LABOR LAW

DIGESTED CASES
 BULLETIN PUBLISHING CORP. V. SANCHEZ
GR No. 74425, October 7, 1986

Facts: The supervisors of the petitioner-company formed a labor union, demanding

recognition as the sole bargaining agent of all the supervisors in the company. The
union later undertook to file a notice of strike with the Ministry of Labor, claiming the
company’s union busting and unfair labor practices.

The petitioner company seeks the cancellation of the registration of the union on the
ground that Art. 246 of the Labor Code and Sec. 11 of Rule II, Book V of the
Implementing Rules hereof, prohibit supervisors from forming labor organizations.

Issue: Whether or not supervisors may form a union for the purposes of collective
bargaining

Held: No, supervisors may not form a union for the purposes of collective bargaining.
According to Sec. 11, Rule II, Omnibus Rules, supervisory unions are presently no
longer recognized nor allowed to exist and operate. Also, Art. 246 of the Labor Code
explicitly excludes managerial employees from the right of self-organization, the right
to from, join and assist labor organizations.

The nature of the duties of herein respondents-members of the union are managerial.
The members of the union, wholly composed of supervisors employed by petitioner-
company, are not qualified to organize a Labor union for the purposes of collective
bargaining.
 KAP. MANGGAGAWA NG CAMARA SHOES V. CAMARA SHOES
GR No. L-50985, January 30, 1982

Facts: Petitioners filed a complaint for unfair labor practice. Petitioner Asturias was
dismissed for allegedly overpricing items he was asked to buy. Petitioner Ramos was
deducted amounts from his pay for an alleged loan and was suspended for tampering
the payroll, writing thereon “under protest”.

The Labor Arbiter declared the respondent not guilty of any unfair labor practice ruling
that the latter’s actions were justifiable. He ordered reinstatement without backwages of
Asturias, and ruled Ramos’ case as moot and academic, the latter having been
reinstated.

Issue: Whether or not the Labor Arbiter correctly ruled out unfair labor practice

Held: No. While dismissal is a management prerogative, it must be done without abuse
of discretion.

There was no basis in the respondent’s actions. Nowhere in the records was it shown
that Asturias overpriced the items he was asked to buy. He never even sought
reimbursement for the difference. On the other hand, the deductions made from Ramos
were made only when there had already been strained labor relations between him and
the respondent, and was without his consent. His writing of “under protest” was
merely an exercise of freedom of expression, of his right to air his grievances on the
unauthorized deductions.

It appears from evidence the respondent made its actions of dismissal and suspension
when the labor disputes were presumably at their peak, the petitioners appearing to be
active members of the union, only for harassment purposes.
 VICTORIANO V. ELIZALDE ROPE WORKERS UNION
GR No. L-25246, September 12, 1974

Facts: Victoriano was an employee of the Elizalde Rope Factory. As such, he was a
member of herein respondent Elizalde Rope Workers Union, pursuant to a closed shop
provision in the collective bargaining agreement that membership in the union shall be
required as a condition of employment for all permanent employees.

The law does not preclude such agreements, but an exception came about upon
enactment of RA 3350 which provides: “but such agreement shall not cover members of
any religious sects which prohibit affiliation of their members in any such labor
organization”.

Being a member of the religious sect Iglesia ni Cristo, Victoriano is prohibited from
affiliating with any labor organization. He hence resigned from the union. The union in
turn asked the company to dismiss Victoriano from service. The union assailed the
constitutionality of RA 3350, contending that it infringes on the fundamental right to
form lawful association guaranteed by the Bill of Rights.

Issue: Whether or not RA 3350 is unconstitutional for infringing the right to association

Held: No. RA 3350 merely excludes application and coverage of the agreement to
employees belonging to any religious sects which prohibit affiliation of their members
with any labor organization. They, hence, cannot be compelled to join labor unions
despite such agreements.

They may not be refused employment or dismissed on the sole account of not being
members of the union. These religious sects members are not in fact prohibited but are
actually given the liberty to affiliate or not, with labor unions. The law does not coerce
them. Neither may the employer or the union.

It may not be amiss to point out that free exercise of religion is superior to contract
rights. In case of conflict, the latter must yield to the former.
 SANYO PHILIPPINES WORKERS UNION vs. HON. POTENCIANO S.
CANIZARES 211 SCRA 361 / G.R. No. 101619
July 8, 1992

Facts:

On March 4, 1991, PSSLU wrote a letter to Sanyo recommending the dismissal of the
employees who are non-union workers allegedly on the grounds of: 1) they were
engaging in anti-union activities; 2) they willfully violated the pledge of cooperation
with PSSLU which they signed and executed and 3) they threatening with bodily harm
and even death the officers of the union. Pursuant to the above letter, the company sent
a memorandum to the same workers advising them that their failure to appeal the
decision of the union for dismissal will be then effective.

The company considered them dismissed because the company received no information
on whether or not said employees appealed to PSSLU. The dismissed employees filed a
complaint with the NLRC for illegal dismissal. PSSLU filed a motion to dismiss the
complaint alleging that the Labor Arbiter was without jurisdiction over the case, relying
on Article 217 (c) of P.D. 442, as amended by Section 9 of Republic Act No. 6715 which
provides that cases arising from the interpretation or implementation of the collective
bargaining agreements shall be disposed of by the labor arbiter by referring the same to
the grievance machinery and voluntary arbitration.

Issue: Whether or not the Labor Arbiter has jurisdiction over the case

Held:

Yes, Labor Arbiter has jurisdiction over the case. Article 260 of the Labor Code on
grievance machinery and voluntary arbitrator states that "(t)he parties to a Collective
Bargaining Agreement shall include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish machinery for the
adjustment and resolution of grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies." It is further provided in
said article that the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is not settled in that
level, it shall automatically be referred to voluntary arbitrators (or panel of voluntary
arbitrators) designated in advance by the parties. It need not be mentioned that the
parties to a CBA are the union and the company. Hence, only disputes involving the
union and the company shall be referred to the grievance machinery or voluntary
arbitrators. In the instant case, both the union and the company are united or have come
to an agreement regarding the dismissal of private respondents. No grievance between
them exists which could be brought to a grievance machinery. The problem or dispute
in the present case is between the union and the company on the one hand and some
union and non-union members who were dismissed, on the other hand. The dispute
has to be settled before an impartial body. The grievance machinery with members
designated by the union and the company cannot be expected to be impartial against
the dismissed employees. Due process demands that the dismissed workers grievances
be ventilated before an impartial body. Since there has already been an actual
termination, the matter falls within the jurisdiction of the Labor Arbiter.

ESPERO SANTOS SALAW vs. National Labor Relations Commission

 202 SCRA 7 / G.R. No. 90786 September 27, 1991

Facts:

The petitioner Espero Salaw was employed by the private respondents as a credit
investigator-appraiser. On November 1984, the Criminal Investigation Service of the
Philippine Constabulary, NCR, extracted from the petitioner without the assistance of
counsel and a Sworn Statement which made it appear that the petitioner, in cahoots
with a co-employee, a supervisor in charge of the acquired assets of respondent
Associated Bank, sold twenty sewing machines and electric generators which had been
foreclosed by the respondent bank from Worldwide Garment and L.P. Money Garment.

On April 1, 1985, the petitioner was terminated from his employment for alleged
serious misconduct or willful disobedience and fraud or willful breach of the trust
reposed on him by the private respondents. Subsequently, the petitioner filed with the
NLRC a complaint for illegal dismissal against respondent Bank. The Labor Arbiter
declared the dismissal of complainant illegal and ordered respondents to reinstate
complainant to his former or equivalent position. On appeal, the NLRC reversed the
decision of the labor arbiter and dismissed the case for lack of merit. The petitioner filed
a Motion for Reconsideration but this was denied

Issue: Whether or not the dismissal of the petitioner was legally justified?

Held:

No, the dismissal of the petitioner was not legally justified. Under the Labor Code, as
amended, the requirements for the lawful dismissal of an employee by his employer are
two-fold: the substantive and the procedural. Not only must the dismissal be for a valid
or authorized cause as provided by law (Articles 279, 281, 282-284, New Labor Code),
but the rudimentary requirements of due process, notice and hearing must also be
observed before an employee may be dismissed. The inviolability of notice and hearing
for a valid dismissal an employee cannot be over-emphasized. Those twin requirements
constitute essential elements of due process in cases employee dismissal. The
requirement of notice is intended inform the employee concerned of the employer's
intent dismiss him and the reason for the proposed dismissal; on other hand, the
requirement of hearing affords the employ the opportunity to answer his employer's
charges against him and accordingly to defend himself therefrom before dismissal
effected. Neither one of these two requirements can be dispensed with without running
afoul of the due process requirement of the Constitution. In this case, as the records
clearly show, complainant was denied that constitutional right when his subsequent
request refute the allegations against him was granted and a hearing was set "without
counsel or representative. The investigation of petitioner Salaw by the respondent Bank'
investigating committee violated his constitutional right to due process, in as much as
he was not given a chance to defend himself, as provided in Rule XIV, Book V of the
Implementing Rules and Regulations of the Labor Code governing the dismissal of
employees. Significantly, the dismissal of the petitioner from his employment was
characterized by undue haste. The law is clear that even in the disposition of labor
cases, due process must not be subordinated to expediency or dispatch. Otherwise, the
dismissal of the employee will be tainted with illegality.

TANDUAY DISTILLERY LABOR UNION v. NLRC

G.R. NO. 75037, April 30, 1987
Facts:

Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and members
of the Tanduay Distillery Labor Union (TDLU), a duly organized and registered labor
organization and the exclusive bargaining agent of the rank and file employees of the
petitioner company.

A Collective Bargaining Agreement (CBA), was executed between TDI and TDLU. The
CBA was duly ratified by a majority of the workers in TDI including herein private
respondents and contained a union security clause which provides that “all workers
who are or may during the effectivity of the CBA, become members of the Union in
accordance with its Constitution and By-Laws shall, as a condition of their continued
employment, maintain membership in good standing in the Union for the duration of
the agreement.”

TDLU created a committee to investigate its erring members in accordance with its by-
laws which are not disputed by the private respondents. Thereafter, TDLU, through the
Investigating Committee and approved by TDLU's Board of Directors, expelled the
private respondents from TDLU for disloyalty to the Union.

Issue: Whether or not TDI was justified in terminating private respondents'

employment in the company on the basis of TDLU's demand for the enforcement of the
Union Security Clause of the CBA between TDI and TDLU

Held:

The dismissal of an employee pursuant to a demand of the majority union in

accordance with a union security agreement following the loss of seniority rights is
valid and privileged and does not constitute an unfair labor practice.

Article 249 (e) of the Labor Code as amended specifically recognizes the closed shop
arrangement as a form of union security. The closed shop, the union shop, the
maintenance of membership shop, the preferential shop, the maintenance of treasury
shop, and check-off provisions are valid forms of union security and strength. They do
not constitute unfair labor practice nor are they violations of the freedom of association
clause of the Constitution. There is no showing in these petitions of any arbitrariness or
a violation of the safeguards enunciated in the decisions of this Court interpreting
union security arrangements brought to us for review.

PANTRANCO v. PSC, 70 PHIL 221

Facts:
Petitioner wanted to have Sec. 1 of CA 454 be declared unconstitutional or that if
constitutional be declared inapplicable to valid and subsisting certificates issued prior
to its enactment. This arose from the time petitioner applied for ten additional trucks to
comply with his existing certificates of public convenience issued before the enactment
of the CA 454 because he was not agreeable with the conditions set forth by PSC. He
contended that this Act violates the constitutional guarantee of non-impairment of
contracts.

Issue: Was the constitutional guarantee of non-impairment of obligations and contracts

violated?

Held:

No. Statutes for the regulation of public utilities are a proper exercise by the state of its
police power for the control and regulation of public utilities in order to protect the
public. If one voluntarily placed his property in public service, he cannot complain of
the regulation of the State through its police power. A regulation of public utilities
applies not only to future but also to present contracts in operation. Such statutes are,
therefore, not unconstitutional, either impairing the obligation of contracts, taking
property without due process, or denying the equal protection of the laws, especially
inasmuch as the question whether or not private property shall be devoted to a public
and the consequent burdens assumed is ordinarily for the owner to decide.

ABE v. FOSTER WHEELER CORPORATION 110 PHIL 198

Facts:
In a complaint filed against Foster Wheeler Corp and Caltex, herein plaintiffs contends
that they were discharged from employment without notice and demanded recovery of
separation pay and other necessary benefits. It is contended for the defendants that
since all the contracts entered into with plaintiffs were executed before Republic Act
1052 became effective, said Act cannot be given such effect as to make it applicable even
to contracts already existing upon its approval as were the contracts here it would
become unconstitutional under the rule prohibiting impairment of contracts.

Issue: Is the contention of the defendant meritorious?

Held:

No. The freedom of contract under our system of government is not meant to be
absolute. It is understood to be subject to reasonable legislative regulations aimed at the
promotion of public, health, moral, safety and welfare. By its very nature, Republic Act
1052 is a measure intended to provide protection to the workingmen and its enactment
is a valid exercise of the police power of the State.

ASIA BED FACTORY v. NATIONAL BED WORKER’S UNION 100 PHIL 837

Facts:
The company and its employees, in a collective agreement, agreed that “employees,
shall be provided with work on Sundays at time and a half (150% wages); and that in
the event no work on Sundays is available through no fault of the employees, they shall
be paid the equivalent of their wages as if they had performed work for that day.”
Three months later the Blue Sunday Law was passed prohibiting work on Sundays. The
employees contended they should nevertheless be paid on Sundays – since this
prohibition by the law was not their fault.

Issue: Whether or not the employees should be paid.

Held:

The employees should not be paid because the company was prohibited by law to
provide them work on Sundays. The company’s duty to provide work on Sundays was
extinguished by the law, so it is unfair to require it to pay the employees who after all
would not be working on said days. Indeed the obligation of the employer to furnish
work became a legal impossibility.

KAISAHAN v. GOTAMCON SAWMILLS, 80 PHIL 521

Facts:
During the pendency of the labor dispute between the petitioners and the respondents,
the CIR managed to forge a voluntary agreement which results into a return-to-work
order, and the respondents was prohibited to, among others, lay-off any of the
petitioners. Barely 4 months the contract, petitioners again staged a strike, violating the
condition of the agreement. The latter countered by assailing the Sec 19 of CA 103, the
law upon which the voluntary agreement was based, arguing that the same results to
involuntary servitude.

Issue: Should a voluntary agreement with a condition that workers must return to work
be voided upon a ground of involuntary servitude?

Held:

No. An employee entering into a contract of employment voluntarily accepts, among

other conditions, those prescribed in Section 19 of CA 103. The voluntariness of the
employee's entering into it or not--with such implied condition, negatives the possibility
of involuntary servitude ensuing.

SSS EMPLOYEES ASSOC. v. CA, 175 SCRA 686

Facts:

Petitioners went on strike after their employer SSS failed to act upon the union's
demands concerning the implementation of their CBA. SSS filed an injunction
contending that the petitioners are covered by Civil Service laws which prohibits
employees of the government from staging a strike. SSSEA on the other hand, argued
that the NLRC has the jurisdiction of the case by virtue of the provisions of the Labor
Code.

Issue: Does the court have jurisdiction? Do employees covered by the Civil Service have
the right to strike?

Held:

On question of jurisdiction, yes. The RTC, in the exercise of its general jurisdiction
under BP 129, has jurisdiction over petitioner's claim for damages and for the issuance
of a writ of injunction to stop the strike, since the Labor Code do not apply to
government employees.

On the right to strike of government workers, No. The Constitution provides guarantee
among workers with the right to organize and conduct peaceful concerted activities. On
the other hand, EO 180 provides that the Civil Service law and rules governing
concerted activities in government service shall be observed subject to any legislation
that may be enacted by Congress. Referring to Memo Circular No.6, s. 1987 of the CSC
which states that prior to the enactment by Congress of applicable laws concerning
strike by government employees, enjoins under pain of administrative sanctions, all
government officials and employees from staging a strike, demonstrations, mass leaves,
walk-outs and other forms of mass action which will result in temporary stoppage or
disruption of public service, the court ruled that in the absence of any legislation
allowing government employees to strike, they are therefore prohibited from doing so.

BANGALISAN v. CA, 276 SCRA 619

Facts:

Petitioners were among the 800 public school teachers who staged “mass actions” on
September 17 to 19, 1990 to dramatize their grievances against the alleged failure of the
government to implement measures intended for their material benefit. The Education
Secretary issued a Return-to-Work Order but the petitioners failed to comply. Hence
they were charged by the Secretary with several administrative cases leading to their
dismissal from service.

Issue: Can government employees engage in a strike?

Held:

No. As a general rule, even in the absence of express statutory prohibition like Memo
Circ. No.6 public employees are denied the right to strike or engage in work stoppage
against a public employer. The right of the sovereign to prohibit strikes or work
stoppages public employees was clearly recognized at common law. To grant
employees of the public sector the right to strike there must be a clear and direct
legislative authority therefor. In the absence of any express legislation allowing
government employees to strike, recognizing their right to do so, or regulating the
exercise of the right, employees in the public service may not engage in strike, walk-
outs and temporary work stoppage like workers in the private sector.

PALMERIA V. NLRC
247 SCRA 57 August 3, 1995

Facts:

Palmeria was employed by private respondent Coca-cola, which later entered into a
contract of service with Lipercon Services. It was made to appear that the petitioner was
an employee of Lipercon, before being dismissed by Coca-cola. Petitioner was able to
prove his employment with Coca-cola, hence sought for reinstatement. The labor arbiter
and NLRC ruled that reinstatement could not be availed of because of the vehement
refusal of the respondent to accept back the petitioner.

Issue: Should the petition for reinstatement be granted despite the strained relations
between employee and employer?

Held:

Yes. The importance of the remedy of reinstatement to an unjustly dismissed employee

cannot be overstated. It is the remedy that most effectively restores the right of an
employee to his employment and all its benefits before its violation by his employer.
Yet despite all its virtues, reinstatement does not and cannot fully vindicate all of an
employee’s injuries for reinstatement no more than compensates for his financial
damages. It cannot make up for his other sufferings, intangible yet valuable xxx It is a
right which cannot be allowed to be devalued by the purchasing power of employers
who are only too willing to bankroll the separation pay of their illegally dismissed
employees to get rid of them.

PEOPLE V. TURDA
233 SCRA 702 July 06, 1994

Facts:

In the first week of August 1986, appellant Gener Turda, his wife Milagros Turda and
Carmen Manera went to the house of complainant Florante Rosales to convince his
family that the former could secure an overseas job for Florante in Italy and another for
his sister Shirley Cabalu in France for a fee. Florante and Shirley accepted the offer and
their father, Roberto Rosales, paid P70,000.00 for both. However, he did not ask for a
receipt because of his trust in appellant and his wife who were Shirley's "compadre"
and "comadre" for the past seventeen (17) years.

Sometime before September 1987, another complainant, Celina Andan, learned that her
application for an immigrant visa with the Canadian Embassy was denied. While her
application was pending, Celina's mother, Milagros Andan, was persuaded by Milagros
Turda to entrust to her the processing of Celina's papers since she (Milagros Turda) had
already been abroad and had gone through the application process previously. The
Andans and the Turdas had known each other for more than ten (10) years as their
stores which sold rice and LPG, respectively, were near each other.

All the complainants have testified that in every recruitment transaction, appellant was
always present with the other accused. With respect to the recruitment of Rosales and
Shirley Cabalu, both testified that the three (3) accused went to their house to induce
them to apply for overseas work for a fee, and that appellant was likewise around when
the amount of P70,000.00 was quoted by the other accused as the recruitment service
fee. Also, complainant Celina Andan categorically testified that appellant and his wife
were together when the latter was paid the downpayment in check for her trip to
Canada. Celina further asserted that the Turdas were always together in their
recruitment transactions.

Issue: Whether or not the appellant is guilty of large-scale illegal recruitment.

Held: Yes. A review of the testimonies of complainants leads to no other conclusion

than that appellant, his wife and Manera were conspirators in the illegal recruitment
business by contributing acts in pursuance of the financial success of their joint venture
for their mutual benefit. There is no doubt that the acts of appellant and his wife
conclusively established a common criminal design mutually deliberated upon and
accomplished through coordinated moves. Such acts constitute enlisting, contracting or
procuring workers or promising them overseas employment under Art. 13, par. (b), of
the Labor Code. Since appellant did not have the license or authority to recruit and yet
recruited at least three (3) persons, he is guilty of large-scale illegal recruitment under
Art. 38, penalized under Art. 39, of the Labor Code.

PEOPLE V. PANIS
142 SCRA 664 July 11, 1990

Facts:

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

Motion to quash filed by respondent: on the ground that the informations did not
charge an offense because he was accused of illegally recruiting only one person in each
of the four informations. Under the proviso in Article 13(b), he claimed, there would be
illegal recruitment only “whenever two or more persons are in any manner promised or
offered any employment for a fee.” Motion at first was denied but was subsequently
granted. The prosecution is now on certiorari.

Issue:

The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442,
otherwise known as the Labor Code, reading as follows:

(b) Recruitment and placement’ refers to any act of canvassing, enlisting, contracting,
transporting, hiring, or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and
placement.

Held:

Petitioner’s contention: private respondent is being prosecuted under Article 39 in

relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However,
as the first two cited articles penalize acts of recruitment and placement without proper
authority, which is the charge embodied in the informations, application of the
definition of recruitment and placement in Article 13(b) is unavoidable; that the
requirement of two or more persons is imposed only where the recruitment and
placement consists of an offer or promise of employment to such persons and always in
consideration of a fee. The other acts mentioned in the body of the article may involve
even only one person and are not necessarily for profit.

RAMON RASE and ROSITA RASE, vs. NATIONAL LABOR RELATIONS

COMMISSION, G & M (Phils.), INC., and RIYADH MEDICAL CENTER
G.R. No. 110637, October 7, 1994

Facts:

The petitioners are the parents of Marilyn. She was recruited by private respondent G &
M (Phils.), Inc. (hereinafter G & M) and was subsequently deployed to respondent
Riyadh Medical Center in Saudi Arabia. She was to work as a nursing aide with a salary
of US$400.00 monthly. On 2 July 1987, Marilyn left for Saudi Arabia.
On 6 March 1989, Marilyn died of acute viral encephalitis. At the time of her death,
Marilyn was not working with the Riyadh Medical Center but with Sheik Fahad Al
Owaidah as a domestic helper to the Sheik’s fourth wife.

Issue: Whether the decision of the POEA is in fact supported by substantial evidence.

Held:

Yes. Section 5, Rule 133 of the Rules of Court provides that in cases filed before
administrative or quasi-judicial bodies (like the POEA) a fact may be deemed
established if it is supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion.

The POEA is not bound by the technical rules of procedure and evidence. Under its
Rules and Regulations in force at the time the petitioners filed their complaint (1989),
adjudication proceedings before it were summary in nature and judgment may be
rendered on the basis of position papers and memoranda. In other words, the POEA is
not, among other things, strictly bound by the technical rules of evidence.

In the instant case, the POEA resolved the petitioners’ complaint on the basis of the
documentary evidence submitted by the parties which, insofar as the petitioners are
concerned, included the assailed letter of Marilyn and the affidavit of Imelda Enciong.
The procedure it adopted strictly conformed with its Rules and Regulations. Thus, it
was not necessary for the affiants to appear and testify and to be cross-examined by the
counsel for the adverse party. To require otherwise would be to negate the rationale
and purpose of the summary nature of the administrative proceedings mandated by the
Rules and to make mandatory the application of the technical rules of evidence. The
challenge then against the use of affidavits without the presentation of the affiants for
cross-examination is futile. In Rabago vs. National Labor Relations Commission,18
which also involved a challenge on a similar proceeding, this Court stated that:

“The argument that the affidavit is hearsay because the affiants were not presented for
cross-examination is not persuasive because the rules of evidence are not strictly
observed in proceedings before administrative bodies like the NLRC, where decisions
may be reached on the basis of position papers only.”

KLAVENESS MARITIME AGENCY, INC., et al vs. JOSE MARIUS F. PALMOS and

NATIONAL LABOR RELATIONS COMMISSION
G.R. Nos. 102310-12, May 20, 1994

Facts:

Private respondents were employees of petitioner Denholm Ship Management (HK),

Ltd. (“Denholm”). They were hired as Able Seamen (“AB”) for the M.V. African
Camellia by a local manning agent, co-petitioner Klaveness Maritime Agency, Inc.
(“Klaveness”). The manning contract of Palmos and Sevilla stipulated a period of
employment of twelve (12) months effective 23 March 1989. However, on 7 July 1989,
Palmos and Sevilla were repatriated to the Philippines from the Port of Santos, Brazil.
Klaveness advanced the cost of the repatriation. As a result of their untimely
repatriation, Palmos and Sevilla each filed a complaint for illegal dismissal, as well as
non-payment and underpayment of wages against petitioners Denholm and Klaveness
with the Philippine Overseas Employment Administration (“POEA”). In response,
petitioners Denholm and Klaveness jointly filed a complaint against Palmos and Sevilla
for disciplinary action and reimbursement of repatriation expenses. On motion of
Klaveness and Denholm, the three (3) cases were consolidated.

Issue: Whether the POEA and NLRC erred in disregarding the evidence which
petitioners had submitted to prove their case.

Held: No. The central issue raised here requires us to look at the relevant facts more
closely. In doing so, the Court has examined the entire record of the consolidated cases.
In this connection, we consider that the technical issues sought to be raised by
petitioners concerning the evidence submitted by them (e.g., an extract of the logbook
of the M.V. African Camellia) and the objections to such evidentiary material articulated
by the POEA and the NLRC, do not need prolonged analysis. We believe rather that it is
the tenor and intrinsic worth of such material, along with that of the other pieces of
evidence offered by petitioners and private respondents, that need to be examined,
bearing constantly in mind that in proceedings before the POEA and the NLRC, the
strict rules of evidence are not applicable in their full rigor.

The Labor Code does not, of course, require a formal trial-type proceeding before an
erring employee may be dismissed. This is specially true in the case of a vessel on the
ocean or in a foreign port. The minimum requirement of due process in termination
proceedings—which must be complied with even in respect of seamen on board a
vessel—consists of notice to the employees intended to be dismissed and the grant to
them of an opportunity to present their own side of the alleged offense or misconduct
which led to the management decision to terminate. In the case at bar, however, as
already pointed out, the true proximate cause of the dismissal of Palmos and Sevilla
was not any alleged act or misconduct on the part of the two (2) seamen, but rather the
emotional needs of Chief Officer Paredes which Captain Mogul decided to satisfy. The
need to accord due process to the dismissed employee is, of course, quite immaterial
where, as in the case at bar, the efficient cause of the dismissal was not an act or acts on
the part of the dismissed employee.

TEODORO RANCES, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION and PACIFIC ASIA OVERSEAS CORPORATION
G.R. No. 101135, July 14, 1995

Facts:

Petitioner was hired by private respondent in March 1984 as a radio officer of a vessel
belonging to its principal, the Gulf-East Ship Management Limited. Petitioner
authorized private respondent to deduct from his monthly salary the amount of
US$765.00 and to remit the same to his wife, Clarita Rances.

It appears that a case filed by petitioner in Dubai was amicably settled, with the
payment to petitioner of the sum of US$5,500.00 plus “a return ticket to [petitioner’s]
country.”
Armed with the Dubai decision, petitioner returned to the Philippines after his tour of
duty and on October 10, 1985 filed a complaint with the Philippine Overseas
Employment Administration (POEA) for the enforcement of the Dubai decision against
private respondent (POEA Case No. [M]85-10-0814). POEA and NLRC ruled in favor of
petitioner. However, in a petition for review (G.R. No. 76595), we reversed the decision
of NLRC, holding that the POEA has no jurisdiction to hear and decide a claim for
enforcement of a foreign judgment. However, we ruled that petitioner could initiate
another proceeding before the POEA against private respondent on the basis of the
contract of employment between petitioner and private respondent or the latter’s
foreign principal (Rollo, p. 54).

On June 6, 1988, petitioner filed with the POEA another complaint (POEA Case No. [M]
88-06-478) against private respondent for non-payment of salary allotments for the
months of March, April and May 1984 due to petitioner’s wife. In his position paper,
petitioner contended that only the amount of P13,393.45 or the dollar equivalent of
US$765.00 was remitted to his wife, thereby leaving a balance of US$1,530.00.

In answer to petitioner’s complaint, private respondent raised, inter alia, the defenses of
payment and prescription.

Issue: Whether the filing of enforcement of foreign judgment to POEA tolled the
running of prescription.

Held:

No. Neither do we accept petitioner’s contention that his filing of a complaint to enforce
the Dubai decision on October 10, 1985 has the effect of tolling the running of the
prescriptive period. The cause of action in said case was for the enforcement of a
decision, while the cause of action in the present case is for the collection of a sum of
money. Furthermore, POEA has no jurisdiction to hear and decide a claim for
enforcement of a foreign judgment. Such a claim must be brought before the regular
courts. In effect, it is as if no action has been filed which could have stopped the
running of the prescriptive period.

FE M. ALINDAO v. HON. FELICISIMO JOSON, et. Al.

GR No. 114132 NOVEMBER 14, 1996

Facts:

Petitioner Fe applied, interviewed and qualified for employment in Saudi Arabia as a

laboratory aide, for a term of 1 year and with a monthly salary of US$370.00, through
private respondent, Hisham. She paid Hisham P15, 000 as placement fee, but no receipt
was issued. When she arrived in Saudi Arabia, she was made to work as a domestic
helper. Because of unfair working conditions, she worked at several residences until she
saved enough money to return home. When she arrived in the Philippines, she filed
with Philippine Overseas Employment Agency (POEA) a complaint against Hisham for
breach of contract.
The POEA rendered a decision suspending Hisham and to pay petitioner her money
claims. Hisham appealed to the National Labor Relations Commission (NLRC) and
filed a motion for reconsideration with the POEA. The NLRC affirmed the decision of
the POEA. Hisham now argues that the order cannot be enforced because the motion
for reconsideration was still pending with the POEA. Respondent POEA administrator
Joson find the motion for reconsideration of Hisham to be meritorious. Hence petitioner
elevated this case to the Supreme Court.

Issue: Whether or not the 1991 POEA Rules and Regulations vesting upon the Secretary
of Labor jurisdiction over motions for reconsideration should be given retroactive effect.

Held:

Yes. Petition is meritorious. We have recognized an exception to the rule that where a
court has already obtained and is exercising jurisdiction over a controversy, its
jurisdiction to proceed to the final determination of the case is not affected by new
legislation transferring jurisdiction over such proceedings to another tribunal. This
exception is when the change in jurisdiction is curative in character. Thus, this Court
gave retroactive effect to the PD 1691 which substantially re-enacted Article 217 of the
Labor Code after the latter was amended by PD 1367 by, inter alia, removing from the
enumeration of cases falling under the exclusive jurisdiction of Labor Arbiters “money
claims arising from employer-employee relations.” If this were so, then it is with more
reason that the provision of the 1991 POEA Rules and Regulations vesting upon the
Secretary of Labor jurisdiction over motions for reconsideration (to be treated as
petitions for review) should be given retroactive effect, not only because it is a rule of
procedure, but also because it is remedial or curative since the 1985 POEA Rules and
Regulations is unclear as to the agency which shall resolve such motions.

BIENVENIDO CADALIN, et. Al. v. POEA’s ADMINISTRATOR, et. Al.

GR No. 104776 DECEMBER 5, 1994

Facts: On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on
behalf of 728 other OCWs instituted a class suit by filing an “Amended Complaint”
with the POEA for money claims arising from their recruitment by ASIA
INTERNATIONAL BUILDERS CORPORATION (AIBC) and employment by BROWN
& ROOT INTERNATIONAL, INC (BRI) which is a foreign corporation with
headquarters in Houston, Texas, and is engaged in construction; while AIBC is a
domestic corporation licensed as a service contractor to recruit, mobilize and deploy
Filipino workers for overseas employment on behalf of its foreign principals. The
amended complaint sought the payment of the unexpired portion of the employment
contracts, which was terminated prematurely, and secondarily, the payment of the
interest of the earnings of the Travel and Reserved Fund; interest on all the unpaid
benefits; area wage and salary differential pay; fringe benefits; reimbursement of SSS
and premium not remitted to the SSS; refund of withholding tax not remitted to the BIR;
penalties for committing prohibited practices; as well as the suspension of the license of
AIBC and the accreditation of BRII.

On October 2, 1984, the POEA Administrator denied the “Motion to Strike Out of the
Records” filed by AIBC but required the claimants to correct the deficiencies in the
complaint pointed out. AIB and BRII kept on filing Motion for Extension of Time to file
their answer. The POEA kept on granting such motions. Claimants filed an opposition
to the motions for extension of time and asked that AIBC and BRII declared in default
for failure to file their answers. The POEA Administrator issued an order directing
AIBC and BRII to file their answers within ten days from receipt of the order.
On June 19, 1987, AIBC finally submitted its answer to the complaint. At the same
hearing, the parties were given a period of 15 days from said date within which to
submit their respective position papers. On October 27, 1988, AIBC and BRII filed a
“Consolidated Reply,” POEA Administrator rendered his decision which awarded the
amount of $824, 652.44 in favor of only 324 complainants. The case rooted from the
Labor Law enacted by Bahrain where most of the complainants were deployed. His
Majesty Ise Bin Selman Al Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on
June 16, 1176, otherwise known re the Labour Law for the Private Sector. NLRC
promulgated its Resolution, modifying the decision of the POEA. The resolution
removed some of the benefits awarded in favor of the claimants. NLRC denied all the
MRs. Hence, these petitions filed by the claimants and by AlBC and BRII.

Issue: Whether or not complainants’ claim for the benefits provided therein have
prescribed.

Held: Yes. Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for
filing “actions to enforce any cause of action under said law.” On the other hand, Article
291 of the Labor Code of the Philippines provides the prescriptive period for filing
“money claims arising from employer-employee relations.” The claims in the cases at
bench all arose from the employer- employee relations, which is broader in scope than
claims arising from a specific law or from the collective bargaining agreement. The
contention of the POEA Administrator, that the three-year prescriptive period under
Article 291 of the Labor Code of the Philippines applies only to money claims
specifically recoverable under said Code, does not find support in the plain language of
the provision. Neither is the contention of the claimants in G.R. No. 104911-14 that said
Article refers only to claims “arising from the employer’s violation of the employee’s
right,” as provided by the Labor Code supported by the facial reading of the provision.

MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY v. THE NATIONAL

LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION and FRANCISCO D. REYES
No. L-77279 APRIL 15, 1988

Facts: Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd
Shabokshi Group, a Saudi Arabian firm, recruited private respondent to work in Saudi
Arabia as a steelman. The term of the contract was for one year, from May 15, 1981 to
May 14,1982. However, the contract provided for its automatic renewal. The contract
was automatically renewed when private respondent was not repatriated by his Saudi
employer but instead was assigned to work as a crusher plant operator.

On March 30, 1983, while he was working as a crusher plant operator, private
respondent’s right ankle was crushed under the machine he was operating. On May 15,
1983, after the expiration of the renewed term, private respondent returned to the
Philippines, His ankle was operated for which he incurred expenses.
He then returned to Saudi Arabia to resume his work. Subsequently, he was
repatriated. Upon his return, he had his ankle treated for which he incurred further
expenses.

On the basis of the provision in the employment contract that the employer shall
compensate the employee if he is injured or permanently disabled in the course of
employment, private respondent filed a claim, docketed as POEA Case No. 84–09–847,
against petitioner with respondent Philippine Overseas Employment Administration
(POEA) . The POEA rendered judgment in favor of private respondent.

Not satisfied with the resolution of the POEA, petitioner instituted the instant special
civil action for certiorari, alleging grave abuse of discretion on the part of the NLRC.
ISSUE: Whether or not that the NLRC gravely abused its discretion when it ruled that
petitioner was liable to private respondent for disability benefits since at the time he
was injured his original employment contract, which petitioner facilitated, had already
expired.

Held: No. There is no merit in petitioner’s contention. Private respondents contract of

employment cannot be said to have expired on May 14, 1983 as it was automatically
renewed since no notice of its termination was given by either or both of the parties at
least a month before its expiration, as so provided in the contract itself. Therefore,
private respondent’s injury was sustained during the lifetime of the contract.

The power of the agency to sue and be sued jointly and solidarily with the principal or
foreign-based employer for any of the violations of the recruitment agreement and the
contracts of employment [Section 10(a) (2) Rule V, Book I, Rules to Implement the Labor
Code].

Even if indeed petitioner and the Saudi principal had already severed their agency
agreement at the time private respondent was injured, petitioner may still be sued for a
violation of the employment contract because no notice of the agency agreement’s
termination was given to the private respondent.

ALGA MOHER INTERNATIONAL PLACEMENT SERVICES v. DIEGO P.

ATIENZA [ GR No. 74610-11, Sep 30, 1988 ]

Facts: Ponce and Miraflor entered into separate contracts of employment with the
Modern System Establishment through its agent, Alga Moher International, a duly
licensed recruitment and placement agency. Under the terms and conditions of said
contracts, Ponce was hired as a driver of light equipment for a period of two (2) years,
while Miraflor was hired as an airconditioning technician for a period of two (2) years.
Dr. Salah, the representative of Modern System, personally conducted the interview
and selection of Ponce and Miraflor.

Pursuant to their employment contracts, Ponce and Miraflor left for Saudi Arabia
where, for the first two weeks, Ponce worked as a cook while Miraflor worked as an
airconditioning technician. Thereafter, Ponce was assigned to work as a heavy
equipment operator and later, as a construction worker. Miraflor was assigned as a
construction worker. Thinking that these reassignments constituted a breach of their
contracts, Ponce and Miraflor reported the matter to Alga Moher. In due time, Modern
System was apprised of the complaint and soon thereafter, it terminated the contracts of
Ponce and Miraflor, detained them for one week, and repatriated them after giving their
passports, plane tickets and salaries for the month of May.

Upon their arrival in the Philippines, Ponce and Miraflor each filed a complaint for
illegal dismissal, illegal deduction from wages, illegal exaction and breach of contract
against Modern System and Alga Moher. The two cases were consolidated and
proceedings were held before the POEA. The POEA rendered a joint decision ordering
Alga Moher and Modern System the basic salaries for the unexpired portion of the
complainants contract of employment and Attorney’s fees. Modern System and Alga
Moher appealed to the respondent Commission which later affirmed the POEA's
decision in its decision. Hence, the instant petition filed only by Alga Moher.

Issues: 1.Whether or not private respondents were illegally dismissed

2.Whether or not Article 279 of the Labor Code should be applied in
determining the monetary benefits to be awarded to the private respondents.

Held: 1. In finding that the private respondents were illegally dismissed, the POEA, in
its decision of August 7, 1984, said: "Complainants herein were clearly illegally
dismissed. In the first place, their contracts were terminated after two months, despite
the fact that the parties agreed on a period of two years. Furthermore, respondents'
defense to the effect that complainants were not found qualified for the position for
which they were hired does not lie, considering that complainants were made to
perform tasks alien to the positions stated in their contract, and considering, further that
complainants were made to undergo rigid interview and trade tests before they were
deployed."

2. Article 279 of the Labor Code provides: "Art. 279. Security of Tenure.- In cases of
regular employment, the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights
and to his backwages computed from the time his compensation was withheld from
him up to the time of reinstatement." This law was correctly applied by the POEA and
the respondent Commission because private respondents were found to have been
illegally dismissed by their foreign employer, Modern System. If they not illegally
dismissed, they could have completed their two-year contract.
LLOBRERA VS. NATIONAL LABOR RELATIONS COMMISSION
No. L-76271. June 28, 1988.

Facts:

“As may be gleaned from the case records, complainant served on board M.T. SARA
HASHIM as Captain. Prior to his repatriation, complainant alleges that Gencon forced
him to sign an erroneous statement of wages under threat that if he refused to sign, he
would be put in jail or sent home without being paid at all. Hence complainant was
paid only the sum of SR1,576.80, and despite the fact that complainant is entitled to
additional overtime pay, as well as pro-rata leave pay, Gencon allegedly refused to pay
the same. Complainant maintains that he is entitled to the difference between what he
was actually paid by Gencon and what he was actually entitled to as per his
computations.

“In support of his claim, complainant submitted copies of the erroneous statement of
wages prepared by management, the actual statement of wages as per his
computations, and the Final Settlement sent by El Greco to Gencon after complainant
had sought El Greco’s assistance for the purpose of reviewing the complainant’s claims.
The POEA rendered a judgment, ordering respondents El Greco and General
Contracting, to pay complainant Llobrera, his overtime pay differential, pro rata leave
pay and refund of deductions made upon complainant’s wages.”

The NLRC reversed the decision of the POEA holding that the POEA failed to rule on
the quit claim or final settlement which was signed by the petitioner; and that in the
absence of prima facie evidence that the said settlement was obtained through fraud,
duress, intimidation and deceit, the same must be given full force and effect.

Issue: Whether the respondent NLRC was wrong in annulling the decision of POEA
and in denying the petitioner’s claim for overtime pay and leave pay and for refund of
illegal deductions.

Held:

We agree with the petitioner. The only reason why the NLRC reversed the findings of
the POEA was because of the final settlement which according to the NLRC should
have the force and effect of law between the petitioner and private respondents in the
absence of a prima facie showing of fraud, duress or intimidation. However, the NLRC
completely disregarded the fact that the petitioner tried to prove that the final
agreement was only forced upon him not only by alleging threats of being jailed in a
foreign country which were employed by the private respondents against him but also
by presenting evidence to show that he was entitled to much more than what was
credited to him in the final settlement and that he could not have possibly willingly
agreed to receive less than what he could prove by the evidence in his possession had
there been no threat or intimidation on the part of the private respondents. Hence, there
could be no other explanation for his signing the final settlement other than that he was
forced to do so.

EASTERN SHIPPING LINES, INC., petitioner, vs. POEA

No. L-76633. October 18, 1988.*

Facts:

The private respondent in this case was awarded the sum of P192,000.00 by the
Philippine Overseas Employment Administration (POEA) for the death of her husband.
The decision is challenged by the petitioner on the principal ground that the POEA had
no jurisdiction over the case as the husband was not an overseas worker.

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accident in Japan. His widow sued for damages under Executive Order No. 797 and
Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel,
argued that the complaint was cognizable not by the POEA but by the SSS and should
have been filed against the State Insurance Fund. The POEA nevertheless assumed
jurisdiction and after considering the position papers of the parties ruled in favor of the
complainant.
Issue: Whether a seaman is an overseas worker

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

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment
is defined as “employment of a worker outside the Philippines, including employment
on board vessels plying international waters, covered by a valid contract.” A contract
worker is described as “any person working or who has worked overseas under a valid
employment contract and shall include seamen”4 or “any person working overseas or
who has been employed by another which may be a local employer, foreign employer,
principal or partner under a valid employment contract and shall include seamen.”
These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while
under a contract of employment with the petitioner and alongside the petitioner’s
vessel, the M/V Eastern Polaris, while berthed in a foreign country.

It is worth observing that the petitioner performed at least two acts which constitute
implied or tacit recognition of the nature of Saco’s employment at the time of his death
in 1985. The first is its submission of its shipping articles to the POEA for processing,
formalization and approval in the exercise of its regulatory power over overseas
employment under Executive Order NO. 797.7 The second is its payment8 of the
contributions mandated by law and regulations to the Welfare Fund for Overseas
Workers, which was created by P.D. No. 1694 “for the purpose of providing social and
welfare services to Filipino overseas workers.”

ROYAL CROWN INTERNATIONALE. vs. NLRC

179 SCRA 569 Oct.16,1989

Facts:

In 1983, Royal Crown International, a private employment agency, recruited and

deployed Virgilio P. Nacionales for employment with ZAMEL as an architectural
draftsman in Saudi Arabia. On February 13,1984, ZAMEL terminated the employment
of private respondent on the ground that his performance was below par. For the next
three successive days, the private respondent was detained at his quarters and was not
allowed to report to work until his exit papers were ready. On February 16, 1984, he
was made to board a plane bound for the Philippines. Private respondent filed a
complaint for illegal termination against petitioner and ZAMEL with POEA.

Issues: 1. Whether or not petitioner as a private employment agency may be held jointly
and severally liable with ZAMEL
2. Whether or not sufficient evidence was presented by petitioner to establish the
termination of private respondent’s employment for justified valid cause.
Held:

1. Yes, there being an admission that petitioner is the representative and agent of
ZAMEL. The petitioner voluntarily assumed solidarity liability under various
contractual undertakings it submitted to the Bureau of Employment services. Under the
Labor Code, the requirement to operate a private employment agency for overseas
recruitment and placement is to submit a document whereby it assumed all
responsibilities for the proper use of its license and the implementation of the contracts
of employment with the workers it recruited and deployed for overseas employment.

2. The General Manager’s letter merely stated that the grounds for the employee's
dismissal were his unsatisfactory performance and various acts of dishonesty,
insubordination and misconduct. But the particular acts which would indicate private
respondent's incompetence or constitute the above infractions were neither specified
nor described therein. The petitioner’s evidence was insufficient to prove termination of
employment for just and valid cause. When termination cases involve a Filipino worker
recruited and deployed for overseas employment, the burden naturally devolves upon
both the foreign base employer and the employment agency or recruitment entity
which recruited the workers.
 FACILITIES MANAGEMENT CORP vs. DE LA OSA
89 SCRA 131 March 26, 1979

Facts:

Leonardo De La OSA filed a petition for the recovery of his overtime compensation,
swing shift and graveyard shift and full backwages. He was employed by FMC through
its agent, Jaime V. Cantuira, for the said corporation is domiciled in California, USA. de
la Osa was employed as a painter from March 1964 to Nov.1964; a houseboy from Dec.
1964to Nov.1965 and from Dec. 1965 to Aug.1966; a cashier from Aug. 1966 to March 27,
1967. He further averred that from Dec.1965 to Aug.1966, he rendered overtime services
daily and that the said entire period was divided into swing and graveyard shift, but he
was not paid both overtime and night shift premiums despite his repeated demands.

FMC claims that they are domiciled in Wake Island which is beyond the territorial
jurisdiction of the Philippine government; that Cantuira, its employee stationed in
Manila, is without power and authority of legal representation and the employment
contract carries the approval of the Department of Labor of the Philippine.

Issues: 1. Whether or not Court of Industrial Relations has jurisdiction over the said
case.
2. Whether or not de la Osa should be compensated.

Held:
1. Yes, the contract of employment between the parties litigant was shown to have been
originally executed and renewed in Manila as asserted by de la Osa and not denied by
FMC. Hence any dispute arising therefrom should necessarily be determined in the
place or venue where it was contracted.

2. Yes, because he rendered night time services as required by respondent and

considering the physical, moral and sociological effects arising from the performance of
such nocturnal duties, the petitioner should be compensated at least 50% more than his
basic wage rate.
 DEL ROSARIO VS NLRC
187 SCRA 777 July 24, 1990

Facts:

The POEA promulgated a decision dismissing the complaint for money claims filed by
Del Rosario for lack of merit. The decision was appealed to the NLRC, which reversed
the POEA decision and ordered Philsa Construction and Trading Co.Ind and Ariel
Enterprises (the foreign employer) to jointly and severally pay private respondent the
peso equivalent of $16,039,000 salary differentials and $2,420.03 as vacation leave
benefits. A writ of execution was issued by the POEA but it was returned unsatisfied.
Private respondent moved for the issuance of an alias writ against the officers of Philsa.
This motion was opposed by the officers led by petitioners, the president and general
manager of the corporation. However, POEA issued a resolution ordering the sheriff to
execute against the properties of the petitioner and if insufficient, against the cash
and/or surety bond of bonding company concerned for the full satisfaction of the
judgment awarded.

Issue: Whether or not the resolution of POEA ordering the execution against the
properties of the PHILSA officers proper

Held:

No. Under the law, a corporation is bestowed juridical personality, separate and distinct
from its stockholders. But when the juridical personality of the corporation is used to
defeat public convenience, justify wrong, protect or defend crime, the corporation shall
be considered as a mere association of persons and its responsible officers and/or
stockholders shall be individually liable. For the same reasons, a corporation shall be
liable for obligations of a stockholder or a corporation and its successor-in-interest shall
be considered as one and the liability of the former shall attach to the latter.

But for the separate juridical personality of a corporation to be disregarded, the wrong
doing must be clearly and convincingly established. It cannot be presumed.

Thus, at the time Philsa allowed its license to lapse in 1985 and even at the time it was
delivered in 1986, there was yet no judgment in favor of private respondent. Intent to
evade payment of his claims cannot therefore be implied from the expiration of Phila’s
license and its delisting. Neither will the organization of Philsa International Placement
and Services Corp. and its registration with the POEA as a private employment agency
imply fraud since it was organized and registered in 1981, several years before private
respondent filed his complaint with the POEA in 1985. The creation of the second
anticipation of private respondent’s money claims and the consequent adverse
judgment against Philsa.

FEAGLE CONSTRUCTION CORPORATION V. GAYDA

G.R. No. 82310, June 18, 1990
Facts:

Private respondents have been employed with Algosaibi-Bison, Ltd. in Saudi Arabia for
three to five years working on construction projects for the Kingdom of Saudi Arabia.
Sometime in 1983, Algosaibi-Bison, Ltd. started encountering financial difficulties
because of the drop in the price of oil. Because of this development, petitioner decided
to stop sending back Filipino workers to work with Algosaibi-Bison, Ltd. sometime in
July 1984, the Filipino workers employed with Algosaibi-Bison, Ltd. who had returned
to Manila, including private respondents, requested for a meeting with the
management of petitioner. During the meeting, the workers requested petitioner to
return them to their job site in Saudi Arabia. The president of petitioner informed the
workers that petitioner did not want to send back any workers to Saudi Arabia because
of the big risk due to the financial difficulties of Algosaibi-Bison, Ltd. The workers
assured petitioner that they were willing to assume the risk in case the remittance of
their salaries would be delayed. They signed a Statement to this effect. Algosaibi-Bison,
Ltd. went into bankruptcy in 1986. On October 3, 1986, private respondents filed with
the POEA a Complaint against petitioner for the payment of their claims with the
liquidator of Algosaibi-Bison, Ltd.

Issue: Whether petitioner may be held solidarily liable with the foreign employer for
any unpaid claims of private respondents against their foreign principal employer even
as they have a stipulation to this effect

Held:

Yes. In view of the circumstances proven in this case, and the very clear waiver of
liability individually signed by private respondents in favor of petitioner, the petitioner
cannot be held jointly and solidarily liable with the employer Algosaibi-Bison, Ltd. for
the claims of private respondents.

The general rule as provided for in Section 1, Rule II of the rules and regulations of the
POEA is that every licensed private recruitment agency shall be jointly and solidarily
liable with the employer for all claims and liabilities which may arise in connection with
the implementation of the contract of employment.

In this case, however, it is necessary to deviate from the general rule. First, because of
change in circumstances and second, because of individual agreements between
petitioner and private respondents which cannot be considered contrary to law.

The individual statements voluntarily signed by the private respondents to convince the
reluctant petitioner to send them back to Saudi Arabia, notwithstanding their
knowledge of the financial reverses of this employer, are eloquent individual waivers of
their rights against petitioner. They insisted on returning to work, even persuading
petitioner to allow them to do so, by waiving the possible liability of petitioner. Under
these circumstances, when private respondents were insisting to return to work despite
warning, the Court cannot consider their written waivers as to petitioner’s
responsibilities void.
 

PEOPLE V. CORONACION
G.R. No. 97845, September 29, 1994
Facts:

Nelia Coronacion, Eduardo Aquino, and June Mendez were charged with the crime of
illegal recruitment in large scale and by a syndicate for falsely representing themselves
to have the capacity to contract, enlist, and transport Filipino workers for employment
abroad.

Issue:

Whether the first element of the offense of illegal recruitment i.e., that the appellants
undertook any of the recruitment activities defined under Article 13(b) of the Labor
Code, as amended, or any of the prohibited activities defined under Article 34 of the
same Code was successfully established

Held:

Yes. A careful examination and evaluation of the testimonies of the complaining

witnesses lead to no other conclusion than that the appellants and their co-accused June
Mendez who is still at large, acted in concert in the illegal recruitment business
conducted in the office of appellant Eduardo Aquino with each of them performing acts
contributive to the success of an enterprise designed for mutual benefit and advantage.

While it may be true that appellant Eduardo Aquino had hardly any personal dealings
with herein private complainants. He certainly made no disclaimer to private
complainants of Coronacion and Mendez’ authority to recruit workers for abroad in his
office.

As to Nelia Coronacion, she clearly led private complainants to believe that she was
acting for somebody in authority when she extended her recruiting services.
 

PEOPLE V. COMIA
G.R. No. 109761, September 1, 1994

Facts:
For falsely representing herself to have the capacity and power to contract, enlist, and
recruit workers for employment abroad, Carmelita Comia was charged with illegal
recruitment in large scale under paragraphs (a) and (b) of Article 38, in relation to
paragraph (a) of Article 39 of the Labor Code. Proffered to satisfy the first element of the
crime were the testimonies of the complainants pointing to the accused as the person
who promised them employment abroad and who collected and received various
amounts from them. The accused questions the sufficiency of the said testimonies
contending that Article 13(b) which defines recruitment and placement, specifically
provides that the offer or promise of employment must be “for a fee” thereby making
receipts indispensable in proving alleged payment.

Issue:

Whether the failure of complainants to present receipts as proof of the fees they paid to
the accused fatal to their case

Held:

No. The complainants duly proved by their respective testimonies that the accused was
involved in the entire recruitment process. She gave the impression that she knows a
certain Dr. Zenaida Andres who owns a hospital in Hongkong and has the power to
hire people for janitorial jobs thereat. She relayed the requirements to them, monitored
their compliance, and most especially, collected and received fees. Their testimonies, in
this regard, being clear and positive, were sufficient. In People v. Naparan and People
v. Sendon, the Court did not fault the victims of illegal recruitment for not asking for
receipts explaining that inasmuch as they were inexperienced and titillated by the
prospect of earning easy money abroad, they fell easy prey to the accused-appellant’s
glibness and roseate promises and were deluded into relying on her assurance that
receipts for their money would be issued later.

PEOPLE VS. SENDON

G.R. Nos. 101579-82. December 15, 1993

Facts:
Accused-appellant Sendon was found guilty beyond reasonable doubt of the crime of
illegal recruitment in large scale defined in Article 38 and penalized under Article 39,
both of the Labor Code, as amended, for having falsely and unlawfully represented
herself to the public at large as a licensed recruiter and having again victimized four
persons. Appellant asserts that she was never directly or indirectly involved in any
recruitment activity. She admits introducing one Marites Dimasalang, allegedly an
employee in the direct hire section of the POEA, to whom she referred said job order to
private complainants, but denies having anything to do whatever in employing them
for work abroad.

Issue: Whether accused-appelant is guilty of illegal recruitment in large scale.

Held:

Yes. Under Article 38(b) of the Labor Code, recruitment and placement becomes illegal
recruitment in large scale which is considered an offense involving economic sabotage
and is penalized under Article 39 of the Labor Code when committed against three or
more persons individually or as a group, the crime .

In this case, the documentary and testimonial evidence of the prosecution, however,
show that appellant took an active and direct part in the recruitment process by
adopting a systematic and elaborate scheme which gave the impression that she had the
power to send people abroad for work. What assumes a fatal and crucial role in
appellant’s bid for exculpation is her failure to present evidence that Marites
Dimasalang really exists and is not merely a figment of her imagination. As stated
earlier, both Velasco and Hermogeno were informed, upon their inquiry, that no person
by the name of Marites Dimasalang was ever connected with the POEA. Thus, the
Court is left to conclude that appellant merely conjured that fictitious person to deflect
any liability from herself.

PEOPLE VS. BODOZO

G.R. No. 96621.October 21, 1992

Facts:
Accused-appellants were charged with five (5) counts of Estafa and a separate charge
for Illegal Recruitment but were acquitted of the crime Estafa. After trial, the two were
found guilty, beyond reasonable doubt, of the crime of illegal recruitment defined in
and penalized by Article 13 in relation to Article 38 of the Labor Code, as amended.
Hence, this appeal. Accused-appelants assert that they merely helped private
complainants apply for overseas employment.

Issue: Whether the guilt of the accused-appellants have been proven beyond reasonable
doubt.

Held:

Yes. The crime of illegal recruitment has two elements:

1. The offender is a non-license or non-holder of authority to lawfully engage in the

recruitment and placement of workers; and

2. That the offender undertakes either any recruitment activities defined under Article
13(b), or any prohibited practices enumerated under Article 34 of the Labor Code.

In this case at bar, it is undisputed that accused-appellants Joey Bodozo and Nimfa
Bodozo are neither licensed nor authorized to recruit workers for overseas employment
as shown by the certification14 issued by the Philippine Overseas Employment
Administration (POEA).

Accused-appellants alleged that they merely helped private complainants apply for
overseas employment. Evidences on record, however, show otherwise. Accused-
appellants not only asked private complainants to fill up application forms but also to
submit to them their NBI clearances, passports and medical certificates. In addition
thereto, accused-appellants collected payment for processing fee and other sundry
expenses from private complainants, all of which constitutes acts of recruitment within
the meaning of the law.

FLORES VS. PEOPLE

G.R. Nos. 93411-12. July 20, 1992

Facts:
Petitioner was found guilty of the charges of Illegal Recruitment and Estafa, in two (2)
separate informations. Petitioner contends that the term “recruiter” cannot be applied to
her arguing that to recruit means to “engage” or “hire” (as new employees, members),
but the record shows that she did not invite much less entice people for possible
employment overseas. That she merely extended offended party Oval assistance by
referring him to the placement agency to which she had previously referred her brother.
Asserting further that she did not make false representation to the offended party
(Oval) and that the amount delivered to her was given voluntarily, hence, no estafa was
committed by her.

Issue: Whether or not petitioner be acquitted on the ground of reasonable doubt as the
evidence on record is insufficient to prove that she employed deceit or false
representations.

Held:

The Court agrees with the respondent court that there is evidence that accused-
petitioner had represented to Oval that she could send the latter abroad for
employment as a can-maker in Japan. And because of his representation, Oval and his
companion, Pacifico de Jesus, gave her money in consideration of the same
representation. Petitioner’s defense that she did not recruit Oval for employment
abroad is beside the point. The undisputable fact is that she gave Oval the distinct
impression that she had the power or ability to send people abroad for work so that he
was convinced to give her the money she demanded to enable him to be employed as
can maker in Japan.

The term “recruit” or “recruitment” must be understood in the light of what the law
contemplates and not how a dictionary defines it. By her own admission, she is not
licensed by the POEA to recruit workers for employment here or abroad. It would seem
that the promissory note in question was indeed signed by petitioner without the
presence of counsel. Nonetheless, there is no direct or positive evidence on record that
the degree of constraint or duress either actually inflicted or threatened was sufficient to
overcome petitioner’s mind and will as to make her sign the promissory note.

PEOPLE VS. MANUGAS JR.

231 SCRA 1

Facts:
In 1987, accused-appellant Fernando Manungas, Jr. recruited Wilfrey Mabalot, Danilo
Ramirez, Leonardo Estanoco and Crisanto Collado to work as janitors in Saudi-
Arabia. In connection with this, Fernando required the applicants the several
amounts for medical, placement and other fees. The applicants failed to be deployed
to Saudi however, and upon verification with POEA, they found out that Fernando was
not a licensed recruiter. Complainants filed complaints of Estafa and Illegal
Recruitment on a Large Scale against Fernando. Fernando maintained that he was not
illegally recruiting because he was connected with a duly licensed recruitment agency,
and that only because the job openings was subsequently awarded to another
recruitment agency that the applicants he recruited were not able to leave for Saudi.

Issue:
Whether or not Fernando was guilty of Illegal Recruitment on a Large Scale, given
the circumstances.

Ruling:

The Supreme Court ruled that Fernando, despite of his being connected with a
licensed recruitment agency, was still guilty of illegal recruitment under the Labor
Code, because he performed the acts of recruitment as defined in Article 13 of the
Labor Code, by himself. He was the one who recruited the applicants, and he was the
one who required of them the fees he collected himself. Illegal recruitment was also
qualified because he recruited more than three persons.
 

PEOPLE VS. GOCE, 247 SCRA 780

Facts:

On January 1988, an information for illegal recruitment committed by a syndicate in

large scale, punishable under Articles 38 and 39 of the labor code as amended by PD
2018, filed against Dan and Loma Goce and Nelly Agustin in the RTC of Manila,
alleging that in or about during the period comprised between May 1986 and June
25, 1987, both dates inclusive in the City of Manila, the accused conspired and
represent themselves to have the capacity to recruit Filipino workers for employment
abroad.

January 1987, a warrant of arrest was issued against the 3 accused but none of them
was arrested. Hence, on February 1989, the RTC ordered the case archived but issued a
standing warrant us arrest against the accused.

Thereafter, knowing the whereabouts of the accused, Rogelio Salado requested for a
copy of the warrant of arrest and eventually Nelly Agustin was apprehended by the
Paranaque Police. Agustin's counsel filed a motion to revive the case and requested to
set a hearing for purpose of due process and for accused to immediately have her day in
court. On the arraignment, Agustin pleaded not guilty and the trial went on with four
complainants testified for the prosecution and receipts of the processing fees they paid.

Agustin for the defense asserted that Goce couple were licensed recruiters but
denied her participation in the recruitment and denied knowledge of the receipts
as well. On November 1993, trial court rendered judgment finding that Agustin as a
principal in the crime of illegal recruitment in large scale with sentence of life
imprisonment and pay P100, 000.00.

Issue: Whether or not (1) her act of introducing the complainants to the couple does
not fall within the meaning of illegal recruitment and placement under Article 13 in
relation to Article 34 of the labor code; (2) there is no proof of conspiracy and (3) there
is no proof that appellant offered/promised overseas employment to the complainants.

Held:

The testimonial evidence shows that Agustin indeed further committed acts
constitutive of illegal recruitment because, the complainants had a previous
interview with Agustin (as employee of the Goce couple) about fees and papers to
submit that may constitute as referral. Agustin collected the payments of the
complainants as well as their passports, training fees, medical tests and other
expenses. On the issue of proof, the court held that the receipts exhibited by the
claimants are clear enough to prove the payments and transaction made. 

PEOPLE VS. AVENDAÑO, 216 SCRA 187

Facts:

Six (6) separate information for Illegal Recruitment of some 38 workers were filed
against appellant Abelardo Avendaño y Crespo which were docketed as
Criminal Case Nos. 6113-MN, 6114-MN, 6125-MN, 6131-MN, 6143- MN and 6148-MN
in the Regional Trial Court, Branch 170, at Malabon, Metro Manila.

Upon arraignment, Avendaño pleaded not guilty to six filed information. His
co-accused, Carmelito Soriano, Jr., Renato M. Soriano and Manuel Calonog have
remained at large. The accused(Abelardo C. Avedaño) is the Treasurer of MCBRAJ
Agro- Industrial Development Company (MAINDECO), with offices at 26 Sta. Cecilia
St., Sto. Rosario Village, Malabon, Metro Manila, which is also his residence. The
company is not licensed nor authorized to recruit workers for overseas employment.
Carmelito Soriano, Jr. is the President of the said Company, Manuel Calanog is the
personnel manager. The accused appealed to the Court.

Issues:
1. Whether or not the trial court erred in appreciating only the evidence of the
prosecution and in disregarding the evidence of the defense.
2. Whether or not the trial court erred in convicting accused-appellant of the crime
charged despite the failure of the prosecution to prove his guilt beyond reasonable
doubt.

Held:

The appeal has no merit. The trial court correctly fount Avendaño to have conspired
with his co-accused Carmelito Soriano, Jr., Manuel Calanog and Renato M. Soriano,
to illegally recruit some 38 persons for overseas employment, charging and
collecting a fee of P5,500.00 from each job applicant although they (the accused)
did not have the required license and authority from the Department of Labor to
engage in recruiting workers for overseas employment. They defrauded the job
applicants of the "fees" (P5,500.00) which the latter paid for the false hope of
obtaining employment in Papua, New Guinea, which was never realized.
Appellant's pretext that the fee of P5,500.00 paid by each job applicant was not a
placement fee but payment for a share of stock in MAINDECO, supposedly a
prerequisite for the deployment of the "stockholder" in Papua, New Guinea, must be
rejected for the simple reason that those who purchased the "shares" did not intend to
invest, but to obtain a job placement, in Papua, New Guinea. They were not investors
but job seekers. Further proof that they were being swindled is that those who paid
P5,500.00 each received a receipt for only P4,500.00 from the appellant who informed
them that the unreceipted amount of P1,000.00 was to pay for their medical
examination and the processing of their passports, although no passports were ever
issued to them. Appellant and his co-accused committed Illegal Recruitment on a Large
Scale as defined and penalized in Articles 38(b) and 39(a) of the Labor Code, because
they had victimized more than three (3) job applications — thirty eight (38) in fact.

WHEREFORE, as the trial court did not commit any reversible error in Finding
Avendaño guilty of large scale illegal recruitment in Criminal Cases Nos. 6113, 6114
and 6125, and of simple illegal recruitment in Criminal Case Nos. 6131, 6143 and 6148,
and as the penalties imposed are in accordance with the law, the appealed decision is
hereby AFFIRMED in toto.
AURORA T. AQUINO vs. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES
G.R. No. 91896, November 21, 1991

Facts: Aurora T. Aquino disclosed that in 1973, she was a licensed contractor authorized
to hire laborers as evidenced by a Labor Contractor's License dated 22 May, 1973. Said
license was issued after payment the year 1973-1974 in the recruitment of workers. In
January of 1973, Rodrigo Nicolas applied in response to a published notice of alleged
recruitment of workers for Guam. Of the total Pl,500.00 Nicolas paid,Pl,000.00 was later
refunded directly to him by appellant and the balance of P500.00 was included in an
alleged "group refund check" for P5,270 which could not be cashed for lack of funds. On
or before March 12, 1973, Braulio Sapitula likewise applied for the position of carpenter
and paid a P1500.Sometime in May 1973, Aurelio Costales, also applied for a job in
Guam and paid a total P2050. He was paid P700.00 by appellant, and the balance of
P650.00 was allegedly part of the alleged "group refund check" for P5,270.00 issued by
appellant. On June, 1974, Benito Vertudez applied for a Guam job at appellant's agency.
When he asked for a refund, he was issued a check for the amount of Pl,070.00 by
appellant, but said check like the alleged "group refund check" was dishonored for lack
of funds. On November 2, 1978, a complaint was filed against appellant for violation of
the Provisions of Article 24,of P.D. No. 442 before the Regional Trial Court of Manila,
Branch VIII. She alleged that on 18 May, 1974 on the expiration of her license, she
applied for its renewal to the Bureau of Labor addressed to Minister Blas Ople. She was
told by Under-Secretary Inciong to proceed with her operation "until such time as the
Secretary will go home." She waited for the renewal, but was not able to receive any
reply from the Department of Labor; hence, she stopped operations in 1976. The
applicants Vertudes, Sapitula, Empredo,and Nicolas, were not able to leave for Guam
within such period. The lower court found Aquino guilty beyond reasonable doubt of
Illegal Recruitment in violation of Art. 25, PD 442 and penalized under Art. 39 par. (b),
Labor Code. The Court of Appeals affirmed the decision of the lower court.

Issue: Whether Aquino is guilty of illegal recruitment?

Held: No. The Court the accused-petitioner not guilty of illegal recruitment.
Recruitment refers to the offering of inducements to qualified personnel to enter a
particular job or employment. Valid license from the Department of Labor should be
obtained for an employment agency to operate, otherwise it will constitute an act of
illegal recruitment. The foregoing facts, however, conspicuously show that the
recruitment activities, namely the continued operation of the Greenwich Travel Agency,
the advertisements that the agency was recruiting workers for overseas employment
and the active solicitation of workers ceased upon the non-renewal Aurora Aquino's
license to operate the said agency. The payments for services rendered are necessary
consequences of the applications for overseas employment. They are intended for
administrative and business expenses and for the travelling expenses of the applicants
once cleared for overseas travel. Anent the recruitment of Vertudez, the Court held in
favor of Aquino, since the prosecution only relied on the testimony of Vertudez that he
was recruited on June 1974. Such testimony was denied by Aquino. No other evidence
was presented by the prosecution particularly in relation to the recruitment of Benito
Vertudes. Thus, the Court ruled in favor of the accused pursuant to the rule on the
construction of penal laws. However, it is asking too much to expect a licensed agency
to absolutely at the stroke of midnight stop all transactions on the day its license expires
and refuse to accept carry-over payments after the agency is closed. In any business,
there has to be a winding-up after it ceases operations. The collection of unpaid
accounts should not be the basic of a criminal prosecution.
ROLANDO ROXAS SURVEYING COMPANY VS NLRC
GR NO. L-61684, OCTOBER 11, 1983

Facts:

Complainant applied for and was accepted as survey man by the respondent on the
strength of his 14 years of experience in survey work with the Bureau of Lands; that on
March 1, 1976, he started working as such survey man with seven men under him in
Surigao del Sur; that in September 1976, he requested and was granted 15 days vacation
leave; that after the expiration of his leave of absence, he reported for work but was not
allowed by the engineer of the cadastral survey party unless the consent of the
respondent had been obtained; that for his reason, he sent a telegram to the respondent
but received no reply so he proceeded to Manila and called up the respondent who told
him he could no longer return to his job because of the irregularities he had committed
during his employment; that this created a misunderstanding between the complainant
and the respondent which resulted in the filing of charges and counter-charges against
each other." Petitioner contends that the reason for private respondent’s dismissal was
his anomalous conduct while working for the company unauthorized collection of
money from people whose lands were being surveyed; that his continuance in the
service, is patently inimical to its interest, aside from the fact that his dishonesty is
shown when he did not disclose his conviction for malversation of public funds, with
the penalty of perpetual disqualification to hold government office; that the filing and
observation of respondent NLRC that reinstatement of private respondent to his former
position "would be imprudent and impracticable" lead to the inevitable conclusion that
he should not be paid back wages. To do otherwise, it is argued, "would be doing
violence to the rule that conclusions made in the decision must be consistent with the
findings of facts." Further, petitioner points out that private respondent was employed
merely for the cadastral survey being conducted in Surigao del Sur and that there was
no fixed period for said employment. Thus, the company has the right to terminate
private respondent at any time and even without cause.

Issue: Whether or not private respondent was only an apprentice and not a regular
employee?

Held: The above communication to Engineer Morales for him to assess the capabilities
of private respondent is not sufficient to show that he was taken in as an apprentice.
There was no written agreement that his services had been engaged as an apprentice.
On the contrary, every circumstance would indicate that he was accepted on the basis of
his credentials that he had been an employee for several years as a surveyor in the
Bureau of Lands. He was given a salary of P450.00 a month and, on June 1, 1976, was
sent to Surigao del Sur to perform the work of a surveyor, with seven men under him to
supervise. For all intents and purposes, he comes within the meaning of a regular
employee "to perform activities which are usually necessary or desirable in the usual
business or trade of the employees." (Article 281 of the Labor Code). In short, if it was
really the intention of petitioner to employ private respondent as an apprentice only, it
should have so stated the same clearly and in writing. Thus, as a regular employee,
private respondent cannot be terminated except for a just cause or when authorized
under Article 283 of the Labor. WHEREFORE, for lack of merit, the petition is
dismissed.
 

NITTO ENTERPRISES vs.NLRC and ROBERTO CAPILIFIRST DIVISION

45. G.R. No. 114337

Facts:

Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum
products, hired Roberto Capili sometime in May 1990 as an apprentice machinist,
molder and coremaker as evidenced by an apprenticeship agreement for a period of six
(6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75
which was 75% of the applicable minimum wage. On August 2, 1990, Roberto Capili
who was handling a piece of glass which he was working on, accidentally hit and
injured the leg of an office secretary who was treated at a nearby hospital. Further,
Capili entered a workshop within the office premises which was not his work station.
There, he operated one of the power press machines without authority and in the
process injured his left thumb. The following day he was asked to resign. Three days
after, , private respondent formally filed before the NLRC Arbitration Branch, National
Capital Region a complaint for illegal dismissal and payment of other monetary
benefits. The Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit. On appeal, NLRC
issued an order reversing the decision of the Labor Arbiter. The NLRC declared that
Capili was a regular employee of Nitto Enterprises and not an apprentice.
Consequently, Labor Arbiter issued a Writ of Execution ordering for the reinstatement
of Capili and to collect his back wages. Petitioner, Nitto Enterprises filed a case to the
Supreme Court.

Issue:

Does the NLRC correctly rule that Capili is a regular employee and not an apprentice of
Nitto Enterprises?

Held: Yes. The apprenticeship agreement between petitioner and private respondent
was executed on May 28, 1990 allegedly employing the latter as an apprentice in the
trade of "care maker/molder. However, the apprenticeship Agreement was filed only
on June 7, 1990.Notwithstanding the absence of approval by the Department of Labor
and Employment, the apprenticeship agreement was enforced the day it was signed.
The act of filing the proposed apprenticeship program with the Department of Labor
and Employment is a preliminary step towards its final approval and does not
instantaneously give rise to an employer-apprentice relationship. Nitto Enterprises did
not comply with the requirements of the law. It is mandated that
apprenticeshipagreements entered into by the employer and apprentice shall be entered
only in accordance with the apprenticeship program duly approved by the Minister of
Labor and Employment. Thus, the apprenticeship agreement has no force and effect;
and Capili is considered to be a regular employee of the company.

BERNARDO VS. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 122917 July 12, 1999

Facts:

Complainants 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.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. The labor arbiter ruled against herein
petitioners. On appeal, the NLRC affirmed the said decision ruling that herein
petitioners could not be deemed regular employees under Article 280 of the Labor
Code. 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. 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.

Issue:

Whether petitioners are regular employees.

Held:

Yes. However, only the employees, who worked for more than six months and whose
contracts were renewed are deemed regular. Hence, their dismissal from employment
was illegal. Verily, the renewal of the contracts of the handicapped workers and the
hiring of others lead to the conclusion that their tasks were beneficial and necessary to
the bank. More important, these facts show that they were qualified to perform the
responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.

In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as a qualified
able-bodied person. The fact that the employees were fqualified 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. As regular employees, the twenty-seven
petitioners are entitled to security of tenure; that is, their services may be terminated
only for a just or authorized cause. Because respondent failed to show such cause, these
twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other privileges.

INSULAR LIFE ASSURANCE CO., LTD. VS. NLRC

G.R. No. 84484 November 15, 1989

Facts:

Petitioner Company and private respondent Basiao entered into a contract which
provides that as Agent of the former he shall be free to exercise his own judgment as to
time, place and means of soliciting insurance. Nothing therein contained be construed
to create the relationship of employee and employer between the Agent and the
Company. Four years later, the parties entered into another contract—an Agency
Manager’s Contract while concurrently fulfilling his commitments under the first
contract with the Company. The second contract however, was terminated even years
later. Basiao thereafter filed with the then Ministry of Labor a complaint against the
Company and its president. Respondents on the other hand, questions the Ministry’s
jurisdiction over Basiao’s claim, asserting that he was not the Company’s employee, but
an independent contractor and that the Company had no obligation to him for unpaid
commissions under the terms and conditions of his contract.

Issue:

Whether the private respondent is an employee of petitioner thereby placing his claim
for unpaid commissions within the original and exclusive jurisdiction of the Labor
Arbiter

Held:

No. status of an employee from that of an independent contractor is control, that is,
whether or not the party who engages the services of another has the power to control
the latter’s conduct in rendering such services. Pursuing the argument, the respondents
draw attention to the provisions of Basiao’s contract obliging him to “x x observe and
conform to all rules and regulations which the Company may from time to time
prescribe x x,” as well as to the fact that the Company prescribed the qualifications of
applicants for insurance, processed their applications and determined the amounts of
insurance cover to be issued as indicative of the control, which made Basiao, in legal
contemplation, an employee of the Company.

The Company’s thesis, that no employer-employee relation in the legal and generally
accepted sense existed between it and Basiao, is drawn from the terms of the contract
they had entered into, which, either expressly or by necessary implication, made Basiao
the master of his own time and selling methods, left to his judgment the time, place and
means of soliciting insurance, set no accomplishment quotas and compensated him on
the basis of results obtained. He was not bound to observe any schedule of working
hours or report to any regular station; he could seek and work on his prospects
anywhere and at anytime he chose to, and was free to adopt the selling methods he
deemed most effective.

GREAT PACIFIC LIFE ASSURANCE CORPORATION VS. NLRC

G.R. Nos. 80750-51 July 23, 1990

Facts:

Brothers Rodrigo and Ernesto Ruiz, herein private respondents, were dismissed from
service on the ground of acts inimical to the Company’s interest. Grepalife contends
that Rodrigo and Ernesto are agents, not employees, of the company by alleging that
they were hired under agency agreements, that they were not among the company’s
“organic personnel” who handled technical and administrative functions of the
company. That they were paid on the basis of production/output (by way of
commissions and bonuses, and not salaries), and that they were neither under any form
of control whatsoever as to hours of work nor were they “on call” by the company and
therefore, necessarily, it is the Civil Code and the Insurance Code which properly
govern the relationship, to the exclusion of the Labor Code.

Issue:

Whether the relationships of the Ruiz brothers and Grepalife were those of employer-
employee.

Held:

Yes. Article 280 of the Labor Code provides that “[t]he provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreements 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. . . .” Furthermore, in determining who is considered an
“employee”, the Court has time and again applied the “four-fold” test,** with control
being the most crucial and determinative indicator of an employer-employee
relationship. The “employer” must have control (or must have reserved the right to
control) not only over the result of the “employee’s” work but also the means and
methods by which it is to be accomplished

First, their work at the time of their dismissal as zone supervisor and district manager
are necessary and desirable to the usual business of the insurance company. They were
entrusted with supervisory, sales and other functions to guard Grepalife’s business
interests and to bring in more clients to the company, and even with administrative
functions to ensure that all collections, reports and data are faithfully brought to the
company. Furthermore, it cannot be gainsaid that Grepalife had control over private
respondents’ performance as well as the result of their efforts. A cursory reading of
their respective functions as enumerated in their contracts reveals that the company
practically dictates the manner by which their jobs are to be carried out.

The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose
claim for unpaid commissions should have been litigated in an ordinary civil action.
The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being
without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter’s
decision. This conclusion renders it unnecessary and premature to consider Basiao’s
claim for commissions on its merits.

COSMOPOLITAN VS. MAALAT AND NLRC

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

Facts: Petitioner Cosmopolitan Funeral Homes, Inc. engaged the services of private
respondent Noli Maalat as a “supervisor” to handle the solicitation of mortuary
arrangements, sales and collections. The funeral services which he sold refer to the
taking of the corpse, embalming, casketing, viewing and delivery. The private
respondent was paid on a commission basis of 3.5% of the amounts actually collected
and remitted.

On January 15, 1987, respondent Maalat was dismissed by the petitioner for
commission of the numerous violations despite previous warnings. Maalat then filed a
complaint for illegal dismissal and non-payment of commissions. On the basis of the
parties’ position papers, 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 in the total amount of P205,571.52.

In an appeal from the decision, the NLRC, on May 31, 1988, reversed the Arbiter’s
action and rendered a new decision, declaring the dismissal of complainant Noli Maalat
by respondent-appellant as justified and with lawful cause and hereby order and direct
respondent to pay complainant Maalat his separation pay equivalent to one-half (1/2%)
month average income for every year of service to appellant. Finally, this case is
remanded to the Regional Arbitration Branch of origin for further proceedings. The
petitioner’s motion for reconsideration was denied, hence, this petition for review
before this Court.

Issue: Whether or not the private respondent is an employee or a commission agent.

Held: The private respondent is an employee of the petioner. The Court ruled that there
exists an employment relationship between the parties. 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 in which the petitioner has failed to overcome.

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 actually exercised its control over the private
respondent. In other words, Maalat worked exclusively for the petitioner. Moreover, the
private respondent was prohibited from engaging in part-time embalming business
outside of the company and a violation thereof was cause for dismissal. Incurring
absences without leave was likewise subject to disciplinary action. The petitioner
admits that these prohibitive rules bound the private respondent but states that these
rules have no bearing on the means and methods ordinarily required of a supervisor.
The overall picture is one of employment.

Worthy of note too are two other company rules which provide that “negotiation and
making of contract with customers shall be done inside the office” and “signing of
contract should be made immediately before the cadaver or deceased is place in the
casket.” Said rules belie the petitioner’s stand that it does not have control over the
means and methods by which the work is accomplished. The control test has been
satisfied.
MARTINEZ VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 117495; May 29, 1997

Facts:

Raul Martinez was an operator of two taxicab units under business name PAMATX and
another two units under business name TIGERTX. Private respondents worked for him
as drivers. When Martinez died, he left behind his mother, Nelly Martinez as his sole
heir.

On 14 July 1992, private respondents lodged a complaint against Raul and Nelly before
the labor arbiter for violation of PD 851 and illegal dismissal. They alleged that they
have been regular drivers of Raul earning 400 a day, not once during their employment
that they received 13th month pay. When Nelly assumed the management of the units,
she informed the drivers that she will sell the units for she can't manage it, but later did
not proceed with her plan and assigned the units to other drivers instead.

Nelly traversed that the 13th month pay was personal to Raul and therefore didn't
survive the death of Raul. Nelly contend 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 of lessee-lessor.

Issue: Whether there exist an employer-employee relationship between a jeepney

owners/operators and jeepney drivers under the boundary system.

Held: Yes, there exist an employer-employee relationship. As early as 3 March 1956, in

National Labor Union v. Dinglasan, this Court ruled that the relationship between
jeepney owners/operators on one hand and jeepney drivers on the other under the
boundary system is that of employer-employee and not of lessor-lessee. Therein we
explained that in the lease of chattels the lessor loses complete control over the chattel
leased although the lessee cannot be reckless in the use thereof, otherwise he would be
responsible for the damages to the lessor. In the case of jeepney owners/operators and
jeepney drivers, the former exercise supervision and control over the latter. The fact that
the drivers do not receive fixed wages but get only that in excess of the so-called
“boundary” they pay to the owner/operator is not sufficient to withdraw the
relationship between them from that of employer and employee. The doctrine is
applicable by analogy to the present case.

Thus, private respondents were employees of Raul Martinez because they had been
engaged to perform activities which w ere usually necessary or desirable in the usual
business or trade of the employer.10 The records show that private respondents had
been employed since 20 October 1989 except for Ogana, the Delvos, Albao and Colibao
who were employed on later dates.

EASTERN SHIPPING LINES, INC., vs. POEA, MINISTER OF LABOR AND

EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO,
G.R. No. 76633; October 18, 1988

Facts:

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

Issue: Whether or not the POEA had jurisdiction over the case as the husband was not
an overseas worker

Held: The POEA had jurisdiction over the case as the husband was an overseas worker.
The Court ruled that there is no reason to disturb the factual finding of the POEA that
Vitaliano Saco was an overseas employee of the petitioner at the time he met with the
fatal accident in Japan in 1985.

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment
is defined as "employment of a worker outside the Philippines, including employment
on board vessels plying international waters, covered by a valid contract. 3 A contract
worker is described as "any person working or who has worked overseas under a valid
employment contract and shall include seamen" 4 or "any person working overseas or
who has been employed by another which may be a local employer, foreign employer,
principal or partner under a valid employment contract and shall include seamen." 5
These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while
under a contract of employment with the petitioner and alongside the petitioner's
vessel, the M/V Eastern Polaris, while berthed in a foreign country.

It is worth observing that the petitioner performed at least two acts which constitute
implied or tacit recognition of the nature of Saco's employment at the time of his death
in 1985. The first is its submission of its shipping articles to the POEA for processing,
formalization and approval in the exercise of its regulatory power over overseas
employment under Executive Order NO. 797. 7 The second is its payment 8 of the
contributions mandated by law and regulations to the Welfare Fund for Overseas
Workers, which was created by P.D. No. 1694 "for the purpose of providing social and
welfare services to Filipino overseas workers."

Significantly, the office administering this fund, in the receipt it prepared for the private
respondent's signature, described the subject of the burial benefits as "overseas contract
worker Vitaliano Saco." 9 While this receipt is certainly not controlling, it does indicate,
in the light of the petitioner's own previous acts, that the petitioner and the Fund to
which it had made contributions considered Saco to be an overseas employee.

Hence, Saco was an overseas employee and POEA had jurisdiction over the case.
UNION OF FILIPINO EMPLOYEES VS VIVAR, JR.
G.R. No. 79255, January 20, 1992

Facts:

Filipro Inc. (now Nestle Philippines, Inc.) had excluded sales personnel from the
holiday pay award and changed the divisor in the computation of benefits from 251 to
261 days. Both Filipro and the Union of Filipro Employees submitted the case for
voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary
arbitrator.

In his decision, Vivar directed Filipro to pay its monthly paid employees holiday pay
pursuant to Article 94 of the Code, subject only to the exclusions and limitations
specified in Article 82 and such other legal restrictions as are provided for in the Code.
Issue:

Whether or not Respondent’s sales personnel are entitled to holiday pay.

Held:

No. Under Article 82 of the Labor Code, field personnel are not entitled to holiday pay.
Said article defines field personnel as non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty.

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

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume
based on sales target; (2) good collection performance; (3) proper compliance with good
market hygiene; (4) good merchandising work; (5)minimal market returns and (6)
proper truck maintenance.

The above criteria indicate that these sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not by the actual hours of field
work which are hardly susceptible to determination

CAGAMPAN vs. NLRC & ACE MARITIME AGENCIES, INC

G.R. Nos. 85122-24, March 22, 1991

Facts:

On April 17 and 18, 1985, petitioners, all seamen, entered into separate contracts of
employment with the Golden Light Ocean Transport, Ltd., through its local agency,
private respondent ACE MARITIME AGENCIES, INC. They were deployed on May 7,
1985, and discharged on July 12, 1986.

Thereafter, petitioners collectively and/or individually filed complaints for non-

payment of overtime pay, vacation pay and terminal pay against private respondent.
The latter was furnished with copies of petitioners' complaints and summons, but it
failed to file its answer within the reglementary period. Thus, an Order was issued
declaring that private respondent has waived its right to present evidence in its behalf
and that the cases are submitted for decision.
On August 5, 1987, the Philippine Overseas Employment Administration (POEA)
rendered a Decision DISMISSING petitioners' claim for terminal pay but GRANTED
their prayer for leave pay and overtime pay. Private respondent appealed from the
POEA's Decision to the NLRC. The NLRC reversed and set aside the decision.
Petitioners then filed an Urgent Motion for Reconsideration but the same was denied by
the NLRC for lack of merit.

Issue:

Whether or not the petitioner seamen are entitled to overtime pay.

Held:

The contract provision guarantees the right to overtime pay but the entitlement to such
benefit must first be established. Realistically speaking, a seaman, by the very nature of
his job, stays on board a ship or vessel beyond the regular eight-hour work schedule.
For the employer to give him overtime pay for the extra hours when he might be
sleeping or attending to his personal chores or even just lulling away his time would be
extremely unfair and unreasonable.

Seamen are required to stay on board their vessels by the very nature of their duties,
and it is for this reason that, in addition to their regular compensation, they are given
free living quarters and subsistence allowances when required to be on board. It could
not have been the purpose of our law to require their employers to pay them overtime
even when they are not actually working; otherwise, every sailor on board a vessel
would be entitled to overtime for sixteen hours each day, even if he spent all those
hours resting or sleeping in his bunk, after his regular tour of duty.

The correct criterion in determining whether or not seamen are entitled to overtime pay
is not, therefore, whether they were on board and can not leave the ship beyond the
regular 8-working hours a day, but whether they actually rendered service in excess of
said number of hours.

STOLT-NIELSEN MARINE SERVICE VS NLRC

G.R. No. 105396. November 19, 1996

Facts: On December 09, 1988, private respondent boarded the Stolt Crown vessel.
Captain Erkiaga, a Spanish national, instantly ordered him to perform work connected
with the berthing and unberthing maneuvers on the upper deck of the ship. He
followed the captain’s order despite his contract that called for a different assignment.
On January 29, 1989, a Sunday and his scheduled rest day, private respondent was
ordered to clean the deck cargo tank using “toline” chemical, a toxic substance
detrimental to the respiratory system. He was not provided with a protective mask. The
risk to his health notwithstanding, he again followed Captain Erkiaga’s order. He
worked for seventeen (17) hours from 5:00 that morning until 10:00 in the evening. Due
to his exposure to the pungent chemical, he suffered from chest pains and dizziness. On
February 01, 1989, he was unable to report for work but he informed First Engineer Juan
J. Ruiz about his physical condition. Ruiz, unfortunately, neither mentioned the matter
to Captain Erkiaga nor summoned the vessel’s resident physician to attend to him.
Captain Erkiaga interpreted private respondent’s failure to work to be an act of
disobedience and immediately ordered him, along with some other seamen, to report
on deck “within five minutes” to clean up the deck cargo tank. Despite his illness,
private respondent tried to reach the deck on time but he was unable to make it. On
February 07, 1989, he was repatriated to the Philippines. Upon arrival in Manila two
days later, he went to the manning agent’s physician who found him to be suffering
from bronchitis. He made a written report on the circumstances of his case, furnishing
with a copy thereof the manning agent's Capt. Maximiano Hernandez. The latter
confirmed the termination of private respondent’s employment. On 13 March 1989, he
went to the bank to get his salary for the months of January and February 1989. He
learned that his salary allotments were not remitted by petitioners. He then filed with
the POEA a complaint for illegal dismissal and contract substitution. POEA ruled in his
favor which was affirmed by NLRC.

Issue: Whether or not private respondent was illegally dismissed.

Held: Yes. Willful disobedience of the employer’s lawful order envisages the
concurrence of at least two requisites: (a) The employee’s assailed conduct must have
been intentional and characterized by a “wrongful and perverse attitude;” and (b) the
order violated must have been reasonable, lawful, and made known to the employee
and should pertain to the duties which he has been engaged to discharge. It is possible
that private respondent may have indeed shown some reluctance to the captain’s order;
nevertheless, he ultimately did comply with the orders of the captain. Not the least
insignificant is that the Captain’s assignments have not been the contractually assigned
tasks of private respondent. Providing assistance to other members of the crew in their
jobs on board a vessel when needed or required is violative neither of labor laws nor of
the employment contract except when such assistance becomes regularly imposed, or
when it is used to coerce, compel, or force the crew members to perform jobs other than
what have been contracted for. Even when an employee is found to have transgressed
the employer’s rules, in the actual imposition of penalties upon the erring employee,
due consideration must still be given to his length of service and the number of
violations committed during his employ. The penalty must in no case be unduly harsh
and grossly disproportionate. The employer must furnish the worker with two (2)
written notices before termination of employment can be legally effected: (a) notice
which apprises the employee of the particular acts or omissions for which his dismissal
is sought, and (b) the subsequent notice which informs the employee of the employer’s
decision to dismiss him.
TEOFILO ARICA vs. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 78210 February 28, 1989

Facts: This case stemmed from a complaint filed against private respondent Stanfilco for
assembly time, moral damages and attorney's fees with the Regional Arbitration Branch
No. XI, Davao City. After the submission by the parties of their respective position
papers, Labor Arbiter Pedro C. Ramos rendered a decision in favor of private
respondent STANFILCO, holding that “the thirty-minute assembly time long practiced
cannot be considered waiting time or work time and, therefore, not compensable.”

After considering the appeal memorandum of complainant and the opposition of

respondents, the First Division of public respondent NLRC upholds the Labor Arbiters'
decision.

Petitioners filed a Motion for Reconsideration which was opposed by private

respondent. The public respondent NLRC denied the Motion for Reconsideration.

Issue: Whether or not the 30-minute activity of the petitioners before the scheduled
working time is compensable under the Labor Code?
Ruling: No, the 30-minute activity of the petitioners before the scheduled working time
is not compensable under the Labor Code. The thirty (30)-minute assembly 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. Furthermore, the thirty (30)-minute assembly is a
deeply- rooted, routinary practice of the employees, and the proceedings attendant
thereto are not infected with complexities as to deprive the workers the time to attend
to other personal pursuits. They are not new employees as to require the company to
deliver long briefings regarding their respective work assignments. Their houses are
situated right on the area where the farm are located, such that after the roll call, which
does not necessarily require the personal presence, they can go back to their houses to
attend to some chores. In short, they are not subject to the absolute control of the
company during this period, otherwise, their failure to report in the assembly time
would justify the company to impose disciplinary measures. The CBA does not contain
any provision to this effect; the record is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time
was not primarily intended for the interests of the employer, but ultimately for the
employees to indicate their availability or non-availability for work during every
working day.

NAWASA vs. NWSA CONSOLIDATED UNIONS, ET AL.

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 and granted the
claims of the union.

Issues: 1. Whether or not NAWASA is a public utility and, therefore, exempted from
paying additional compensation for work on Sundays and legal holidays.
2. Whether or not the intervenors are "managerial employees" within the
meaning of Republic Act 2377 and, therefore, not entitled to the benefits of
Commonwealth Act No. 444.

Held: 1. Yes, NAWASA is a public utility because its primary function is to construct,
maintain and operate water reservoirs and waterworks for the purpose of supplying
water to the inhabitants, as well as consolidate and centralize all water supplies and
drainage systems in the Philippines. A public utility is exempt from paying additional
compensation for work on Sundays and legal holidays conformably to Section 4 of
Commonwealth Act No. 444. However, by virtue of the contractual obligation
NAWASA has with the respondent unions, it has obligated itself for the payment of
additional compensation.
2. No. One of the distinguishing characteristics managerial employee may be
known as expressed in the explanatory note of Republic Act No. 2377 is that he is not
subject to the rigid observance of regular office hours. The true worth of his service does
not depend so much on the time he spends in office but more on the results he
accomplishes. In fact, he is free to go out of office anytime. The philosophy behind the
exemption of managerial employees from the 8-Hour Labor Law is that such workers
are not usually employed for every hour of work but their compensation is determined
considering their special training, experience or knowledge which requires the exercise
of discretion and independent judgment, or perform work related to management
policies or general business operations along specialized or technical lines. For these
workers it is not feasible to provide a fixed hourly rate of pay or maximum hours of
labor. In this case, the functions, duties and responsibilities of the intervenors do not
bear any direct relation with the management of the NAWASA, nor do they participate
in the formulation neither of its policies nor in the hiring and firing of its employees.
Moreover, they are required to observe working hours and record their time work and
are not free to come and go to their offices, or move about at their own discretion.

BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC vs.

PHILIPPINE REFINING CO., INC.
G.R. No. L-27761-September 30, 1981

Facts:
On April 15,1966, the Bisig ng Manggagawa ng Philippine Refining Company, Inc., as
the representative union of the rank and file employees of the Philippine Refining Co.,
Inc., filed with the Court of First Instance of Manila a petition for declaratory relief
praying, among 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 or not the phrase "regular base pay" as used in the above-quoted
provision of the 1965 CBA includes Christmas bonus and other fringe benefits?

Held:
NO. The phrase "regular base pay" is clear, unequivocal and requires no interpretation.
It means regular basic pay and necessarily excludes money received in different
concepts such as Christmas bonus and other fringe benefits. In this connection it is
necessary to remember that in the enforcement of previous collective bargaining
agreements containing the same provision of overtime pay at the rate of regular base
pay plus 50@'c thereof", the overtime compensation was invariably based only on the
regular basic pay, exclusive of Christmas bonus and other tinge benefits. Appellant
union knew all the while of such interpretation and precisely attempted to negotiate for
a provision in the subject collective bargaining agreement that would include the
Christmas bonus and other fringe benefits in the computation of the overtime pay.
Significantly, the appellee company did not agree to change the phrase "regular base
pay" as it could not consent to the inclusion of the fringe benefits in the computation of
the overtime pay. Hence, the appellant union could not question the intended definition
of the phrase but could only claim that the same violated the Nawasa doctrine and
insist that the phrase should be redefined to conform to said doctrine. In the case at bar,
it is admitted that the contractual formula of "regular base pay plus 50% thereof" yields
an overtime compensation which is higher than the result in applying the statutory
formula as elaborated in the Nawasa case. Consequently, its validity is upheld and the
parties are enjoined to accord due respect to it. Decision appealed from is hereby
affirmed in all respects.

SHELL OIL WORKERS' UNION vs.

SHELL COMPANY OF THE PHILIPPINES, LTD., AND THE COURT OF
INDUSTRIAL RELATIONS, G.R. No. L-28607, February 12, 1972

Facts: Respondent, Shell Company of the Philippines (COMPANY) dissolved its

security guard section stationed at its Pandacan Installation, notwithstanding its (guard
section) continuance and that such is assured by an existing collective bargaining
contract. The respondent company transferred 18 security guards to its other
department and consequently hired a private security agency to undertake the work of
said security guards. This resulted in a strike called by petitioner Shell Oil Workers’
Union (UNION), The President certified it to respondent Court of Industrial Relations
(CIR). CIR declared the strike illegal on the ground that such dissolution was a valid
exercise of a management prerogative. Thus, this appeal is taken.

Petitioner argued that the 18 security guards affected are part of the bargaining unit and
covered by the existing collective bargaining contract, as such, their transfers and
eventual dismissals are illegal being done in violation of the existing contract. The
Company maintained that in contracting out the security service and redeploying the 18
security guards affected, it was merely performing its legitimate prerogative to adopt
the most efficient and economical method of operation, that said action was motivated
by business consideration in line with past established practice and made after notice to
and discussion with the Union, that the 18 guards concerned were dismissed for
willfully refusing to obey the transfer order, and that the strike staged by the Union is
illegal.

Issue: Whether the existing collective bargaining contract on maintaining security

guard section, among others, constitute a bar to the decision of the management to
contract out security guards.

Held: Yes. The strike was legal because there was a violation of the collective
bargaining agreement by Company. It was part of the CBA that the Security Guard
Section will remain. Yet, the Company did not comply with the stipulation in CBA. It
was thus an assurance of security of tenure, at least, during the lifetime of the
agreement. For what is involved is the integrity of the agreement reached, the terms of
which should be binding on both parties.

The right to self-organization guarded by the Industrial Peace Act explicitly includes
the right “to engage in concerted activities for the purpose of collective bargaining and
to the mutual aid or protection.” The employee, tenant or laborer is inhibited from
striking or walking out of his employment only when so enjoined by the CIR and after a
dispute has been submitted thereto and pending award or decision by the court of such
dispute.

In the present case, the employees or laborers may strike before being ordered not to do
so and before an industrial dispute is submitted to the CIR, subject to the power of the
latter, after hearing when public interest so requires or when the dispute cannot, in its
opinion, be promptly decided or settled, to order them to return to work, with the
consequence that if the strikers fail to return to work, when so ordered, the court may
authorize the employer to accept other employees or laborers.” Thus, a strike may not
be staged only when, during the pendency of an industrial dispute, the CIR has issued
the proper injunction against the laborers (section 19, Commonwealth Act No. 103, as
amended).

PHILIPPINE NATIONAL BANK vs.

PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) and
COURT OF INDUSTRIAL RELATIONS
G.R. 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.”

Hence this petition.

Issue: Should the cost of living allowance and longevity pay granted by the employer
be included in the computation of overtime pay?

Held: No. Overtime pay is for extra effort beyond that contemplated in the employment
contract; additional pay given for any other purpose cannot be included in the basis for
the computation of overtime pay. 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).Courts cannot make contracts for
the parties themselves. Commonwealth Act 444 prescribes that overtime work shall be
paid 'at the same rate as their regular wages or salary, plus at least twenty-five per
centum additional' (Secs. 4 & 5). The law did not define what is a 'regular wage or
salary'. What the law emphasized by way of repeated expression is that in addition to
'regular wage', there must be paid an additional 25% of that 'regular wage' to constitute
overtime rate of pay. The parties were thus allowed to agree on what shag be mutually
considered regular pay from or upon which a 25% premium shall be based and added
to make up overtime compensation. This the parties did by agreeing and accepting for a
very long period to a basic hourly rate to which a premium shall be added for purposes
of over time. Also significant is the fact that Commonwealth Act 444 merely sets a
minimum, a least premium rate for purposes of overtime. In this case, the parties
agreed to premium rates four (4) or even six (6) times than that fixed by the Act. Far
from being against the law, therefore, the agreement provided for rates 'commensurate
with the Company's reputation of being among the leading employers in the
Philippines' (Art. 1, Sec. 2, Coll. Barg. Agreement) at the same time that the Company is
maintained in a competitive position in the market Coll. Barg. Agreement, lbid).

PHILIPPINE DUPLICATORS, INC. vs.

NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE
DUPLICATORS EMPLOYEES UNION-TUPAS
G.R. No. 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.

The Labor Arbiter directed Petitioner Duplicators to pay 13th month pay to private
respondent employees computed on the basis of their fixed wages plus sales
commission.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 (Revised
Guidelines Implementing 13th Month Pay) provides that overtime pay, earning and
other remuneration which are not part of the basic salary shall not be included in the
computation of the 13th month pay.
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 or not 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 commissions which are an integral part of the basic salary structure of
the Philippine Duplicators 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.

SHELL CO OF THE PHIL v. NATIONAL LABOR UNION

81 Phil 315, July 26, 1948

Facts: A complaint was filed by National Labor Union against petitioner Shell Company
praying for the grant of additional compensation of 50% on their regular wages.

The Industrial Relations Court issued a decision ordering Shell Company of the
Philippine Islands to pay their workers who work at night an additional compensation
of 50% on their regular wages if they work during the day. There is a need of night
service since most flights take off at night which explains necessity for nightwork to
supply gasoline and lubricants.

Issue: Whether or not the Court of Industrial Relations is right in consider the day at
night as a full day's work; consequently to provide and arrange to be remunerated with
50% more than regular wages daytime

Held: Yes. If the Court of Industrial Relations has, in cases of dispute, the power to set
wages it deems fair and reasonable for the work day, there is no reason why it must not
have the same power over wages night; so work is the one and the other. And as
appreciation wing that night work is heavier and cumbersome than the day and
therefore deserve higher pay, there is no reason to revoke or alter.
There is no possible argument against universal fact that regular, normal,
ordinary work is the day, and night work is very exceptional and justified only by
certain unavoidable imperative reasons. For something humanity has working as usual
of day.

Reasons of hygiene, medicine, morality, culture, sociology, establish together the work
of employee has many drawbacks, as there is no choice but to do so is only fair to
remunerated better than usual to compensate certain wage the workers' point of such
drawbacks.

The Court said that while there was no law actually requiring payment of additional
compensation for night work, the industrial court has the power to determine the wages
that night workers should receive under Commonwealth Act No. 103, and so it justified
the additional compensation given to night workers by the industrial court in the Shell
case for "hygienic, medical, moral, cultural and sociological reasons." Therefore cannot
be invoked as an authority for concluding that one who does night work cannot be paid
additional compensation for the same work as overtime. One is paid for his work done
during the night and the other is paid because it is in excess of the regular eight-hour
work he may be legally required to do. One is done for reasons of health and the other
because of and express mandate of the law (Commonwealth Act No. 444).

NARIC v. Workers Union

105 Phil 891, May 29, 1959

Facts: Upon motion of the union, the industrial court issued an order directing its chief
examiner or any of his assistants, to compute the additional compensation for night
work granted in the decision covering the period from October 3, 1952 to February 16,
1953. The report submitted by chief examiner shows that there are 163 workers and
employees of the corporation who have rendered night work from October 3, 1952 to
February 16, 1953 and the 25 per cent additional compensation of said workers and
employees computed on the basis of their respective monthly salaries amounted to
P5,221.84. The report considered any and all work performed between 6:00 o’clock in
the afternoon and 6:00 o’clock in the morning as "night work" and accordingly has
awarded each employee or worker and additional compensation of 25 per cent for
"night work." It further stated that if a particular employee worked from 8:00 o’clock in
the morning to 5:00 o’clock in the afternoon and then rendered overtime service from
5:00 o’clock in the afternoon of the same day to 7:00 o’clock in the evening of the same
day, he considered the work from 5:00 to 6:00 p.m. as overtime work and entitled to 25
per cent additional compensation as overtime work, and the same work from 6:00 to
7:00 p.m. as both overtime work and night work and therefore entitled to 25 per cent
additional compensation as night work.

Issue: Should the employee performing his regular eight hours work during the
daytime be paid for his services from 5:00 o’clock to 9:00 o’clock in the afternoon as
’overtime work’ and at the same time be paid from 6:00 o’clock to 9:00 o’clock in the
evening as night work?"

Held: Yes. Night work is any and all work rendered between 6:00 o’clock in the
afternoon and 6:00 o’clock in the morning, and consequently, if a certain employee
performs his regular eight hours up to 5:00 o’clock in the afternoon and renders
overtime from 5:00 p.m. to 9:00 p. m. of the same day, the said employee is entitled to
an additional compensation for overtime services from 5:00 p.m. to 9:00 p.m. and at the
same time to additional compensation for "nightwork" from 6:00 p.m. for the very same
work. One who does night work can also be paid additional compensation for the same
work as overtime. One is paid because it is in excess of the regular eight-hour work he
may be legally required to do. One is done for reasons of health and the other because
of an express mandate of the law (Commonwealth Act No. 441).

Work done at night should be paid more than work done by the chief examiner.
Respondent court is there workers regular hour of duty, he should also be paid
additional compensation for overtime work. This is what was done by the chief
examiner. Respondent court is therefore justified in affirming his report.

JOSE RIZAL COLLEGE v. NLRC

156 SCRA 27 December 1, 1987

Facts: Petitioner is a non-stock, non-profit educational institution duly organized and

existing under the laws of the Philippines. Private respondent National Alliance of
Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of Jose
Rizal College filed a complaint against the college for said alleged non-payment of
holiday pay from 1975 to 1977.

Labor Arbiter rendered a decision that the faculty and personnel of the respondent who
are paid their salary by the month uniformly in a school year, irrespective of the
number of working days in a month, without deduction for holidays, are presumed to
be already paid the 10 paid legal holidays and are no longer entitled to separate
payment for the said regular holidays. The personnel of the respondent Jose Rizal
College who are paid their wages daily are entitled to be paid the 10 unworked regular
holidays according to the pertinent provisions of the Rules and Regulations
Implementing the Labor Code. The Collegiate faculty of the respondent Jose Rizal
College who by contract are paid compensation per student contract hour are not
entitled to unworked regular holiday pay considering that these regular holidays have
been excluded in the programming of the student contact hours.

NLRC modified the decision appealed therefrom rendering that personnel paid by the
hour are entitled to holiday pay.
Issue: Whether or not the school faculty who according to their contracts are paid per
lecture hour are entitled to unworked holiday pay

Held: No. The provisions in the Labor Code as to holiday pay do not apply in this case.

The Implementing Rules and Regulations, Rule IV, Book III is not justified by the
provisions of the law which after all is silent with respect to faculty members paid by
the hour. Regular holidays specified as such by law are known to both school and
faculty members as no class days. Certainly, the latter do not expect payment for said
unworked days, and this was clearly in their minds when they entered into the teaching
contracts.

SAMAHANG MANGGAGAWA SA BANDOLINO VS. NLRC, 275 SCRA 633

Facts: This is a petition for certiorari to set aside the decision of the National Labor
Relations Commission (NLRC), dated May 31, 1995, which reversed the decision of the
labor arbiter, dated July 22, 1992, finding petitioners to have been illegally dismissed
and consequently ordering their reinstatement and the payment to them of their
monetary claims.

On August 22, 1990, they filed a complaint for illegal dismissal, unfair labor practice,
underpayment, overtime pay, and holiday pay. At the initial conference, the labor
arbiter issued a return to work order to the private respondents based on the private
respondents claim that they had not dismissed petitioners. But petitioners were not
allowed to work by private respondents.

On July 22, 1992, the Labor Arbiter, Potenciao S. Caizares, Jr., concluded that private
respondents were guilty of unfair labor practice for having restrained the petitioners
exercise of the right to self-organization. Thus, ordering the respondents to reinstate the
complainants in their previous jobs and to pay them backwages for one (1) year
without qualifications or deductions for earning elsewhere during their illegal
dismissal and to pay the complainants salary differential and legal holiday pay.

Private respondents appealed to the NLRC, and in its decision dated May
31, 1995, the NLRC reversed the labor arbiter. It ruled that except for Jaime Sibug,
petitioners were all piece-rate workers entitled only to 13th month pay for three years.
Issue: Whether or not the petitioners are entitled to salary differentials, as found by the
labor arbiter, and to 13th-month pay.

Held: Petitioners do not dispute the NLRCs finding that, except for Jaime Sibug, the rest
of petitioners are piece-rate workers. Consequently, all petitioners are entitled to
minimum wage and 13th- month pay, but only Jaime Sibug is entitled to an additional
award of holiday pay. All of the petitioners are entitled to salary differentials, as found
by the labor arbiter, and to 13th-month pay, as ruled by the NLRC. Pursuant to Art. 279
of the Labor Code, as amended by Republic Act No. 6715, and our ruling in
Bustamante v. National Labor Relations Commission, the petitioners are entitled to full
back wages from the time their compensation was withheld up to the time of their
actual reinstatement or, where reinstatement is no longer possible, to full back wages
up to the time of finality of this decision.

WHEREFORE, in view of the foregoing, the decision of the NLRC dated May 31, 1995
is set aside and the decision of the labor arbiter dated July 22, 1992 is reinstated, with
the modification that only Jaime Sibug should be given holiday pay, while all
petitioners should be given 13th-month pay and full back wages.

UNION OF FILIPINO EMPLOYEES VS. VIVAR, 205 SCRA 200

Facts: This labor dispute stems from the exclusion of sales personnel from the holiday
pay award and the change of the divisor in the computation of benefits from 251 to
261days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) Wled with
the National Labor Relations Commission (NLRC) a petition for declaratory relief
seeking a ruling on its rights and obligations respecting claims of its monthly paid
employees for holiday pay in the light of the Court's decision in Chartered Bank
Employees Association v. Ople (138 SCRA 273 [1985]). Both Filipro and the Union of
Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and
appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Filipro filed a motion
for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of
salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the
holiday pay, and (3) deduction from the holiday pay award of overpayment for
overtime, night differential, vacation and sick leave benefits due to the use of 251
divisor. (Rollo, pp. 138-145) Petitioner UFE answered that the award should be made
elective from the date of effectivity of the Labor Code, that their sales personnel are not
Weld personnel and are therefore entitled to holiday pay, and that the use of 251
as divisor is an established employee benefit which cannot be diminished.

Issue: Whether or not the respondent's sales personnel are not Weld personnel under
Article 82 of the Labor Code?
Held: The criteria for granting incentive bonus are: (1) attaining or exceeding sales
volume based on sales target; (2) good collection performance; (3) proper compliance
with good market hygiene; (4) good merchandising work; (5) minimal market returns;
and (6) proper truck maintenance. (Rollo, p. 190). The Court thereby resolves that the
grant of holiday pay be effective, not from the date of promulgation of the Chartered
Bank case nor from the date of effectivity of the Labor Code, but from October 23,
1984, the date of promulgation of the IBAA case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor
to be used in computing holiday pay shall be 251 days. The holiday pay as above
directed shall be computed from October 23, 1984. In all other respects, the order of the
respondent arbitrator is hereby AFFIRMED.

OSIAS ACADEMY VS. DOLE, 191 SCRA 612

Facts:

The award by the respondent Minister of Labor 1 of separation pay, on grounds of

equity, to two employees 2 of petitioner Osias Academy despite the avowedly correct
grant of clearance to it to terminate the services of said employees on the ground of
loss of confidence based on a satisfactory showing of embezzlement of company
funds, serious misconduct, etc., is challenged in the special civil action of certiorari at
bar.

Issue: Whether or not the grant of separation pay by respondent Minister of Labor is
justified.

Held: The grant was unjustifiable. We hold that henceforth separation pay shall be
allowed as a measure of social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct or those rejecting on his
moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations
with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called,
on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely
that he will commit a similar offense in his next employment because he thinks he can
expect a little leniency if he is again found out. Those who invoke social justice may do
so only if their hands are clean and their motives blameless and not simply because they
happen to be poor. This great policy of our Constitution is not meant for the protection
of those who have proved they are not worthy of it, like the workers who have tainted
the cause of labor with the blemishes of their own character.

In light of the foregoing propositions, it is evident that the grant of separation pay to the
private respondents is unjustified, they having been dismissed for causes rejecting on
their moral character.

WHEREFORE, the order of respondent Minister of Labor dated January 16, 1987,
upholding the grant by the Regional Director to petitioner Academy of clearance to
terminate the services of the respondent spouses, is AFFIRMED except for the grant of
separation pay to the latter which is hereby DISALLOWED.

DENTECH MANUFACTURING CORP. VS. NLRC, 172 SCRA 588

Facts: On June 26, 1985, the private respondents filed a Complaint with the arbitration
branch of the respondent National Labor Relations Commission (NLRC) against the
petitioners for, among others, illegal dismissal and violation of Presidential Decree No.
851. Private respondent sought their reinstatement as well as the payment of their 13th
month pay and service incentive leave pay, and separation pay in the event that they
are not reinstated. It is alleged in the Complaint and Position Paper accompanying the
same that they were dismissed from the firm for pursuing union activities.

The petitioners also argued that the private respondents are not entitled to a 13th
month pay. They maintained that each of the private respondents receive a total
monthly compensation of more that Pl,000.00 and that under Section 1 of Presidential
Decree No. 851, such employees are not entitled to receive a 13th month pay. The
petitioners likewise alleged that the company is in bad financial shape and that
pursuant to Section 3 of the Decree, the firm is exempted from complying with the
provisions of the Decree.

Issue: Whether or not the private respondents are entitled as a matter of right to a 13th
month pay.

Held: Presidential Decree No. 851 was signed into law in 1975 by then President
Ferdinand Marcos. Under the original provisions of Section 1 thereof, all employers are
required to pay all their employees receiving a basic salary of not more than Pl,000.00
a month, regardless of the nature of their employment, a 13th month pay not later
than December 24 of every year. Under Section 3 of the rules and regulations
implementing said Presidential Decree financially distressed employers, ie., those
currently incurring substantial losses, are not covered by the Decree. Section 7 thereof
requires, however, that such distressed employers must obtain the prior authorization
of the Secretary of Labor and Employment before they may qualify for such exemption.
On May 1, 1978, Presidential Decree No. 1364 was signed into law. The Decree enjoined
the Department of Labor and Employment to stop accepting applications for exemption
under, inter alia, Presidential Decree No. 851.

On August 13, 1986, President Corazon C. Aquino issued Memorandum Order No.28
which office Section 1 of Presidential Decree No. 851. The said issuance eliminated the
Pl,000.00 salary ceiling. From the foregoing, it clearly appears that the petitioners have
no basis to claim that the company is exempted from complying with the pertinent
provisions of the law relating to the payment of 13th month compensation.

The Pl,000.00 salary ceiling provided in Presidential Decree No. 851 pertains to basic
salary, not total monthly compensation. The petitioners admit that the private
respondents work only five days a week and that they each receive a basic daily wage
of P40.00 only. A simple computation of the basic daily wage multiplied by the number
of working days in a month results in an amount of less than Pl,000.00. Thus, there is no
basis for the contention that the company is exempted from the provision of
Presidential Decree No. 851 which mandated the payment of 13th month compensation
to employees receiving less than P1,000.00 a month.

The instant Petition is DISMISSED for lack of merit.

Leiden Fernandez vs. NLRC, Jan. 28, 1998

Facts: The instant case stemmed from a consolidated complaint against private
respondents Agencia Cebuana-H. Lhuillier and/or Margueritte Lhuillier (Lhuillier)
for illegal dismissal (Rec., pp. 56-58). The Agencia Cebuana is a sole proprietorship
operated by Margueritte Lhuillier. This is a petition for certiorari under Rule 65 of the
Rules of Court assailing the March 11, 1992 Decision of Respondent National Labor
Relations Commission (NLRC) decision:

The judgment is rendered in favor of the complainants and against the respondent. The
respondent is hereby ordered: To reinstate the complainants to their respective
position [sic] at the Agencia Cebuana with full back wages without qualification; if
reinstatement is not feasible, for one reason or another, to pay to the complainants their
respective separation pay, service incentive leave pay with full back wages without
qualification

Issue: Whether or not there is a limit to the amount of service incentive leave pay and
back wages that may be awarded to an illegally dismissed employee.

Held: The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of
the Implementing Rules and Regulations provides that [e]very employee who has
rendered at least one year of service shall be entitled to a yearly service incentive leave
of five days with pay. Service incentive leave is a right which accrues to every employee
who has served within 12 months, whether continuous or broken reckoned from the
date the employee started working, including authorized absences and paid regular
holidays unless the working days in the establishment as a matter of practice or policy,
or that provided in the employment contracts, is less than 12 months, in which case said
period shall be considered as one year. It is also commutable to its money equivalent if
not used or exhausted at the end of the year. In other words, an employee who has
served for one year is entitled to it. He may use it as leave days or he may collect its
monetary value. To limit the award to three years, as the solicitor general recommends,
is to unduly restrict such right. The law indeed does not prohibit its commutation.

The Implementing Rules clearly state that entitlement to benefit provided under this
Rule shall start December 16, 1975, the date the amendatory provision of the [Labor]
Code took effect. Hence, petitioners, except Lim and Canonigo, should be entitled to
service incentive leave pay from December 16, 1975 up to their actual reinstatement.

The petition is GRANTED and the assailed Decision and Resolution are REVERSED
and SET ASIDE. The labor arbiters decision is REINSTATED with MODIFICATIONS,
such that the award of separation pay is deleted and the service incentive leave pay is
computed from December 16, 1975 up to petitioners actual reinstatement.

SONGCO VS. NLRC, 183 SCRA 610

Facts: This is a petition for certiorari seeking to modify the decision of the National
Labor Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco
and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-
Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel,
Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which
dismissed the appeal of petitioners herein and in effect affirmed the decision of the
Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent
to their one month salary (exclusive of commissions, allowances, etc.) for every year of
service. Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig)
filed with the Department of Labor (Regional office No. 4) an application seeking
clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and
Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was seasonably opposed by
petitioners alleging that the company is not suffering from any losses. They alleged
further that they are being dismissed because of their membership in the union. At the
last hearing of the case, however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that the sole issue to be resolved is
the basis of the separation pay due to petitioners. Petitioners, who were in the sales
force of Zuellig received monthly salaries of at least P40, 000. In addition, they received
commissions for every sale they made.

Issue: Whether or not earned sales commissions and allowances should be included in
the monthly salary of petitioners for the purpose of computation of their separation
pay.

Held: It could be deduced that wage is used in its generic sense and obviously refers to
the basic wage rate to be ascertained on a time, task, piece or commission basis or other
method of calculating the same. It does not, however, mean that commission,
allowances or analogous income necessarily forms part of the employee's salary because
to do so would lead to anomalies (sic), if not absurd, construction of the word "salary."
For what will prevent the employee from insisting that emergency living allowance,
13th month pay, overtime, and premium pay, and other fringe benefits should be added
to the computation of their separation pay. This situation, to our mind, is not the real
intent of the Code and its rules. The ambiguity between Article 97(f), which defines the
term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the
Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the
terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means
a recompense or consideration made to a person for his pains or industry in another
man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea of compensation
for services rendered. Indeed, there is eminent authority for holding that the words
"wages" and "salary" are in essence synonymous "Salary," the etymology of which is the
Latin word "salarium," is often used interchangeably with "wage", the etymology of
which is the Middle English word "wagen". Both words generally refer to one and the
same meaning, that is, a reward or recompense for services performed. Likewise, "pay"
is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as
the words "wages", "pay" and "salary" have the same meaning, and commission is
included in the definition of "wage", the logical conclusion, is, in the computation of the
separation pay of petitioners, their salary base should include also their earned sales
commissions. The petition is GRANTED.

JOSE S. SANTOS V. NLRC ET AL.

G.R. No. 115795, March 6, 1998

Facts:

Petitioner is a married man and is employed as a teacher by private respondent

Hagonoy Institute Inc. from June 1980 until his dismissal on June 1, 1991. Petitioner and
Mrs. Arlene T. Martin, also a teacher employed at Hagonoy Institute, fell in love and
had an affair. Private respondent, upon hearing of circulating rumors among faculty
and school officials, of the illicit relationship of petitioner and Mrs. Martin, advised the
latter to take a leave of absence, Mrs. Martin ignored such notice and was henceforth
prevented from entering the campus of private respondent, effectively dismissing her
from work. Private respondent set-up a committee to investigate the veracity of the
rumors, after two weeks of investigation, the illicit relationship of petitioner and Mrs.
Martin was confirmed. Petitioner was charged administratively for immorality and
asked to present his side, on May 1991, petitioner was dismissed effective June 1, 1991.
Petitioner filed a complaint for illegal dismissal with the NLRC Regional Arbitration
Branch No. III, San Fernando, Pampanga and petitioner’s complaint was dismissed but
awarded financial assistance of PHP 13,750. On appeal, the NLRC affirmed the decision
of the labor arbiter.

Issue: Can the illicit relationship between the petitioner and Mrs. Martin be considered
immoral as to constitute a cause for termination under Art. 282 of the Labor Code?

Held: Court reiterates that to constitute a valid dismissal, two requisites must concur:
(a) it must be for any offense expressed in Art. 282 of the Labor Code, (b) employee
must be accorded due process, that is, the opportunity to be heard and to defend
oneself. Art. 282 of the Labor Code lists the following just causes to terminate an
employee: (1) serious misconduct or willful disobedience by employee of lawful orders
of the employer or his representative in connection with his work, (2) gross and
habitual neglect by employee of his duties; (3) fraud or willful breach, (4) commission of
crime or offense of the person of his employer or his family or his authorized
representative, (5) other courses analogous to the foregoing.

In addition, Section 94, Manual of Regulations for Private Schools, paragraph E, lists
“disgraceful or immoral conduct” as ground for termination. Furthermore, the Court
ruled that Art. 68 of the Family Code enjoins the husband and wife to live together,
observe mutual love, respect and fidelity, and render mutual help and support.” As a
teacher, one stands in loco parentis to his students and must therefore act with a high
standard of integrity and honesty. It is settled therefore that a teacher who engages in
extra marital affairs, when both are married, amounts to gross immorality justifying
termination from employment.

Petition is dismissed, NLRC decision is affirmed with modification, deleting financial

assistance.

CONSUNJI vs K’ UCAN 159 SCRA 07

GR NO. 137873, April 20, 2001

Facts:

A construction worker died when he fell 14 floors when the platform which he was on
board fell from the Renaissance Tower in Pasig City. He works for DM Consunji Inc. It
was noted that this happened because the pin inserted to the platform loosened and
there was no safety lock. His widow filed with RTC of Pasig a complaint for damages
against DM Consunji Inc. The employer averred that the widow already availed
benefits from the State Insurance Fund and that she cannot recover civil damages from
the company anymore.

Issue: Whether or not the widow is already barred from availing death benefits under
the Civil Code because she already availed damages under the Labor Code

Held:

Although SC ruled that recovery of damages under the Worker’s Compensation Act is a
bar to recover under a civil action, the CA ruled that in this case, the widow had a right
to file an ordinary action for civil actions because she was not aware and ignorant of her
rights and courses of action. She was not aware of her rights and remedies. Thus, her
election to claim from the Insurance Fund does not waive her claim from the petitioner
company. The argument that ignorance of the law excuses no one is not applicable in
this case because it is only applicable to mandatory and prohibitory laws.
 STATES MARINE CORP. VS. CEBU SEAMEN’S ASSC.
GR L 12444 February 28, 1963

Facts:

On September 12, 1952, the respondent union filed with the Court of Industrial
Relations (CIR), a petition (Case No. 740-V) against the States Marine Corporation, later
amended on May 4, 1953, by including as party respondent, the petitioner Royal Line,
Inc. The Union alleged that 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.

The petitioners’ shipping companies, answering, averred that in enacting Rep. Act No.
602 (Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal,
furnished to employees should be deducted from the daily wages.

Issue: Whether or not meals are deductable from wages.

Held:

It is argued that the food or meals given to the deck officers, marine engineers and
unlicensed crew members in question, were mere “facilities” which should be deducted
from wages, and not “supplements” which, according to said section 19, should not be
deducted from such wages, because it is provided therein: “Nothing in this Act shall
deprive an employee of the right to such fair wage … or in reducing supplements
furnished on the date of enactment.” In the case of Atok-Big Wedge Assn. v. Atok-Big
Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined as follows —
“Supplements”, therefore, constitute extra remuneration or special privileges or benefits
given to or received by the laborers over and above their ordinary earnings or wages.
“Facilities”, on the other hand, are items of expense necessary for the laborer’s and his
family’s existence and subsistence so that by express provision of law (Sec. 2[g]), they
form part of the wage and when furnished by the employer are deductible therefrom,
since if they are not so furnished, the laborer would spend and pay for them just the
same.

Facilities may be charged to or deducted from wages. Supplements, on the other hand,
may not be so charged. Thus, when meals are freely given to crew members of a vessel
while they were on the high seas, not as part of their wages but as a necessary matter in
the maintenance of the health and efficiency of the crew personnel during the voyage,
the deductions made therefrom for the meals should be returned to them, and the
operator of the coastwise vessels affected should continue giving the same benefit.
Petition dismissed.

MABEZA VS. NLRC

271 SCRA 670

Facts:

Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an
inspection was made by the Department of Labor and Employment (DOLE) at Hotel
Supreme and the DOLE inspectors discovered several violations by the hotel
management. Immediately, the owner of the hotel, Peter Ng, directed his employees to
execute an affidavit which would purport that they have no complaints whatsoever
against Hotel Supreme. Mabeza signed the affidavit but she refused to certify it with the
prosecutor’s office. Later, when she reported to work, she was not allowed to take her
shift. She then asked for a leave but was not granted yet she’s not being allowed to
work. In May 1991, she then sued Peter Ng for illegal dismissal. Peter Ng, in his
defense, said that Mabeza abandoned her work. In July 1991, Peter Ng also filed a
criminal complaint against Mabeza as he alleged that she had stolen a blanket and some
other stuff from the hotel. Peter Ng went on to amend his reply in the labor case to
make it appear that the reason why he dismissed Mabeza was because of his loss of
confidence by reason of the theft allegedly committed by Mabeza. The labor arbiter who
handled the case, a certain Felipe Pati, ruled in favor of Peter Ng.

Issues:1.) Whether or not there is abandonment in the case at bar

2.) Whether or not loss of confidence as ground for dismissal applies in the case
at bar

Held:

No. The side of Peter Ng is bereft of merit so is the decision of the Labor Arbiter which
was unfortunately affirmed by the NLRC. Abandonment is not present. Mabeza
returned several times to inquire about the status of her work or her employment
status. She even asked for a leave but was not granted. Her asking for leave is a clear
indication that she has no intention to abandon her work with the hotel. Even the
employer knows that his purported reason of dismissing her due to abandonment will
not prosper so he amended his reply to indicate that it is actually “loss of confidence”
that led to Mabeza’s dismissal.

It is true that loss of confidence is a valid ground to dismiss an employee. But this is
ideally only applied to workers whose positions require a certain level or degree of trust
particularly those who are members of the managerial staff. Evidently, an ordinary
chambermaid who has to sign out for linen and other hotel property from the property
custodian each day and who has to account for each and every towel or bedsheet
utilized by the hotel’s guests at the end of her shift would not fall under any of these
two classes of employees for which loss of confidence, if ably supported by evidence,
would normally apply. Further, the suspicious filing by Peter Ng of a criminal case
against Mabeza long after she initiated her labor complaint against him hardly warrants
serious consideration of loss of confidence as a ground of Mabeza’s dismissal.

PNB VS. ANDRADA ELECTRIC AND ENGINEERING CO.,

April 17, 2002

Facts:

Respondent is a partnership duly organized, existing, and operating under the laws of
the Philippines is a semi-government corporation duly organized, existing and
operating under the laws of the Philippines; whereas, NASUDECO is also a semi-
government corporation and the sugar arm of the PNB; and the defendant Pampanga
Sugar Mills (PASUMIL), is a corporation organized, existing and operating under the
1975 laws of the Philippines. The plaintiff is engaged in the business of general
construction for the repairs and/or construction of different kinds of machineries and
buildings. On August 26, 1975, PNB acquired the assets of the defendant PASUMIL that
were earlier foreclosed by the DBP. PNB organized the defendant NASUDECO in
September 1975, to take ownership and possession of the assets and ultimately to
nationalize and consolidate its interest in other PNB controlled sugar mills. Prior to
October 29, 1971, the defendant PASUMIL engaged the services of defendant for
electrical rewinding and repair, most of which were partially paid by the defendant
PASUMIL, leaving several unpaid accounts with the plaintiff. On October 29, 1971, the
plaintiff and the defendant PASUMIL entered into a construction contract. The
defendant PASUMIL and the defendant PNB, and now the defendant NASUDECO,
failed and refused to pay the plaintiff their just, valid and demandable obligation based
on the contract. Defendant prayed that judgment be rendered against the defendants
PNB, NASUDECO, and PASUMIL.

Issue: Whether or not the Veil of Corporate Fiction should be pierced in this case

Held:

No. The absence of the elements in the present case precludes the piercing of the
corporate veil. First, other than the fact that petitioners acquired the assets of PASUMIL,
there is no showing that their control over it warrants the disregard of corporate
personalities. Second, there is no evidence that their juridical personality was used to
commit a fraud or to do a wrong; or that the separate corporate entity was farcically
used as a mere alter ego, business conduit or instrumentality of another entity or
person. Third, respondent was not defrauded or injured when petitioners acquired the
assets of PASUMIL. Being the party that asked for the piercing of the corporate veil,
respondent had the burden of presenting clear and convincing evidence to justify the
setting aside of the separate corporate personality rule. However, it utterly failed to
discharge this burden; it failed to establish by competent evidence that petitioner‘s
separate corporate veil had been used to conceal fraud, illegality or inequity.

A. C. RANSOM LABOR UNION VS. OPLE

150 SCRA 49

Facts:

On June 6, 1961, employees of AC Ransom, most being members of the AC Ransom

Labor Union, went on strike. The said strike was lifted on June 21 with most of the
strikers being allowed to resume their work. However, twenty-two strikers were
refused reinstatement. During 1969, the Hernandez family (owners of AC RANSOM)
organized another corporation under the name of Rosario Industrial Corporation. The
said company dealt in the same type of business as AC Ransom. The issue of back
wages was brought before the Court of Industrial Relations which rendered a decision
on December 19, 1972 ordering the twenty-two strikers to be reinstated with back
wages. On April 2, 1973, RANSOM filed an application for clearance to close or cease
operations. The same was granted by the Ministry of Labor and Employment. Although
it has stopped operations, RANSOM has continued its personality as a corporation. For
practical purposes, reinstatement of the 22 strikers has been precluded. As a matter of
fact, reinstatement is not an issue in this case. A motion of execution was filed by
the Union against AC Ransom but the former was unable to collect due to the
inability to find leviable assets of the company. The Union subsequently asked the
officers of Ransom to be personally liable for payment of the back wages. The motion
was granted by the Labor Arbiter but was subsequently reversed bythe NLRC.

Issue: Whether or not the officers of the corporation should be held personally liable to
pay for the back wages

Held:

Yes. Under Article 212 (c) of the Labor Code, “Employee” includes any person acting in
the interest of an employer, directly or indirectly. 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 the employer (Ransom).” In PD 525, where a corporation fails to pay
the emergency allowance therein provided, the prescribed penalty “shall be imposed
upon the guilty officer or officers” of the corporation. In the instant case, RANSOM, in
foreseeing the possibility or probability of payment of back wages to the 22 strikers,
organized ROSARIO to replace RANSOM, with the latter to be eventually phased out
if the 22 strikers win their case. The record does not clearly identify “the officer or
officers” of RANSOM directly responsible for failure to pay the back wages of the 22
strikers. In the absence of definite proof in that regard, it should be presumed that the
responsible officer is the President of the corporation who can be deemed the chief
operation officer thereof. It is very obvious that the second corporation seeks the
protective shield of a corporate fiction whose veil in the present case could, and should,
be pierced as it was deliberately and maliciously designed to evade its financial
obligation to its employees. When a notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, the law will regard the
corporation as an association or persons, or, in the case of two corporations, will merge
them into one.

PABALAN AND LAGDAMEO VS. NLRC

GR No. 89879, April 20, 1990

Facts:

Eighty-four (84) workers of the Philippine Inter-Fashion, Inc. (PIF) filed a complaint
against latter for illegal transfer simultaneous with illegal dismissal without justifiable
cause and in violation of the provision of the Labor Code in security of tenure as well as
the provisions of BP 130. Complainants demanded reinstatement with full backwages,
living allowance, 13th month pay, and other benefits under existing laws and/or
separation pay. The labor arbiter ruled in favor of complainants, ordering PIF and
petitioners jointly and severally liable. The NLRC affirmed the appealed decision.
Hence, this petition alleging lack of jurisdiction and grave abuse of discretion.

Issues:
(1) Whether the respondents acquired jurisdiction over the petitioners.
(2) Whether the officers of the PIF could be held jointly and severally liable with the
corporation for its liability.

Held:
(1) Yes. Record shows that while originally it was PIF which was impleaded as
respondent before the labor arbiter, petitioners also appeared in their behalf through
counsel. Thereafter when the supplemental position paper was filed by complainants,
petitioners were impleaded as respondents to which they filed an opposition inasmuch
as they filed their own supplemental position papers. They were therefore properly
served with summons and they were not deprived of due process.

(2) No. The settled rule is that the corporation is vested by law with a personality
separate and distinct from the persons composing it, including its officers as well as
from that of any other legal entity to which it may be related. Thus, a company manager
acting in good faith within the scope of his authority in terminating the services of
certain employees cannot be held personally liable for damages. Mere ownership by a
single stockholder or by another corporation of all or nearly all capital stocks of the
corporation is not by itself sufficient ground for disregarding the separate corporate
personality.
 
 CARMELCRAFT CORP. VS. NLRC
GR No. 90634-34, June 6, 1990

Facts:

After its registration as a labor union, the Camelcraft Employees Union sought but did
not get recognition from petitioners. Consequently, it filed a petition for certification
election. On July 1987, petitioners announced in a meeting with the employees that it
would cease operations due to serious financial issues. Operations did cease as
announced. The union filed a complaint with the DOLE against 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. 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 or not the cessation of operations of petitioner is justified.

Held:

The reason invoked by the petitioner company to justify the cessation of its operations
is hardly credible. The real reason for the decision of petitioners to cease operations was
the establishment of respondent Carmelcraft Employees Union. It was apparently
unwelcome to the corporation, which would rather shut down than deal with the
union.

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 enter into a collective bargaining with
management through labor union of their own choices and confidence.
 

GUDEZ VS. NLRC

GR 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.

In view of the closing of RAPSA, the latter's clients obtained the security services of
another agency named Emilio Salting Alviar Protective and Security Agency (ESAPSA
fr brevity). Petitioners filed their separate complaints with the Labor Arbiter against
RAPSA, Herminia Crisologo, for separation pay, recovery of lost tool deposit,
allowances and other monetary claims. The Labor Arbiter rendered its decision in favor
of the petitioners.

Issue: Whether or not respondent Crisologo may be held solidarity liable with
respondent corporation for separation pay and other monetary claims due to
petitioners.

Held:

On the basis of the legal definition of employer provided for in Article 212 par. c of the
Labor Code, not only is the juridical entity held liable for the money claims due to its
employees but also the responsible natural person or persons acting in the interest of
such juridical entity; and that respondent Crisologo, being the president of respondent
RAPSA should therefore be held jointly and severally liable with the corporation for
such labor claims. The term “employer” includes any person acting in the interest of an
employer, directly or indirectly.

There is no dispute herein that respondent Crisologo is in fact the president of

respondent corporation, RAPSA. Neither is there any doubt that respondent RAPSA
had closed its business upon the order of the Philippine Constabulary and that as a
consequence thereof the services of petitioner employees were terminated without
awarding them separation pay as required under the Labor Code. It is significant to
note that the respondent corporation had ceased to exist when the Labor Arbiter
rendered its decision holding respondent Crisologo jointly and severally liable with
respondent corporation for the money claims of its employees. Moreover, records show
that on September 25, 1987, which is the same day when the Labor Arbiter's decision
was promulgated, RAPSA filed a petition for voluntary insolvency with the Regional
Trial Court of Makati. The foregoing circumstances make it more necessary to hold
respondent Crisologo liable for the claims due to petitioners; otherwise, any decision
that would be rendered in favor of the latter would be useless and ineffective for there
would be no one against whom it can be enforced. Thus, where the employer
corporation is no longer existing and unable to satisfy the judgment in favor of the
employee, the officer should be held liable for acting on behalf of the corporation.

NERI VS. NLRC, ET AL.

224 SCRA 717/ G.R. No. 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 labor-only contracting (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 or not BCC is engaged in LOC.

Held:

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.

There are indications that BCC carries an independent business according to its own
manner and method, free from the control and supervision of its principal in all matters
except as to the results thereof.
The Court has already taken judicial notice of the general practice adopted in several
government and private institutions and industries of hiring independent contractors to
perform special services ranging from janitorial, security and even technical or other
specific services such as those performed by Neri and Cabelin. While these services may
be considered directly related to the principal business of the employer, nevertheless
they are not necessary in the conduct of the principal business of the employer.

PHILIPPINE BANK OF COMMUNICATIONS VS. NLRC

146 SCRA 347/ 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. On 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 or not an employer-employee relationship existed between the bank

and Orpiada.

Held:

Yes. In the case at bar, Orpiada is not previously selected by the bank but was assigned
to work by CESI. The selection of Orpiada by CESI, was however subject to the
acceptance of the bank. With respect to the payment of Orpiada’s wages, the bank
remitted to CESI the daily rate or Orpiada and CESI pays the latter his wages. He was
also listed in the payroll of CESI with SSS deduction. In respect of the power of
dismissal, the bank requested CESI to withdraw Orpiada’s assignment, which resulted
to the latter’s termination. With regards to power of control, Orpiada performed his
functions within the bank’s premises and not inCESA/Payment of wages and power of
dismissal exist between CESI and Orpiada. However, selection and control exist
between Orpiada and the bank. Thus, it is necessary to determine the relationship
between the bank andCESI, whether the latter is a job (independent) contactor or a
labor-only contracting. In the present case, the undertaking of CESI in favor of the bank
was not the performance of a specific job, but to produce its client – the bank – with a
certain number of persons to work as messengers. Thus, Orpiada utilized the premises
and office equipment of the bank and not of CESI. Orpiada worked in the bank for a
period of 16 months. Under the Labor Code, any employee who has rendered at least 1
year, whether continuous or not, shall be considered as a regular employee. Therefore,
CESI was only engaged in a labor-only contracting with petitioner and Orpiada. As a
result, petitioner is liable to Opiada as if Opiada had been directly employed by the
bank. Wherefore, petition of certiorari is denied.

GUARIN, ET AL. VS. NLRC & LIPERCON SERVICES

178 SCRA 267/ 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 Contractual Laborers/Helpers/Janitors. For this reason,
petitioners were hired by Lipercon 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 or not Lipercon is an independent contractor and the petitioners are its
employees.

Held:

The Supreme Court ruled that as provided in Article 106 of the Labor Code, and as can
be gleaned from the agreement between Lipercon and Novelty, it was clear that
Lipercon was a "labor-only" contractor and thus served merely an agent of Novelty
tasked to provide it with manpower. Lipercon's contention that it is an independent
contractor 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 (3) years. As Lipercon was a
"labor-only" contractor, the workers it supplied Novelty became regular employees of
the latter and the Court ordered their reinstatement with backwages for one (1) year
without qualification or deduction.
 SAN MIGUEL CORPORATION VS. NLRC
G.R. Nos. 74193-94. June 2, 1992

Facts:

A complaint dated February 8, 1983, was filed by respondent Luisito de Ocampo, and
one hundred and thirty three (133) coemployees against their employer. Reliable
Contractor, and the San Miguel Corporation for underpayment of wages, and
nonpayment of their 13th month pay for 1980 to 1982. They alleged that they are the
regular and permanent employees of Reliable Labor Contractor (Reliable for brevity),
which entered into a contract of service to undertake the loading and unloading of
various materials and to repair shells and pellets for the petitioner, San Miguel
Corporation, on a task (or piece, work) basis until December, 1982. During that period,
the private respondents were not paid their 13th month pay and were only receiving a
daily wage of P17.00 per day. San Miguel Corporation answered that under P.D. No.
851 and implementing rules and regulations, it is not jointly and severally liable with
the contractor (Reliable) for the payment of the 13th month pay of the latter's
employees, and that it has regularly and conscientiously paid Reliable the agreed
contractor's fees which included the basic daily wage, emergency allowance and the
13th month pay of Reliable's employees. Reliable, for its part, alleged that as it hired the
complainants on a task basis up to December, 1982, it was exempted from the coverage
of P.D, No. 851 during that period.

Issue: Whether the San Miguel may be held jointly and severally liable with the labor
contractor for the payment of the workers' 13th month pay.

Held: Yes. We agree with the NLRC's ruling that San Miguel is solidarily liable with
Reliable for the employees' 13th month pay by virtue of the express provision of Art.
107 of the Labor Code that the solidary liability of an employer and his contractor or
subcontractor under Art. 106 shall apply to an indirect employer and his contractor.

The petitioner as indirect employer of the private respondents (employees of the labor-
only-contractor [Reliable] is solidarily liable with the latter for the payment of the 13th
month pay which the latter's workers are legally entitled to receive in addition to their
wages because nonpayment thereof constitutes a violation of the Code for which "every
employer or indirect employer shall be held responsible with his contractor or
subcontractor." (Art. 109, Labor Code.)
 AQUINO VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 87653. February 11, 1992

Facts:

The petitioners’ services were terminated on the ground of retrenchment, and they
received separation pay double that required by the Labor Code. Thereafter, they
demanded retirement benefits, invoking the Retirement Plan of the respondent
company which they said was contractual rather than statutory. The question
eventually submitted to the labor authorities was, having received the separation pay,
were the petitioners still entitled to the retirement benefits? The Labor Arbiter said they
were, but the NLRC reversed him. The issue is now before us for final resolution.

Issue: Whether the petitioners are still entitled to the retirement benefits.

Held:

Yes. We have carefully examined the record, and particularly the Collective Bargaining
Agreement and the Retirement Plan, and have found no specific prohibition against the
payment of both benefits to the employee. Maintaining that the above cases have no
application to the case at bar, the company calls attention to Book VI, Section 14, Rule 1,
of the Omnibus Rules Implementing the Labor Code, which provides as follows:
(a) An employee who is retired pursuant to a bonafide retirement plan or in
accordance with the applicable individual or collective agreement or established
employer policy shall be entitled to all the retirement benefits provided therein or to
termination pay equivalent to at least one-half month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being considered as one whole
year.

However, it overlooks sub-section (c) of the same Section 14, which clearly provides
that:
(c) This Section shall apply where the employee retires at the age of sixty (60)
years or more.

The private respondent has not shown that the petitioners were sixty years or older at
the time of their separation and therefore covered by the said section. Having itself
invoked that provision, the company had the obligation to prove that the petitioners
came under its terms.

In arriving at our conclusion, we are guided by the principle that any doubt concerning
the rights of labor should be resolved in its favor, pursuant to the social justice policy.
The Court feels that if the private respondent really intended to make the separation
pay and the retirement benefits mutually exclusive, it should have sought inclusion of
the corresponding provision in the Retirement Plan and the Collective Bargaining
Agreement so as to remove all possible ambiguity regarding this matter.

EAGLE SECURITY AGENCY, INC. VS. NLRC

G.R. No. 81314. May 18, 1989/G.R. No. 81447. May 18, 1989

Facts:

In 1980, petitioners Philippine Tuberculosis Society, Inc. (hereinafter referred to as PTSI)

and Eagle Security Agency, Inc. (hereinafter referred to as EAGLE) entered into a
“Contract for Security Services” wherein the latter agreed to provide security services in
the former’s premises. The contract covered the period from November 2, 1979 to July
31, 1985. Pursuant to this agreement, private respondents were assigned by EAGLE to
PTSI as security guards. Subsequently, on November 5, 1985, a complaint was filed by
private respondents against PTSI and EAGLE for unpaid wage and allowance increases
under Wage Order Nos. 2, 3, 5 and 6 ** with interest plus damages and attorney’s fees.

Issue: Whether the petitioners are jointly and severally liable to pay the wage and
allowance increases of the security guards.

Held:

Yes. The Court finds that the NLRC acted correctly in ordering the two petitioners to
jointly and severally pay the wage and allowance increases to the security guards.
Petitioners’ solidary liability for the amounts due the security guards finds support in
Articles 106, 107 and 109 of the Labor Code.

This 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 [Article 99, Labor Code]. 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. This joint and several liability
facilitates, if not guarantees, payment of the workers’ performance of any work, task,
job or project, thus giving the workers ample protection as mandated by the 1987
Constitution.

In the case at bar, it is beyond dispute that the security guards are the employees of
EAGLE. That they were assigned to guard the premises of PTSI pursuant to the latter’s
contract with EAGLE and that neither of these two entities paid their wage and
allowance increases under the subject wage orders are also. Thus, the application of the
aforecited provisions of the Labor Code on joint and several liability of the principal
and contractor is appropriate.
 REPUBLIC V PERALTA
150 SCRA 37, May 20, 1987

Facts:

The petitioner seeks the review on certiorari of the order of the CFI of Manila in its Civil
Case No.108395. In its questioned order, the lower court held that the above
enumerated claims of USTC Association of Employees and Workers Union and
Federacion de la Industria Tabaquera y Otros Trabajadores de Filipinas (USTC and
FOITAF; "Unions") for 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. The trial court in so ruling over the civil case relied primarily upon Article 110
of the Labor Code. The Solicitor General, in seeking the reversal of the lower court’s
order, argues that Article 110 of the Labor Code is not applicable, being that as it speaks
of "wages", a term ,which he asserts, does not include the separation pay claimed by the
Unions. Solicitor General contends that "Separation pay," is given to a laborer for a
separation from employment computed on the basis of the number of years the laborer
was employed by the employer; it is a form of penalty or damage against the employer
in favor of the employee for the latter's dismissal or separation from service.

Issue: Whether the separation pay is included in the term “wages”.

Held:

Yes. For the specific purposes of Article 110 and in the context of insolvency termination
or separation pay is reasonably regarded as forming part of the remuneration or other
money benefits accruing to employees or workers by reason of their having previously
rendered services to their employer; as such, they fall within the scope of "
remuneration nor earnings for services rendered or to be rendered. "Liability for
separation pay might indeed have the effect of a penalty, so far as the employer is
concerned. So far as concerns the employees, however, separation pay is additional
remuneration to which they become entitled because, having previously rendered
services, they are separated from the employer's service.

We note, in this connection, that in Philippine Commercial and Industrial Bank (PCIB)
us. National Mines and Allied Workers Union, the Solicitor General took a different
view and there urged that the term "wages" under Article 110 of the Labor Code may be
regarded as embracing within its scope severance pay or termination or separation pay.
In PCIB, this Court agreed with the position advanced by the Solicitor General. We see
no reason for overturning this particular position. 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.
DEVELOPMENT BANK OF THE PHILIPPINES vs. NLRC and NATIONAL MINES
AND ALLIED WORKERS UNION
G.R. No. 97175 May 18, 1993

Facts:

On November 14, 1986, private respondents filed with DOLE- Daet, Camarines Norte,
17 individual complaints against Republic Hardwood Inc. (RHI) for unpaid wages and
separation pay. These complaints were thereafter endorsed to Regional Arbitration
Branch of the NLRC since the petitioners had already been terminated from
employment. RHI alleged that it had ceased to operate in 1983 due to the government
ban against tree-cutting and that in May 24, 1981, its sawmill was totally burned
resulting in enormous losses and that due to its financial setbacks, RHI failed to pay its
loan with the DBP. RHI contended that since DBP foreclosed its mortgaged assets on
September 24,1985, then any adjudication of monetary claims in favor of its former
employees must be satisfied against DBP. Private respondent impleaded DBP. Labor
Arbiter favored private respondents and held RHI and DBP jointly and severally liable
to private respondents. DBP appealed to the NLRC. NLRC affirmed LA’s judgment.
DBP filed M.R. but it was dismissed. Thus, this petition for certiorari.

Issue: Whether the private respondents are entitled to separation pay.

Held:

Yes. Despite the enormous losses incurred by RHI due to the fire that gutted the
sawmill in 1981 and despite the logging ban in 1953, the uncontroverted claims for
separation pay show that most of the private respondents still worked up to the end of
1985. RHI would still have continued its business had not the petitioner foreclosed all of
its assets and properties on September 24, 1985. Thus, the closure of RHI’s business was
not primarily brought about by serious business losses. Such closure was a consequence
of DBP’s foreclosure of RHI’s assets.

The Supreme Court applied Article 283 which provides:

“. . . in cases of closures or cessation of operations of establishment or undertaking not

due to serious business losses or financial reverses, the separation pay shall be
equivalent to 1 month pay or at least 1/2 month pay for every year of service,
whichever is higher. . . .”
 A.N. BOLINAO, JR., et al., vs. HON. MANUEL S. PADOLINA, PHELPS DODGE
(PHILS.) INC., BANK OF AMERICA, AND DEPUTY SHERIFF CARLOS G. MAOG
G.R. No. 81415 June 6, 1990

Facts: Petitioners were former employees of Sabena Mining Corporation. In 1982 and
1983 they were laid off without being recalled. In September, 1983, 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. On May 29,1984, a compromise agreement was entered into by the parties,
wherein petitioners were to be paid on a staggered basis. The company faithfully
complied with the scheduled payments only up to March, 1985 because it ceased
operations effective April 1, 1985. With this development, petitioners moved for the
issuance of a writ of execution in June, 1985. In an order dated June 21, 1985, the Labor
Arbiter issued a writ of execution against the company to collect the balance. On June
27, 1985 Deputy Sheriff Antonio P. Soriano garnished the remaining amount of
P150,279.64 in the savings account of the company at the Development Bank of the
Philippines (DBP). However, the same amount was previously garnished by two
creditors of the company; namely, Bank of America and Phelps Dodge (Phils). 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 in Civil Case No. 45452 by the Pasig Regional Trial Court cannot
prevail over the garnishment pursuant to a writ of execution issued in Civil Case No.
50936 in favor of respondent Phelps Dodge (Phils.) Inc., for failure of Bank of America
to prosecute its hen.

Issue: Whether the petitioners enjoy preferential right or claim over the funds of Sabena
Mining Corporation.

Held: No. It is quite clear from the provisions of Article 110 of the Labor Code and
Section 10, Rule VIII, Book H of the Revised Rules and Regulations Implementing the
Labor Code, that a declaration of bankruptcy or a judicial liquidation must be present
before the worker's preference may be enforced. Thus, it was held that Article 110 of the
Labor Code and its implementing rule cannot be invoked absent a formal declaration of
bankruptcy or a liquidation order.

In the case at bar, there was no showing of any insolvency proceeding or declaration of
bankruptcy or judicial liquidation that was being filed by Sabena Mining Corporation.
It is only an extra-judicial foreclosure that was being enunciated as when DBP extra-
judicially foreclosed the assets of Sabena Mining Corporation. Conversely, to hold that
Article 110 is also applicable in extra-judicial proceedings would be putting the worker
in a better position than the State which could only assert its own prior preference in
case of a judicial proceeding. Article 110 must not be viewed in isolation and must
always be reckoned with the provisions of the Civil Code.

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.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK VS. NLRC
G.R. No. 82135. August 20, 1990

Facts:

FORTUNATO M. DIZON, Jr., who was then holding the position of Executive Vice
President and Chief Operating Officer of the BANCO FILIPINO SAVINGS AND
MORTGAGE BANK, received a letter from the Central Bank appointed liquidator, MS.
VALENZUELA, informing him that all management authority in the bank had been
assumed by the Central Bank appointed liquidators and that his employment is being
terminated. 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 unexpended/unused
reimbursable allowance. His claims were not paid.

Issue: Whether Dizon's money claim should be given first priority under Art 110 of the
Labor Code.

Held:

Yes. The Court held, 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.
Not being an absolutely preferred credit, as taxes are under Articles 2241 (1) and 2242
(1), Dizon's claims cannot be paid ahead of other credits and outside of the liquidation
proceeding because the "free property" or the property left after the creditors mentioned
in Articles 2241 and 2242 are paid has not yet been. In the words of Lipana v.
Development Bank of Rizal, "to execute the judgment would unduly deplete the assets
of respondent bank to the obvious prejudice of other [depositors and] creditors."

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.
 LANTION VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 82028. January 29, 1990

Facts:

On 10 November 1983, petitioner Filomeno Lantion received a letter, dated 9 November

1983, terminating him as the Acting Vice-President and concurrently Executive Officer
of the University effective 11 November 1983. Petitioner Clarita Lantion, wife of
Filomeno, was terminated as Dean of the Institute of Business and Agricultural
Administration and Concurrent Head of the Department of Business, Finance, and
Management effective 1 June 1984. While petitioner Fuentes, Filomeno’s sister-in-law,
was terminated as Secretary to the Legal Office on 21 November 1983. Petitioners
maintain that their positions were not affected by the reorganization program; that they
were not re-hired despite their seniority in service, superior qualifications, and
efficiency; that petitioner, Clarita Lantion, was replaced by a faculty member who does
not even possess the necessary academic qualification required by the University and
the Ministry of Education; that petitioner, Juana Fuentes, was replaced by an
undergraduate and very much her junior in terms of service; that their dismissal was
motivated by vindictiveness since petitioner, Filomeno, had previously testified in the
administrative charge against respondent Meneses; that petitioners were illegally
dismissed without the one-month notice and are entitled to their monetary claims and
reinstatement without loss of seniority rights and with full backwages.

Issue: Whether the petitioners were illegally terminated.

Held:

Yes. The Court held, retrenchment was proper, therefore, there can be no question. The
conditions laid down, however, were not religiously followed. Petitioners were not
rehired although they fall outside the exception provided. Their positions were not
affected by the re-organizational changes envisioned in the retrenchment program. The
position of Vice-President continued to exist (Exh. K). And as far as Filomeno and
Clarita Lantion are concerned, their temporary appointment to other positions could
not have affected their permanent status pursuant to the ruling in the First GAUF Case.
Clarita’s position was neither abolished. She was replaced by another faculty member.
It may be that petitioners Filomeno and Clarita Lantion had expressed their conformity
to their termination, while Fuentes had tendered her courtesy resignation. As is
obvious, however, those steps were but in administrative compliance with the
Memorandum Circular of 14 October 1983 of the University, ante. As a matter of fact,
courtesy resignations could have been dispensed with as all personnel were deemed
resigned. Besides, such compliance had placed them in a better position than the
Complainants in the First GAUF Case considering the proviso in the Memo-Circular of
the University that “those who submit courtesy resignations may be re-appointed while
those who would fail to submit may be retrenched.”

Reinstatement of petitioners with backwages for three (3) years is thus called for as held
in the First GAUF Case. In fact, in its Comment dated 10 December 1988, the NLRC
now admits that petitioner Fuentes is entitled to reinstatement with three (3) years
backwages as it is not clear from the records that her position as Secretary to the Legal
Office was abolished under the retrenchment program of the University.
 MATERNITY CHILDREN’S HOSPITAL VS. SECRETARY OF LABOR
G.R. No. 78909. June 30, 1989

Facts:

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

Cagayan de Oro Women’s Club and Puericulture Center, headed by Mrs. Antera
Dorado, as hold-over President. The hospital derives its finances from the club itself as
well as from paying patients, averaging 130 per month. It is also partly subsidized by
the Philippine Charity Sweepstakes Office and the Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the
employees are given food, but the amount spent therefor is deducted from their
respective salaries. On May 23, 1986, ten (10) employees of the petitioner employed in
different capacities/positions filed a complaint with the Office of the Regional Director
of Labor and Employment, for underpayment of their salaries and ECOLAs. On June
16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers
to inspect the records of the petitioner to ascertain the truth of the allegations in the
complaints. Payrolls covering the periods of May, 1974, January, 1985, November, 1985
and May, 1986, were duly submitted for inspection. On July 17, 1986, the Labor
Standard and Welfare Officers submitted their report confirming that there was
underpayment of wages and ECOLAs of all the employees by the petitioner.

Issue: Whether the Regional Director had jurisdiction over the case.

Held:

Yes. The Court held, 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. Prior to the promulgation of E.O. No. 111 on December 24, 1986,
the Regional Director’s authority over money claims was unclear. The complaint in the
present case was filed on May 23, 1986 when E.O. No. 111 was not yet in effect, and the
prevailing view was that stated in the case of Antonio Ong, Sr. vs. Henry M. Parel, et
al., G.R. No. 76710, dated December 21, 1987. The Ong case relied on the ruling laid
down in Zambales Base Metals Inc. vs. The Minister of Labor, et al., that the “Regional
Director was not empowered to share in the original and exclusive jurisdiction
conferred on Labor Arbiters by Article 217.” We believe, however, that even in the
absence of E.O. No. 111, Regional Directors already had enforcement powers over
money claims, effective under P.D. No. 850, issued on December 16, 1975, which
transferred labor standards cases from the arbitration system to the enforcement
system. Viewed in the light of PD 850 and read in coordination with MOLE Policy
Instructions Nos. 6, 7 and 37, it is clear that it has always been the intention of our labor
authorities to provide our workers immediate access (when still feasible, as where an
employer-employee relationship still exists) to their rights and benefits, without being
inconvenienced by arbitration/litigation processes that prove to be not only nerve-
wracking, but financially burdensome in the long run. The amendment of the visitorial
and enforcement powers of the Regional Director (Article 128-b) by said E.O. 111
reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the
Regional Directors to resolve uncontested money claims in cases where an employer-
employee relationship still exists. This intention must be given weight and entitled to
great respect.

M. RAMIREZ INDUSTRIES v. SECRETARY OF LABOR

GR No. 89894, January 03, 1997

Facts: Petitioner M. Ramirez Industries is a single proprietorship in Tungkop,

Minglanilla, Cebu. It is engaged in the manufacture of handmade rattan baskets for
export abroad, principally to Japan, and has in its employ from 400 to 500 employees.

On April 1, 1986, 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 and/or Manny Ramirez, its proprietor.
Accordingly, an inspection was conducted in the company premises on the same day by
Labor Standard Officer Juanito Yallosa. After verifying the allegations of the complaint,
the case was docketed as LSED Case No. 028-86. Meantime it appears that private
respondents stopped working on April 8, 1986.

On April 11, 1986, petitioner filed an ex parte motion to dismiss the case alleging
voluntary desistance by private respondents. Attached to the motion was a letter,
signed by 215 employees, affirming their decision to desist from proceeding with their
claim against petitioner.

The motion was set for conference on May 7, 1986. Both petitioner and private
respondents were notified, but only private respondents appeared. Private respondents
opposed the motion on the ground that they were not signatories to the letter of
affirmation supporting the motion to dismiss.

The Regional Director denied petitioner's motion in an order dated May 22, 1986, after
finding that 90 per cent of the signatures in the letter were not those of the
complainants, while complainants, whose signatures appeared in the letters, had been
deceived into signing the letters.

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 or not the Regional Director has no jurisdiction to take cognizance of
this case?

Held: Yes, the Regional Director has jurisdiction on this case. The petitioner contends
that the case falls within the original and exclusive jurisdiction of the Labor Arbiter,
citing in support of its contention Art. 217 of the Labor Code. But 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. However, On
March 3, 1987, President Corazon C. Aquino, issued E.O. No. 111, conferring
jurisdiction over money claims of laborers on Regional Directors where the following
requisites concur: (1) the claim must arise from employer-employer relationship; (2) the
claimant does not seek reinstatement, and (3) the aggregate money claim of each
employee does not exceed P5,000.00. On the other hand, if the individual claims of
employee exceed P5,000.00 and, even if they do not, if they include claims for
reinstatement, the matter falls within the original and exclusive jurisdiction of the Labor
Arbiter.

VICENTE ATILANO/ROSE SHIPPING LINES, Petitioner, v. HON. DIONISIO C.

DE LA SERNA (GR No. 82488, February 28, 1990)

Facts:
On May 20, 1995, 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.

Acting on the letter – complaint, the Office of the Regional Director ordered a Labor
Standards and Welfare Officer to conduct a complaint inspection on July 22, 1985 at the
establishment of petitioner in Cebu City. However, no actual inspection was effected
because the owner, petitioner Mr. Vicente Atilano, allegedly on a business trip to
Manila, and his employees declined to allow the inspection in his absence.

Respondent Regional Director subsequently summoned the parties to conciliation

conferences the first of which was held on August 5, 1985 where only the complainants
(private respondents herein) appeared.

The conference was then rescheduled to August 16, 1985 and on that meeting both
parties was represented. Another hearing was held on August 21, 1985 and there the
private respondents submitted their position paper elaborating and documenting their
claims. Petitioner did not file any position paper.

Issue:

Whether or not the public respondents have jurisdiction over the subject matter of the
case?

Held:

Yes, they have. LSED Case No. 055-85 was commenced on 20 May 1985; the order of the
Regional Director in said case, which is here sought to be set aside, was issued on 16
January 1986, while the order of the same official denying petitioner’s motion to dismiss
for lack of merit was rendered on 24 April 1986. The order of the Undersecretary of
Labor here assailed was, as already noted, issued on 3 March 1988. At all material times
— i.e., from 20 May 1985 through to 3 March 1988, the legal provisions governing the
exercise of the visitorial and enforcement powers of the Regional Directors of Labor
were embodied in P.D. No. 850 (promulgated on 16 December 1975) and Executive
Order No. 111 (promulgated on 24 December 1986), amending Article 128 (b) of the
Labor Code.

The lack of inspection was cured when the Regional Director called the parties to
several conferences, petitioner could have presented whatever he had in his books and
records to refute the claims of private respondents; petitioner did not do so and his
failure must be deemed a waiver of his right to contest the conclusions of the Regional
Director on the basis of the evidence and records actually made available to him.
 MARCOPPER MINING CORPORATION v. BLAS OPLE
(GR No. 51254, June 11, 1981)

Facts: It is in pursuance of the constitutional principle of the enjoyment by the people of

a decent standard of living that a Presidential Decree was issued by way of response to
the ravages of world-wide inflation, causing extreme difficulty to laborers and wage-
earners. Relying on the above Decree, private respondent Marcopper Employees Labor
Union filed a complaint before the National Labor Relations Commission for the
payment of the 13th-month salary. Petitioner Marcopper Mining Corporation opposed
on the ground that in view of its then existing collective bargaining agreement adopted
on October 8, 1977 which granted the employees belonging to private respondent mid-
year and year-end bonuses, it was exempt from the operation of such Decree. Its
opposition prevailed with a regional director, who, on March 29, 1979, dismissed the
complaint. On appeal, then Deputy Minister of Labor, respondent Amado G. Inciong,
on July 25, 1979, reversed such order. 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." He went on to say: "Foremost to consider
and in point is, Section 10 of the Rules and Regulations Implementing PD No. 851
which deals on prohibition against reduction or elimination of the benefits provided by
the Decree. Said section provides as follows: 'Nothing herein shall be construed to
authorize any employer to eliminate, or diminish in any way, supplements, or other
employee benefits or favorable practice being enjoyed by the employee at the time of
the promulgation of this issuance.' Both the mid-year and year-end bonuses are benefits
being enjoyed by complainants at the time of the promulgation of PD 851, hence,
covered by the foregoing prohibition…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 or not the Marcopper employees are entitled to midyear and year-end
bonuses?

Held: Yes, they are. In the case at bar, the payment of the mid-year and Christmas
bonuses in those years when petitioner's operation is profitable is a matter of
contractual obligation on the part of the petitioner. It should be noted that the CBA
clearly states that petitioner 'shall grant mid-year and end-year bonuses to employees
following years in which it had profitable operations.' The only thing that is left to the
discretion of petitioner is the amount of such mid-year and end-year bonuses; but there
is no question that petitioner has to grant such bonuses. Since said bonuses granted in
fulfillment of petitioner's contractual obligations under the CBA are employee benefits
enjoyed by petitioner's employees at the time PD 851 took effect and since the payment
of such bonuses is obligatory on the part of petitioner, the petitioner does not come
under the exempting clause of PD 851 and it has to pay its employees the 13th month
pay required under said 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.
 OSIAS ACADEMY V. DOLE
GR No. 83257-58, December 21, 1990

Facts:

On January 19 & 21, 1981, 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 an order awarding
the private respondent salary and allowance differentials?

Held:

No, it is well established in 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 (Purefoods Corp. v. NLRC, 171
SCRA415 [1989]; Buiser v. Leogardo, Jr., 131 SCRA 151 [1984]), which is not obtaining in
the present case. The petition is dismissed and appealed order is affirmed.
 DAVAO FRUITS CORPORATION V ALU
GR no. 85073, August 24, 1993
Facts:
On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of
all the rank-and-file workers and employees of petitioner, filed a complaint (NLRC Case
No. 1791-MC-XI-82) before the Ministry of Labor and Employment, Regional
Arbitration Branch XI, Davao City, against petitioner, for "Payment of the Thirteenth-
Month Pay Differentials." Respondent ALU sought to recover from petitioner the
thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to
their sick, vacation and maternity leaves, premium for work done on rest days and
special holidays, and pay for regular holidays which petitioner, allegedly in disregard
of company practice since 1975, excluded from the computation of the thirteenth month
pay for 1982.

The Labor Arbiter decided in favor of respondent ALU. Petitioner appealed the decision
of the Labor Arbiter to the NLRC, which affirmed the said decision accordingly
dismissed the appeal for lack of merit.

Issue: Whether or not in the computation of the thirteenth month pay given by
employers to their employees under P.D. No. 851, payments for sick, vacation and
maternity leaves, premiums for work done on rest days and special holidays, and pay
for regular holidays may be excluded in the computation and payment thereof,
regardless of long-standing company practice.

Held:
Petition is dismissed. Under Presidential Decree No. 851 thirteenth month pay shall
mean one twelfth (1/12) of the basic salary of an employee within a calendar year and
basic salary shall include all remunerations or earnings paid by an employer to an
employee for services rendered but may not include cost of living allowances.
Furthermore, the Department of Labor and Employment issued on January 16, 1976
issued the "Supplementary Rules and Regulations Implementing P.D. No. 851" which in
paragraph 4 thereof further defines the term "basic salary," thus:
4. Overtime pay, earnings and other remunerations which are not part of the basic
salary shall not be included in the computation of the 13th month pay.
In other words, whatever compensation an employee receives for an eight-hour work
daily or the daily wage rate is the basic salary. Any compensation or remuneration
other than the daily wage rate is excluded. It follows therefore, that payments for sick,
vacation and maternity leaves, premium for work done on rest days special holidays, as
well as pay for regular holidays, are likewise excluded in computing the basic salary for
the purpose of determining the thirteenth month pay. However, from 1975 to 1981,
petitioner had freely, voluntarily and continuously included in the computation of its
employees' thirteenth month pay, the payments for sick, vacation and maternity leaves,
premiums for work done on rest days and special holidays, and pay for regular
holidays. The considerable length of time the questioned items had been included by
petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to
negate any claim of mistake.

A company practice favorable to the employees had indeed been established and the
payments made pursuant thereto, ripened into benefits enjoyed by them. And any
benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer.
 PHILIPPINE FUJI XEROX CORP. VS. CRESENCIANO B. TRAJANO AND
PHILIPPINE FUJI XEROX EMPLOYEES UNION
G.R. No. L-102552, December 10, 1993

Facts:

A routine inspection was conducted on May 2, 1989 in the premises of petitioner Boie-
Takeda Chemicals, Inc. by Laborand Development Officer Reynaldo B. Ramos under
Inspection Authority
No. 4-209-89. Finding that Boie-Takeda had not been including the commissions earned
by its medical representatives in the computation of their 13th month pay, Ramos
served a Notice of Inspection Results on Boie-Takeda requiring Boie-Takeda within ten
(10) calendar days from notice to effect restitution or correction of the underpayment of
13th month pay for the year(s) 1986, 1987 and 1988 of Med Rep. A similar Routine
Inspection was conducted in the premises of Philippine Fuji Xerox Corp. on September
7, 1989.

In their almost identically-worded petitioner, petitioners, through common counsel,

attribute grave abuse of discretion to respondent labor officials. They maintain that
under P.D. 851, the 13th month pay is based solely on basic salary. As defined by the
law itself and clarified by the implementing and Supplementary Rules as well as by the
Supreme Court in a long line of decisions, remunerations which do not form part of the
basic or regular salary of an employee, such as commissions, should not be considered
in the computation of the 13th month pay.

Issue: Whether or not the Revised Guidelines on the Implementation of the 13th Month
Pay Law issued by then Secretary Drilon providing for the inclusion of commissions in
the 13th month pay were issued in excess of the statutory authority conferred by P.D.
851.

Held:

Yes. In remunerative schemes consisting of a fixed or guaranteed wage plus

commission, the fixed or guaranteed wage is patently the "basic salary" for this is what
the employee receives for a standard work period. Commissions are given for extra
efforts exerted in consummating sales or other related transactions. They are, as such,
additional pay, which this Court has made clear do not form part of the "basic salary.

In including commissions in the computation of the 13th month pay, the second
paragraph of Section 5(a) of the Revised Guidelines on the Implementation of the 13th
Month Pay Law unduly expanded the concept of “basic salary” as defined in P.D. 851.
It is a fundamental rule that implementing rules cannot add to or detract from the
provisions of the law it is designed to implement. Administrative regulations adopted
under legislative authority by a particular department must be in harmony with the
provisions of the law they are intended to carry into effect. They cannot widen its scope.
An administrative agency cannot amend an act of Congress.
PHIL. AGRICULTURAL COMMERCIAL & INDUSTRIAL WORKERS UNION VS.
NLRC
G.R. NO. 107994,August 14, 1995

Facts:

Petitioner union complaint for payment of 13th month pay to the drivers and
conductors of respondent company, on the ground that although said drivers and
conductors are compensated on a purely commission basis as described in their 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 are compensated on
a purely commission basis, they are not entitled to 13th month pay pursuant to the
exempting provisions enumerated in paragraph 2 of the Revised Guidelines on the
Implementation of the 13th Month Pay Law. Section of Article XIV of the CBA expressly
provides 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.

Issue: Whether or not the bus drivers and conductors of respondent Vallacar Transit,
Inc. are entitled to 13th month pay.

Held:

Yes. 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.
In the case at bench, 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 (8) hours work.
Thus is correctly construed in the MOLE Explanatory Bulletin No. 86-12.
The 13th month pay of bus drivers and conductors must be one-twelfth (1/12) of their
total earnings during the calendar year.

ARCHILLES MANUFACTURING CORP. VS. NLRC

 G.R. No. 107225 June 2, 1995

Facts:

Archilles Manufacturing Corporation (ARCHILLES for brevity), Alberto Yu and Adrian

Yu are the petitioners, the latter two (2) being the Chairman and the Vice-President of
ARCHILLES, respectively. Private respondents Geronimo Manuel, Arnulfo Diaz, Jaime
Carunungan and Benjamin Rindon were employed by ARCHILLES as laborers in its
steel factory located in Barangay Pandayan, Meycauayan, Bulacan, each receiving a
daily wage of P96.00.

Private respondents filed a complaint for illegal dismissal. On 10 July 1991 the Labor
Arbiter found the dismissal of private respondents illegal and ordered their
reinstatement as well as the payment to them the backwages, proportionate 13th month
pay for the year 1990 and attorney's fees.

Issue: Whether or not the award of 13th Month Pay was proper.

Held:

Yes. 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. 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."

Furthermore, Sec. 4 of the original Implementing Rules of P.D. 851 mandates employers
to pay their employees a 13th month pay not later than the 24th of December every year
provided that they have worked for at least one (1) month during a calendar year. In
effect, this statutory benefit is automatically vested in the employee who has at least
worked for one month during the calendar year.

As correctly stated by the Solicitor General, such benefit may not be lost or forfeited
even in the event of the employee's subsequent dismissal for cause without violating his
property rights.

UNITED CMC TEXTILE WORKERS UNION VS. VALENZUELA, 149 SCRA 424
Facts: Petitioner union Bled a complaint against CTMI for non-payment of the 1978
Christmas bonus of rank and file employees as provided in their CBA. The decision of
the SC has become final and executor in favor of the petitioner union.

Subsequently, CTMI filed an appeal stating that the decision of the SC has become moot
and academic by virtue of a previous jurisprudence (La Carlota) ruling that employers
already paying the equivalent of the 13th month pay to their employees, such as
Christmas bonus, are under no legal obligation to pay an additional month pay
prescribed under PD 851. Respondent Labor Arbiter refused to continue with the
execution of the decision contending that it has become moot and academic.

Issue: 1. Whether or not employer paying its employees the Christmas bonus under
the CBA is no longer required to pay the 13th month pay provided under PD 851.

2. Whether or not the Carlota ruling is applicable in the case herein.

Held: 1. Yes. 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 provide, thus the intention is clear that said bonus is meant to be in addition to the
legal requirement.

2. No. La Carlota doctrine cannot be applied because judgments which had been
long become final and executory can no longer be amended or modified by the courts.
Such doctrine known as “the law of the case.”

UNIVERSAL CORN PRODUCTS VS. NLRC, 153 SCRA 191

Facts: The petitioner invokes National Federation of Sugar Workers (NFSW) v. Ovejera,
the 13th-month pay law, does not cover employers already paying their employees an
"equivalent" to the 13th month pay. Sometime in May, 1972, the petitioner and the
Universal Corn Products Workers Union entered into a collective bargaining agreement
in which it was provided, among other things, that: the company agrees to grant all
regular workers within the bargaining unit with at least one (1) year of continuous
service, a Christmas bonus equivalent to the regular wages for seven (7) working days,
effective December, 1972. The bonus shall be given to the workers on the second week
of December. 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 into 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 or not employer paying its13th month pay provided under PD 851 is
no longer required to pay Christmas bonus.
2. Whether or not 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
forhaving 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 as a consequence 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 collective
bargaining agreement, if no agreement and negotiations are continued, all the
provisions of this Agreement shall remain in full force up to the time a new
agreement is executed.

WHEREFORE, premises considered, the petition is hereby DISMISSED. The Decision

of the public respondent NLRC promulgated on February 11, 1982, and its
Resolution dated March 23, 1982, are hereby AFFIRMED. The temporary restraining
order issued on May 19, 1982 is LIFTED.

This Decision is IMMEDIATELY EXECUTORY.

METRO TRANSIT ORGANIZATION VS. NLRC, 245 SCRA 767

Facts:
In this Petition for Certiorari, petitioner Metro Transit Organization, Inc. ("Metro") asks
us to set aside the Decision and Resolution of the National Labor Relations Commission
("NLRC") dated 30 March and 22 June 1994 respectively in NLRC-NCR- CA No. 000042-
92 ordering it to pay its supervisory employees amounts representing (i) a demanded
wage increase based on company practice and (ii) a correction or adjustment of an
underpayment of an annual wage increase granted in the collective bargaining
agreement (CBA) between Metro and herein private respondent Supervisory
Employees Association Metro ("SEAM").

Issue: Whether or not a bonus forms part of wages depends upon the circumstances
and conditions for its payment.

Held:

As a rule, a bonus is an act of liberality which cannot be demanded as a matter or right.

But a bonus becomes a demandable or enforceable obligation when it is made part of
the wage or salary or compensation of the employee. Whether or not a bonus forms part
of wages depends upon the circumstances and conditions for its payment. If it is
additional compensation which the employer promised and agreed to give without any
conditions instead for its payment, such as successful business or greater production or
output, then it is of he Where it is not payable to all, but only to some employees and
only when their labor becomes more e6cient or productive, it is only an inducement for
efficiency, a prize therefore, and not a part of the wage.

LOURDES G. MARCOS vs NLRC

G.R. No. 111744 September 8, 1995

Facts:
Petitioners were regular employees of private respondent Insular Life Assurance Co:,
Ltd., but they were dismissed on November 1990 when their positions were declared
redundant. Private respondent required petitioners to execute a "Release and
Quitclaim," and petitioners complied but with a written protest reiterating their
previous demand that they were nonetheless entitled to receive their service awards.

Issue: Whether or not petitioners were estopped from claiming service award,
performance and anniversary bonuses.

Held:

No. The acceptance of termination does not divest a laborer of the right to prosecute his
employer for unfair labor practice acts. Quitclaims and/or complete releases are against
public policy and, therefore, null and void.
In the instant case, it is an undisputed fact that when petitioners signed the instrument
of release and quitclaim, they made a written manifestation reserving their right to
demand the payment of their service awards. The element of total voluntariness in
executing that instrument is negated by the fact that they expressly stated therein their
claim for the service awards, a manifestation equivalent to a protest and a disavowal of
any waiver thereof. Quitclaims and/or complete releases executed by the employees do
not estopped them from pursuing their claims arising from unfair labor practices of the
employer. However, in the case at bar, equity demands that the performance and
anniversary bonuses should be prorated to the number of months that petitioners
actually served respondent company in the year 1990.

EMPLOYERS CONFEDERATION OF THE PHILIPPINES vs NWPC

G.R. No. 96169 September 24, 1991

Facts:
Petitioners ECOP questioned the validity of the wage order issued by the RTWPB dated
October 23, 1990 pursuant to the authority granted by RA 6727. The wage order
increased the minimum wage by P17.00 daily in the National Capital Region. The wage
order is applied to all workers and employees in the private sector including those who
are paid above the statutory wage rate. Petitioners contend that the power of RTWPB
was delegated, through RA 6727, to grant minimum wage adjustments and in the
absence of authority, it can only adjust floor wages.

Issue: Whether or not the wage order issued by RTWPB is valid.

Held:

Yes. Article 124 of the Labor Code provides that the regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically
feasible to maintain the minimum standards of living necessary for the health, efficiency
and general well-being of the employees within the framework of the national economic
and social development program. In the determination of such regional minimum
wages, the Regional Board shall, among other relevant factors, consider the following:
(a) The demand for living wages; (b) Wage adjustment vis-a-vis the consumer price
index; (c) The cost of living and changes or increases therein; (d) The needs of workers
and their families; (e) The need to induce industries to invest in the countryside; (f)
Improvements in standards of living; (g) The prevailing wage levels; (h) Fair return of
the capital invested and capacity to pay of employers; (i) Effects of employment
generation and family income; and (j) The equitable distribution of income and wealth
along the imperatives of economic and social development." The wage order was not
acted in excess of board’s authority. RA 6727 gave statutory standards for fixing the
minimum wage. The law gave reasonable limitations to the delegated power of the
board.

AISA vs NLRC
G.R. No. 111722 May 27, 1997

Facts:
Private respondents, security guards of petitioner AISA, filed a complaint against AISA
for non-compliance with the current minimum wage order. AISA alleges that payment
of the wage increases under the current minimum wage order should be borne
exclusively by DMMSU. It further contends that Articles 106, 107 and 109 of the Labor
Code generally refer to the failure of the contractor or sub-contractor to pay wages in
accordance with the Labor Code with a mandate that failure to pay such wages would
make the employer and contractor jointly and severally liable for such payment.

Issue: Whether or not petitioner is jointly and severally liable with DMMSU.

Held:

The joint and several liability of the contractor and the principal is mandated by the
Articles 106, 107 and 109 of 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 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.

In the case at bar, it is not disputed that private respondents are the employees of AISA.
Neither is there any question that they were assigned to guard the premises of DMMSU
pursuant to the latter's security service agreement with AISA and that these two entities
paid their wage increases. AISA cannot escape liability since the law provides for the
joint and solidary liability of the principal and the contractor to protect the laborers.

ILAW AT BUKLOD NG MANGGAGAWA (IBM) vs. NLRC ET AL., 198 SCRA 586

Facts:

IBM representing 4500 employees of SMC working at various plants, offices and
warehouses in NCR presented to the company a demand for correction of the
significant distortion in the workers’ wages pursuant to the Wage Rationalization Act.
Demand unheeded by company hence the union members refused to render overtime
services until the distortion has been corrected by SMC. It appears that the employees
working hours/schedule has been freely observed by the employees for the past 5 years
and due to the abandonment of the longstanding schedule of work and reversion to the
eight-hour shift substantial losses were incurred by SMC.

SMC filed a complaint with arbitration branch of NLRC then before the NLRC for the
latter to declare the strike illegal. Union’s contention: workers’ refusal to work beyond 8
hours was a legitimate means of compelling SMC to correct distortion. The coordinated
reduction by the Union’s members of the work time in order to compel SMC to yield to
the demand was an illegal and unprotected activity.

Issue: Whether or not the strike was legal

Held:

Yes. The strike invoking the issue of wage distortion is illegal. The legality of these
activities depends on the legality of the purposes sought to be attained. These joint or
coordinated activities may be forbidden or restricted by law or contract. The legislative
intent that solution of the problem of wage distortions shall be sought by voluntary
negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of
the employees or management, is made clear in the rules implementing RA 6727 issued
by the Secretary of Labor and Employment pursuant to the authority granted by Section
13 of the Act. Section 16, Chapter I of these implementing rules, after reiterating the
policy that wage distortions be first settled voluntarily by the parties and eventually by
compulsory arbitration, declares that, “Any issue involving wage distortion shall not be
a ground for a strike/lockout.”

Moreover, the collective bargaining agreement between the SMC and the Union,
relevant provisions of which are quoted by the former without the latter’s demurring to
the accuracy of the quotation, also prescribes a similar eschewal of strikes or other
similar or related concerted activities as a mode of resolving disputes or controversies,
generally, said agreement clearly stating that settlement of “all disputes, disagreements
or controversies of any kind” should be achieved by the stipulated grievance procedure
and ultimately by arbitration.

EAGLE SECURITY AGENCY vs. NLRC

173 SCRA 479

Facts:

Employees of Eagle Security Agency (ESA), security guards in the Philippine

Tuberculosis Society, Inc. (PTSI), 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 or not ESA and PTSI should be jointly and severally liable for the wage
increases.

Held:

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.

MINDANAO TERMINAL AND BROKERAGE SERVICE vs. ROLDAN-

CONFESSOR

Facts:

Petitioner Mindanao Terminal and Brokerage Service, Inc., (Company) and respondent
Associated Labor Unions, (Union) entered into a collective bargaining agreement for a
period of five (5) years, starting on August 1, 1989, and ending July 31, 1994. On the
third year of the CBA the Company and the Union met to renegotiate the provisions of
the CBA for the fourth and fifth years. The parties, however, failed to resolve some of
their differences, as a result of which a deadlock developed.

On November 12, 1992, a formal notice of deadlock was sent to the Company on the
following issues: wages, vacation leave, sick leave, hospitalization, optional retirement,
13th month pay and signing bonus. On November 18, 1992, the Company announced a
cost-cutting or retrenchment program. On December 18, 1992, as a result of a conference
called by the NCMB, the Union and the Company went back to the bargaining.

The NCMB tried to settle the issues of creditability and retroactivity, however the
conciliation was proved futile, hence Secretary of Secretary of Labor assumed
jurisdiction over the dispute. Secretary of Labor issued an Order dated May 14, 1993,
ordering the Company and the Union to incorporate into their existing collective
bargaining agreement all improvements reached by them in the course of
renegotiations. The Secretary of Labor held that the 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 on August 1, 1993 until the expiration of the CBA.

Issue: Whether or not the Secretary of Labor has authority to decree retroaction of,
Wage Increase, CBA provision.

Held:

Yes. The Court finds that as early as January 14, 1993, well within the six (6) month
period provided by law, the Company and the Union have perfected their agreement.
The order of the Secretary of Labor may be considered in the nature of an arbitral
award, pursuant to Art. 263(g) of the Labor Code, and, therefore, binding on the parties.
After all, the Secretary of Labor assumed jurisdiction over the dispute because
petitioner asked the Secretary of Labor to do so after the NCMB failed to make the
parties come to an agreement.

Accordingly, making a belated issue of creditability, petitioner is correctly said to have

delayed the agreement beyond the six (6) month period so as to minimize its expenses
to the detriment of its workers and its conduct to smack of bad faith and to run counter
to the good faith required in Collective Bargaining. If petitioner wanted to be given
credit for the wage increases in the event of future mandated wage increases, it should
have expressly stated its reservation during the early part of the CBA negotiations.

C. PLANAS COMMERCIAL and MARCIAL COHU vs. NATIONAL LABOR

RELATIONS COMMISSION and RAMIL DE LOS REYES

Facts:

C PLANAS COMMERCIAL, a business entity engaged in merchandising and retailing

of plastic products and fruits, was charged by respondent Ramil de los Reyes with
illegal dismissal and non-payment of basic wages and certain monetary benefits.
On 15 April 1994 the Labor Arbiter found petitioners to have illegally dismissed Ramil
de los Reyes. Consequently, petitioners were ordered to reinstate him with back wages
and to pay him salary differentials, 13th month pay and service incentive pay.
On appeal public respondent NLRC reversed and set aside the decision of the Labor
Arbiter except that salary differentials in the amount of P36,342.80 which NLRC
sustained.

Issue: Whether or not NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction for sustaining the award of salary differentials to Ramil de los
Reyes.

Held:

In light of the pertinent facts, we find the petition without merit. Petitioners invoke the
exemption provided by law for retail establishments which employ not more than ten
(10) workers to justify their non-liability for the salary differentials in question. They
insist that PLANAS is a retail establishment leasing a very small and cramped stall in
the Divisoria market which cannot accomodate more than ten (10) workers in the
conduct of its business.

We are unconvinced. The records disclose de los Reyes' clear entitlement to salary
differentials. Well-settled is the rule that factual findings of labor officials who are
deemed to have acquired expertise in matters within their jurisdiction are generally
accorded not only respect but even finality and bind this Court when supported by
substantial evidence or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.29 Thus, as long as their decisions are
devoid of any unfairness or arbitratriness in the process of their deduction from the
evidence proferred by the parties before them, all that is left is our stamp of finality by
affirming the factual findings made by them.30 In this case, the award of salary
differentials by the NLRC in favor of de los Reyes was made pursuant to RA 6727
otherwise known as the Wage Rationalization Act, and the Rules Implementing Wage
Order Nos. NCR-01 and NCR-01-A and Wage Order Nos. NCR-02 and NCR-02-A.

DUNCAN ASSOC. OF DETAILMAN-PTGWO VS.

GLAXO WELLCOME PHILS., INC.
G.R. No. 162994, September 17, 2004

Facts: Tecson was hired by Glaxo on Oct. 24, 1995. Contract of employment signed by
Tecson stipulates, among others, that he agrees to study and abide by the existing
company rules; to disclose to management any existing future relationship by
consanguinity or affinity with co-employees or employees with competing drug
companies and should management find that such relationship poses a prossible
conflict of interest, to resign from the company. Company's Code of Employee Conduct
provides the same with stipulation that management may transfer the employee to
another department in a non-counterchecking position or preparation for employment
outside of the company after 6 months. Before getting married, Tecson's District
Manager reminded him several times of the conflict of interest but marriage took place
in Sept. 1998. In Jan. 1999, Tecson's superiors informed him of conflict of intrest. Tecson
asked for time to comply with the condition (that either he or Betsy resign from their
respective positions). Unable to comply with condition, Glaxo transferred Tecson to the
Butuan-Surigao City-Agusan del Sur sales area. After his request against transfer was
denied, Tecson brought the matter to Glaxo's Grievance Committee and while pending,
he continued to act as medical representative in the Camarines Sur-Camarines Norte
sales area. On Nov. 15, 2000, the National Conciliation and Mediation Board ruled that
Glaxo's policy was valid.

Issue: Whether Tecson was constructively dismissed.

Held: The Court finds no merit in petitioners’ contention that Tescon was constructively
dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area
to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was excluded
from attending the company’s seminar on new products which were directly competing
with similar products manufactured by Astra. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution
in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee.30 None of these conditions are present in the instant case.
The record does not show that Tescon was demoted or unduly discriminated upon by
reason of such transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City sales area:
. . . In this case, petitioner’s transfer to another place of assignment was merely in
keeping with the policy of the company in avoidance of conflict of interest, and thus
valid…Note that [Tecson’s] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close coordination
with District Managers and Medical Representatives. Her duties include monitoring
sales of Astra products, conducting sales drives, establishing and furthering
relationship with customers, collection, monitoring and managing Astra’s inventory…
she therefore takes an active participation in the market war characterized as it is by
stiff competition among pharmaceutical companies. Moreover, and this is significant,
petitioner’s sales territory covers Camarines Sur and Camarines Norte while his wife is
supervising a branch of her employer in Albay. The proximity of their areas of
responsibility, all in the same Bicol Region, renders the conflict of interest not only
possible, but actual, as learning by one spouse of the other’s market strategies in the
region would be inevitable. [Management’s] appreciation of a conflict of interest is
therefore not merely illusory and wanting in factual basis…

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA,

vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA
G.R. No. 164774, April 12, 2006

Facts:

The evidence for the petitioners show that respondents Ronaldo D. Simbol , Wilfreda N.
Comia and Lorna E. Estrella were all regular employees of the company. Star Paper
Corporation employed Ronaldo Simbol on Oct 1993. He met Alma Dayrit, also an
employee of the company, whom he married. Before marriage, Josephine Ongsitco, the
manager advised the couple that one of them must resign if they decided to get married
pursuant to a company policy to which Simbol complied.

On February 5, 1997 Comia was hired by the company. She met Howard Comia, a co-
employee, whom she married on June1, 2000. Ongsitco likewise reminded them the
company policy, Comia resigned on June 30,2000.

Estrella was also hired on July 29, 1994. She met Luisito Zuñiga also a co-worker.
Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company
allegedly could have terminated her services due to immorality but she opted to resign
on December21, 1999.

Labor Arbiter dismissed the complaint and states that the company policy was decreed
pursuant to what the respondent corporation perceived as management prerogative.
On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter. In
its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision.

Issue: Whether or not the questioned policy violates the rights of the employee under
theConstitution and the Labor Code?

Held: The Court ruled on the side of the respondents.Article 136 of the Labor Code
which provides:It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.It is significant to note that respondents were hired after they were found fit
for the job, but were asked to resign when they married a co-employee. Petitioners
failed to show how the marriage of Simbol to Alma Dayrit could be detrimental to its
business operations. It must be reasonable under the circumstances to qualify as a valid
exercise of management prerogative.The questioned policy may not facially violate
Article 136 of the Labor Code but it creates a disproportionate effect. The failure of
petitioners to prove a legitimate business concern in imposing the questioned policy
cannot prejudice the employee’s right to be free from arbitrary discrimination based
upon stereotypes of married persons working together in one company.

EMS MANPOWER & PLACEMENT SERVICES vs. NATIONAL LABOR

RELATIONS COMMISSION and LUISA G. MANUEL
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 filed 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.

Issue: Whether Luisa Manuel was illegally dismissed or if her termination was for a
just and valid cause

Held:

This Court is convinced that Luisa was dismissed from her employment without any
valid cause, in contravention of her security of tenure, as guaranteed by the
Constitution and the Labor Code, as amended. Under Article XIII, Section 3 of the
Charter," (t)he State shall afford full protection to labor, local and overseas," and all
workers "shall be entitled to security to tenure." In basically the same tenor, the Labor
Code provides in Article 279 that" (i)n cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized by
this Title (on termination of employment)."

Finally, contrary to the claim of EMS that there was no illegal dismissal in the case at
bar because Yee adequately complied with the employment contract by paying Luisa a
one-month separation pay in lieu of notice and shouldering her repatriation expenses,
suffice it to say that said contract is not in conformity with our laws inasmuch as it
failed to stipulate the "just causes for the termination of the contract or of the service of
the workers," as mandated by Section 14(e), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code.