Insular Life Assurance Co., Ltd. vs.

NLRC
G.R. No. 84484
November 15, 1989

Facts:

Petitioner Insular Life entered into a contract with respondent Basiao where the latter
is authorized to solicit for insurance policies. Sometime later, the parties entered into
another contract which caused Basiao to organize an agency in order to fulfill its terms.
The contract being subsequently terminated by petitioner, Basiao sued the latter which
prompted also for the termination of their engagement under the first contract. Basiao
thus filed before the Ministry of Labor seeking to recover alleged unpaid commissions.
Petitioner contends that Basiao is not an employee but an independent contractor for
which they have no obligation to pay said commissions. The Labor Arbiter found for
Basiao ruling that there exists employer-employee relationship between him and
petitioner. NLRC affirmed.

Issue:

Whether or not employer-employee relationship existed between petitioner and Basiao.

Ruling:

No. In determining the existence of employer-employee relationship, the following

elements are generally considered namely: (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, although the latter is the most important element.It
should, however, be obvious that not every form of control that the hiring party
reserves to himself over the conduct of the party hired in relation to the services
rendered may be accorded the effect of establishing an employer-employee relationship
between them in the legal or technical sense of the term.
Rules and Regulations governing the conduct of the business are provided for in the
insurance code and enforced by the insurance commissioner. It is, therefore, usual and
expected for an insurance company to promulgate a set of rules to guide its commission
agents in selling its policies that they may not run afoul of the law and what it requires
or prohibits. Of such a character are the rules which prescribes the qualifications of
persons who may be insured, subject insurance applications to processing and approval
by the company and reserve to the company the determination of the premiums to be
paid and the schedules of payment. None of these really invades the agent’s contractual
prerogative to adopt his own selling methods or to sell insurance at his own time and
convenience, hence cannot justifiably be said to establish on employer-employee
relationship between him and the company.

Singer Sewing Machine v NLRC

G.R. No. 91307
January 24, 1991

1
Facts:

The respondent union, collectors of Singer Sewing Machine Company-Singer Machine

Collectors Union-Baguio (SIMACUB) filed a petition for direct certification as the sole
and exclusive bargaining agent of all collectors of Singer Sewing Machine. Petitioner
opposed because the union members are not employees but independent contractors as
evidenced by the collection agency agreement which they signed.The med-arbiter found
an employer-employee relationship to exist between the union members and the
petitioner. This was likewise affirmed by the Secretary of Labor.

Issue:

Whether or not private respondents are regular employees of the company on the
alleged ground that they are performing activities desirable or necessary to the
business.

Ruling:

No. The SC calls the importance for the application of the control test, which if not
satisfied, would lead to the conclusion that no employee employer relationship exists. If
the union members are not employees, no right to organize for the purpose of
bargaining or as a bargaining agent cannot be recognized. The following elements are
generally considered in the determination of the relationship: the selection and
engagement of the employee, payment of wages, power of dismissal and the power to
control the employee’s conduct which is the most important element. Under the
collection agency agreement, the collection agents were paid their compensation for
their services on a commission basis, particularly six percent of all collections made by
the collecting agent. From here, the agreement did not fix an amount for wages nor the
required number working hours the collecting agents must put it. Thus, the Court held
that collecting agents that are paid on a commission basis are considered independent
contractors and not employees of the company. In such a situation, the company does
not pass the control test because the company has no control over the collecting agent’s
performance of collection services. On the contrary, the company only has control over
the amount of collections made, which is a result of his work. For the company to have
control over the commission agents, the company should not only have control over the
end or result to be achieved but also over the means and methods in achieving the end.

GREAT PACIFIC LIFE ASSURANCE CORPORATION vs. NATIONAL LABOR

RELATIONS COMMISSION
G.R. No. 73887
December 21, 1989

Facts:

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Honorato Judico filed a complaint for illegal dismissal against Grepalife and prayed for
award of money claims. The LA dismissed the complaint on the ground that the
employer-employee relations did not exist between the parties, but ordered Grepalife to
pay complainant the sum of P1,000.00 by reason of Christian Charity. Both appealed to
NLRC.
The NLRC reversed the LA ruling by declaring Judico a regular employee as defined
under Art. 281 of the Labor Code.
Grepalife argued that Judico is not its employee because his compensation was in the
form of commissions and bonuses based on actual production (insurance plans sold and
premium collections).

Issue:

Whether employer-employee relationship existed between the parties.

Ruling:

Yes. That private respondent Judico was an agent of the petitioner is unquestionable.
But, as We have held in Investment Planning Corp. v. SSS, 21 SCRA 294, an insurance
company may have two classes of agents who sell its insurance policies: salaried
employees who keep definite hours and work under the control and supervision of the
company; and (2) registered representatives who work on commission basis. One
salient point in the determination of employer-employee relationship which cannot be
easily ignored is the fact that the compensation that these agents on commission
received is not paid by the insurance company but by the investor (or the person
insured). After determining the commission earned by an agent on his sales the agent
directly deducts it from the amount he received from the investor, or the person insured
and turns over to the insurance company the amount invested after such deduction is
made. The test therefore is whether the "employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished.

Cosmopolitan Funeral Homes vs. Maalat

GR N0. 86693
July 2, 1990

Facts:

Sometime in 1962, petitioner Cosmopolitan Funeral Homes, Inc. engaged the services of
private respondent Noli Maalat as a "supervisor" . He was paid on a commission basis of
3.5% of the amounts actually collected and remitted. Later in 1987, respondent Maalat

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was dismissed by the petitioner. Maalat filed a complaint for illegal dismissal and non-
payment of commissions. Labor Arbiter rendered a decision declaring Maalat's
dismissal illegal and ordering the petitioner to pay separation pay, commission,
interests and attorney's fee in the total amount of P205,571.52. In an appeal,the
National Labor Relations Commission (NLRC), reversed the Arbiter's action and
rendered a new decision The petitioner's motion for reconsideration was denied, hence,
this petition for review before this Court.
Issue:

Is there an employer-employee relationship or merely an independent contract?

Ruling:

Yes, there is an ER-EE relationship. In determining whether a person who performs

work for another is the latter's employee or an independent contractor, the prevailing
test is the "right of control" test. Under this test, an employer-employee relationship
exists where the person for whom the... services are performed reserves the right to
control not only the end to be achieved, but also the manner and means to be used in
reaching that end. The NLRC, after its perusal of the facts and evidence on record, stated
that there exists an employment relationship between the parties. The petitioner has
failed to overcome this factual finding. The fact that the petitioner imposed and applied
its rule prohibiting superiors from engaging in other funeral business which it
considered inimical to company interests proves that it had the right of control and
exercised its control... over the private respondent. In other words, Maalat worked
exclusively for the petitioner.

Consulta v CA
G.R. No. 145443
March 18, 2005

Facts:

Pamana Philippines, Inc. ("Pamana") is engaged in health care business. Raquel P.

Consulta ("Consulta") was a Managing Associate of Pamana. Consulta’s appointment
dated 1 December 1987 up to January 2, 1988. In November 1987, she was issued a
certification where she was authorized to negotiate for and in behalf of Pamana with

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Federation of Filipino Civilian Employees Association (FFCEA). But in March 1988,
Consulta, claiming that Pamana did not pay her commission for the FFCEA account, filed
a complaint for unpaid wages or commission against Pamana, its President Razul Z.
Requesto ("Requesto"), and its Executive Vice-President Aleta Tolentino ("Tolentino").
The Labor Arbiter ruled in favor of Consulta, Pamana was ordered to pay her unpaid
commission. On appeal, the NLRC affirmed the LA’s decision. The CA then reversed the
NLRC’s decision, ruled that Consulta was a commission agent, not an employee of
Pamana.

Issues:

Was Consulta an employee of Pamana, thereby giving the LA jurisdiction over it’s claim
for unpaid commission?

Ruling:

No. There being no employer-employee relationship between Pamana and Consulta, the
Labor Arbiter and the NLRC had no jurisdiction to entertain and rule on Consulta's
money claim. Article 217 of the Labor Code provides: (a) Except as otherwise provided
under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty calendar days after the submission of the case by the parties
for decision without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural. Consulta filed her
action under Article 217(a) (6) of the Labor Code. However, since there was no
employer-employee relationship between Pamana and Consulta, the Labor Arbiter
should have dismissed Consulta's claim for unpaid commission. Consulta's remedy is to
file an ordinary civil action to litigate her claim.

MEGASCOPE GENERAL SERVICES vs. NLRC

G.R. No. 109224
June 19, 1997

Facts:

The case involves a dispute between Petitioner and NLRC and several workers
(respondents) who were employed by the petitioner. The workers were hired on a
contractual basis to provide general services, such as gardening and maintenance work,
to the National Power Corporation (NPC). When the contract between the petitioner
and NPC ended, the workers’ employment was terminated. The workers filed a
complaint for illegal dismissal and other labor-related claims. The labor arbiter ruled in

5
favor of the workers, finding that they were regular employees and entitled to
separation pay. The NLRC affirmed the decision of the labor arbiter. Hence, the present
petition.

Issue:

Whether employer-employee relationship exist.

Ruling:

Yes. The Supreme Court have reiterated time and again that the yardstick in the
determination of the existence of an employer-employee relationship consists of these
four (4) elements: (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. All these elements are present in this case.

Insular Life Assurance v. NLRC and Melecio Basiao

G.R. No. 84484
November 15, 1989

Facts:

Petitioner Insular Life entered into a contract with respondent Basiao where the latter
is authorized to solicit for insurance policies. Sometime later, the parties entered into
another contract which caused Basiao to organize an agency in order to fulfill its terms.
The contract being subsequently terminated by petitioner, Basiao sued the latter which
prompted also for the termination of their engagement under the first contract. Basiao
thus filed before the Ministry of Labor seeking to recover alleged unpaid commissions.
Petitioner contends that Basiao is not an employee but an independent contractor for
which they have no obligation to pay said commissions. The Labor Arbiter found for

6
Basiao ruling that there exists employer-employee relationship between him and
petitioner. NLRC affirmed.

Issue:
Whether employer-employee relationship existed between petitioner and Basiao.

Ruling:

No. In determining the existence of employer-employee relationship, the following

elements are generally considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employees’ conduct — although the latter is the most important element. It
should, however, be obvious that not every form of control that the hiring party
reserves to himself over the conduct of the party hired in relation to the services
rendered may be accorded the effect of establishing an employer-employee relationship
between them in the legal or technical sense of the term.

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 138051
June 10, 2004

Facts:

In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers
while MJMDC was represented by Sonza, as President and general manager, and
Tiangco as its EVP and treasurer. Referred to in the agreement as agent, MJMDC agreed
to provide Sonza’s services exclusively to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for the first year and
P317, 000 for the second and third year. On April 1996, Sonza wrote a letter to ABS-
CBN's President, Eugenio Lopez III, where he irrevocably resigned in view of the recent
events concerning his program and career. The acts of the station are violative of the
Agreement and said letter will serve as notice of rescission of said contract. The letter

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also contained the waiver and renunciation for recovery of the remaining amount
stipulated but reserves the right to seek recovery of the other benefits under said
Agreement. After the said letter, Sonza filed with the Department of Labor and
Employment a complaint alleging that ABS-CBN did not pay his salaries, separation pay,
service incentive pays,13th month pay, signing bonus, travel allowance and amounts
under the Employees Stock Option Plan (ESOP). ABSCBN contended that no employee-
employer relationship existed between the parties. However, ABS-CBN continued to
remit Sonza’s monthly talent fees but opened another account for the same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-
employer relationship. The LA ruled that he is not an employee by reason of his peculiar
skill and talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he
was free to perform his services in accordance with his own style. NLRC and CA
affirmed the LA. Should there be any complaint, it does not arise from an employer-
employee relationship but from a breach of contract.

Issue:

Whether there was employer-employee relationship between the parties.

Ruling:

No. Case law has consistently held that the elements of an employee-employer
relationship are selection and engagement of the employee, the payment of wages, the
power of dismissal and the employer’s power to control the employee on the means and
methods by which the work is accomplished. The last element, the so-called “control
test”, is the most important element.

Martinez vs NLRC
G.R. No. 117495
May 29, 1997

Facts:

Raul Martinez was an operator of two taxicab units under PAMATX and TIGERTX.
Private respondents worked for him as drivers. When Martinez died, he left behind his
mother, Nelly Martinez as his sole heir. Nelly traversed that the 13th month pay was
personal to Raul and therefore didn't survive the death of Raul. Nelly contends too that
the drivers were not entitled of the benefits of PD 851 because paid on purely boundary
basis which are not covered by PD 851, the relationship was not employer-employee
but that od lessee-lessor.

On 30 August 1993 the Labor Arbiter dismissed the complaint. However, respondent
National Labor Relations Commission viewed the case differently. According to NLRC,
(a) private respondents were regular drivers because payment of wages, which is one of
the essential requisites for the existence of employment relation, may either be fixed, on
commission, boundary, piece-rate or task basis; (b) the management of the business

8
passed on to petitioner who even replaced private respondents with a new set of
drivers; and, (c) the claims of private respondents survived the death of Raul Martinez
considering that the business did not cease operation outright but continued
presumably, in the absence of proof of sale, up to the moment.

NLRC thus set aside the appealed decision, and as alternative to reinstatement, ordered
petitioner to grant respondents separation pay equivalent to one month salary for every
year of service a fraction of six months being considered as one whole year. On 30
September 1994 the motion for reconsideration was denied. Hence, this recourse of
petitioner.

Issue:

Whether the petitioner to grant respondents separation pay.

Ruling:

Yes. Private respondents simply assumed the continuance of an employer-employee

relationship between them and petitioner, when she took over the operation
of the business after the death of her son Raul Martinez, without any supporting
evidence. Consequently, we cannot sustain for lack of basis the factual finding of
respondent NLRC on the existence of employer-employee relationship between
petitioner and private respondents. Clearly, such finding emanates from grave abuse of
discretion. With this conclusion, consideration of the issue on illegal dismissal becomes
futile and irrelevant.

SEVILLA v. CA
G.R. No. L-41182-3
April 16, 1988

Facts:

In 1960, the Tourist World Services Inc. (TWS) and Sevilla entered a lease contract for
the use as branch office. In the said contract, both parties were held solidarily liable for
the prompt payment of the monthly rental agreed on. When the branch office was
opened, it was run by appellant Sevilla wherein any airline fare brought in on her
efforts, 4% of that would go to her and 3% was to be withheld by TWS.The TWS appears
to have been informed that Sevilla related to a rival firm, the Philippine Travel Bureau,
and, since the branch office was anyhow losing, the TWS considered closing its office.
The premises were locked and neither the appellant Sevilla nor any of her employees
could enter, a complaint was filed by the herein appellants against the appellees with a
prayer for the issuance of mandatory preliminary injunction.

In the appeal, Lina Sevilla claims she was not an employee of the TWS to the end that
her relationship with TWS was one of a joint business venture. She declares that she did
not receive any salary from TWS and only earned commissions. Sevilla likewise claimed
that she shared in the expenses maintaining the office and TWS shouldered the rental in

9
consideration for the 3% split in the commissions procured. TWS contend that the
appellant was an employee of the appellee Tourist World Service, Inc. and as such was
designated manager and she had no say on the lease executed.

Issue:

Whether appellant Sevilla was in a joint venture with TWS or at least its agent coupled
with an interest which could not be terminated or revoked unilaterally by TWS.

Ruling:

It is the Court’s considered opinion, that when the petitioner, Lina Sevilla, agreed to
(wo)man the private respondent, Tourist World Service, Inc.’s Ermita office, she must
have done so pursuant to a contract of agency. It is the essence of this contract that the
agent renders services “in representation or on behalf of another.” In the case at bar,
Sevilla solicited airline fares, but she did so for and on behalf of her principal, Tourist
World Service, Inc. As compensation, she received 4% of the proceeds in the concept of
commissions. And as we said, Sevilla herself, based on her letter of November 28, 1961,
presumed her principal’s authority as owner of the business undertaking. We are
convinced, considering the circumstances and from the respondent Court’s recital of
facts, that the parties had contemplated a principal-agent relationship, rather than a
joint management or a partnership.

FLORES VS. NLRC

G.R. No. L-66890
April 15, 1988

Facts:
Spouses Herminio and Herminia Flores worked for Fortunato Nuestro in his funeral
parlor known as Funeraria Nuestro, respectively, as helper- utility man and as
bookkeeper, embalmer, and cashier. The petitioners were given living quarters right
inside the compound of the funeral parlor. On October 30,1982, Herminio and
Fortunato had an altercation, during which the former was physically assaulted by the
latter and suffered a punctured wound. Herminio filed an action for slight physical
injuries against respondent. As a result of the incident and fearing for his safety,
Herminio, together with his family, was compelled to vacate his living quarters.
Petitioners then file a complaint for illegal dismissal.

Issue:

Was there an employer-employee relationship?

Ruling:

Yes. Respondent had registered the petitioners with the Social Security System is proof
that they were indeed his employees. The coverage of Social Security Law is predicated
on the existence of an employer- employee relationship.

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 EASTERN SHIPPING LINES, INC. vs. POEA
G.R. No. 76633
October 18, 1988

Facts:

A Chief Officer of a ship was killed in an accident in Japan. The widow filed a complaint
for charges against the Eastern Shipping Lines with POEA, based on a Memorandum
Circular No. 2, issued by the POEA which stipulated death benefits and burial for the
family of overseas workers. ESL questioned the validity of the memorandum circular as
violative of the principle of non-delegation of legislative power. It contends that no
authority had been given the POEA to promulgate the said regulation; and even with
such authorization, the regulation represents an exercise of legislative discretion which,
under the principle, is not subject to delegation. Nevertheless, POEA assumed
jurisdiction and decided the case.

Issue:

Whether the Issuance of Memorandum Circular No. 2 is a violation of non-delegation of

powers.

Ruling:

No. SC held that there was a valid delegation of powers. The authority to issue the said
regulation is clearly provided in Section 4(a) of Executive Order No. 797 “The governing
Board of the Administration (POEA), as hereunder provided shall promulgate the
necessary rules and regulations to govern the exercise of the adjudicatory functions of
the Administration (POEA).” It is true that legislative discretion as to the substantive
contents of the law cannot be delegated. What can be delegated is the discretion to
determine how the law may be enforced, not what the law shall be. The ascertainment
of the latter subject is a prerogative of the legislature. This prerogative cannot be
abdicated by the legislature to the delegate.

CONTINENTAL MARBLE CORP. and FELIPE DAVID, vs. NATIONAL LABOR

RELATIONS COMMISSION
G.R. No. L-43825
May 9, 1988

Facts:

Rodito Nasayao claimed that he was appointed plant manager of the corporation and
receiving a compensation of P3,000.00, a month or 25% of the monthly net income of
the company, whichever is greater, when the company failed to give his salary for the
months of May, June, and July Nasayo filed a complaint with the NLRC. Rodito Nasayao
filed a motion to dismiss the appeal on the ground that the decision of the voluntary

11
arbitrator is final, unappealable, and immediately executory, and a motion for the
issuance of a writ of execution. The Commission dismissed the appeal on the ground
that the decision appealed from is final, unappealable, and immediately executory.
Continental Marble Corp., seek to annul and set aside the decision.

Issue:

Whether there exists an employee-employer relationship between Rodito Nasayao and

Continental Marble Corp.?

Ruling:

No. The court relied on the so -called “control test” that is the most important element,
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. Most of all, the element of control is lacking. 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.
Union Filipro Employees vs Vivar
G.R. No. 79255
January 20, 1992

Facts:

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with
the National Labor Relations Commission (NLRC) a petition for claims of its monthly
paid employees for holiday pay. Filipro filed a motion for clarification seeking the
limitation of the award to three years, the exclusion of salesmen, sales representatives,
truck drivers, merchandisers, and medical representatives (hereinafter referred to as
sales personnel) from the award of the holiday pay, and 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.

Issue:

12
Whether Nestle’s sales personnel are entitled to holiday pay; and

Ruling:

No, sales personnel are not entitled to holiday pay. 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 law requires that the actual hours of work
in the field be reasonably ascertained. The company has no way of determining whether
these sales personnel, even if they report to the office before 8:00 a.m. prior to field
work and come back at 4:30 p.m, really spend the hours in between in actual field work.

Rada v NLRC
G.R. No. 96078
January 9, 1992

Facts:

Hilario Rada was contracted by Philnor Consultants and Planners, Inc. as a driver. He
was assigned to a specific project in Manila. The contract he signed was for 2.3 years.
His task was to drive employees to the project from 7am to 4pm. He was allowed to
bring home the company vehicle in order to provide a timely transportation service to
the other project workers. The project he was assigned to was not completed as
scheduled hence, since he has a satisfactory record, he was re-contracted for an
additional 10 months. After 10 months the project was not yet completed. Several
contracts thereafter were made until the project was finished in 1985.

At the completion of the project, Rada was terminated as his employment was co-
terminus with the project. He later sued Philnor for non-payment of separation pay and
overtime pay. He said he is entitled to be paid OT pay because he uses extra time to get
to the project site from his home and from the project site to his home every day – in
total, he spends an average of 3 hours OT every day.

Issue:

Whether Rada is entitled to separation pay and OT pay.

Ruling:

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Separation pay – NO. Overtime pay – Yes. The SC ruled that Rada was a project
employee whose work was coterminous with the project for which he was hired. Project
employees, as distinguished from regular or non-project employees, are mentioned in
Section 281 of the Labor Code as those ‘where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee. Rada is entitled to OT pay.
The fact that he picks up employees of Philnor at certain specified points along EDSA in
going to the project site and drops them off at the same points on his way back from the
field office going home to Marikina, Metro Manila is not merely incidental to Rada’s job
as a driver. On the contrary, said transportation arrangement had been adopted, not so
much for the convenience of the employees, but primarily for the benefit of Philnor.

CAGAMPAN v NLRC
G.R. Nos. 85122-24
March 22, 1991

Facts:

On April 17 and 18,1985, petitioners, all seamen, entered separate contracts of

employment with the Golden Light Ocean Transport, Ltd., through its local agency,
private respondent ACE MARITIME AGENCIES, INC. 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 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 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 (Page 68, Records).
The Philippine Overseas Employment Administration (POEA) rendered a Decision
dismissing petitioners' claim for terminal pay but granted their prayer for leave pay and
overtime pay.

Issue:

Whether petitioners, even without sufficient evidence of actual rendition of overtime

work, would automatically be entitled to overtime pay.

Ruling:

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No. The NLRC ruling on the disallowance of overtime pay is ably supported by the fact
that petitioners never produced any proof of actual performance of overtime work. The
contract provision means that the fixed overtime pays of 30% would be the basis for
computing the overtime pay when overtime work would be rendered. Simply, stated,
the rendition of overtime work and the submission of sufficient proof that said work
was performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed based on 30% of the basic monthly salary. In
short, the contract provision guarantees the right to overtime pay but the entitlement to
such benefit must first be established.

STOLT-NIELSEN TRANSPORTATION GROUP, INC vs MEDEQUILLO

G.R. No. 177498
January 18, 2012

Facts:

Sulpecio Madequillo filed a complaint before the Adjudication Office of the Philippine
Overseas Employment Administration (POEA) against the petitioners for illegal
dismissal under a first contract and for failure to deploy under a second contract.
Complaint 380-Affidavit States: On 6 November 1991(First Contract), he was hired by
Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management
of Panama as Third Assistant Engineer on board the vessel “Stolt Aspiration” for a
period of nine (9) months; He would be paid with a monthly basic salary and a fixed OT
pay, a total of $1,212.00 per month during the employment period; for nearly three (3)
months of rendering service and while the vessel was at Batangas, he was ordered by
the ship’s master to disembark the vessel and repatriated back to Manila for no reason
or explanation; Upon his return to Manila, he immediately proceeded to the petitioner’s
office where he was transferred employment with another vessel (Second Contract)
named MV “Stolt Pride” under the same terms and conditions of the First Contract;
Despite the commencement of the Second Contract on 21 April 1992, petitioners failed
to deploy him; He made a follow-up with the petitioner but the same refused to comply
with the Second Employment Contract.

Thereafter, he demanded for his passport, seaman’s book and other employment
documents. However, he was only allowed to claim the said documents in exchange of
his signing a document; He was constrained to sign the document involuntarily because
without these documents, he could not seek employment from other agencies.

Issues:

Whether there was novation of the first contract by the second contract.

Ruling:

15
Yes. It is evident that novation took place in this case. The parties impliedly
extinguished the first contract by agreeing to enter into the second contract to placate
Medequillo, Jr. who was unexpectedly dismissed and repatriated to Manila. The second
contract would not have been necessary if the petitioners abided by the terms and
conditions of Madequillo, Jr.’s employment under the first contract. The records also
reveal that the 2nd contract extinguished the first contract by changing its object or
principal. These contracts were for overseas employment aboard different vessels.
Contrary to petitioners’ assertion, the first contract was a “previous valid contract”
since it had not yet been terminated at the time of Medequillo, Jr.’s repatriation to
Manila. The legality of his dismissal had not yet been resolved with finality.
Undoubtedly, he was still employed under the first contract when he negotiated with
petitioners on the second contract. As such, the NLRC correctly ruled that petitioners
could only be held liable under the second contract.
Ramos vs Court of Appeals
GR No. 124354
December 29, 1999

Facts:

Plaintiff Erlinda Ramos undergo an operation for the removal of a stone in her gall
bladder. She underwent series of examination which revealed that she was fit for the
said surgery. Through the intercession of a mutual friend, she and her husband met Dr.
Osaka for the first time, and she was advised by Dr. Osaka to go under the operation
called cholecystectomy and the same was agreed to be scheduled on June 17,1985 at
9:00am at the Delos Santos Medical Center. Rogelio asked Dr. Osaka to look for a good
anesthesiologist to which the latter agreed to. A day before the scheduled operation, she
was admitted at the hospital and on the day of the operation, Erlinda’s sister was with
her insider the operating room. Dr. Osaka arrived at the hospital late, Dr. Guttierez, the
anesthesiologist, started to intubate Erlinda when Herminda heard her say that
intubating Erlinda is quite difficult and there were complications. This prompt Dr. Osaka
to order a call to another anesthesiologist, Dr. Caldron who successfully intubated
Erlinda. After the operation, Erlinda was diagnosed to be suffering from diffuse cerebral
parenchymal damage and that the petitioner alleged that this was due to lack of oxygen
supply to her brain which resulted from the intubation.

Issue:

Whether the doctors and the hospital are liable for damages against petitioner for the
result to Erlinda.

Ruling:

Yes. The private respondents were unable to disprove the presumption of negligence on
their part in the care of Erlinda and their negligence was the proximate case of her
piteous condition. Nevertheless, even though the scope of res ipsa liquitor has been
measurably enlarged, it does not automatically follow that it applies to all cases of
medical negligence as to mechanically shift the burden of proof to the defendant to
show that he is not guilty of the ascribed negligence. Res ipsa liquitor is not a rigid or
ordinary doctrine to be perfunctorily used but a rule to be cautiously applied,

16
depending upon the circumstances of each case. It is generally restricted to situations in
malpractice cases where a layman can say, as a matter of common knowledge and
observation, that the consequences of professional care were not as such as would
ordinarily have followed if due care had been exercised. A distinction must be made
between the failure to secure results, and the occurrence of something more unusual
and not ordinarily found if the service or treatment rendered followed the usual
procedure of those skilled in that practice. It must be conceded that the doctrine of res
ipsa liquitor can have no application in a suit against a physician or surgeon which
involves the merits of a diagnosis or of a scientific treatment.

ARICA VS MOLE
G.R. No. 78210
February 28, 1989

Facts:

Teofilo Arica et al and 561 others sued Standard Fruits Corporation (STANFILCO)
Philippines for allegedly not paying the workers for their assembly time which takes
place every workday from 5:30am to 6am. The assembly time consists of the roll call of
the workers; their getting of assignments from the foreman; their filling out of the
Laborer’s Daily Accomplishment Report; their getting of tools and equipment from the
stockroom; and their going to the field to work. The workers alleged that this is
necessarily and primarily for STANFILCO’s benefit.

Issue:

Whether the worker’s assembly time should be paid.

Ruling:

No. The thirty-minute time long practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be
considered as ‘waiting time’ within the purview of Section 5, Rule I, Book III of the Rules
and Regulations Implementing the Labor Code.

SHELL Co. VS. NLU

GR NO. L-1309
July 26, 1948

Facts:

Acting on the petition of the National Labor Union, the Industrial Relations Court has
rendered a decision in which, among other things, obliges the Shell Oil Company of Phil.
Is., to pay their workers who work at night (after the sun sets until he gets up the
following day) additional compensation of 50% over their regular wages if they are
workday. It seems that the company needs the night service of a certain number of

17
workers, because the planes from abroad often land and take off at night, necessitating
work at night for the supply of gasoline and lubricants, and other duties.
The oil company has appealed against the decision through certiorari to rescind it. The
company appellant claims and argues that not only there is no legal provision to
empower the Industrial Relations Court to order the payment of additional
compensation to workers who work at night, but on the contrary, the Commonwealth
Act. 444 absolves the employer of such, where this law only provides where it is
compulsory to pay "overtime" (additional compensation), and among such cases not
including work at night. For its part, the union workers' appeal argues that the option
under discussion is part of the broad powers that Commonwealth Law No. 103 - the
organic letter of the Industrial Relations Court - grants to said court; and that
Commonwealth Law No. 444 that is invoked does not have any application to the
present case, since it is necessarily limited in scope, referring particularly and
exclusively to the maximum day of continuous work allowed in industrial
establishments - the day of 8 hours.

Issue:

Whether the workers of Shell Oil deserve to be paid night differential for nighttime
work rendered required by the operations of the company beyond the 8-hour workday?

Ruling:

Yes. The case against nightwork, then, may be said to rest upon several grounds. In the
first place, there are the remotely injurious effects of permanent nightwork manifested
in the later years of the worker's life. Of more immediate importance to the average
worker is the disarrangement of his social life, including the recreational activities of his
leisure hours and the ordinary associations of normal family relations. From an
economic point of view, nightwork is to be discouraged because of its adverse effect
upon efficiency and output. A moral argument against nightwork in the case of women
is that the night shift forces the workers to go to and from the factory in darkness.
Recent experiences of industrial nations have added much to the evidence against the
continuation of nightwork, except in extraordinary circumstances and unavoidable
emergencies. The immediate prohibition of nightwork for all laborers is hardly
practicable; its discontinuance in the case of women employees is unquestionably
desirable. 'The night was made for rest and sleep and not for work' is a common saying
among wageearning people, and many of them dream of an industrial order in which
there will be no night shift.

NARIC WORKER'S UNION, ET AL. VS. HON.CARMELINO G. ALVENDIA, ET AL.

G.R. No. L-14439
March 25, 1960

Facts:

National Rice and Corn Corporation filed a complaint for damages against herein
petitioners as a result of the alleged blocking and obstruction of the gates of the

18
company's offices by striking picketers who threatened violence and bodily harm to
persons crossing the union's picket line.

Issue:

Do the employees of National Rice and Corn Corporation, being an instrumentality of

the Government, have the right to strike?

Ruling:

Yes. Under the proviso of Section 11 of the Industrial Peace Act (already quoted), the
prohibition to strike is clearly limited to "employees employed in governmental
functions and not to those employed in proprietary functions of the Government" (Sec.
11, Republic Act 875). Since the work of the members of the petitioning union consists
mainly in hauling goods at the respondent's warehouses, barges and piers, the same
bears only a very remote relation to the governmental functions of respondent
corporation, and the union members are not covered by the prohibition against strikes.
Restrictions of the workers' basic right to collective action to improve their conditions
of work or protect themselves against oppressive practices are to be strictly construed.

COSMOPOLITAN FUNERAL HOMES v. NOLI MAALAT

GR No. 86693
July 2, 1990

Facts:

Petitioner Cosmopolitan Funeral Homes, Inc. engaged the services of private

respondent Noli Maalat as a "supervisor" respondent Maalat was dismissed by the
petitioner for commission of the following violations despite previous warnings
Maalat filed a complaint for illegal dismissal and non-payment of commissions. Labor
Arbiter Newton R. Sancho rendered a decision declaring Maalat's dismissal illegal and
ordering the petitioner to pay separation pay, commission, interests, and attorney's fee
the National Labor Relations Commission... reversed the Arbiter's act action.

Issue: Whether the NLRC erred in ruling that an employment relationship existed
between the parties.

Ruling:

In determining whether a person who performs work for another is the latter's
employee or an independent contractor, the prevailing test is the "right of control" test.
Under this test, an employer-employee relationship exists where the person for whom
the... services are performed reserves the right to control not only the end to be
achieved, but also the manner and means to be used in reaching that end.

The NLRC, after its perusal of the facts and evidence on record, stated that there exists
an employment relationship between the parties. The petitioner has failed to overcome
this factual finding.

19
The fact that the petitioner imposed and applied its rule prohibiting superiors from
engaging in other funeral business which it considered inimical to company interests
proves that it had the right of control and exercised its control... over the private
respondent. In other words, Maalat worked exclusively for the petitioner.

Songco, et al. vs. National Labor Relations Commission

G.R. Nos. 50999-51000
March 23, 1990

Facts:

Zuelig filed an application for clearance to terminate the services of Songco, and others,
on the ground of retrenchment due to financial losses. During the hearing, the parties
agreed that the sole issue to be resolved was the basis of the separation pay due. The
salesmen received monthly salaries of at least P400.00 and commission for every sale
they made. The Collective Bargaining Agreements between Zuelig and the union of
which Songco, et al. were members contained the following provision: "Any employee
who is separated from employment due to old age, sickness, death or permanent lay-off,
not due to the fault of said employee, shall receive from the company a retirement
gratuity in an amount equivalent to one month's salary per year of service." The Labor
Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one-
month salary (exclusive of commissions, allowances, etc.) for every year of service with
the company.

Issue: Whether earned sales commissions and allowances should be included in the
monthly salary of Songco, et al. for the purpose of computing their separation pay.

Ruling:
In the computation of back wages and separation pay, account must be taken not only of
the basic salary of the employee, but also of the transportation and emergency living
allowances. SC held that the commissions also claimed by the employee (override
commission plus net deposit incentive) are not properly includible in such base figure
since such commissions must be earned by actual market transactions attributable to
the petitioner [salesman]. Since the commissions in the present case were earned by
actual transactions attributable to Song, et al., these should be included in their
separation pay. In the computation thereof, what should be considered is the average
commission earned during their last year of employment.

20
 Nawasa vs. Nawasa Consolidated Union
G.R. NO. L-18939
August 31, 1964

Facts:

Petitioner National Waterworks & Sewerage Authority is a government-owned and

controlled corporation created under Republic Act No. 1383, while respondent NWSA
Consolidated Unions are various labor organizations composed of laborers and
employees of the NAWASA. The Court of Industrial Relations conducted a hearing on the
controversy then existing between petitioner and respondent unions which the latter
embodied in a "Manifesto", namely: implementation of the 40-Hour Week Law
(Republic Act No. 1880); alleged violations of the collective bargaining agreement
concerning "distress pay"; minimum wage of P5.25; promotional appointments and
filling of vacancies of newly created positions; additional compensation for night work;
wage increases to some laborers and employees; and strike duration pay. In addition,
respondent unions raised the issue of whether the 25% additional compensation for
Sunday work should be included in computing the daily wage and whether, in
determining the daily wage of a monthly-salaried employee, the salary should be
divided by 30 days. The respondent court rendered its decision stating that the
NAWASA is an agency not performing governmental functions and, therefore, is liable to
pay additional compensation for work on Sundays and legal holidays conformably to
Commonwealth Act No. 444, known as the Eight-Hour Labor Law and38- granted the
claims of the union.

Issue:

Whether NAWASA is performing governmental functions and, therefore, essentially a

service agency of the government.

Ruling:

No, NAWASA is not an agency performing governmental functions. Rather, it performs

proprietary functions, and as such comes within the coverage of Commonwealth Act No.
444. While under republic Act No. 1383 the NAWASA is considered as a public
corporation it does not show that it was so created for the government of a portion of
the State. The National Waterworks and Sewerage Authority was not created for
purposes of local government. It was created for the "purpose of consolidating and
centralizing all waterworks, sewerage and drainage system in the Philippines under one
control and direction and general supervision." The NAWASA therefore, though a public
corporation, is not a municipal corporation, because it is not an agency of the State to
regulate or administer the local affairs of the town, city, or district which is
incorporated. Moreover, the NAWASA, by its charter, has personality and power
separate and distinct from the government. It is an independent agency of the
government, and it may charge rates for its services.

21
 BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC. vs. PHILIPPINE
REFINING CO., INC
G.R. No. L-27761
September 30, 1981

Facts:

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
othersThat 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; 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.

Issue:

Whether the phrase "regular base pay" includes Christmas bonus and other fringe
benefits?

Ruling:

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

22
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.

PNB vs. PHILIPPINE NATIONAL BANK EMPLOYEES’ ASSOCIATION (PEMA)

GR No. L-30279
July 30, 1982

Facts:

PNB and PNB Employees Association (PEMA) had a dispute regarding the proper
computation of overtime pay. PEMA wanted the cost-of-living allowance (granted in
1958) and longevity pay (granted in 1961) to be included in the computation. PNB
disagreed and the 2 parties later went before the CIR to resolve the dispute. PNB
contends that the parties have not so stipulated under the collective bargaining
agreement between them.

The Court of Industrial Relations decided in favor of PEMA and held that PNB should
compute the overtime pay of its employees on the basis of the sum total of the
employee's basic salary or wage plus cost-of-living allowance and longevity pay. The
CIR relied on the ruling in NAWASA v NAWASA Consolidated Unions, which held that
"for purposes of computing overtime compensation, regular wage includes all payments
which the parties have agreed shall be received during the work week, including
differentiated payments for working at undesirable times, such as at night and the
board and lodging customarily furnished the employee."

Issue:

Whether the cost-of-living allowance and longevity pay granted by the employer be
included in the computation of overtime pay?

Ruling:

No. Overtime pay is for extra effort beyond that contemplated in the employment
contract; additional pay given for any other purpose cannot be included in the basis for
the computation of overtime pay. It appears that the answer to dispute lies, not in the
text of the NAWASA case but in the terms and conditions and practice in the
implementation of, the agreement, an area which makes resolution of the issue
dependent on the relation of the terms and conditions of the contract to the phraseology
and purpose of the Eight-Hour Labor Law (Act 444).

PNB v. Teresita Cruz

23
 G.R. No. 80593
December 18,1989

Facts:

The focus of the instant petition for certiorari is the application of Article 110 of the
Labor Code. The said article provides that workers shall enjoy first preference regarding
wages due them in cases of bankruptcy or liquidation of an employer's business.

Issue:

Whether Article 110 of the labor code purport to create a lien in favor of workers or
employees for unpaid wages either upon all of the properties or upon any particular
property owned by their employer.

Ruling:

Yes. Aggregate Mining Exponents (AMEX) laid-off about (70%) of its employees because
it was experiencing business reverses. The retained employees constituting (30%) of
the work force however, were not paid their wages. This non-payment of salaries went
on until July 1982 when AMEX completely ceased operations and instead entered into
an operating agreement with T.M. San Andres Development Corporation whereby the
latter would be leasing the equipment and machineries of AMEX. The unpaid employees
sought redress from the Labor Arbiter who rendered a decision finding their claim valid
and meritorious. AMEX and its President, Tirso Revilla did not appeal from this decision.
But PNB, in its capacity as mortgagee-creditor of AMEX interposed an appeal with the
respondent Commission, not being satisfied with the outcome of the case. The appeal
was primarily based on the allegation that the workers' lien covers unpaid wages only
and not the termination or severance pay which the workers likewise claimed they
were entitled to. The National Labor Relations Commission affirmed the decision
appealed from.

Philippine Duplicators, Inc. vs. NLRC

G.R. No. 110068
February 15, 1995

24
Facts:

Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater
part of the latter’s wages or salaries being composed of the sales or incentive
commissions earned on actual sales of duplicating machines closed by them. Thus, the
sales commissions received for every duplicating machine sold constituted part of the
basic compensation or remuneration of the salesmen of the Philippine Duplicators for
doing their job. The Labor Arbiter directed Petitioner Duplicators to pay 13th month
pay to private respondent employees computed based on their fixed wages plus sales
commission.

Petitioner Corporation contends that their sales commission should not be included in
the computation of the 13th month pay invoking the consolidated cases of Boie-Takeda
Chemicals, Inc. vs Hon. Dionisio dela Serna and Philippine Fuji Xerox Corp. vs Hon.
Crecencio Trajano, were the so-called commissions of medical representatives of Boie-
Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were not included in
the term “basic salary” in computing the 13th month pay.

Issue:

Whether sales commissions comprising a pre-determined percent of the selling price of

the goods are included in the computation of the 13th month pay.

Ruling:

Yes. These commission which are an integral part of the basic salary structure of the
Philippine Duplicator’s employees-salesmen, are not overtime payments, nor profit-
sharing payments nor any other fringe benefit. Thus, salesmen’s commissions
comprising a pre-determined percent of the selling price of the goods were properly
included in the term “basic salary” for purposes of computing the 13th month pay.
Commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file
employees of Fuji Xerox Co. were not included in the term “basic salary” because these
were paid as “productivity bonuses” which is not included in the computation of
13th month pay.

MILLARES VS. NLRC and PICOP

G.R. No. 122827
March 29, 1999

Facts:

25
Petitioners numbering 116 occupied different positions in the mill site of respondent
Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In
1992 PICOP suffered a major financial setback allegedly brought about by the joint
impact of restrictive government regulations on logging and the economic crisis. To
avert further losses, it undertook a retrenchment program and terminated the services
of petitioners. Accordingly, petitioners received separation pay computed at the rate of
1-month basic pay for every year of service. Believing however that
the allowances they allegedly regularly received monthly during their
employment should have been included in the computation thereof they lodged a
complaint for separation pay differentials.

Issue:

Whether the subject allowances form part of petitioners’ “wages” for the computation of
separation pay.

Ruling:

No. In case of retrenchment to prevent losses, Art. 283 of the Labor Code imposes on the
employer an obligation to grant to the affected employees separation pay equivalent to
1 month pay or at least 1/2 month pay for every year of service, whichever is higher.
Since the law speaks of “pay,” the question arises, “What exactly does the term connote?
We correlate Art. 283 with Art. 97 of the same Code on definition of terms. “Pay” is not
defined therein but “wage.” In Songco the Court explained that both words (as well as
salary) generally refer to one and the same meaning, i.e., a reward or recompense for
services performed. Specifically, “wage” is defined in letter (f) as the remuneration or
earnings, however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value, as determined
by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by
the employer to the employee.

STATES MARINE CORPORATION VS. CEBU Seaman’s Association

GR No. l-12444
February 28, 1963

Facts:

26
States Marine Corporation and Royal Line, Inc. (SMC) were engaged in the business of
marine coastwise transportation, employing steamships of Philippine registry. They had
a collective bargaining contract with Cebu Seamen's Association, INC. (CSA)On
September 12, 1952, the SMC filed with the CIR, a petition against SMC. The Union
alleged that the officers and men working on board the petitioners' vessels have not
been paid their sick leave, vacation leave and overtime pay; that CSA threatened or
coerced them to accept a reduction of salaries, observed by other shipowners; that 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. A decision was rendered in favor of the union.

Issue:

Whether the Congress had in mind that the amount of P.40 per meal, furnished the
employees should be deducted from the daily wages. Is this correct?

Ruling:

The SC held that such deductions are not authorized. In the business of transportation
of passengers and freight, the men who work in 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." Section 3, par. f, of the Minimum
Wage Law, (R.A. No. 602), provides as follows: (f) Until and unless investigations by the
Secretary of Labor on his initiative or on petition of any interested party result in a
different determination of the fair and reasonable value, the furnishing of meals shall be
valued at not more than thirty centavos per meal for agricultural employees and not
more than forty centavos for any other employees covered by this Act, and the
furnishing of housing shall be valued at not more than twenty centavos daily for
agricultural workers and not more than forty centavos daily for other employees
covered by this Act.

Mabeza v NLRC
G.R. No. 118506
April 18, 1997

Facts:

Mabeza and her co-employees were asked by hotel’s management to sign an affidavit
attesting to the latter’s compliance with minimum wage and other labor standard

27
provisions of law. Petitioner signed it but refused to go to the prosecutor to attest to the
veracity and contents of the affidavit. The affidavit was nonetheless submitted to DOLE
Labor Inspector to refute the findings of the latter. After refusing, Mabeza was asked by
management to turn over the keys to her living quarters and remove her belongings
from the hotel premises. She filed for leave of absence but was denied. When she
attempted to return to work after three days, she was informed that she should not
report to work by the hotel’s cashier. Petitioner filed for illegal dismissal alleging non-
payment of pay and incentives.

Ng alleged that Mabeza abandoned her work and said that she was not underpaid, and
other benefits were paid in the form of facilities to petitioner. 11 months after, Ng filed a
criminal complaint for Qualified Theft and perjury against Mabeza. Labor arbiter ruled
against petitioner and rendered that there were valid grounds for dismissal due to the
alleged criminal acts resulting to loss of confidence on part of Mabeza. This was
affirmed by NLRC.

Issue: Whether there was unfair labor practice by the hotel management

Ruling:

Yes. The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether the employer has exerted pressure, in the form of
restraint, interference or coercion, against his employee’s right to institute concerted
action for better terms and conditions of employment. Without doubt, the act of
compelling employees to sign an instrument indicating that the employer observed
labor standards provisions of law when he might have not, together with the act of
terminating or coercing those who refuse to cooperate with the employer’s scheme
constitutes unfair labor practice. The first act clearly preempts the right of the hotel’s
workers to seek better terms and conditions of employment through concerted action.
For refusing to cooperate with the private respondent’s scheme, petitioner was
obviously held up as an example to all the hotel’s employees, that they could only cause
trouble to management at great personal inconvenience. Implicit in the act of
petitioner’s termination and the subsequent filing of charges against her was the
warning that they would not only be deprived of their means of livelihood, but also
possibly, their personal liberty.

D.M. CONSUNJI, INC. v. Pucan

G.R. No. L-71413
March 21, 1988

Facts:

Private respondent was a regular employee of D. M. Consunji, Inc., (petitioner for

brevity) since 1959. He was a finishing carpenter assigned to all carpentry work such as
setting partitions, installing cabinets, office fixtures, etc. with a daily salary of P20.60 at
petitioner’s main office in Pandacan, Manila for eight (8) years. On May 8, 1978, he

28
received a Memorandum (transferring him to the Cainta Workshop) when he reported
back to work after a brief period of rest and hospitalization due to a heart attack.

Issue:

Whether backwages limited to three years.

Ruling:

Reinstatement with full backwages for an indefinite and prolonged period is viewed
with disfavor by this Court. Thus, it has been held that "A ruling that would permit a
dismissed laborer to earn backwages for all time, or for a very long period of time, is not
only unjust to the employer but the same would foster indolence on the part of the
laborers.

GAA VS CA
G.R. No. L-44169
December 3, 1985

Facts:

Europhil Industries Corporation was formerly one of the tenants in Trinity Building,
while Rosario A. Gaa was then the building administrator. Europhil filed an action for
damages against Gaa alleging that the latter perpetrated certain acts that can be
considered a trespass upon its rights namely, cutting of its electricity and removing its
name from the building directory and gate passes of its officials and employees. The
lower court ordered Gaa to pay Europhil actual, moral and exemplary damages. After
such decision became final and executory, the court issued a Notice of Garnishment and
was served upon El Grande Hotel, where Gaa was then employed. The sheriff garnished
Gaa’s salary, commission and/or remuneration. Gaa filed a motion to lift said
garnishment on the ground that her “salaries, commission and, or remuneration” are
exempted from execution under Article 1708 of the New Civil Code. The lower court
denied the motion. The Court of Appeals affirmed the lower court’s decision and held
that Gaa is a manager and not a mere laborer as contemplated under Article 1708.

Issue:

Whether the petitioner is covered by Ariticle 1708 of the New Civil Code.

Ruling:

No. Article 1708 of the New Civil Code provides that “The laborer’s wage shall not be
subject to execution or attachment, except for debts incurred for food, shelter, clothing
and medical attendance.” A laborer is one whose work depends on mere physical power
to perform ordinary manual labor and not one engaged in services consisting mainly of
work requiring mental skill or business capacity or the exercise of intellectual faculties.
In the instant case, Gaa is definitely not within that class of laborers to exempt her

29
salary from execution. Gaa not an ordinary or rank and file laborer but “a responsibly
place employee,” of El Grande Hotel. She is responsible for planning and coordinating
the activities of all housekeeping personnel to ensure the maintenance and orderliness
of hotel rooms. She is then, occupying a position equivalent to that of a supervisory
position.

Camelcraft Corp vs. NLRC

G.R. Nos. 90634-35
June 06, 1990

Facts:

After its registration as a labor union, the Carmelcraft Employees Union did not get
recognition from the petitioners. Consequently, it filed a petition for certification
election in June 1987. On July 13, 1987, Carmelcraft Corporation, through its president
and general manager, Carmen Yulo, announced in a meeting with the employees that it
would cease operations on August 13, 1987, due to serious financial losses. On August
17, 1987, the union filed a complaint with the Department of Labor against the
petitioners for illegal lockout, unfair labor practice and damages, followed the next day
with another complaint for payment of unpaid wages, emergency cost of living
allowances, holiday pay, and other benefits. On November 29, 1988, the Labor Arbiter
declared the shutdown illegal and violative of the employees' right to self-organization.
The claim for unpaid benefits was also granted.

Issue:

Whether the employees are estopped from any claim brought about by their mutual
understanding with the employer.

Ruling:

No. The Court ruled that the reason invoked by the petitioner company to justify the
cessation of its operations is preposterous. The act of the petitioners was an unfair labor
practice prohibited by Article 248 of the Labor Code, to wit ART. 248. Unfair labor
practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization.
More importantly, it was a defiance of the constitutional provision guaranteeing to
workers the right to self-organization and to enter collective bargaining with
management through the labor union of their own choice and confidence.

30
 PNB v Andrada
GR 142936
April 17, 2002

Facts:

PNB acquired the assets of the Pampanga Sugar Mills that were earlier foreclosed by the
DBP. The PNB organized the National Sugar Development Corporation to take
ownership and possession of the assets and ultimately to nationalize and consolidate its
interest in other PNB controlled sugar mills. PASUMIL engaged the services of the
Andrada Electric & Engineering Company for electrical rewinding and repair, most of
which were partially paid by PASUMIL, leaving several unpaid accounts with AEEC.
AEEC and PASUMIL entered into a contract for AEEC to construct its energy facilities.
Aside from the work contract, PASUMIL required AEEC to perform extra work, and
provide electrical equipment and spare parts. Out of the total obligation of P777,263.80,
PASUMIL had paid only P250,000.00. Out of the unpaid balance of P527,263.80,
PASUMIL made a partial payment to AEEC of P14,000.00, in broken amounts, leaving an
unpaid balance of P513,263.80. PASUMIL and PNB, and now NASUDECO, allegedly failed
and refused to pay AEEC their just, valid and demandable obligation. The President of
the NASUDECO is also the Vice-President of the PNB. AEEC besought said official to pay
the outstanding obligation of PASUMIL, inasmuch as PNB and NASUDECO now owned
and possessed the assets of PASUMIL, and these defendants all benefited from the
works, and the electrical, as well as the engineering and repairs, performed by AEEC. A
case was filed by AEEC. PNB and NASUDECO filed a joint motion to dismiss on the
ground that the complaint failed to state sufficient allegations to establish a cause of
action against PNB and NASUDECO, in as much as there is lack or want of privity of
contract between the them and AEEC, but was denied. The Trial Court rendered
judgment in favor of AEEC. PNB and NASUDECO appealed. The Court of Appeals
affirmed the decision. PNB and NASUDECO filed the petition for review.

Issue:

Whether PNB and NASUDECO may be held liable for PASUMIL’s liability to AEEC.

Ruling:

No. Basic is the rule that a corporation has a legal personality distinct and separate from
the persons and entities owning it The corporate veil may be lifted only if it has been
used to shield fraud, defend crime, justify a wrong, defeat public convenience, insulate
bad faith or perpetuate injustice. Thus, the mere fact that the Philippine National Bank
(PNB) acquired ownership or management of some assets of the Pampanga Sugar Mill
(PASUMIL), which had earlier been foreclosed and purchased at the resulting public
auction by the Development Bank of the Philippines (DBP), will not make PNB liable for
the PASUMIL's contractual debts to Andrada Electric & Engineering Company (AEEC).

INDINO, VS. NLRC

G.R. NO. 80352

31
 SEPTEMBER 29, 1989

Facts:

The petitioner, Benjamin G. Indino, joined the Philippine National Construction

Corporation (PNCC) as a project personnel officer on December 12, 1974. On January 6,
1981, he was transferred to private respondent DISC, a sister corporation of PNCC,
which assigned him to its Philphos Project in Isabel, Leyte. On July 27, 1983, while the
petitioner was on a paid vacation leave, he received a "letter-memorandum" from
Roman B. Lopez, DISC personnel manager, informing him that his services were no
longer needed at the Philphos Project in Leyte. Immediately after receipt of the "letter-
memorandum," the petitioner filed with the NLRC a complaint for illegal dismissal
against private respondent DISC; it was docketed as NLRC-NCR CASE No. 7- 3590-83. 4
The case, however, was prematurely terminated upon a joint motion to dismiss filed by
the parties. On the basis of that agreement, the petitioner was reinstated on October 1,
1983 at respondent DISC's central office, occupying the position of Project
Administrative Officer III. 6 Barely two months after his reinstatement, however, or on
December 14, 1983, the petitioner received another "letter-memorandum" from
respondent DISC, again terminating his services. Accordingly, pursuant to this "formal
separation," the petitioner received from DISC the amount of P20,458.52 as separation
benefits which the petitioner, however, refused to accept. He then filed a complaint for
illegal dismissal. The labor arbiter dismissed the petitioner's complaint for lack of merit,
whose decision was affirmed by NLRC.

Issue:

Whether Indino’s removal from employment amount to an illegal dismissal due to

failure of the respondent DISC to show that it was incurring, or at least about to incur,
losses.

Ruling:

The failure of the respondent DISC to show proof of its actual or imminent losses that
would justify drastic cuts in personnel or costs, is fatal to its cause. Article 283 (then
Article 284) of the Labor Code provides that an "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." Clearly, under the said provision of law, the right of an
employer to terminate the services of any employee is predicated on the existence of
any of the following causes: (1) installation of labor- saving devices; (2) redundancy; (3)
retrenchment to prevent losses; and (4) the closing or cessation of operation of the
establishment or undertaking, unless the closing is for the purpose of circumventing the
provisions of law. Thus, while business reverses can be a just cause for terminating
employees, they must be sufficiently proven by the employer. 14 This is precisely
mandated under par. (b) of Article 277 (formerly 278) of the Labor Code which states,

32
among others, that "The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer."

FRANCISCO V. DEL ROSARIO vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 85416
July 24, 1990

Facts:
POEA promulgated a decision dismissing the complaint for money claims for lack of
merit. The decision was appealed to the NLRC, which reversed the POEA decision and
ordered Philsa Construction and Trading Co., Inc., the recruiter and Arieb Enterprises,
the foreign employer to pay private respondent their salary differentials and vacation
leave benefits jointly and severally. A writ of execution was issued by the POEA but it
was returned unsatisfied as Philsa was no longer operating and was financially
incapable of satisfying the judgment. Private respondent moved for the issuance of an
alias writ against the officers of Philsa. This motion was opposed by the officers, led by
petitioner, the president and general manager of the corporation.

Petitioner appealed to the NLRC. On September 23, 1988, the NLRC dismissed the
appeal on the theory that the corporate personality of Philsa should be disregarded.
According to the NLRC, Philsa Construction & Trading Co., Inc. and Philsa International
Placement & Services Corp are one and the same because both corporations has the
same set of directors and officers. Petitioner's motion for reconsideration was denied.
Thus, this petition was filed, alleging that the NLRC gravely abused its discretion.

Issue:

Whether the action of the NLRC should be disregarded.

Ruling:

Yes. Not only has there been a failure to establish fraud, but it has also not been shown
that petitioner is the corporate officer responsible for private respondent's
predicament. It must be emphasized that the claim for differentials and benefits was
directed against the foreign employer. Philsa became liable only because of its
undertaking to be jointly and severally bound with the foreign employer, an
undertaking required by the rules of the POEA, together with the filing of cash and
surety bonds, to ensure that overseas workers shall find satisfaction for awards in their
favor.

NAFLU V. OPLE
G.R. NO. L-68661
JULY 22, 1986

Facts:

33
NAFLU was the designated exclusive bargaining agent for the employees of LAWMAN
Industrial Collective bargaining negotiations between NAFLU and Lawman happened
between October 1981 and January 1982. NAFLU declared a strike after Lawman
refused to grant substantial economic demands to its workers. The strike was ended in
the same month through efforts of the Bureau of Labor Relations. Lawman agreed to
increase wages by one peso for 3 consecutive years: grant vacation leave, sick leave, and
other fringe benefits. This CBA was supposed to take effect in September 1982. August
1982 - Lawman commenced a partial shutdown of its operations. It hauled it machines
out from its factory to a different location in Malabon, where it operated under the
name LIBRA Garments. It also hired new workers. When the Lawman employees
discovered this, Libra changed its name to DOLPHIN Garments.

NAFLU filed a request for conciliation before the Bureau of Labor Relations, requesting
the Bureau to intervene in their dispute with Lawman over certain money claims, the
non-implementation of the CBA, and the establishment of a runaway shop to bust the
union. Lawman unilaterally declared a temporary shutdown but promised its
employees that normal operations will resume in Jan. 1983. NAFLU filed a notice of
strike, after all efforts to mediate the charge of unfair labor practice and money claims
have failed. Lawman offered to pay P200,000 as complete settlement of all claims plus
separation pay. NAFLU rejected the offer as it would be tantamount to accepting the
separation of its members from the company. Conciliation efforts proved futile. NAFLU
filed before the NLRC an unfair labor practice complaint against Lawman.

Issue:

Whether the employees of Lawman should be reinstated to their former positions.

Ruling:

Yes. Veil of corporate fiction must be pierced; Libra must reinstate lawman's workers. It
is obvious from the above findings that Libra seeks the protective shield of corporate
fiction to achieve an illegal purpose. This veil should be pierced as it was deliberately
and maliciously designed to evade Lawman's financial obligations to its employees.
When the veil of corporate fiction is made as a shield to perpetrate a fraud or to confuse
legitimate issues (here, the relation of employer-employee), the same should be pierced.

Pabalan and Lagdameo VS. NLRC

GR NO. 89879
April 20, 1990

Facts:

84 workers of the Philippine Inter-Fashion (PIF) filed a complaint against the latter for
illegal transfer simultaneous with illegal dismissal in violation of the Labor Code. PIF
was notified about the complaint and summons but hearings were continually re-set for
failure of its officers (petitioners herein) to appear. Complainant workers thus moved to

34
implead petitioners as officers of PIF in the complaint for their illegal transfer to a new
firm. The Labor Arbiter ruled in favor of workers holding petitioners-officers jointly and
severally liable with PIF to pay them their benefits. Petitioners’ appeal was dismissed.

Issue:

Whether petitioners as officers may be held jointly and severally liable with the
corporation for its liability.

Ruling:

No. Complainants did not allege or show that petitioners, as officers of the corporation
deliberately and maliciously designed to evade the financial obligation of the
corporation to its employees or used the transfer of the employees to perpetrate an
illegal act or as a vehicle for the evasion of existing obligations, the circumvention of
statutes, or to confuse the legitimate issues. Not one of the above circumstances has
been shown to be present. Hence petitioners cannot be held jointly and severally liable
with the PIF corporation under the questioned decision and resolution of the public
respondent.

Gudez v NLRC
G.R. No. 83023
March 23, 1990

Facts:

Petitioners were formerly employed by respondent Retired Army Protective and

Security Agency Inc. (RAPSA for brevity) as executive director, security guards and
supervisors. Respondent RAPSA is a corporation engaged in providing security services.
It has for its president and treasurer, respondent Herminia A. Crisologo. In a letter dated
July 3, 1986, Col. Ricardo A. Carranceja of the Philippine Constabulary, Supervisory Unit
for Security, and Investigation Agencies (PCSUSIA for brevity) ordered RAPSA to cease
operations and to turn over their firearms to the Firearms and Explosive Unit of the
Philippine Constabulary. However, in another letter dated July 18, 1986, the PCSUSIA
allowed RAPSA to continue its operations up to August 15, 1986 for the winding up of
its affairs. Hence on the aforesaid date, RAPSA ceased its operations and terminated the
employment of petitioners. Petitioners filed their separate complaints with the Labor
Arbiter against RAPSA, Herminia Crisologo, ESAPSA and Malou Alviar, for separation
pay, recovery of lost tool deposit, allowances, and other monetary claims.

Issue:

35
Whether an appeal was made by respondent Crisologo from the decision of the Labor
Arbiter to the Commission.

Ruling:

Yes. Time-honored principle that administrative and quasi-judicial bodies like the
National Labor Relations Commission are not bound by the technical rules of procedure
in the adjudication of cases. However, the rule on substitution of counsel or
employment of additional counsel is still observed in labor cases. Thus, there can be no
valid substitution of counsel until the prescribed procedure is followed, to wit: 1) there
must be filed a written application for substitution; 2) there must be filed the written
consent of the client to the substitution; 3) there must be filed the written consent of the
attorney to be substituted, if such consent can be obtained; and 4) in case such written
consent cannot be procured, there must be filed with the application for substitution,
proof of the service of notice of such motion in the manner required by the rules on the
attorney to be substituted (Philippine Apparel Workers Union v. NLRC, L50320, October
27, 1983, 125 SCRA 391). Records do not show that the above procedure had been
complied with. Hence, We find that there was no valid substitution of counsel and that
counsel for respondent RAPSA was not authorized to appeal for and in behalf of
respondent Crisologo.

NERI VS. NLRC

GR Nos. 97008-09
July 23, 1993

Facts:

Petitioners Virginia Neri and Jose Cabelin were hired by Building Care(BCC), a
corporation engaged in providing technical, maintenance, engineering, housekeeping,
security and other specific services to its clientele. They were assigned to respondent
Far East Bank and Trust Company (FEBTC), with Neri as a radio/telex operator and
Cabelin as janitor/messenger. Petitioners then instituted an action with the Regional
Arbitration Branch No. 10 to compel FEBTC to recognize and accept them as regular
employees. The Labor Arbiter denied the complaint for lack of merit, declaring that BCC
was considered an independent contractor because it proved it had substantial capital
of P1M. Neri and Cabelin, however, contend that BCC is engaged in LOC 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, they argued that they performed duties which are directly
related to the principal business of FEBTC.

Issue:

Whether BCC is engaged in LOC.

36
Ruling:

BCC is an independent contractor. One is not required to possess both a) substantial

capital and b) investment in the form of tools, equipment, machinery, work premises,
among others, to be considered a job contractor. Possession of either attribute is
sufficient for the purposes of complying with one of the conditions for the establishment
of permissible job contracting. In this case, BCC proved it had substantial capital of
P1M.On the issue of control, petitioners do not deny that they were selected and hired
by BCC before being deployed in FEBTC. BCC likewise acknowledges that petitioners are
its employees. The record is replete with evidence disclosing the 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
for absence were filed directly with the BCC and salaries were drawn only from BCC. As
a matter of fact, Neri even secured a certificate from BCC that she was employed by the
latter. More importantly, under the terms and conditions of the contract, it was BCC
alone which had the power to reassign petitioners. These are indications that BCC
carries an independent business according to its own manner and method, freeform the
control and supervision of its principal in all matters except as to the results thereof.

PHIL. BANK OF COMMUNICATIONS V. NLRC

G.R. NO. L-66598
DECEMBER 19, 1986

Facts:

Philippine Bank of Communications and the Corporate Executive Search, Inc. (CESI)
entered into an agreement under which CESI would provide “Temporary Services” to
PBCom consisting of eleven (11) messengers, one of whom was Orpiada who had been
assigned to the bank since June 1975. He rendered messengerial services to the bank,
within its premises, together with others doing similar job. In or about October 1976,
the bank requested CESI to withdraw Orpiada’s assignment because Orpiada’s services
“were no longer needed.” Orpiada filed a complaint against the bank for illegal dismissal
and failure to pay the 13th-month pay. During the compulsory arbitration proceedings,
the Bank impleaded CESI as an additional respondent. Both the bank and CESI
maintained that CESI (and not the bank) was Orpiada’s employer.

Issue:

Whether an employer-employee relationship existed between the bank and Orpiada.

Ruling:

There is, of course, nothing illegal about hiring persons to carry out “a specific project or
undertaking the completion or termination of which (was) determined at the time of the
engagement of (the) employee, or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.” Under the

37
Labor Code, however, any employee who has rendered at least one year of service,
whether such service is continuous or not, shall be considered a regular employee
(Article 281, second paragraph). 2 Assuming, therefore, that Orpiada could properly be
regarded as a casual (as distinguished from a regular) employee of the bank, he
becomes entitled to be regarded as a regular employee of the bank as soon as he had
completed one year of service to the bank. Employers may not terminate the service of a
regular employee except for a just cause or when authorized under the Labor Code
(Article 280 3 [now 279], Labor Code).

We hold that, in the circumstances of this case, CESI was engaged in “laboronly”
contracting vis-a-vis the petitioner bank and in respect of Ricardo Orpiada, and that
consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly
employed not only by CESI but also by the bank. It may well be that the bank may in
turn proceed against CESI to obtain reimbursement of, or some contribution to, the
amounts which the bank will have to pay to Orpiada.

Guarin vs. NLRC

G.R. No. 86010
October 3, 1989

Facts:

In 1983, private respondents Lipercon Services, Inc. and Novelty Philippines, Inc.
entered into a "Contract of Services" in which the former, for a contract price, undertook
to provide the latter with contractuan Laborers/Helpers/Janitors. For this reason,
petitioners were hired by Liperson to work with Novelty as helpers, janitors,
janitresses, firemen, and mechanics. Petitioners worked with Novelty as such for three
years. In 1986, Novelty terminated its agreement with Lipercon and consequently
petitioners were dismissed. Petitioners filed an illegal dismissal case against Novelty
and Lipercon, in which case the Labor Arbiter ruled that petitioners were regular
employees of Novelty and declared their dismissal illegal. Both employers appealed. The
National Labor Relations Commission reversed the Labor Arbiter's decision and ruled
that Lipercon was an independent contractor. It ordered Lipercon, to reinstate
petitioners.

Issue:

Whether Lipercon is an independent contractor and the petitioners are its employees.

Ruling:

The Supreme Court ruled that as provided in Article 106 of the Labor Code, and as can
be gleaned from the agreement between krersen, and Novelty, it was clear that Ligercen
was a "labor-only" contractor and thus served merely an agent of Novelty tasked to
provide it with manpower. Linercen's contention that it is an independent contractor

38
because it claimed to have substantial capital and investment in tools and equipment
was not given merit because it was not able to present substantial evidence to that
effect. On the contrary, the Supreme Court held that petitioners' works were directly
related to the daily operations of a garment factory since gardeners work to maintain
clean and well-kept grounds around the factory, mechanics to keep the machines
functioning properly, and firemen to look out for fires. This fact is confirmed, according
to the Court, by Novelty's rehiring the workers or renewing the contract with Lipercon
every year from 1983 to 1986, a period of three years. As Linerson was a "labor-only"
contractor, the workers it supplied Novelty became regular employees of the latter and
the Court ordered their reinstatement with back wages.

Filipinas Synthetic Fiber Corporation vs. NLRC, et al.

G.R. No. 113347
June 14, 1996

Facts:

On 4 April 1991 FILSYN, a domestic corporation engaged in the manufacture of

polyester fiber, contracted with De Lima Trading and General Services (DE LIMA) for
the performance of specific janitorial services Pursuant to the agreement Felipe Loterte,
among others, was deployed at FILSYN to take care of the plants and maintain general
cleanliness around the premises. On 24 February 1992 Loterte sued FILSYN and DE
LIMA as alternative defendants for illegal dismissal, underpayment of wages, on-
payment of legal holiday pay, service incentive leave pay and 13th month pay alleging
that he was first assigned to perform janitorial work at FILSYN in 1981 by the La Saga
General Services; that the La Saga was changed to DE LIMA on August 1991; that when a
movement to demand increased wages and 13th month pay arose among the workers
on December 1991 he was accused by a certain Dodie La Flores of having posted in the
bulletin board at FILSYN an article attributing to management a secret understanding to
block the demand; and, for denying responsibility, his gate pass was unceremoniously
cancelled on 6 February 1992 and he was subsequently dismissed. Loterte was
classified by the Labor Arbiter as a regular employee on the ground that he performed
tasks usually necessary or desirable in the main business of FILSYN for more than ten
(10) years or since 1981. FILSYN was declared to be the real employer of Loterte and
DELIMA as a mere labor contractor. Hence, FILSYN was adjudged liable for Loterte's
reinstatement, payment of salary differentials and back wages and other benefits.
Hence, this petition for certiorari by FILSYN.

Issue:

Whether there exists an employer-employee relationship between FILSYN and private

respondent Felipe Loterte.

39
Ruling:

DE LIMA is an independent job contractor, therefore no direct employer-employee

relationship exists between petitioner FILSYN and private respondent Felipe Loterte.
The relationship between petitioner Filipinas Synthetic Fiber Corporation and private
respondent De Lima Trading and General Services (DE LIMA) is one of job
contractorship. Under the Labor Code, two (2) elements must exist for a finding of
labor-only contracting: (a) the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and (b) the workers recruited and placed by such persons are
performing activities directly related to the principal business of such employer. These
two (2) elements do not exist in the instant case. Judicial notice has already been taken
of the general practice in private as well as in government institutions and industries of
hiring janitorial services on an independent contractor basis. Respondent De Lima
Trading and General Services (DE LIMA) are ordered to reinstate private respondent
Felipe Loterte to hisformer position or its equivalent without loss of seniority rights.
And private respondent De Lima Trading and General Services (DE LIMA) is ordered
jointly and severally with petitioner Filipinas Synthetic Fiber Corporation to pay private
respondent Felipe Loterte his salary differentials, 13th month pay, service incentive
leave pay, and backwages without prejudice to FILSYN seeking reimbursement from
DELIMA for whatever amount the former may pay or have paid the latter.

BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES V. ZAMORA

G.R. No. L-48645
January 7, 1987

Facts:

On July 11, 1969, Brotherhood Labor Unity Movement of the Philippines (BLUMP), filed
a complaint against San Miguel Corporation. It alleged that respondents ordered the
individual complainants to disaffiliate from the complainant union, the management
then dismissed the individual complainants when they insisted on their union
membership. Petitioners are workers who have been employed at the San Miguel Parola
Glass Factory for nearly 7 years prior to their dismissal. They worked as cargadores or
pahinantes at the SMC plant loading, unloading, piling or palleting empty bottles and
wooded shells to and from company trucks and warehouses. Respondents alleged that
the complainants have never been their employees and were employees of an
independent contractor, Camahort. Petitioners first reported for work to Camahort who
signs their gate passes and the respondent company provided them with tools,
equipment and paraphernalia used in loading, unloading, piling and hauling operations.
Job orders came from Camahort. The orders are then transmitted to an assistantofficer-
in-charge. In turn, the assistant informs the warehouseman and checkers regarding the
same. The latter, thereafter, relays said orders to the capatazes or group leaders who
then give orders to the workers as to where, when and what to load, unload, pile, pallet
or clean. Petitioners were pain every 10 days on piece rate. The group leader notes
down the number or volume of work that each individual worker has accomplished.

40
Camahort approves the final report. 8. Petitioners also worked exclusively for SMC plnt,
never having been assigned to other companies or departments of SMC plant, even
when the volume of work is minimum.

Issue:

Whether the petitioners employees of private respondent, San Miguel Corporation?

Ruling:

Yes. In determining the existence of employee-employer relationship, the elements that

are generally considered are the following: 1. the selection and engagement of the
employee 2. the payment of wages 3. the power of dismissal 4. 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.
Applying the above criteria, the evidence strongly indicates the existence of an
employer, employee relationship between the petitioner workers and respondent San
Miguel Corporation. The respondent asserts that the petitioners are employees of the
Guaranteed Labor Contractor, an independent labor contracting firm. The facts and
evidence on record negate respondent SMC's claim. The existence of an independent
contractor relationship is generally established by the following criteria: "whether or
not the contractor is carrying on an independent business; the nature and extent of the
work; the skill required; the term and duration of the relationship; the right to assign
the performance of a specified piece of work; the control and supervision of the work to
another; the employer's power with respect to the hiring, firing and payment of the
contractor's workers; the control of the premises; the duty to supply the premises tools,
appliances, materials and labor; and the mode, manner and terms of payment." None of
the above criteria exists in the case at bar.

A.C. Ransom Labor Union vs NLRC

G.R. No. L-69494
May 29, 1987

Facts:

Hernandez established A. C. RANSOM (Phils.) Corp. (RANSOM). In 1961, employees of

RANSOM, most members of herein petitioner UNION, went on strike and established a
picket line. When it was lifted, most were allowed to resume to work except for the 22
workers, which the Company refused to reinstate. In 1969, Hernandez family organized
Rosario Industrial Corp. (ROSARIO) in same compound and nature of business with
RANSOM. In 1972, the Court of Industrial Relations ordered RANSOM, its officers and
agents to reinstate the 22workers, but in 1973, RANSOM applied for clearance to close,
which was granted by the Ministry of Labor and Employment without prejudice to the
right of employees to seek redress of grievance.

In 1974, back wages of the 22 workers were computed (164K) so petitioner UNION filed
motions for execution (up to 10motions) but could not be implemented for failure to

41
find leviable assets of RANSOM.- Hence, last Motion of Execution filed asked its officers
and agents to be held personally liable for the payment of back wages. LA (GENILO
ORDER) granted and ordered 7 officers and directors of the Company liable (herein
private respondents). NLRC affirmed LA with modification that in absence of proof that
the officers exceeded their authority, writ of execution cannot be enforced against them.

Issue:

Whether the judgment against the Corporation to reinstate employees with back wages
enforceable against its agents and officers in their individual, private and personal
capacities?

Ruling:

Yes. If the employer is a corporation, Article 212 (c) of the Labor Code provides:
'Employer includes any person acting in the interest of an employer directly or
indirectly. The term shall not include any labor organization or any of its officers or
agents except when acting as employer. Since RANSOM is an artificial person, it must
have an officer who can be presumed to be the employer, being the “person acting in the
interest of employer".

The responsible officer of an employer corporation can be held personally, not to say
even criminally, liable for non-payment of back wages, which is provided in the
Minimum Wage Law, Section 15(b): If any violation of this Act is committed a form of
penalty or damage against the employer in favor of the employee for the latter's
dismissal or separation from service.

Industrial Timber Corporation v. NLRC

G.R. No. 107302 & 107306
June 10, 1997

Facts:

Petitioner Industrial Timber Corporation (ITC) was leased a plywood plant located at
Butuan City for a period of 5 years by Industrial Plywood Group Corporation (IPGC).
Thereafter, ITC commenced operation of the plywood plant and hired 387 workers.
Sometime after, ITC notified DOLE and its workers of the plant’s shutdown due to the
non-renewal of the anti-pollution permit and the alleged lack of logs for milling
constrained ITC to lay off all its workers until further notice. A final notice of closure or
cessation of business operations followed advising the workers to collect the benefits
due them under the law and CBA. Later, IPGC took over the plywood plant and was
issued a permit to operate coincidentally the same day the ITC ceased operation of the
plant. This prompted respondents to file a complaint for illegal dismissal and unfair
labor practice alleging that the cessation of ITC’s operation was intended to bust the
union and that both corporations are one and the same entity. LA dismissed the

42
complaint. On appeal, NLRC first ordered the reinstatement of employees but later,
ruled to dismiss herein respondent’s complaints. CA set aside the decision.

Issue:

Whether respondents were illegally dismissed due to the closure of ITC’s business.

Ruling:

No. The right to close the operation of an establishment or undertaking is one of the
authorized causes in terminating employment of workers, the only limitation being that
the closure must not be for the purpose of circumventing the provisions on termination
of employment embodied in the Labor Code. Under Article 283 of the Labor Code, three
requirements are necessary for a valid cessation of business operations: (a) service of a
written notice to the employees and to the DOLE at least one month before the intended
date thereof; (b) the cessation of business must be bona fide in character; and (c)
payment to the employees of termination pay amounting to one month pay or at least
one-half month pay for every year of service, whichever is higher.

In the case at bar, ITC notified its employees and the DOLE of the ‘no plant operation’
due to lack of raw materials. This was followed by a ‘shut down’ notice due to the
expiration of the anti-pollution permit. However, this shutdown was only temporary as
ITC assured its employees that they could return to work once the renewal is acted
upon by the DENR. Then, ITC sent its employees a final notice of closure or cessation of
business operations to take effect on the same day it was released. We find that this falls
short of the notice requirement for termination of employment due to authorized cause
considering that the DOLE was not furnished, and the notice should have been furnished
both the employees and the DOLE at least one month before the intended date of
closure.

Tabas vs. California Manufacturing

G.R. No. 806680
January 26, 1989

Facts:
Petitioners were the employees of Livi Manpower Services. They were assigned to the
respondent pursuant to a manpower supply agreement as “promotional merchandisers”.
It was provided in the agreement that: 1) California would have no control or
supervision over the workers as to how they perform or accomplish their work, 2) Livi
is an independent contractor and that it has the sole responsibility of complying with all
the existing as well as future laws, rules and regulations pertinent to employment of
labor, 3) the assignment to California was “seasonal and contractual”, and 4)payroll,
including COLA and holiday pay shall be delivered Livi at California’s premises.
Petitioners were made to sign 6-month employment contracts which were renewed for

43
the same period. Unlike regular employees of California, they did not receive fringe
benefits and bonuses and were paid only a daily allowance. Petitioners contend that
they have become regular employees of California. After their claim for regularization,
California no longer re-hired them. Livi, on the other hand, claims the workers as its
employees and that it is an independent contractor. Labor Arbiter found that no
employer-employee relationship existed. The NLRC affirmed the ruling.

Issue:

Whether there is an employer-employee relationship between California and the

petitioners.

Ruling:

Yes. The existence of an employer-employee relationship is a question of law and

cannot be made subject to agreement. The stipulations in the manpower supply
agreement will not erase either party’s obligations as an employer. Livi is a labor-only
contractor, notwithstanding the provisions in the agreement. The nature of one’s
business is not determined by self-serving appellations but by test provided by statute
and the prevailing case law. California’s contention that the workers are not performing
activities which are directly related to its general business of manufacturing is
untenable. The promotion or sale of products, including the task of occasional price
tagging, is an integral part of the manufacturing business. Livi as a placement agency
had simply supplied the manpower necessary for California to carry out its
merchandising activities, using the latter’s premises and equipment. Merchandising is
likewise not a specific project because it is an activity related to the day-to-day
operations of California. Based on Article 106 of the Labor Code, the labor-only
contractor is considered merely an agent of the employer and liability must be
shouldered by either one or by both. Petitioners are ordered reinstated as regular
employees.

Deferia v. NLRC
G.R. No. 78713
February 27, 1991

Facts:

Private respondent Erma Industries is a corporation engaged in exporting marine

products. Its vice-president entered into a contract with its private co-respondent
Undan for the latter to supply the former with its products in Bacolod. Under the
contract, Erma would provide both the financing and the equipment to Undan while the
latter would be responsible for hiring the workers. Undan engaged the services of the
nineteen petitioners and were paid on a piece-work basis or pakiao.

Issue:

Whether labor-only contracting exist.

44
Ruling:

Yes. There is "labor-only" contracting where the person supplying workers to an

employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and
placed by such persons are performing activities which are directly related to the
principal business of such employer.

SAN MIGUEL CORPORATION VS PROSPERO A. ABALLA

G.R. NO. 149011
June 28, 2005

Facts:

Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative

(Sunflower) entered a one-year Contract of Service and such contract is renewed on a
monthly basis until terminated. Pursuant to this, respondent Prospero Aballa et al.
rendered services to SMC. After one year of rendering service, Aballa et al., filed a
complaint before National Labor Relations Commission (NLRC) praying that they be
declared as regular employees of SMC. On the other hand, SMC filed before the
Department of Labor and Employment (DOLE) a Notice of Closure due to serious
business losses. Hence, the labor arbiter dismissed the complaint and ruled in favor of
SMC. Aballa et al. then appealed before the NLRC. The NLRC dismissed the appeal
finding that Sunflower is an independent contractor. On appeal, the Court of Appeals
reversed NLRC’s decision on the ground that the agreement between SMC and
Sunflower showed a clear intent to abstain from establishing an employer-employee
relationship.

Issue:

Whether Aballa et al. are employees of SMC.

Ruling:

The Contract of Services between SMC and Sunflower shows that the parties clearly
disavowed the existence of an employer-employee relationship between SMC and
private respondents. The language of a contract is not, however, determinative of the
parties’ relationship; rather it is the totality of the facts and surrounding circumstances
of the case. A party cannot dictate, by the mere expedient of a unilateral declaration in a
contract, the character of its business, i.e., whether as labor-only contractor or job
contractor, it being crucial that its character be measured in terms of and determined by
the criteria set by statute.

45
 EAGLE SECURITY AGENCY vs. NLRC
G.R. No. 81314
May 18, 1989

Facts:

Employees of Eagle Security Agency, security guards in the Philippine Tuberculosis

Society, Inc., filed a complaint against ESA and PTSI for unpaid wage increases granted
under four wage orders. PTSI alleged that the wage increases should be borne
exclusively by ESA, pursuant to the provision in their contract, while the latter
contended that, under the wage orders, the former should be held liable for the same.

Issue:

Whether ESA and PTSI should be jointly and severally liable for the wage increases.

Ruling:

Yes. The joint and several liability of the contractor and the principal is mandated by the
Labor Code to assure compliance of the provisions therein including the statutory
minimum wage. The contractor is made liable by virtue of his status as direct employer.
The principal, on the other hand, is made the indirect employer of the contractor's
employees for purposes of paying the employees their wages should the contractor be
unable to pay them. The solidary liability, however, does not preclude the right of
reimbursement from the co-debtor by the one who paid.

NESTLE VS NLRC
G.R. No. 91231
February 4, 1991

Facts:

By this petition for certiorari, petitioner seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989, of the NLRC, Second Division, in Cert. Case
No. 0522 entitled, "In Re: Labor Dispute of Nestlé Philippines, Inc." insofar as it modified
the petitioner's existing non-contributory Retirement Plan. Thereafter, UFE was
certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales
Office. In August 1987, while the parties, were negotiating, the employees at Cabuyao
resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the
factory. Marathon collective bargaining negotiations between the parties ensued. UFE
declared a bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed
jurisdiction and issued a return-to-work order. In spite of that order, the union struck,
without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro
factory on September 11, 1987, up to December 8, 1987. The company retaliated by
dismissing the union officers and members of the negotiating panel who participated in
the illegal strike. The NLRC affirmed the dismissals on November 2, 1988.

46
Issue:

Whether the employees have no vested or demandable right to a non-contributory

retirement plan.

Ruling:

The petitioner's contention, that employees have no vested or demandable right to a

non-contributory retirement plan, has no merit for employees do have a vested and
demandable right over existing benefits voluntarily granted to them by their employer.
The latter may not unilaterally withdraw, eliminate, or diminish such benefits. The
NLRC's resolution of the bargaining deadlock between Nestlé and its employees is
neither arbitrary, capricious, nor whimsical. The benefits and concessions given to the
employees were based on the NLRC's evaluation of the union's demands, the evidence
adduced by the parties, the financial capacity of the Company to grant the demands, its
long term viability, the economic conditions prevailing in the country as they affect the
purchasing power of the employees as well as its concomitant effect on the other factors
of production, and the recent trends in the industry to which the Company belongs (p.
57, Rollo). Its decision is not vitiated by abuse of discretion.

Davao IPS vs Abarquez

G.R. No. 102132
March 19, 1993

Facts:

Petitioner and private respondent and the exclusive collective bargaining agent of the
rank-and-file workers entered into collective bargaining agreement under Sections 1
and 3, Article VIlI thereof, provide for sick leave with pay benefits each year to its
employees who have rendered at least one 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), 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 said discontinuance because 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. The Union brought it before the National Conciliation and
Mediation Board and said public respondent issued an award in favor of the Union.
Hence, this instant petition.
Issue:

Whether the intermittent field workers are entitled to conversion to cash of any unused
sick leave.

47
Ruling:

The Supreme Court dismissed the petition. It was said that CBA is not an ordinary
contract but impressed with public interest, thus it must yield to the common good. 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.

Globe Mackay Cable and Radio Corp. vs NLRC

G.R. No. L-74156
June 29, 1988

Facts:

Wage Order No. 6 increased the cost-of-living allowance (COLA) of non-agricultural

workers in the private sector. Petitioner Corporation complied with said Order by
paying its monthly-paid employees the mandated P3.00 per day COLA. In its
computation, Petitioner Corporation multiplied the P3.00 daily COLA by 22 days, which
is the number of working days in the company. Respondent Union disagreed with the
computation alleging that prior to the effectivity of the Wage Order, Petitioner
Corporation had been computing and paying the COLA on the basis of 30 days per
month and that this constituted an employer practice, which should not be unilaterally
withdrawn. The Labor Arbiter sustained the position of Petitioner Corporation by
holding that the monthly COLA should be computed on the basis of 22 days, since the
evidence showed that there are only 22 days in a month for monthly-paid employees in
the company.

The NLRC reversed the Labor Arbiter on appeal, holding that Petitioner Corporation
was guilty of illegal deductions considering that COLA should be paid and computed on
the basis of 30 days since workers paid on a monthly basis are entitled to COLA on days
“unworked”; and the full allowance enjoyed by Petitioner Corporation’s monthly-paid
employees before the CBA executed between the parties constituted voluntary
employer practice, which cannot be unilaterally withdrawn.

Issue:

Whether the computation and payment of COLA on the basis of 30 days per month
constitute an employer practice which should not be unilaterally withdrawn.

Ruling:

No. Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 provides that
“all covered employees shall be entitled to their daily living allowance during the days
that they are paid their basic wage, even if unworked.” The primordial consideration for
entitlement of COLA is that basic wage is being paid. The payment of COLA is mandated

48
only for the days that the employees are paid their basic wage, even if said days are
unworked. On the days that employees are not paid their basic wage, the payment of
COLA is not mandated. Moreover, Petitioner Corporation cannot be faulted for
erroneous application of a doubtful or difficult question of law. Since it is a past error
that is being corrected, no vested right may be said to have arisen nor any diminution of
benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the
correction.

Asis v MOLE
G.R. No. 58094-95
March 15, 1989

Facts:

In addition to petitioner's basic salaries and other fringe benefits as legal counselor and
later as Head of its Manpower and Services Department, his employer, private
respondent CENTRAL AZUCARERA DE PILAR, granted him, and a few other officials of
the company, a monthly ration of 200 liters of gasoline and a small tank of liquefied
petroleum gas (LPG). This monthly ration was temporarily revoked some five years
later as a cost reduction measure of the Central. The petitioner commenced an action
against the Central with the Regional Office of the Ministry of Labor and Employment,
seeking restoration of his monthly ration of gasoline and LPG, and complaining against a
signed memorandum ordaining his relief. He theorized that he had in effect been
dismissed, illegally. The Regional Director's judgment was for petitioner's reinstatement
including the restoration of additional benefits (ration of gasoline and LPG) but upon
appeal by Central, the Deputy Minister of Labor reversed the Regional Director's
decision. Hence, this petition.
Issue: Whether an employee may demand restoration restored even if such are not part
of the basic salary.

Ruling: No. The temporary revocation of the petitioner's monthly ration of fuel, suffice
it to point out that, as the Solicitor General stresses, this had been occasioned by force of
circumstances affecting the Central's business. The monthly ration was not a part of his
basic salary and is not indeed found in any of the management payroll vouchers
pertinent to the petitioner. Moreover, the adverse consequences of the suspension of
the monthly rations had been largely if not entirely negated by the Central's
undertaking to reimburse the petitioner for his consumption of fuel during the period of
suspension.

Lexal Lab v. CIR

G.R. No. L-24632
October 26, 1968

Facts:

49
CIR, confirming the report of its Chief Examiner and Economist, ruled in its order of
February 16, 1965 that Ponseca was entitled to back wages from November 5, 1958
when he ceased reporting for work, to November 24, 1963 a day prior to his
reinstatement on November 25, 1963; and that for the number of days that he was
supposed to be in Manila, he was to earn P4.50 a day, and during the periods when he
should have been in the provinces, P4.50 a day plus a per diem of P4.00 or a total of
P8.50 daily. This order was subsequently modified by CIR's resolution of May 22, 1965,
which directed the deduction of P5,000.00 previously paid Ponseca under the judgment
and P610.00 which Ponseca earned from other sources during his lay-off. Petitioners
vigorously objected to the inclusion of the P4.00 per diem in the computation of
Ponseca's back wages because the latter "did not actually spend for his meals and
lodgings for he was all the time in Manila, his station." CIR brushed this contention
aside. Whereupon petitioners appealed to this Court from the order of February 16,
1965 and the resolution of May 22, 1965.

CIR directing petitioner Lexal Laboratories (Lexal) to reinstate Guillermo Ponseca, a

dismissed employee, to his former position "with full back wages from the day of his
dismissal up to the time he is actually reinstated without loss of his seniority rights and
of such other rights and privileges enjoyed by him prior to his lay-off.

Issue:

Whether “per diems” are included in backpay?

Ruling:

No. Lexal concedes that whenever its employee, Guillermo Ponseca, was out of Manila,
he was allowed a per diem of P4.00 broken down as follows: P1.00 for breakfast; P1.00
for lunch; P1.00 for dinner; and P1.00 for lodging. Ponseca — during the period
involved — did not leave Manila. Therefore, he spent nothing for meals and lodging
outside of Manila. Because he spent nothing, there is nothing to be reimbursed. Since
per diems are reimbursement, Ponseca should not be entitled to per diems. Neither is it
suggested in the record that per diems formed part of the terms of employment
between petitioners and respondent union (of which Ponseca is a member), or with
Ponseca himself for that matter. Nor was pronouncement made either in the original
decision or in the questioned order and resolution of CIR that per diems are part of back
wages. CIR simply hit upon the idea that per diems should be paid as part of the back
wages because they were "paid to him regularly.

Republic vs. Peralta

G.R. No. 56568
May 20, 1987

Facts:

In the voluntary insolvency proceedings commenced private respondent Quality

Tobacco Corporation (the "Insolvent" ), the claims of creditors were filed:

50
(i) P2,806,729.92, by the USTC Association of Employees and Workers Union - PTGWO
("USTC"), as separation pay for their members.
(ii) P53,805.05 by the Federacion de la Industria Tabaquera y Otros Trabajadores de
Filipinas ("FOITAF"), as separation pay for their members, an amount similarly awarded
by the NLRC in the same NLRC Case.
(iii) P1,085,188.22 by the Bureau of Internal Revenue for tobacco inspection fees
covering the period 1 October 1967 to 28 February 1973;
(iv)P276,161.00 by the Bureau of Customs for customs duties and taxes payable on
various importations by the Insolvent. These obligations appear to be secured by surety
bonds. Some of these imported items are apparently still in customs custody so far as
the record before this Court goes. The trial court held that the above-enumerated claims
of the unions for separation pay of their respective members embodied in final awards
of the National Labor Relations Commission were to be preferred over the claims of the
Bureau of Customs and the Bureau of Internal Revenue. The Solicitor-General, in
seeking the reversal of the questioned Orders, argues that Article 110 of the Labor Code
is not applicable as it speaks of "wages," a term which he asserts does not include the
separation pay claimed by the Unions. "Separation pay," the Solicitor General contends.

Issue:

38Whether separation pay of their respective members embodied in final awards of the
NLRC were to be preferred over the claims of the Bureau of Customs and the BIR

Ruling:

The resolution of the issue of priority among the several claims filed in the insolvency
proceedings instituted by the Insolvent cannot, however, rest on a reading of Article
110 of the Labor Code alone. Those provisions may be seen to classify credits against a
particular insolvent into three general categories, namely: (a) special preferred credits
listed in Articles 2241 and 2242, (b) ordinary preferred credits listed in Article 2244;
and (c) common credits under Article 2245.
Put succinctly, Articles 2241 and 2242 jointly with Articles 2246 to 2249 establish a
two-tier order of preference. The first tier includes only taxes, duties and fees due on
specific movable or immovable property. All other special preferred credits stand on the
same second tier to be satisfied, pari passu and pro rata,out of any residual value of the
specific property to which such other credits relate.

DBP vs. NLRC

G.R. No. 108031
March 1, 1995

Facts:

Leonor A. Ang started employment as Executive Secretary with Tropical Philippines

Wood Industries, Inc. (TPWII). In 1982 she was promoted to the position of Personnel
Officer. In September 1983 petitioner Development Bank of the Philippines (DBP), as
mortgagee of TPWII, foreclosed its plant facilities and equipment. Nevertheless, TPWII
continued its business operations interrupted only by brief shutdowns for the purpose

51
of servicing its plant facilities and equipment. In January 1986 DBP took possession of
the foreclosed properties. From then on, the company ceased its operations. As a
consequence, private respondent was on 15 April 1986 verbally terminated from the
service. On 14 December 1987, private respondent filed with the Labor Arbiter a
complaint for separation pays, 13th month pay, vacation and sick leave pay, salaries and
allowances against TPWII, its General Manager, and petitioner. After hearing the Labor
Arbiter found TPWII primarily liable to private respondent but only for her separation
pay and vacation and sick leave pay because her claims for unpaid wages and 13th
month pay were later paid after the complaint was filed. The General Manager was
absolved of any liability. DBP was held subsidiarily liable in the event the company
failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an
employee to be paid benefits due him from the properties of his employer is superior to
the right of the latter's mortgage. The National Labor Relations Commission affirmed
the ruling of the Labor Arbiter.

Issue:

Whether the NLRC committed grave abuse of discretion.

Ruling:

There is yet no declaration of bankruptcy nor judicial liquidation of TPWII. Hence, it

would be premature to enforce the worker's preference. The additional ratiocination of
public respondent that "under Article 110 of the Labor Code complainant enjoys a
preference of credit over the properties of TPWII being held in possession by DBP," is a
dismal misconception of the nature of preference of credit. A preference applies only to
claims which do not attach to specific properties. A lien creates a charge on a particular
property. The right of first preference as regards unpaid wages recognized by Article
110 does not constitute a lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a preference in application. It is a
method adopted to determine and specify the order in which credits should be paid in
the final distribution of the proceeds of the insolvent's assets. It is a right to a first
preference in the discharge of the funds of the judgment debtor.

BOLINAO VS. PADOLINA

G.R. No. 81415
June 6, 1990

Facts:

Petitioners filed a formal complaint for collection of unpaid salaries, unused accrued
vacation and sick leave benefits, 13th month pay, and separation pay before the
National Labor Relations Commission (NLRC) against Sabena Mining Corporation and
Development Bank of the Philippines. A compromise agreement was entered into by the
parties, wherein petitioners were to be paid on a staggered basis the collective amount
of P385.583 95. The company faithfully complied with the scheduled payments only up
to March 1985 because it ceased operations effective April 1, 1985. With this

52
development, petitioners moved for the issuance of a writ of execution in June 1985.
The Labor Arbiter issued a writ of execution against the company to collect the balance
of P311,580.14.In an order dated September 30, 1987, the respondent court directed
the DBP to release to its Deputy Sheriff, herein respondent Carlos G. Maog, the amount
of P150,279.64 declaring that the writ of preliminary attachment made by Bank of
America thru Deputy Sheriff Norberto Doblado by the Pasig Regional Trial Court cannot
prevail over the garnishment pursuant to a writ of execution issued in favor of
respondent Phelps Dodge (Phils.) Inc., for failure of Bank of America to prosecute.

The order came to the attention of the petitioners who then filed a "Motion to Intervene
and to Lift Order of September 30, 1987" on October 13, 1987, and a third-party claim
with the deputy sheriff on October 19, 1987. Petitioners filed their reply to the
opposition and at the same time filed a motion to resolve the third party claimOn
January 5, 1988, the respondent court issued an order denying the motion to intervene
and dismissing the third-party claim, declaring that the garnishment made by its Deputy
Sheriff in favor of respondent Phelps Dodge, Phils., Inc. superior to the rights of
petitioners.

Issue:

Whether petitioners enjoy preferential right or claim over the funds of Sabena Mining
Corporation as provided for under the provisions of Article 110 of the New Labor Code.

Ruling:

Article 110 Section 10, Rule VIll, Book H of the Revised Rules and Regulations
Implementing the Labor Code, Article 110 of the Labor Code, in determining the reach
of its terms, cannot be viewed in isolation. Rather, Article 110 must be read in relation
to the provisions of the Civil Code concerning the classification, concurrence, and
preference of credits, which provisions find application in insolvency proceedings
where the claims of all creditors, preferred or non-preferred, may be adjudicated in a
binding manner.

The reason behind the necessity for a judicial proceeding or a proceeding in rem before
the concurrence and preference of credits may be appealed is to bind all interested
persons whether known to the parties or not. The claims of all credits whether
preferred or non-preferred, the Identification of the preferred ones and the totality of
the employer's assets should be brought into the picture. There can then be an
authoritative, fair, and binding adjudication instead of the piece meal settlement which
would result from the questioned decision in this case DBP v. Labor Arbiter.

DBP VS. Santos

GR No. 78261-62
March 08, 1989

Facts:

53
DBP obtained a writ of possession from RTC of all the properties of Riverside Mills
Corporation after having extra judicially foreclosed the same at public auction in 1983.
Meanwhile respondent employees filed a complaint of separation pay, underpayment,
damages etc. Respondent Santos declared that the former employees of RMC should
enjoy first preference as regards separation pay, unpaid wages and other benefits due
them over and above all encumbrances on all of the assets of RMC specifically those
being asserted by DBP. Hence this petition.

Issue:

Whether Article 110 of the Labor Code and section 10, Rule VIII, Book III of the IRR
applicable in this case?

Ruling:

No. Article 110 of the Labor ode and its implementing rule cannot be invoked by the
respondents in this case absent a formal declaration of bankruptcy or a liquidation
order.

HAUTEA v. NLRC
G.R. No.96149
February 06, 1994

Facts:

Jose Hautea was hired by the Calinog-Lambunao Sugarmill, Inc. (CLSMI). Subsequently,
heretired from his employment with CLSMI. Then the Philippine National Bank
(PNB)extrajudicially foreclosed the real and personal mortgaged to it by CLSMI and at
the auction saleit was the sole bidder. Thereafter, Hautea filed with the National Labor
Relations Commission (NLRC) a complaint for separation pay or retirement benefits
against CLSMI and/or PNB. TheLabor Arbiter rendered a decision in favor of Hautea and
against CLSMI and PNB. And actingon the motion for execution, the Labor Arbiter issued
the necessary writ of execution and theSheriff levied on the property of CLSMI worth
more or less P1,500,000.00 which APT/PNBacquired through foreclosure of mortgage.
However, the NLRC found for APT and PNB andlifted the writ of execution. Hence, this

54
petition.

Issue:

Whether judgment against the employer can be enforced against the mortgagee.

Ruling:

No, judgment against the employer cannot be enforced against the mortgagee of the fore
closed properties of the employer. In the instant case, although PNB was impleaded as
party respondent, it was not held liable for the claim of Hautea. Correctly so because it
was not the employer of Hautea. It was dragged into the case because it has in its
possession, property of the employers which it had acquired through foreclosure of
mortgage. Thus, its liability attached through the levy on the property which it had
foreclosed. As amended by Republic Act 6715, Article 110 of the Labor Code provides
that in the event of bankruptcy or liquidation of an employer’s business, his workers
shall enjoy first preference as regards their unpaid wages and other monetary claims,
any provision of law to the contrary notwithstanding. Such unpaid wages and monetary
claims shall be paid in full before the claims of the Government and other creditors may
be paid. However, even if Article 110 and its Implementing Rule, as amended, should be
interpreted to mean “absolute preference”, the same should be given only prospective
effect in line with the cardinal rule that laws shall have no retroactive effect, unless the
contrary is provided. Thereby, any infringement on the constitutional guarantee on non-
impairm-ent of theobligation of contracts is also avoided. To give Article 110 retroactive
effect would be to wipeout the mortgage in PNB's favor and expose it to risk which it
sought to protect itself against by requiring a collateral.

PERFECTO M. PASCUA v. BANK WISE, INC., and PHILIPPINE VETERANS BANK

G.R. No. 191460
January 31, 2008

Facts:

Perfecto M. Pascua was employed by Philippine Veterans Bank as Executive Vice

President for Marketing. In a Memorandum of Agreement, Philippine Veterans Bank
obliged itself to purchase the entire outstanding capital stock of Bank wise. Thereafter,
the Philippine Veterans Bank elected a new set of members of board of directors and
appointed a new set of officers. Pascua was reassigned to a Special Accounts Unit
without specification as to his duties and responsibilities. Pascua was then instructed to
tender his resignation as part of the merger agreement of the Bank with the guarantee
that Pascua would receive all his money claims during the transition. He pleaded
through a letter that he may be allowed to stay until the end of the year. Seeing as
Pascua had yet to submit his resignation, the director of Bank wise told Pascua that it
was imperative that he submit his resignation and assured his continued service with
Philippine Veterans Bank. Thereafter, Pascua resigned. Despite repeated demands for
his money claims, Philippine Veterans and Bank wise failed to release Pascua’s

55
remuneration. Pascua then filed a complaint for illegal dismissal, non-payment of salary,
overtime pay, holiday pay, premium pay for holiday, service incentive leave, 13th month
pay, separation pay, retirement benefits, actual damages, moral damages, exemplary
damages, and attorney’s fees against the banks. The Labor Arbiter dismissed
the case on the ground that Pascua had voluntarily resigned. NLRC reversed the LA’s
decision and held that Pascua is constructively dismissed.

Issue:

Whether Pascua is constructively dismissed?

Ruling:

No. Perfecto Pascua held a highly technical position in the company, and he would have
supervised several employees in his long years in service and might have even
processed their resignation letters. He would have been completely aware of the
implications of signing a categorically worded resignation letter. If he did not intend
to resign, he would not have submitted a resignation letter. He would have continued
writing to Bankwise signifying his refusal to resign.

CIR V NLRC
GR No. 74965
November 3, 1994

Facts:

The Commissioner of the Internal Revenue sent two letters of demand to the
respondent Maritime Company of the Philippines for deficiency common carrier's tax,
fixed tax, 6% Commercial Broker's tax, documentary stamp tax, income tax and
withholding taxes in the total amount of P17,284,882.45. However, since this was not
paid, the CIR placed under constructive distraint six barges owned by Maritime
Company of the Philippines. Four of the barges placed under constructive distraint were
levied upon execution by respondent deputy sheriff of Manila on July 20, 1985 to satisfy
a judgment for unpaid wages and other benefits of employees of respondent Maritime
Company of the Philippines. The four barges were sold by respondent deputy sheriff at
a public auction on August 12, 1985. On September 4, 1985, petitioner asked the Labor
Arbiter to annul the sale and to enjoin the sheriff from disposing of the proceeds of the
sale or, in the alternative, to remit them to the Bureau of Internal Revenue so that the
amount could be applied to the payment of private respondent Maritime Company's tax
liabilities. The labor arbiter denied petitioner’s motion. The NLRC affirmed the LA’s
denial of petitioner’s motion.

56
Issue:

Whether the prior constructive distraint is superior to a later levy of personal

properties by judgment to pay unpaid wages.

Ruling:

Yes. The National Internal Revenue Code provides for the collection of delinquent taxes
by any of the following remedies: (a) distraint of personal property or levy of real
property of the delinquent taxpayer; and (b) civil or criminal action. The constructive
distraint of personal property shall be affected by requiring the taxpayer or any person
having possession or control of such property to sign a receipt covering the property
distrained and obligate himself to preserve the same intact and unaltered and not to
dispose of the same in any manner whatever without the express authority of the
Commissioner of Internal Revenue. In case the taxpayer or the person having the
possession and control of the property sought to be placed under constructive distraint
refuses or fails to sign the receipt herein referred to, the revenue officer effecting the
constructive distraint shall proceed to prepare a list of such property and in the
presence of two witnesses leave a copy thereof in the premises where the property
distrained is located, after which the said property shall be deemed to have been placed
under constructive distraint.”

Bangko Filipino vs. NLRC

G.R. No. 82135
August 20, 1990

Facts:

Banco Filipino Savings And Mortgage Bank was placed under receivership and was later
ordered to be liquidated by the Monetary Board of the Central Bank. Dizon Jr., who was
then the Executive Vice President and Chief Operating Officer of the bank received a
letter from the Central Bank that all management authority in the bank had been
assumed by the Central Bank appointed liquidators and that his employment is being
terminated. Dizon filed with the liquidator a request for the payment to him of the cash
equivalent of his vacation and sick leave credits and unused reimbursable allowance.
Mr. Dizon filed with the liquidator a request for the payment to him of the cash
equivalent of his vacation and sick leave credits and unused reimbursable allowance. He
was not paid by the liquidator because Dizon's claim should be treated as a claim of a
creditor and therefore be processed pursuant to the liquidation plan as approved by the
Monetary Board. So, Dizon filed a complaint with the labor arbiter against the bank for
recovery of unpaid salary, the cash equivalent of his accumulated vacation and sick
leaves, termination pay under Article 283 of the Labor Code and moral damages and
attorney's fees.

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Issue:

Whether unpaid wages of employees are preferred credits.

Ruling:

No. In Republic v. Peralta, supra the majority of this Court was of the opinion that the
above quoted provision did not upgrade the worker's claim as absolutely preferred
credit. There We explained that the provision did not alter Articles 2241 and 2242 of
the Civil Code so much so that creditors with liens over a certain property are still given
special preference over the proceeds of that property. And it is only after these specially
preferred credits are satisfied may the ordinary preferred credits enumerated in Article
2244 of the Civil Code be paid according to their order of priority. The significance of
Article 110 in the scheme of concurrence and preference of credit is to raise the
worker's money claim into first priority under Article 2244. (See also Development
Bank of the Philippines v. NLRC, G.R. Nos. 82763-64, March 19, 1990).
Thus, Dizon's adjudicated claims should be submitted to the liquidators for processing.
If, of course, it is later determined that Banco Filipino's liquidation is improper then the
NLRC'S decision may be executed under normal procedure. If the contrary is proven,
however, and the bank's liquidation should proceed, Dizon's established claims should
be treated as an ordinary preferred credit enjoying first preference under Art. 2244 of
the Civil Code.

Maternity Children's Hospital vs. SOLE

G.R. No. 78909
June 30, 1989

Facts:

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

Cagayan doer 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 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 employees of the petitioner employed in different capacities/positions
filed a complaint with the Office of the Regional DOLE. 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.

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Issue:

Whether 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.

Ruling:

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. 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.

SSK PARTS CORPORATION v CAMAS

G.R. No. 85935
January 30, 1990

Facts:

Cases were filed against petitioner for illegal deductions, underpayment of wages, non-
payment of legal holiday pay and service incentive leave.

Issue:

Is the Regional Director of the DOLE empowered to hear and decide matter involving
recovery of wages and other monetary claims and benefits?

Ruling:

Yes. The jurisdiction of the Regional Director over employees' claims for wages and
other monetary benefits not exceeding P5,000 has been affirmed by Republic Act No.
6715, amending Article 129 of the Labor Code.
In this case, although the petitioner contested the Regional Director's finding of
violations of labor standards committed by the petitioner, that issue was resolved by an
examination of evidentiary matters which were verifiable in the ordinary course of
inspection. Hence, there was no need to indorse the case to the appropriate arbitration
branch of the National Labor Relations Commission (NLRC) for adjudication.

59
 Star Security and Detective Investigation Agency v Secretary of Labor
G.R. No. 82607
July 12, 1990

Facts:

A complaint was filed by private respondent Thelma L. Cuerda before the then Ministry
of Labor and Employment, Regional Office No. 9 in Zamboanga City against the
petitioner Star Security and Detective Investigation Agency for underpayment of
minimum wage, emergency cost of living allowance, non-payment of 13th month pay,
regular holiday pay, rest day pay and service incentive leave pay. An inspection was
conducted by the Regional Office a quo on the premises of the petitioner, but the
necessary documents (payrolls) as requested by the inspecting officer were not made
available. Petitioner promised, however, that said documents would be made available
the following week. On May 26, 1986, petitioner submitted the requested documents
(payrolls), but only for the year 1985. Petitioner stated that such documents may also
be made as the basis for the year 1982 up to year 1985 salary. On June 26, 1986,
petitioner filed a motion for reconsideration assailing the above-mentioned Order on
the grounds that the Regional Director has no jurisdiction over the case and that the
award made in favor of the private respondent has no basis in law and in fact. On July
24, 1986, the Regional Director issued another Order modifying his Order dated June 5,
1986 and ordering the petitioner to pay complainant the sum of Eighteen Thousand
Three Hundred and Ninety Four Pesos and Ninety Six Centavos (P18,394.96). On appeal
to the Secretary of Labor, the decision of the Regional Director was upheld in an order 2
dated August 5, 1987. The motion for reconsideration filed by the petitioner was denied
in an order dated February 17, 1988. Hence, this petition for certiorari.

Issue:

Whether the Regional Director of the Department of Labor acted within the bounds of
his jurisdiction in taking cognizance of the complaint by private respondent.

Ruling:

No. It can be gleaned from the complaint filed by private respondent Cuerda that she
was relieved of her employment due to her expired license and as found by public
respondent Secretary of Labor, Cuerda did not seek reinstatement but just wanted to
press her claim for the benefits and separation pay. Also, the amount involved in this
case is more than five thousand pesos (P5,000). All these factors taken into
consideration, we find that the claims should have been filed with the labor arbiter.

Servando’s Inc. vs SOLE

G.R. No. 85840
June 5, 1991

Facts:

60
The Labor Standards and Welfare Office conducted a routine inspection of petitioner’s
establishment and discovered that there were deficiency in the wages of 54 employees
pursuant to 3 Wage Orders. Adopting the recommendation made by the Labor
Standards and Welfare Office, the Regional Director issued an order requiring petitioner
to pay its employees the total amount of P964.952.50 as differentials.

Issue:

Whether the Regional Director has the jurisdiction to hear and decide cases involving
recovery of wages and other monetary claims and benefits of workers and employees.

Ruling:

The power of the Regional Director to adjudicate employees’ money claims is subject to
the concurrence of all the requisites provided under Sec. 2 of RA 6715, to wit: (1) the
claim is presented by an employee or person employed in domestic or household
service, or househelper; (2) the claim arises from employer-employee relations; (3) the
claimant does not seek reinstatement; and (4) the aggregate money claim of each
employee or househelper does not exceed P5,000.00.

In the case at bar, the Regional Director has no jurisdiction over the case. The aggregate
claims of each of the fifty four (54) employees of herein petitioner are over and above
the amount of P5,000.00. Under the circumstances, the power to adjudicate such claims
belongs to the Labor Arbiter who has the exclusive jurisdiction over employees’ claims
where the aggregate amount of the claim for each employee exceeds P5,000.00.

ABOITIZ SHIPPING VS DELA SERNA

G.R. No. 88538
April 25, 1990

Facts:

A complaint was filed by the Aboitiz Shipping Employees Association against Aboitiz
Shipping Corporation for non- compliance of the mandated minimum wage rates and
allowances. Accordingly, the Labor Regulation Officers of the Regional Office a quo
inspected the respondent's employment records. Series hearings were conducted
whereof the respondent was directed to present and submit all its pertinent
papers/employment records covered by the Investigation. However, on several
occasions, respondent failed to appear. Aboitiz Shipping Corporation was required for
quite number of times to present in evidence its employee’s payrolls and vouchers.
However, Aboitiz Shipping failed to do so.

The Regional Director of DOLE-NCR rendered a decision ordering Aboltiz Snipping to

pay the complainants the amount of PhP1,350,828.00 representing underpayment of
daily allowance of 2.00 peso per day reckoned from 16 February 1982 to 15 February
1985. On appeal to the Office of the Secretary of Labor and Employment, in which
Aboitiz Shipping questioned the jurisdiction of respondent Regional Director over the

61
instant claims, respondent Undersecretary issued the Order dismissing petitioner's
appeal and affirming the Order of the respondent Director.

Issue:

Whether the Regional Director of DOLE-NCR corrective assumed jurisdiction over the
money claims filed with him by the complainants.

Ruling:

Under the foregoing provisions of Articles 129 and 217 of the Labor Code, as amended,
the Regional Director is empowered, through summary proceeding and after due notice,
to hear and decide cases Involving recovery or wages and other monetary claims and
benefits, Including Interest. Petitioner was not denied due process of law. The Court
also does not agree with Aboitiz Shipping's allegation that it was improper for the
respondent Regional Director to order in the questioned Under compliance with PD.
1678 as the issue on the said decree was never raised by private respondent in its
complaint filed before the Regional Director. While it may be true that P.D. 1678 is not
one or the laws where non-compliance therewith was complained or. still, the Regional
Director correctly acted in ordering petitioner, as he (Regional Director) has such
power under his visitorial and enforcement authority provided under Article 128(a) of
the Labor Code.

M. RAMIREZ INDUSTRIES V. SOLE

GR No. 89894
January 3, 1997

Facts:

Carolyn Alfonso and 260 other employees filed a complaint with the Regional Office No.
VII of the Department of Labor in Cebu City, alleging non-payment of minimum wage,
living allowances and non-compliance with other labor standard laws against M.
Ramirez Industries. On June 11, 1986, petitioner filed a motion to remand the case to
the National Labor Relations Commission, contending that the matter was outside the
jurisdiction of the Regional Director. Without acting on the motion, the Regional
Director on July 18, 1986 ordered petitioner to pay private respondents the total
amount of P430,901.75.

Issue:

Whether the contention of the petitioner is correct?

Ruling:

The contention has no merit. It is true that on April 1, 1986, when this case was filed in
the Regional Office, Labor Arbiters had original and exclusive jurisdiction over money
claims of laborers pursuant to Art. 217(a)(3) of the Labor Code as quoted above. On
March 3, 1987, however, President Corazon C. Aquino, issued E.O. No. 111, conferring

62
jurisdiction over money claims of laborers on Regional Directors, concurrently with
Labor Arbiters.

Atilano vs. De la Cruz

G. R. No. 82488
Feb. 28, 1990

Facts:

This Petition for Certiorari is directed against the order of respondent Undersecretary
of Labor and Employment dated 3 March 1988 which sustained the decision of
respondent Regional Director in LSED Case No. 055-85. That decision awarded salary
differentials, allowances, 13th month pay and overtime pay to the seventeen private
respondent employees of petitioner Vicente Atilano who is doing business under the
rubric Rose Shipping Lines. On 20 May 1985, private respondents filed a letter-
complaint in the Regional Office of the then Ministry of Labor and Employment, Cebu
City, against petitioner Rose Shipping Lines and its Proprietor/Manager Vicente Atilano
docketed as LSED Case No. 055-85. The letter-complaint alleged violations by petitioner
of labor standard laws on minimum wages, allowances, 13th month pay and overtime
pay.

Issue:

Whether the public respondents, Regional Director and Undersecretary of Labor, have
jurisdiction over the subject matter.

Ruling:

In the resolution, therefore, of any question of jurisdiction over a money claim arising
from employer-employee relations, the first inquiry should be into whether the
employment relation does indeed still exist between the claimant and the Respondent.
If the relation no longer exists, and the claimant does not seek reinstatement, the case is
cognizable by the Labor Arbiter, not by the Regional Director. On the other hand, if the
employment relation still exists, or reinstatement is sought, the next inquiry should be
into the amount involved. If the amount involved does not exceed P5,000.00, the
Regional Director undeniably has jurisdiction. But even if the amount of the claim
exceeds P5,000.00, the claim is not on that account necessarily removed from the

63
Regional Director’s competence. In respect thereof, he may still exercise the visitorial
and enforcement powers vested in him by Article 128 of the Labor Code, as amended,
supra; that is to say, he may still direct his labor regulations officers or industrial safety
engineers to inspect the employer’s premises and examine his records; and if the
officers should find that there have been violations of labor standards provisions, the
Regional Director may, after due notice and hearing, order compliance by the employer
therewith and issue a writ of execution to the appropriate authority for the enforcement
thereof. However, this power may not, to repeat, be exercised by him where the
employer contests the labor regulations officers’ findings and raises issues which
cannot be resolved without considering evidentiary matters not verifiable in the normal
course of inspection. In such an event, the case will have to be referred to the
corresponding Labor Arbiter for adjudication, since it falls within the latter’s exclusive
original jurisdiction."

Employers Confederation of the Philippines v. Trade Union Congress of the

Philippines
G.R. No. 96169
September 24, 1991

Facts:

October 15, 1990, Regional Board of National Capital Region issued Wage Order No.
NCR-01, increasing the minimum wage of P17 daily in NCR. TUCP moved for
reconsideration. So did PMAP. October 23, 1990, Regional Board issued Wage Order
No.01-A amending NCR-01. All workers even those who already reach the minimum
wage of P125 shall receive an increase by P17. ECOP questions the validity of
Wage Order NCR-01-A promulgated pursuant to RA No.6727RA 6727: An Act to
rationalize wage policy determination by establishing the Mechanism and Proper
Standards. Therefore, amending for the purpose Art. 99 of and incorporating Articles
120, 121, 123, 124, 126, and 127, into, Presidential Decree no. 442 as amended,
otherwise known as the labor Code of the Philippines for Industrial dispersal tothe
countryside and for other purposes, ECOP appealed to National Wages and Productivity
Commission. Dismiss by NWPC on November 6, denied reconsideration of the same on
Nov. 14, 1990. ECOP prayed for the reinstatement of W.O. No.NCR-01 which is anchored
on the floor-wage method rather than the present which is implementing the ceiling
method.

Issues:

Whether the Regional Board acted more than authority in passing W.O. No. NCR-01-A.

Ruling:

No. The board did not act in excess in authority. The court is in opinion that Congress
meant boards to be creative in resolving the annual question of wages w/out the labor
and management knocking on the legislation door every time. Act is not an effort to pass
the buck or abdicate its duty but to leave questions of wages to the expertise of the
experts Court noted the increasing trend is the salary-cap method(ceiling) not the floor-

64
wage method. CBA did not help much in the Wage method. CBA did not help much in the
Wage Distortion problems, but the cap-method did. RA 6727 intended to rationalize
wages:1. Provide full-time boards to police wages round the clock; 2. Giving the boards
enough power to achieve goal.

Alpha Investigation and Security Agency vs NLRC

G.R. No. 111722
May 27, 1997

Facts:

Labor Arbiter de Asis rendered a decision that the respondent Alpha Investigation and
Security Agency and Mariano Marcos State University to pay each complainant the
amount of P41,459.51 representing salary differential for the period from February 16,
1990 to September 30, 1991, or the total amount of P787,730.69 to the nineteen (19)
respondents. AISA and DMMSU interposed separate appeals. The NLRC, on May 7, 1993,
rendered a decision affirming the solidary liability of AISA and DMMSU and remanding
the records of the case to the arbitration branch of origin for computation of the salary
differential awarded by the Labor Arbiter. Only AISA filed a motion for reconsideration,
which was denied by the NLRC on July 1, 1993, for lack of merit. In this petition, AISA
alleges that payment of the wage increases under the current minimum wage order
should be borne exclusively by DMMSU, pursuant to Section 6 of Republic Act 6727 (RA
6727)

Issue:

Whether Articles 106, 107 and 109 of the Labor Code generally refer to the failure of the
contractor or sub-contractor to pay wages involve only on wage differentials or wages
increases (and not wages in general).

Ruling:

This interpretation is not acceptable. It is a cardinal rule in statutory construction that

in interpreting the meaning and scope of a term used in the law, a careful review of the
whole law involved, as well as the intendment of the law, must be made. In fact,
legislative intent must be ascertained from a consideration of the statute, and not of an
isolated part or a particular provision alone. The joint and several liability of the
contractor and the principal is mandated by the Labor Code to ensure compliance with
its provisions, including the statutory minimum wage. The contractor is made liable by
virtue of his status as direct employer, while the principal becomes the indirect
employer of the former's employees for the purpose of paying their wages in the event

65
of failure of the contractor to pay them. This gives the workers ample protection
consonant with the labor and social justice provisions of the 1987 Constitution.

Eagle Security Agency vs. NLRC

G.R. No. 81314
May 18, 1989

Facts:

Employees of Eagle Security Agency, security guards in the Philippine Tuberculosis

Society, Inc., filed a complaint against ESA and PTSI for unpaid wage increases granted
under four wage orders. PTSI alleged that the wage increases should be borne
exclusively by ESA, pursuant to the provision in their contract, while the latter
contended that, under the wage orders, the former should be held liable for the same.

Issue:

Whether ESA and PTSI should be jointly and severally liable for the wage increases.

Ruling:

Yes. The joint and several liability of the contractor and the principal is mandated by the
Labor Code to assure compliance of the provisions therein including the statutory
minimum wage. The contractor is made liable by virtue of his status as direct employer.
The principal, on the other hand, is made the indirect employer of the contractor's
employees for purposes of paying the employees their wages should the contractor be
unable to pay them. The solidary liability, however, does not preclude the right of
reimbursement from the co-debtor by the one who paid.

Meycauayan Colleges vs. Drilon

G. R. No. 81144
May 7, 1990

Facts:

The Union staged a Strike. The Hotel claims that the strike was illegal and dismissed
some employees. The Union, on the other hand, accused the Hotel of illegally dismissing
the workers. A Petition for Assumption of Jurisdiction under Article 263(g) of the Labor
Code was later filed by the Union before the Secretary of Labor. Thereafter, Secretary
issued an Order directing the striking officers and members of the Union to return to

66
work within twenty-four (24) hours. But the Hotel refused to accept them and instead
filed a Motion for Reconsideration of the Secretary’s Order. Secretary of Labor modified
his decision and instead directed that the strikers be reinstated only in the payroll.

Issue:

WON payroll reinstatement is proper in lieu of actual reinstatement under Article

263(g)of the Labor Code.

Ruling:

Payroll reinstatement in lieu of actual reinstatement is not sanctioned under the

provision of the said article. There is no similar compelling reason that called for payroll
reinstatement as an alternative remedy. A strained relationship between the striking
employees and management is no reason for payroll reinstatement in lieu of actual
reinstatement. Under Article 263(g), all workers must immediately return to work and
all employers must readmit all of them under the same terms and conditions prevailing
before the strike or lockout.

MINDANAO TERMINAL AND BROKERAGE SERVICE (MTBSI) vs ROLDAN-CONFESOR

G.R. No. 111809
May 5, 1997

Facts:

MTBSI (Company) and ALU entered a CBA for 5 years. On the 3rd year they renegotiate
for the 4th and 5th year. But of no avail. Deadlock notice sent to Company. The latter
announced a cost-cutting or retrenchment program. Union cited ULP and submitted for
mediation. They were able to agree except for retirement issue. Notice of strike. Sec of
Labor, upon their submission decided that wage increases for the fourth and fifth years
of the CBA were not to be credited as compliance with future mandated increases. In
addition, the fourth-year wage increase was to be retroactive to August 1992 and was to
be implemented until July 31, 1993, while the fifth-year wage increase was to take effect
next day until the expiration of the CBA.

Issue:

Whether the Sec of Labor is correct.

Ruling:

Yes. The signing of the CBA is not determinative of the question whether the agreement
was entered into within six months from the date of expiry of the term of such other
provisions as fixed in such collective bargaining agreement within the contemplation of
Art. 253-A. The fact that no agreement was then signed is of no moment.
The two terms, agreement, and contract are indeed similar, although the former is
broader than the latter because an agreement may not have all the elements of a
contract. As in the case of contracts, however, agreements may be oral or written.[6]

67
Hence, even without any written evidence of the Collective Bargaining Agreement made
by the parties, a valid agreement existed in this case from the moment the minds of the
parties met on all matters they set out to discuss. The retroactivity of the award is
discretionary on Sec of Labor. Form of Arbitral Awards.

National Food Authority v. Masada Security Agency,

G.R. no. 163448
March 8, 2005

Facts:

MSA Inc. is a security agency engaged in providing security services to individuals,

corporations or government agencies. MSA entered into a one year contract to provide
security services to the various offices, warehouses and installations of NFA within the
scope of the NFA Region 1. In their agreement, the parties acknowledged the application
to their contract of the wage orders issued by the Regional Tripartite Wages and
Productivity Boards (RTWPB) which has wage fixing authority within the region
including wage orders setting the daily minimum wage rates pursuant to R.A. 6727.
Under Section 4 of R.A. 6727, the statutory minimum wage rates for all workers and
employees in the private sector, whether agricultural or non-agricultural shall be
increased by P25 per day. Pursuant to this law, RTWPB issued several wage orders
mandating increases in the daily wage rate. Accordingly, MSA requested NFA for a
corresponding upward adjustment in the monthly contract rate consisting of the
increases in the daily minimum wage of the security guards as well as the
corresponding raise in their overtime pay, holiday pay, 13th month pay, and rest day
pay. MSA also claimed increases in Social Security (SSS) and Pag-Ibig premiums as well
as administrative costs and margin. NFA however granted the request only with respect
to the increase in the daily wage by multiplying the amount of the mandated increase by
30 days and denied the same with respect to adjustments in the other wage related
benefits and remunerations computed based on the daily wage.

Issue:

Whether the NFA was correct?

Ruling:

Yes. The term wage as used in Section 6 of RA 6727 pertains to no other than the
statutory minimum wage which 1 monthly contract rate1. NFA only granted the request
only with respect to the increase in daily wage Respondent filed a case for recovery of
sum of money against NFA with the RTC. NFA CONTENTION: Respondent cannot
demand an adjustment on the said salary benefits because it is bound by their contract
expressly limiting NFA’s obligation to pay only the increment in the daily wage. Pre-trial
Issue: WON respondent is entitled to recover from NFA wage related benefits of the
security guards. RTC Ruling: NFA is liable to pay the security guards’ wage related
benefits pursuant to RA 6727, because the basis of the computation of said benefits, like
overtime pay, holiday pay, SSS and Pag-ibig premium, is the increased minimum wage.

68
It also found NFA liable for the consequential adjustments in administrative costs and
margin.

Planas Commercial vs NLRC

G.R. 144619
November 11, 2005

Facts:

Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages,
nonpayment of overtime pay, holiday pay, service incentive leave pay, and premium pay
for rest day and holiday and night shift differential against petitioners in the Arbitration
Branch of NLRC. Respondents were hired in January 1990, May 1990 and July 1991 as
laborers and were paid below the minimum wage for the past 3 years. They were
required to work for more than 8 hours a day and never enjoyed the minimum benefits.
Petitioners filed their comment stating that the respondents were their helpers. The
Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an
appeal with the NLRC where it granted the money claims. Petitioners appealed with the
CA, but it was denied. It said that the company having claimed of exemption of the
coverage of the minimum wage shall have the burden of proof to the claim. Petitioners
insist that C. Planas Commercial is a retail establishment principally engaged in the sale
of plastic products and fruits to the customers for personal use, thus exempted from the
application of the minimum wage law; that it merely leases and occupies a stall in the
Divisoria Market and the level of its business activity requires and sustains only less
than ten employees at a time. Petitioners contend that private respondents were paid
over and above the minimum wage required for a retail establishment, thus the Labor
Arbiter is correct in ruling that private respondents’ claim for underpayment has no
factual and legal basis. Petitioners claim that since private respondents alleged that
petitioners employed 24 workers, it was incumbent upon them to prove such allegation
which private respondents failed to do.

Issue:

Whether petitioner is exempted from the application of minimum wage law.

Ruling:

Petitioners have not successfully shown that they had applied for the exemption. R.A.
No. 6727 known as the Wage Rationalization Act provides for the statutory minimum
wage rate of all workers and employees in the private sector. Section 4 of the Act
provides for exemption from the coverage, thus: Sec. 4. (c) Exempted from the
provisions of this Act are household or domestic helpers and persons employed in the
personal service of another, including family drivers. Also, retail/service establishments
regularly employing not more than ten 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

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be deferred pending resolution of the application for exemption by the appropriate
Regional Board. If 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.

Globe-Mackay Cable and Radio Corporation (GMRC) vs. NLRC and Imelda Salazar
G.R. No. 82511
March 3, 1992

Facts:

Private Respondent, "Imelda Salazar" was employed as general systems analyst of

Globe-Mackay Cable and Radio Corp. (GMRC) While Delfin Saldivar, her close friend,
was employed as technical operations' support manager in May 1982.

Petitioner GMRC investigated Saldivar's activities due to the reports indicating that the
company equipment and spare parts were in custody of Saldivar. The internal audit
report also indicated that Saldivar entered a partnership with Richard A. Yambao,
owner and manager of Eledon Engineering Services (Elecon), a supplier often
recommended by Saldivar to the petitioner. It also appeared during Maramara's
investigation that Imelda Salazar violated company regulations by involving herself in
transactions with conflict of interest with the company. Evidence showed that she
signed as a witness to the articles of partnership between Yambao and Saldivar, and
that she had full knowledge of the loss and whereabouts of the missing air conditioner,
but she failed to inform her employer. The Company placed Salazar under 1-month
preventive suspension, allowing her 30 days within which to explain her side. However,
Salazar instead filed a complaint against petitioner for illegal suspension, which was
later modified to illegal dismissal. The Labor arbiter ordered the company to reinstate
Salazar to her former and equivalent position and to pay her full back wages and
benefits, plus moral damages. National Labor Relations Commission affirmed the labor
arbiter's decision but limited back wages for only two years and deleted the award of
moral damages.

Issue:

Whether the action of dismissal would constitute a violation of Art. 279 of the Labor
Code, which protects the security of tenure of an employee.

Ruling:

Yes. The Court did not agree on the petitioner's action of suspension and eventual
dismissal of Salazar due to lack of evidence to show that Salazar was involved with the
malicious activities of Saldivar. The wordings of the Labor Code are clear and
unambiguous "An employee who is unjustly dismissed from work shall be entitled to
reinstatement and full back wages." Under the principle of Statutory Construction, if a
statute is clear, plain, and free from ambiguity. It must be given its literal meaning and
applied without attempted interpretation. The plain meaning rule or Verba Legis
derived from the maxim "Speech is the index of intention" should be applied in this case.

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Since there is no evidence to show an authorized or legal dismissal, and GMRC only
relied to an internal audit finding, Salazar, according to the Labor Code, is entitled to
reinstatement and full back wages allowed by the Court.

MARCOPPER MINING VS. OPLE

GR No. 51254
June 11, 1981

Facts:

A Presidential Decree was issued requiring every employer to pay 13 th month pay to
every employees who received a basic salary of not more that P1,000.00 a month.
Relying on the Decree respondents—employees file a cpmplaint before the NLRC for the
payment of 13th month salary. Petitioner opposed on the ground that in view of its
existing CBA adopted on October 8, 1977 which granted employees belonging to private
respondent mid-year and year-end bonuses, it was exempt from the operation of the
decree. The complaint was dismissed by the Regional Director, but it was reversed by
Deputy Minister of Labor. He explicitly stated that the bonuses under the collective
bargaining agreement are "by their very nature of a different character from the 13th
month pay ordained by the Decree."

In fact, said benefits were negotiated and re-incorporated in subsequent collective

bargaining agreement which gives them a character separate and distinct from the 13th
month pay. By reason of the collective bargaining agreement, complainants acquired a
vested right over such benefits on a mutual and contractual understanding. Any
subsequent grant of benefit, extended by law, will not operate to disturb the existing
agreement and to construe otherwise will result to the prejudice of the workers. If we
must consider deeper the grant of the bonuses, we will find that it is a voluntary gesture
on the part of the respondent irrespective of the amount of salary of the employees and
does not form part of their pay. It is likewise conditional in that the same could be
availed of only when profit in business has been realized. Once profit is declared, then
bonuses must be automatically granted in the amount to be determined by the
company. On the other hand, the grant of 13th month pay to employees is mandatory,
irrespective of loss or profit by the company."

Issue:

Whether the petitioner is exempted to grant 13th month pay because of CBA?

Ruling:

No. If it grants bonuses notwithstanding the fact that it is not in profitable operation, the
grant thereof is a purely voluntary gesture on the part of the company, and the company
is then entitled to credit the same as the 13th month salary under the Decree. In other
words, all employee monetary benefits provided in the CBA are in addition to, and may
not be taken as substitute for, the employee benefits granted by law, otherwise there
would be no reason for the execution of the CBA."[9] The Solicitor General then went on
to state that a bonus under the collective bargaining agreement and the 13th-month pay

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are of different category. For while the former is an obligation created by contract, the
other is created by law; while the former is contractual in character, only if there are
profits, the latter is absolute and mandatory on the part of the employer; while the
former benefits only those earning P1,000 or less a month, the latter applies to all rank-
and-file workers. It is clear, therefore, that a 13th-month pay is wages while the bonuses
provided for are mere supplements or fringe benefits.

OSIAS ACADEMY vs DOLE, et al.

GR No. 83257-58
December 21, 1990

Facts:

The respondents, Eva Cayetano et al, filed a complaint for money claim with the
Department of Labor against Osias Academy for underpayment of ECOLA. An inquiry
was forwarded to the Bureau of Labor Standard as to the correct wages to teacher who
works for 5 days in a week, to which the Bureau of Labor Standard. The Regional
Director, considered the employees as falling under group 4 where the rest day is not
considered paid, thus dismissing the complaint. The decision was appealed to the
Secretary of Labor and employment, who through the Undersecretary reversed the
order of the regional director, stating that the respondents-petitioner were under paid
and they are classified as monthly employees. Thus, this petition for certiorari with
preliminary injunction and urgent prayer for restraining order.

Issue:

Whether or not there was grave abuse of discretion amounting to lack of jurisdiction by
the Department of Labor and Employment in issuing a order awarding the private
respondent salary and allowance differentials?

Ruling:

No, it is Well established is the principle that findings of administrative agencies which
have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only respect but even finality. Judicial review by this Court on
labor cases do not go so far as to evaluate the sufficiency of the evidence upon which the
Deputy Minister and the Regional Director based their determinations but are limited to
issues of jurisdiction or grave abuse of discretion for Certiorari to lie, there must be
capricious arbitrary and whimsical exercise of power, the very antithesis of the judicial
prerogative in accordance with centuries of both civil and common law traditions. The
abuse of discretion must be grave, and patent and it must be shown that the discretion
was exercised arbitrarily or despotically.

Songco, et al. vs. National Labor Relations Commission

G.R. Nos. 50999-51000
March 23, 1990

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Facts:

Zuelig filed an application for clearance to terminate the services of Songco, and others,
on the ground of retrenchment due to financial losses. During the hearing, the parties
agreed that the sole issue to be resolved was the basis of the separation pay due. The
salesmen received monthly salaries of at least P400.00 and commission for every sale
they made. The Collective Bargaining Agreements between Zuelig and the union of
which Songco, et al. were members contained the following provision: "Any employee
who is separated from employment due to old age, sickness, death or permanent lay-off,
not due to the fault of said employee, shall receive from the company a retirement
gratuity in an amount equivalent to one month's salary per year of service." The Labor
Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one-
month salary (exclusive of commissions, allowances, etc.) for every year of service with
the company.

Issue:

Whether earned sales commissions and allowances should be included in the monthly
salary of Songco, et al. for the purpose of computing their separation pay.

Ruling:

In the computation of back wages and separation pay, account must be taken not only of
the basic salary of the employee, but also of the transportation and emergency living
allowances. SC held that the commissions also claimed by the employee (override
commission plus net deposit incentive) are not properly includible in such base figure
since such commissions must be earned by actual market transactions attributable to
the petitioner [salesman]. Since the commissions in the present case were earned by
actual transactions attributable to Song, et al., these should be included in their
separation pay. What should be considered is the average commission earned during
their last year of employment.

PHILIPPINE FUJI XEROX CORP. vs. CRESENCIANO B. TRAJANO

G.R. No. L-102552
December 10, 1993

Facts:

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A Routine Inspection was conducted in the premises of Philippine Fuji Xerox Corp. on
September 7, 1989 pursuant to Routine Inspection Authority No. NCR-LSED-RI-494-89.
In his Notice of Inspection Results, addressed to the Manager, Mr. Nicolas O. Katigbak,
Senior Labor and Employment Officer Nicanor M. Torres noted the following violation
committed by Philippine Fuji Xerox Corp., to wit: Underpayment of 13th month pay of
62 employees, more or less — pursuant to Revised Guidelines on the Implementation of
the 13th month pay law for the period covering 1986, 1987 and 1988.

Issue:

Whether the petitioner committed an underpayment of the 13 th month pay of its

employees.

Ruling:

No. Contrary to respondents' contention, Memorandum Order No. 28 did not repeal,
supersede or abrogate P.D. 851. As may be gleaned from the language of the
Memorandum Order No. 28, it merely "modified" Section 1 of the decree by removing
the P1,000.00 salary ceiling. The concept of 13th Month Pay as envisioned, defined and
implemented under P.D. 851 remained unaltered, and while entitlement to said benefit
was no longer limited to employees receiving a monthly basic salary of not more than
P1,000.00, said benefit was, and still is, to be computed on the basic salary of the
employee-recipient as provided under P.D. 851. Thus, the interpretation given to the
term "basic salary" as defined in P.D. 851 applies equally to "basic salary" under
Memorandum Order No. 28.

Phil. Duplicators vs NLRC

GR 110068
February 15, 1995

Facts:

Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater
part of the latter’s wages or salaries being composed of the sales or incentive
commissions earned on actual sales of duplicating machines closed by them. Thus, the
sales commissions received for every duplicating machine sold constituted part of the
basic compensation or remuneration of the salesmen of the Philippine Duplicators for
doing their job.

Petitioner Corporation contends that their sales commission should not be included in
the computation of the 13th month pay invoking the consolidated cases of Boie-Takeda
Chemicals, Inc. vs Hon. Dionisio dela Serna and Philippine Fuji Xerox Corp. vs Hon.
Crecencio Trajano, were the so-called commissions of medical representatives of Boie-
Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were not included in
the term “basic salary” in computing the 13th month pay.

Issue:

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Whether sales commissions comprising a pre-determined percent of the selling price of
the goods are included in the computation of the 13th month pay.

Held:

Yes. These commission which are an integral part of the basic salary structure of the
Philippine Duplicator’s employees-salesmen, are not overtime payments, nor profit-
sharing payments nor any other fringe benefit. Thus, salesmen’s commissions
comprising a pre-determined percent of the selling price of the goods were properly
included in the term “basic salary” for purposes of computing the 13th month pay.
Commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file
employees of Fuji Xerox Co. were not included in the term “basic salary” because these
were paid as “productivity bonuses” which is not included in the computation of 13th
month pay.

Philippine Agricultural commercial and Industrial Workers Union v NLRC

GR No. 107994
August 14, 1995

Facts:

Petitioner Philippine Agricultural Commercial and Agricultural Workers Union TUCP

(the union) is the exclusive bargaining agent of the rank and file employees of
respondent Vallacar Transit, Inc. The union instituted a complaint with NLRC for
payment of 13th month pay in behalf of the drivers and conductors of respondent
Vallacar Transit on the ground that although said drivers and conductors are
compensated on a "purely commission" basis as described in their Collective Bargaining
Agreement (CBA), they are automatically entitled to the basic minimum pay mandated
by law should said commission be less than their basic minimum for eight (8) hours
work. Respondent Vallacar Transit, Inc. contended that since said drivers and
conductors are compensated on a purely commission basis, they are not entitled to 13th
month pay pursuant to the exempting provisions enumerated in para. 2 of the Revised
Guidelines on the Implementation of the Thirteenth Month Pay Law. It further
contended that Sec.2 of Art. XIV of the CBA expressly provided that "drivers and
conductors paid on a purely commission are not legally entitled to 13th month pay."
Said CBA, being the law between the parties, must be respected. Labor Arbiter:
dismissed the complaint. NLRC: likewise dismissed so was the MR.Hence, the present
petition.

Issues:

Whether the bus drivers and conductors of Vallacar Transit, Inc. are entitled to 13th
month pay.

Ruling:

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Yes. Every employee receiving a commission in addition to a fixed or guaranteed wage
or salary, is entitled to a 13th month pay. For purposes of entitling rank and file
employees a 13th month pay, it is immaterial whether the employees concerned are
paid a guaranteed wage plus commission or a commission with guaranteed wage
inasmuch as the bottom line is that they receive a guaranteed wage. While the bus
drivers and conductors of respondent company are considered by the latter as being
compensated on a commission basis, they are not paid purely by what they receive as
commission. As admitted by respondent company, the said bus drivers and conductors
are automatically entitled to the basic minimum pay mandated by law in case the
commissions they earned be less than their basic minimum for eight hours work.
Evidently therefore, the commissions form part of the wage or salary of the bus drivers
and conductors.

ARCHILLES MANUFACTURING CORP. v. NLRC

G.R. No. 107225
June 2, 1995

Facts:

Private respondents Manuel, Diaz, Carunungan and Benjamin Rindon were employed by
ARCHILLES as laborers in its steel factory with a daily wage of P96. In 1988 a mauling
incident nearly took place involving a relative of an employee in the bunkhouse and
since then, workers were prohibited from bringing family members to the bunkhouse.
Despite such, private respondents continued to do so, causing their termination. Private
respondents filed a complaint for illegal dismissal.LA ruled for reinstatement payment
to them of backwages, proportionate 13th month pay for the year 1990 and attorney’s
fees.NLRC reversed, ruling that dismissals were valid due to willful disobedience,
however ordered ACHILLES to pay private respondents their “withheld” salaries and
also proportionate 13th month pay for 1990 and attorney’s fees. Petitioners questions
the award.

Issue:

Whether dismissal for cause results in the forfeiture of the employee’s right to a 13th
month pay.

Ruling:

No. Paragraph 6 of the Revised Guidelines on the Implementation of the 13th Month Pay
Law (P.D. 851) provides that “(a)n employee who has resigned or whose services were
terminated at any time before the payment of the 13th month pay is entitled to this
monetary benefit in proportion to the length of time he worked during the year,
reckoned from the time he started working during the calendar year up to the time of
his resignation or termination from the service.The payment of the 13th month pay may
be demanded by the employee upon the cessation of employer-employee relationship.

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This is consistent with the principle of equity that as the employer can require the
employee to clear himself of all liabilities and property accountability, so can the
employee demand the payment of all benefits due him upon the termination of the
relationship.”

BROKENSHIRE MEMORIAL HOSPITAL, INC. vs. NLRC

G.R. No. 74621
February 7, 1990

Facts:

This case originated from a complaint filed by private respondents against petitioner on
September 21,1984 with the Regional Office of the MOLE, Region XI, Davao City for non-
compliance with the provisions of Wage Order No. 5. After due healing the Regional
Director rendered a decision dated November 16, 1984, in favor of private respondents.
Judgment having become final and executory; the Regional Director issued a Writ of
Execution whereby some movable properties of the hospital (petitioner herein) were
levied upon, and its operating expenses kept with the bank were garnished. The levy
and garnishment were lifted when petitioner hospital paid the claim of the private
respondents (281 hospital employees) directly, in the total amount ofP163,047.50
covering the period from June 16 to October 15, 1984. After making said payment,
petitioner hospital failed to continue to comply with Wage Order No. 5 and likewise,
failed to comply with the new Wage Order No. 6 which took effect on November 1, 1984,
prompting private respondents to file against petitioner another complaint docketed as
ROXI-LSED-14-85, which is now the case at bar.

Issue:

Whether the Regional Director has jurisdiction over money claims of workers
concurrent with the Labor Arbiter.

Ruling:

Republic Act 6715, provided that the following requisites concur, to wit:1) The claim is
presented by an employee or person employed in domestic or household service,
householder under the code; 2) The claimant, no longer being employed, does not seek
reinstatement; and 3)The aggregate money claim of the employee or house helper does
not exceed five thousand pesos(P5,000.00).In the absence of any of the three (3)
requisites, the Labor Arbiters have exclusive original jurisdiction over all claims arising
from employer-employee relations, other than claims for employee's compensation,
social security, Medicare and maternity benefits.
Nevertheless, it should be emphasized that the amount of the employer's liability is not
quite a factor in determining the jurisdiction of the Regional Director. However, the
power to order compliance with labor standards provisions may not be exercised where
the employer contends or questions the findings of the labor regulation officers and
raises issues which cannot be determined without considering evidentiary matters not
verifiable in the normal course of inspection, as in the case at bar.

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 NFSW vs. Ovejera
G.R. No. L-59743
May 31, 1982

Facts:

Sometime in May 1972, the petitioner and the Universal Corn Products Workers Union
entered into a collective bargaining agreement in which it was provided, among other
things, that the company agrees to grant all regular workers within the bargaining unit
with at least one year of continuous service, a Christmas bonus equivalent to the regular
wages for seven working days, effective December 1972. The bonus shall be given to the
workers on the second week of December. The agreement had 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 an
"addendum" stipulating certain wage increases covering the years from 1974 to 1977.
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, 6 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."

Issue:

1. Whether employer paying its13th month pay provided under PD 851 is no longer
required to pay Christmas bonus.
2. Whether the Carlota ruling is applicable in the case herein.

Held:

We hold that in the case at bar, Ovejera (La Carlota) case does not apply. We apply
instead, United CMC Textile Workers Union v. Valenzuela 8 a recent decision. In that
case this Court, speaking through Mr. Justice Edgardo Paras, held that if the Christmas
bonus was included in the 13th month pay, then there would be no need for having a
specific provision on Christmas bonus in the CBA. But it did not provide for a bonus in
graduated amounts depending on the length of service of the employee. The intention is
clear therefore that the bonus provided in the CBA was meant to be in addition to the
legal requirement. It is claimed, however, that because of the impasse between the
parties beginning 1974 through 1979, no collective bargaining agreement was in force
during those intervening years. Hence, there is allegedly no basis for the money award
granted by the respondent labor body. But it is not disputed that under the 1972

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collective bargaining agreement, if no agreement and negotiations are continued, all the
provisions shall remain in full force up to the time a new agreement is executed.

TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT VS. NLRC AND CRUZ

G.R. NO. 120592
MAR 14, 1997

Facts:

Petitioner and private respondent Atty. Emmanuel Noel A. Cruz entered into a retainer
agreement whereby the former obligated itself to pay the latter a monthly retainer fee
of P3,000.00 in consideration of the undertaking to render the services enumerated in
their contract. During the existence of that agreement, petitioner union referred to
private respondent the claims of its members for holiday, mid-year and year-end
bonuses against their employer, Traders Royal Bank (TRB). A complaint was filed by
petitioner. NLRC favored the employees, awarding them holiday pay differential, mid-
year bonus differential, and year-end bonus differential. TRB challenged the decision of
the NLRC before the SC. The SC deleted the award of mid-year and year-end bonus
differentials while affirming the award of holiday pay differential.

After private respondent received the decision of the SC he notified the petitioner union,
the TRB and the NLRC of his right to exercise and enforce his attorney’s lien over the
award of holiday pay differential, he filed a motion before LA for the determination of
his attorney’s fees, praying that 10% of the total award for holiday pay differential
computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his
attorney’s fees, and that petitioner union be ordered to pay and remit said amount to
him. Petitioner opposed said motion. LA favored private respondent. Petitioner
appealed to NLRC but NLRC affirmed LA’s decision. Hence the petition at bar.

Issue:

Whether the private respondent entitled to Atty.’s fees aside from his retainer fee.

Ruling:

Yes. There are 2 commonly accepted concepts of attorney’s fees, the so-called ordinary
and extraordinary. In its ordinary concept, an attorney’s fee is the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his employment by and his
agreement with the client. In its extraordinary concept, an attorney’s fee is an indemnity
for damages ordered by the court to be paid by the losing party in a litigation. The basis
of this is any of the cases provided by law where such award can be made, such as those
authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client,

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unless they have agreed that the award shall pertain to the lawyer as additional
compensation or as part thereof.

Metro Transit Corp. v. NLRC

G.R. No. 116008
July 11, 1995

Facts:

The Supervisory Employees Association of Metro (SEAM) is the collective bargaining

unit of supervisory employees of petitioner. Collective Bargaining Agreement (CBA)
between the parties was entered into and became effective only on 1 December 1989.
As a matter of company practice, before the above CBA was entered, any wage increase
given the rank-and-file employees were corresponding wage increase for the same
amount to the supervisors plus P50. Prior to 1 December 1989, on April of 1989, wage
increase of P500 was given to rank-and-file employees but no corresponding increase to
supervisors.

In compliance with the CBA of SEAM and petitioner on its effectivity, P800 wage
increase was given. Thereafter, on 17 April 1990, P600 increase were given to rank-and-
file employees’ thus corresponding increase was given to supervisors under agreement
that this is an advance of the P1000 increase due them on 1 December 1990. Come 1
December 1990, the difference of P400 increase was credited to the supervisors. March
of 1992, SEAM filed Notice to Strike for alleged wage distortion. Public respondent
assumed jurisdiction and it held that Metro is liable for P550 increase from April 1989
onwards and likewise pay P600 per month as underpayment of the increase on
December 1990 onwards. Metro contend however that the grant of increase during the
absence of CBA between SEAM and Metro is a form of bonus, thus it should not be
regarded as compulsory.

Issue:

Whether petitioner validly refused to pay the supervisory employees their P550
increase on April 1989?

Ruling:

No. If it is additional compensation which the employer promised and agreed to give
without any conditions imposed for its payment, such as success of business or greater
production or output, then it is part of the wage. The demand for this increase was
based on a company practice, admitted by Metro, of granting a salary increase (and a
premium) to supervisory employees whenever rank-and-file employees were granted a
salary increase. That those increases were precisely designed to correct or minimize the
wage distortion effects of increases given to rank-and-file employees, highlights the fact
that those increases were part of the wage structure of supervisory employees. The
demanded increase therefore is not a bonus that is generally not demandable as a

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matter of right. The demanded increase, in this instance, is an enforceable obligation so
far as the supervisory employees of Metro are concerned.

Protacio vs. Laya Mananghaya & Co.

G.R. No. 168654
March 25, 2009

Facts:

A petition for review on certiorari under Rules 45 of the Rules of Civil Procedure,
assailing the decision and resolution of the Court of Appeals in CA-G.R. SP No. 85038.
The Court of Appeals’ decision reduced the monetary award granted to petitioner by the
NLRC while the resolution denied petitioner’s motion for reconsideration for lack of
merit.

Issue:

Whether the NLRC acted without or more than jurisdiction or with grave abuse of
discretion in rendering its decision.

Ruling:

As a rule, in certiorari proceedings under Rule 65 o the Rules of Court, the appellate
court does not assess and weigh the sufficiency of evidence upon which the Labor
Arbiter and the NLRC based their conclusion. The query in this proceeding is limited to
the determination of whether the NLRC acted without or more than its jurisdiction or
with grave abuse of discretion in rendering its decision. However, as an exception, the
appellate court may examine and measure the factual findings of the NLRC if the same
are not supported by substantial evidence. The Court has not hesitated to affirm the
appellate
court’s reversals of the decisions of the labor tribunal if they are not supported by
substantial evidence.

LEPANTO V. LEPANTO EMPLOYEES

G.R. NO. 180866
MARCH 2, 2010

Facts:

The respondent Association objected to the P600.00 cash benefit and argued that this
was in violation of the CBA it executed with the petitioner. The parties failed to amicably
settle the dispute.The respondent Association filed a Notice of Strike with the National
Conciliation Mediation Board.The efforts to conciliate failed. The case was then referred
to the Voluntary Arbitrator for resolution where the Complaint was docketed as Case
No. LAG-PM-12-095-02. The Voluntary Arbitrator rendered a Decision declaring that

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petitioner is bound to grant each of its workers a Christmas bonus of P3,000.00 because
the bonus was given prior to the effectivity of the CBA between the parties and that the
financial losses of the company is not a sufficient reason to exempt it from granting the
same. It stressed that the CBA is a binding contract and constitutes the law between the
parties. The Voluntary Arbitrator further expounded that since the employees had
already been given P600.00 cash bonus, the same should be deducted from the claimed
amount of P3,000.00, thus leaving a balance of P2,400.00. Petitioner elevated the case to
the Court of Appeals which affirmed toto the decision of the Voluntary Arbitrator.

Issue:

Whether the petitioner obliged to give the members of the respondent Association a
Christmas bonus?

Ruling:

By definition, a bonus is a gratuity or act of liberality of the giver. It is something given

in addition to what is ordinarily received by or strictly due the recipient. A bonus is
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. A bonus
is also granted by an enlightened employer to spur the employee to greater efforts for
the success of the business and realization of bigger profits. Generally, a bonus is not a
demandable and enforceable obligation. For a bonus to be enforceable, it must have
been promised by the employer and expressly agreed upon by the parties. Given that
the bonus in this case is integrated in the CBA, the same partakes the nature of a
demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas
bonus due to respondent Association has become more than just an act of generosity on
the part of the petitioner but a contractual obligation it has undertaken.

Samar Mining Co vs. WCC

G.R. Nos. L-29938-39
March 31, 1971

Facts:

Appeal from an order of the Workmen’s Compensation Commission and its resolution
en banc denying the petition of herein petitioner, for the consolidation of two cases filed
in two different regional offices for compensation for the death of one and the same
person. As a consequence of the death on April 5, 1967 of Fernando Mendoza, an
employee of petitioner at its mining operations in Buug, Zamboanga del Sur, two
separate claims for death compensation were filed against petitioner in two different
regional offices of respondent Commission. The records, upon examination, show that
one was first filed on May 4, 1967 with Regional Office No. IV, Manila, by Trinidad Vda.
de Mendoza; 1 and the second was filed afterwards on July 31, 1967 with Regional
Office No. IX, Zamboanga City by Emeteria Vda. de Mendoza. 2 Each claimant claims to
be the legal wife and surviving spouse of the deceased and entitled to the compensation
payable for his death.

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Issues:

Whether case should be consolidated.

Ruling:

Yes. The two cases shall therefore be consolidated with the case filed in Manila, RO4-
WC Case No. 7052, prevailing, subject only to the right reserved to Emeteria to submit in
Zamboanga City, upon due notice to the other parties, the referee in the Zamboanga City
case her documentary evidence and testimonial evidence upon deposition by written
interrogatories, as well as any interrogatories she may wish to have propounded to
Trinidad, which shall be forwarded to the Manila case to form part of the record thereof.
Only one decision shall be rendered in the said Manila case, resolving the
compensability of the death of the deceased Fernando Mendoza as well as the question
of who among the two claimants is the legal wife and dependent of the decedent entitled
to receive any compensation payable under the Compensation Act, for the purposes of
the Act.

De Mendoza v Mendoza
G.R. No. L-36637
July 14, 1978

Facts:

Generoso Mendoza filed an application for the registration of two parcels of land, with a
residential house thereon, situated in Bulacan. During the pendency of the case, the
same were sold to the respondent spouses Daniel Gole Cruz and Dolores Mendoza,
subject to the vendors' usufructuary rights. The instrument embodying such sale was
presented. The registration court rendered a decision ordering the registration of the
two parcels of land in the names of the vendees, subject to the usufructuary rights of the
vendors. Applicant-vendor, Generoso Mendoza, filed a motion for the issuance of the
decree. Thus, a decree was issued confirming the title to the land of vendees and
ordering the registration of the same in their names.

Later on, petitioner filed an urgent petition for reconsideration praying that the decision
and the decree be set aside and the Title be cancelled, on the ground that the vendees,
the registered owners, had failed to pay the purchase price of the lands. The registration
court set its decision. The registration court set aside its decision. It held that it did not
have jurisdiction to order registration in the names of respondents who were not

83
parties to the application for registration. The court then ordered registration in the
name of petitioner. Respondents went to the Court of Appeals which reversed the order
of the trial court.

Issue:

Whether the registration court could not legally order the registration of the land in the
names of the vendees-respondents since they were neither the applicants nor the
oppositions in the registration case.

Ruling:

No. Petitioner overlooks Section 29 of the Land Registration Act which expressly
authorizes the registration of the land subject matter of a registration proceeding in the
name of the buyer or of the person to whom the land has been conveyed by an
instrument executed during the interval of time between the filing of the application for
registration and the issuance of the decree of title. The law does not require that the
application for registration be amended by substituting the "buyer" or the person to
whom the property has been conveyed" for the applicant. Neither does it require that
the "buyer" or the "person to whom the property has been conveyed" be a party to the
case. He may thus be a total stranger to the land registration proceedings. The only
requirements of the law are: (1) that the instrument be presented to the court by the
interested party together with a motion that the same be considered in relation with the
application; and (2) that prior notice is given to the parties to the case. And the peculiar
facts and circumstances obtaining in this case shoe that these requirements have been
complied with.

Republic of the Philippines v. Workmen’s Compensation Commission

G.R. No. L-29019
May 18, 1972

Facts:

Cleofe filed a claim for compensation for the death of his husband, then municipal Judge
of Goa, Camarines Sur. DOJ received the notice on July 20, 1967 and only on August 2,
1967 did the First Assistant Solicitor General informed the Department of Labor
Regional Office that the government is controverting the claim. An award was rendered
to the deceased family on August 29, 1967.

Issue:

Whether the controversion was late.

Ruling:

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Yes. The Court ruled that the fact that controversion was filed by the Office of the
Solicitor General 13 days after receipt of the claim by the Justice Department is, in our
view, inexcusable, and must result in the forfeiture of the right to controvert said claim,
as correctly held by the decision of the Workmen's Compensation Commission.

COMMANDO SECURITY AGENCY v. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 95844
July 20, 1992

Facts:

Private respondent Nemesio Decierdo was a security guard of the petitioner. Petitioner
entered into a contract to provide guarding services to the Alsons Development and
Investment Corporation (ALSONS) for a period of one year, unless renewed under such
terms and conditions as may be mutually acceptable.

Detail Order 02-016 was issued to Decierdo assigning him to the Pacific Oil Company in
Bunawan, Davao City, with instruction to report to the manager, but Decierdo refused to
accept the assignment as he is going to rest for a while.
Decierdo filed a complaint for illegal dismissal. Executive Labor Arbiter rendered a
decision ordering respondent Commando Security Agency to pay complainant Nemesio
Decierdo salary, holiday and rest day pay differentials, 13th month pay differentials and
service incentive leave pay; and dismissing the complaint for illegal dismissal, unfair
labor practice, overtime pay and night premium for lack of merit. Petitioner appealed to
the NLRC which on May 26, 1989, affirmed with modification the decision of the Labor
Arbiter. Hence, this petition for certiorari alleging that the NLRC gravely abused its
discretion. The petition for certiorari is without merit.

Issue:

Whether NLRC gravely abused its discretion.

Ruling:

Petitioner's contention that Decierdo is estopped from complaining about the25%

deduction from his salary representing petitioner's share in procuring job placement for
him, is not well taken. That provision of the employment contract was illegal and
iniquitous, hence, null and void. The constitutional provisions on social justice (Sections
9 and 10, Article II) and protection to labor (Sec. 18, Article II) in the declaration of
Principles and State Policies, impose upon the courts the duty to be ever vigilant in
protecting the rights of workers who are placed in a contractually disadvantaged
position and who sign waivers or provisions contrary to law and public policy. We
affirm the NLRC's ruling that: It goes without saying that respondent may not deduct its
so-called "share" from the salaries of its guards without the latter's express consent and
if such deductions are not allowed by law. This is notwithstanding any previous
agreement or understanding between them. Any such agreement or contract is void ab
initio being contrary to law and public policy.

85
 APODACA vs. NLRC
G.R. No. 80039
April 18, 1989

Facts:

Petitioner was employed in respondent corporation. Respondent Jose M. Mirasol

persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00
per share or a total of P150,000.00. He made an initial payment of P37,500.00.
Petitioner was appointed President and General Manager of the respondent
corporation. However, he resigned. Petitioner instituted with the NLRC a complaint
against private respondents for the payment of his unpaid wages, his cost-of-living
allowance, the balance of his gasoline and representation expenses and his bonus
compensation. Private respondents admitted that there is due to petitioner the amount
of P17,060.07 but this was applied to the unpaid balance of his subscription in the
amount of P95,439.93. Petitioner questioned the set-off alleging that there was no call
or notice for the payment of the unpaid subscription and that, accordingly, the alleged
obligation is not enforceable. The labor arbiter ruled in favor of the petitioner. Then,
NLRC held that a stockholder who fails to pay his unpaid subscription on call becomes a
debtor of the corporation and that the set-off of said obligation against the wages and
others due to petitioner is not contrary to law, morals and public policy.

Issue:

Whether the corporation can validly offset the unpaid shared in lieu of the wages.

Ruling:

No. The unpaid subscriptions are not due and payable until a call is made by the
corporation for payment. Private respondents have not presented a resolution of the
board of directors of respondent corporation calling for the payment of the unpaid
subscriptions. It does not even appear that a notice of such call has been sent to
petitioner by the respondent corporation. No doubt such set-off was without lawful
basis, if not premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable. Lastly, the NLRC has no jurisdiction
to determine such intra-corporate dispute between the stockholder and the corporation
as in the matter of unpaid subscriptions. This controversy is within the exclusive
jurisdiction of the Securities and Exchange Commission.

GENESIS TRANSPORT SERVICE, INC. V. UMMGT & TAROY

G.R. NO. 182114
APRIL 5, 2010

Facts:

86
Taroy filed a complaint for illegal dismissal and payment of service incentive leave pay,
claiming that he was singled out for termination because of his union activities, other
drivers who had met accidents not having been dismissed from employment. He later
amended his complaint to implead his Unyon ng Malayang Manggagawa ng Genesis
Transport (the union) as complainant and add as grounds of his cause of action unfair
labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment
of service incentive leave pay. On the claim of illegal wage deduction: Taroy alleged that
in 1997, Genesis Transport Service started deducting from his weekly earnings an
amount ranging from P160 to P900 representing toll fees, without his consent and
written authorization as required under Article 113 of the Labor Code and contrary to
company practice; and that deductions were also taken from the bus conductors'
earnings, thus resulting in double deduction.

Upon appeal before the CA, the appellate court held that Genesis Transport violated
Taroy's statutory right to due process when he was preventively suspended for more
than thirty (30) days, in violation of the Implementing Rules and Regulations of the
Labor Code. As such, the CA held that Taroy was entitled to the award of nominal
damages. Otherwise, the CA affirmed the NLRC's ruling ordering Genesis Transport to
refund Taroy the underpayment. Hence, the instant petition.

Issue:

Whether Taroy is entitled for refund.

Ruling:

Yes. The Court held that it cannot take judicial notice of Genesis Transport's claim that
the deduction of tollgate fees from the gross earnings of drivers is an accepted and long-
standing practice in the transportation industry. For the Court to take judicial notice,
three material requisites must concur: (1) the matter must be one of common and
general knowledge; (2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the jurisdiction of the
court. None of these was established in the present case. Albeit the amounts
representing tollgate fees were deducted from gross revenues and not directly from
Taroy's commissions, the labor tribunal and the appellate court correctly held that the
withholding of those amounts reduced the amount from which Taroy's 9% commission
would be computed. Such a computation marks a change in the method of payment of
wages, resulting in a diminution of Taroy's wages in violation of Article 113 vis-a-vis
Article 100 of the Labor Code, as amended. Without Taroy's written consent or
authorization, the deduction is illegal.

PRODUCER’S BANK VS. NLRC

GR. No: 100701
March 28, 2001

Facts:

87
The present petition originated from a complaint filed by private respondent on 11
February 1988 with the Arbitration Branch, NLRC, charging petitioner with diminution
of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In
addition, private respondent prayed for damages. Labor arbiter dismissed the
complaint for lack of merit. NLRC, however, granted all of private respondent’s claims,
except for damages. Petition filed a Motion for Partial Reconsideration, which was
denied by the NLRC. Hence, recourse to this Court.

Petitioner contends: that the NLRC gravely abused its discretion in ruling as it did for
the succeeding reasons stated: (1) it contravened the Supreme Court decision in
Traders Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2)
its ruling is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary
to the CBA, and (4) the so-called “company practice invoked by it has no legal and moral
bases” (4) petitioner, under conservatorship and distressed, is exempted under Wage
Order No. 6.

Issue:

Whether respondent is entitled for the payment of the above-mentioned monetary

claims.

Ruling:

Yes. Petitioner was not only experiencing a decline in its profits but was reeling from
tremendous losses triggered by a bank-run which began in 1983. In such a depressed
financial condition, petitioner cannot be legally compelled to continue paying the same
number of bonuses to its employees. Thus, the conservator was justified in reducing the
mid-year and Christmas bonuses of petitioner’s employees. To hold otherwise would be
to defeat the reason for the conservatorship which is to preserve the assets and restore
the viability of the financially precarious bank. Ultimately, it is to the employees’
advantage that the conservatorship achieves its purposes for the alternative would be
petitioner’s closure whereby employees would lose not only their benefits, but their
jobs as well.

SHS vs. Diaz

GR 185814
October 13, 2010

Facts:

Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and
existing under the laws of the Republic of the Philippines and registered with the
Philippine Economic Zone Authority. Petitioner Winfried
Hartmannshenn (Hartmannshenn), a German national, is its president, in which
capacity he determines the administration and direction of the day-to-day business
affairs of SHS. Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for
Business Development on probationary status. On November 29, 2005, Hartmannshenn

88
instructed Taguiang not to release respondent’s salary. Later that afternoon, respondent
called and inquired about his salary. Taguiang informed him that it was being withheld
and that he had to immediately communicate with Hartmannshenn. Respondent denied
having received such directive. The next day, on November 30, 2005, respondent served
on SHS a demand letter and a resignation letter. In the evening of the same
day, November 30, 2005, respondent met with Hartmannshenn in Alabang. The latter
told him that he was extremely disappointed for the following reasons: his poor work
performance; his unauthorized leave and malingering from November 16 to November
30, 2005; and failure to immediately meet Hartmannshenn upon his arrival
from Germany.

Issue:

Whether the temporary withholding of Diaz salary by petitioners was a valid exercise of
management prerogative.

Ruling:

Although management prerogative refers to “the right to regulate all aspects of

employment,” it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee. To sanction such an interpretation
would be contrary to Article 116 of the Labor Code, which provides:
ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any
person, directly or indirectly, to withhold any amount from the wages of a worker or
induce him to give up any part of his wages by force, stealth, intimidation, threat or by
any other means whatsoever without the worker’s consent.

Jose Rizal College v. NLRC

G.R. No. L-65482
December 1, 1987

Facts:

The National Alliance of Teachers sued Jose Rizal College for alleged nonpayment of
unworked holidays from 1975 to 1977. The members of the Alliance concerned are
faculty members who are paid based on student contract hour.

Issue:

Whether the school faculty are entitled to unworked holiday pay.

Ruling:

89
 As far as unworked regular holidays are concerned; the teachers are not entitled to
holiday pay. Regular holidays specified as such by law are known to both school and
faculty members as no class days; certainly, the latter do not expect payment for said
unworked days, and this was clearly in their minds when they entered the teaching
contracts. On the other hand, the teachers are entitled to be paid for unworked special
holidays. Otherwise stated, the faculty member, although forced to take a rest, does not
earn what he should earn on that day. Be it noted that when a special public holiday is
declared, the faculty member paid by the hour is deprived of expected income, and it
does not matter that the school calendar is extended in view of the days or hours lost,
for their income that could be earned from other sources is lost during the extended
days. Similarly, when classes are called off or shortened on account of typhoons, floods,
rallies, and the like, these faculty members must likewise be paid, whether extensions
are ordered.

SAMAHAN NG MGA MANGAGAWA SA BANDOLINO VS NLRC

GR NO. 125195
JULY 17, 1997

Facts:

Petitioners are former employees of private respondent Bandolino Shoe Corporation

and members of petitioner union, Samahan ng Manggagawa sa Bandolino-LMLC. Private
respondents German Alcantara, Aida Alcantara, and Mimi Alcantara are the owners and
officers of Bandolino Shoe Corporation. Petitioners Marcial Franco, Johnny Florencio,
and Romeo Reyes were directed to take a two-week leave because of a strike at the
Shoemart, Bandolino's biggest customer. Apparently, the strike adversely affected
private respondents' business. Petitioners were told by management that, should the
circumstances improve, they would be recalled working after two weeks. Labor Arbiter,
Potenciañ o S. Cañ izares, Jr., decided the case in favor of petitioners. He found that
petitioners had been illegally dismissed because of their union activities and that
private respondents had committed unfair labor practice.

Issue:

Whether the petitioner has been illegally dismissed.

Ruling:

There was evidence to the effect that Marcial Franco had been asked to disclose the
names of the members of the union and that the management had shown interest in the
unionizing activities of the petitioners. This evidence has remained unchallenged. What
is more, it appears that only alleged members of the petitioner union were put on
"rotation." The labor arbiter’s observation during the hearing that the private
respondents had shown hostility towards petitioners for their union activities is a
determination of fact which is based on the totality of private respondents’ conduct,
indicating anti-union bias. Nor is it disputed that private respondents’ opposed

90
petitioners’ petition for certification election when this matter should be the sole
concern of the workers. Private respondents’ interest belies their claim that they were
not aware of petitioners’ organizational and union activities prior to the union’s
registration. An employer may be guilty of ULP in interfering with the right to self-
organization even before the union has been registered.

Union of Filipro Emplovees vs Vivar

GR No. 79255
January 20, 1992

Facts:

The respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor
Relations Commission (NLRC) a petition for claims of its monthly paid employees for
holiday pay in the light of the Court's decision in Chartered Bank Employees Association
v. Ople. The case was submitted for voluntary arbitration by both Filipro and the Union
of Filipro Employees (UFE)wherein the labor arbiter appointed was respondent
Benigno Vivar. The ruling if Vivar was that Filipro to pay its monthly paid employees
holiday pay pursuant to Art 94 of Labor Code, subject to exclusions and limitations in
Art82. Filipro then 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 (3) deduction from the holiday pay award of overpayment for overtime,
night differential, vacation, and sick leave benefits due to the use of 251 divisor. On the
other hand, 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. Vivar then 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 251days as divisor. The case was
forwarded to the NLRC who remanded the case to the arbiter due to lack of jurisdiction.

Issue:

Whether the ruling of the arbiter is correct?

Ruling:

91
 As to the ruling on holiday pay, yes. The Court held that the sales personnel were not
entitled to holiday pay since law requires that the actual hours of work in the field be
reasonably ascertained. However, the company has no way of determining whether
these sales personnel really spend the hours required in actual field work given that
they do not report to the office the whole day. As to the ruling on the divisor to be used,
no. The Court held that the divisor in computing the award of holiday pay should still be
251 days. 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. Respondent Nestle's invocation of solutio indebiti, or payment by mistake,
due to its use of 251 days as divisor must fail considering the Labor Code mandate that
"all doubts in the implementation and interpretation of this Code, including its IRR, shall
be resolved in favor of labor.

Dentech Mftg. Corp. Vs. NLRC

G.R. No. 81477
April 19, 1989

Facts:

Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno were employed as
welders, upholsterers, and painters by of Dentech Manufacturing Corporation, a firm
engaged in the manufacture and sale of dental equipment and supplies. However, they
were dismissed from the firm due to their alleged abandonment of their work without
informing the company about their reasons for doing so. Marbella et al filed a complaint
with the arbitration branch of the NLRC for illegal dismissal and violation of
Presidential Decree No. 851. Among other things they sought the payment of the cash
bond they filed with the company at the start of their employment.

Issue:

Whether Marbella et al are entitled to the refund of the cash bond they filed with
Dentech at the start of their service.

Ruling:

The Court held that refund of the cash bond filed by Marbella et al is in order. Article
114 of the Labor Code prohibits an employer from requiting his employees to file a cash
bond or to make deposits, subject to certain exceptions: "when the employer is engaged
in such trades, occupations or business where the practice of making deductions or
requiring deposits is a recognize done, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules and regulations."Dentech have not satisfactorily
disputed the applicability of this provision of the Labor Code to the case at bar and
further failed to show that the company is authorized by law to require the private
respondents to file the cash bond in question. It’s to the effect that the proceeds of the

92
cash bond had already been given to a certain carinderia to pay for the accounts of the
private respondents there in does not merit serious consideration. No receipt has been
shown to prove such payment.

FERNANDEZ V. NLRC
G.R. No. 105892
January 28, 1998

Facts:

Petitioners alleged that prior to and during early July 1990, they "demanded" from
Margueritte Lhuillier an increase in their salaries since her business was making good
and that she was evading payment of taxes by making false entries in her records of
account; that Lhuillier became angry and threatened them that something would
happen to their employment if they would report her to the BIR; that shortly thereafter,
Lhuillier suspected them of stealing jewelry from the pawnshop; that on July 19, 1990,
Lhuillier verbally informed them not to report for work as their employment had been
terminated. On their part, petitioners Lim and Canonigo alleged that in early January
1990 and in June 1990, respectively, they demanded increases in their salaries since
they noted that Lhuillier had a very lucrative business besides evading tax payments by
making false entries in her records of account; that they also informed her that they
intended to join the Associated Labor Union (ALU), which made Lhuillier angry, causing
her to threaten them that should they report her to the BIR and join the ALU something
would happen to their employment; that Lhuillier advised them to tender their
resignations as they were reportedly responsible for some anomalies at the Agencia
Cebuana-H Lhuillier; that Lhuillier assured them that they will be given separation pay;
that they asked Lhuillier that they be allowed to confront the persons who reported to
her about their supposed involvement in the alleged anomalies but she ignored it and
told them to tender their respective resignations effective February 16, 1990 (for Lim)
and July 14, 1990 (for Canonigo); and that they were not given separation pay

Issue:

Whether petitioners were illegally dismissed.

Ruling:

Private respondents did not abandon their employment; rather, they were illegally
dismissed. To succeed in pleading abandonment as a valid ground for dismissal, the
employer must prove (1) the intention of an employee to abandon his or her
employment and (2) an overt act from which such intention may be inferred, i.e., the
employee showed no desire to resume his work. 30 Mere absence is not sufficient. The

93
employer must prove a deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning. 31 Private respondents failed to
discharge this burden. The claim of abandonment was inconsistent with the immediate
filing of petitioners' complaint for illegal dismissal and prayer for reinstatement. For
how can an inference be made that an employee had no intention of returning to work,
when he filed a complaint for illegal dismissal praying for reinstatement three days
after the alleged abandonment? Moreover, considering that petitioner had been with
Pawnshop Lhuillier for several years — ranging from six (6) years to thirty-three (33)
years — it is unlikely that they would simply leave their employment. Clearly, there is
no cogent basis for private respondents' theory that said petitioners abandoned their
work. In this light, we sustain the finding of the labor arbiter that said petitioners were
illegally dismissed, with neither just cause nor due process.

EMS MANPOWER & PLACEMENT SERVICES, Petitioner, v. NLRC

G.R. No. 107723
July 24, 1997

Facts:

Luisa G. Manuel was hired as a domestic helper in Hong Kong by Deborah Li Siu Yee.
Her contract was for two years, but stayed for only two months because she was
dismissed and repatriated to the Philippines after she made repeated demands for her
rights under the employment contract. Luisa led a complaint with the Philippine
Overseas Employment Administration for illegal dismissal against Yee and illegal
exaction against petitioner EMS Manpower. The POEA Administrator dismissed the
complaint for lack of merit. On appeal, the NLRC reversed the decision of the POEA
Administrator, no clear evidence to support the POEA's finding that Luisa was
dismissed for a just cause.

Issue:

Whether Luisa Manuel was dismissed for a just cause.

Ruling:

The Supreme Court declared that Luisa was unjustly dismissed from her employment.
As correctly ruled by the NLRC, the telex could hardly be recognized as sufficient
evidence of Luisa's purported misconduct. It was a single document totally
uncorroborated and easily fabricated to suit one's personal interest and purpose. The
NLRC decision is affirmed.

94
 NITO ENTERPRISES VS. NLRC
G.R. No. 114337
September 29, 1995

Facts:

Petitioner Nito Enterprises hired Capili as an apprentice machinist under an

apprenticeship agreement for six months for a daily wage, which was 75% of
applicable minimum wage. However, shortly 2 months after he started work,
Capili was asked to resign because he had been causing accidents, that he has
been doing certain things beyond the scope of his duty, and that he had even
injured himself in handling one of the machines, to the financial prejudice of the
company as his medication would be shouldered by Nito Enterprises. Capili later
filed a complaint for illegal dismissal, which the Labor Arbiter dismissed. This
decision was reversed by the NLRC, holding that Capili was a regular employee.
With this, Nito came to the Supreme Court. Nito Enterprises assails the NLRC
decision on the ground that no apprenticeship program had yet been filed and
approved at the time the agreement was executed.

Issue:
Whether Capili a regular employee or an apprentice.

Ruling:

Yes. Petitioner did not comply with the requirements of the law. It is mandated
that apprenticeship agreements entered by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by
the Minister of Labor and Employment. Since the apprenticeship agreement
between petitioner and private respondent has no force and effect in the absence
of a valid apprenticeship program duly approved by the DOLE, private
respondent’s assertion that he was hired not as an apprentice but as a delivery
boy (“kargador” or “pahinante”) deserves credence. He should rightly be
considered as a regular employee of petitioner as defined by Article 280 of the
Labor Code and pursuant to the constitutional mandate to protect the rights of
workers and promote their welfare.

95
 BERNARDO VS. NLRC
GR No. 122917
July 3, 1999

Facts:

Petitioners numbering 43 are deaf mutes who were hired on various periods from 1988
to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters
through a uniformly worded agreement called ‘Employment Contract for Handicapped
Workers. Subsequently, they are dismissed. Petitioners maintain that they should be
considered regular employees, because their task as money sorters and counters was
necessary and desirable to the business of respondent bank. They further allege that
their contracts served merely to preclude the application of Article 280 and to bar them
from becoming regular employees. Private respondent, on the other hand, submits that
petitioners were hired only as “special workers and should not in any way be
considered as part of the regular complement of the Bank.”[12] Rather, they were
“special” workers under Article 80 of the Labor Code.

Issue:

Whether petitioners became regular employees?

Ruling:

Yes. The fact that the employees were qualified disabled persons necessarily removes
the employment contracts from the ambit of Article 80. Since the Magna Carta accords
them the rights of qualified able-bodied persons, they are thus covered by Article 280 of
the Labor Code, which provides:

“ART. 280. Regular and Casual Employment. — The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer.

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