsistence allowance. The examiner, on April 23, 1960, submitted a
report giving Malondras an average of sixteen (16) overtime hours a day, on the basis of his
time sheets, and recommending the payment to him of the total amount of P15,242.15 as
overtime compensation during the periods covered by the report.

Issue: Whether or not Malondras is entitled to the 16 hours overtime as a worker in a barge.

Held: The only matter to be determined here is, the number of hours of overtime for which
Malondras should be paid for the periods January 1, 1954 to December 31, 1956, and from
January to April 30, 1957. Respondents urge that this is a question of fact and not subject to
review by this Court, there being sufficient evidence to support the Industrial Court's ruling on
this point. It appears, however, that in crediting Malondras with 16 hours of overtime service
daily for the periods in question, the court examiner relied only on his daily time sheets which,
although approved by petitioner's officers in charge and its auditors, do not show the actual
number of hours of work rendered by him each day.

15
We can not agree with the Court below that respondent Malondras should be paid overtime
compensation for every hour in excess of the regular working hours that he was on board his
vessel or barge each day, irrespective of whether or not he actually put in work during those
hours. Seamen are required to stay on board their vessels by the very nature of their duties, and
it is for this reason that, in addition to their regular compensation, they are given free living
quarters and subsistence allowances when required to be on board. It could not have been the
purpose of our law to require their employers to pay them overtime even when they are not
actually working; otherwise, every sailor on board a vessel would be entitled to overtime for
sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk,
after his regular tour of duty. The correct criterion in determining whether or not sailors are
entitled to overtime pay is not, therefore, whether they were on board and can not leave ship
beyond the regular eight working hours a day, but whether they actually rendered service in
excess of said number of hours.

While Malondras' daily time sheets do not show his actual working hours, nevertheless,
petitioner has already admitted in the Stipulation of Facts in this case that Malondras and his co-
claimants did render service beyond eight (8) hours a day when so required by the exigencies of
the service; and in fact, Malondras was credited and already paid for five (5) hours daily
overtime work during the period from May 1 to December 31, 1957, under the examiner's first
report. Since Malondras has been at the same job since 1954, it can be reasonably inferred that
the overtime service he put in whenever he was required to be aboard his barge all day from
1954 to 1957 would be more or less consistent.

WHEREFORE, the order appealed from is modified in the sense that respondent Malondras
should be credited five (5) overtime hours instead of sixteen (16) hours a day for the periods
covered by the examiner's report.

16
 BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC vs.
PHILIPPINE REFINING CO., INC.,
G.R. No. L-27761 September 30, 1981
ABAD SANTOS, J.:

FACTS: On April 15,1966, the Bisig ng Manggagawa ng Philippine Refining Company,

Inc., as the representative union of the rank and file employees of the Philippine Refining Co.,
Inc., filed with the Court of First Instance of Manila a petition for declaratory relief praying,
among others — That a declaratory judgment be rendered declaring and adjudicating the e
rights and duties of petitioner and respondent under the above quoted provision of their
Collective 13 - agreements and further declaring that the Christmas bonus of one month or thirty
days pay and other de determinable benefits should be included for the purpose of computation
of the overtime pay spread throughout the twelve months period of each year from August, 1963
up to the present and subsequently hereafter; and that respondent be therefore directed to pay
such differential in the overtime pay of all the employees of the herein respondent ;

Petitioner union contended that the respondent company was under obligation to include
the employees' Christmas bonus and other fringe benefits in the computation of their overtime
pay by virtue of the ruling of this Court in the case of NAWASA vs. NAWASA Consolidated
Unions

On May 3, 1966, the Philippine Refining Co.. Inc. filed its answer to the petition alleging,
among others, that never did the parties intend, in the 1965 collective bargaining agreement and
in prior agreements, to include the employees' Christmas bonus and other fringe benefits in the
computation of the overtime pay and that the company precisely agreed to a rate of 50%, which
is much higher than the 25% required by the Eight-Hour Labor Law (Commonwealth Act No.
444, as amended), on the condition that in computing the overtime pay only the "regular base
pay" would be considered. Furthermore, respondent company contended that the ruling of this
Court in the NAWASA case relative to the computation of overtime compensation could not be
applied to its employees since it was a private corporation and not a government-owned or
controlled corporation like the NAWASA.

Court of First Instance of Manila rendered a decision declaring that the term "regular
base pay" in Section 6, Ararticle VI of Exhibit A refers only to "regular base pay" and does not
include Christmas bonus and other fringe benefits. ITheld that while the NAWASA ruling
concerning the meaning of the phrase "regular pay" of the Eight-Hour Labor Law could be
applied to employees of private corporations like the Philippine Refining Company, the same
was, nevertheless, inapplicable to the case at bar which involved the interpretation of the phrase
"regular base pay which was different from "regular pay". It declared that "regular base pay"
referred only to the basic or monthly pay exclusive of Christmas bonus and other fringe benefits.
Furthermore, the validity of the provision of the 1965 collective bargaining agreement
concerning the computation of the employees' overtime pay on the basis of their "regular base
pay" was upheld by the court for the reason that the same was even higher than the overtime
pay prescribed by law. The court emphasized that contracts are binding on the parties insofar
as they are not contrary to law, morals and public order.

This is an appeal from the decision of the Court of First Instance of Manila dated
December 8, 1966, in Civil Case No. 65082, holding that Christmas bonus and other fringe
benefits are excluded in the computation of the overtime pay of the members of the appellant
union under Section 6, Article VI of the 1965 collective bargaining agreement which reads as
follows: Overtime pay at the rate of regular base pay plus 50% thereof shag be paid for

16
all work performed in excess of eight hours on ordinary days within the work week (that is to
say, Monday to Friday).

ISSUE: Whether or not the phrase "regular base pay" as used in the above-quoted
provision of the 1965 CBA includes Christmas bonus and other fringe benefits?

HELD:
NO The phrase "regular base pay" is clear, unequivocal and requires no interpretation. It
means regular basic pay and necessarily excludes money received in different concepts such
as Christmas bonus and other fringe benefits. In this connection it is necessary to remember
that in the enforcement of previous collective bargaining agreements containing the same
provision of overtime pay at the rate of regular base pay plus 50@'c thereof", the overtime
compensation was invariably based only on the regular basic pay, exclusive of Christmas bonus
and other tinge benefits. Appellant union knew all the while of such interpretation and precisely
attempted to negotiate for a provision in the subject collective bargaining agreement that would
include the Christmas bonus and other fringe benefits in the computation of the overtime pay.
Significantly, the appellee company did not agree to change the phrase "regular base pay" as it
could not consent to the inclusion of the fringe benefits in the computation of the overtime pay.
Hence, the appellant union could not question the intended definition of the phrase but could
only claim that the same violated the Nawasa doctrine and insist that the phrase should be
redefined to conform to said doctrine.

In the case at bar, it is admitted that the contractual formula of "regular base pay plus 50%
thereof" yields an overtime compensation which is higher than the result in applying the
statutory formula as elaborated in the Nawasa case. Consequently, its validity is upheld and the
parties are enjoined to accord due respect to it.

Decision appealed from is hereby affirmed in all respects.

16
 PNB vs. PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION
G.R. No. L-30279 July 30, 1982
BARREDO, J.:

Facts:
The case involves a 25 year dispute. PNB assails the decision of the Court of Industrial
Relations pursuant to a jurisprudence (NAWASA vs NAWASA Consolidated Unions) that in the
computation of overtime pay the cost of living pay and longevity pay be taken into account. PNB
questions the ruling doctrine as well as asks the court for the correct interpretation of CA 444 or
the eight hour law in the determination of the overtime pay.

Issue:
Whether or not the cost of living allowance and longevity pay be included in the computation of
overtime pay

Held:
The cost-of-living allowance began to be granted in 1958 and the longevity pay in 1981. In other
words, they were granted by PNB upon realizing the difficult plight of its labor force in the face of
the unusual inflationary situation in the economy of the country, which, however acute, was
nevertheless expected to improve. There was thus evident an inherently contingent character in
said allowances. They were not intended to be regular, much less permanent additional part of
the compensation of the employees and workers. Also with the longevity pay; manifestly, this
was not based on the daily or monthly amount of work done or service rendered it was more of
a gratuity for their loyalty, or their having been in the bank's employment for consideration
periods of time. What are decisive in determining the basis for the computation of overtime pay
are two very germane considerations, namely, (1) whether or not the additional pay is for extra
work done or service rendered and (2) whether or not the same is intended to be permanent
and regular, not contingent nor temporary and given only to remedy a situation which can
change any time. Overtime pay is for extra effort beyond that contemplated in the employment
contract, hence when additional pay is given for any other purpose, it is illogical to include the
same in the basis for the computation of overtime pay. This holding supersedes NAWASA.

16
G.R. No. L-13178 March 25, 1961
PAMPANGA SUGAR DEVELOPMENT COMPANY, petitioner,
vs.THE COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
BAUTISTA ANGELO, J.:

Facts: This is a petition to set aside an order entered by respondent court on July 9, 1957
assuming jurisdiction to take cognizance of the labor dispute certified to it by the President of
the Philippines between the Pampanga Sugar Development Corporation and its employees
under Section 10 of Republic Act 875.
It appears that previous to such certification a voluntary certification election was conducted by
the Department of Labor wherein the PASUDECO Workers Union was chosen as the exclusive
bargaining representative of all the employees of the company as against another union named
Sugar Workers Association. Subsequently, a collective bargaining agreement with respect to
the terms and conditions of employment was entered into between the winning union and the
Pampanga Sugar Development Corporation, which agreement as well as the certification of the
PASUDECO Workers Union as the exclusive bargaining representative was approved by the
Court of Industrial Relations.

During the 1955-1956 milling season the members of the Sugar Workers Association, the union
that lost in the election, declared a strike at the sugar mill of the company at San Fernando,
Pampanga, as a result of the refusal of said company to entertain the demands submitted to it
by said union. And having been advised of said dispute which remained unsettled for sometime
and affected the sugar industry, the President of the Philippines, on November 23, 1956 wrote
respondent court stating that, pursuant to section 10 of Republic Act No. 875, he certifies to said
court "the labor dispute between the management of the Pasudeco and its employees, and
requires the Court to take immediate steps in the exercise of its powers granted by law."
On December 7, 1956, the PASUDECO requested the court not to assume jurisdiction over the
dispute as thus certified contending that since the Sugar Workers Association is merely a
minority union which lost in the certification election it has no right to represent the employees of
the company nor to present the demands it has submitted on December 14, 1955 and as such it
cannot create a labor dispute that may give jurisdiction to the industrial court even if the same is
certified by the President of the Philippines. Respondent court, however, declared itself with
jurisdiction to act on the dispute regardless of the collective bargaining agreement entered into
between the PASUDECO Workers Union and the Pampanga Sugar Development Corporation.
Hence, the present petition for certiorari.
It appears that the Sugar Workers Association, a minority union, submitted to the management
of the Pampanga Sugar Development Corporation a set of demands which eventually reached
the industrial court involving, among others, payment for past overtime service, a general wage
increase retroactive to December 1, 1954, reinstatement of all laid-off employees, retirement
plan due to long service, old age and disability, termination of pay, and recognition of union
check off, and because they were not heeded due perhaps to the fact that said union was not
the collective bargaining representative, its members went on strike. As the strike coincided with
the milling season of 1955-1956 and affected an industry which is important to our national
economy, the President certified the dispute to the Court of Industrial Relations for settlement
pursuant to Section 10 of Republic Act No. 875, which we copy here under or reference:
When in the opinion of the President of the Philippines there exists a labor dispute in an industry
indispensable to the national interest and when such labor dispute is certified by the President
to the Court of Industrial Relations, said Court may cause to be issued a restraining order
forbidding the employees to strike or the employer to lockout the employees, pending an
investigation by the Court, and if no other solution to the dispute is found, the Court may issue
an order fixing the terms and conditions of employment.

16
It thus appears that when in the opinion of the President a labor dispute exists in an industry
indispensable to national interest and he certifies it to the Court of Industrial Relations the latter
acquires jurisdiction to act thereon in the manner provided for by law. Thus the court may take
either of the following courses: it may issue an order forbidding the employees to strike or the
employer to lockout its employees, or, failing in this, it may issue an order fixing the terms and
conditions of employment. It has no other alternative. It cannot throw the case out on the
assumption that the certification was erroneous.
This is the situation that obtains herein. A strike was declared by a good number of employees
and workers of the PASUDECO coincidental with the milling season which threatens to impair
an industry important to our national economy and considering the dispute as one that involves
national interest he certified it to the industrial court for adjudication. Note that the certification
only makes reference to a labor dispute between the company and its employees. It does not
state that the dispute was caused by a major or a minor union. It is obvious that respondent
court has acquired jurisdiction over the dispute and, contrary to petitioner's contention, it acted
properly in declaring itself competent to act thereon.1

It is true, as petitioner contends, that the Sugar Workers Association is a minor union which lost
in the certification election conducted by the Department of Labor wherein another union was
chosen as the exclusive representative of all the employees of the company and that, under the
law, the union thus selected is deemed to be the exclusive representative of said employees for
the purpose of collective bargaining in respect to rates of pay, wages, hours of employment, or
other conditions of employment.2 The fact, however, is that because of the strike declared by
the members of the minority union which threatens a major industry the President deemed it
wise to certify the controversy to the Court of Industrial Relations for adjudication. This is a
power that the law gives to the President the propriety of its exercise being a matter that only
devolves upon him. The same is not the concern of the industrial court. What matters is that by
virtue of the certification made by the President the case was placed under the jurisdiction of
said court.

ISSUE: whether a minority union may create a labor dispute cognizable by the Court of
Industrial Relations in disregard of the representative chosen in a certification election and of
the collective bargaining agreement entered into by said representative and the company is a
legal matter that does not affect the jurisdiction of the court.

HELD: This is an issue that the court should determine once the dispute is submitted for
decision. Here may come in many other matters that are worth looking into, such as the right of
a minority to be protected against the abuses of the majority, failure on the part of the union
representative to secure the best terms and conditions of employment as the circumstances
may demand, or whether the time has come to order a new certification election. As a matter of
fact, there is an intimation by the government counsel that the collective bargaining agreement
concluded between the company and PASUDECO Workers Union already expired on
December 1, 1957 thereby implying that new terms and conditions of employment may be the
subject of new negotiations. These are matters that come within the jurisdiction of the court.

WHEREFORE, petition is denied, without pronouncement as to costs

16
 NATIONAL WATERWORKS and SEWERAGE AUTHORITY vs. NWSA CONSOLIDATED
UNIONS, ET AL.,

G.R. No. L-18939 August 31, 1964

FACTS:

Petitioner and respondent unions submitted a joint stipulation of facts on the issues concerning
the 40-Hour Week Law, "distress pay," minimum wage, filling of vacancies, night compensation,
and salary adjustments, reserving the right to present evidence on matters not covered therein.
On December 4, 1957, respondent intervenors filed a petition in intervention on the issue for
additional compensation for night work. Later, however, they amended their petition by including
a new demand for overtime pay in favor of Jesus Centeno, Cesar Cabrera, Feliciano Duiguan,
Cecilio Remotigue, and other employees receiving P4,200.00 per annum or more.

On February 5, 1958, petitioner filed a motion to dismiss the claim for overtime pay alleging that
respondent Court of Industrial Relations was without jurisdiction to pass upon the same
because, as mere intervenors, the latter cannot raise new issues not litigated in the principal
case, the same not being the lis mota therein involved. To this motion the intervenors filed an
opposition. Thereafter, respondent court issued an order allowing the issue to be litigated.
Petitioner's motion to reconsider having been denied, it filed its answer to the petition for
intervention

ISSUE:

Whether undertime work shall be offset by overtime work.

RULING:

Where a worker incurs undertime hours during his regular daily work, said undertime hours
should not be offset against the overtime hours. If it were otherwise, the unfairness would be
evident from the fact that the undertime hours represent only the employees’ hourly rate of pay
while the overtime hours reflect both the employees’ hourly rate of pay and the appropriate
premium such that, not being of equal value, offsetting the undertime hours against the overtime
hours would result in the undue deprivation of the employees’ overtime premium. The situation
is even more acceptable where the undertime hours are not only offset against the overtime
hours but are also charged against the accrued leave of the employee, for under this method
the employee is made to pay twice the for his undertime hours with work beyond the regular
working hours. The proper method should be to deduct the undertime hours from the accrued
leave but to pay the employee the overtime compensation to which he is entitled. Where the
employee has exhausted his leave credits, his undertime hours may simply be deducted from
his day’s wage, but he should still be paid his overtime compensation for work in excess of eight
hours a day.

16
 G.R. No. L-26844 September 30, 1969

FELIPE DE LEON, BALDOMERO SALVADOR, MARTINIANO EVANGELISTA, VICENTE

PANLAQUI, CASTOR TUASON, FRANCISCO GONZALO, ENRIQUE PAGCU, CLAUDIO
SICHON, ESTANISLAO SICHON, RUBEN ICBAN, ABONDINO ISIP, LUIS P. ISIP,
DIOSDADO P. GONZALES, MAXIMO PAULE, FAUSTINO DIMATULAC, MATEO BAUTISTA,
WILFREDO AYCARDO, HORACIO OCAMPO, FABIAN MENESES, FLORENTINO GARCIA
and JOSE D. GALANG, petitioners,
vs.
PAMPANGA SUGAR DEVELOPMENT COMPANY, INC., respondent.

Juan C. Limin for petitioners.

Carlos, Madarang, Carballo and Valdez for respondent.

CASTRO, J.:

FACTS:

The respondent Pampanga Sugar Development Company (PASUDECO) operates a

sugar central at San Fernando, Pampanga. The petitioners were its security guards required to
work eight hours a day, seven days a week.

On November 28, 1961 the petitioners filed with the CIR a complaint seeking payment to
them of premium or differential pay in the total amount P49,581.79, plus attorney's fees of
P3,000 and costs of suit. Upon the finding that the "petitioners were paid their monthly salaries
plus 25% additional compensation for work on Sundays and Holidays as provided for by law
and that work on said days is one of the terms and conditions of their employment as security
guards." CIR Judge Joaquin M. Salvador dismissed the case. Acting on the petitioners' motion
for reconsideration, the court en banc affirmed Judge Salvador's order.

Hence this appeal.

ISSUE:

Whether or not the petitioners' are entitled to (1) regular remuneration, or 100%; and (2)
an additional sum of at least 25% of the regular remuneration, for work on Sundays and
Holidays.

HELD:

The import of the law for work on Sundays and legal holidays, the employer must pay
the employee: (1) his regular remuneration, or 100%; and (2) an additional sum of at least 25%
of the regular remuneration, which is called the "premium pay." In other words, the pay for
Sundays and legal holidays is 125% of the pay for ordinary days, but only the excess of 25% is
premium pay. With respect to employees paid on a monthly basis, the first 100% (of the 125%),
corresponding to the regular remuneration, may or may not be included in the monthly salary. If
it is, then the employee is entitled to collect only the premium of 25%. If it is not, then the
employee has a right to receive the entire 125%.

16
 Since the security guards of PASUDECO are paid on a monthly basis, the first 100% (of
the 125%), corresponding to the regular remuneration, is already included in the monthly salary.
Accordingly, the employees are entitled to collect only the premium of 25%.

The only question remaining is whether the 25% premium pay has also been paid. In the
order of Judge Salvador, affirmed by the court en banc, there is a finding that the "petitioners
were paid their monthly salaries plus 25% additional compensation for work on Sundays and
holidays." The factual findings of the trial judge, unaltered or unmodified by the court en banc,
cannot be reviewed by this Court. The findings of fact of the CIR are conclusive on this Court,
where they are supported by substantial evidence, and the lower court has not acted with grave
abuse of discretion in reaching them. 5

ACCORDINGLY, the judgment a quo dismissing the complaint is affirmed. No

pronouncement as to costs.

16
G.R. No. L-65482 December 1, 1987
JOSE RIZAL COLLEGE, vs. NATIONAL LABOR RELATIONS COMMISSION AND
NATIONAL ALLIANCE OF TEACHERS/OFFICE WORKERS, respondents.

FACTS: Petitioner is a non-stock, non-profit educational institution duly organized and existing
under the laws of the Philippines. It has three groups of employees categorized as follows: (a)
personnel on monthly basis, who receive their monthly salary uniformly throughout the year,
irrespective of the actual number of working days in a month without deduction for holidays; (b)
personnel on daily basis who are paid on actual days worked and they receive unworked
holiday pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before
the start of the semester they sign contracts with the college undertaking to meet their classes
as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private
respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty
and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the
college for said alleged non-payment of holiday pay, docketed as Case No. R04-10-81-72. Due
to the failure of the parties to settle their differences on conciliation, the case was certified for
compulsory arbitration where it was docketed as RB-IV-23037-78.

ISSUE: Whether or not the school faculty who according to their contracts are paid per lecture
hour are entitled to unworked holiday pay.

HELD: After the parties had submitted their respective position papers, the Labor Arbiter **
rendered a decision on February 5, 1979, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by
the month uniformly in a school year, irrespective of the number of working days in a month,
without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and
are no longer entitled to separate payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages daily are
entitled to be paid the 10 unworked regular holidays according to the pertinent provisions of the
Rules and Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid
compensation per student contract hour are not entitled to unworked regular holiday pay
considering that these regular holidays have been excluded in the programming of the student
contact hours. (Rollo. pp. 26-27)
On appeal, respondent National Labor Relations Commission in a decision promulgated on
June 2, 1982, modified the decision appealed from, in the sense that teaching personnel paid by
the hour are declared to be entitled to holiday pay (Rollo. p. 33).
Hence, this petition.

The decision of the NLRC was set aside and a new one was rendered to wit:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays,
whether the same be during the regular semesters of the school year or during semestral,
Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared
as special holidays or for some reason classes are called off or shortened for the hours they are
supposed to have taught, whether extensions of class days be ordered or not; in case of
extensions said faculty members shall likewise be paid their hourly rates should they teach
during said extensions.

16
 San Miguel Corporation vs. Court of Appeals
January 30, 2002 375 SCRA 311 GR. No. 146775

Facts
It was October 17, 1992, the Department of Labor and Employment, Illiigan district
office, conducted a routine inspection in San Miguel Corporation in Illigan city. DOLE discovered
that there was an underpayment by SMC of regular Muslim holiday pay to its employees. SMC
contested the findings and DOLE conducted summary hearings. SMC failed to submit proof that
it was paying regular Muslim holiday pay to its employees. DOLE issued a compliance order to
consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim
employees a holiday pay within 30 days from the receipt of the order. SMC appealed to the
DOLE main office in Manila, but its appeal was dismissed for lack of merit. SMC, then, went to
the Court of Appeals for a relief via a petition for certiorari.

Issue
Whether or not there is a distinction between Muslims and non-Muslims as regards to
the payment of benefits for Muslim holidays.

Held
Muslim holidays are legally observed within the area of jurisdiction of the ARMM. It is
only upon presidential proclamations that Muslim holidays may be officially observed outside the
ARMM and generally extends to Muslims to enable them to observe the said holidays.
There must be no distinction between Muslims and non-Muslims as regards payment of
benefits for Muslim holidays; wages and other emoluments are laid down by law and not based
on faith or religion.

17
INSULAR BANK OF ASIA and AMERICAN EMPLOYEES UNION v. Hon. AMADO INCIONG

G.R. No. L- 52415 October 23, 1984

Ponente: MAKASIAR, J!1

FACTS: On June 20, 1975, the Union filed a complaint against the bank for the payment of
holiday pay before the then Department of Labor, NLRC, Regional Office IV in Manila.
Conciliation having failed, and upon the request of both parties, the case was certified for
arbitration on July 7, 1975. On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a
decision granting petitioner’s complaint for payment of holiday pay. Respondent bank did not
appeal from the said decision. Instead, it complied with the order of the Labor Arbiter by paying
their holiday pay up to and including January 1976.

P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday
pay. Accordingly by authority of Article 5 of the Labor Code, the Department of Labor (now
Ministry of Labor) promulgated the rules and regulations for the implementation of holidays with
pay.

The section reads: “Status of employees paid by the month. — Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a salary of not less
than the statutory or established minimum wage shall be presumed to be paid for all days in the
month whether worked or not.” Policy Instruction 9 was issued by the then Secretary of Labor
on April 23,1976, interpreting the said rule. The bank, by reason of the ruling laid down by the
rule implementing Article 94 of the Labor Code and by Policy Instruction 9, stopped the payment
of holiday pay to an its employees.

On August 30,1976, the Union filed a motion for a writ of execution to enforce the arbiter’s
decision dated August 1975, which the bank opposed. On October 18,1976, the Labor Arbiter,
instead of issuing a writ of execution, issued an order enjoining the bank to continue paying its
employees their regular holiday pay. On November 17, 1976, the bank appealed from the
order of the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC promulgated its resolution
dismissing the bank’s appeal, and ordering the issuance of the proper writ of execution. On
February 21,1979, the bank filed with the Office of the Minister of Labor a motion for
reconsideration/appeal with urgent prayer to stay execution. On August 13,1979 the NLRC
issued an order directing the Chief of Research and Information of the Commission to compute
the holiday pay of the IBAA employees from April 1976 to the present in accordance with the
Labor Arbiter dated August 25,1975.

On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado
Inciong, issued an order setting aside the resolution of the NLRC dated June 20, 1978, and
dismissing the case for lack of merit.

Issue: Whether or not the Ministry of Labor is correct in determining that monthly paid
employees are excluded from the benefits of holiday pay?

Held: From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article
82 of the same Code, it is clear that monthly paid employees are not excluded from the benefits
of holiday pay. However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly paid employees from the said benefits by inserting, under

17
Rule IV, Book Ill of the implementing rules, Section 2, which provides that: “employees who are
uniformly paid by the month, irrespective of the number of working days therein, with a salary of
not less than the statutory or established minimum wage shall be presumed to be paid for all
days in the month whether worked or not.” Even if contemporaneous construction placed upon a
statute by executive officers whose duty is to enforce it is given great weight by the courts, still if
such construction is so erroneous, the same must be declared as null and void. So long, as the
regulations relate solely to carrying into effect the provisions of the law, they are valid. Where an
administrative order betrays inconsistency or repugnancy to the provisions of the Act, the
mandate of the Act must prevail and must be followed. A rule is binding on the Courts so long
as the procedure fixed for its promulgation is followed and its scope is within the statutory
authority granted by the legislature, even if the courts are not in agreement with the policy
stated therein or its innate wisdom. Further, administrative interpretation of the law is at best
merely advisory, for it is the courts that finally determine what the law means.

The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor,
and reinstated the decision of the Labor Arbiter Ricarte T. Soriano.

17
 CHARTERED Bank Employees Association vs. NLRC

Facts: On May 20, 1975, the Chartered Bank Employees Association, in representation of its
monthly paid employees/members, instituted a complaint with the Regional Office No. IV,
Department of Labor, now Ministry of Labor and Employment (MOLE) against private
respondent Chartered Bank, for the payment of ten (10) unworked legal holidays, as well as for
premium and overtime differentials for worked legal holidays from November 1, 1974.

On the bases of the foregoing facts, both the arbitrator and the National Labor Relations
Commission (NLRC) ruled in favor of the petitioners ordering the respondent bank to pay its
monthly paid employees, holiday pay for the ten (10) legal holidays effective November 1, 1974
and to pay premium or overtime pay differentials to all employees who rendered work during
said legal holidays. On appeal, the Minister of Labor set aside the decision of the NLRC and
dismissed the petitioner's claim for lack of merit basing its decision on Section 2, Rule IV, Book
Ill of the Integrated Rules and Policy Instruction No. 9, which respectively provide:
Sec. 2. Status of employees paid by the month. Employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or not.
POLICY INSTRUCTION NO. 9
TO: All Regional Directors
SUBJECT: PAID LEGAL HOLIDAYS
The rules implementing PD 850 have clarified the policy in the implementation of
the ten (10) paid legal holidays. Before PD 850, the number of working days a
year in a firm was considered important in determining entitlement to the benefit.
Thus, where an employee was working for at least 313 days, he was considered
definitely already paid. If he was working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended to benefit principally
daily employees. In the case of monthly, only those whose monthly salary did not
yet include payment for the ten (10) paid legal holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees. The new
determining rule is this: 'If the monthly paid employee is receiving not less than
P240, the maximum monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten (10) paid legal
holidays. However, if deductions are made from his monthly salary on account of
holidays in months where they occur, then he is still entitled to the ten (10) paid
legal holidays.
These new interpretations must be uniformly and consistently upheld.
This issuance shall take effect immediately.

Issues: Whether or not the Secretary of Labor erred and acted contrary to law in promulgating
Sec. 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9. ?

17
Decision: While it is true that the contemporaneous construction placed upon a statute by
executive officers whose duty is to enforce it should be given great weight by the courts, still if
such construction is so erroneous, as in the instant case, the same must be declared as null
and void. It is the role of the Judiciary to refine and, when necessary correct constitutional
(and/or statutory) interpretation, in the context of the interactions of the three branches of the
government, almost always in situations where some agency of the State has engaged in action
that stems ultimately from some legitimate area of governmental power (The Supreme Court in
Modern Role, C.B. Swisher 1958, p. 36).

Since the private respondent premises its action on the invalidated rule and policy instruction, it
is clear that the employees belonging to the petitioner association are entitled to the payment of
ten (10) legal holidays under Articles 82 and 94 of the Labor Code, aside from their monthly
salary. They are not among those excluded by law from the benefits of such holiday pay.
Presidential Decree No. 850 states who are excluded from the holiday provisions of that law. It
states:
ART. 82. Coverage. The provision 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. (Emphasis
supplied).
The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy
Instruction No. 9 add another excluded group, namely, "employees who are uniformly paid by
the month." While the additional exclusion is only in the form of a presumption that all monthly
paid employees have already been paid holiday pay, it constitutes a taking away or a
deprivation which must be in the law if it is to be valid. An administrative interpretation which
diminishes the benefits of labor more than what the statute delimits or withholds is obviously
ultra vires.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in
computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251
working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal
holidays from the total number of calendar days in a year. If the employees are already paid for
all non-working days, the divisor should be 365 and not 251.

WHEREFORE, the September 7, 1976 order of the public respondent is hereby REVERSED
and SET ASIDE. The March 24, 1976 decision of the National Labor Relations Commission
which affirmed the October 30, 1975 resolution of the Labor Arbiter but deleted interest
payments is REINSTATED.
SO ORDERED.

17
Obango VS NLRC and Antique Electric Cooperative Inc.

G.R. No. L-147420 June 10, 2004

Facts:

Petitioners argue that monthly-paid employees are considered paid for all days of the
month including un-worked days. Petitioners assert that they should be paid for all the 365 days
in a year. They argue that since in the computation of leave credits, ANTECO uses a divisor of
304, ANTECO is not paying them 61 days every year. Petitioners base their claim on Section 2,
Rule IV of Book III of the Omnibus Rules Implementing the Labor Code.

On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioners

granting them wage differentials amounting to P1,017,507.73 and attorney’s fees of 10%.
ANTECO appealed the Decision to the NLRC on 24 December 1996. On 27 November 1997,
the NLRC reversed the Labor Arbiter’s Decision.

Issue:

Whether or not petitioners are entitled to their money claim?

Held:

Petitioners’ claim is without basis

Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9
issued by the Secretary (then Minister) of Labor are null and void since in the guise of clarifying
the Labor Code’s provisions on holiday pay, they in effect amended them by enlarging the
scope of their exclusion.

The Labor Code is clear that monthly-paid employees are not excluded from the benefits
of holiday pay. However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly-paid employees from the said benefits by inserting, under
Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-paid
employees are presumed to be paid for all days in the month whether worked or not.

Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal
basis, petitioners’ claim for wage differentials must 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.

17
 Union of Filipro Employees vs Benigno Vivar., Jr., NLRC and Nestle Phils. Inc.
G.R. No. 79255, Jan. 20, 1992

Facts:

Petitioner union assails the ruling of the arbitrator that, in the award of holiday pay, the
divisor should be changed from 251 to 261 days to include additional 10 holidays and that the
employees should reimburse the amounts overpaid by Filipro due to the use of 251 days divisor.
Upon the payment of the ordered payment of holidays by Filipro (Nestle), it was then
established that the divisor for the computation of daily pay is no longer 251 but 261 because of
the inclusion of 10 paid holidays. Thus, the retaining of 251 as divisor would accelerate the
basis of conversion and computation by 10 days. Filipro would have been overpaying the
Petitioner members and thus the members were required to reimburse the same under the
concept of “solution indebiti”

Issue:

Whether or not Employer can be reimbursed of overpayment because of the 251 day
divisor?

Ruling:

There is no merit to claim for overpayment of overtime and night differential pay and sick
and vacation leave benefits, which all computation is based on the daily rate. The daily rate is
still the same since the change in the divisor would also lead to a change to the dividend that
will be used. The daily rate is still the same before and after the grant of holiday pay.

17
 Wellington Investment and Manufacturing Corp., vs Trajano
G.R. No. 114698 July 3, 1995

SECOND DIVISION, NARVASA, C.J.:

Facts:

The case arose from a routine inspection conducted by a Labor Enforcement Officer on August
6, 1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner
Wellington Investment and Manufacturing Corporation (hereafter, simply Wellington). The officer
thereafter drew up a report, a copy of which was "explained to and received by" Wellington's
personnel manager, in which he set forth his finding of "(n)on-payment of regular holidays falling
on a Sunday for monthly-paid employees." 1

Wellington sought reconsideration of the Labor Inspector's report, by letter dated August 10,
1991. However, respondent’s arguments failed to persuade the Regional Director who, in an
Order issued on July 28, 1992, ruled and accordingly directed Wellington to pay its employees
compensation corresponding to four (4) extra working days. 4Wellington timely filed a motion for
reconsideration of this Order of August 10, 1992. 5 Its motion was treated as an appeal and was
acted on by respondent Undersecretary. By Order dated September 22, the latter affirmed the
challenged order of the Regional Director." 6 Again, Wellington moved for reconsideration, 7 and
again was rebuffed. 8

Wellington then instituted the special civil action of certiorari at bar in an attempt to nullify the
orders above mentioned. By Resolution dated July 4, 1994, this Court authorized the issuance
of a temporary restraining order enjoining the respondents from enforcing the questioned
orders. 9

Issue:

Whether a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an

additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday

Held:

Every worker should, according to the Labor Code, 10 "be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten
(10) workers;" this, of course, even if the worker does no work on these holidays. Particularly as
regards employees "who are uniformly paid by the month, "the monthly minimum wage shall not
be less than the statutory minimum wage multiplied by 365 days divided by twelve." 12 This
monthly salary shall serve as compensation "for all days in the month whether worked or not,"
and "irrespective of the number of working days therein." 13. So, too, in the event of the
declaration of any special holiday, or any fortuitous cause precluding work on any particular day
or days (such as transportation strikes, riots, or typhoons or other natural calamities), the
employee is entitled to the salary for the entire month and the employer has no right to deduct
the proportionate amount corresponding to the days when no work was done. The monthly
compensation is evidently intended precisely to avoid computations and adjustments resulting
from the contingencies just mentioned which are routinely made in the case of workers paid on
daily basis.

17
In Wellington's case, no issue that to this extent, it complied with the minimum norm laid down
by law. Apparently 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 calls the "314 factor;" that is to say, 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 covers payment for 314 days of the year, including regular and special holidays, as well
as days when no work is done by reason of fortuitous cause, as above specified, or causes not
attributable to the employees.

There is no provision of law requiring any employer to make such adjustments in the monthly
salary rate set by him to take account of legal holidays falling on Sundays in a given year, or,
contrary to the legal provisions bearing on the point, otherwise to reckon a year at more than
365 days. As earlier mentioned, what the law requires of employers opting to pay by the month
is to assure that "the monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve," 17 and to pay that salary "for all days in the month
whether worked or not," and "irrespective of the number of working days therein." 18 That salary
is due and payable regardless of the declaration of any special holiday in the entire country or a
particular place therein, or any fortuitous cause precluding work on any particular day or days
(such as transportation strikes, riots, or typhoons or other natural calamities), or cause not
imputable to the worker. And as also earlier pointed out, the legal provisions governing monthly
compensation are evidently intended precisely to avoid re-computations and alterations in
salary on account of the contingencies just mentioned, which, by the way, are routinely made
between employer and employees when the wages are paid on daily basis.

Decision:

In promulgating the orders complained of the public respondents have attempted to legislate, or
interpret legal provisions in such a manner as to create obligations where none are intended.
They have acted without authority, or at the very least, with grave abuse of their discretion.
Their acts must be nullified and set aside.

WHEREFORE, the orders complained of, namely: that of the respondent Undersecretary dated
September 22, 1993, and that of the Regional Director dated July 30, 1992, are NULLIFIED
AND SET ASIDE, and the proceeding against petitioner DISMISSED. SO ORDERED.

Regalado, Puno and Mendoza, JJ., concur

17
G.R. No. L-23076 February 27, 1969

NICANOR M. BALTAZAR, plaintiff-appellee,

vs.
SAN MIGUEL BREWERY, INC., defendant-appellant.

Jose P. Osorio for plaintiff-appellee.

Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant.

DIZON, J.:

Fatcs:
On October 9, 1956 sixteen regular workers at appellant's Dagupan warehouse went on a
strike. For the purpose of relieving the tension prevailing at the place — because it was alleged
that the unfair treatment dispensed to the employees by Baltazar was the cause of the strike —
Baltazar was recalled to appellant's Manila office on October 13 of the same year upon
recommendation of its sales supervisor and industrial relations officer, who found out, after a
personal investigation, that the employees' grievance was well founded. The day following
Baltazar's recall to Manila the strikers returned to work voluntarily.

When Baltazar reported at appellant's main office in Manila on October 15, 1956, the
latter's sales supervisor informed him that he was not to return to Dagupan anymore.
Thereafter, he reported for work at the main office aforesaid from October 16, 1956 until
November 2 of the same year, apparently without being given any specific work or assignment.
From November 3, 1956 up to December 19 of the same year, or a period of more than one and
one-half months, he absented himself from work without prior authority from his superiors and
without advising them or anybody else of the reason for his prolonged absence. For this reason,
pursuant firstly, to existing rules and regulations considering ten unexcused or unauthorized
absences within a calendar year as sufficient ground for an outright dismissal from employment,
and secondly, the provisions of appellant's health, welfare and retirement plan requiring that
sick leave, to be considered authorized or excusable, must be certified to by the company
physician, appellant, by a letter dated December 31, 1956, informed Baltazar that he was
dismissed for cause effective November 30 of the same year.

Four months later, or more specifically on May 2, 1957, Baltazar commenced the present
action. After trial upon the issues arising from the parties' pleadings, the trial court ruled that
Baltazar's dismissal was justified, and, as a consequence, dismissed his complaint. For
insufficiency of evidence, the court also dismissed appellant's counterclaim. But despite the
dismissal of Baltazar's complaint and the finding that his dismissal from employment was for
cause, the trial court ordered appellant to pay him one month separation pay, plus the cash
value of six months accumulated sick leave. So We are now urged to reverse this portion of the
decision upon the following grounds:

I. The trial court erred in requiring the defendant appellant to pay separation pay after
having found and declared as an established fact that the dismissal of plaintiff-appellee was fully
justified.

II. The trial court erred in awarding plaintiff-appellee the money equivalent of an
"accumulated sick leave of six (6) months as terminal leave" despite its express findings to the
effect that (1) sick leave benefits under defendant-appellant's health, welfare and retirement

17
plan may be enjoyed only if and when the sickness is certified to by the company physician — a
requirement which was admittedly not complied with, and (2) said benefits are "non-
commutative and may not therefore be commuted to cash".lawphi1.nêt

The trial court found that appellee's absence for forty-eight successive days was without
permission or authority of his superiors and, as a result, ruled that it was sufficient cause for his
dismissal in accordance with the rules and regulations of his employer. This must be deemed
final, because Baltazar did not appeal.

It is settled in this jurisdiction that one not employed for a definite period is not entitled to
one-month notice or to one-month salary in lieu thereof if his dismissal was for cause (Republic
Act No. 1052; Marcaida vs. Philippine Education Company, 53 O.G. No. 23, p. 8559). In the
Marcaida case this Court, speaking through the now Chief Justice Roberto Concepcion, said the
following:

Issue: whether or not Republic Act No. 1052 makes reference to termination of
employment, instead of dismissal, precisely to exclude employees separated from the service
for causes attributable to their own fault.

We rule therefore that appellee is not entitled to one month separation pay.

Held: the appealed decision is hereby reversed, without special pronouncement as to costs. It
is so ordered.

18
 Davao Integrated Port Stevedoring Services vs. Abarquez

(G.R. No. 102132.)

Facts:

Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private

respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file
workers of petitioner-company, entered into a collective bargaining agreement (CBA) on
October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with
pay benefits each year to its employees who have rendered at least one (1) year of service with
the company,

The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-
company under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio
Beltran, Jr. upon the latter's resignation in June 1989), stopped the payment of its cash
equivalent on the ground that they are not entitled to the said benefits under Sections 1 and 3 of
the 1989 CBA.

The public respondent favored the commutation of unenjoyed sick leave with pay benefits.

Issue:

Whether the public respondent erred in interpreting Sections 1 and 3.

Held:

Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers
in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of
the herein public respondent is the necessary consequence of the exercise of his arbitral power
as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining
Agreement." We, therefore, find that no grave abuse of discretion was committed by public
respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3,
Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.

WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of
public respondent dated September 10, 1991 is hereby AFFIRMED. No costs.

SO ORDERED.

18
DONALD KWOK, Petitioner, vs. PHILIPPINE CARPET MANUFACTURING CORPORATION,
respondent.

FACTS:

In 1965, petitioner Donald Kwok and his father-in-law Patricio L. Lim, along with some other
stockholders, established a corporation, the respondent Philippine Carpet Manufacturing
Corporation (PCMC). The petitioner became its general manager, executive vice-president and
chief operations officer. Lim, on the other hand, was its president and chairman of the board of
directors. When the petitioner retired 36 years later or on October 31, 1996, he was receiving a
monthly salary of P160,000.00. He demanded the cash equivalent of what he believed to be his
accumulated vacation and sick leave credits during the entire length of his service with the
respondent corporation, i.e., from November 16, 1965 to October 31, 1996, in the total amount
of P7,080,546.00 plus interest. However, the respondent corporation refused to accede to the
petitioner's demands, claiming that the latter was not entitled thereto.
The petitioner filed a complaint against the respondent corporation for the payment of his
accumulated vacation and sick leave credits before the NLRC. He claimed that Lim made a
verbal promise to give him unlimited sick leave and vacation leave benefits and its cash
conversion upon his retirement or resignation without the need for any application therefor. In
addition, Lim also promised to grant him other benefits, such as golf and country club
membership; the privilege to charge the respondent corporation's account; 6% profit-sharing in
the net income of the respondent corporation (while Lim got 4%); and other corporate
perquisites. According to the petitioner, all of these promises were complied with, except for the
grant of the cash equivalent of his accumulated vacation and sick leave credits upon his
retirement.
The respondent corporation denied all these, claiming that upon the petitioner's retirement, he
received the amount of P6,902,387.19 representing all the benefits due him. Despite this, the
petitioner again demanded P7,080,546.00, which demand was without factual and legal basis.
The respondent corporation asserted that the chairman of its board of directors and its
president/vice-president had unlimited discretion in the use of their time, and had never been
required to file applications for vacation and sick leaves; as such, the said officers were not
entitled to vacation and sick leave benefits.

ISSUE:
1. Whether or not the petitioner is entitled, based on the documentary and testimonial evidence
on record, to the cash value of his vacation and sick leave credits in the total amount of
P7,080,546.00;

HELD:
On November 29, 1999, the NLRC, by majority vote, rendered judgment granting the
appeal, reversing and setting aside the decision of the Labor Arbiter. The NLRC ordered
the dismissal of the complaint.

18
On February 28, 2001, the CA rendered judgment affirming the decision of the NLRC and
dismissing the petition. The petitioner's motion for reconsideration thereof was denied by the
appellate court, per its Resolution dated July 17, 2001.
The petitioner, thus, filed the instant petition for review on certiorari with this Court, but the same
has not been granted.
Moreover, the petitioner is not covered by the Memorandum dated November 6, 1981 because
he had unlimited leave credits; hence, it cannot be gainsaid that he still had unused leave
credits to be converted. According to the respondent corporation, the petitioner himself admitted
that he was not included in the Memorandum dated November 6, 1981; and even assuming that
he was covered by the said memorandum, the fact that his complaint was filed only in 1996
precludes him from claiming the cash conversion of such leave credits for the years 1966 to
1993.
The petitioner was burdened to prove not only the existence of such benefits but also that he is
entitled to the same, especially considering that such privileges are not inherent to the positions
occupied by the petitioner in the respondent corporation, son-in-law of its president or not.
The general rule is that, in the absence of authority from the board of directors, no
person, not even its officers, can validly bind a corporation. A corporation is a juridical
person, separate and distinct from its stockholders and members, 'having xxx powers,
attributes and properties expressly authorized by law or incident to its existence.
the power and the responsibility to decide whether the corporation should enter into a
contract that will bind the corporation is lodged in the board, subject to the articles of
incorporation, by-laws, or relevant provisions of law.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against
the petitioner.

18
 Ruga vs. NLRC
Jan. 22, 1990

Facts:
Petitioners were the fishermen crew members of one of several fishing vessels owned
by respondent De Gusman Fishing Enterprises. Petitioners rendered service aboard the fishing
vessel in various capacities. When for same unproved charges, their services were terminated,
the fishermen filed illegal dismissed complaint. The vessel owners contended that they were not
employees at all.

Issue:
Whether or not there is an employee-employer relationship
Ruling:
According to Alipio Ruga, he is under the control and supervision of private respondent's
operations manager. Matters dealing on the fixing of the schedule of the fishing trip and the time
to return to the fishing port were shown to be the prerogative of private respondent. While
performing the fishing operations, petitioners received instructions via a single-side band radio
from private respondent's operations manager who called the patron/pilot in the morning. They
are told to report their activities, their position, and the number of tubes of fish-catch in one day.
While tenure or length of employment is not considered as the test of employment,
nevertheless the hiring of petitioners to perform work which is necessary or desirable in the
usual business or trade of private respondent for a period of 8-15 years since 1968 qualify them
as regular employees

18
G.R. No. L-12444 February 28, 1963

STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners,

vs.
CEBU SEAMEN'S ASSOCIATION, INC., respondent.

PAREDES, J.:

Facts:

Petitioners were engaged in the business of marine coastwise transportation, employing therein
several steamships of Philippine registry. After the Minimum Wage Law had taken effect, the
petitioners required their employees on board their vessels, to pay the sum of P.40 for every
meal, while the masters and officers were not required to pay their meals.

The petitioners' shipping companies, answering, averred that in enacting Rep. Act No. 602
(Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal, furnished
the employees should be deducted from the daily wages.

Issue: WON meals or food in question are facilities or supplements.

Held:

We hold that such deductions are not authorized. In the coastwise business of transportation of
passengers and freight, the men who compose the complement of a vessel are provided with
free meals by the shipowners, operators or agents, because they hold on to their work and
duties, regardless of "the stress and strain concomitant of a bad weather, unmindful of the
dangers that lurk ahead in the midst of the high seas."

If there are no supplements given, within the meaning and contemplation of section 19, but
merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as they
should be harmonized. And even if there is such a conflict, the respondent CIR should resolve
the same in favor of the safety and decent living laborers (Art. 1702, new Civil Code)..

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 criterion is not so much with the
kind of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose.
Considering, therefore, as definitely found by the respondent court that the meals were freely
given to crew members prior to August 4, 1951, while they were on the high seas "not as part of
their wages but as a necessary matter in the maintenance of the health and efficiency of the
crew personnel during the voyage", the deductions therein made for the meals given after
August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected
should continue giving the same benefit..

It has been found and held that the meals or food in question are not facilities but supplements.

The petition is dismissed

18
 PHILIPPINE AIRLINES, INC., vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 115785 August 4, 2000

PARDO, J.

FACTS: On June 30, 1975, Philippine Airlines hired respondent Raul Diamante as
Integrated Ticket Representative for Bacolod City station.

On April 8, 1988, Edgardo Pineda, Rizalino Cabarloc, Ernesto Subia and Rolando Velasco went
to Bacolod Airport to have their tickets booked for their flight to Manila on April 9 and 10, 1988.
Romeo Vista, a former officemate of Edgardo Pineda, was their contact person. At the airport,
Leticia Vista, wife of Romeo Vista, introduced Raul Diamante to Edgardo Pineda as the person
who could help in the booking of his ticket. Pineda requested Diamante if he could book their
tickets for the April 8, 1988 flight, particularly Subia, who had to attend an important meeting in
Manila. Diamante answered that all flights for the week were fully booked. He suggested that he
leave with him their tickets. Pineda gave four (4) tickets to Diamante together with the amount of
(P1,000.00) then Diamante assured them that they will be accommodated. Subia was booked
for the April 8, 1988 flight to Manila while Pineda, Velasco and Cabarloc were booked for the
April 10, 1988 flight. When Subia failed to take the flight due to illness, Diamante returned
Subia's ticket to Vista the following day since it was Diamante's day off. In order to facilitate
Subia's re-booking, Vista asked for the help of her friend Nelia Cawaling, a neighbor of PAL
Station Agent Rodolfo Puentebella. With the help of Cawaling and Puentebella, Subia was able
to take the April 9, 1988 flight to Manila.

Upon their arrival in Manila, on June 20, 1988, Pineda executed an affidavit charging Diamante
with bribery/corruption. On July 08, 1988 petitioner's Bacolod Branch Manager required
Diamante to comment on the affidavit. On July 13, 1988, Diamante submitted his sworn
statement denying the allegations against him.

On July 27, 1988, after evaluation of the complaint and finding the explanation of Diamante
insufficient, petitioner's manager charged Diamante administratively with bribery/extortion and
violation of PAL's Code of Discipline, particularly Article VIII, Section 1, paragraph 2 thereof,
which provides:

"Any employee who directly or indirectly requests or receives any consideration, share,
percentage or commission for himself or for another person in connection with the performance
of his duties."

Thereafter, petitioner convened an ad-hoc Committee on Administrative Investigation and

conducted an investigation. On October 3, 1988 at a clarificatory hearing of the committee
Diamante appeared and was investigated with the assistance of his counsel, Atty. Allan
Zamora, and PALEA representative Mario Cornelio. During the hearing, it was agreed to reset
the hearing on October 24, 1988, to give Diamante a chance to confront Pineda. After several
postponements, there was never a confrontation. No confrontation occurred due to the fact that
the committee unilaterally set the confrontation on November 11, 1988, at Tuguegarao Airport,
Cagayan, despite the previous agreement of the parties and respondent counsel's request to
reset it on November 22, 1988, in Manila. The Committee, after deliberation, resolved the case
on the basis of the evidence on record.

18
On December 14, 1988, Diamante received a notice of his dismissal from the service by an
office memorandum, dated November 29, 1988. Diamante filed with the National Labor
Relations Commission for illegal dismissal, reinstatement with backwages and damages. Labor
Arbiter rendered a decision declaring the dismissal legal and valid. Diamante appealed the
decision to the National Labor Relations Commission (NLRC). NLRC rendered a decision
granting Diamante's appeal and setting aside the Labor Arbiter's decision and ordering the
reinstatement of Diamante with three years backwages. Petitioner filed a motion for
reconsideration which the NLRC denied in a resolution Hence, this petition.6

ISSUE: Whether respondent was illegally dismissed which would entitle him to
reinstatement with backwages?

HELD: Regarding the legality of respondent's dismissal, we note that respondent was
found to have violated the Company Code of Discipline. We recognize the right of an employer
to regulate all aspects of employment. This right, aptly called management prerogative, gives
employers the freedom to regulate, according to their discretion and best judgment, all aspects
of employment, including work assignment, working methods, processes to be followed, working
regulations transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of workers. In general, management has the prerogative to discipline its
employees and to impose appropriate penalties on erring workers pursuant to company rules
and regulations.

Since private respondent's dismissal was for just and valid cause, the order of public
respondent for the reinstatement of private respondent with award of backwages has no factual
and legal basis.

WHEREFORE, the petition is hereby GRANTED. The challenged decision and resolution of the
National Labor Relations Commission are SET ASIDE. In lieu thereof, the decision of the Labor
Arbiter dated October 28, 1992, is AFFIRMED.

18
 INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS vs. Quisumbing
G.R. No. 128845 June 1, 2000

FACTS:
Private respondent International School, Inc is a domestic educational institution established
primarily for dependents of foreign diplomatic personnel and other temporary residents.

Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School 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? 2

The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires
are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies
the difference on two "significant economic disadvantages" foreign-hires have to endure,
namely: (a) the "dislocation factor" and (b) limited tenure
When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the collective
bargaining representative of all faculty members" 4 of the School, contested the difference in
salary rates between foreign and local-hires.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation
and Mediation Board to bring the parties to a compromise prompted the Department of Labor
and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE
Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing
subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997.

Petitioner claims that the point-of-hire classification employed by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.

The School disputes these claims and gives a breakdown of its faculty members, numbering 38
in all, with nationalities other than Filipino, who have been hired locally and classified as local
hires. 5 The Acting Secretary of Labor found that these non-Filipino local-hires received the
same benefits as the Filipino local-hires.

ISSUE: Whether or not there was an equal pay for an equal work.

HELD:

We cannot agree. 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. 22 This rule applies to the School, its "international character" notwithstanding.

18
If an employer accords employees the same position and rank, the presumption is that these
employees perform equal work. This presumption is borne by logic and human experience. If
the employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to injury. The
employer has discriminated against that employee; it is for the employer to explain why the
employee is treated unfairly.

The local-hires perform the same services as foreign-hires and they ought to be paid the same
salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited
tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor
and limited tenure affecting foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping
costs, taxes and home leave travel allowances.

In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There
is no reasonable distinction between the services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-hires contravenes public policy
and, certainly, does not deserve the sympathy of this Court.

18
 ATOK-BIG WEDGE MINING CO., INC., vs. ATOK-BIG WEDGE MUTUAL BENEFIT
ASSOCIATION,

G.R. No. L-5276 March 3, 1953

FACTS:

Demand was submitted to petitioner by respondent union through its officers for various
concession, among which were (a) an increase of P0.50 in wages, (b) commutation of sick and
vacation leave if not enjoyed during the year, (c) various privileges, such as free medical care,
medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e) no dismissal without
prior just cause and with a prior investigation, etc. Some of the demands, were granted by the
petitioner, and the other were rejected, and so hearings were held and evidence submitted on
the latter. After the hearing the respondent court rendered a decision, the most important
provisions of which were those fixing the minimum wage for the laborers at P3.20, declaring that
additional compensation representing efficiency bonus should not be included as part of the
wage, and making the award effective from September 4, 1950. It is against these portion of the
decision that this appeal is taken.

On the issue of the wage, it is contended by petitioner that as the respondent court found that
the laborer and his family at least need the amount of P2.58 for food, this should be the basis
for the determination of his wage, not what he actually spends; that it is not justifiable to fix a
wage higher than that provided by Republic Act No. 602; and that respondent union made the
demand in accordance with a pernicious practice of claiming more after an original demand is
granted. The respondent court found that P2.58 is the minimum amount actually needed by the
laborer and his family

ISSUE:

What will be the basis to determine the minimum wage.

RULING:

A person's needs increase as his means increase. This is true not only as to food but as to
everything else — education, clothing, entertainment, etc. The law guarantees the laborer a fair
and just wage. The minimum must be fair and just. The "minimum wage" can by no means
imply only the actual minimum. Some margin or leeway must be provided, over and above the
minimum, to take care of contingencies such as increase of prices of commodities and desirable
improvement in his mode of living.

19
 G.R. No. 144619 November 11, 2005

C. PLANAS COMMERCIAL and/or Marcial Cohu, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), DIOLETO MORENTE,
ALFREDO OFIALDA, and RUDY ALLAUIGAN, respondents.

AUSTRIA-MARTINEZ, J.:

FACTS:

Before us is a petition for review on certiorari filed by C. Planas Commercial and/or

Marcial Cohu, (petitioners) assailing the Decision of the Court of Appeals (CA) dated January
19, 2000 which affirmed in toto the decision of the National Labor Relations Commission
(NLRC) and the Resolution dated August 15, 2000 denying petitioners’ motion for
reconsideration.
On September 14, 1993, Dioleto Morente, Rudy Allauigan and Alfredo Ofialda (private
respondents) together with 5 others filed a complaint for underpayment of wages, nonpayment
of overtime pay, holiday pay, service incentive leave pay and premium pay for holiday and rest
day and night shift differential against petitioners with the Arbitration Branch of the NLRC.
In their position paper, private respondents alleged that petitioner Cohu, owner of C.
Planas Commercial, is engaged in wholesale of plastic products and fruits of different kinds with
more than 24 employees; that private respondents were hired by petitioners on January 14,
1990, May 14, 1990 and July 1, 1991, respectively, as helpers/laborers; that they were paid
below the minimum wage law for the past 3 years; that they were required to work for more than
8 hours a day without overtime pay; that they never enjoyed holiday pay and did not have a rest
day as they worked for 7 days a week; and they were not paid service incentive leave pay
although they had been working for more than one year. Private respondent Ofialda asked for
night shift differential as he had worked from 8 p.m. to 8 a.m. the following day for more than
one year.
On December 6, 1994, a decision was rendered by the Labor Arbiter dismissing private
respondents’ money claims for lack of factual and legal basis; complainants failed to
substantiate their claim that the respondent establishment regularly employs twenty (24)
workers. Accordingly, we have no factual basis to grant salary differentials to complainants. In
the same context, under Sec. 1 (b), Rule IV and Sec. 1(g), Rule V of the Implementing Rules of
the Labor Code, complainants are not entitled to legal holiday pay and service incentive leave
pay. There is no sufficient factual basis to award overtime pay and premium pay for holiday and
rest day because complainants failed to substantiate that they rendered overtime and during
rest days.
On September 30, 1997, the NLRC modified Labor Arbiter’s decision by directing C.
Planas Commercial to pay Alfredo Ofialda, Diolito Morente and Rudy Allauigan the total amount
of Seventy-Five Thousand One Hundred Twenty Five Pesos (P75,125.00) representing their
combined salary differentials, holiday pay, and service incentive leave pay. On claims for
underpayment/non-payment of legally mandated wages and fringe benefits where exemption
from coverage of the minimum wage law is put up as a defense, he who invokes such an
exemption (usually the employer) has the burden of showing the basis for the exemption like for
instance the fact of employing regularly less than ten workers. In the instant case, complainants
alleged that despite employing more than twenty-four (24) workers in his establishment, hence
covered by the minimum wage law, nevertheless the individual respondent did not pay his
workers the legal rates and benefits due them since their employment. By way of answer,

19
respondents countered that they employ less than ten (10) persons, hence the money claims of
complainants lack factual and legal basis. With respect to the other claims, i.e., overtime pay
and premium pay for holiday and rest day, There is no reason to disturb the Labor Arbiter’s
ruling thereon, that there is no sufficient factual basis to award the claims because complainants
failed to substantiate that they rendered overtime and during rest days. These claims, unlike
claims for underpayment and non-payment of fringe benefits mandated by law, need to be
proven by the claimants.

Petitioners filed a petition for certiorari with prayer for temporary restraining order and
preliminary injunction to the Supreme Court on November 26, 1997. In a Resolution dated June
28, 1999, the petition was referred to the CA which denied the petition for lack of merit and
affirmed in toto the NLRC decision. I

Hence, the instant petition for review on certiorari filed by petitioners.

ISSUE:

Whether or not private respondents are entitled to the money claims and whether or not
C. Planas Commercial is a retail establishment principally engaged in the sale of plastic
products and fruits regularly employing not more than ten (10) workers, thus exempted
from the application of the minimum wage law.

HELD:

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.
Retail/service establishments regularly employing not more than ten (10)
workers may be exempted from the applicability of this Act upon application with
and as determined by the appropriate Regional Board in accordance with the
applicable rules and regulations issued by the Commission. Whenever an
application for exemption has been duly filed with the appropriate Regional
Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate
Regional Board.

In the event that applications for exemptions are not granted, employees
shall receive the appropriate compensation due them as provided for by this Act
plus interest of one percent (1%) per month retroactive to the effectivity of this
Act.

19
 Clearly, for a retail/service establishment to be exempted from the coverage of the
minimum wage law, it must be shown that the establishment is regularly employing not more
than ten (10) workers and had applied for exemptions with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by
the Commission. Petitioners’ main defense in controverting private respondents’ claim for
underpayment of wages is that they are exempted from the application of the minimum wage
law, thus the burden of proving such exemption rests on petitioners. Petitioners had not shown
any evidence to show that they had applied for such exemption and if they had applied, the
same was granted.

The petition is PARTLY GRANTED. The Decision of the Court of Appeals dated
January 19, 2000 and its Resolution dated August 15, 2000
are AFFIRMED with MODIFICATION that petitioners are ordered to pay private respondent
Alfredo Ofialda the total amount of P18,476.00 and the monetary awards in favor of private
respondents Rudy Allauigan and Dioleto Morente are DELETED.

19
 G.R. No. 102132. March 19, 1993.
DAVAO INTEGRATED PORT STEVEDORING SERVICES vs. RUBEN V. ABARQUEZ, in his
capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE
UNIONS (ATU-TUCP),

FACTS:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private
respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file
workers of petitioner-company, entered into a collective bargaining agreement (CBA) on
October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with
pay benefits each year to its employees who have rendered at least one (1) year of service with
the company.

During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on
April 15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field
workers of petitioner who are members of the regular labor pool and the present regular extra
labor pool who had rendered at least 750 hours up to 1,500 hours were extended sick leave
with pay benefits. Any unenjoyed portion thereof at the end of the current year was converted to
cash and paid at the end of the said one-year period pursuant to Sections 1 and 3, Article VIII of
the CBA. The number of days of their sick leave per year depends on the number of hours of
service per calendar year in accordance with the schedule provided in Section 3, Article VIII of
the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-
company under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio
Beltran, Jr. upon the latter's resignation in June 1989), stopped the payment of its cash
equivalent on the ground that they are not entitled to the said benefits under Sections 1 and 3 of
the 1989 CBA.

The Union objected to the said discontinuance of commutation or conversion to cash of the
unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it is a
deviation from the true intent of the parties that negotiated the CBA; that it would violate the
principle in labor laws that benefits already extended shall not be taken away and that it would
result in discrimination between the non-intermittent and the intermittent workers of the
petitioner-company.

After the parties had filed their respective position papers, 2 public respondent Ruben
Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union ruling that the
regular intermittent workers are entitled to commutation of their unenjoyed sick leave with pay
benefits under Sections 1 and 3 of the 1989 CBA.

Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the
instant petition.
Petitioner-company argued that it is clear from the language and intent of the last sentence of
Section 1, Article VIII of the 1989 CBA that only the regular workers whose work are not
intermittent are entitled to the benefit of conversion to cash of the unenjoyed portion of sick
leave, thus: ". . . And provided, however, that only those regular workers of the Company whose
work are not intermittent are entitled to the herein sick leave privilege."

ISSUE:

19
Whether or not benefits granted pursuant to company practice or policy can peremptorily be
withdrawn.

HELD:
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave
and vacation leave benefits, among others, are by their nature, intended to be replacements for
regular income which otherwise would not be earned because an employee is not working
during the period of said leaves. They are non-contributory in nature, in the sense that the
employees contribute nothing to the operation of the benefits. By their nature, upon agreement
of the parties, they are intended to alleviate the economic condition of the workers.

Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the
unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October
16, 1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said
privilege of commutation or conversion to cash, being an existing benefit, the petitioner-
company may not unilaterally withdraw, or diminish such benefits. It is a fact that petitioner-
company had, on several instances in the past, granted and paid the cash equivalent of the
unenjoyed portion of the sick leave benefits of some intermittent workers. Under the
circumstances, these may be deemed to have ripened into company practice or policy which
cannot be peremptorily withdrawn.

19
NESTLE PHILIPPINES, INC. v. NLRC and UFE
G.R. No. 91231 February 4, 1991
Ponente: GRIÑO- AQUINO: J

FACTS: UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-
file employees of Nestle Phils. Cagayan de oro factory as well as its Cebu/Davao Sales office.
While the parties negotiating their CBA, the employees of Cabuyao resorted to a “slow down”
and “walk-outs” prompting the petitioner to shut down the factory, subsequently, the Sec. of
Labor assumed jurisdiction and issued a return to work order, in spite of the order, the union
struck without notice. The company retaliated by dismissing the union officers and members of
negotiating panel who participated in the illegal strike. UFE declared a bargaining deadlock.
Thereafter, the union filed a notice of strike and filed a case of unfair labor practice against the
company. After conciliation efforts the NCMB yielded negative results, the dispute was certified
to the NLRC by the Sec. of Labor.
The NLRC issued a resolution that the company shall continue implementing its retirement Plan
modified as follows;
1.) For 15 years of service or less- an amount equal to 100% of the employees’ monthly
salary for every year of service;

2.) For more that 15 but not less than 20 years in service – 125% of the employees monthly
salary for every year of service

3.) For 29 years or more – 150% of the employees’ monthly salary for every year of service.

ISSUE: Whether or not the employees have not vested demandable right to a contributory
retirement plan?
HELD: The Supreme Court held that the employees have vested and demandable right over
existing benefits Voluntary granted to them by their employer. The employer may not unilaterally
withdraw, eliminate or diminish such benefits.
The NLRC correctly observed that the inclusion of the retirement plan in the CBA as part of the
package of economic benefit 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
“consensual character” to the plan so that it may not be terminated or modified at the will by
either party.
The fact that the retirement plan is non-contributory, the employees contribute nothing to the
operation of the plan, does not make it a non-issue in the CBA. – Salary increases, rice
allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick and other Leaves with pay – are
non-contributory benefits. Since the retirement plan has been an integral part of the CBA.
The decision of the NLRC is not vitiated by abuse of discretion. The benefits and concessions
given to the employees were based on the NLRC’s evaluation of the unions’ demand, the
evidence adduced by the parties, the financial capacity of the company to grant such demands,
its long-term viability, the economic conditions prevailing in the country as they affect the
purchasing power of the employees as well as it concomitant effect on the other factors of
production, the recent trends in the industry to which it belongs.

19
 R. Tiangco and V. Tiangco vs. Hon. Vicente Leogardo, Jr.
{G.R. No. L-57636, May 16, 1983

Facts: Reynaldo Tiangco, is a fishing operator who owns the Reynaldo Tiangco Fishing
Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from
Navotas, Rizal. His business is capitalized at P2,000,000.00, while the petitioner, Victoria
Tiangco, is a fish broker whose business is capitalized at P100,000.00.
The private respondents, Aurelio Ilustrisimo, Pepito Gilbuena, Rogelio Carabio, Abraham
Gilbuena, Rustom Ofqueria, Ernesto Diong, Jesus Gilbuena, Clemente (Emerenciano) Villaruel,
Dominador Lacerna, and Graciano Durana, are batillos engaged by the petitioner Reynaldo
Tiangco to unload the fish catch from the vessels and take them to the Fish Stall of the
petitioner Victoria Tiangco. The private respondents, Eddie Batobalanos, Aguedo Marabe,
Gregorio Laylay, Fruto Gihapon, Solomon Clarin, Pepito Batoy, Jose Ofqueria, Daniel Cabrera,
Juan Castro, Alcafone Esgana, Tomas Capalar, Antonio Gilbuena, Ernesto Batoy, Serafio
Yadawon, Juan Gihapon, Elias Escaran and Roberto Bayon-on, were batillos engaged by
Victoria Tiangco. 3 The work of these batillos were limited to days of arrival of the fishing
vessels and their working days in a month are comparatively few. Their working hours average
four (4) hours a day.
On April 8, 1980, the private respondents filed a complaint against the petitioners with the
Ministry of Labor and Employment for non-payment of their legal holiday pay and service
incentive leave pay, as well as underpayment of their emergency cost of living allowances which
used to be paid in full irrespective of their working days, but which were reduced effective
February, 1980, in contravention of Article 100 of the new Labor Code which prohibits the
elimination or diminution of existing benefits.
The petitioners denied the laborers' contention, claiming that the laborers were all given, in
addition to their regular daily wage, a daily extra pay in amounts ranging from 30 centavos to 10
pesos which are sufficient to offset the laborers' claim for service incentive leave and legal
holiday pay. As regards the claim for emergency allowance differentials, the petitioners admitted
that they discontinued their practice of paying their employees a fixed monthly allowance, and
effective February, 1980, they no longer paid allowances for non-working days. They argued,
however, that no law was violated as their refusal to pay allowances for non-working days is in
consonance with the principle of "no work, no allowance"; and that they could not pay private
respondents a fixed monthly allowance without risking the viability of their business.
Resolving the case, the Director of the National Capitol Region of the Ministry of Labor and
Employment ruled that the daily extra pay given to private respondents was a ,'production
incentive benefit", separate and distinct from the service incentive leave pay and legal holiday
pay, payment of which cannot be used to offset a benefit provided by law, and ordered the
petitioners to pay the private respondents their service incentive leave pay and legal holiday
pay. However, he denied the laborers' claim for differentials in the emergency cost of living
allowance for the reason that the emergency cost of living allowance accrues only when the
laborers actually work following the principle of "no work, no pay," and private respondents are
not entitled to a fixed monthly allowance since they work on a part time basis which average
only four (4) days a week. The private respondents should not be paid their allowances during
non-working days.
From this order, both parties appealed.
On May 22, 1981, the respondent Deputy Minister of Labor and Employment modified the order
and directed the petitioners to restore and pay the individual respondents their fixed monthly

19
allowance from March, 1980 and to pay them the amount of P58,860.00, as underpayment of
their living allowance from May, 1977 to February 21, 1980.
Issue: Whether or not the Deputy Minister of Labor and Employment acted in excess of his
jurisdiction?
Decision: We find no merit in the contention. However, a revision of the amount due the private
respondents is in order for the reason that the respondent Deputy Minister of Labor and
Employment failed to take into consideration, in computing the amount due each worker, the
fact that the private respondents are employed by two different individuals whose businesses
are divergent and capitalized at various amounts, contrary to the provisions of P.D. 525 and
subsequent amendatory decrees, wherein the amount of the emergency cost of living allowance
to be paid to a worker is made to depend upon the capitalization of the business of his employer
or its total assets, whichever is higher.
Hence, for the period from November, 1976 to April 30, 1977, the petitioner Victoria Tiangco
should pay her workers a fixed monthly allowance of P 30.00, while the workers of the petitioner
Reynaldo Tiangco were entitled to a fixed monthly allowance of P50.00, each. The record
shows that during this period, the petitioner Victoria Tiangco was paying her workers a monthly
allowance of P30.00 each. Accordingly, there was no underpayment for this period insofar as
her batillos are concerned. The petitioner Reynaldo Tiangco, however, paid his employees
P30.00, instead of P50.00, as mandated by law. Therefore, there was an underpayment of
P20.00 a month for each batillo under his employ. For the 6-month period, he should pay his
workers differentials in the amount of P120.00 each.
For the period from May, 1977 to March 1979, the workers of the petitioner Victoria Tiangco
were entitled to a fixed monthly allowance of P90.00 in view of the promulgation of P.D. 1123
which granted an across-the-board increase of P60.00 a month in their allowances. For this
period, however, the said petitioner paid her workers only P60.00 a month, or a difference of
P30.00 a month. There was, therefore, an underpayment of P690.00 for every batillo under her
employ for the 23-month period.
With the addition of P60.00 across-the-board increase in their allowances, the workers of the
petitioner Reynaldo Tiangco were entitled to receive a fixed monthly allowance of P110.00.
However, the record shows that his workers were only paid P60.00 a month, or a difference of
P50.00 a month. Consequently, each batillo hired by him should be paid a differential of
P1,150.00 for the 23-month period.
For the period from April, 1979 to August, 1979, the employees of the petitioner Victoria Tiangco
were entitled to a fixed monthly allowance of P150.00 while the workers employed by the
petitioner Reynaldo Tiangco were entitled to an allowance of P170.00, pursuant to P.D. 1614.
The record shows, however, that both petitioners paid their workers only P120.00 a month.
There was a difference of P30.00 a month in the case of the petitioner Victoria Tiangco, and
P50.00, a month, in the case of the petitioner Reynaldo Tiangco. Hence, for this period, the
petitioner Victoria Tiangco should pay the amount of P150.00 to each batillo in her employ,
while the petitioner Reynaldo Tiangco should pay the amount of P250.00, as differentials in the
cost of living allowances of the workers under his employ.
With this modification, the judgment appealed from is AFFIRMED in all other respects. With
costs against the petitioners.

19
G.R. No. 74156 June 29, 1988

GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS
SANTIAGO,petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE
MACKAY EMPLOYEES UNION and EDA CONCEPCION, respondents.

Facts:

On October 30, 1984 Wage Order No. 6 mandated an increased in the cost-of-living
allowance of non-agricultural workers in the private sector for P3.00. The order was complied by
the petitioner Corporation by multiplying the same by 22 days, equivalent to the number of
working days in the company.
Respondent union alleges that instead of multiplying the COLA by 22 it should be
multiplied by 30 representing the number of days in a month, as what the corporation's normal
practice prior to the said Wage Order. Thus the union filed a complaint against the Corporation
for for illegal deduction, underpayment, unpaid allowances, and violation of Wage Order No. 6.

Issue:

Whether or not COLA under Wage Order No. 6 should be multiplied by 22 or 30

representing the number of working days in a month.

Held:

Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by

holding that since the individual petitioners acted in their corporate capacity they should not
have been impleaded; and that the monthly COLA should be computed on the basis of twenty
two (22) days, since the evidence showed that there are only 22 paid days in a month for
monthly-paid employees in the company. His reasoning, inter alia, was as follows:
To compel the respondent company to use 30 days in a month to compute the
allowance and retain 22 days for vacation and sick leave, overtime pay and other benefits is
inconsistent and palpably unjust. If 30 days is used as divisor, then it must be used for the
computation of all benefits, not just the allowance. But this is not fair to complainants, not to
mention that it will contravene the provision of the parties' CBA.

Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:

Section 5. Allowance for Unworked Days.

All covered employees shall be entitled to their daily living allowance during the days that they
are paid their basic wage, even if unworked. (Emphasis supplied)

... it is evident that the intention of the law is to grant ECOLA upon the payment of basic wages.
Hence, we have the principle of 'No Pay, No ECOLA.

19
G.R. No. 166647 March 31, 2006

PAG-ASA STEEL WORKS, INC., Petitioner,

vs.
COURT OF APPEALS, FORMER SIXTH DIVISION and PAG-ASA STEEL WORKERS UNION
(PSWU), Respondent.

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 of
petitioner.

On January 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of the
National Capital Region (NCR) issued Wage Order No. NCR-06. It provided for an increase of
P13.00 per day in the salaries of employees receiving the minimum wage, and a consequent
increase in the minimum wage rate to P198.00 per day. Petitioner and the Union negotiated on
how to go about the wage adjustments. Petitioner forwarded a letter dated March 10, 1998 to
the Union with the list of the salary adjustments of the rank-and-file employees after the
implementation of Wage Order No. NCR-06, and the notation that said "adjustments [were] in
accordance with the formula [they] have discussed and [were] designed so as no distortion shall
result from the implementation of Wage Order No. NCR-06."

On September 23, 1999, petitioner and the Union entered into a Collective Bargaining
Agreement (CBA), effective July 1, 1999 until July 1, 2004 to grant all workers the increase
however if no wage increase given by the Wage Board within six (6) month the management is
willing to give increase. On October 14, 1999, Wage Order No. NCR-07 was issued, and on
October 26, 1999, its Implementing Rules and Regulations. It provided for a P25.50 per day
increase in the salary of employees receiving the minimum wage and increased the minimum
wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file
employees.

On July 1, 2000, the rank-and-file employees were granted the second year increase provided
in the CBA in the amount of P25.00 per day.

On November 1, 2000, Wage Order No. NCR-08 took effect. Thereby setting the minimum
wage rate at (P250.00) per day. On July 1, 2000, the rank-and-file employees were granted the
second year increase provided in the CBA in the amount of P25.00 per day. Then Union
president Lucenio Brin requested petitioner to implement the increase under Wage Order No.
NCR-08 in favor of the company’s rank-and-file employees. Petitioner rejected the request, the
Union elevated the matter to the National Conciliation and Mediation Board. When the parties
failed to settle, they agreed to refer the case to voluntary arbitration.

On June 6, 2001, the VA rendered judgment in favor of the company and ordered the case
dismissed. The Union filed a petition for review with the CA, they diverted the issue whether or
not the increase of (P26.50 ) must be paid in the union members as a matter of practice and
parol evidence can be resorted to in proving or explaining the existence of a collateral
agreement despite that the employees are receiving wage above the minimum wage and
whether wage distortion exist.. On September 23, 2004, the CA rendered judgment in favor of

20
the Union and reversed that of the VA. Petitioner filed a motion for reconsideration which the CA
denied for lack of merit on January 11, 2005.

ISSUE: Whether or not the company was obliged to grant the wage increase under Wage
Order No. NCR-08 as a matter of practice?

HELD: Petitioner is not obliged to grant the wage increase under Wage Order No. NCR-08
either by virtue of the CBA, or as a matter of company practice. 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

20
Lexal Laboratories and/or Jose Angeles vs National Chemical Industries Workers Union-
PAFLU and the Court of Industrial Relations

Facts:

The Court of Industrial Relations (CIR) decided to reinstate Guillermo Ponseca, a dismissed
employee, to his former position with full back wages from the day of his dismissal up to the
time he is reinstated without loss of his seniority rights and of such other rights and privileges
enjoyed by him prior to his lay-off. Ponseca was entitled to back wages from the day he ceased
reporting for work, to a day prior to his reinstatement. Petitioners objected to the inclusion of
P4.00 per diem in the computation of Ponseca’s back wages because he did not spend for his
meals and lodgings for he was all the time in Manila, his station. CIR stated that per diems
should be paid as part of the back wages because they were “paid to him regularly.”

Per diem is intended to cover the cost of lodging and subsistence of officers and employees
when the latter are on duty outside of their permanent station. Ponseca, during the period
involved, did not leave Manila. Since he spent nothing for meals and lodging outside of Manila,
there is nothing to be reimbursed. Since per diem is in the nature of reimbursement, Ponseca
should not be entitled to per diems.

Issue:

Whether per diems are included in backpay.

Ruling:

Judgement is hereby rendered ordering petitioner Lexal Laboratories to pay Guillermo Ponseca,
by way of net backpay, the sum of P2,697.00

20
G.R. No. 111744 September 8, 1995

LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA

L. CRUZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE ASSURANCE CO.,
LTD., respondents.

REGALADO, J.:

Facts:

Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but
they were dismissed when their positions were declared redundant. A special redundancy
benefit was paid to them, which included payment of accrued vacation leave and fifty percent
(50%) of unused current sick leave, special redundancy benefit, equivalent to three (3) months
salary for every year of service; and additional cash benefits, in lieu of other benefits provided
by the company or required by law. 3

Before the termination of their services, petitioner Marcos had been in the employ of private
respondent for more than twenty (20) years; petitioner Andrada, more than twenty-five (25)
years; petitioner Lopez, exactly thirty (30) years; and petitioner Cruz, more than twenty (20)
years.

Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to respondent
company questioning the redundancy package, She claimed that they should receive their
respective service awards and other prorated bonuses which they had earned at the time they
were dismissed. In addition, Lopez argued that "the cash service awards have already been
budgeted in a fund distinct and apart from redundancy fund. 5

Thereafter, private respondent required petitioners to execute a "Release and Quitclaim," 6 and
petitioners complied but with a written protest reiterating their previous demand that they were
nonetheless entitled to receive their service awards.

Meanwhile, in the same year, private respondent celebrated its 80th anniversary wherein the
management approved the grant of an anniversary bonus equivalent to one (1) month salary
only to permanent and probationary employees as of November 15, 1990. 9

On March 26, 1991, respondent company announced the grant of performance bonus to both
rank and file employees and supervisory specialist grade and managerial staff equivalent to two
(2) months salary and 2.75 basic salary, respectively, as of December 30, 1990. The
performance bonus, however, would be given only to permanent employees as of March 30,
1991. 10

20
In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay
petitioners their service awards, anniversary bonuses and prorated performance bonuses,
including ten percent (10%) thereof as attorney's fees.

Issue: WON respondent NLRC committed reversible error or grave abuse of discretion in
affirming the validity of the "Release and Quitclaim" and, consequently, that petitioners are not
entitled to payment of service awards and other bonuses.

Held:

Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for
his claims does not necessarily result in the waiver thereof. The law does not consider as valid
any agreement whereby a worker agrees to receive less compensation than what he is entitled
to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to
which he is legally entitled.

Furthermore, in the instant case, it is an undisputed fact that when petitioners signed the
instrument of release and quitclaim, they made a written manifestation reserving their right to
demand the payment of their service awards. The element of total voluntariness in executing
that instrument is negated by the fact that they expressly stated therein their claim for the
service awards, a manifestation equivalent to a protest and a disavowal of any waiver thereof.

The grant of service awards in favor of petitioners is more importantly underscored in the
precedent case of Insular Life Assurance Co., Ltd., et al. vs. NLRC, et al., 24 where this Court
ruled that "as to the service award differentials claimed by some respondent union members,
the company policy shall likewise prevail, the same being based on the employment contracts
or collective bargaining agreements between the parties. As the petitioners had explained,
pursuant to their policies on the matter, the service award differential is given at the end of the
year to an employee who has completed years of service divisible by 5.

A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition
to what would ordinarily be given. 25 The term "bonus" as used in employment contracts, also
conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous,
over and above the prescribed wage which the employer agrees to pay.

While there is a conflict of opinion as to the validity of an agreement to pay additional sums for
the performance of that which the promisee is already under obligation to perform, so as to give
the latter the right to enforce such promise after performance, the authorities hold that if one
enters into a contract of employment under an agreement that he shall be paid a certain salary
by the week or some other stated period and, in addition, a bonus, in case he serves for a
specified length of time, there is no reason for refusing to enforce the promise to pay the bonus,
if the employee has served during the stipulated time, on the ground that it was a promise of a
mere gratuity.

This is true if the contract contemplates a continuance of the employment for a definite term,
and the promise of the bonus is made at the time the contract is entered into. If no time is fixed
for the duration of the contract of employment, but the employee enters upon or continues in
service under an offer of a bonus if he remains therein for a certain time, his service, in case he
remains for the required time, constitutes an acceptance of the offer of the employer to pay the

20
bonus and, after that acceptance, the offer cannot be withdrawn, but can be enforced by the
employee.

The weight of authority in American jurisprudence, with which we are persuaded to agree, is
that after the acceptance of a promise by an employer to pay the bonus, the same cannot be
withdrawn, but may be enforced by the employee. However, in the case at bar, equity demands
that the performance and anniversary bonuses should be prorated to the number of months that
petitioners actually served respondent company in the year 1990. This observation should be
taken into account in the computation of the amounts to be awarded to petitioners.

WHEREFORE the decision of Labor Arbiter Alex Arcadio Lopez is upheld.

20
 Traders Royal Bank vs NLRC and Traders Royal Bank Employees Union
GR No. 88168
GRIÑO-AQUINO, J.:

Facts:

` Respondent Traders Royal Bank Employees Union filed a complaint to the NLRC on the
account of diminution of their benefits by the petitioner. Said diminution was effected through;
mid-year bonus, from two (2) months gross pay to two (2) months basic and year-end bonus
from three (3) months gross to only two (2) months.

NLRC rendered a decision in favor of the Employees union and ordered Traders Royal
Bank to pay to employees the mid-year bonus differential representing the difference between
two (2) months gross pay and two (2) months basic pay and end-year bonus differential of one
(1) month gross pay for 1986.

The motion for reconsideration of Traders Royal Bank was then denied.

Thus the petition for certiorari.

Issue:

Whether or not the reduction in bonuses is tantamount to diminution of benefits?

Held:

The petition for Certiorari was granted.

Ratio:

A bonus is a “gratuity or act of liberality of the giver which the recipient has no right to
demand as a matter of right.” The discretion of giving bonuses rests upon the management and
the income of the operations of the past year.

It has been claimed that the income of the petitioner has indeed decreased yet the bank
still gave out the usual bonuses. Any claim that the receipt of the employees of bonuses has
been a company tradition and cannot be adjusted to its fiscal position is without merit. The
company cannot be forced to give bonuses which it can no longer afford and in effect, be
penalized for its past generosity. Bonuses are not part of labor standards like salaries, cost of
living allowances, and leave benefits, which are provided by the Labor Code.

20
 National Federation of Sugar Workers vs. Ovejera
G.R. No. L-59743 May 31 1982

EN BANC, PLANA, J:

Facts:

National Federation of Sugar Workers (NFSW) has been the bargaining agent of CENTRAL
AZUCARERA DE LA CARLOTA (CAC) rank and file employees and has concluded with CAC a
collective bargaining agreement stipulating a provision regarding the grant of bonuses.

On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th month pay
under PD 851, in addition to the Christmas, milling and amelioration bonuses being enjoyed by
CAC workers.

To settle the strike, a compromise agreement was concluded between CAC and NFSW on
November stipulating that the parties agree to abide by the final decision of the Supreme Court
in any case involving the 13th Month Pay Law if it is clearly held that the employer is liable to
pay a 13th month pay separate and distinct from the bonuses already given.

Meanwhile, a motion for reconsideration on the case of Marcopper Mining Corp. vs. Blas Ople
et. al. (G.R. No. 51254) for the payment of 13th month pay under PD 851 was denied and an
entry of judgment was made in favor of the Union. After the Marcopper decision had become
final, NFSW renewed its demand that CAC give the 13th month pay. CAC refused. A notice of
strike was filed with the Ministry of Labor and Employment and was subsequently commenced
based on the non-payment of the 13th month pay.

Issue:

Whether under PD 851, CAC is obliged to give its workers a 13th month salary in addition to
Christmas, milling and amelioration bonuses stipulated in a collective bargaining agreement
amounting to more than a month's pay.

Held:

The evident intention of the law, as revealed by the law itself, was to grant an additional income
in the form of a 13th month pay to employees not already receiving the same. Otherwise put,
the intention was to grant some relief — not to all workers — but only to the unfortunate ones
not actually paid a 13th month salary or what amounts to it, by whatever name called; but it was
not envisioned that a double burden would be imposed on the employer already paying his
employees a 13th month pay or its equivalent — whether out of pure generosity or on the basis
of a binding agreement and, in the latter ease, regardless of the conditional character of the
grant (such as making the payment dependent on profit), so long as there is actual payment.
Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or
possibly 15th month pay. This view is justified by the law itself which makes no distinction in the
grant of exemption: "Employers already paying their employees a 13th month pay or its
equivalent are not covered by this Decree." (P.D. 851.)

20
To require employers (already giving their employees a 13th month salary or its equivalent) to
give a second 13th month pay would be unfair and productive of undesirable results. To the
employer who had acceded and is already bound to give bonuses to his employees, the
additional burden of a 13th month pay would amount to a penalty for his munificence or
liberality. The probable reaction of one so circumstance would be to withdraw the bonuses or
resist further voluntary grants for fear that if and when a law is passed giving the same benefits,
his prior concessions might not be given due credit; and this negative attitude would have an
adverse impact on the employees.

Decision:

At any rate, in view of the rulings made herein, NFSW cannot insist on its claim that its
members are entitled to a 13th month pay in addition to the bonuses already paid by CAC.

WHEREFORE, the petition is dismissed for lack of merit. No costs. SO ORDERED.

20
G.R. No. L-60337 August 21, 1987

UNIVERSAL CORN PRODUCTS (A DIVISION OF UNIVERSAL ROBINA CORPORATION),

petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION et. al

SARMIENTO, J.:

Sometime in May, 1972, the petitioner and the Universal Corn Products Workers Union entered
into a collective bargaining agreement in which it was provided, among other things, that:

xxx xxx xxx

The COMPANY agrees to grant all regular workers within the bargaining unit with
at least one (1) year of continuous service, a Christmas bonus equivalent to the
regular wages for seven (7) working days, effective December, 1972. The bonus
shall be given to the workers on the second week of December.

In the event that the service of a worker is not continuous due to factory
shutdown, machine breakdown or prolonged absences or leaves, the Christmas
bonus shall be prorated in accordance with the length of services that worker
concerned has served during the year .

xxx xxx xxx

The agreement had a duration of three years, effective June 1, 1971, or until June 1, 1974.

On account however of differences between the parties with respect to certain economic issues,
the collective bargaining agreement in question expired without being renewed. On June 1,
1979, the parties entered into an "addendum" stipulating certain wage increases covering the
years from 1974 to 1977. Simultaneously, they entered into a collective bargaining agreement
for the years from 1979 to 1981. Like the "addendum," the new collective bargaining agreement
did not refer to the "Christmas bonus" theretofore paid but dealt only with salary adjustments.
According to the petitioner, the new agreements deliberately excluded the grant of Christmas
bonus with the enactment of Presidential Decree No. 851 on December 16, 1975. It further
claims that since 1975, it had been paying its employees 13th-month pay pursuant to the
Decree.

For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978 inclusive, in
accordance with the 1972 CBA, the union went to the labor arbiter for relief. In his decision, the
labor arbiter ruled that the payment of the 13th month pay precluded the payment of further
Christmas bonus. The union appealed to the National Labor Relations Commission (NLRC).
The NLRC set aside the decision of the labor arbiter appealed from and entered another one,
"directing respondent company [now the petitioner] to pay the members concerned of
complainants [sic] union their 7-day wage bonus in accordance with the 1972 CBA from 1975 to
1978.

20
 .

ISSUE:

WHETHER OR NOT ADDITIONAL BONUSES SHALL CONSTITUTE 13TH MONTH PAY

BENEFITS

HELD:

No, the seven-day bonus here demanded "to be in addition to the legal requirement." Although
unlike the Valenzuela CBA, which took effect after the promulgation of Presidential Decree No.
851 in 1975, the subject agreement was entered into as early as 1972, that is no bar to our
application of Valenzuela. What is significant for us is the fact that, like the Valenzuela,
agreement, the Christmas bonus provided in the collective bargaining agreement accords a
reward, in this case, for loyalty, to certain employees. This is evident from the stipulation
granting the bonus in question to workers "with at least one (1) year of continuous service." As
we said in Valenzuela" this is "a purpose not found in P.D. 851.

21
G.R. No. 114280 July 26, 1996

PHILIPPINE AIRLINES, INC. (PAL), petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and AIRLINE PILOTS ASSOCIATION OF
THE PHILIPPINES (ALPAP), respondents.

G.R. No. 115224 July 26, 1996

AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES (ALPAP), petitioner,

vs.

NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE AIRLINES, INC. (PAL),

respondents.

Facts:
ALPAP filed its complaint 2 on September, 1991, charging PAL of violating Presidential Decree
No. 851, its Implementing Rules and Regulations and Memorandum Order No. 28 issued by
then President Corazon C. Aquino, for unlawfully refusing and failing to pay the pilots their
thirteenth month pay from 1988 to 1990. Aside from their accumulated thirteenth month pay,
ALPAP prayed for an award of P500,000.00 as moral damages and P100,000.00 as exemplary
damages to each of their pilots, plus attorney's fees equivalent to ten percent (10%) of the total
awards adjudged. Subsequently, however, ALPAP expanded the coverage of its claim from
1986 to 1990 upon filing its position paper. 3

In answer to the complaint, PAL denied any liability to ALPAP and maintained that it was not
obliged to give its pilots a thirteenth month pay under P.D. 851 as it was already paying said
employees the equivalent of a thirteenth month pay in the form of a year-end bonus. PAL
invokes that under Section 2 of PD 851 and its Implementing Rules and Regulations,
"employers already paying their employees a 13th month pay or more in a calendar year or its
equivalent at the time of this issuance," are not covered by PD 851. 4 Additionally, PAL
contends that there is no demandable obligation in the absence of any contractual stipulation or
a legal provision requiring it to give its pilots a thirteenth month pay as aside from a year-end
bonus that the latter are already receiving. 5

WHEREFORE, judgment is hereby rendered in this case, declaring respondent Philippine

Airlines (PAL) guilty of non-payment of the thirteenth month pay. Respondent is therefore
ordered to pay members of the complainant Airlines Pilots Association of the Philippines
(ALPAP) the following sums of money:

13th month pay P 69,167,244.00

Moral and Exemplary
damages 6,948,000.00
Attorney's fees 7,611,542.00
———————
Grand Total P83,726,768.00

21
All other claims are denied for lack of legal or factual basis. 7

In the aforecited decision, the Labor Arbiter discarded PAL's contentions and took note of the
fact that the payment of the year-end bonus is conditional and uncertain. PAL's argument that is
exempted from the coverage of PD 851 was ruled out because it was shown that except for the
pilots, all other employees of PAL were receiving both the thirteenth moth pay and the year-end
bonus. However, the coverage of the award for thirteenth month pay was confined to 1988 until
1990, excluding those from 1986 and 1987, due to ALPAP's failure to amend its complaint.

Not satisfied, both parties appealed to the NLRC which in turn promulgated the assailed
resolution on November 23, 1993 8 and ruled in this wise:

WHEREFORE, premises considered, the decision of (sic) dated 29, May 1992 is hereby
AFFIRMED with the modification that the respondent PAL also pay the 13th month pay to the
ALPAP pilots for the years 1986 and 1987; the dismissal of the claim for moral and exemplary
damages; the payment of PAL of legal interest form the dates the 13th month pay of the ALPAP
pilots accrued up to the time of actual payment; and the payment of attorney's fees of 10% of
the total award.

SO ORDERED. 9

Still dissatisfied, the parties sought reconsideration which, however, were both denied by the
NLRC in this resolution dated February 28, 1994. 10 The NLRC also reduced the award of
attorney's fees to five percent (5%) and deleted the payment of legal interest for lack of basis.
11

Hence, these petitions.

The pivotal issue in this petition is whether or not the NLRC committed grave abuse of
discretion in holding PAL liable to the members of ALPAP for non-payment of their thirteenth
month pay from 1988 to 1990, not withstanding that, as claimed by PAL, there is no legal basis
for the said finding.

PAL's contention is premised on the following arguments:

1) Payment of the thirteenth month pay under P.D. 851 and Memorandum Order No. 28 covers
only rank and file employees. Pilots are excluded from the coverage because they are not rank
and file employees but rather supervisory employees. Hence, they are not entitled to any
thirteenth month pay.

2) There is no contractual obligation to pay the pilots any thirteenth month pay in the absence of
any provision in their CBA. And even assuming that they are entitled to a thirteenth month pay,
the payment of a year-end bonus is already equivalent to a thirteenth month pay.

Anent the first argument, PAL cites Memorandum Order No. 28 which provides as follows:

Sec. 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are
hereby required to pay all their rank and file employees a 13th month pay not later than
December 24 of every year.

21
Issue:
Whether or not pilots cannot be classified as rank and file employees since the nature of their
job includes the exercise of supervision over the cabin crew and the power to recommend
disciplinary actions over the latter. 12

Interestingly, however, the contention was raised by PAL rather belatedly and invoked for the
first time on appeal. Worse, this issue was not even discussed in PAL's original Memorandum
and was raised only much later when PAL filed a Supplemental Memorandum on Appeal
through a new counsel. In fact, in denying PAL's appeal, the NLRC did not even bother to
consider the new issue raised by PAL. This precludes us from taking cognizance of and
resolving the aforementioned issue with respect to the employment status of the pilots as it
would be violative of the proscription against the presentation of new issues on appeal. The rule
is well-settled that points of law, theories, issues and arguments not adequately brought to the
attention of the trial court need not be, and ordinarily will not be considered by a reviewing court
as they cannot be raised for the first time on appeal 13 because this would be offensive to the
basic rules of fair play, justice and due process. 14 By invoking the alleged supervisory status of
the pilots during the pendency of its appeal and raising the issue only later in their Supplemental
Memorandum, it was evident that this was a last ditch effort to shift to a new theory and raise a
new matter in the hope of a favorable result. This, however, is the pernicious practice that has
consistently been rejected. Thus, PAL is now barred from claiming that their pilots are not rank
and file employees.

The other argument of PAL is that there is no provision in the CBA of ALPAP which obligates
the former to pay the members of the latter any thirteenth month pay. PAL contends that it is of
no moment that its other employees, namely, the flight attendants belonging to the Flight
Attendants' and Stewards' Association of the Philippines (FASAP) and the other rank and file
employees belonging to Philippine Airlines Employees' Association (PALEA), are being granted
both the thirteenth month pay and the year-end bonus because the payment of the said benefits
were the result of contractual negotiations in their respective CBA's. the absence of such
contractual grant to the members of ALPAP only shows that there was no intention to give the
pilots the same benefits. Furthermore, PAL argues that even assuming that the pilots are legally
entitled to a thirteenth month pay, the law exempts them from compliance with the same
because the payment of a year-end/Christmas bonus is already equivalent to the thirteenth
month pay. To bolster this claim, PAL relies on the doctrine laid down by this Court in the cases
of National Federation of Sugar Workers (NFSW) vs Ovejera, [114 SCRA 354 (1982)], Dole
Philippines, Inc. vs. Leogardo, Jr. [117 SCRA 938 (1982)] and Brokenshire Memorial Hospital
vs. NLRC [143 SCRA 564 (1986)], which was crystallized as follows:

The absence of an express provision in the CBA between PAL and ALPAP obligating the former
to pay the members of the latter a thirteenth month pay is immaterial. It cannot be disputed that
the tenor of P.D. 851 as amended by Memorandum Order No. 28 is mandatory in so providing
that "all employers are hereby required to pay all their rank and file employees a thirteenth
month pay not later than December 24 of every year."

The term "bonus" was in turn interpreted to mean:

"[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 . . . it is also granted by an enlightened

21
employer to spur the employee to greater efforts for the success of the business and realization
of bigger profits. 19

The award of attorney's fees on the basis of quantum meruit at the rate of five percent (5%) of
the total monetary award is reasonable in this case considering the explicit provisions laid out in
Article III of the Labor Code and in Rule VIII, Sec. II, Book III of the Omnibus Rules
Implementing the Labor Code, 27 to wit:

Art. III. Attorney's fees. — (a) in cases of unlawful withholding of wages the culpable party may
be assessed attorney's fees equivalent to ten percent of the amount wages recovered.

xxx xxx xxx

Sec. 11, Attorney's fees — Attorney's fees in any judicial or administrative proceedings for the
recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted
from the total amount due the winning party.

WHEREFORE, finding no merit in the petitions, the same are hereby DENIED and the
Resolutions of public respondent NLRC promulgated on November 23, 1993 and February 28,
1994 are hereby AFFIRMED.

SO ORDERED.

21
Framanlis Farms Inc. vs. Minister of Labor (G.R. No. 72616-17 March 8, 1989)

Facts:

In April 1980, eighteen (18) employees of the petitioners filed against their employer, and the
other petitioners two labor standard cases which were docketed in the Regional Office of the
Ministry of Labor in Bacolod City as FAD Cases Nos. 179180 and 0792-80 ("PAFLU
SEPTEMBER CONVENTION VS. FRAMANLIS FARMS"), alleging that in 1977 to 1979 they
were not paid emergency cost of living allowance (ECOLA) minimum wage, 13th month pay,
holiday pay, and service incentive leave pay.

The Deputy Minister of Labor favored the employees of the petitioner.

Issue:

Framanlis Farms, Inc. alleged that the Deputy Minister erred:

1. in awarding pay differentials, holiday and service incentive leave for pakyaw workers who are
not regular employees but are merely paid on piece-rate, contrary to Art. 82 of the Labor Code;

2. in requiring the petitioners to pay 13th month pay despite the fact that they (petitioners) had
substantially complied with the requirement by extending yearly bonuses and other benefits in
kind and in cash to the complainants, pursuant to Section 3(c) of PD 851 which exempts the
employer from paying 13th month pay when its equivalent has already been given; and

3. in not precisely stating who among the private respondents are pakyaw and non-pakyaw
workers.

Held:

The respondent Minister did not err in requiring the petitioners to pay wage differentials to their
pakyaw workers. With regard to the 13th month pay, petitioners admitted that they failed to pay
their workers 13th month pay in 1978 and 1979. Benefits in the form of food or free electricity,
assuming they were given, were not a proper substitute for the 13th month pay required by law.
Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay.

The failure of the Minister's decision to identify the pakyaw and non-pakyaw workers does not
render said decision invalid. The workers may be identified or determined in the proceedings for
execution of the judgment.

WHEREFORE, the petition for certiorari is dismissed with costs against the petitioners.

21
SAN MIGUEL CORPORATION (CAGAYAN COCA-COLA PLANT), petitioner,
vs.
Hon. AMADO G. INCIONG, Deputy Minister of Labor and CAGAYAN COCA-COLA FREE
WORKERS UNION, respondents.

FACTS:

On January 3, 1977, Cagayan Coca-Cola Free Workers Union, private respondent herein, filed
a complaint against San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein,
alleging failure or refusal of the latter to include in the computation of 13th- month pay such
items as sick, vacation or maternity leaves, premium for work done on rest days and special
holidays, including pay for regular holidays and night differentials.

An Order dated February 15, 1977 was issued by Regional Office No. X where the complaint
was filed requiring herein petitioner San Miguel Corporation (Cagayan Coca-Cola Plant) "to pay
the difference of whatever earnings and the amount actually received as 13th month pay
excluding overtime premium and emergency cost of living allowance."

Herein petitioner appealed from that Order to the Minister of Labor in whose behalf the Deputy
Minister of Labor Amado G. Inciong issued an Order dated June 7, 1978 affirming the Order of
Regional Office No. X and dismissing the appeal for lack of merit. Petitioner's motion for
reconsideration having been denied, it filed the instant petition.

On February 14, 1979, this Court issued a Temporary Restraining Order enjoining respondents
from enforcing the Order dated December 19, 1978.

Public respondent's consistent stand on the matter since the effectivity of Presidential Decree
851 is that "payments for sick leave, vacation leave, and maternity benefits, as well as salaries
paid to employees for work performed on rest days, special and regular holidays are included in
the computation of the 13th-month pay. On its part, private respondent cited innumerable past
rulings, opinions and decisions rendered by then Acting Labor Secretary Amado G. Inciong to
the effect that, "in computing the mandatory bonus, the basis is the total gross basic salary paid
by the employer during the calendar year. Such gross basic salary includes: (1) regular salary or
wage; (2) payments for sick, vacation and maternity leaves; (3) premium for work performed on
rest days or holidays: (4) holiday pay for worked or unworked regular holiday; and (5)
emergency allowance if given in the form of a wage adjustment."

Petitioner, on the other hand, assails as erroneous the aforesaid order, ruling and opinions,
vigorously contends that Presidential Decree 851 speaks only of basic salary as basis for the
determination of the 13th-month pay; submits that payments for sick, vacation, or maternity
leaves, night differential pay, as well as premium paid for work performed on rest days, special
and regular holidays do not form part of the basic salary; and concludes that the inclusion of
those payments in the computation of the 13th-month pay is clearly not sanctioned by
Presidential Decree 851.

ISSUE:

1. Whether or not in the computation of the 13th-month pay under Presidential Decree 851,
payments for sick, vacation or maternity leaves, premium for work done on rest days and

21
 special holidays, including pay for regular holidays and night differentials should be
considered.

HELD:

The Court finds petitioner's contention meritorious.

The provision in dispute is Section 1 of Presidential Decree 851 and provides:

All employers are hereby required to pay all their employees receiving a basic salary of not
more than Pl,000 a month, regardless of the nature of the employment, a 13th-month pay not
later than December 24 of every year.

Section 2 of the Rules and Regulations for the implementation of Presidential Decree 851
provides:

a) Thirteenth-month pay shall mean one twelfth (1/12) of the basic salary of an employee
within a calendar year

b) Basic salary shall include all remunerations on earnings paid by an employer to an

employee for services rendered but may not include cost-of-living allowances granted
pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit sharing
payments and all allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975.

Under Presidential Decree 851 and its implementing rules, the basic salary of an
employee is used as the basis in the determination of his 13th-month pay. Any
compensations or remunerations which are deemed not part of the basic pay is excluded
as basis in the computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:

a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of

Instructions 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.

21
 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.

The all-embracing phrase "earnings and other remuneration" which are deemed not part
of the basic salary includes within its meaning payments for sick, vacation, or maternity
leaves. Maternity premium for works performed on rest days and special holidays pays
for regular holidays and night differentials. As such they are deemed not part of the basic
salary and shall not be considered in the computation of the 13th-month pay 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 hours a day provided
what the employee is paid for the overtime work, additional compensation equivalent to
his regular wage plus at least twenty-five (25%) percent thereof.

It is clear that overtime pay is an additional compensation other than and added to the
regular wage or basic salary, for reason of which such is categorically excluded from the
definition of basic salary under the Supplementary Rules and Regulations Implementing
Presidential Decree 851.

In Article 93 of the same Code, paragraph

c) work performed on any special holiday shall be paid an additional compensation of at

least thirty percent (30%) of the regular wage of the employee.

It is likewise clear that premium for special holiday which is at least 30% of the regular
wage is an additional compensation other than and added to the regular wage or basic
salary. For similar reason it shall not be considered in the computation of the 13th-
month pay.

WHEREFORE, the Orders of the Deputy Labor Minister dated June 7, 1978 and December 19,
1978 are hereby set aside and a new one entered as above indicated. The Temporary

21
Restraining Order issued by this Court on February 14, 1979 is hereby made permanent. No
pronouncement as to costs.

21
G.R. No. 100167 March 2, 1995

ISALAMA MACHINE WORKS CORPORATION, petitioner,

vs.
HON. LABOR RELATIONS COMMISSION, FIFTH DIVISION and ISALAMA MACHINE
WORKS CORPORATION LABOR UNION-WORKERS ALLIANCE TRADE UNION AND/OR
HENRY BAYGAN, NATHAN PURACAN, GREGORIO LAYSON, JR., NANDY VIRTUDAZO,
JIMMY SACRO, CHARITO ESTRERA, DENISON AMBOAYEN, BIENVENIDO CABIL,
MELCHOR MARTINEZ, FLORIDAN BILAR, NOEL LAYSON, EDISON ALMORADES, MA.
CELESTINA CLEMEN, LEONCIO CUIZON, VENNIE OPORTO, RODOLFO IGNACIO and
ALMIRANTE ZAGADO, respondents.

VITUG, J.:

Facts:

Isalama Machine Works Corporation and private respondent Isalama Machine Works
Corporation Labor Union-Workers Alliance Trade Union entered into a collective bargaining
agreement ("CBA") , i.e., to furnish the workers with safety shoes and free company laminated
IDs and, in general, to improve the employees' working conditions.

On 21 December 1987, the corporation paid the workers the 13th month pay based on the
average number of days actually worked during the year. The union, through its president,
private respondent Henry Baygan, demanded that the 13th month pay should, instead, be made
on the basis of a full one month basic salary. The corporation countered that its own
computation of the 13th month pay accorded with the CBA provisions and Presidential Decree
No. 851.

On 05 January 1988, the union filed a notice of strike with the Department of Labor and
Employment, Region X, Cagayan de Oro, alleging the commission of unfair labor practice and
CBA violation by the corporation. After several conferences, the National Conciliation and
Mediation Board ("NCMB") succeeded in having the dispute amicably settled except for the 13th
month pay differential which remained in contention. The union insisted that the failure of the
corporation to implement fully the 13th month pay provision of the CBA amounted to unfair labor
practice. The corporation argued that the 13th month pay was a mere money claim and
therefore not a "strikeable issue." The case was ultimately indorsed to the NLRC for compulsory
arbitration.

Issue: Whether or not the 13th month pay can be a basis for strike.

Held:

In this case, the real reason for the strike is clearly traceable to the unresolved dispute between
the parties on 13th month pay differentials under Presidential Decree No. 851, i.e., the proper
manner of its application and computation. The Court does not see this issue, given the
aforequoted provisions of the law and its implementing rules, to be constitutive of unfair labor
practice. Section 9 of Rules and Regulations Implementing Presidential Decree No. 851, in fact,

22
specifically states that "(n)onpayment of the thirteenth-month pay provided by the Decree and
(the) rules shall be treated as money claims cases and shall be processed in accordance with
the Rules Implementing the Labor Code of the Philippines and the Rules of the National Labor
Relations Commission."

22
G.R. No. L-60403 August 3, 1983

ALLIANCE OF GOVERNMENT WORKERS (AGW); PNB-FEMA BANK EMPLOYEES

ASSOCIATION (AGW); KAISAHAN AT KAPATIRAN NG MGA MANGAGAWA AT KAWANI
NG MWSS (AGW); BALARA EMPLOYEES ASSOCIATION (AGW); GSIS WORKERS
ASSOCIATION (AGW); SSS EMPLOYEES ASSOCIATION (AGW); PVTA EMPLOYEES
ASSOCIATION (AGW); NATIONAL ALLIANCE OF TEACHERS AND OFFICE WORKERS
(AGW); , petitioners,
vs.
THE HONORABLE MINISTER OF LABOR and EMPLOYMENT, PHILIPPINE NATIONAL
BANK (PNB); METROPOLITAN WATERWORKS and SEWERAGE SYSTEM (MWSS);
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS); SOCIAL SECURITY SYSTEM
(SSS); PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION (PVTA) PHILIPPINE NORMAL
COLLEGE (PNC); POLYTECHNIC UNIVERSITY OF THE PHILIPPINES (PUP), respondents.

GUTIERREZ, JR., J.:

Facts:

According to the petitioners, P.D. No. 851 requires all employers to pay the 13th-month pay to
their employees with one sole exception found in Section 2 which states that "(E)mployers
already paying their employees a 13th month pay or its equivalent are not covered by this
Decree. " The petitioners contend that Section 3 of the Rules and Regulations Implementing
Presidential Decree No. 851 included other types of employers not exempted by the decree.
They state that nowhere in the decree is the secretary, now Minister of Labor and Employment,
authorized to exempt other types of employers from the requirement.

Section 3 of the Rules and Regulations Implementing Presidential Decree No. 851 provides:

Section 3. Employers covered — The Decree shall apply to all employers except
to:

a) Distressed employers, such as (1) those which are currently incurring

substantial losses or 112) in the case of non-profit institutions and organizations,
where their income, whether from donations, contributions, grants and other
earnings from any source, has consistently declined by more than forty (40%) per
cent of their normal income for the last two (2) )years, subject to the provision of
Section 7 of this issuance.

b) The Government and any of its political subdivisions, including government-

owned and controlled corporations, except)t those corporation, operating
essentially as private, ,subsidiaries of the government;

c) Employers already paying their employees 13th-month pay or more in a

calendar year or its equivalent at the of this issuance;

d) Employers of household helpers and persons in the personal service of

another in relation to such workers: and

22
 e) Employers of those who are paid on purely commission, boundary, or task
basis and those who are paid a fixed for performing a specific work, irrespective
of the time consumed in the performance thereof, except where the workers are
paid an piece- rate basis in which case the employer shall be covered by this
issuance :insofar ab such workers are concerned ...

The petitioners assail this rule as ultra vires and void. Citing Philippine Apparel Workers'Union v.
NIRC et al., (106 SCRA 444); Teoxon v. Members of the Board of' Administators (33 SCRA
585); Santos u. Hon. Estenzo et al., (109 Phil. 419); Hilado u. Collector of Internal Revenue
(100 Phil. 288), and Olsen & Co. Inc. v. Aldanese and Trinidad (43 Phil. 259), the petitioners
argue that regulations adopted under legislative authority must be in harmony with the
provisions of the law and for the sole purpose of carrying into effect its general provisions. They
state that a legislative act cannot be amended by a rule and an administrative officer cannot
change the law. Section 3 is challenged as a substantial modification by rule of a Presidential
Decree and an unlawful exercise of legislative power.

Issue: WON the branches, agencies, subdivisions, and instrumentalities of the Government,
including government owned or controlled corporations included among the 4 "employers""
under Presidential Decree No. 851 which are required to pay an their employees receiving a
basic salary of not more than P1,000.00 a month, a thirteenth (13th) month pay not later than
December 24 of every year.

Held:

The Solicitor General states:

"Presidential Decree No. 851 is a labor standard law which requires covered employers to pay
their employees receiving not more than P1,000.00 a month an additional thirteenth-month pay.
Its purpose is to increase the real wage of the worker (Marcopper Mining Corp. v. Ople, 105
SCRA 75; and National Federation of Sugar Workers v. Ovejera, G.R. No. 59743, May 31,
1982) as explained in the'whereas'clause which read:

WHEREAS, it is necessary to further protect the level of real

wages from the ravage of world-wide inflation;

WHEREAS, there has been no increase in the legal minimum

wage rates since 1970; 11

WHEREAS, the Christmas season is an opportune time for

society to show its concern for the plight of the working masses so
they may celebrate the Christmas and New Year.

xxx xxx xxx

What the P.D. No. 851 intended to cover, as explained in the prefatory statement
of the Decree, are only those in the private sector whose real wages require
protection from world-wide inflation. This is emphasized by the "whereas" clause
which states that 'there has been no increase in the legal minimum wage rates
since 1970'. This could only refer to the private sector, and not to those in the
government service because at the time of the enactment of Presidential Decree

22
 No. 851 in 1975, only the employees in the private sector had not been given any
increase in their minimum wage. The employees in the government service had
already been granted in 1974 a ten percent across-the-board increase on their
salaries as stated in P.D. No. 525, Section 4.

Moreover, where employees in the government service were to benefit from labor
standard laws, their coverage is explicitly stated in the statute or presidential
enactment. This is evident in (a) Presidential Decree No. 390, Sec. 1 which
granted emergency cost of living allowance to employees in the national
government; (b) Republic Act No. 6111, Sec. 10 on medicare benefits; (c)
Presidential Decree No -442, Title II, Article 97 on the applicable minimum wage
rates; (d) Presidential Decree No. 442, Title 11, Article 167 (g) on workmen's
compensation; (e) Presidential Decree No. 1123 which provides for increases in
emergency allowance to employees in the private sector and in salary to
government employees in Section 2 thereof; and (f) Executive Order No. 752
granting government employees a year-end bonus equivalent to one week's pay.
Thus, had the intention been to include government employees under the
coverage of Presidential Decree No. 851, said Decree should have expressly so
provided and there should have been accompanying yearly appropriation
measures to implement the same. That no such express provision was provided
and no accompanying appropriation measure to was passed clearly show the
intent to exclude government employees from the coverage of P. D. No. 85 1.

We agree.

It is an old rule of statutory construction that restrictive statutes and acts which impose burdens
on the public treasury or which diminish rights and interests, no matter how broad their terms do
not embrace the Sovereign, unless the Sovereign is specifically mentioned. (See Dollar Savings
Bank v. United States, 19 Wall (U.S.) 227; United States v. United Mine Workers of America,
330 U.S. 265). The Republic of the Philippines, as sovereign, cannot be covered by a general
term like "employer" unless the language used in the law is clear and specific to that effect.

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

22
 ROLANDO Y. TAN vs. LEOVIGILDO LAGRAMA, ET AL.
G.R. No. 151228 August 15, 2002
MENDOZA, J.:

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 Sub-Regional Arbitration Branch No. X of the National Labor
Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed
and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary
differential, and damages.

Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an
independent contractor who did his work according to his methods, while he (petitioner) was
only interested in the result thereof. He cited the admission of Lagrama during the conferences
before the Labor Arbiter that he was paid on a fixed piece-work basis, i.e., that he was paid for
every painting turned out as ad billboard or mural for the pictures shown in the three theaters,
on the basis of a "no mural/billboard drawn, no pay" policy. He submitted the affidavits of other
cinema owners, an amusement park owner, and those supervising the construction of a church
to prove that the services of Lagrama were contracted by them. He denied having dismissed
Lagrama and alleged that it was the latter who refused to paint for him after he was scolded for
his habits.

ISSUE: Whether or not an employer-employee relationship existed between

petitioner and private respondent, and whether petitioner is guilty of illegally dismissing private
respondent?

HELD:In determining whether there is an employer-employee relationship, we have applied a

"four-fold test," to wit: (1) whether the alleged employer has the power of selection and
engagement of employees; (2) whether he has control of the employee with respect to the
means and methods by which work is to be accomplished; (3) whether he has the power to
dismiss; and (4) whether the employee was paid wages. These elements of the employer-
employee relationship are present in this case.

The existence in this case of the first element is undisputed. It was petitioner who engaged the
services of Lagrama without the intervention of a third party. It is the existence of the second
element, the power of control, that requires discussion here.

22
Of the four elements of the employer-employee relationship, the "control test" is the most
important. Compared to an employee, an independent contractor is one who carries on a
distinct and independent business and undertakes to perform the job, work, or service on its
own account and under its own responsibility according to its own manner and method, free
from the control and direction of the principal in all matters connected with the performance of
the work except as to the results thereof. Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his principal, an employee is
subject to the employer's power to control the means and methods by which the employee's
work is to be performed and accomplished.

In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an
independent contractor and never his employee, the evidence shows that the latter performed
his work as painter under the supervision and control of petitioner. Lagrama worked in a
designated work area inside the Crown Theater of petitioner, for the use of which petitioner
prescribed rules. The rules included the observance of cleanliness and hygiene and a
prohibition against urinating in the work area and any place other than the toilet or the rest
rooms.9 Petitioner's control over Lagrama's work extended not only to the use of the work area,
but also to the result of Lagrama's work, and the manner and means by which the work was to
be accomplished.

Moreover, it would appear that petitioner not only provided the workplace, but supplied as well
the materials used for the paintings, because he admitted that he paid Lagrama only for the
latter's services.10

WHEREFORE, based on the foregoing, the petition is DENIED for lack of showing that the
Court of Appeals committed any reversible error.

22
 Lambo vs. NLRC
G.R. No. 111042 October 26, 1999

FACTS:

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985,
respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As
in the case of the other 100 employees of private respondents, petitioners were paid on a piece-
work basis, according to the style of suits they made. Regardless of the number of pieces they
finished in a day, they were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest
day, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees.

After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal
dismissal and accordingly ordered them to pay petitioners’ claims.

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found
that petitioners had not been dismissed from employment but merely threatened with a closure
of the business if they insisted on their demand for a "straight payment of their minimum wage,"
after petitioners, on January 17, 1989, walked out of a meeting with private respondents and
other employees. According to the NLRC, during that meeting, the employees voted to maintain
the company policy of paying them according to the volume of work finished at the rate of
P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be
paid the minimum wage and other benefits. 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 petitioner may validly claim payment by result.

HELD:

The petition is meritorious.

In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate
their status as regular employees of private respondents. The term "wage" is broadly defined in
Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the
piece is just a method of compensation and does not define the essence of the relations. 7 Nor
does the fact that petitioners are not covered by the SSS affect the employer-employee
relationship.

22
the decision of the National Labor Relations Commission is SET ASIDE and another one is
RENDERED ordering private respondents to pay petitioners the total amount of One Hundred
Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above

22
 MAKATI HABERDASHERY, INC., vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. Nos. 83380-81 November 15, 1989

FACTS:

Individual complainants have been working for petitioner Makati Haberdashery, Inc. as tailors,
seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate basis
except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their
piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for
work before 9:30 a.m. everyday. Private respondents are required to work from or before 9:30
a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on
Sundays and holidays.

The Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed
a complaint for (a) underpayment of the basic wage; (b) underpayment of living allowance; (c)
non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service
incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3,
4 and 5.

Labor Arbiter rendered judgment in favor of complainants. The NLRC affirmed the arbiter’s
decision.

Petitioner urged that the NLRC erred in concluding that an employer-emplyee relationship
existed between petitioner and the workers.

ISSUE: Whether employees paid on piece-rate basis are entitled to service incentive pay.

RULING:

The facts at bar indubitably reveal that the most important requisite of control is present. As
gleaned from the operations of petitioner, when a customer enters into a contract with the
haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern
maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat
or shirt as specified by the customer. Supervision is actively manifested in all these aspects —
the manner and quality of cutting, sewing and ironing.

Petitioner has reserved the right to control its employees not only as to the result but also the
means and methods by which the same are to be accomplished. That private respondents are
regular employees is further proven by the fact that they have to report for work regularly from
9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report
for work before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m.

22
The workers did not exercise independence in their own methods, but on the contrary were
subject to the control of petitioners from the beginning of their tasks to their completion. Unlike
independent contractors who generally rely on their own resources, the equipment, tools,
accessories, and paraphernalia used by private respondents are supplied and owned by
petitioners. Private respondents are totally dependent on petitioners in all these aspects.

The piece-rate workers in the case at bar are employees which fall under exceptions set forth in
the implementing rules and therefore not entitled to service incentive leave and holiday pay.

23
 LABOR CONGRESS OF THE PHILIPPINES V NATIONAL LABOR RELATIONS
COMMISSION,

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 claim[s] and for violation of labor
standard[s] laws.

On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-
1964-91 against private respondents for:

After the submission by the parties of their respective position papers and presentation of
testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges
of unfair labor practice, union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners' prayer for actual, moral and exemplary
damages. Labor Arbiter Santos, however, directed the reinstatement of the individual
complainants:

ISSUE:
Whether or not the petitioners are “pakyao” or per piece workers and therefore not entitled to
benefits as that of a regular employee.

HELD:

As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service
incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their
complaint, 15 we hold that petitioners are so entitled to these benefits. Three (3) factors lead us
to conclude that petitioners, although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners' tasks, their job of repacking snack food was
necessary or desirable in the usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners worked for private
respondents throughout the year, their employment not having been dependent on a specific
project or season; and third, the length of time 16 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 17 and 13th month pay, 18 inter alia,
"field personnel and other employees whose time and performance is unsupervised by the
employer, including those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of the time consumed in
the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group.
As mentioned earlier, not only did petitioners labor under the control of private respondents as
their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota

23
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.

The Supreme Court in its decision held: DECLARING petitioners to have been illegally
dismissed by private respondents, thus entitled to full back wages and other privileges, and
separation pay in lieu of reinstatement at the rate of one month's salary for every year of service
with a fraction of six months of service considered as one year

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 G.R. No. 116960 April 2, 1996

BERNARDO JIMENEZ and JOSE JIMENEZ, as Operators of JJ's TRUCKING, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, PEDRO JUANATAS and FREDELITO
JUANATAS, respondents.

REGALADO, J.:

FACTS:

On June 29, 1990, private respondents Pedro and Fredelito Juanatas, father and son, filed a
claim for unpaid wages/commissions, separation pay and damages against JJ's Trucking and/or
Dr. Bernardo Jimenez. Said respondents, as complainants therein, alleged that in December,
1987, they were hired by herein petitioner Bernardo Jimenez as driver/mechanic and helper,
respectively, in his trucking firm, JJ Trucking. They were assigned to a ten-wheeler truck to haul
soft drinks of Coca-Cola Bottling Company and paid on commission basis, initially fixed at 17%
but later increased to 20% in 1988.

Private respondents further alleged that for the years 1988 and 1989 they received only a partial
commission of P84,000.00 from petitioners' total gross income of almost P1,000,000.00 for the
said two years. Consequently, with their commission for that period being computed at 20% of
said income, there was an unpaid balance to them of P106,211.86; that until March, 1990 when
their services were illegally terminated, they were further entitled to P8,050.00 which added up
to a grand total of P114,261.86 due and payable to them.

Disputing the complaint, petitioners contend that respondent Fredelito Juanatas was not an
employee of the firm but was merely a helper of his father Pedro; that all commissions for 1988
and 1989, as well as those up to March, 1990, were duly paid; and that the truck driven by
respondent Pedro Juanatas was sold to one Winston Flores in 1991 and, therefore, private
respondents were not illegally dismissed. 2

After hearings duly conducted, and with the submission of the parties' position/supporting
papers, Labor Arbiter Rogue B. de Guzman rendered a decision ordering respondents JJ's
Trucking and/or Dr. Bernardo Jimenez to pay jointly and severally complainant Pedro Juanatas
a separation pay of P15,050.00, plus attorney's fee equivalent to 10% of the award. The
complaint of Fredelito Juanatas is hereby dismissed for lack of merit.

On appeal filed by private respondents, the NLRC modified the decision of the labor arbiter
declaring Fredelito Juanatas as respondents' employee and shares in the commission and
separation pay awarded to complainant Pedro Juanatas, his father. Further, respondent JJ's
Trucking and Dr. Bernardo Jimenez are jointly and severally liable to pay complainants their
unpaid commissions in the total amount of P84,387.05.

Hence, this petition for certiorari, seeking the annulment of the decision of respondent NLRC
denying petitioners' motion for reconsideration.

ISSUE:

23
Whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private
respondents were not paid their commissions in full, and (b) that respondent Fredelito Juanatas
was an employee of JJ's Trucking.

HELD:

On the first issue, there is no reason to disturb the findings of respondent NLRC that the entire
amount of commissions was not paid, because of the evident failure of petitioners to present
evidence that full payment thereof has been made.

As a general rule, one who pleads payment has the burden of proving it. Even where the
plaintiff (herein private respondent) must allege non-payment, the burden of evidence rests on
the defendant (herein petitioners) to prove payment, rather than on the plaintiff to prove non-
payment.

In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent
to 17%, later increased to 20%, of the gross income is not disputed by petitioners. Although
private respondents admit receipt of partial payment, petitioners still have to present proof of full
payment.

The testimony of petitioners which merely denied the claim of private respondents, unsupported
by documentary evidence, is not sufficient to establish payment. Although petitioners submitted
a notebook showing the alleged vales of private respondents for the year 1990, 15 the same is
inadmissible and cannot be given probative value considering that it is not properly
accomplished, is undated and unsigned, and is thus uncertain as to its origin and authenticity. 16

Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense
and in effect admitted the allegations of private respondents.

With respect to the second issue, NLRC erred in holding that the son, Fredelito, was an
employee of petitioners. In the case at bar, the elements of an employer-employee relationship,
are not present. The agreement was between petitioner JJ's Trucking and respondent Pedro
Juanatas. The hiring of a helper was discretionary on the part of Pedro. Hence, Fredelito was
not an employee of petitioners.

WHEREFORE, the judgment of respondent National Labor Relations Commission is

AFFIRMED, with the MODIFICATION that declaring Fredelito Juanatas is not an employee of
petitioners and not entitled to share in the award for commission and separation pay.

23
VIRGINIA G. NERI and JOSE CABELIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION FAR EAST BANK & TRUST COMPANY
(FEBTC) and BUILDING CARE CORPORATION, respondents

FACTS:

Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had
substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor
Arbiter ruled that BCC was only job contracting and that consequently its employees were not
employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual
finding was affirmed by respondent National Labor Relations Commission (NLRC, for brevity).
Nevertheless, petitioners insist before us that BCC is engaged in "labor-only" contracting hence,
they conclude, they are employees of respondent FEBTC.

Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by,
respondent BCC, a corporation engaged in providing technical, maintenance, engineering,
housekeeping, security and other specific services to its clientele. They were assigned to work
in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980,
respectively, Neri an radio/telex operator and Cabelin as janitor, before being promoted to
messenger on 1 April 1989.

On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional
Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to
accept them as regular employees and for it to pay the differential between the wages being
paid them by BCC and those received by FEBTC employees with similar length of service.

On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit. Respondent
BCC was considered an independent contractor because it proved it had substantial capital.
Thus, petitioners were held to be regular employees of BCC, not FEBTC. The dismissal was
appealed to NLRC which on 28 September 1990 affirmed the decision on appeal. On 22
October 1990, NLRC denied reconsideration of its affirmance, prompting petitioners to seek
redress from this Court.

Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it

failed to adduce evidence purporting to show that it invested in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of its
business. Moreover, petitioners argue that they perform duties which are directly related to the
principal business or operation of FEBTC. If the definition of "labor-only" contracting is to be
read in conjunction with job contracting, then the only logical conclusion is that BCC is a "labor
only" contractor. Consequently, they must be deemed employees of respondent bank by
operation of law since BCC is merely an agent of FEBTC following the doctrine laid down in
Philippine Bank of Communications v. National Labor Relations Commission where we ruled
that where "labor-only" contracting exists, the Labor Code itself establishes an employer-
employee relationship between the employer and the employees of the "labor-only" contractor;
hence, FEBTC should be considered the employer of petitioners who are deemed its employees
through its agent, "labor-only" contractor BCC.

ISSUE:

23
Whether or not FEBTC should be considered the employer of petitioners who are deemed its
employees through its agent, “labor-only” BCC.

HELD:

Article 106 of the Labor Code defines "labor-only" contracting thus —

Art. 106. Contractor or subcontractor. — . . . . There is "labor-only" contracting

where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited by such persons are
performing activities which are directly related to the principal business of such
employer . . . . (emphasis supplied).

Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has
substantial capital. While there may be no evidence that it has investment in the form of tools,
equipment, machineries, work premises, among others, it is enough that it has substantial
capital, as was established before the Labor Arbiter as well as the NLRC.

Even assuming ex argumenti that petitioners were performing activities directly related to the
principal business of the bank, under the "right of control" test they must still be considered
employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job
description which detailed her functions as a radio/telex operator. However, a cursory reading of
the job description shows that what was sought to be controlled by FEBTC was actually the
end-result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds
received and relayed by her, respectively, tallies with that of the register. The guidelines were
laid down merely to ensure that the desired end-result was achieved. It did not, however, tell
Neri how the radio/telex machine should be operated.

Besides, petitioners do not deny that they were selected and hired by BCC before being
assigned to work in the Cagayan de Oro Branch of FFBTC. BCC likewise acknowledges that
petitioners are its employees. The record is replete with evidence disclosing that BCC
maintained supervision and control over petitioners through its Housekeeping and Special
Services Division: petitioners reported for work wearing the prescribed uniform of BCC; leaves
of absence were filed directly with BCC; and, salaries were drawn only from BCC.

The determination of employer-employee relationship involves factual findings. Absent any

grave abuse of discretion, and we find none in the case before us, we are bound by the findings
of the Labor Arbiter as affirmed by respondent NLRC.

23
 Manila Water Company vs Herminio D. Pena, et al.
July 8, 2004 G.R. No. 158255

Ynares-Santiago, J,:

Facts
On August 1, 1997, under the concession agreement, petitioner, Manila Water
Company, undertook to absorb former employees of the Metropolitan Waterworks and
Sewerage System (MWSS) and positions were in the list furnished by the latter, while the
employment of those not in the list was terminated on that day.
Private respondents who were contractual collectors of the MWSS, were among the 121
employees not included in the list, but still the petitioner engaged their services without written
contract. On September 1, 1997, they signed a three-month contract to perform collection
services for eight branches of petitioner in the East Zone. Before the end of the three month
contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI) which
was contracted by the Petitioner to collect charges for the Balara Branch. Most of the 121
collectors were asked by the petitioner to transfer to the First Class Courier Services, a newly
registered corporation. Only private respondents herein remained with ACGI. Petitioner
continued to transact with ACGI to do its collection needs until February 8, 1999, when
petitioner terminated its contract with ACGI.
Private respondents filed a complaint for illegal dismissal and money claims against the
petitioner.

Issue
Whether or not the employment of the respondents was labor-only contracting.

Held
“Labor-Only Contracting” refers to an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform job, work or service for a principal, and
any of the following elements are present: (1) The contractor or the subcontractor does not have
substantial capital or investments which relates to the job, work or service to be performed and
the employees recruited, supplied or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal; or (2) the contractor
does not exercise the right to control over the performance of the work of the contractual
employee. There is no doubt that ACGI was engaged in labor-only contracting, and as such, is
considered merely an agent of the petitioner. In labor-only contracting, the statute creates an
employer-employee relationship for a comprehensive purpose: to prevent a circumvention of
labor laws. The contractor is considered merely an agent of the principal employer and the latter
is responsible to the employees of the labor-only contractor as if such employees had been
directly employed by the principal employer. Since ACGI is only a labor-only contractor, the
workers it supplied should be considered as employees of the petitioner. As private
respondents’ employer, petitioner has the burden of proving that the dismissal was for a cause
allowed under the law and that they were afforded procedural due process. Petitioner failed to
discharge this burden by substantial evidence as it maintained the defense that it was not the
employer of private respondents. Having established that the schemes employed by petitioner
were devious attempts to defeat the tenurial rights of private respondents and that it failed to
comply with the requirements of termination under the Labor Code, the dismissal of the private
respondent is tainted with illegality.

23
i