1. PHILIPPINE COMMERCIAL INTERNATIONAL BANK VS.

ANASTACIO D. ABAD
G.R. No. 158045. February 28, 2005
Facts: Anastacio D. Abad was the senior Assistant Manager (Sales
Head) of petitioner Philippine Commercial International Bank (PCI
Bank now Equitable PCI Bank)], when he was dismissed from his
work. Abad received a Memorandum from petitioner Bank
concerning the irregular clearing of PNB-Naval Check of Sixtu Chu,
the Banks valued client. Abad submitted his Answer,
categorically denying that he instructed his subordinates to
validate the out-of-town checks of Sixtu Chu presented for deposit
or encashment as local clearing checks. During the actual
investigation conducted by petitioner Bank, several transactions
violative of the Banks Policies and Rules and Regulations were
uncovered by the Fact-Finding Committee. Consequently, the
Fact-Finding Officer of petitioner Bank issued another
Memorandum to Abad asking the latter to explain the newly
discovered irregularities. Not satisfied with the explanations of
Abad, petitioner Bank served another Memorandum, terminating
his employment effective immediately upon receipt of the same.
Thus, Abad instituted a Complaint for Illegal Dismissal.
Issue: Whether or not awarding of separation pay equivalent to
one-half (1/2) months pay for every year of service to respondent
is gross, the same being contrary to law and jurisprudence.
Held: The award of separation pay is required for dismissals due
to causes specified under Articles 283 and 284 of the Labor Code,
as well as for illegal dismissals in which reinstatement is no longer
feasible. On the other hand, an employee dismissed for any of the
just causes enumerated under Article 282 of the Labor Code is
not, as a rule, entitled to separation pay.
As an exception, allowing the grant of separation pay or some
other financial assistance to an employee dismissed for just

causes is based on equity. The Court has granted separation pay

as a measure of social justice even when an employee has been
validly dismissed, as long as the dismissal was not due to serious
misconduct or reflective of personal integrity or morality.
2. BERNARDINO A. CAINGAT, vs. NATIONAL LABOR
RELATIONS COMMISSION, STA. LUCIA REALTY & DEVT.,
INC., R.S. MAINTENANCE & SERVICES, INC., and R.S. NIGHT
HAWK SECURITY & INVESTIGATION AGENCY, INC
G.R. No. 154308. March 10, 2005
Facts: Petitioner Benardino A. Caingat was hired by respondent
Sta. Lucia Realty and Development, Inc. (SLRDI) as the General
Manager of SLRDIs sister companies, R.S. Night Hawk Security
and Investigation Agency, Inc., and R.S. Maintenance and Services
Inc. both organized to service the malls and subdivisions owned
by SLRDI. In connection with this, he was allowed to use 10% of
the total payroll of respondent R.S. Maintenance to defray
operating expenses. Later, the Finance Manager discovered that
petitioner deposited company funds in the latters personal
account and used the funds to pay his credit card purchases,
utility bills, trips abroad and acquisition of a lot in Laguna. Thus,
complainant received a memorandum stating that upon
verification of financial records, it was found that the latter have
misappropriated company funds in the sum of about P5,
000,000.00 and is hereby suspended from his duties as Manager
of the stated companies. Without conducting any investigation,
respondent R.S. Maintenance filed a complaint for sum of money
and damages with prayer for writ of preliminary attachment.
Petitioner in turn filed a complaint for illegal dismissal against the
respondents.
Issue: Did respondents illegally dismiss petitioner?
Held: As firmly entrenched in our jurisprudence, loss of trust and

confidence as a just cause for termination of employment is

premised on the fact that an employee concerned holds a position
where greater trust is placed by management and from whom
greater fidelity to duty is correspondingly expected. This includes
managerial personnel entrusted with confidence on delicate
matters, such as the custody, handling, or care and protection of
the employers property. The betrayal of this trust is the essence
of the offense for which an employee is penalized. Managements
loss of trust and confidence on petitioner was well justified.
Private respondents had every right to dismiss petitioner.
Petitioners long period of disappearance from the scene and
departure for abroad before making a claim of illegal dismissal
does not contribute to its credibility.
Nonetheless, while dismissal may truly be justified by loss of
confidence, the management failed to observe fully the
procedural requirement of due process for the termination of
petitioners employment. Two notices should be sent to the
employee. The respondents only sent the first notice, gleaned
from the memorandum. There was no second notice.
RETRENCHMENT; NOTICE REQUIREMENT;SEPARATION PAY
3. JAKA FOOD PROCESSING CORPORATION, vs. DARWIN
PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON
DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB.
G.R. No. 151378. March 28, 2005
Facts: Respondents were earlier hired by petitioner JAKA Foods
Processing Corporation until the latter terminated their
employment because the corporation was in dire financial
straits. It is not disputed, however, that the termination was
effected without JAKA complying with the requirement under
Article 283 of the Labor Code regarding the service of a written
notice upon the employees and the Department of Labor and
Employment at least one (1) month before the intended date of

termination. Respondents filed complaints for illegal dismissal,

underpayment of wages and nonpayment of service incentive
leave and 13th month pay against JAKA. The Labor Arbiter
rendered a decision declaring the termination illegal and ordering
JAKA to reinstate respondents with full backwages, and separation
pay if reinstatement is not possible. The Court of Appeals
reversed said decision and ordered respondent JAKA to pay
petitioners separation pay equivalent to one (1) month salary, the
proportionate 13th month pay and, in addition, full backwages
from the time their employment was terminated.
Issue: What are the legal implications of a situation where an
employee is dismissed for cause but such dismissal was effected
without the employers compliance with the notice requirement
under the Labor Code?
Held: It was established that there was ground for respondents
dismissal, i.e., retrenchment, which is one of the authorized
causes enumerated under Article 283 of the Labor Code. Likewise,
it is established that JAKA failed to comply with the notice
requirement under the same Article. Considering the factual
circumstances in the instant case, the Court deem it proper to fix
the indemnity at P50, 000.00. The Court of Appeals have been in
error when it ordered JAKA to pay respondents separation pay
equivalent to one (1) month salary for every year of service. In
all cases of business closure or cessation of operation or
undertaking of the employer, the affected employee is entitled to
separation pay. This is consistent with the state policy of treating
labor as a primary social economic force, affording full protection
to its rights as well as its welfare. The exception is when the
closure of business or cessation of operations is due to serious
business losses or financial reverses; duly proved, in which case,
the right of affected employees to separation pay is lost for
obvious reasons.

4. HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L.

STARKE VS. CANDIDO
CUENCA ET AL.
G.R. No. 150478. April 15, 2005
Facts: Hacienda Bino is a 236-hectare sugar plantation located at
Negros Occidental, and represented in this case by Hortencia L.
Starke, owner and operator of the said hacienda. The 76
individual respondents were part of the workforce of Hacienda
Bino consisting of 220 workers, performing various works, such as
cultivation, planting of cane points, fertilization, watering,
weeding, harvesting, and loading of harvested sugarcanes to
cargo trucks. During the off-milling season, petitioner Starke
issued an Order or Notice which stated, that all Hacienda
employees who signed in favor of CARP are expressing their
desire to get out of employment on their own volition. The
respondents regarded such notice as a termination of their
employment. As a consequence, they filed a complaint for illegal
dismissal. The respondents as complainants alleged that they are
regular and permanent workers of the hacienda and that they
were dismissed without just and lawful cause.
Issue: Whether the respondents are regular or seasonal
employees.
Held: The primary standard for determining regular employment
is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or
business of the employer. There is no doubt that the respondents
were performing work necessary and desirable in the usual trade
or business of an employer. Hence, they can properly be classified
as regular employees. For respondents to be excluded from those
classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must
have been employed only for the duration of one season. While

the records sufficiently show that the respondents work in the

hacienda was seasonal in nature, there was, however, no proof
that they were hired for the duration of one season only.
5. ALABANG COUNTRY CLUB INC., ET AL. VS. NATIONAL
LABOR RELATIONS COMMISSION, ET AL.
G.R. No. 157611. August 9, 2005
Facts: Petitioner Alabang Country Club Inc. (ACCI), is a stock, nonprofit corporation that operates and maintains a country club and
various sports and recreational facilities for the exclusive use of
its members. Sometime in 1993, Francisco Ferrer, then President
of ACCI, requested its Internal Auditor, to conduct a study on the
profitability of ACCIs Food and Beverage Department (F & B
Department). Consequently, report showed that from 1989 to
1993, F & B Department had been incurring substantial losses.
Realizing that it was no longer profitable for ACCI to maintain its
own F & B Department, the management decided to cease from
operating the department and to open the same to a contractor,
such as a concessionaire, which would be willing to operate its
own food and beverage business within the club. Thus, ACCI sent
its F & B Department employees individual letters informing them
that their services were being terminated and that they would be
paid separation pay. The Union in turn, with the authority of
individual respondents, filed a complaint for illegal dismissal.
Issue: Whether or not the clubs right to terminate its employees
for an authorized cause, particularly to secure its continued
viability and existence is valid.
Held: When petitioner decided to cease operating its F & B
Department and open the same to a concessionaire, it did not
reduce the number of personnel assigned thereat. It terminated
the employment of all personnel assigned at the department.
Petitioners failure to prove that the closure of its F & B

Department was due to substantial losses notwithstanding, the

Court finds that individual respondents were dismissed on the
ground of closure or cessation of an undertaking not due to
serious business losses or financial reverses, which is allowed
under Article 283 of the Labor Code. The closure of operation of
an establishment or undertaking not due to serious business
losses or financial reverses includes both the complete cessation
of operations and the cessation of only part of a companys
activities.
ELEMENTS OF ILLEGAL RECRUITMENT IN LARGE SCALE
6. PEOPLE OF THE PHILIPPINES VS. ROSE DUJUA, ET AL.
G.R. Nos. 149014-16. February 5, 2004
Facts: Ramon Dujua, his mother Rose, his aunt, Editha Singh, and
his uncle, Guillermo Samson were charged with illegal recruitment
in large scale. Only Ramon was arrested. Four testified against
Ramon Dujua. All of them were promised work abroad upon
payment of fees but they were not actually deployed. Ramon
pleaded not guilty and denied the allegations that he was a
recruiter.
Issue: Whether or not illegal recruitment in large scale was
committed by Raon Dujua, et al.
Held: The essential elements of the crime of illegal recruitment in
large scale are: 1) The accused engages in acts of recruitment
and placement of workers defined under Article 13 (b) or in any
prohibited activities under Article 34 of the Labor Code; 2) the
accused has not complied with the guidelines issued by the
Secretary of Labor and Employment particularly with respect to
the securing of a license or an authority to recruit and deploy
workers either locally or overseas; and 3) the accused commits
the unlawful acts against three or more persons individually or as
a group.

All three elements were established beyond reasonable doubt.

First, the testimonies of the complaining witnesses satisfactorily
proved that Dujua promised them employment and assured them
of placement overseas. All of them identified Dujua as the person
who recruited them for employment abroad. As against the
positive and categorical testimonies of the three complainants,
Dujuas mere denials cannot prevail. As long as the prosecution is
able to establishthrough credible testimonial evidence that Dujua
has engaged in illegal recruitment , a conviction for the offense
can very well be justified.
Second, Dujua did not have any license or authority to recruit
persons for overseas work, as shown by the Certification issued
by the POEA. Neither did his employer, World Pack Travel and
Tours, possess such license or authority.
Third, it has been alleged and proven that Dujua undertook the
recruitment of more than three persons.
CBA; REFUSAL TO RENEGOTIATE ECONOMIC PROVISIONS OF THE
CBA BY THE MANAGEMENT CONSTITUTES ULP
7. GENERAL MILLING CORPORATION VS. HON. COURT OF
APPEALS
G.R. No. 146728. February 11, 2004
Facts: General Milling Corporation employed 190 workers. All the
employees were members of a union which is a duly certified
bargaining agent. The GMC and the union entered into a
collective bargaining agreement which included the issue of
representation that is effective for a term of three years which will
expire on November 30, 1991. On November 29, 1991, a day
before the expiration of the CBA, the union sent GMC a proposed
CBA, with a request that a counter proposal be submitted within
ten days. on October 1991, GMC received collective and individual
letters from the union members stating that they have withdrawn
from their union membership. On December 19, 1991, the union

disclaimed any massive disaffiliation of its union members. On

January 13, 1992, GMC dismissed an employee who is a union
member. The union protected the employee and requested GMC
to submit to the grievance procedure provided by the CBA, but
GMC argued that there was no basis to negotiate with a union
which is no longer existing. The union then filed a case with the
Labor Arbiter but the latter ruled that there must first be a
certification election to determine if the union still enjoys the
support of the workers.
Issue: Whether or not GMC is guilty of unfair labor practice for
violating its duty to bargain collectively and/or for interfering with
the right of its employees to self-organization.
Held: GMC is guilty of unfair labor practice when it refused to
negotiate with the union upon its request for the renegotiation of
the economic terms of the CBA on November 29, 1991. the
unions proposal was submitted within the prescribed 3-year
period from the date of effectivity of the CBA. It was obvious that
GMC had no valid reason to refuse to negotiate in good faith with
the union. The refusal to send counter proposal to the union and
to bargain anew on the economic terms of the CBA is tantamount
to an unfair labor practice under Article 248 of the Labor Code.
Under Article 252 of the Labor Code, both parties are required to
perform their mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an
agreement. The union lived up to this obligation when it
presented proposals for a new CBA to GMC within 3 years from
the effectivity of the original CBA. But GMC failed in its duty under
Article 252. What it did was to devise a flimsy excuse, by
questioning the existence of the union and the status of its
membership to prevent any negotiation. It bears stressing that
the procedure in collective bargaining prescribed by the Code is
mandatory because of the basic interest of the state in ensuring
lasting industrial peace.

The Court of Appeals found that the letters between February to

June, 1993 by 13 union members signifying their resignation from
the union clearly indicated that GMC exerted pressure on the
employees. We agree with the Court of Appeals conclusion that
the ill-timed letters of resignation from the union members
indicate that GMC interfered with the right of its employee to selforganization.
UNIONS; UNFAIR LABOR PRACTICE; STRIKES; ILLEGAL DISMISSAL
8. STAMFORD MARKETING CORP., ET AL. VS. JOSEPHINE
JULIAN, ET AL.
G.R. No. 145496. February 24, 2004
Facts: On November 2, 1994, Zoilo de la Cruz, president of the
Philippine Agricultural Commercial and Industrial Workers Union
(PACIWU-TUCP), sent a letter to Rosario Apacible, treasurer and
general manager of Stamford Marketing Corporation, GSP
Manufacturing Corporation, Giorgio Antonio Marketing
Corporation, Clementine Marketing Corporation and Ultimate
Concept Phils., Inc. The letter informed her that the rank-and-file
employees of the said companies had formed the Apacible
Enterprises Employees Union-PACIWU-TUCP and demanded that it
be recognized. After such notice, the following three cases arose:
In the First Case, Josephine Julian, president of PACIWU-TUCP,
Jacinta Tejada and Jecina Burabod, a Board Member and a
member of the said union, were dismissed. They filed a suit with
the Labor Arbiter alleging that their employer had not paid them
with their overtime pay, holiday pay/premiums, rest day premium,
13th month pay for the year 1994 salaries for services actually
rendered, and that illegal deduction had been made without their
consent from their salaries for a cash bond. Stamford alleged that
the three were dismissed for not reporting for work when required
to do so and for not giving notice or explanation when asked.
In the Second Case, PACIWU-TUCP filed, on behalf of 50

employees allegedly dismissed illegally for union membership by

the petitioners, a case for unfair labor practice against GSP which
denied such averments. GSP countered that the BLR did not list
Apacible Enterprises Employees Union as a local chapter of
PACIWU or TUCP. Thus, the strike that said union organized after
the GSP refused to negotiate with them was illegal and that they
refused to return to work when asked.
The Third Case was filed for claims of the 50 employees dismissed
in the second case. Petitioner corporations, however, maintained
that they have been paying complainants the wages/salaries
mandated by law and that the complaint should be dismissed in
view of the execution of quitclaims and waivers by the private
respondents.
The Labor Arbiter ordered the three cases consolidated as the
issues were interrelated and the respondent corporations were
under one management.
First Case: The dismissal was illegal and Stamford was ordered to
reinstate the complainants as well as pay the backwages and
other benefits claimed. It was held that the reassignment and
transfer of the complainants were forms of interference in the
formation and membership of a union, an unfair labor practice.
Stamford also failed to substantiate their claim that the said
employees abandoned their employment. It also failed to prove
the necessity of the cash deposit of P2,000 and failed to furnish
written notice of dismissal to any complainants. Further, it failed
to prove payments of the amounts being claimed.
Second Case: The strike was illegal and the officers of the union
have lost their employment status, thus terminating their
employment with GSP. GSP is however ordered to reinstate the
complainants who were members of the union without
backwages, save some employees specified. It was established
that the union was not registered, and thus had staged an illegal
strike. The officers of the union should be liable and dismissed,
but the members should not, as they acted in good faith in the
belief that their actions were within legal bounds.

Third Case: GSP was ordered to pay each complainant their

claims, as computed by each individual. All other claims were
dismissed for lack of merit. The Labor Arbiter found petitioners
liable for salary differentials and other monetary claims for
petitioners failure to sufficiently prove that it had paid the same
to complainants as required by law. It was also ordered to return
the cash deposits of the complainants, citing the same reasons as
in the First Case.
On appeal, the NLRC affirmed the decision in the First and Third
Cases, but set aside the judgment of the Second Case for further
proceedings in view of the factual issues involved.
On May 14, 1996, a Petition to Declare the Strike Illegal was filed
which was decided in favor of Stamford, upholding the dismissal
of the union officers. The officers made no prior notice to strike,
no vote was taken among union members, and the issue involved
was non-strikable, a demand for salary increases
On elevation to the appellate court, it was ruled that the officers
should be given separation pay, and that Jacina Burabod and the
rest of the members should be reinstated without loss of seniority,
plus backwages. It provided for the payment of the backwages
despite the illegality of the strike because the dismissals were
done prior to the strike. Such is considered an unfair labor
practice as there was lack of due process and valid cause. Thus,
the dismissed employees were still entitled to backwages and
reinstatement, with exception to the union officers who may be
given separation pay due to strained relations with their
employers.
Issues: (1) Whether or not the respondents union officers and
members were validly and legally dismisses from employment
considering the illegality of the strike.
(2) Whether or not the respondents union officers were entitled
to backwages, separation pay and reinstatement, respectively.
Held: (1) The termination of the union officers was legal under

Article 264 of the Labor Code as the strike conducted was illegal
and that illegal acts attended the mass action. Holding a strike is
a right that could be availed of by a legitimate labor organization,
which the union is not. Also, the mandatory requirements of
following the procedures in conducting a strike under paragraph
(c) and (f) of Article 263 were not followed by the union officers.
Article 264 provides for the consequences of an illegal strike, as
well as the distinction between officers and members who
participated therein. Knowingly participating in an illegal strike is
a sufficient ground to terminate the employment of a union officer
but mere participation is not sufficient ground for termination of
union members. Thus, absent clear and substantial proof, rankand-file union members may not be terminated. If he is
terminated, he is entitled to reinstatement.
The Court affirmed the ruling of the CA on the illegal dismissal of
the union members, as there was non-observance of due process
requirements and union busting by management. It also affirmed
that the charge of abandonment against Julian and Tejada were
without credence. It reversed the ruling that the dismissal was
unfair labor practice as there was nothing on record to show that
Julian and Tejada were discouraged from joining any union. The
dismissal of the union officers for participation in an illegal strike
was upheld. However, union officers also must be given the
required notices for terminating employment, and Article 264 of
the Labor Code does not authorize immediate dismissal of union
officers participating in an illegal strike. No such requisite notices
were given to the union officers.
The Court upheld the appellate courts ruling that the union
members, for having participated in the strike in good faith and in
believing that their actions were within the bound of the law
meant only to secure economic benefits for themselves, were
illegally dismissed hence entitled to reinstatement and
backwages.
(2) The Supreme Court declared the dismissal of the union officers
as valid hence, the award of separation pay was deleted.

However, as sanction for non-compliance with the notice

requirements for a lawful termination, backwages were awarded
to the union officers computed from the time they were dismissed
until the final entry of the judgment.
JURISDICTION OF THE LABOR ARBITERS AND THE NLRC
9. EVELYN TOLOSA VS. NATIONAL LABOR RELATIONS
COMMISSION
G.R. No. 149578. April 10, 2003
Facts: Captain Virgilio Tolosa was master of the vessel M/V Donna
owned by Quana-Kaiun, and was hired through its manning agent,
Asia Bulk Transport Phils., Inc. (Asia Bulk). During channeling
activities upon the vessels departure from Yokohama on
November 6, 1992, Capt. Tolosa was drenched with rainwater.
Subsequently, he contracted fever on November 11 which was
later on accompanied by loose bowel movement for the
succeeding 12 days. His condition was reported to Asia Bulk and
the US Coast Guard Headquarters in Hawaii on November 15.
However, before he could be evacuated, he died on November 18,
1992.
Evelyn Tolosa, the widow, filed a complaint before the POEA for
damages against Pedro Garate, Chief Mate of the vessel, Mario
Asis, Second Mate, Asia Bulk and Quana-Kaiun. The case was
transferred to the NLRC. The Labor Arbiter ruled in favor of the
widow, awarding actual damages plus legal interest, as well as
moral and exemplary damages and attorneys fees. On appeal to
the NLRC, the decision of the Labor Arbiter was vacated and the
complaint was dismissed for lack of jurisdiction over the subject
matter of the action pursuant to the provisions of the Labor Code,
as amended. Sustaining the NLRC, the CA ruled that the labor
commission had no jurisdiction over the subject matter of the
action filed by petitioner. Her cause did not arise from an
employer-employee relation, but from a quasi-delict or tort. Under

Article 217 (a)(4) of the Labor Code which allows an award of

damages incident to an employer-employee relation, the
damages awarded were not proper as she is not an employee, but
merely the wife of an employee.
Issues: (1) Whether or not the Labor Arbiter and the NLRC had
jurisdiction over petitioners action.
(2) Whether or not the monetary award granted by the Labor
arbiter has already reached finality.
Held: (1) The Court affirmed that the claim for damages was filed
not for claiming damages under the Labor Code but under the
Civil Code. The Court was convinced that the allegations were
based on a quasi-delict or tort. Also, she had claimed for actual
damages for loss of earning capacity based on a life expectancy
of 65 years, which is cognizable under the Civil Code and can be
recovered in an action based on a quasi-delict. Though damages
under a quasi-delict may be recoverable under the jurisdiction of
labor arbiters and the NLRC, the relief must be based on an action
that has reasonable casual connection with the Labor Code, labor
statutes or CBAs. It must be noted that a workers loss of earning
capacity and backlisting are not to be equated with wages,
overtime compensation or separation pay, and other labor
benefits that are generally cognized in labor disputes. The loss of
earning capacity is a relief or claim resulting from a quasi-delict or
a similar cause within the realm of Civil Law. In the present case,
Evelyn Tolosas claim for damages is not related to any other
claim under Article 217, other labor statutes, or CBAs. She cannot
anchor her claim for damages to Article 161 of the Labor Code,
which does not grant or specify a claim or relief. This provision is
only a safety and health standard under Book IV of the same
Code. The enforcement of this labor standard rests with the labor
secretary. It is not the NLRC but the regular courts that have
jurisdiction over action for damages, in which the employeremployee relation is merely incidental, and in which the cause of

action proceeds from a different source of obligation such as a

tort.
(2) On the finality of the award, the Court ruled that issues not
raised in the court below cannot be raised for the first time on
appeal. Thus, the issue being not brought to the attention of the
Court of Appeals first, this cannot be considered by the Supreme
Court. It would be tantamount to denial of the right to due process
against the respondents to do so.
ABANDONMENT OF WORK; REQUISITES
10. SAMUEL SAMARCA VS. ARC-MEN INDUSTRIES, INC.
G.R. No. 146118. September 29, 2003
Facts: Samuel Samarca was employed as a laborer by Arc-Men
Industries, Inc. On September 26, 1993, petitioner filed an
application for an emergency leave of absence on account of his
sons hospitalization. Upon his return for work, petitioner was
immediately served with a notice of respondents order
suspending him for 30 days. Feeling aggrieved, petitioner filed a
complaint for illegal suspension against respondent and its owner.
During the pendency of the complaint, petitioners 30-day
suspension ended. Consequently, respondent, in a letter, directed
petitioner to report for work immediately. However, he refused,
prompting respondent to send him a Notice to Terminate,
directing him to submit, within 5 days, a written explanation why
he should not be dismissed from the service for abandonment of
work. For his part, petitioner submitted a letter-reply explaining
that because of the pendency of his complaint for illegal
suspension with the Labor arbiter, he could not report for work.
Respondent, finding the petitioners written explanation
insufficient, decided to terminate his services via a Notice of
Termination. Consequently, petitioner filed an amended complaint
for illegal dismissal.
Issue: Whether or not petitioner abandoned his work.

Held: To constitute abandonment, two elements must concur: (1)

The failure to report for work or absence without valid or
justifiable reason, and (2) a clear intention to sever the employeremployee relationship manifested by some overt acts. Mere
absence is not sufficient. It is the employer who has the burden of
proof to show a deliberate and justified refusal of the employee to
resume his employment without any intention of returning.
The above twin essential requirements for abandonment to exist
are not present in the case at bar. Petitioners absence is not
without a justifiable reason. It must be recalled that upon receipt
of the Notice to Terminate by reason of abandonment, petitioner
sent respondent a letter explaining that he could not go back to
work because of the pendency of his complaint for illegal
suspension. And immediately after he was dismissed for
abandonment of work, he lost no time to amend his complaint to
illegal dismissal. This alone negates any intention on his part to
forsake his work. It is a settled doctrine that the filing of a
complaint for illegal dismissal is inconsistent with the charge of
abandonment, for an employee who takes steps to protest his
dismissal cannot by logic be said to have abandoned his work.
ABANDONMENT OF WORK; PROCEDURE FOR TERMINATING
AN EMPLOYEE; ILLEGAL DISMISSAL
11. AGABON VS. NATIONAL LABOR RELATIONS
COMMISSION
G.R. No. 158693. November 17, 2004
Facts: Private respondent Riviera Home Improvements, Inc. is
engaged in the business of selling and installing ornamental and
construction materials. It employed petitioner Virgilio Agabon and
Jenny Agabon as gypsum board and cornice installers on January
2, 1992 until February 23, 1999 when they were dismissed for
abandonment of work. Petitioners then filed a complaint for illegal

dismissal. The Labor Arbiter rendered a decision declaring the

dismissal illegal. On appeal, the NLRC reversed the decision
because it found that the petitioners had abandoned their work
and were not entitled to backwages and separation pay. The Court
of Appeals in turn ruled that the dismissal of the petitioners was
not illegal because they had abandoned their employment.
Issue: Whether or not petitioners were illegally dismissed.
Held: The dismissal should be upheld because it was established
that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last
known addresses would have been useless because they did not
reside there anymore. Unfortunately for the private respondent,
this is not a valid excuse because the law mandates the twin
notice requirements to the employees last known address. Thus,
it should be held liable for non-compliance with the procedural
requirements of due process.
When the dismissal is for a just cause, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the
employee for the violation of his statutory rights.

12. JOSE SONZA vs. ABS-CBN BROADCASTING

CORPORATION
[G.R. No. 138051. June 10, 2004]
Facts:
In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN
was represented by its corporate officers while MJMDC was
represented by Sonza, as President and general manager, and
Tiangco as its EVP and treasurer. Referred to in the agreement as

agent, MJMDC agreed to provide Sonzas services exclusively to

ABS-CBN as talent for radio and television. ABS-CBN agreed to
pay Sonza a monthly talent fee of P310, 000 for the first year and
P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he
irrevocably resigned in view of the recent events concerning his
program and career. After the said letter, Sonza filed with the
Department of Labor and Employment a complaint alleging that
ABS-CBN did not pay his salaries, separation pay, service
incentive pay,13th month pay, signing bonus, travel allowance
and amounts under the Employees Stock Option Plan (ESOP).
ABS-CBN contended that no employee-employer relationship
existed between the parties. However, ABS-CBN continued to
remit Sonzas monthly talent fees but opened another account for
the same purpose.
The Labor Arbiter dismissed the complaint and found that there is
no employee-employer relationship. NLRC affirmed the decision of
the Labor Arbiter. CA also affirmed the decision of NLRC.
Issue:
Whether or not there was employer-employee relationship
between the parties.
SC Ruling:
Case law has consistently held that the elements of an employeeemployer relationship are selection and engagement of the
employee, the payment of wages, the power of dismissal and the
employers power to control the employee on the means and
methods by which the work is accomplished. The last element,
the so-called "control test", is the most important element.
Sonzas services to co-host its television and radio programs are
because of his peculiar talents, skills and celebrity status.
Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary

employees. The specific selection and hiring of SONZA, because

of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. All the
talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. For violation of any
provision of the Agreement, either party may terminate their
relationship. Applying the control test to the present case, we find
that SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor. This
test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The
converse holds true as well the less control the hirer exercises,
the more likely the worker is considered an independent
contractor. To perform his work, SONZA only needed his skills and
talent. How SONZA delivered his lines, appeared on television,
and sounded on radio were outside ABS-CBNs control. ABS-CBN
did not instruct SONZA how to perform his job. ABS-CBN merely
reserved the right to modify the program format and airtime
schedule "for more effective programming." ABS-CBNs sole
concern was the quality of the shows and their standing in the
ratings.
Clearly, ABS-CBN did not exercise control over the means and
methods of performance of Sonzas work. A radio broadcast
specialist who works under minimal supervision is an independent
contractor. Sonzas work as television and radio program host
required special skills and talent, which SONZA admittedly
possesses.
ABS-CBN claims that there exists a prevailing practice in the
broadcast and entertainment industries to treat talents like Sonza
as independent contractors. The right of labor to security of
tenure as guaranteed in the Constitution arises only if there is an

employer-employee relationship under labor laws. Individuals with

special skills, expertise or talent enjoy the freedom to offer their
services as independent contractors. The right to life and
livelihood guarantees this freedom to contract as independent
contractors. The right of labor to security of tenure cannot
operate to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an independent
contractor.

13. ANGELITO LAZARO vs. SOCIAL SECURITY COMMISSION

435 SCRA 472 (2004)
Facts:
Respondent Rosalina M. Laudato filed a petition before the SSC for
social security coverage and remittance of unpaid monthly social
security contributions against her three (3) employers. Among the
respondents was herein petitioner Angelito L. Lazaro, proprietor of
Royal Star Marketing (Royal Star), which is engaged in the
business of selling home appliances.
Lazaro denied that Laudato was an employee but instead claimed
that she was an agent of the company. Lazaro also maintained
that she was not mandated to work of definite work hours and
thus not deemed to be a regular employee of Royal Star
Marketing, the company of Lazaro.
SSC promulgated a decision rendering that Laudato is a regular
employee of Royal Star Marketing and entitled to social security
contributions. Lazaro filed a petition for review before the CA
where CA ruled that Laudato was an employee of Royal Star
Marketing. This petition before the Court assails same arguments
raised by Lazaro in SSC. She raised that Laudato was not an
employee of Royal Star Marketing since Royal Star had no control
over the activities of Laudato.

Issue:
Whether or not Laudato was a regular employee of Royal Star
Marketing and thus, entitled to social security contributions.
SC Ruling:
It is an accepted doctrine that for the purposes of coverage under
the Social Security Act, the determination of employer-employee
relationship warrants the application of the control test, that is,
whether the employer controls or has reserved the right to control
the employee, not only as to the result of the work done, but also
as to the means and methods by which the same is accomplished.
The SSC, applying the control test found that Laudato was an
employee of Royal Star. The Court agrees with the findings of the
SSC and the CA. The fact that Laudato was paid by way of
commission does not preclude the establishment of an employeremployee relationship.
In the case of Grepalife v. Judico, the Court upheld the existence
of an employer-employee relationship between the insurance
company and its agents, despite the fact that the compensation
that the agents on commission received was not paid by the
company but by the investor or the person insured. The relevant
factor remains, as stated earlier, whether the "employer" controls
or has reserved the right to control the "employee" not only as to
the result of the work to be done but also as to the means and
methods by which the same is to be accomplished.
Neither does it follow that a person who does not observe normal
hours of work cannot be deemed an employee.
In the case of Cosmopolitan Funeral Homes, Inc. v. Maalat, the
employer similarly denied the existence of an employer-employee
relationship, as the claimant according to it, was a supervisor on
commission basis who did not observe normal hours of work.
This Court declared that there was an employer-employee
relationship, noting that [the] supervisor, although compensated

on commission basis, [is] exempt from the observance of normal

hours of work for his compensation is measured by the number of
sales he makes.

15. ABS-CBN BROADCASTING CORPORATION vs. MARLYN

NAZARENO et al.
[G.R. No. 164156. September 26, 2006]
Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is
engaged in the broadcasting business and owns a network of
television and radio stations, whose operations revolve around
the broadcast, transmission, and relay of telecommunication
signals. It sells and deals in or otherwise utilizes the airtime it
generates from its radio and television operations. It has a
franchise as a broadcasting company, and was likewise issued a
license and authority to operate by the National
Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine,
and Lerasan as production assistants (PAs) on different dates.
They were assigned at the news and public affairs, for various
radio programs in the Cebu Broadcasting Station. On December
19, 1996, petitioner and the ABS-CBN Rank-and-File Employees
executed a Collective Bargaining Agreement (CBA) to be effective
during the period from December 11, 1996 to December 11,
1999. However, since petitioner refused to recognize PAs as part
of the bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for
Recognition of Regular Employment Status, Underpayment of
Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay,
Sick Leave Pay, and 13th Month Pay with Damages against the
petitioner before the NLRC. The Labor Arbiter rendered judgment
in favor of the respondents, and declared that they were regular

employees of petitioner as such, they were awarded monetary

benefits. NLRC affirmed the decision of the Labor Arbiter.
Petitioner filed a motion for reconsideration but CA dismissed it.
Issue:
Whether or not the respondents were considered regular
employees of ABS-CBN.
SC Ruling:
The respondents are regular employees of ABS-CBN. It was held
that where a person has rendered at least one year of service,
regardless of the nature of the activity performed, or where the
work is continuous or intermittent, the employment is considered
regular as long as the activity exists, the reason being that a
customary appointment is not indispensable before one may be
formally declared as having attained regular status.
In Universal Robina Corporation v. Catapang, the Court states that
the primary standard, therefore, of determining regular
employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade
or business of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of
the employer. The connection can be determined by considering
the nature of work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee
has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law
deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such
activity exists.
Additionally, respondents cannot be considered as project or
program employees because no evidence was presented to show

that the duration and scope of the project were determined or

specified at the time of their engagement. In the case at bar,
however, the employer-employee relationship between petitioner
and respondents has been proven. In the selection and
engagement of respondents, no peculiar or unique skill, talent or
celebrity status was required from them because they were
merely hired through petitioners personnel department just like
any ordinary employee. Respondents did not have the power to
bargain for huge talent fees, a circumstance negating
independent contractual relationship. Respondents are highly
dependent on the petitioner for continued work. The degree of
control and supervision exercised by petitioner over respondents
through its supervisors negates the allegation that respondents
are independent contractors.
The presumption is that when the work done is an integral part of
the regular business of the employer and when the worker,
relative to the employer, does not furnish an independent
business or professional service, such work is a regular
employment of such employee and not an independent
contractor. As regular employees, respondents are entitled to the
benefits granted to all other regular employees of petitioner
under the CBA . Besides, only talent-artists were excluded from
the CBA and not production assistants who are regular employees
of the respondents. Moreover, under Article 1702 of the New Civil
Code: In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent
living of the laborer.

16. ANGELINA FRANCISCO vs. NLRC

[500 SCRA 690 (2006)]
Facts:

Petitoner was hired by Kasei Corporation during the incorporation

stage. She was designated as accountant and corporate secretary
and was assigned to handle all the accounting needs of the
company. She was also designated as Liason Officer to the City of
Manila to secure permits for the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was
assigned to handle recruitment of all employees and perform
management administration functions. In 2001, she was replaced
by Liza Fuentes as Manager. Kasei Corporation reduced her salary
to P2,500 per month which was until September. She asked for
her salary but was informed that she was no longer connected to
the company. She did not anymore report to work since she was
not paid for her salary. She filed an action for constructive
dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally
dismissed. NLRC affirmed the decision while CA reversed it.
Issue:
Whether or not there was an employer-employee relationship.
SC Ruling:
The court held that in this jurisdiction, there has been no uniform
test to determine the existence of an employer-employee relation.
Generally, courts have relied on the so-called right of control test
where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the
means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee
in the payrolls, can help in determining the existence of an
employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the

work is to be accomplished; and (2) the underlying economic

realities of the activity or relationship.
In Sevilla v. Court of Appeals, the court observed the need to
consider the existing economic conditions prevailing between the
parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture
in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole
economic activity, such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the
extent of the workers investment in equipment and facilities; (3)
the nature and degree of control exercised by the employer; (4)
the workers opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the success of
the claimed independent enterprise; (6) the permanency and
duration of the relationship between the worker and the
employer; and (7) the degree of dependency of the worker upon
the employer for his continued employment in that line of
business. The proper standard of economic dependence is
whether the worker is dependent on the alleged employer for his
continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an
employee of Kasei Corporation because she was under the direct
control and supervision of Seiji Kamura, the corporations
Technical Consultant. It is therefore apparent that petitioner is
economically dependent on respondent corporation for her
continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee
of respondent Kasei Corporation. She was selected and engaged
by the company for compensation, and is economically

dependent upon respondent for her continued employment in

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

17. ROGELIO NOGALES vs. CAPITOL MEDICAL CENTER et al.

[G.R. No. 142625. December 19, 2006]
Facts:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who
was then 37 years old, was under the exclusive prenatal care of
Dr. Oscar Estrada ("Dr. Estrada") beginning on her fourth month of
pregnancy or as early as December 1975. Around midnight of 25
May 1976, Corazon started to experience mild labor pains
prompting Corazon and Rogelio Nogales ("Spouses Nogales") to
see Dr. Estrada at his home. After examining Corazon, Dr. Estrada
advised her immediate admission to the Capitol Medical Center
("CMC"). t 6:13 a.m., Corazon started to experience convulsionsAt
6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps
to extract Corazon's baby. In the process, a 1.0 x 2.5 cm. piece of
cervical tissue was allegedly torn.At 6:27 a.m., Corazon began to
manifest moderate vaginal bleeding which rapidly became
profuse. Corazon died at 9:15 a.m. The cause of death was
"hemorrhage, post partum.
Issue:
Whether or not CMC is vicariously liable for the negligence of Dr.
Estrada.
SC Ruling:

Private hospitals, hire, fire and exercise real control over their
attending and visiting "consultant" staff. The basis for holding an
employer solidarily responsible for the negligence of its employee
is found in Article 2180 of the Civil Code which considers a person
accountable not only for his own acts but also for those of others
based on the former's responsibility under a relationship of patria
potestas.
In general, a hospital is not liable for the negligence of an
independent contractor-physician. There is, however, an
exception to this principle. The hospital may be liable if the
physician is the "ostensible" agent of the hospital. This exception
is also known as the "doctrine of apparent authority.
For a hospital to be liable under the doctrine of apparent
authority, a plaintiff must show that: (1) the hospital, or its agent,
acted in a manner that would lead a reasonable person to
conclude that the individual who was alleged to be negligent was
an employee or agent of the hospital; (2) where the acts of the
agent create the appearance of authority, the plaintiff must also
prove that the hospital had knowledge of and acquiesced in them;
and (3) the plaintiff acted in reliance upon the conduct of the
hospital or its agent, consistent with ordinary care and prudence.
In the instant case, CMC impliedly held out Dr. Estrada as a
member of its medical staff. Through CMC's acts, CMC clothed Dr.
Estrada with apparent authority thereby leading the Spouses
Nogales to believe that Dr. Estrada was an employee or agent of
CMC.

18. COCA-COLA BOTTLERS PHILS., INC., vs. DR. DEAN

CLIMACO
[G.R. No. 146881. February 15, 2007]
Facts:

Dr. Climaco is a medical doctor who was hired by the petitioner by

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

tasks. In addition, the Court finds that the schedule of work and
the requirement to be on call for emergency cases do not amount
to such control, but are necessary incidents to the Retainership
Agreement.
Considering that there is no employer-employee relationship
between the parties, the termination of the Retainership
Agreement, which is in accordance with the provisions of the
Agreement, does not constitute illegal dismissal of respondent.
19. Duncan Association of Detailman-PTGWO vs. Glaxo
Phils.
[G.R. No.162994. September 17, 2004]
Facts:
Petitioner Pedro A. Tecson was hired by respondent Glaxo
Wellcome Philippines, Inc.) as medical representative on October
1995, after Tecson had undergone training and orientation. Tecson
signed a contract of employment which stipulates, among others,
that he agrees to study and abide by existing company rules; to
disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of
competing drug companies and should management find that
such relationship poses a possible conflict of interest, to resign
from the company.
The Employee Code of Conduct of Glaxo similarly provides that an
employee is expected to inform management of any existing or
future relationship by consanguinity or affinity with co-employees
or employees of competing drug companies. If management
perceives a conflict of interest or a potential conflict between
such relationship and the employees employment with the
company, the management and the employee will explore the
possibility of a transfer to another department in a noncounterchecking position or preparation for employment outside
the company after six months.

Tecson was initially assigned to market Glaxos products in the

Camarines Sur-Camarines Norte sales area. Subsequently, Tecson
entered into a romantic relationship with Bettsy, an employee of
Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was
Astras Branch Coordinator in Albay. Despite of warnings, Tecson
married Bettsy. The superiors of Tecson reminded him of the
company policy and suggested that either him or Bettsy shall
resign from their respective companies. Tecson requested more
time to resolve the issue. In November of 1999, Glaxo transferred
Tecson to Mindanao area involving the provinces of Butuan,
Surigao and Agusan del Sur. Tecson did not agree to the
reassignment and referred this matter to the grievance
committee. It was resolved and was submitted to voluntary
arbitration.
The NCMB rendered decision that Glaxos policy was a valid one.
Aggrieved, Tecson filed a petition to the CA where CA held that
Glaxos policy prohibiting its employees from having personal
relationships with employees of competitor companies is a valid
exercise of its management prerogatives. Hence, this petition.
Issue:
Whether or not the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any
competitor company is valid.
SC Ruling:
There is no error to the Court of Appeals when it ruled that
Glaxos policy prohibiting an employee from having a relationship
with an employee of a competitor company is a valid exercise of
management prerogative. Glaxo has a right to guard its trade
secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors,
especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.

The prohibition against personal or marital relationships with

employees of competitor companies upon Glaxos employees is
reasonable under the circumstances because relationships of that
nature might compromise the interests of the company. In laying
down the assailed company policy, Glaxo only aims to protect its
interests against the possibility that a competitor company will
gain access to its secrets and procedures. That Glaxo possesses
the right to protect its economic interests cannot be denied.
No less than the Constitution recognizes the right of enterprises
to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth.
Indeed, while our laws endeavor to give life to the constitutional
policy on social justice and the protection of labor, it does not
mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest
of fair play.

20. Star Paper Corporation vs. Ronaldo Simbol, et al.

[G.R. No.164774. April 12, 2006]
Facts:
Petitioner Star Paper Corporation is a corporation engaged in
trading, principally of paper products. Josephine Ongsitco is its
Manager of the Personnel and Administration Department while
Sebastian Chua is its Managing Director.
Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia
(Comia) and Lorna E. Estrella (Estrella) were all regular employees
of the company. Simbol was employed by the company on
October 1993 and met Alma Dayrit, also an employee of the
company, whom he married on June 1998. Prior to the marriage,
Ongsitco advised the couple that should they decide to get

married, one of them should resign pursuant to a company policy.

Simbol resigned on June 20, 1998 pursuant to the company policy.
Comia was hired by the company on February 1997. She met
Howard Comia, a co-employee, whom she married on June 1,
2000. Ongsitco likewise reminded them that pursuant to company
policy, one must resign should they decide to get married. Comia
resigned on June 30, 2000.
Estrella was hired on July 29, 1994. She met Luisito Zuiga
(Zuiga), also a co-worker. Petitioners stated that Zuiga, a
married man, got Estrella pregnant. The company allegedly could
have terminated her services due to immorality but she opted to
resign on December 21, 1999.
The respondents signed a Release and Confirmation Agreement
and stated therein that they have no money and property
accountabilities in the company. Respondents offer a different
version of their dismissal. Respondents later filed a complaint for
unfair labor practice, constructive dismissal, separation pay and
attorneys fees. They averred that the aforementioned company
policy is illegal and contravenes Article 136 of the Labor Code.
Labor Arbiter dismissed the complaint and states that the
company policy was decreed pursuant to what the respondent
corporation perceived as management prerogative. On appeal to
the NLRC, the Commission affirmed the decision of the Labor
Arbiter. In its assailed Decision dated August 3, 2004, the Court of
Appeals reversed the NLRC decision.
Issue:
Whether or not the questioned policy is a valid exercise of
management prerogative.
SC Ruling:
The case at bar involves Article 136 of the Labor Code which
provides: It shall be unlawful for an employer to require as a

condition of employment or continuation of employment that a

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

employee based on the identity of the employees spouse. This is

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

21. Rolando Rivera vs. Solid Bank Corporation

[G.R. No.163269. April 19, 2006]
Facts:
Petitioner Rolando Rivera had been working for Solidbank
Corporation since July 1977. He was initially employed as an Audit
Clerk, then as Credit Investigator, Senior Clerk, Assistant
Accountant, and Assistant Manager. Prior to his retirement, he
became the Manager of the Credit Investigation and Appraisal

Division of the Consumers Banking Group. In the meantime,

Rivera and his brother-in-law put up a poultry business in Cavite.
In December 1994, Solidbank offered two retirement programs to
its employees: (a) the Ordinary Retirement Program (ORP), under
which an employee would receive 85% of his monthly basic salary
multiplied by the number of years in service; and (b) the Special
Retirement Program (SRP), under which a retiring employee would
receive 250% of the gross monthly salary multiplied by the
number of years in service. Since Rivera was only 45 years old, he
was not qualified for retirement under the ORP. Under the SRP, he
was entitled to receive P1,045,258.95 by way of benefits.
Deciding to devote his time and attention to his poultry business
in Cavite, Rivera applied for retirement under the SRP.
Subsequently, Solidbank required Rivera to sign an undated
Release, Waiver and Quitclaim, which was notarized on March 1,
1995. Rivera acknowledged receipt of the net proceeds of his
separation and retirement benefits and promised that [he] would
not, at any time, in any manner whatsoever, directly or indirectly
engage in any unlawful activity prejudicial to the interest of
Solidbank, its parent, affiliate or subsidiary companies, their
stockholders, officers, directors, agents or employees, and their
successors-in-interest and will not disclose any information
concerning the business of Solidbank, its manner or operation, its
plans, processes, or data of any kind.
On May 1995, the Equitable Banking Corporation employed Rivera
as Manager of its Credit Investigation and Appraisal Division of its
Consumers Banking Group. Upon discovering this, Solidbank First
Vice-President for Human Resources Division (HRD) wrote a letter
informing Rivera that he had violated the Undertaking and
demanded the return of all the monetary benefits he received in
consideration of the SRP within five days from receipt; otherwise,
appropriate legal action would be taken against him.

When Rivera refused to return the amount demanded within the

given period, Solidbank filed a complaint. Petitioner avers that the
prohibition incorporated in the Release, Waiver and Quitclaim
barring him as retiree from engaging directly or indirectly in any
unlawful activity and disclosing any information concerning the
business of respondent bank, as well as the employment ban
contained in the Undertaking he executed, is oppressive,
unreasonable, cruel and inhuman because of its overbreath.
Issue:
Whether or not the post-retirement competitive employment ban
is reasonable.
Ruling of the Court:
The post-retirement competitive employment ban is unreasonable
because it has no geographical limits. The respondent is barred
from accepting any kind of employment in any competitive bank
within the proscribed period.
Retirement plans, in light of the constitutional mandate of
affording full protection to labor, must be liberally construed in
favor of the employee, it being the general rule that pension or
retirement plans formulated by the employer are to be construed
against it. Retirement benefits, after all, are intended to help the
employee enjoy the remaining years of his life, releasing him from
the burden of worrying for his financial support, and are a form of
reward for being loyal to the employer. Respondent is burdened to
establish that a restrictive covenant barring an employee from
accepting a competitive employment after retirement or
resignation is not an unreasonable or oppressive, or in undue or
unreasonable restraint of trade, thus, unenforceable for being
repugnant to public policy
In cases where an employee assails a contract containing a
provision prohibiting him or her from accepting competitive
employment as against public policy, the employer has to adduce

evidence to prove that the restriction is reasonable and not

greater than necessary to protect the employers legitimate
business interests. The restraint may not be unduly harsh or
oppressive in curtailing the employees legitimate efforts to earn
a livelihood and must be reasonable in light of sound public policy.
Consideration must be given to the employees right to earn a
living and to his ability to determine with certainty the area within
which his employment ban is restituted. A provision on territorial
limitation is necessary to guide an employee of what constitutes
as violation of a restrictive covenant and whether the geographic
scope is co-extensive with that in which the employer is doing
business. In considering a territorial restriction, the facts and
circumstances surrounding the case must be considered.

22. International School Alliance of Educators vs. Hon.

Quisumbing
[333 SCRA 13 (2000)]
Facts:
International School, Inc., pursuant to Presidential Decree 732, is
a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary
residents. To enable the School to continue carrying out its
educational program and improve its standard of instruction,
Section 2(c) of the same decree authorizes the School to employ
its own teaching and management personnel selected by it either
locally or abroad, from Philippine or other nationalities, such
personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have
been or will be enacted for the protection of employees.
The School hires both foreign and local teachers as members of
its faculty, classifying the same into two: (1) foreign-hires and (2)
local-hires. The School employs four tests to determine whether a

faculty member should be classified as a foreign-hire or a local

hire: (a) What is one's domicile? (b) Where is one's home
economy? (c) To which country does one owe economic
allegiance? (d) Was the individual hired abroad specifically to
work in the School and was the School responsible for bringing
that individual to the Philippines? Should the answer to any of
these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreignhire.
The School grants foreign-hires certain benefits not accorded
local- hires. These include housing, transportation, shipping costs,
taxes, and home leave travel allowance. Foreign-hires are also
paid a salary rate twenty-five percent (25%) more than localhires. The School justifies the difference on two "significant
economic disadvantages" foreign-hires have to endure, namely:
(a) the "dislocation factor" and (b) limited tenure. The
compensation scheme is simply the School's adaptive measure to
remain competitive on an international level in terms of attracting
competent professionals in the field of international education.
Issue:
Whether or not local hire teachers shall enjoy same salary as
foreign hire teachers where they perform the same work. This
calls for the applicability of the principle of equal pay for equal
work.
SC Ruling:
Notably, the International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides: The States
Parties to the present Covenant recognize the right of everyone to
the enjoyment of just and favorable conditions of work, which
ensure, in particular: ( a) Remuneration which provides all
workers, as a minimum, with: (i)
Fair wages and equal
remuneration for work of equal value without distinction of any
kind, in particular women being guaranteed conditions of work

not inferior to those enjoyed by men, with equal pay for equal
work;
The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for equal
work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be
paid similar salaries. This rule applies to the School.
The School contends that petitioner has not adduced evidence
that local-hires perform work equal to that of foreign-hires. The
Court finds this argument a little inconsiderate. If an employer
accords employees the same position and rank, the presumption
is that these employees perform equal work. If the employer pays
one employee less than the rest, it is not for that employee to
explain why he receives less or why the others receive more. The
employer has discriminated against that employee; it is for the
employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden.
There is no evidence here that foreign-hires perform 25% more
efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under
similar working conditions. Thus the employees are entitled to
same salary for performance of equal work.

23. Bankard Employees Union vs. NLRC

[G.R. No.140689. February 17, 2004]
Facts:
Bankard, Inc. classifies its employees by levels: Level I, Level II,
Level III, Level IV, and Level V. On May 1993, its Board of Directors
approved a New Salary Scale, made retroactive to April 1, 1993,
for the purpose of making its hiring rate competitive in the
industrys labor market. The New Salary Scale increased the

hiring rates of new employees, to wit: Levels I and V by one

thousand pesos (P1,000.00), and Levels II, III and IV by nine
hundred pesos (P900.00). Accordingly, the salaries of employees
who fell below the new minimum rates were also adjusted to
reach such rates under their levels.
This made Bankard Employees Union-WATU (petitioner), the duly
certified exclusive bargaining agent of the regular rank and file
employees of Bankard, to request for the increase in the salary of
its old, regular employees. Bankard insisted that there was no
obligation on the part of the management to grant to all its
employees the same increase in an across-the-board manner.
Petioner filed a notice of strike. The strike was averted when the
dispute was certified by the Secretary of Labor and Employment
for compulsory arbitration. NLRC finding no wage distortion
dismissed the case for lack of merit. Petitioners motion for
reconsideration of the dismissal of the case was denied.
Issue:
Whether the unilateral adoption by an employer of an upgraded
salary scale that increased the hiring rates of new employees
without increasing the salary rates of old employees resulted in
wage distortion within the contemplation of Article 124 of the
Labor Code.
SC Ruling
The Court will not interfere in the management prerogative of the
petitioner. The employees are not precluded to negotiate through
the provisions of the CBA.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION
ACT, amending, among others, Article 124 of the Labor Code), the
term "wage distortion" was explicitly defined as... a situation
where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee

groups in an establishment as to effectively obliterate the

distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation.
In the case of Prubankers Association v. Prudential Bank and Trust
Company, it laid down the four elements of wage distortion, to
wit: (1.) An existing hierarchy of positions with corresponding
salary rates; (2) A significant change in the salary rate of a lower
pay class without a concomitant increase in the salary rate of a
higher one; (3) The elimination of the distinction between the two
levels; and (4) The existence of the distortion in the same region
of the country.
Normally, a company has a wage structure or method of
determining the wages of its employees. In a problem dealing
with "wage distortion," the basic assumption is that there exists a
grouping or classification of employees that establishes
distinctions among them on some relevant or legitimate bases.
Involved in the classification of employees are various factors
such as the degrees of responsibility, the skills and knowledge
required, the complexity of the job, or other logical basis of
differentiation. The differing wage rate for each of the existing
classes of employees reflects this classification.
Put differently, the entry of new employees to the company ipso
facto places them under any of the levels mentioned in the new
salary scale which private respondent adopted retroactive to April
1, 1993. While seniority may be a factor in determining the wages
of employees, it cannot be made the sole basis in cases where the
nature of their work differs.
Moreover, for purposes of determining the existence of wage
distortion, employees cannot create their own independent
classification and use it as a basis to demand an across-the-board
increase in salary.
The wordings of Article 124 are clear. If it was the intention of the
legislators to cover all kinds of wage adjustments, then the

language of the law should have been broad, not restrictive as it

is currently phrased:
Article 124. Standards/Criteria for Minimum Wage Fixing. Where
the application of any prescribed wage increase by virtue of a law
or Wage Order issued by any Regional Board results in distortions
of the wage structure within an establishment, the employer and
the union shall negotiate to correct the distortions. Any dispute
arising from the wage distortions shall be resolved through the
grievance procedure under their collective bargaining agreement
and, if it remains unresolved, through voluntary arbitration.
Article 124 is entitled "Standards/Criteria for Minimum Wage
Fixing." It is found in CHAPTER V on "WAGE STUDIES, WAGE
AGREEMENTS AND WAGE DETERMINATION" which principally
deals with the fixing of minimum wage. Article 124 should thus be
construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in
minimum wage, the distinctions embodied in the wage structure
based on skills, length of service, or other logical bases of
differentiation will be preserved.
If the compulsory mandate under Article 124 to correct "wage
distortion" is applied to voluntary and unilateral increases by the
employer in fixing hiring rates which is inherently a business
judgment prerogative, then the hands of the employer would be
completely tied even in cases where an increase in wages of a
particular group is justified due to a re-evaluation of the high
productivity of a particular group, or as in the present case, the
need to increase the competitiveness of Bankards hiring rate. An
employer would be discouraged from adjusting the salary rates of
a particular group of employees for fear that it would result to a
demand by all employees for a similar increase, especially if the
financial conditions of the business cannot address an across-theboard increase.

Wage distortion is a factual and economic condition that may be

brought about by different causes. The mere factual existence of
wage distortion does not, however, ipso facto result to an
obligation to rectify it, absent a law or other source of obligation
which requires its rectification.

24. Cesar Odango vs. NLRC and Antique Electric

Cooperative, Inc.
[G.R. No.147420. June 10, 2004]
Facts:
Petitioners are monthly-paid employees of ANTECO whose
workdays are from Monday to Friday and half of Saturday. After a
routine inspection, the Regional Branch of the Department of
Labor and Employment found ANTECO liable for underpayment of
the monthly salaries of its employees. On September 1989, the
DOLE directed ANTECO to pay its employees wage differentials
amounting to P1,427,412.75. ANTECO failed to pay. On various
dates in 1995, thirty-three (33) monthly-paid employees filed
complaints with the NLRC praying for payment of wage
differentials, damages and attorneys fees.
On November 1996, the Labor Arbiter rendered a Decision in
favor of petitioners granting them wage differentials amounting to
P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the
Decision to the NLRC where it reversed the Labor Arbiters
Decision. The NLRC denied petitioners motion for reconsideration.
Petitioners then elevated the case to CA where it dismissed the
petition for failure to comply with Section 3, Rule 46 of the Rules
of Court. The Court of Appeals explained that petitioners failed to
allege the specific instances where the NLRC abused its
discretion. The appellate court denied petitioners motion for
reconsideration. Hence, this petition.
Issue:

Whether or not the petitioners are entitled to money claims.

SC Ruling:
The Court ruled that the petitioners are not entitled to money
claims or wage differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the
Implementing Rules and Policy Instructions No. 9 issued by the
Secretary of Labor which was declared null and void since in the
guise of clarifying the Labor Codes provisions on holiday pay,
they in effect amended them by enlarging the scope of their
exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their
claim will still fail. The basic rule in this jurisdiction is "no work, no
pay." The right to be paid for un-worked days is generally limited
to the ten legal holidays in a year. Petitioners claim is based on a
mistaken notion that Section 2, Rule IV of Book III gave rise to a
right to be paid for un-worked days beyond the ten legal holidays.
Petitioners line of reasoning is not only a violation of the "no
work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause.

25. C. Planas Commercial and/or Marcial Cohu vs. NLRC

[G.R. No. 144619. November 11, 2005]
Facts:
In September 1993, Morente, Allauigan and Ofialda and others
filed a complaint for underpayment of wages, non payment of
overtime pay, holiday pay, service incentive leave pay, and
premium pay for rest day and holiday and night shift differential
against petitioners in the Arbitration Branch of NLRC. It alleged
that Cohu is engaged in the business of wholesale of plastic
products and fruits of different kinds with more than 24
employees. Respondents were hired on January 1990, May 1990

and July 19991 as laborers and were paid below the minimum
wage for the past 3 years. They were required to work for more
than 8 hours a day and never enjoyed the minimum benefits.
Petitioners filed their comment stating that the respondents were
their helpers.
The Labor Arbiter rendered a decision dismissing the money
claims. Respondents filed an appeal with the NLRC where it
granted the money claims of Ofialda, Morente and Allaguian.
Petitioners appealed with the CA but it was denied. It said that the
company having claimed of exemption of the coverage of the
minimum wage shall have the burden of proof to the claim.
In the present petition, the Petitioners insist that C. Planas
Commercial is a retail establishment principally engaged in the
sale of plastic products and fruits to the customers for personal
use, thus exempted from the application of the minimum wage
law; that it merely leases and occupies a stall in the Divisoria
Market and the level of its business activity requires and sustains
only less than ten employees at a time. Petitioners contend that
private respondents were paid over and above the minimum
wage required for a retail establishment, thus the Labor Arbiter is
correct in ruling that private respondents claim for underpayment
has no factual and legal basis. Petitioners claim that since private
respondents alleged that petitioners employed 24 workers, it was
incumbent upon them to prove such allegation which private
respondents failed to do.
Issue:
Whether or not petitioner is exempted from the application of
minimum wage law.
SC Ruling:
The contention of the petitioners that they are exempted by the
law must be proven. The petitioners have not successfully shown
that they had applied for the exemption.

R.A. No. 6727 known as the Wage Rationalization Act provides for
the statutory minimum wage rate of all workers and employees in
the private sector. Section 4 of the Act provides for exemption
from the coverage, thus: Sec. 4. (c) Exempted from the
provisions of this Act are household or domestic helpers and
persons employed in the personal service of another, including
family drivers. Also, retail/service establishments regularly
employing not more than ten (10) workers may be exempted from
the applicability of this Act upon application with and as
determined by the appropriate Regional Board in accordance with
the applicable rules and regulations issued by the Commission.
Whenever an application for exemption has been duly filed with
the appropriate Regional Board, action on any complaint for
alleged non-compliance with this Act shall be deferred pending
resolution of the application for exemption by the appropriate
Regional Board.
In the event that applications for exemptions are not granted,
employees shall receive the appropriate compensation due them
as provided for by this Act plus interest of one percent (1%) per
month retroactive to the effectivity of this Act.
Clearly, for a retail/service establishment to be exempted from
the coverage of the minimum wage law, it must be shown that
the establishment is regularly employing not more than ten (10)
workers and had applied for exemptions with and as determined
by the appropriate Regional Board in accordance with the
applicable rules and regulations issued by the Commission.

26. EJR Crafts Corporation vs. Court of Appeals

[G.R. No.147420. June 10, 2004]
Facts:
In 1997, private respondents filed a complaint for underpayment
of wages, regular holiday pay, overtime pay, nonpayment of 13th

month pay and service incentive leave pay against petitioner

before the Regional Office, NCR of the Department of Labor and
Employment (DOLE). Acting on the complaint, Regional Director
issued an inspection authority to Senior Labor Enforcement
Officer.
On 22 August 1997, an inspection was conducted on the premises
of petitioners offices wherein the following violations of labor
standards law were discovered, to wit: non-presentation of
employment records (payrolls and daily time records);
underpayment of wages, regular holiday pay, and overtime pay;
and nonpayment of 13th month pay and service incentive leave
pay. On the same day, the Notice of Inspection Result was
received by and explained to the manager of petitioner
corporation Mr. Jae Kwan Lee, with the corresponding directive
that necessary restitution be effected within five days from said
receipt.
As no restitution was made, the Regional Office thereafter
conducted summary investigations. However, despite due notice,
petitioner failed to appear for two consecutive scheduled
hearings. Petitioner failed to question the findings of the Labor
Inspector received by and explained to the corporations
manager. Petitioner then filed a Motion for Reconsideration of said
Order arguing that the Regional Director has no jurisdiction over
the case as private respondents were allegedly no longer
connected with petitioner corporation at the time of the filing of
the complaint and when the inspection was conducted, and that
private respondents claims are within the exclusive and original
jurisdiction of the Labor Arbiters.
Issue:
Whether or not the Regional Director has jurisdiction over the
claims of herein private respondents.
SC Ruling:

The Court favors the respondents in the money claims against the
petitioner company. It is admitted that for the Regional Director to
exercise the power to order compliance, or the so-called
"enforcement power" under Article 128(b) of P.D. No. 442 as
amended, it is necessary that the employer-employee relationship
still exists.
In support of its contention that it is the Labor Arbiter and not the
Regional Director who has jurisdiction over the claims of herein
private respondents, petitioner contends that at the time the
complaint was filed, the private respondents were no longer its
employees. Considering thus that there still exists an employeremployee relationship between petitioner and private
respondents and that the case involves violations of labor
standard provisions of the Labor Code, we agree with the
Undersecretary of Labor and the appellate court that the Regional
Director has jurisdiction to hear and decide the instant case in
conformity with Article 128(b) of the Labor Code which states: Art.
128. Visitorial and Enforcement Power. (b) Notwithstanding the
provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions
of this Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his
duly authorized representatives shall issue writs of execution to
the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in
the course of inspection.

27. Pag-asa Steel Works, Inc. vs. CA and Pag-asa Steel

Workers Union
[G.R. No.166647. March 31, 2006]
Facts:
Petitioner Pag-Asa Steel Works, Inc. is a corporation duly
organized and existing under Philippine laws and is engaged in
the manufacture of steel bars and wire rods. Pag-Asa Steel
Workers Union is the duly authorized bargaining agent of the
rank-and-file employees.
RTWPB of NCR issued a wage order which provided for a P 13.00
increase of the salaries receiving minimum wages. The Petitioner
and the union negotiated on the increase. Petitioner forwarded a
letter to the union with the list of adjustments involving rank and
file employees. In September 1999, the petitioner and union
entered into an collective bargaining agreement where it provided
wage adjustments namely P15, P25, P30 for three succeeding
year. On the first year, the increase provided were followed until
RTWPB issued another wage order where it provided for a P25.50
per day increase in the salary of employees receiving the
minimum wage and increased the minimum wage to P223.50 per
day. Petitioner paid the P25.50 per day increase to all of its rankand-file employees.
On November 2000, Wage Order No. NCR-08 was issued where it
provided the increase of P26.50 per day. The union president
asked that the wage order be implemented where petitioner
rejected the request claiming that there was no wage distortion
and it was not obliged to grant the wage increase. The union
submitted the matter for voluntary arbitration where it favored
the position of the company and dismissed the complaint. The
matter was elevated to CA where it favored the respondents.
Hence, this petition.
Issue:

Whether or not the company was obliged to grant the wage

increase under Wage Order No. NCR-08 as a matter of practice.
SC Ruling:
The Court favors the petitioner that wage increase shall not be
granted by virtue of CBA or matter of practice by the company. It
is submitted that employers unless exempt are mandated to
implement the said wage order but limited to those entitled
thereto. There is no legal basis to implement the same across-theboard. A perusal of the record shows that the lowest paid
employee before the implementation of Wage Order #8 is
P250.00/day and none was receiving below P223.50 minimum.
This could only mean that the union can no longer demand for
any wage distortion adjustment. The provision of wage order #8
and its implementing rules are very clear as to who are entitled to
the P26.50/day increase, i.e., "private sector workers and
employees in the National Capital Region receiving the prescribed
daily minimum wage rate of P223.50 shall receive an increase of
Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since
the lowest paid is P250.00/day the company is not obliged to
adjust the wages of the workers.
The provision in the CBA that "Any Wage Order to be
implemented by the Regional Tripartite Wage and Productivity
Board shall be in addition to the wage increase adverted above"
cannot be interpreted in support of an across-the-board increase.
If such were the intentions of this provision, then the company
could have simply accepted the original demand of the union for
such across-the-board implementation, as set forth in their
original proposal. The fact that the company rejected this
proposal can only mean that it was never its intention to agree, to
such across-the-board implementation. Wage Order No. NCR-08
clearly states that only those employees receiving salaries below
the prescribed minimum wage are entitled to the wage increase
provided therein, and not all employees across-the-board as
respondent Union would want petitioner to do. Considering

therefore that none of the members of respondent Union are

receiving salaries below the P250.00 minimum wage, petitioner is
not obliged to grant the wage increase to them.
Moreover, to ripen into a company practice that is demandable as
a matter of right, the giving of the increase should not be by
reason of a strict legal or contractual obligation, but by reason of
an act of liberality on the part of the employer. Hence, even if the
company continuously grants a wage increase as mandated by a
wage order or pursuant to a CBA, the same would not
automatically ripen into a company practice.

28. Equitable-PCI Bank vs. Ricardo Sadac

[G.R. No.164772. June 8, 2006]
Facts:
Ricardo Sadac was appointed Vice President of the Legal
Department of petitioner Bank effective 1 August 1981, and
subsequently General Counsel thereof on 8 December 1981. On
June 1989, nine lawyers of petitioner Banks Legal Department, in
a letter-petition to the Chairman of the Board of Directors,
accused respondent Sadac of abusive conduct and ultimately,
petitioned for a change in leadership of the department. On the
ground of lack of confidence in Sadac, under the rules of client
and lawyer relationship, petitioner Bank instructed respondent
Sadac to deliver all materials in his custody in all cases in which
the latter was appearing as its counsel of record. In reaction
thereto, Sadac requested for a full hearing and formal
investigation but the same remained unheeded. On 9 November
1989, respondent Sadac filed a complaint for illegal dismissal with
damages against petitioner Bank and individual members of the
Board of Directors thereof. After learning of the filing of the
complaint, petitioner Bank terminated the services of respondent

Sadac. Finally, on 10 August 1989, Sadac was removed from his

office
Labor Arbiter rendered decision that Sadacs termination was
illegal and entitled to reinstatement and payment of full back
wages. NLRC affirmed the decision upon appeal by the Bank.
Sadac filed for execution of judgment where it gave its
computation which amounted to P 6.03 M representing his back
wages and the increases he should have received during the time
he was illegally dismissed. The Bank opposed to Sadacs
computation. The Labor Arbiter favor Sadacs computation. NLRC,
upon appeal by the bank, reversed the decision. CA reversed the
decision of NLRC. Hence, this petition.
Issue:
Whether or not the computation of back wages shall include the
general increases.
SC Ruling:
To resolve the issue, the court revisits its pronouncements on the
interpretation of the term backwages. Backwages in general are
granted on grounds of equity for earnings which a worker or
employee has lost due to his illegal dismissal. It is not private
compensation or damages but is awarded in furtherance and
effectuation of the public objective of the Labor Code. Nor is it a
redress of a private right but rather in the nature of a command to
the employer to make public reparation for dismissing an
employee either due to the formers unlawful act or bad faith.
In the case of Bustamante v. National Labor Relations
Commission, It said that the Court deems it appropriate to
reconsider such earlier ruling on the computation of back wages
by now holding that conformably with the evident legislative
intent as expressed in Rep. Act No. 6715, back wages to be
awarded to an illegally dismissed employee, should not, as a
general rule, be diminished or reduced by the earnings derived by

him elsewhere during the period of his illegal dismissal. The

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

29. Metropolitan Bank and Trust Company vs. NWPC and

RTWPB
[G.R. No.144322. February 6, 2007]
Facts:
On October 17, 1995, the Regional Tripartite Wages and
Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by
virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known
as the Wage Rationalization Act, issued Wage Order No. R02-03
(Wage Order), as follows: Section 1. Upon effectivity of this Wage
Order, all employees/workers in the private sector throughout
Region II, regardless of the status of employment are granted an
across-the-board increase of P15.00 daily.

The Wage Order was published in a newspaper of general

circulation on December 2, 1995 and took effect on January 1,
1996. Its Implementing Rules were approved on February 14,
1996. Per Section 13 of the Wage Order, any party aggrieved by
the Wage Order may file an appeal with the National Wages and
Productivity Commission (NWPC) through the RTWPB within 10
calendar days from the publication of the Wage Order.
Bankers Council in a letter inquiry to NWPC requested for ruling
to seek exemption from coverage of the wage order since the
members bank are paying more than the regular wage. NWPC
replied that the member banks are covered by the wage order
and does not fall with the exemptible categories.
In another letter inquiry, Metrobank asked for the interpretation of
the applicability of the wage order. NWPC referred it to RTWPB.
RTWPB in return clarified that establishments in Region 2 are
covered by the wage order. Petitioner filed a petition with the CA
and denied the petition.
Issue:
Whether or not the wage order is void thus it has no legal effect
and the RTWPB acted in excess of its jurisdiction.
SC Ruling:
The Court finds that Section 1, Wage Order No. R02-03 is void
insofar as it grants a wage increase to employees earning more
than the minimum wage rate; and pursuant to the separability
clause of the Wage Order, Section 1 is declared valid with respect
to employees earning the prevailing minimum wage rate.
The powers of NWPC are enumerated in ART. 121. Powers and
Functions of the Commission. - The Commission shall have the
following powers and functions: (d) To review regional wage levels
set by the Regional Tripartite Wages and Productivity Boards to
determine if these are in accordance with prescribed guidelines
and national development plans; (f) To review plans and programs

of the Regional Tripartite Wages and Productivity Boards to

determine whether these are consistent with national
development plans; (g) To exercise technical and administrative
supervision over the Regional Tripartite Wages and Productivity
Boards.
R.A. No. 6727 declared it a policy of the State to rationalize the
fixing of minimum wages and to promote productivityimprovement and gain-sharing measures to ensure a decent
standard of living for the workers and their families; to guarantee
the rights of labor to its just share in the fruits of production; to
enhance employment generation in the countryside through
industrial dispersal; and to allow business and industry reasonable
returns on investment, expansion and growth.
In line with its declared policy, R.A. No. 6727 created the NWPC,
vested with the power to prescribe rules and guidelines for the
determination of appropriate minimum wage and productivity
measures at the regional, provincial or industry levels; and
authorized the RTWPB to determine and fix the minimum wage
rates applicable in their respective regions, provinces, or
industries therein and issue the corresponding wage orders,
subject to the guidelines issued by the NWPC. Pursuant to its
wage fixing authority, the RTWPB may issue wage orders which
set the daily minimum wage rates, based on the standards or
criteria set by Article 124 of the Labor Code.
The Court declared that there are two ways of fixing the minimum
wage: the "floor-wage" method and the "salary-ceiling" method.
The "floor-wage" method involves the fixing of a determinate
amount to be added to the prevailing statutory minimum wage
rates. On the other hand, in the "salary-ceiling" method, the wage
adjustment was to be applied to employees receiving a certain
denominated salary ceiling. In other words, workers already being
paid more than the existing minimum wage (up to a certain
amount stated in the Wage Order) are also to be given a wage
increase.

In the present case, the RTWPB did not determine or fix the
minimum wage rate by the "floor-wage method" or the "salaryceiling method" in issuing the Wage Order. The RTWPB did not set
a wage level nor a range to which a wage adjustment or increase
shall be added. Instead, it granted an across-the-board wage
increase of P15.00 to all employees and workers of Region 2. In
doing so, the RTWPB exceeded its authority by extending the
coverage of the Wage Order to wage earners receiving more than
the prevailing minimum wage rate, without a denominated salary
ceiling. As correctly pointed out by the OSG, the Wage Order
granted additional benefits not contemplated by R.A. No. 6727.

30. EJR CRAFTS CORPORATION vs. HON. COURT OF

APPEALS et. al.
[G.R. No. 154101. March 10, 2006]
Facts:
Sometime in 1997, private respondents filed a complaint for
underpayment of wages, regular holiday pay, overtime pay,
nonpayment of 13th month pay and service incentive leave pay
against petitioner before the Regional Office, NCR of the DOLE.
Acting on the complaint, an inspection was conducted on the
premises of petitioners offices on August 22, 1997 wherein
violations of labor standards law were discovered. Petitioner
argued that the Regional Director has no jurisdiction over the case
as private respondents were allegedly no longer connected with
petitioner corporation at the time of the filing of the complaint
and when the inspection was conducted, and that private
respondents claims are within the exclusive and original
jurisdiction of the Labor Arbiters.
Issue:
Whether or not public respondent Regional Director has
jurisdiction over the case.

SC Ruling:
This Court not being a trier of facts, it has to rely on findings of
facts by the lower courts and regard it with great respect. As
found by both Undersecretary of Labor and the Court of Appeals,
the said quitclaim and release forms are unreliable and do not
correspond to other documents on record which would prove that
private respondents were working for the petitioner up to August
1997.
Considering thus that there still exists an employer-employee
relationship between petitioner and private respondents and that
the case involves violations of labor standard provisions of the
Labor Code, this Court rules with the Undersecretary of Labor and
the appellate court that the Regional Director has jurisdiction to
hear and decide the instant case in conformity with Article 128(b)
of the Labor Code which states that: Notwithstanding the
provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions
of this Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his
duly authorized representatives shall issue writs of execution to
the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in
the course of inspection.
Hence, the petition is denied.

31. EX-BATAAN VETERANS SECURTY AGENCY, INC. vs. SEC.

OF LABOR et. al.

[G.R. No. 152396. November 20, 2007]

Facts:
Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the
business of providing security services while private respondents
are EBVSAI's employees assigned to the National Power
Corporation at Ambuklao Hydro Electric Plant, Bokod, Benguet
(Ambuklao Plant). On 20 February 1996, private respondents led
by Alexander Pocding (Pocding) instituted a complaint for
underpayment of wages against EBVSAI before the Regional
Office of the Department of Labor and Employment (DOLE). On 7
March 1996, the Regional Office conducted a complaint inspection
at the Ambuklao Plant where some violations were noted.
Issue:
Whether or not the Secretary of Labor or his duly authorized
representatives acquired jurisdiction over EBVSAI. Corollary to this
is whether the Secretary of Labor or his duly authorized
representatives have jurisdiction over the money claims of private
respondents which exceed P5,000.
SC Ruling:
The petition has no merit. On the Regional Director's jurisdiction
over EBVSAI, the he validly acquired jurisdiction over EBVSAI after
receiving the notices of hearing. Thus, EBVSAI cannot question
the jurisdiction after appearing before the Regional Director.
More importantly, on the Regional Director's jurisdiction over the
money claims, this Court made reference to and affirm the ruling
in Cirineo Bowling Plaza, Inc. v. Sensing, where this Court
sustained the jurisdiction of the DOLE Regional Director and held
that the visitorial and enforcement powers of the DOLE Regional
Director to order and enforce compliance with labor standard laws
can be exercised even where the individual claim exceeds P5,000.

However, if the labor standards case is covered by the exception

clause in Article 128(b) of the Labor Code, then the Regional
Director will have to endorse the case to the appropriate
Arbitration Branch of the NLRC. In order to divest the Regional
Director or his representatives of jurisdiction, the following
elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and (c) that such matters are not verifiable in
the normal course of inspection. The rules also provide that the
employer shall raise such objections during the hearing of the
case or at any time after receipt of the notice of inspection
results. In this case, the Regional Director validly assumed
jurisdiction over the money claims of private respondents even if
the claims exceeded P5,000 because such jurisdiction was
exercised in accordance with Article 128(b) of the Labor Code and
the case does not fall under the exception clause. The Court also
notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice
of inspection results.
Hence, the petition was denied.