1

MANILA ELECTRIC COMPANY vs THE NATIONAL LABOR

RELATIONS COMMISSION, and APOLINARIO M. SIGNO - G.R. No.
78763 July 12,1989
Labor Law Labor Relations Termination of Employment Grounds of
Termination; when offset
Apolinario Signo was employed by the Manila Electric Company
(Meralco) as supervisor-leadman since 1963. During his 20 year-tenure
of service in said company, he had been commended twice for
honesty. However, one time in 1981, he facilitated an illegal
connection to the house of a certain Fernando De Lara; the latter
received free service of electricity for a year since he was not billed
for Meralcos services. This irregularity was later discovered and so in
1983, Signo was fired by Meralco on the ground of breach of trust and
loss of confidence which are grounds for termination under the Labor
Code.
Signo filed a case for illegal dismissal and for backwages. The Labor
Arbiter ruled that though there is breach of trust on the part of Signo,
dismissal is too harsh a penalty considering that Signo has been
employed by Meralco for 20 years; that except for that one time
infraction, Signo had a clean slate with Meralco. On appeal, The
National Labor Relations Commission (NLRC) affirmed the factual
findings of the Labor Arbiter. Meralco questioned the validity of the
NLRC decision before the Supreme Court via a petition for certiorari
under Rule 65 of the Rules of Court.
ISSUE: Whether or not the findings of the NLRC, an administrative
body, is reviewable by the Supreme Court in this case.
HELD: No. The Supreme Court sustained the decision of the NLRC.
Well-established is the principle that findings of administrative
agencies which have acquired expertise because their jurisdiction is
confined to specific matters are generally accorded not only respect
but even finality. Judicial review by this Court on labor cases does not
go so far as to evaluate the sufficiency of the evidence upon which the
proper labor officer or office based his or its determination but is
limited to issues of jurisdiction or grave abuse of discretion. No such
issues of jurisdiction or grave abuse of discretion is present in the case
at bar.

Further, notwithstanding the existence of a valid cause for dismissal,

such as breach of trust by an employee, nevertheless, dismissal should
not be imposed, as it is too severe a penalty if the latter has been
employed for a considerable length of time in the service of his
employer. Reinstatement of respondent Signo is proper in the instant
case, but without the award of backwages, considering the good faith
of Meralco in dismissing him.

2
LUZON DEVELOPMENT BANK vs ASSOCIATION OF LUZON
DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA in
her capacity as VOLUNTARY ARBITRATOR - G.R. No. 120319
October 6, 1995
From a submission agreement of the Luzon Development Bank (LDB)
and the Association of Luzon Development Bank Employees (ALDBE)
arose an arbitration case to resolve the following issue: whether or not
the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on
promotion.
At a conference, the parties agreed on the submission of their
respective Position Papers on December 1-15, 1994. Atty. Ester S.
Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's
Position Paper on January 18, 1995. LDB, on the other hand, failed to
submit its Position Paper despite a letter from the Voluntary Arbitrator
reminding them to do so. As of May 23, 1995 no Position Paper had
been filed by LDB. On May 24, 1995, without LDB's Position Paper, the
Voluntary Arbitrator rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to
the Collective Bargaining Agreement provision nor the Memorandum of
Agreement on promotion. Hence, this petition for certiorari and
prohibition seeking to set aside the decision of the Voluntary Arbitrator
and to prohibit her from enforcing the same.
Issue: Which court has the jurisdiction for the appellate review of
adjudications of all quasi-judicial
Held: Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902,
provides that the Court of Appeals shall exercise:
(B) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act,

and of subparagraph (1) of the third paragraph and subparagraph (4)

of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor
inthe Labor Code and he falls, therefore, within the contemplation of
the term "instrumentality" inthe aforequoted Sec. 9 of B.P. 129. The
fact that his functions and powers are provided for in the Labor Code
does not place him within the exceptions to said Sec. 9 since he is a
quasi-judicial instrumentality as contemplated thereinA fortiori, the
decision or award of the voluntary arbitrator or panel of arbitrators
should likewise be appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular No. 1-95, just like
those of the quasi-judicial agencies, boards and commissions
enumerated therein.
This would be in furtherance of, and consistent with, the original
purpose of Circular No. 1-91 to provide a uniform procedure for the
appellate review of adjudications of all quasi-judicial entities not
expressly excepted from the coverage of Sec. 9 of B.P. 129 by either
the Constitution or another statute. In the same vein, it is worth
mentioning that under Section 22 of Republic Act No. 876, also known
as the Arbitration Law, arbitration is deemed a special proceeding of
which the court specified in the contract or submission, or if none be
specified, the Regional Trial Court for the province or city in which one
of the parties resides or is doing business, or in which the arbitration is
held, shall have jurisdiction. A party to the controversy may, at any
time within one (1) month after an award is made, apply to the court
having jurisdiction for an order confirming the award and the court
must grant such order unless the award is vacated, modified or
corrected.
In effect, this equates the award or decision of the voluntary arbitrator
with that of the regional trial court. Consequently, in a petition for
certiorari from that award or decision, ACCORDINGLY, the Court
resolved to REFER this case to the Court of Appeals

3
Article IX, Section 2 (1) of the 1987 Constitution provides: The civil
service embraces allbranches, subdivisions, instrumentalities and
agencies of the Government, including government owned and
controlled corporations with original charters.

BENJAMIN
C.
JUCO
vs
NATIONAL
LABOR
RELATIONS
COMMISSION and NATIONAL HOUSING CORPORATION - G.R. No.
98107 August 18, 1997
Juco was hired as project engineer of NHC from Nov16, 1970 to May 14,
75. On May 14, he wasseparated from the service for having been
implicated in a crime of theft and/or malversation of public funds.On
March25, 1977, Juco filed a complaint for illegal dismissal against NHC
with
the
Department
of
Labor.Labor
Arbiter
rendered
a
decision dismissing complaint on the ground that NLRC had
no jurisdiction over thecase.Juco then elevated the case to NLRC which
rendered a decision reversing decision of Labor Arbiter.NHC appealed
before this SC. On Jan6, 1989, Juco filed with CSC a complaint for illegal
dismissal,
withprelim
mandatory injunction. NHC moved for dismissal of complaint
on the ground that CSC has no jurisdiction over case. So, having no
jurisdiction, CSC dismissed the case. Subsequently Juco also filed
withNLRC complaint for illegal dismissal with prelim mandatory
injunction. Labor Arbiter Caday rendered adecision declaring that
Jucos dismissal was illegal. NHC appealed before NLRC and later on,
NLRCreversed the decision of Labor Arbiter Caday on the ground of
lack of jurisdiction.
ISSUE : Whether NLRC or CSC has jurisdiction over Jucos case.
HELD:

In NASECO v NLRC SC had occasion to apply the present Constitution in

decidingwhether or not the employees of NASECO are covered by the
Civil Service Law or the Labor Code notwithstanding that the case
arose at the time when the 1973 Constitution was still ineffect. It was
ruled that the NLRC has jurisdiction over the employees of NASECO on
the groundthat it is the 1987 Constitution that governs because it is
the Constitution in place at the time of the decision. Furthermore, the
new phrase "with original charter" means that government-ownedand
controlled corporations refer to corporations chartered by special law
as distinguished fromcorporations organized under the Corporation
Code. Thus, NASECO which had been organizedunder the general
incorporation statute and a subsidiary of the National Investment
DevelopmentCorporation, which in turn was a subsidiary of the
Philippine National Bank, is exluded from thepurview of the Civil
Service Commission.The National Housing Corporation is a government
owned
corporation
organized
in
1959in accordance with Executive Order No. 399, otherwise known as t
he Uniform Charter of Government Corporation, dated January 1, 1959.
Its shares of stock are and have been onehundred percent (100%)
owned by the Government from its incorporation under Act 1459,
theformer corporation law. The government entities that own its shares
of stock are the GovernmentService Insurance System, the Social
Security System, the Development Bank of the Philippines,the National
Investment and Development Corporation and the People's Homesite
and HousingCorporation. 13 Considering the fact that the NHA had
been
incorporated
under
Act
1459,
theformer
corporation law, it is but correct to say that it is a government-owned o
r controlledcorporation whose employees are subject to the provisions
of the Labor Code. This observation isreiterated in the recent case of
Trade Union of the Philippines and Allied Services (TUPAS) v.National
Housing Corporation, 14 where we held that the NHA is now within the
jurisdiction
of
theDepartment of Labor and Employment, it being a governmentowned and/or controlledcorporation without an original charter.
Furthermore, we also held that the workers or employeesof the NHC

4
(now NHA) undoubtedly have the right to form unions or employee's
organization andthat there is no impediment to the holding of a
certification election among them as they arecovered by the Labor
Code. Thus, the NLRC erred in dismissing petitioner's complaint for lack
of jurisdiction because the rule now is that the Civil Service now
covers only government-owned or controlled corporations with original
charters. 15 Having been incorporated under the CorporationLaw, its
relations with its personnel are governed by the Labor Code and come
under the jurisdiction of the National Labor Relations Commission.

5
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA),
DIONISION T. BAYLON, RAMON MODESTO, JUANITO MADURA,
REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA,
PLACIDO AGUSTIN, VIRGILIO MAGPAYO vs THE COURT OF
APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C.
PERALEJO, RTC, BRANCH 98, QUEZON CITY - G.R. No. 85279 July
28, 1989
Facts:
On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon
City a complaint for damages with a prayer for a writ of preliminary
injunction against petitioners, alleging that on June 9, 1987, the
officers and members of SSSEA staged an illegal strike and baricaded
the entrances to the SSS Building, preventing non-striking employees
from reporting for work and SSS members from transacting business
with the SSS; that the strike was reported to the Public Sector Labor Management Council, which ordered the strikers to return to work; that
the strikers refused to return to work; and that the SSS suffered
damages as a result of the strike. The complaint prayed that a writ of
preliminary injunction be issued to enjoin the strike and that the
strikers be ordered to return to work; that the defendants (petitioners
herein) be ordered to pay damages; and that the strike be declared
illegal.

It appears that the SSSEA went on strike after the SSS failed to act on
the union's demands, which included: implementation of the provisions
of the old SSS-SSSEA collective bargaining agreement (CBA) on checkoff of union dues; payment of accrued overtime pay, night differential
pay and holiday pay; conversion of temporary or contractual
employees with six (6) months or more of service into regular and
permanent employees and their entitlement to the same salaries,
allowances and benefits given to other regular employees of the SSS;
and payment of the children's allowance of P30.00, and after the SSS
deducted certain amounts from the salaries of the employees and
allegedly committed acts of discrimination and unfair labor practices.

Issue Whether or not employees of the Social Security System (SSS)

have the right to strike.

Held: The 1987 Constitution, in the Article on Social Justice and Human
Rights, provides that the State "shall guarantee the rights of all
workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in
accordance with law" [Art. XIII, Sec. 31].
Resort to the intent of the framers of the organic law becomes helpful
in understanding the meaning of these provisions. A reading of the
proceedings of the Constitutional Commission that drafted the 1987
Constitution would show that in recognizing the right of government
employees to organize, the commissioners intended to limit the right
to the formation of unions or associations only, without including the
right to strike.

Considering that under the 1987 Constitution "the civil service

embraces all branches, subdivisions, instrumentalities, and agencies of
the Government, including government-owned or controlled
corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1
of E.O. No. 180 where the employees in the civil service are
denominated as "government employees"] and that the SSS is one
such government-controlled corporation with an original charter,
having been created under R.A. No. 1161, its employees are part of the
civil service [NASECO v. NLRC, G.R. Nos. 69870 & 70295, November
24,1988] and are covered by the Civil Service Commission's
memorandum prohibiting strikes. This being the case, the strike staged
by the employees of the SSS was illegal.

6
PEOPLE OF THE PHILIPPINES, VS. HON. DOMINGO PANIS,
PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF
ZAMBALES & OLONGAPO CITY, BRANCH III AND SERAPIO ABUG G.R. NOS. L-58674-77
JULY 11, 1990

promises for a fee employment to two or more persons shall be

deemed engaged in recruitment and placement."

Facts:

As we see it, the proviso was intended neither to impose a condition on

the basic rule nor to provide an exception thereto but merely to create
a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing
with two or more persons to whom, in consideration of a fee, an offer
or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers."

Four informations were filed on January 9, 1981, in the Court of First

Instance of Zambales and Olongapo City alleging that Serapio Abug,
private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging
employment agency, did then and there wilfully, unlawfully and
criminally operate a private fee-charging employment agency by
charging fees and expenses (from) and promising employment in Saudi
Arabia" to four separate individuals named therein, in violation of
Article 16 in relation to Article 39 of the Labor Code.
Abug filed a motion to quash on the ground that the informations did
not charge an offense because he was accused of illegally recruiting
only one person in each of the four informations. Under the proviso in
Article 13(b), he claimed, there would be illegal recruitment only
"whenever two or more persons are in any manner promised or offered
any employment for a fee."
The posture of the petitioner is that the private respondent is being
prosecuted under Article 39 in relation to Article 16 of the Labor Code;
hence, Article 13(b) is not applicable. However, as the first two cited
articles penalize acts of recruitment and placement without proper
authority, which is the charge embodied in the informations,
application of the definition of recruitment and placement in Article
13(b) is unavoidable.
Issue: Whether or not the petitioner is guilty of violating Article 13(b) of
P. D. 442, otherwise known as the Labor Code.
Held: Article 13(b) of P. D. 442, otherwise known as the Labor Code,
states that, "(b) 'Recruitment and placement' refers to any act of
canvassing, 'enlisting, contracting, transporting, hiring, or procuring
workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or

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

7
PEOPLE OF THE PHILIPPINES, VS. LOMA GOCE Y OLALIA, DAN
GOCE AND NELLY D. AGUSTIN, ACCUSED. NELLY D. AGUSTIN G.R. NO. 113161
AUGUST 29, 1995
Facts:
On January 12, 1988, an information for illegal recruitment committed
by a syndicate and in large scale, punishable under Articles 38 and 39
of the Labor Code (Presidential Decree No. 442) as amended by
Section 1(b) of Presidential Decree No. 2018, was filed against spouses
Dan and Loma Goce and herein accused-appellant Nelly Agustin in the
Regional Trial Court of Manila, Branch 5, alleging
That in or about and during the period comprised between May 1986
and June 25, 1987, both dates inclusive, in the City of Manila,
Philippines, the said accused, conspiring and confederating together
and helping one another, representing themselves to have the capacity
to contract, enlist and transport Filipino workers for employment
abroad, did then and there willfully and unlawfully, for a fee, recruit
and promise employment/job placement abroad, to (1) Rolando Dalida
y Piernas, (2) Ernesto Alvarez y Lubangco, (3) Rogelio Salado y Savillo,
(4) Ramona Salado y Alvarez, (5) Dionisio Masaya y de Guzman, (6)
Dave Rivera y de Leon, (7) Lorenzo Alvarez y Velayo, and (8) Nelson
Trinidad y Santos, without first having secured the required license or
authority from the Department of Labor.
Four of the complainants testified for the prosecution. Rogelio Salado
was the first to take the witness stand and he declared that sometime
in March or April, 1987 he was introduced by Lorenzo Alvarez, his
brother-in-law and a co-applicant, to Nelly Agustin in the latter's
residence at Factor, Dongalo, Paraaque, Metro Manila. Representing
herself as the manager of the Clover Placement Agency, Agustin
showed him a job order as proof that he could readily be deployed for
overseas employment. Salado learned that he had to pay P5,000.00 as
processing fee, which amount he gave sometime in April or May of the
same year. He was issued the corresponding receipt.
Also in April or May, 1987, Salado, accompanied by five other
applicants who were his relatives, went to the office of the placement
agency at Nakpil Street, Ermita, Manila where he saw Agustin and met
the spouses Dan and Loma Goce, owners of the agency. He submitted

his bio-data and learned from Loma Goce that he had to give
P12,000.00, instead of the original amount of P5,000.00 for the
placement fee. Although surprised at the new and higher sum, they
subsequently agreed as long as there was an assurance that they
could leave for abroad.

Thereafter, a receipt was issued in the name of the Clover Placement

Agency showing that Salado and his aforesaid co-applicants each paid
P2,000.00, instead of the P5,000.00 which each of them actually paid.
Several months passed but Salado failed to leave for the promised
overseas employment. Hence, in October, 1987, along with the other
recruits, he decided to go to the Philippine Overseas Employment
Administration (POEA) to verify the real status of Clover Placement
Agency. They discovered that said agency was not duly licensed to
recruit job applicants. Later, upon learning that Agustin had been
arrested, Salado decided to see her and to demand the return of the
money he had paid, but Agustin could only give him P500.00.
Ramona Salado, the wife of Rogelio Salado, came to know through her
brother, Lorenzo Alvarez, about Nelly Agustin. Accompanied by her
husband, Rogelio, Ramona went to see Agustin at the latter's
residence. Agustin persuaded her to apply as a cutter/sewer in Oman
so that she could join her husband. Encouraged by Agustin's promise
that she and her husband could live together while working in Oman,
she instructed her husband to give Agustin P2,000.00 for each of them
as placement fee, or the total sum of P4,000.00.
Much later, the Salado couple received a telegram from the placement
agency requiring them to report to its office because the "NOC" (visa)
had allegedly arrived. Again, around February, or March, 1987, Rogelio
gave P2,000.00 as payment for his and his wife's passports. Despite
follow-up of their papers twice a week from February to June, 1987, he
and his wife failed to leave for abroad.
Complainant Dionisio Masaya, accompanied by his brother-in-law,
Aquiles Ortega, applied for a job in Oman with the Clover Placement
Agency at Paraaque, the agency's former office address. There,
Masaya met Nelly Agustin, who introduced herself as the manager of
the agency, and the Goce spouses, Dan and Loma, as well as the

8
latter's daughter. He submitted several pertinent documents, such as
his bio-data and school credentials.
In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial
downpayment for the placement fee, and in September of that same
year, he gave an additional P10,000.00. He was issued receipts for said
amounts and was advised to go to the placement office once in a while
to follow up his application, which he faithfully did. Much to his dismay
and chagrin, he failed to leave for abroad as promised. Accordingly, he
was forced to demand that his money be refunded but Loma Goce
could give him back only P4,000.00 in installments.
As the prosecution's fourth and last witness, Ernesto Alvarez took the
witness stand on June 7, 1993. He testified that in February, 1987, he
met appellant Agustin through his cousin, Larry Alvarez, at her
residence in Paraaque. She informed him that "madalas siyang
nagpapalakad sa Oman" and offered him a job as an ambulance driver
at the Royal Hospital in Oman with a monthly salary of about $600.00
to $700.00.
On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as
processing fee to Agustin at the latter's residence. In the same month,
he gave another P3,000.00, this time in the office of the placement
agency. Agustin assured him that he could leave for abroad before the
end of 1987. He returned several times to the placement agency's
office to follow up his application but to no avail. Frustrated, he
demanded the return of the money he had paid, but Agustin could only
give back P500.00. Thereafter, he looked for Agustin about eight times,
but he could no longer find her.
Only herein appellant Agustin testified for the defense. She asserted
that Dan and Loma Goce were her neighbors at Tambo, Paraaque and
that they were licensed recruiters and owners of the Clover Placement
Agency. Previously, the Goce couple was able to send her son,
Reynaldo Agustin, to Saudi Arabia. Agustin met the aforementioned
complainants through Lorenzo Alvarez who requested her to introduce
them to the Goce couple, to which request she acceded.
Denying any participation in the illegal recruitment and maintaining
that the recruitment was perpetrated only by the Goce couple, Agustin
denied any knowledge of the receipts presented by the prosecution.

She insisted that the complainants included her in the complaint

thinking that this would compel her to reveal the whereabouts of the
Goce spouses.
On November 19, 1993, the trial court rendered judgment finding
herein appellant guilty as a principal in the crime of illegal recruitment.

Issue: Whether or not Agustins act of introducing couple Goce falls

within the meaning of illegal recruitment and placement under Art
13(b) in relation to Art 34 of the Labor Code.

Held:
The testimonial evidence hereon show that she indeed further
committed acts constitutive of illegal recruitment.
All four prosecution witnesses testified that it was Agustin whom they
initially approached regarding their plans of working overseas. It was
from her that they learned about the fees they had to pay, as well as
the papers that they had to submit. It was after they had talked to her
that they met the accused spouses who owned the placement agency.
As correctly held by the trial court, being an employee of the Goces, it
was therefore logical for appellant to introduce the applicants to said
spouses, they being the owners of the agency. As such, appellant was
actually making referrals to the agency of which she was a part. She
was therefore engaging in recruitment activity.
There is illegal recruitment when one gives the impression of having
the ability to send a worker abroad. It is undisputed that appellant
gave complainants the distinct impression that she had the power or
ability to send people abroad for work such that the latter were
convinced to give her the money she demanded in order to be so
employed.

9
WHEREFORE, the appealed judgment of the court a quo is hereby
AFFIRMED in toto, with costs against accused-appellant Nelly D.
Agustin.
SO ORDERED.

10
IMELDA DARVIN, vs. HON. COURT OF APPEALS and PEOPLE OF
THE PHILIPPINES - G.R. No. 125044 July 13, 1998
Facts:
Imelda Darvin was convicted of simple illegal recruitment under the
Labor Code by the RTC. It stemmed from a complaint of one Macaria
Toledo who was convinced by the petitioner that she has the authority
to recruit workers for abroad and can facilitate the necessary papers in
connection thereof. In view of this promise, Macaria gave her P150,000
supposedly intended for US Visa and air fare.
On appeal, the CA affirmed the decision of the trial court in toto, hence
this petition.
Issue: Whether or not appellant is guilty beyond reasonable doubt of
illegal recruitment.
Held: Art. 13 of the Labor Code provides the definition of recruitment
and placement as:
...b.) any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and includes referrals, contract
services, promising or advertising for employment locally or abroad,
whether for profit or not: Provided, that any reason person or entity
which, in any manner, offers or promises for a fee employment to two
or more persons shall be deemed engaged in recruitment and
placement.
Art. 38 of the Labor Code provides:
a.)Any recruitment activities, including the prohibited practices
enumerated under Article 43 of the Labor Code, to be undertaken by
non-licensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 of the Labor Code.
Applied to the present case, to uphold the conviction of accusedappellant, two elements need to be shown: (1) the person charged with
the crime must have undertaken recruitment activities: and (2) the
said person does not have a license or authority to do so.

In the case, the Court found no sufficient evidence to prove that

accused-appellant offered a job to private respondent. It is not clear
that accused gave the impression that she was capable of providing
the private respondent work abroad. What is established, however, is
that the private respondent gave accused-appellant P150,000.
By themselves, procuring a passport, airline tickets and foreign visa for
another individual, without more, can hardly qualify as recruitment
activities. Aside from the testimony of private respondent, there is
nothing to show that appellant engaged in recruitment activities.
At best, the evidence proffered by the prosecution only goes so far as
to create a suspicion that appellant probably perpetrated the crime
charged. But suspicion alone is insufficient, the required quantum of
evidence being proof beyond reasonable doubt. When the Peoples
evidence fail to indubitably prove the accuseds authorship of the
crime of which he stand accused, then it is the Courts duty, and the
accuseds right, to proclaim his innocence.
WHEREFORE, the appeal is hereby granted and the decision of the CA
is REVERSED and SET ASIDE. Appellant is hereby ACQUITTED on
ground of reasonably doubt. The accused is ordered immediately
released from her confinement.

11
VIR-JEN SHIPPING AND MARINE SERVICES, INC. vs NATIONAL
LABOR RELATIONS COMMISSION, ROGELIO BISULA, RUBEN
ARROZA, JUAN GACUTNO, LEONILO ATOK, NILO CRUZ, ALVARO
ANDRADA, NEMESIO ADUG, SIMPLICIO BAUTISTA, ROMEO
ACOSTA, and JOSE ENCABO, - G.R. No. L-58011-12 July 20, 1982

instances, gives the employers more opportunity not only to prepare even
ingenious defenses, what with well-paid talented lawyers they can afford,
but even to wear out the efforts and meager resources of the workers, to
the point that not infrequently the latter either give up or compromise for
less than what is due them.

Facts: The records show that private respondents have a manning

contract for a period of one (1) year with petitioner in representation of its
principal Kyoei Tanker Co. Ltd.

Issue: Whether or not the Seamen breached their respective employment

contracts;

Aware of the problem that vessels not paying rates imposed by the
International Transport Workers Federation (ITF) would be detained or
interdicted in foreign ports controlled by the ITF, petitioner and private
respondents executed a side contract to the effect that should the vessel
M/T Jannu be required to pay ITF rates when it calls on any ITF controlled
foreign port, private respondents would return to petitioner the amounts so
paid to them.
On March 23, 1979, the master of the vessel who is one of the private
respondents sent a cable to petitioner, while said vessel was en route to
Australia which is an ITF controlled port, stating that private respondents
were not contented with the salary and benefits stipulated in the manning
contract, and demanded that they be given 50% increase thereof, as the
"best and only solution to solve ITF problem." The seamen were
accordingly disembarked in Japan and repatriated to Manila.
Issue: That the respondent NLRC had no more jurisdiction to entertain
private respondents' appeal because the NSB decision became final and
executory for failure of said respondents to serve on he petitioner a copy of
their "APPEAL AND MEMORANDUM OF APPEAL" within the ten (10) day
reglementary period for appeal and even after the expiration of said
period;
Held: We have arrived at the conclusion that the shortened period of ten
(10) days fixed by Article 223 contemplates calendar days and not working
days.
Ratio: We are persuaded to this conclusion, if only because We believe
that it is precisely in the interest of labor that the law has commanded that
labor cases be promptly, if not peremptorily, dispose of. Long periods for
any acts to be done by the contending parties can be taken advantage of
more by management than by labor. Most labor claims are decided in their
favor and management is generally the appellant. Delay, in most

Held: With respect to the first issue, the Board believes that the answer
should be in the affirmative.
Ratio: This is so for the Seamen demanded and in fact received from the
Company wages over and above their contracted rates, which in effect is
an alteration or modification of a valid and subsisting contract; and the
same not having been done thru mutual consent and without the prior
approval of the Board the alteration or modification is contrary to the
provisions of the New Labor Code, as amended, more particularly Art. 34 (i)
thereof which states that:
Art. 34. Prohibited practices.It shall be unlawful for any individual, entity,
licensee or holder of authority: xxx
xxx
xxx(i) To substitute or
alter employment contracts approved and verified by the Department of
Labor from the time of actual signing thereof by the parties up to and
including the period of expiration of the same without the approval of the
Department of Labor;xxx
xxx
xxx
The revision of the contract was not done thru mutual consent for the
Company did not voluntarily agree to an increase of wage, but was only
constrained to make a counter-proposal of 25% increase to prevent the
vessel from being interdicted and/or detained by the ITF because at the
time the demand for salary increase was made the vessel was enroute to
Kwinana, Australia (via Senipah, Indonesia), a port where the ITF is strong
and militant.
While the Board recognizes the rights of the Seamen to seek higher wages
provided the increase is arrived at thru mutual consent, it could not
however, sanction the same if the consent of the employer is secured thru
threats, intimidation or force.
Issue: Whether or not the Seamen were illegally dismissed by the
Company;

12
Held: the Board believes that the termination of the services of the
Seamen was legal and in accordance with the provisions of their respective
employment contracts.
Ratio: Considering the findings of the Board that the Seamen breached
their contracts, their subsequent repatriation was justified. While it may be
true that the Seamen were hired for a definite period their services could
be terminated prior to the completion of the fun term thereof for a just and
valid cause. It may be stated in passing that Vir-jen Shipping & Marine
Services, Inc., despite the fact that it was compelled to accede to a 25%
salary increase for the Seamen, tried to convince its principal Kyoei Tanker,
Ltd. to an adjustment in their agency fee to answer for the 25% increase,
but the latter not only denied the request but likewise terminated their
Manning, Agreement. The Seamen's breach of their employment contracts
and the subsequent termination of the Manning Agreement of Vir-jen
Shipping & Marine Services, Inc. with the Kyoei Tanker, Ltd., justified the
termination of the Seamen's services.

13
DANILO B. TABAS, EDUARDO A. BONDOC, RAMON M. BRIONES,
EDUARDO R. ERISPE, JOEL MADRIAGA, ARTHUR M. ESPINO, AMARO
BONA, FERDINAND CRUZ, FEDERICO A. BELITA, ROBERTO P. ISLES,
ELMER ARMADA, EDUARDO UDOG, PETER TIANSING, MIGUELITA
QUIAMBAO, NOMER MATAGA, VIOLY ESTEBAN AND LYDIA ORTEGA,
PETITIONERS, VS. CALIFORNIA MANUFACTURING COMPANY, INC.,
LILY-VICTORIA
A.
AZARCON,
NATIONAL LABOR
RELATIONS
COMMISSION, AND HON. EMERSON C. TUMANON, RESPONDENTS. G.R. No. 80680, January 26, 1989
Facts:
On July 21, 23, and 28, 1986, the petitioners petitioned the NLRC for
reinstatement and payment of various benefits, including minimum wage,
overtime pay, holiday pay, thirteen- month pay, and emergency cost of
living allowance pay, against the respondent.
On October 7, 1986, after the cases had been consolidated, the respondent
filed a motion to dismiss as well as a position paper denying the existence
of an employer-employee relation between the petitioners and the
respondents and, consequently, any liability for payment of money claims.
It appears that the petitioners were, prior to their stint with respondents,
employees of Livi, which subsequently assigned them to work as
"promotional merchandisers" 3 for the former firm pursuant to a manpower
supply agreement. The petitioners were made to sign employment
contracts with durations of six months, upon the expiration of which they
signed new agreements with the same period, and so on. The petitioners
now allege that they had become regular California employees and
demand, as a consequence whereof, similar benefits. They likewise claim
that pending further proceedings below, they were notified by California
that they would not be rehired. As a result, they filed an amended
complaint charging California with illegal dismissal.
California admits having refused to accept the petitioners back to work but
deny liability therefor for the reason that it is not, to begin with, the
petitioners' employer and that the "retrenchment" had been forced by
business losses as well as expiration of contracts. 9
Issue:
Whether there exist an employer-employee relation between the
petitioners and the respondents based on the manpower supply contract
agreement between repondent California and Livi.

Held:
The existence of an employer-employees relation is a question of law and
being such, it cannot be made the subject of agreement. Hence, the fact
that the manpower supply agreement between Livi and California had
specifically designated the former as the petitioners' employer and had
absolved the latter from any liability as an employer, will not erase either
party's obligations as an employer, if an employer-employee relation
otherwise exists between the workers and either firm. At any rate, since
the agreement was between Livi and California, they alone are bound by it,
and the petitioners cannot be made to suffer from its adverse
consequences.
This Court has consistently ruled that the determination of whether or not
there is an employer- employee relation depends upon four standards:
(1) the manner of selection and engagement of the putative employee;(2)
the mode of payment of wages;(3) the presence or absence of a power of
dismissal; and(4) the presence or absence of a power to control the
putative employee's conduct. 14
Of the four, the right-of-control test has been held to be the decisive factor.
15
The Court need not therefore consider whether it is Livi or California which
exercises control over the petitioner vis-a-vis the four barometers referred
to earlier, since by fiction of law, either or both shoulder responsibility.
The records show that the petitioners bad been given an initial six-month
contract, renewed for another six months. Accordingly, under Article 281 of
the Code, they had become regular employees-of-California-and had
acquired a secure tenure. Hence, they cannot be separated without due
process of law.
Decision:
WHEREFORE, the petition is GRANTED. Judgment is hereby RENDERED: (1):
SETTING ASIDE the decision, dated March 20, 1987, and the resolution,
dated August 19, 1987; (2) ORDERING the respondent, the California
Manufacturing Company, to REINSTATE the petitioners with full status and
rights of regular employees; and (3) ORDERING the respondent, the
California Manufacturing Company, and the respondents, Livi Manpower
Service, Inc. and/or Lily-Victoria Azarcon, to PAY, jointly and severally, unto
the petitioners: (a) backwages and differential pays effective as and from

14
the time they had acquired a regular status under the second paragraph,
of Section 281, of the Labor Code, but not to exceed three (3) years, and
(b) all such other and further benefits as may be provided by existing
collective bargaining agreement(s) or other relations, or by law, beginning
such time; and (4) ORDERING the private respondents to PAY unto the
petitioners attorney's fees equivalent to ten (10%) percent of all money
claims hereby awarded, in addition to those money claims. The private
respondents are likewise ORDERED to PAY the costs of this suit.

15
DR. CARLOS L. SEVILLA and LINA O. SEVILLA vs THE COURT OF
APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA - G.R. No. L-41182-3 April 16, 1988
On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the
appellees) entered into on Oct. 19, 1960 by and between Mrs. Segundina
Noguera, party of the first part; the Tourist World Service, Inc., represented
by Mr. Eliseo Canilao as party of the second part, and hereinafter referred
to as appellants, the Tourist World Service, Inc. leased the premises
belonging to the party of the first part at Mabini St., Manila for the former-s
use as a branch office. In the said contract the party of the third part held
herself solidarily liable with the party of the part for the prompt payment of
the monthly rental agreed on. When the branch office was opened, the
same was run by the herein appellant Una 0. Sevilla payable to Tourist
World Service Inc. by any airline for any fare brought in on the efforts of
Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to be withheld
by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc.
appears to have been informed that Lina Sevilla was connected with a rival
firm, the Philippine Travel Bureau, and, since the branch office was anyhow
losing, the Tourist World Service considered closing down its office. This
was firmed up by two resolutions of the board of directors of Tourist World
Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first abolishing
the office of the manager and vice-president of the Tourist World Service,
Inc., Ermita Branch, and the second,authorizing the corporate secretary to
receive the properties of the Tourist World Service then located at the said
branch office. It further appears that on Jan. 3, 1962, the contract with the
appellees for the use of the Branch Office premises was terminated and
while the effectivity thereof was Jan. 31, 1962, the appellees no longer
used it. As a matter of fact appellants used it since Nov. 1961. Because of
this, and to comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch office, and,
finding the premises locked, and, being unable to contact Lina Sevilla, he
padlocked the premises on June 4, 1962 to protect the interests of the
Tourist World Service. When neither the appellant Lina Sevilla nor any of
her employees could enter the locked premises, a complaint wall filed by
the herein appellants against the appellees with a prayer for the issuance
of mandatory preliminary injunction. Both appellees answered with
counterclaims. For apparent lack of interest of the parties therein, the trial
court ordered the dismissal of the case without prejudice. Trial court ruled
in favor of the respondent, hence this petition.

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

master-servant relationship. True the respondent Court would later

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

16
DY KEH BENG, VS. INTERNATIONAL LABOR AND MARINE UNION OF
THE PHILIPPINES, ET. AL. - G.R. No. L-32245, May 25, 1979
A charge of unfair labor practice was filed against Dy Keh Beng, a
proprietor of a basket factory, bydismissing Solano and Tudla for their
union activities.Dy Keh Beng contended that he did not know Tudla and
Solano was not his employee because the lattercame to the establishment
only when there was work which he did on pakiaw basis.Dy Keh Beng
countered with a special defense of simple extortion committed by the
head of the laborunion.
ISSUE: W/N there existed an employee-employer relation between
petitioner and respondents
HELD: Yes. Evidence showed that the work of Solano and Tudla was
continuous except in the event of illness,although their services were
compensated on piece basis. The control test calls for the existence of the
right tocontrol the manner of doing the work, not the actual exercise of
the right considering that Dy Keh Beng is engagedin the manufacture of
baskets known as kaing, those working under Dy would be subject to
Dys specificationssuch as the size and quality of the kaing. And since
the laborers are done at Dys establishments, it could beinferred that Dy
could easily exercise control upon them.As to the contention that Solano
was not an employee because he worked on piece basis, the court
ruledthat it should be determined that if indeed payment by piece is just a
method of compensation and does not definethe essence of the relation.
Payment cannot be construed by piece where work is done in such
establishment so asto put the worker completely at liberty to turn him
out and take it another at pleasure Justice Perfecto also contended that
pakyaw
system
is
a labor
contract
between
employers
and
employeesbetween capitalists and laborers.Wherefore, the award of
backwages is modified to an award of backwages for 3 years at the rated
of compensation the employees were receiving at the time of dismissal.
FACTS: Petitioner, Dy Keh Beng, proprietor of basket factory, was charged
with ULP for discriminatory acts defined under Sec 4(a), subparagraph (1 &
4), R.A. No. 875 by dismissing on September 28-29, 1960, respectively,
Carlos N. Solano and Ricardo Tudla for their union activities. After PI was
conducted, a case was filed in the CIR for in behalf of the ILMUP and two of
its members, Solano and Tudla. Dy Keh Beng contended that he did not
know Tudla and that Solano was not his employee because the latter came
to the establishment only when there was work which he did on pakiaw
basis. According to Dy Keh Beng, Solano was not his employee for the

following reasons:
(1) Solano never stayed long enough at Dys
establishment; (2) Solano had to leave as soon as he was through with the
order given him by Dy; (3) When there were no orders needing his services
there was nothing for him to do; (4) When orders came to the shop that his
regular workers could not fill it was then that Dy went to his address in
Caloocan and fetched him for these orders; and (5) Solano's work with Dy's
establishment was not continuous.
According to petitioner, these facts show that respondents Solano and
Tudla are only piece workers, not employees under Republic Act 875, where
an employee is referred to as shall include any employee and shag not be
limited to the employee of a particular employer unless the act explicitly
states otherwise and shall include any individual whose work has ceased
as a consequence of, or in connection with any current labor dispute or
because of any ulp and who has not obtained any other substantially
equivalent and regular employment. while an employer includes any
person acting in the interest of an employer, directly or indirectly but shall
not include any labor organization (otherwise than when acting as an
employer) or anyone acting in the capacity of officer or agent of such labor
organization. Petitioner also contends that the private respondents "did not
meet the control test in the fight of the ... definition of the terms employer
and employee, because there was no evidence to show that petitioner had
the right to direct the manner and method of respondent's work. He points
to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et
al.,L-13130, October 31, 1959, where the Court ruled that: The test ... of
the existence of employee and employer relationship is whether there is an
understanding between the parties that one is to render personal services
to or for the benefit of the other and recognition by them of the right of
one to order and control the other in the performance of the work and to
direct the manner and method of its performance. The CIR found that
there existed an employee-employer relationship between Dy Keh Beng
and complainants Tudla and Solano, although Solano was admitted to have
worked on piece basis.
ISSUE: Whether or not an employee employer relation existed between
petitioner Dy Keh Beng and the respondents Solano and Tudla.
HELD: The SC also noted the decision of Justice Paras in the case of
Sunrise Coconut Products Co. Vs. CIR (83 Phil 518, 523) that judicial
notice of the fact that the so-called "pakyaw" system mentioned in this
case as generally practiced in our country, is, in fact, a labor contract
-between employers and employees, between capitalists and laborers.

17
With regard to the control test the SC said that It should be borne in mind
that the control test calls merely for the existence of the right to control
the manner of doing the work, not the actual exercise of the right.
Considering the finding by the Hearing Examiner that the establishment of
Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, it
is natural to expect that those working under Dy would have to observe,
among others, Dy's requirements of size and quality of the kaing. Some
control would necessarily be exercised by Dy as the making of the kaing
would be subject to Dy's specifications. Parenthetically, since the work on
the baskets is done at Dy's establishments, it can be inferred that the
proprietor Dy could easily exercise control on the men he employed.

18
INSULAR LIFE ASSURANCE CO., LTD.,
VS. NATIONAL LABOR
RELATIONS COMMISSION (FOURTH DIVISION, CEBU CITY), LABOR
ARBITER NICASIO P. ANINON AND PANTALEON DE LOS REYES - G.R.
No. 119930, March 12, 1998
FACTS:
Petitioner entered into an agency contract with respondent delos
Reyes authorizing the latter to solicit for life insurance and he would be
paid compensation in the form of commissions. It contained the stipulation
that no ER-EE relationship shall be create. However, delos Reyes was
prohibited by petitioner from working for any other life insurance company
and violation of this company was a ground of termination.
Petitioner and private respondent entered into another contract
where the latter was appointed as Acting Unit Manager under its office.
One of the duties of delos Reyes is to supervise and coordinate the
underwriters. It was similarly provided in the management contract that
the relation of the acting unit manager and/or the agents of his unit to the
company shall be that of independent contractor.
Private respondent worked concurrently as agent and Acting Unit
Manager until he was notified by petitioner that his services were
terminated. So, he filed a complaint on the ground of illegal dismissal and
for not paying him salaries and separation pay.
ISSUE: W/N ER-EE relationship exists between Insular Life and delos Reyes
HELD: Yes.
Both petitioner and respondent NLRC treated the agency contract
and the management contract entered into between petitioner and de los
Reyes as contracts of agency. There exist major distinctions between the
two arrangements. While the first has the earmarks of an agency contract,
the second is far removed from the concepts of agency in that provided
therein are conditionality that indicates an employer-employee
relationship.
Private respondent was appointed as Acting Unit Manager only
upon recommendation of the District Manager. This indicates that private
respondent was hired by petitioner because of the favorable endorsement
of its duly authorized officer. Then, the very designation of the
appointment of private respondent as acting unit manager obviously

implies a temporary employment status which may be made permanent

only upon compliance with company standards.
On the matter of payment of wages, petitioner points out that
respondent was compensated strictly on commission basis, the amount of
which was totally dependent on his total output. But, the managers
contract, speaks differently. Under the contract, de los Reyes must meet
with the manpower and production requirements as Acting Unit Manager.
As to the matter involving the power of dismissal and control by
the employer, respondents duty to collect the companys premiums using
company receipts is further evidence of petitioners control over
respondent.
Thus, exclusivity of service, control of assignments and removal of
agents under private respondent;s unit, collection of premiums, furnishing
of company yfacilities and materials as well as capital described are but
hallmarks of the management system in which herein private respondent
worked. Private respondent de los Reyes was an employee of herein
petitioner.
Wherefore, petition of Insular Life is denied.

19
ANGELINA
FRANCISCO,
VS.
NATIONAL
LABOR
RELATIONS
COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD
LIZA AND RAMON ESCUETA - G.R. NO. 170087, August 31, 2006

The Labor Arbiter found that petitioner was illegally dismissed,

NLRC affirmed with modification the Decision of the Labor Arbiter. On
appeal, CA reversed the NLRC decision. CA denied petitioners MR, hence,
the present recourse.

In 1995, Petitioner was hired by Kasei Corporation during its incorporation

stage. She was designated as Accountant and Corporate Secretary and
was assigned to handle all the accounting needs of the company. She was
also designated as Liaison Officer to the City of Makati to secure business
permits, construction permits and other licenses for the initial operation of
the company.

ISSUES:

Although she was designated as Corporate Secretary, she was not

entrusted with the corporate documents; neither did she attend any board
meeting nor required to do so. She never prepared any legal document
and never represented the company as its Corporate Secretary.
1996, petitioner was designated Acting Manager. Petitioner was assigned
to handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with
government agencies, especially with the BIR, SSS and in the city
government of Makati; and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated by Kasei
Corporation.
January 2001, petitioner was replaced by a certain Liza R. Fuentes
as Manager. Kasei Corporation reduced her salary, she was not paid her
mid-year bonus allegedly because the company was not earning well. On
October 2001, petitioner did not receive her salary from the company. She
made repeated follow-ups with the company cashier but she was advised
that the company was not earning well. Eventually she was informed that
she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report
for work and filed an action for constructive dismissal before the labor
arbiter. Private respondents averred that petitioner is not an employee of
Kasei Corporation. They alleged that petitioner was hired in 1995 as one of
its technical consultants on accounting matters and act concurrently as
Corporate Secretary. As technical consultant, petitioner performed her
work at her own discretion without control and supervision of Kasei
Corporation. Petitioner had no daily time record and she came to the office
any time she wanted and that her services were only temporary in nature
and dependent on the needs of the corporation.

1. WON there was an employer-employee relationship between petitioner

and private respondent; and if in the affirmative,
2. Whether petitioner was illegally dismissed.
RULING:
1. 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.
There are instances when, aside from the employers power to
control the employee, economic realities of the employment relations help
provide a comprehensive analysis of the true classification of the
individual, whether as employee, independent contractor, corporate officer
or some other capacity.
It is better, therefore, to adopt a two-tiered test involving: (1) the
employers power to control; and (2) the economic realities of the activity
or relationship.
The control test means that there is an employer-employee
relationship when the person for whom the services are performed
reserves the right to control not only the end achieved but also the manner
and means used to achieve that end.
There has to be 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

20
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, it can be said that petitioner is an
employee of Kasei Corporation because she was under the direct control
and supervision of Seiji Kamura, the corporations Technical Consultant.
She reported for work regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses over an
indefinite period of engagement. Respondent corporation had the power to
control petitioner with the means and methods by which the work is to be
accomplished.
Under the economic reality test, the petitioner can also be said to
be an employee of respondent corporation because she had served the
company for 6 yrs. before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from.
When petitioner was designated General Manager, respondent corporation
made a report to the SSS. Petitioners membership in the SSS evinces the
existence of an employer-employee relationship between petitioner and
respondent corporation. The coverage of Social Security Law is predicated
on the existence of an employer-employee relationship.
2. The corporation constructively dismissed petitioner when it
reduced her. This amounts to an illegal termination of employment, where
the petitioner is entitled to full backwages
A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary resignation
resulting in cessation of work resorted to when continued employment
becomes impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee. Petition is
GRANTED.

21
OSCAR VILLAMARIA, JR. VS.COURT OF APPEALS AND JERRY V.
BUSTAMANTE, - G.R. NO. 165881, April 19, 2006
FACTS
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole
proprietorship engaged in assembling passenger jeepneys with a public
utility franchise to operate along theBaclaran-Sucat route. By 1995,
Villamaria stopped assembling jeepneys and retained only nine, four of
which he operated by employing drivers on a boundary basis. One of
thosedrivers was respondent. Bustamante remitted P450 a day to
Villamaria as boundary and kept the residue of his daily earnings as
compensation for driving the vehicle. In August 1997,Villamaria
verbally agreed to sell the jeepney to Bustamante under the boundaryhulog scheme, where Bustamante would remit to Villarama P550 a day
for a period of 4 years;Bustamante would then become the owner of the
vehicle and continue to drive the same under Villamarias franchise. It was
also agreed that Bustamante would make a downpaymentof P10,000
On August 7, 1997, Villamaria executed a contract entitled Kasunduan ng
Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog over the
passenger jeepney. The parties agreedthat if Bustamante failed to pay the
boundary-hulog for 3 days, Villamaria Motors would hold on to the vehicle
until Bustamante paid his arrears, including a penalty of P50 a day; in
caseBustamante failed to remit the daily boundary-hulog for a period of
one week, the Kasunduan would cease to have legal effect and
Bustamante would have to return the vehicle toVillamaria Motors
Bustamante continued driving the jeepney under the supervision and
control of Villamaria. As agreed upon, he made daily remittances of P550
in payment of the purchase price of thevehicle. Bustamante failed to pay
for the annual registration fees of the vehicle, but Villamaria allowed him to
continue driving the jeepney.
In 1999, Bustamante and other drivers who also had the same
arrangement with Villamaria Motors failed to pay their respective
boundary-hulog. This prompted Villamaria to serve aPaalala, reminding
them that under the Kasunduan, failure to pay the daily boundary-hulog for
one week, would mean their respective jeepneys would be returned to him
without anycomplaints. He warned the drivers that the Kasunduan would
henceforth be strictly enforced and urged them to comply with their
obligation to avoid litigation. On July 24, 2000,Villamaria took back the
jeepney driven by Bustamante and barred the latter from driving the

vehicle.- Bustamante filed a Complaint for Illegal Dismissal against

Villamaria and his wife Teresita. He narrated that in July 2000, he informed
the Villamaria spouses that the surplus engine ofthe jeepney needed to be
replaced, and was assured that it would be done. However, he was later
arrested and his drivers license was confiscated because apparently,
thereplacement engine that was installed was taken from a stolen
vehicle. He was no longer allowed to drive the vehicle unless he paid them
P70,000.
ISSUES
1. WON the existence of a boundary-hulog agreement negates the
employer-employee relationship between the vendor and vendee2. As a
corollary, WON the Labor Arbiter has jurisdiction over a complaint for illegal
dismissal in such a case
HELD
1. NO
Ratio
Under the boundary-hulog scheme, a dual juridical relationship is created:
that of
employer-employee and
vendor-vendee. The
Kasunduan did
not extinguish the employer-employee relationship of the parties extant
before the execution of said deed.
Reasoning
- The boundary system is a scheme by an owner/operator engaged in
transporting passengers as a common carrier to primarily govern the
compensation of the driver, that is, the lattersdaily earnings are remitted
to the owner/operator less the excess of the boundary which represents
the drivers compensation. Under this system, the owner/operator
exercises controland supervision over the driver. It is unlike in lease of
chattels where the lessor loses complete control over the chattel leased
but the lessee is still ultimately responsible for theconsequences of its use.
The management of the business is still in the hands of the
owner/operator, who, being the holder of the certificate of public
convenience, must see to it that thedriver follows the route prescribed by
the franchising and regulatory authority, and the rules promulgated with
regard to the business operations. The fact that the driver does not
receivefixed wages but only the excess of the boundary given to the
owner/operator is not sufficient to change the relationship between

22
them. Indubitably, the driver performs activities whichare usually
necessary or desirable in the usual business or trade of the
owner/operator.- Under the Kasunduan, respondent was required to remit
P550 daily to petitioner, an amount which represented the boundary of
petitioner as well as respondents partial payment(hulog) of the purchase
price of the jeepney. Thus, the daily remittances also had a dual purpose:
that of petitioners boundary and respondents partial payment (hulog) for
the vehicle.This dual purpose was expressly stated in the Kasunduan. The
well-settled rule is that an obligation is not novated by an instrument that
expressly recognizes the old one, changes onlythe terms of payment, and
adds other obligations not incompatible with the old provisions or where
the new contract merely supplements the previous one. The two
obligations of therespondent to remit to petitioner the boundary-hulog can
stand together.- The existence of an employment relation is not dependent
on how the worker is paid but on the presence or absence of control over
the means and method of the work. The amountearned in excess of the
boundary hulog is equivalent to wages and the fact that the power of
dismissal was not mentioned in the Kasunduan did not mean that private
respondent neverexercised such power, or could not exercise such power.Neither is such juridical relationship negated by petitioners claim that the
terms and conditions in the Kasunduan relative to respondents behavior
and deportment as driver was for hisand respondents benefit: to insure
that respondent would be able to pay the requisite daily installment of
P550, and that the vehicle would still be in good condition despite the
lapse of 4years. What is primordial is that petitioner retained control over
the conduct of the respondent as driver of the jeepney.- As respondents
employer, it was the burden of petitioner to prove that respondents
termination from employment was for a lawful or just cause, or, at the very
least, that respondentfailed to make his daily remittances of P550 as
boundary. However, petitioner failed to do so. Well-settled is the rule that,
the employer has the burden of proving that the dismissal of anemployee
is for a just cause. The failure of the employer to discharge this burden
means that the dismissal is not justified and that the employee is entitled
to reinstatement and back wages.2. YES
Reasoning
- The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved byreference to the Labor Code,
other labor statutes or their collective bargaining agreement.
Disposition

Petition is DENIED. Decision of the CA is AFFIRMED.

23
MAKATI HABERDASHERY, INC., JORGE LEDESMA AND CECILIO G.
INOCENCIO,
VS. NATIONAL LABOR RELATIONS COMMISSION,
CEFERINA J. DIOSANA (LABOR ARBITER, DEPARTMENT OF LABOR
AND EMPLOYMENT, NATIONAL CAPITAL REGION), SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN) - TUCP AND ITS MEMBERS,
JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO,
ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO
A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO,
LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY
OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA AND MARIA
ANGELES - G.R. Nos. 83380-81, November 15, 1989
FACTS:
Individual complainants are working for Makati Haberdashery Inc as
tailors, seamstress, sewers, basters, and plantsadoras and are paid on a
piece-rate basis (except two petitioners who are paid on a monthly basis)
In addition, they are given a daily allowance of P 3.00 provided they report
before 9:30 a.m. everyday. Work schedule: 9:30-6 or 7 p.m., Mondays to
Saturdays and even on Sundays and holidays during peak periods. The
Sandigan ng Manggagawang Pilipino filed a complaint for underpayment of
the basic wages, underpayment of living allowance, nonpayment of
overtime work, nonpayment of holiday pay, and other money claims. The
Labor Arbiter rendered judgment in favor of complainants which the NLRC
affirmed but limited back wages to one year. Petitioner urged that the
NLRC erred in concluding that an employer-employee relationship existed
between the petitioner and the workers.

1. As to the service incentive leave pay: as piece-rate workers being paid

at a fixed amount for performing work irrespective of time consumed in the
performance thereof, they fall under the exceptions stated in Sec1(d), Rule
V, IRR, Book III, Labor Code.

Service Incentive Leave

SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the
performance thereof;
2. Employer-Employee Relationship
There is such relationship because in the application of the four-fold test, it
was found that petitioners had control over the respondents not only as to
the result but also as to the means and method by which the same is to be
accomplished. Such control is proven by a memorandum which
enumerates procedures and instructions regarding job orders, alterations,
and their behavior inside the shop issued by the Assistant Manager which
reads in part:
"Effective immediately, new procedures shall be followed:

Issue:

To follow instruction and orders from the undersigned

1. WON employees paid on piece-rate basis are entitled to service

incentive pay?

Before accepting the job orders, tailors must check the

materials, job orders, due dates, and other things to maximize
efficiency

Effective immediately all job orders, must be finished one day

before the due date. This can be done by proper scheduling of
job order and if you will cooperate with your supervisors. xxxx

If there is any problem regarding supervisors or co-tailor inside

our shop, consult with me at once to settle the problem.
Fighting inside the shop is strictly prohibited. Any tailor
violating this memorandum will be subject to disciplinary
action.

2. WON there is an Employer-Employee Relationship?

Held:
1. NO, fall under exceptions set forth in the implementing rules (this will be
reexamined under Article 101).
2. Yes, evident in a Memorandum issued by the Assistant Manager.
Ratio:

24
WHEREFORE, the decision of the National Labor Relations Commission
dated March 30, 1988 and that of the Labor Arbiter dated June 10, 1986
are hereby modified. The complaint filed by Pelobello and Zapata for illegal
dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of
factual and legal bases. Award of service incentive leave pay to private
respondents is deleted. SO ORDERED.

compensation and benefits; (2) there was an increase in basic pay of the
average of 50% of their basic pay prior to the JE Program, with the union
members now enjoying a wide gap (P1,269.00 per month) in basic pay
compared to the highest paid rank-and-file employee.

NATIONAL SUGAR REFINERIES CORPORATION,

VS. NATIONAL
LABOR RELATIONS COMMISSION AND NBSR SUPERVISORY UNION
(PACIWU) TUCP - G.R. No. 101761, March 24, 1993

Two years after the implementation of the JE Program the members of

herein respondent union filed a complaint for non-payment of overtime,
rest day and holiday pay allegedly in violation of Article 100 of the Labor
Code.

Facts:On June 1, 1988, National Sugar Refineries Corporation,petitioner,

implement a Job evaluation (JE) program affectingall employees including
the members of respondent union,granted salary adjustments and increase
in benefits,therefore the respondents were re-classified as managerialstaff.
After two years the respondent union filed a complaintwith the Executive
Labor Arbiter for non-payment of overtime and benefits, the Labor Arbiter
render a decision topay the respondent overtime and benefits, that they
are notmanagerial employee, as defined in Art. 212(m), however,the
petitioner claim that the respondent were not entitled tobenefits and
should be considered as managerial staff ascontemplated in Art. 82,
therefore they are not entitled tobenefits.
FACTS: Petitioner National Sugar Refineries Corporation (NASUREFCO), a
corporation which is fully owned and controlled by the Government,
operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. Private respondent union represents the former supervisors of
the NASUREFCO Batangas Sugar Refinery.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program
affecting all employees, from rank-and-file to department heads. As a
result, all positions were re-evaluated, and all employees including the
members of respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions.
For about ten years prior to the JE Program, the members of respondent
union were treated in the same manner as rank-and file employees. As
such, they used to be paid overtime, rest day and holiday pay. With the
implementation of the JE Program, the following adjustments among others
were made: (1) the members of respondent union were re-classified under
levels S-5 to S-8 which are considered managerial staff for purposes of

On May 11, 1990, petitioner NASUREFCO recognized herein respondent

union as the bargaining representative of all the supervisory employees at
the NASUREFCO Batangas Sugar Refinery.

ISSUE: W/N supervisory employees should be considered as officers or

members of the managerial staff under Article 82, Book III of the same
Code, and hence are not entitled to overtime rest day and holiday pay.
HELD: YES. Article 212(m), Book V of the Labor Code on Labor Relations
reads:
(m) Managerial employee is one who is vested with powers or
prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharged, assign or discipline
employees. Supervisory employees are those who, in the interest of
the employer effectively recommend such managerial actions if
the exercise of such authority is not merely routinary or clerical in
nature but requires the use of independent judgment. All
employees not falling within any of those above definitions are considered
rank-and-file employees of this Book.
Respondent NLRC, in holding that the union members are entitled to
overtime, rest day and holiday pay, and in ruling that the latter are not
managerial employees, adopted the definition stated in the aforequoted
statutory provision.
A cursory perusal of the Job Value Contribution Statements of the union
members will readily show that these supervisory employees are under the
direct supervision of their respective department superintendents and that
generally they assist the latter in planning, organizing, staffing, directing,
controlling communicating and in making decisions in attaining the
companys set goals and objectives.

25
These supervisory employees are likewise responsible for the effective and
efficient operation of their respective departments. The members of
respondent union discharge duties and responsibilities which ineluctably
qualify them as officers or members of the managerial staff, as defined in
Section 2, Rule I Book III of the aforestated Rules to Implement the Labor
Code, viz.: (1) their primary duty consists of the performance of
work directly related to management policies of their employer;
(2) they customarily and regularly exercise discretion and
independent judgment; (3) they regularly and directly assist the
managerial employee whose primary duty consist of the
management of a department of the establishment in which they
are employed (4) they execute, under general supervision, work
along specialized or technical lines requiring special training,
experience, or knowledge; (5) they execute, under general
supervision, special assignments and tasks; and (6) they do not
devote more than 20% of their hours worked in a work-week to
activities which are not directly and clearly related to the
performance of their work hereinbefore described. Under the facts
obtaining in this case, the union members should be considered as officers
and members of the managerial staff and are, therefore, exempt from the
coverage of Article 82 hence they are not entitled to overtime, rest day
and holiday.
CHARLITO PEARANDA, VS. BAGANGA PLYWOOD CORPORATION
AND HUDSON CHUA, - G.R. NO. 159577, May 03, 2006
In June 1999, Pearanda was hired by Baganga Plywood Corporation
(owned byHudson Chua) to take charge of the operations and maintenance
of its steam plantboiler. Pearanda was employed as a Foreman/Boiler
Head/Shift Engineer tasked todo the following tasks among others:"
1. To supply the required and continuous steam to all consuming units
atminimum cost."
2. To supervise, check and monitor manpower workmanship as well
asoperation of boiler and accessories."
3. To evaluate performance of machinery and manpower.xxx"
5. To train new employees for effective and safety while working.xxx"
7. To recommend personnel actions such as: promotion, or disciplinary
action.xxxIn 2001, BPC shut down due to some repairs and maintenance.

BPC did not technically fire Pearanda but due to the latters insistence,
BPC gave him his separation benefits.
BPC subsequently reopened but Pearanda did not reapply.Pearanda now
claims that BPC still needed to pay him his overtime pays and
premiumpays.The NLRC ruled that Pearanda is a managerial employee
and as such he is notentitled to overtime and premium pay as stated under
the Labor Code. Pearandaappealed. He said that he is not a managerial
employee.
ISSUE: Whether or not Pearanda is entitled to overtime and premium pay.
HELD:
No. Though there is an error made by the NLRC in finding Pearanda as
amanagerial employee, the Supreme Court still ruled that Pearanda is not
entitled toovertime and premium pay.Pearanda is not a managerial
employee. Under the Implementing Rules andRegulations of the Labor
Code, managerial employees are those that perform thefollowing:"(1) Their
primary duty consists of the management of the establishment in
whichthey are employed or of a department or subdivision thereof;"(2)
They customarily and regularly direct the work of two or more
employeestherein;"(3) They have the authority to hire or fire other
employees of lower rank; or theirsuggestions and recommendations as to
the hiring and firing and as to thepromotion or any other change of status
of other employees are given particularweight."Pearanda does not meet
the above requirements.

26
AUTO BUS TRANSPORT SYSTEMS, INC., VS. ANTONIO BAUTISTA, G.R. NO. 156367, May 16, 2005
THE FACTS
Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May
1995. He was assigned to the Isabela-Manila route and he was paid by
commission (7% of gross income per travel for twice a month).
In January 2000, while he was driving his bus he bumped another bus
owned by Auto Bus. He claimed that he bumped the he accidentally
bumped the bus as he was so tired and that he has not slept for more than
24 hours because Auto Bus required him to return to Isabela immediately
after arriving at Manila. Damages were computed and 30% or P75,551.50
of it was being charged to Bautista. Bautista refused payment.
Auto Bus terminated Bautista after due hearing as part of Auto Bus
management prerogative. Bautista sued Auto Bus for Illegal Dismissal. The
Labor Arbiter Monroe Tabingan dismissed Bautistas petition but ruled that
Bautista is entitled to P78,117.87 13th month pay payments and
P13,788.05 for his unpaid service incentive leave pay.
The case was appealed before the National Labor Relations Commission.
NLRC modified the LAs ruling. It deleted the award for 13th Month pay. The
court of Appeals affirmed the NLRC.
Auto Bus averred that Bautista is a commissioned employee and if that is
not reason enough that Bautista is also a field personnel hence he is not
entitled to a service incentive leave. They invoke:
Art. 95 . RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1 . Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the
performance thereof; . . .

ISSUES
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under
Article 291 of the Labor Code, as amended, is applicable to respondents
claim of service incentive leave pay.
RULING OF THE COURT
1. Yes, Bautista is entitled to Service Incentive Leave. The Supreme Court
emphasized that it does not mean that just because an employee is paid
on commission basis he is already barred to receive service incentive leave
pay.
The disposition of the first issue revolves around the proper interpretation
of Article 95 of the Labor Code vis - vis Section 1(D), Rule V, Book III of
the Implementing Rules and Regulations of the Labor Code which provides:
Art. 95 . RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1 . Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the
performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that
the grant of service incentive leave has been delimited by the
Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According
to the Implementing Rules, Service Incentive Leave shall not apply to
employees classified as "field personnel." The phrase "other employees
whose performance is unsupervised by the employer" must not be
understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification
of the interpretation of the definition of field personnel under the Labor

27
Code as those "whose actual hours of work in the field cannot be
determined with reasonable certainty."8
The same is true with respect to the phrase " those who are engaged on
task or contract basis, purely commission basis . " Said phrase should be
related with "field personnel," applying the rule on ejusdem generis that
general and unlimited terms are restrained and limited by the particular
terms that they follow.9 Hence, employees engaged on task or contract
basis or paid on purely commission basis are not automatically exempted
from the grant of service incentive leave, unless, they fall under the
classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the
grant of service incentive leave just because he was paid on purely
commission basis is misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, field personnel shall refer to
non-agricultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with reasonable
certainty.
As a general rule, field personnel are those whose performance of their
job/service is not supervised by the employer or his representative, the
workplace being away from the principal office and whose hours and days
of work cannot be determined with reasonable certainty; hence, they are
paid specific amount for rendering specific service or performing specific
work. If required to be at specific places at specific times, employees
including drivers cannot be said to be field personnel despite the fact that
they are performing work away from the principal office of the employee.
Certainly, Bautista is not a field employee. He has a specific route to
traverse as a bus driver and that is a specific place that he needs to be at
work. There are inspectors hired by Auto Bus to constantly check him.
There are inspectors in bus stops who inspects the passengers, the
punched tickets, and the driver. Therefore he is definitely supervised
though he is away from the Auto Bus main office.
2. Yes, the prescriptive period with respect to his claim for service incentive
leave pay only commenced from the time the employer failed to
compensate his accumulated service incentive leave pay at the time of his

dismissal. Since respondent had filed his money claim after only one
month from the time of his dismissal, necessarily, his money claim was
filed within the prescriptive period provided for by Article 291 of the Labor
Code.
Article 291 of the Labor Code states that all money claims arising from
employer - employee relationship shall be filed within three (3) years from
the time the cause of action accrue d; otherwise, they shall be forever
barred.
Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the three (3)-year
prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service
incentive leave, but from the time when the employer refuses to pay its
monetary equivalent after demand of commutation or upon termination of
the employees services, as the case may be.
The above construal of Art. 291, vis - - vis the rules on service incentive
leave, is in keeping with the rudimentary principle that in the
implementation and interpretation of the provisions of the Labor Code and
its implementing regulations, the workingmans welfare should be the
primordial and paramount consideration.18 The policy is to extend the
applicability of the decree to a greater number of employees who can avail
of the benefits under the law, which is in consonance with the avowed
policy of the State to give maximum aid and protection to labor.19
WHEREFORE, premises considered, the instant petition is hereby DENIED.
The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is
hereby AFFIRMED. No Costs.

28
SAN
MIGUEL
BREWERY
SALES
FORCE
UNION
(PTGWO),
PETITIONER, VS. HON. BLAS F. OPLE, AS MINISTER OF LABOR AND
SAN MIGUEL CORPORATION, RESPONDENTS. - G.R. No. 53515,
February 08, 1989
FACTS:
Where after the morning roll call the outside or field sales personnel leave
the plant of the company to go on their respective sales routes and they do
not have a daily time record but the sales routes are so planned that they
can be completed within 8 hours at most, and they received monthly
salaries and sales commissions in variable amounts, so they are made to
work beyond the required eight hours similar to piece-rate work, pakiao, or
commission basis regardless of the time employed, and the employees
participation depends on their industry, it is held that the Eight Hour Labor
Law has no application to said outside or field sales personnel and that
they are not entitled to overtime compensation.
ISSUE:
Whether the Eight Hour Labor Law has application to Outside or Field Sales
Personnel and whether they are entitled to overtime compensation.
RULING:
The Eight-Hour Labor Law only has application where an employee or
laborer is paid on a monthly or daily basis, or is paid a monthly or daily
compensation, in which case, if he is made to work beyond the requisite
period of 8 hours, he should be paid the additional compensation
prescribed by law. This law has no application when the employee or
laborer is paid on a piece- work, "pakiao", or commission basis, regardless
of the time employed. The philosophy behind this exemption is that his
earnings in the form of commission based on the gross receipts of the day.
His participation depends upon his industry so that the more hours he
employs in the work the greater are his gross returns and the higher his
commission. This philosophy is better explained in Jewel Tea Co. v.
Williams, C.C.A. Okla., 118 F. 2d 202, as follows:
The reasons for excluding an outside salesman are fairly apparent. Such
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little,
within the range of his ability, as his ambition dictates. In lieu of overtime
he ordinarily receives commissions as extra compensation. He works away
from his employer's place of business, is not subject to the personal

supervision of his employer, and his employer has no way of knowing the
number of hours he works per day.

29
LUZON STEVEDORING CO., INC., petitioner, vs. LUZON MARINE
DEPARTMENT UNION and THE HON. MODESTO CASTILLO, THE HON.
JOSE S. BAUTISTA, THE HON. V. JIMENEZ YANSON and THE HON.
JUAN L. LANTING, Judges of the Court of Industrial Relations,
respondents. - G.R. No. L-9265
April 29, 1957
FACTS:
On June 21, 1948, herein respondent Luzon Marine Department Union filed
a petition with the Court of Industrial Relations containing several demands
against herein petitioner Luzon Stevedoring Co., Inc., among which were
the petition for full recognition of the right of COLLECTIVE bargaining, close
shop and check off. However, on July 18, 1948, while the case was still
pending with the CIR, said labor union declared a strike which was ruled
down as illegal by this Court in G.R. No. L-2660 promulgated on May 30,
1950.
After the parties had submitted exhaustive memoranda, the trial Judge
rendered a decision on February 10, 1955, finding that the company gave
said employees 3 free meals every day and about 20 minutes rest after
each mealtime; that they worked from 6:00 am. to 6:00 p.m. every day
including Sundays and holidays, and for work performed in excess of 8
hours, the officers, patrons and radio operators were given overtime pay in
the amount of P4 each and P2 each for the rest of the crew up to March,
1947, and after said date, these payments were increased to P5 and P2.50,
respectively, until the time of their separation or the strike of July 19, 1948;
that when the tugboats underwent repairs, their personnel worked only 8
hours a day excluding Sundays and holidays; that although there was an
effort on the part of claimants to show that some had worked beyond 6:00
p.m., the evidence was uncertain and indefinite and that demand was,
therefore, denied; that respondent Company, by the nature of its business
and as defined by law (Section 18-b of Commonwealth Act as amended) is
considered a public service operator by the Public Service Commission in
its decision in case No. 3035-C entitled "Philippine Shipowners. Association
vs. Luzon Stevedoring Co., Inc., et al."(Exh. 23), and, therefore, exempt
from paying additional remuneration or compensation for work performed
on Sundays and legal holidays, pursuant to the provisions of section 4 of
Commonwealth Act No. 444 (Manila Electric Co. vs. Public Utilities
Employees Association, 79 Phil., 408. 44 Off. Gaz., 1760); and ruled that:
The Luzon Marine Department Union, through counsel, therefore, filed a
motion for reconsideration praying that the decision of February 10, 1955,
be modified so as to declare and rule that the members of the Union who

had rendered services from 6:00 a.m. to 6:00 p.m. were entitled to 4 hours'
overtime pay; that allotted to the taking of their meals should not be
deducted from the 4 hours of overtime rendered by said employees, that
the amounts of P3 and P2 set aside for the daily meals of the employees
be considered as part of their actual compensation in determining the
amount due to said employees separated from the service without just
cause be paid their unearned wages and salaries from the date of their
separation up to the time the decision in case L-2660 became final; and for
such other relief as may be just and equitable in the premises.

Luzon Stevedoring Co., Inc. also sought for the reconsideration of the
decision only in so far as it interpreted that the period during which a
seaman is aboard a tugboat shall be considered as "working time" for the
purpose of the Eight-Hour-Labor Law.
In pursuance of Section 1 of Commonwealth Act No. 103, as amended by
Commonwealth Act No. 254 and further amended by Commonwealth Act
No. 559, the motions for reconsideration were passed upon by the Court en
banc, and on June 6, 1955, a resolution modifying the decision of February
10, 1955, was issued, in the sense that the 4 hours of overtime work
included in the regular daily schedule of work from 6:00 a.m. to 6:00 p.m.
should be paid independently of the so-called "coffee-money", after
making a finding that said extra amounts were given to crew members of
some tugboats for work performed beyond 6:00 p.m. over a period of some
16 weeks. The Company's motion for reconsideration was denied.
From this resolution, the Luzon Stevedoring Co., Inc. filed the present
petition for certiorari and when the Court of Industrial Relations, acting
upon said Company's motion for clarification, ruled that the 20 minutes'
rest given the claimants after mealtime should not be deducted from the 4
hours of overtime worked performed by said claimants, petitioner filed a
supplemental petition for certiorari dated September 5, 1955, and both
petitions were given due course by this Court.
ISSUE: WHETHER OR NOT TIME SPENT BY A SEAMAN ON THE SHIP SHALL
BE CONSIDERED HOURS WORKED
The rule is that a seaman is not required to leave the premises of the boat
in order of period of rest shall not be counted, it being enough that he
ceases to work, mar rest completely and leave at his will the spot where he
actually stas while working, go somewhere else, whether within or outside

30
the premises of said boat. If these requisites are complied with, the period
of rest shall not be counted.

31
NATIONAL DEVELOPMENT COMPANY, petitioner, vs. COURT OF
INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS UNION,
respondents. - G.R. No. L-15422
November 30, 1962
FACTS:
At the National Development Co., a GOCC, there were four shifts of work.
One shift was from 8 a.m. to 4 p.m., while the three other shifts were from
6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6
a.m. o In each shift, there was a one-hour mealtime period, to wit: From
(1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and
from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.
Although there was a one-hour mealtime, petitioner nevertheless credited
the workers with eight hours of work for each shift and paid them for the
same number of hours. However, since 1953, whenever workers in one
shift were required to continue working until the next shift, petitioner
instead of crediting them with eight hours of overtime work, has been
paying them for six hours only, petitioner that the two hours corresponding
to the mealtime periods should not be included in computing
compensation. On the other hand, respondent National Textile Workers
Union whose members are employed at the NDC, maintained the opposite
view and asked the Court of Industrial Relations to order the payment of
additional overtime pay corresponding to the mealtime periods. After
hearing, Judge Arsenio I. Martinez of the CIR issued an order holding that
mealtime should be counted in the determination of overtime work. o
Petitioner appealed to this Court, contending, first, that the CIR has no
jurisdiction over claims for overtime compensation and, secondary that the
CIR did not make "a correct appraisal of the facts, in the light of the
evidence" in holding that mealtime periods should be included in overtime
work because workers could not leave their places of work and rest
completely during those hours.
RULING:
ISSUE RE: JURISDICTION OF CIR
Where the employer-employee relationship is still existing or is sought
to be reestablished because of its wrongful severance, (as where the
employee seeks reinstatement) the Court of Industrial Relations has
jurisdiction over all claims arising out of, or in connection with the
employment, such as those related to the Minimum Wage Law and the
Eight-Hour Labor Law. After the termination of their relationship and no

reinstatement is sought, such claims become mere money claims, and

come within the jurisdiction of the regular courts.
REQUISITES (JURISDICTION) (a) There must exist between the parties an
employeremployee relationship or the claimant must seek his
reinstatement; and (b) the controversy must relate to a case certified by
the President to the CIR as one involving national interest, or must arise
either under the Eight-Hour Labor Law, or under the Minimum Wage Law.
In default of any of these circumstances, the claim becomes a mere
money claim that comes under the jurisdiction of the regular courts.
ISSUE RE: WON ON THE BASIS OF THE EVIDENCE, THE MEALTIME BREAKS
SHOULD BE CONSIDERED WORKING TIME UNDER THE FOLLOWING
PROVISION OF THE LAW
The legal working day for any person employed by another shall be of not
more than eight hours daily.When the work is not continuous, the time
during which the laborer is not working and can leave his working place
and can rest completely shall not be counted.
While it may be correct to say that it is well-high impossible for an
employee to work while he is eating, yet under Section 1 of Com. Act No.
444 such a time for eating can be segregated or deducted from his work, if
the same is continuous and the employee can leave his working place rest
completely. The time cards show that the work was continuous and
without interruption. There is also the evidence adduced by the petitioner
that the pertinent employees can freely leave their working place nor rest
completely. There is furthermore the aspect that during the period covered
the computation of the work was on a 24-hour basis and previously stated
divided into shifts.
The work in petitioner company was continuous and therefore the
mealtime breaks should be counted as working time for purposes of
overtime compensation.
WHEREFORE, the order of March 19, 1959 and the resolution of April 27,
1959 are hereby affirmed and the
TIMOTEO CRUZ, PLAINTIFF AND APPELLANT, VS. SEE YING, DOING
BUSINESS UNDER THE NAME AND STYLE OF TIMES CANDY
FACTORY, DEFENDANT AND APPELLEE. - G. R. No. L-12046, October
29, 1959
Read original 1 page lang

32

33
PAMPANGA SUGAR DEVELOPMENT CO., INC., petitioner, vs. COURT
OF INDUSTRIAL RELATIONS AND SUGAR WORKERS ASSOCIATION,
respondents. - G.R. No. L-39387 June 29, 1982
Facts: Petitioner Pampanga Sugar Development Company Inc. seeks the
reversal of the decision of the respondent CIR awarding respondent Sugar
Workers Association's counsel attorney's fees equivalent to 20% in the
judgment and ordering the lower court's Examining Division to compute
the wage and fringe benefits differentials due the 28 individual workers
who did not execute quitclaims as well as attorney's fees corresponding to
20% of the benefits due to 53 workers who entered into agreements
waiving their rights and benefits under the decision.
Sometime in
February, 1956, the workers' affiliates of respondent Union staged a strike
against petitioner company. This labor dispute was certified by the
President to the Court of Industrial Relations. After six years, the said Court
issued an order directing petitioner company to reinstate the members of
respondent union. On March 12, 1963 some 88 union members were thus
reinstated by petitioner. However, petitioner discriminated against the
reemployed workers with respect to wage rates, off-season pay, cost of
living allowance, milling bonus and Christmas bonus by depriving them of
aforesaid benefits or by granting to some members benefits lesser than
those given to members of the Pasudeco Workers Union, another labor
group in the service of petitioner. On December 4, 1972, the CIR handed
down a decision adjudging herein petitioner guilty of unfair labor practice
acts and directing petitioner to pay wage differentials to certain workers
and fringe benefits as would be found due and payable to them and to
readmitted seasonal and casual members of respondent union totalling 88
with the exception of 7 workers.
Issue: Whether or not the quitclaims are valid
Held: No Ratio: The court held that such quitclaims are not valid because
of these reasons: Firstly, the quitclaims are secured after the petitioner lost
its case on the lower court. It's obvious that petitioner wants to frustrate
the decision of the lower court not to grant benefits to the workers.
Secondly, while rights may be waived they must not be contrary to law,
public order, public policy, morals or good customs or prejudicial to a third
person with a right recognized by law. The quitclaims are not valid because
they are contrary to law. It is provided in the quitclaims that the workers
will forego their benefits and the petitioner company is exempt from legal
liability. Third, the quitclaims are contrary to public policy. Parties to
litigations cannot be allowed to trifle with the judicial system by coming to
court and later on agreeing to a compromise without the knowledge and

approval of the court. In the case at bar, the lower court has already
rendered a decision on the issues presented before the alleged quitclaims
agreements were made. It shows the evident bad faith of the petitioner to
comply with its legal obligation.

34
MERCURY DRUG CO., INC., petitioner, vs. NARDO DAYAO, ET AL.,
respondents, - G.R. No. L-30452 September 30, 1982
After the passage of Republic Act 875, this Court has not only upheld the
industrial court's assumption of jurisdiction over cases for salary
differentials and overtime pay [Chua Workers Union (NLU) vs. City
Automotive Co., et al., G.R. No. L- 11655, April 29, 1959; Prisco vs. CIR, et
al., G.R. No. L-13806, May 23, 1960] or for payment of additional
compensation for work rendered on Sundays and holidays and for night
work [Nassco vs. Almin, et al., G.R. No. L9055, November 28, 1958;
Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L8738, May 31, 1957] but has also supported such court's ruling that work
performed at night should be paid more than work done at daytime, and
that if that work is done beyond the worker's regular hours of duty, he
should also be paid additional compensation for overtime work. [Naric vs.
Naric Workers' Union. et al., G. R No. L-12075, May 29, 1959, citing Shell
Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case
for extra compensation now falls beyond the powers of the industrial court
to decide, would amount to a further curtailment of the jurisdiction of said
court to an extent which may defeat the purpose of the Magna Carta to the
prejudice of labor.' [Luis Recato Dy, et al v-9. CIR, G.R. No. L-17788, May
25,1962]"
The petitioner's contention that its employees fully understood what they
signed when they entered into the contracts of employment and that they
should be bound by their voluntary commitments is anachronistic in this
time and age.
The Mercury Drug Co., Inc., maintains a chain of drugstores that are open
every day of the week and, for some stores, up to very late at night
because of the nature of the pharmaceutical retail business. The
respondents knew that they had to work Sundays and holidays and at
night, not as exceptions to the rule but as part of the regular course of
employment. Presented with contracts setting their compensation on an
annual basis with an express waiver of extra compensation for work on
Sundays and holidays, the workers did not have much choice. The private
respondents were at a disadvantage insofar as the contractual relationship
was concerned. Workers in our country do not have the luxury or freedom
of declining job openings or filing resignations even when some terms and
conditions of employment are not only onerous and inequitous but illegal.
It is precisely because of this situation that the framers of the Constitution
embodied the provisions on social justice (Section 6, Article 11) and

protection to labor (Section 9, Article I I) in the Declaration of Principles and

State Policies.

It is pursuant to these constitutional mandates that the courts are ever

vigilant to protect the rights of workers who are placed in contractually
disadvantageous positions and who sign waivers or provisions contrary to
law and public policy.
Decision:WHEREFORE, the petition is hereby dismissed. The decision and
resolution appealed from are affirmed with costs against the petitioner.

35
JOSE RIZAL COLLEGE, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION AND NATIONAL ALLIANCE OF TEACHERS/OFFICE
WORKERS, respondents. - G.R. No. L-65482 December 1, 1987
FACTS
Petitioner has 3 groups of employees categorized asfollows:(a) personnel
on monthly basis, who receive theirmonthly salary uniformly throughout
the year,irrespective of the actual number of working days in amonth
without deduction for holidays;(b) personnel on daily basis who are paid
on actualdays worked and they receive unworked holiday pay and(c)
collegiate faculty who are paid on the basis ofstudent contract
hour.Unable to receive their corresponding holiday pay, asclaimed, from
1975 to 1977, respondent NATOW, inbehalf of the faculty and personnel
of Jose Rizal Collegefiled with the Ministry of Labor a complaint against
thecollege for said alleged non-payment of holiday pay. Thecase was
certified for compulsory arbitration due to thefailure of the parties to settle.
LA rendered a decision, declaring that:1. The faculty and personnel of Jose
Rizal College whoare paid their salary by the month uniformly in a
schoolyear, irrespective of the number of working days in amonth, without
deduction for holidays, are presumed tobe already paid the 10 paid legal
holidays and are nolonger entitled to separate payment for the said
regularholidays2. The personnel of Jose Rizal College who are paidtheir
wages daily are entitled to be paid the 10 unworkedregular holidays
according to the pertinent provisions ofthe Rules and Regulations
Implementing the Labor Code3. Collegiate faculty of the Jose Rizal College
who bycontract are paid compensation per student contracthour are not
entitled to unworked regular holiday payconsidering that these regular
holidays have beenexcluded in the programming of the student
contacthours.
NLRC modified
LA
decision
and
declared
that
teachingpersonnel paid by the hour are entitled to holiday pay.Hence,
this petition.
Petitioner's arguments:
1. It is not covered by Book V of the LC as it is a non-profit institution;2. Its
hourly paid faculty members are paid on a contractbasis because they are
required to hold classes for aparticular number of hours. In the
programming of thesestudent contract hours, legal holidays are excluded
andlabelled in the schedule as "no class day", but if aregular week day is
declared a holiday, the schoolcalendar is extended to compensate for that
day. Thus,the advent of any legal holidays within the semester willnot
affect the faculty's salary because this day is notincluded in their schedule

while the calendar is extendedto compensate for special holidays. Hence

theprogrammed number of lecture hours is not diminished.
Soliciter General's arguments:
1. Under Art. 94 of the LC (as amended), holiday payapplies to all
employees except those in retail andservice establishments. To deprive
therefore employeespaid at an hourly rate of unworked holiday pay
iscontrary to the policy considerations underlying suchpresidential
enactment, and its precursor, the BlueSunday Law (RA 946) apart from the
constitutionalmandate to grant greater rights to labor (CONST, Art. II,Sec.
9)2. NLRC ruled that the purpose of a holiday pay is toprevent diminution
of the monthly income of the workerson account of work interruptions. It is
no excusetherefore that the school calendar is extended wheneverholidays
occur, because such happens only in case ofspecial holidays.
ISSUE
1.

2.

(main) Whether or not the school faculty who,according to

their contracts are paid per lecturehour are entitled to
unworked holiday pay
2. (other) Whether P was deprived of due process whenit was not
notified of the appeal made to the NLRCagainst the decision of the
LA

RULING
First Issue
(a) petitioner is exempted from paying hourly paid faculty members their
pay for regular holidays, whether the same be during the regular
semesters of the school year or during semestral, Christmas, or Holy Week
vacations;
(b) but petitioner must pay said faculty members their regular hourly rate
on days declared as special holidays or for some reason classes are called
off or shortened for the hours they are supposed to have taught, whether
extensions of class days be ordered or not; in case of extensions said
faculty members shall likewise be paid their hourly rates should they teach
during said extensions.
RATIO
Relevant Provisions:

36
Art. 94 LC:.
Right to holiday pay (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
(b)
The employer may require an employee to work on any holiday but
such employee shall be paid a compensation equivalent to twice his
regular rate; ... "
IRR, Rule IV, Book III: SEC. 8. Holiday pay of certain employees. (a)
Private school teachers, including faculty members of colleges and
universities, may not be paid for the regular holidays during semestral
vacations. They shall, however, be paid for the regular holidays during
Christmas vacations. ...
Re: PAY FOR REGULAR HOLIDAYS (FOR FACULTY PAID BY THE HOUR)
IRR is not justified by the provisions of law which is silent wrt faculty
members paid by the hour. Regular holidays specified as such by law are
known to both school and faculty members as "no class days". Certainly,
the latter do not expect payment for said unworked days, and this was
clearly in their minds when they entered into the teaching contracts.
Re: PAY FOR SPECIAL PUBLIC HOLIDAYS (FOR FACULTY PAID BY THE HOUR)
Both the law and the IRR are silent as to payment on Special Public
Holidays.
The purpose of the holiday pay (ie prevent the diminution of the monthly
income of the employees on account of work interruptions) is defeated
when a regular class is cancelled on account of a special public holiday and
class hours are held on another working day to make up for time lost in the
school calendar. When a special public holiday is declared, the faculty
member paid by the hour is deprived of expected income, and it does not
matter that the school calendar is extended for their income that could be
earned from other sources is lost during the extended days. Similarly,
when classes are called off or shortened on account of typhoons, floods,
rallies, and the like, these faculty members must likewise be paid, whether
or not extensions are ordered.
Second Issue
NO, P was not deprived of due process. Petitioner was amply heard and
represented in the proceedings, as the records show. It submitted its

position paper before the LA and NLRC and even filed a MR of the NLRC
decision, etc. Hence, P's claim of lack of due process is unfounded.

37
THE CHARTERED BANK EMPLOYEES ASSOCIATION, PETITIONER, VS.
HON. BLAS F. OPLE, IN HIS CAPACITY AS THE INCUMBENT
SECRETARY OF LABOR, AND THE CHARTERED BANK,
RESPONDENTS. - G.R. No. L-44717, August 28, 1985
Facts:
On May 20, 1975, the Chartered Bank Employees Association, in
representation of its monthly paid employees/members, instituted a
complaint with the Regional Office No. IV, Department of Labor, now
Ministry of Labor and Employment (MOLE) against Chartered Bank, for the
payment of ten (10) unworked legal holidays, as well as for premium and
overtime differentials for worked legal holidays from November 1, 1974.

Under the rules implementing PD 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees. The
new determining rule is this: 'If the monthly paid employee is receiving not
less than P240, the maximum monthly minimum wage, and his monthly
pay is uniform from January to December, he is presumed to be already
paid the ten (10) paid legal holidays. However, if deductions are made
from his monthly salary on account of holidays in months where they
occur, then he is still entitled to the ten (10) paid legal holidays.
These new interpretations must be uniformly and consistently upheld.
Issue:
Whether or not the Secretary of Labor erred and acted contrary to
promulgating Sec. 2, Rule IV, Book III of the Integrated Rules and
Instruction No. 9.

The Minister of Labor dismissed the Chartered Bank Employees

Associations claim for lack of merit basing its decision on Section 2, Rule
IV, Book Ill of the Integrated Rules and Policy Instruction No. 9, which
respectively provide:

law in
Policy

Sec. 2. Status of employees paid by the month. Employees who are

uniformly paid by the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or established minimum
wage shall be presumed to be paid for all days in the month whether
worked or not.

Yes.
The Secretary (Minister) of Labor had exceeded his
statutory authority granted by Article 5 of the Labor Code authorizing him
to promulgate the necessary implementing rules and regulations.

POLICY INSTRUCTION NO. 9

TO: All Regional Directors
SUBJECT: PAID LEGAL HOLIDAYS
The rules implementing PD 850 have clarified the policy in the
implementation of the ten (10) paid legal holidays. Before PD 850, the
number of working days a year in a firm was considered important in
determining entitlement to the benefit. Thus, where an employee was
working for at least 313 days, he was considered definitely already paid. If
he was working for less than 313, there was no certainty whether the ten
(10) paid legal holidays were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. In the case of monthly, only those whose
monthly salary did not yet include payment for the ten (10) paid legal
holidays are entitled to the benefit.

Held:

While it is true that the Minister has the authority in the

performance of his duty to promulgate rules and regulations to implement,
construe and clarify the Labor Code, such power is limited by provisions of
the statute sought to be implemented, construed or clarified.

38
DAVAO INTEGRATED PORT STEVEDORING SERVICES, PETITIONER,
VS. RUBEN V. ABARQUEZ, IN HIS CAPACITY AS AN ACCREDITED
VOLUNTARY ARBITRATOR AND THE ASSOCIATION OF TRADE
UNIONS (ATU-TUCP), RESPONDENTS. - G.R. No. 102132, March 19,
1993
Facts: The petitioner and the private respondent entered into a Collective
Bargaining Agreement (CBA) which, under Sections 1 and 3 of Article VIII,
provides for sick leave with pay benefits each year to its employees who
have rendered at least one year of service with the company. Under
Section 1, Article VIII, the company agrees to grant 15 days sick leave with
pay each year to every regular non-intermittent worker who already
rendered at least one year of service with the company. However, such sick
leave can only be enjoyed upon certification by a company designated
physician, and if the same is not enjoyed within one year period of the
current year, any unenjoyed portion thereof, shall be converted to cash
and shall be paid at the end of the said one year period. And provided
however, that only those regular workers of the company whose work are
not intermittent, are entitled to the sick leave privilege. On the other hand,
under Section 3 of the said article, it provides that all intermittent workers
of the company who are members of the Regular Labor Pool shall be
entitled to vacation and sick leaves per year of service with pay with the
basis of the number of hours rendered including overtime. During the
effectivity of the CBA until three months of its renewal with a total of 3
years and 9 months, all the field workers of petitioner who are members of
the regular labor pool and the present regular extra labor pool who had
rendered at least 750 hours to 1,500 hours were extended sick leave with
pay benefits. Every unenjoyed portion thereof at the end of the current
year was converted to cash and paid at the end of the said one- year
period. However, the commutation of unenjoyed portion of the sick leave
was withdrawn when the petitioner-company had a new assistant manager.
It stopped the payment of its cash equivalent on the ground that they are
not entitled to the said benefits under the 1989 CBA, particularly Sections
1 and 3. The Union brought the matter to NCMB and the parties mutually
designated Ruben Abarquez, Jr. to act as voluntary arbitrator. He ruled that
Davao Integrated Port Stevedoring Corporation should grant and extend
sick leave privilege of the commutation of the unenjoyed portion of the
sick leave of all the intermittent field workers who are members of the
regular labor pool and the present extra pool in accordance with the CBA.
The petitioner-company disagreed with the ruling. Hence, this petition.
Issue: Whether or not intermittent field workers who are members of the

regular labor pool and the present extra pool in accordance with the CBA
are entitled to the commutation of the unenjoyed portion of the sick leave.
Held: The petition is denied. A CBA, as used in Article 252 of the Labor
Code, is a contract executed upon request of either the employer or the
exclusive bargaining representative incorporating the agreement reached
after the negotiations with respect to wages, hours of work and all other
terms and conditions of employment, including proposals for adjusting any
grievances or questions arising such agreement. It is unreasonable for the
petitioner to isolate Section 1 of Article VIII of the 1989 CBA from the other
related section on sick leave with pay benefits. The manner they were
deprive of the privilege previously recognized and extended to them by the
petitioner is not only tainted with arbitrariness but likewise discriminatory
in nature. Petitioner is of mistaken notion that since the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick
leave with pay benefits is found in Section 1, Article VIII, only the regular
non-intermittent workers and no other can avail of the said privilege
because of the proviso found in the last paragraph thereof. Public
respondents correctly observed that the parties to the CBA clearly
intended the same sick leave privilege to be accorded the intermittent
workers in the same way that they are both given the same treatment with
respect to vacation leaves non-commutable and non-cummulative. If they
are treated equally with respect to vacation leave privilege, with more
reason should they be on par with each other with respect to sick leave
benefits. Besides, if the intention is otherwise, during its negotiations, why
did not the parties expressly stipulate in the 1989 CBA that regular
intermittent workers are not entitled to commutation of the unenjoyed
portion of their sick leave with pay benefits? There had been no grave
abuse of discretion by public respondent in issuing the decision. Moreover,
his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot
be faulted and is absolutely correct.

39
GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK
WHITE AND JESUS SANTIAGO, PETITIONERS, VS. NATIONAL LABOR
RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES UNION
AND EDA CONCEPCION, RESPONDENTS. - G.R. No. 74156, June 29,
1988
Facts: Wage Order No. 6 increased the cost-of-living allowance (COLA) of
non-agricultural workers in the private sector.
Petitioner Corporation complied with said Order by paying its monthly-paid
employees the mandated P3.00 per day COLA. In its computation,
Petitioner Corporation multiplied the P3.00 daily COLA by 22 days, which is
the number of working days in the company.
Respondent Union disagreed with the computation alleging that prior to
the effectivity of the Wage Order, Petitioner Corporation had been
computing and paying the COLA on the basis of 30 days per month and
that this constituted an employer practice, which should not be unilaterally
withdrawn.
The Labor Arbiter sustained the position of Petitioner Corporation by
holding that the monthly COLA should be computed on the basis of 22
days, since the evidence showed that there are only 22 days in a month for
monthly-paid employees in the company.
The NLRC reversed the Labor Arbiter on appeal, holding that Petitioner
Corporation was guilty of illegal deductions considering that COLA should
be paid and computed on the basis of 30 days since workers paid on a
monthly basis are entitled to COLA on days unworked; and the full
allowance enjoyed by Petitioner Corporations monthly-paid employees
before the CBA executed between the parties constituted voluntary
employer practice, which cannot be unilaterally withdrawn.
Issue: WON the computation and payment of COLA on the basis of 30
days per month constitute an employer practice which should not be
unilaterally withdrawn.
Held: No. Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5
and 6 provides that all covered employees shall be entitled to their daily
living allowance during the days that they are paid their basic wage, even
if unworked. The primordial consideration for entitlement of COLA is that
basic wage is being paid. The payment of COLA is mandated only for the
days that the employees are paid their basic wage, even if said days are

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

40
LCP ET AL. V NLRC - G. R. NO. 123938, MAY 21, 1998

Petitioners:

Doctrine:

Application of LC Article 286(n) in determination of status of piece workers

as regular workers versus LC Article 86 definition

The fact that they are piece workers does not imply that they are
not regular employees entitled for reinstatement.

LA and NLRC decisions were not supported by substantial

evidence;

Abandonment of work was not proved by substantial evidence;

Much credit given to the Kehyeng spouses self-serving arguments.

Facts:
The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private petitioners
in the proceeding (represented by the Labor Congress of the Phils.) were
rank-and-file employees of private respondent Empire Food Products (a
food and fruit processing company), hired on various dates.
Ocampo et al filed against Empire an NLRC complaint for payment of
money claims and for violation of labor standards laws. Alongside this they
also filed a petition for direct certification for the Labor Congress to be
their bargaining representative. On Oct. 23, 1990, petitioners represented
by LCP, and private respondents Gonzalo and Evelyn Kehyeng (Kehyeng
spouses) entered into a Memorandum of Agreement, recognizing the
following:

Status of LCP as sole and exclusive Bargaining Agent and

Representative for all rank and file employees of the Empire Food
Products regarding "wages, hours of work, and other terms and
conditions of employment";

With regard to the NLRC complaint, all parties agree to resolve the
issues during the Collective Bargaining Agreement;

Proper adjustment of wages, withdrawal of case from the Calendar

of NLRC, non-interference or any ULP act, etc.

On Oct. 24, 1990, the Mediator Arbiter approved the memorandum and
certified LCP as the sole and exclusive bargaining agent for the rank-andfile employees of Empire.
On November 1990, LCP President Navarro submitted to Empire a proposal
for collective bargaining. However, on January 1991, the private petitioners
Ana Marie et al filed a complaint for: Unfair Labor Practices via Illegal
Lockout and Dismissal; Union-Busting through harassment, threats and
interference to the right for self-organization; Violation of the Oct. 23, 1990
memorandum Underpayment of wages Actual, moral and exemplary
damages

Respondents:

Ana Marie, et al were piece workers hence they are exempt from
labor standards benefits

Issues:
1

[RELEVANT] WON the petitioners are entitled to labor standard

benefits, considering their status as piece rate workers.

WON the actions of Ana Marie, et al constituted abandonment of

work.

Held:
1

YES, petitioners are entitled to labor standards benefits, namely,

holiday pay, premium pay, 13th month pay and service incentive
leave.

NO, failure to appear to work did not constitute abandonment,

Ratio:
Supreme Court decision cites that Ana Marie, et al, despite being pakyao
or piece workers does not imply that they are not regular employees
entitled to reinstatement. Applying the two-fold test from LC Article 286(n)
[Art. 280 (old)], the SC found that the supposedly piece workers had three
factors in their favor:
a

The nature of the tasks of Ana Marie, et al of repacking snack food

items was NECESSARY and DESIRABLE in the usual business of
Empire Foods, which is a food and fruit processing company.

41
According to Tabas vs California Manufacturing, merchandisers of
processed food who coordinates for sales of processed food was a
necessity and was desirable for the day-to-day operations of a food
processing company. With more reason would the job of food
packers be necessary for the day-to-day operations of a food
processing plant.
b

Ana Marie et al worked throughout the year, with their employment

being independent from a specific project or season.

The length of time that petitioners fulfilled the requirement of

Article 286(n).

Therefore, the SC considered the employees as regular employees despite

their status as piece workers, according them benefits such as holiday pay,
premium pay, 13th month pay and service incentive leave.
The Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive
leave and 13th month pay, inter alia, "field personnel and other employees
whose time and performance is unsupervised by the employer, including
those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of
the time consumed in the performance thereof." However, petitioners as
piece-rate workers do not fall within this group. Not only did the employees
labor under the control of Empire, the employees also worked throughout
the year to fulfil their quota as basis for compensation.
Further, in Section 8 (b), Rule IV, Book III, piece workers are specifically
mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees.
(b)
Where a covered employee is paid by results or output, such as
payment on piece work, his holiday pay shall not be less than his average
daily earnings for the last seven (7) actual working days preceding the
regular holiday: Provided, however, that in no case shall the holiday pay be
less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th
Month Pay Law, in view of the modifications to P.D. No. 851 19 by
Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay, to wit:

2.
EXEMPTED EMPLOYERS - The following employers are still not
covered by P.D. No. 851:
d.
Employers of those who are paid on purely commission, boundary
or task basis, and those who are paid a fixed amount for performing
specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in which
case the employer shall grant the required 13th month pay to such
workers.

However, the Revised Guidelines as well as the Rules and Regulations

identify those workers who fall under the piece-rate category as those who
are paid a standard amount for every piece or unit of work produced that is
more or less regularly replicated, without regard to the time spent in
producing the same.
They should also be paid for overtime pay, even though Sec. 2(e), Rule I,
Book III of the Implementing Rules states that:
workers who are paid by results including those who are paid on piecework, takay, pakiao, or task basis, if their output rates are in accordance
with the standards prescribed under Sec. 8, Rule VII, Book III, of these
regulations, or where such rates have been fixed by the Secretary of Labor
in accordance with the aforesaid section, are not entitled to receive
overtime pay.
In this case, Empire Foods did not allege that they adheredtothestandards
set forthin Sec. 8, Rule VII, Book III, norwiththeratesprescribedbythe
SecretaryofLabor. Therefore, even though they are piece workers, they are
entitled to overtime pay
With regard to the issue of abandonment of work, the SC cited the Office of
Solicitor Generals observations:
In finding that petitioner employees abandoned their work, the Labor
Arbiter and the NLRC relied on the testimony of Security Guard Rolando
Cairo that on January 21, 1991, petitioners refused to work. As a result of
their failure to work, the cheese curls ready for repacking on said date
were spoiled
The failure to work for one day, which resulted in the spoilage of cheese
curls does not amount to abandonment of work. In fact two (2) days after

42
the reported abandonment of work or on January 23, 1991, petitioners filed
a complaint for, among others, unfair labor practice, illegal lockout and/or
illegal dismissal.
Furthermore, the SC stressed that the burden of proving the existence of
just cause for dismissing an employee, such as abandonment, rests on the
employer. According to the SC, Empire Foods failed to discharge this
burden as basis for dismissing the employees.
Also, the SC considered that, in terminating the employees for
abandonment of work, Empire failed to serve to the employees a written
notice of termination (as required by the Two-Notice rule and Section 2,
Rule XIV, Book V of the Omnibus Rules), violating the employees right to
security of tenure and the constitutional right to due process.

INSULAR LIFE ASSURANCE CO., LTD., PETITIONER, VS. NATIONAL

LABOR
RELATIONS
COMMISSION
AND
MELECIO
BASIAO,
RESPONDENTS. G.R. No. 84484, November 15, 1989
FACTS:
Insular Life (company) and Basiao entered into a contract by which Basiao
was authorized to solicit forinsurance in accordance with the rules of the
company. He would also receive compensation, in the form
of commissions. The contract also contained the relations of the parties,
duties of the agent and the acts prohibited tohim including the modes of
termination.After 4 years, the parties entered into another contract an
Agency Managers Contact and to implementhis end of it, Basiao
organized an agency while concurrently fulfilling his commitment under the
first contract. The company terminated the Agency Managers Contract.
Basiao sued the company in a civil action. Thus,the company terminated
Basiaos engagement under the first contract and stopped payment of his
commissions.
ISSUE:
W/N Basiao had become the companys employee by virtue of the
contract, thereby placing his claim forunpaid commissions
HELD:

No.Rules and regulations governing the conduct of the business are

provided for in the Insurance Code. Theserules merely serve as guidelines
towards the achievement of the mutually desired result without dictating
themeans or methods to be employed in attaining it. Its aim is only to
promote the result, thereby creating noemployer-employee relationship. It
is usual and expected for an insurance company to promulgate a set of
rules toguide its commission agents in selling its policies which prescribe
the qualifications of persons who may be insured.None of these really
invades
the agents
contractual
prerogative
to adopt
his own
selling methods or to sellinsurance at his own time and convenience,
hence cannot justifiable be said to establish an employeremployeerelationship between Basiao and the company. The respondents
limit themselves to pointing out that Basiaos contract with the company
bound
him
toobserve and conform to such rules. No showing that such rules were in fa
ct promulgated which effectivelycontrolled or restricted his choice of
methods of selling insurance. Therefore, Basiao was not an employee of
the petitioner, but a commission agent, an independent contractwhose
claim for unpaid commissions should have been litigated in an ordinary
civil action.Wherefore, the complain of Basiao is dismissed.

43
MANILA WATER COMPANY, INC., petitioner, vs. HERMINIO D. PENA,
ESTEBAN B. BALDOZA, JORGE D. CANONIGO, JR., IKE S.
DELFIN,RIZALINO M. INTAL, REY T. MANLEGRO, JOHN L. MARTEJA,
MARLON B. MORADA, ALLAN D. ESPINA, EDUARDO ONG, AGNESIO
D.QUEBRAL, EDMUNDO B. VICTA, VICTOR C. ZAFARALLA,
EDILBERTO C. PINGUL and FEDERICO M. RIVERA, respondents.[G.R. No. 158255. July 8, 2004]
FACTS:
Petitioner Manila Water Company, Inc. is one of the two private
concessionaires contracted by the MetropolitanWaterworks and Sewerage
System (MWSS) to manage the water distribution system in the East Zone
of MetroManila. Under the Concession Agreement, petitioner undertook to
absorb former employees of the MWSS whosenames and positions were in
the list furnished by the latter, while the employment of those not in the
list wasterminated. Private respondents, being contractual collectors of the
MWSS, were among the 121 employees notincluded in the list;
nevertheless, petitioner engaged their services without written contract for
three months. Beforethe end of the three-month contract, the 121
collectors incorporated the Association Collectors Group, Inc. (ACGI),which
was contracted by petitioner to collect charges for the Balara Branch.
Subsequently, most of the 121 collectors were asked by the petitioner to
transfer to the First Classic Courier Services, a newly registered
corporation. Onlyprivate respondents remained with ACGI. Private
respondents filed a complaint for illegal dismissal and moneyclaims against
petitioner, contending that they were petitioners employees as all the
methods and procedures of their collections were controlled by the
latter.Petitioner on the other hand asserts that private respondents were
employees of ACGI, an independent contractor. Itmaintained that it had no
control and supervision over private respondents manner of performing
their work except as to the results. Thus, petitioner did not have an
employer-employee relationship with the private respondents, butonly a
service contractor-client relationship with ACGI.
ISSUE: Whether or not ACGI is an independent contractor;
HELD: ACGI is an independent contractor but a labor- only contractor.First,
ACGI does not have substantial capitalization or investment in the form of
tools, equipment, machineries, workpremises, and other materials, to
qualify as an independent contractor. While it has an authorized capital
stock ofP1,000,000.00, only P62,500.00 is actually paid-in, which cannot be
considered substantial capitalization. The 121collectors subscribed to four

shares each and paid only the amount of P625.00 in order to comply with
theincorporation requirements. Further, private respondents reported daily
to the branch office of the petitioner becauseACGI has no office or work
premises. In fact, the corporate address of ACGI was the residence of its
president, Mr.Herminio D. Pea. Moreover, in dealing with the consumers,
private respondents used the receipts and identificationcards issued by
petitioner.Second, the work of the private respondents was directly related
to the principal business or operation of thepetitioner. Being in the
business of providing water to the consumers in the East Zone, the
collection of the chargestherefore by private respondents for the petitioner
can only be categorized as clearly related to, and in the pursuit of the
latters business. Lastly, ACGI did not carry on an independent business or
undertake the performance of its service contract according to its own
manner and method, free from the control and supervision of its principal,
petitioner. Prior to private respondents alleged employment with ACGI,
they were already working for petitioner, subject to its rules and
regulations in regard to the manner and method of performing their
tasks. This form ofcontrol and supervision never changed although they
were already under the seeming employ of ACGI. Petitionerissued
memoranda regarding the billing methods and distribution of books to the
collectors; it required privaterespondents to report daily and to remit their
collections on the same day to the branch office or to deposit them
withBank of the Philippine Islands; it monitored strictly their attendance as
when a collector cannot perform his dailycollection, he must notify
petitioner or the branch office in the morning of the day that he will be
absent; andalthough it was ACGI which ultimately disciplined private
respondents, the penalty to be imposed was dictated bypetitioner as
shown in the letters it sent to ACGI specifying the penalties to be meted on
the erring privaterespondents. These are indications that ACGI was not left
alone
in
the
supervision
and
control
of
its
allegedemployees. Consequently, it can be concluded that ACGI was not an
independent contractor since it did not carry adistinct business free from
the control and supervision of petitioner.Under this factual milieu, there is
no doubt that ACGI was engaged in labor-only contracting, and as such,
isconsidered merely an agent of the petitioner. In labor-only contracting,
the statute creates an employer-employeerelationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is
consideredmerely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractoras if such
employees had been directly employed by the principal employer. Since
ACGI is only a labor-onlycontractor, the workers it supplied should be
considered as employees of the petitioner.

44
WHEREFORE, in view of the foregoing, the decision of the Court of
Appeals dated November 29, 2002, in CA-G.R. SP No. 67134, reversing the
decision of the National Labor Relations Commission and reinstating the
decision of the Labor Arbiter is AFFIRMED with the MODIFICATION that the
awards of P10,000.00 as moral damages and P5,000.00 as exemplary
damages are DELETED for lack of evidentiary basis.

45
SAN MIGUEL CORP V ABALLA ET AL - G.R. NO. 149011, JUNE 28,
2005
San Miguel Corporation (SMC), entered into a one-year Contract of Services
with Sunflower Multi-PurposeCooperative (Sunflower) to be renewed on a
month to month basis until terminated by either party.
Under thecontract, Sunflower agrees and undertakes to perform and/or
provide for the company the following services for theBacolod Shrimp
Processing Plant: Messengerial/Janitorial, Shrimp Harvesting/Receiving,
andSanitation/Washing/Cold Storage. The cooperative shall employ the
necessary personnel and provide adequateequipment, materials, tools and
apparatus, to efficiently, fully and speedily accomplish the work and
servicesundertaken by the cooperative. The cooperative shall have the
entire charge, control and supervision of the work andservices. There is no
employer-employee relationship between the company and the
cooperative, or the cooperativeand any of its members, or the company
and any members of the cooperative. The cooperative shall,
wheneverpossible, maintain and keep under its control the premises where
the work under this contract shall be performed.Respondents filed a
complaint praying to be declared as regular employees of SMC, with claims
for recoveryof all benefits and privileges enjoyed by SMC rank and file
employees. Subsequently, they included illegal dismissal as additional
cause of action following SMCs closure of its Bacolod Shrimp Processing
Plant which resulted in thetermination of their services. Moreover, SMC
insists that respondents are the employees of Sunflower, anindependent
contractor. On the other hand, respondents assert that Sunflower is
a labor-only contractor.
ISSUE:
Is Sunflower an independent contractor?
HELD:NO.
The following considerations affirm by more than substantial evidence
the existence
of an employer-employee
relationship
between
SMC
and respondents:
The Contract of Services between SMC and Sunflower shows that the
parties clearly disavowed the existenceof an employer-employee
relationship between SMC and respondents. The language of a contract is
not, however, determinative of the parties relationship; rather it is the
totality
of
the
facts
and
surrounding
circumstances
of

thecase. A party cannot dictate, by the mere expedient of a unilateral decl

aration in a contract, the character of itsbusiness, i.e., whether as laboronly contractor or job contractor, it being crucial that its character be
measured interms of and determined by the criteria set by statute. What
appears is
that Sunflower
does not
have substantial
capitalization
or investment in the form of tools,equipment, machineries, work premises
and other materials to qualify it as an independent contractor. And from
the job description provided by SMC itself, the work assigned to private
respondents was directlyrelated to the aquaculture operations of SMC.
Undoubtedly, the nature of the work performed by respondents inshrimp
harvesting, receiving and packing formed an integral part of the shrimp
processing operations of SMC. As forjanitorial and messengerial services,
that they are considered directly related to the principal business of the
employer has been jurisprudentially recognized.Furthermore, Sunflower did
not carry on an independent business or undertake the performance of
itsservice contract according to its own manner and method, free from the
control and supervision of its principal, SMC,its apparent role having been
merely to recruit persons to work for SMC. Thus, it is gathered from the
evidence adduced
by respondents
before the
LA that
their daily
time records were signed by SMC supervisors which fact shows that
SMC exercised
the
power
of
control and
supervision
over
itsemployees. And control of the premises in which private respondents
worked was by SMC. These tend to disprovethe independence of the
contractor

46
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE SOCIAL
SECURITY
COMMISSION
AND
SOCIAL
SECURITY
SYSTEM,
PETITIONERS, VS. ASIAPRO COOPERATIVE, RESPONDENT. - G.R. No.
172101, November 23, 2007
Facts:
Petitioner Republic of the Philippines, represented by the Social Security
Commission (SSC),is a quasi-judicial body authorized by law to resolve
disputes arising out of RA 8282; while SocialSecurity System (SSS) is a
government corporation created by virtue of RA 1161 as amended.On the
other hand, respondent Asiapro is a multi-purpose cooperative created by
virtue ofRA 6938 and duly registered with the Cooperative Development
Authority (CDA). Asiapro is composed of owners-members. Under its bylaws, they are of two categories, towit: (1) regular member entitled to full
membership rights and (2) associate member who has limitedrights
provided under its by-laws. Its prime objective is to provide savings and
credit facilities and todevelop other livelihood services for its ownersmembers.In the discharge of its objective, Asiapro entered into Service
Contracts with Stanfilco- adivision of DOLE Philippines, Inc. and a company
based in Bukidnon. Instead of receivingcompensation or wages from
Asiapro, they receive a share in the service surplus; which Asiaproearns
from different areas of trade it engages in, such as the income derived
from the said ServiceContracts with Stanfilco.In order to enjoy the benefits
under the Social Security Law, the owners-members of Asiaprowho were
assigned to Stanfilco requested the services of the latter to register them
with petitionerSSS as self-employed and to remit their contributions as
such.However, SSS, through its VP for Mindanao Division, Atty. Eddie Jara,
sent a letter to Asiaproinforming them that based on the Service Contracts,
Asiapro is actually a manpower contractorsupplying employees to Stanfilco
and for the reason, it is an employer of its owners-membersworking with
Stanfilco. Thus, Asiapro should register itself with the SSS as an employer
and makethe corresponding report and remittances of premium
contributions in accordance with the SSS law. Asiapro then sent a reply to
SSS asserting that it is NOT an employer as its owners-membersare the
cooperative itself, hence, it cannot be its own employer.***Hence
accordingly, SSS filed a petition before the SSC against Asiapro and
Stanfilco prayingthat Asiapro be directed to register as an employer and
thus report its cooperatives owners-members as covered employees under
the compulsory coverage of the SSS law. Asiapro movedto dismiss, still
alleging that no ER-EE relationship exists between it and its ownersmembers.The trial courts denied Asiapros claim but the Court of Appeals
granted Asiapros petition.Meanwhile, in its Memorandum, petitioners

raised the issue of whether or not the Court erredin not finding that the
SSC has jurisdiction over the subject matter and that it has valid basis
indenying Asiapros motion to dismiss.
Issue:
Does the SSC have jurisdiction over the subject matter?
Court Ruling:On the jurisdiction of the SSC over the matter:
Petitioner SSCs jurisdiction is clearly stated in Section 5 of RA 8282 as well
as Section 1,Rule III of the 1997 SSS Revised Rules of Procedure.Section 5
provides
Settlement of Disputes
(a) any dispute arising under this act withrespect to coverage, benefits,
contributions
and
penalties
thereon
or
any
other
matter
relatedthereto, shall be cognizable by the Commission.
Similarly, Section 1 of the 1997 SSS Revised Rules of Procedure states that

Jurisdiction Any dispute arising under the Social Security Act with
respect to coverage, entitlement of benefits,collection and settlement of
contributions
and
penalties
thereon
or
any
other
matter
relatedthereto, shall be cognizable by the Commission, after the
SSS, through its President, Manageror Officer-in-Charge of the Department/
Branch/ Representative Office concerned had first takenaction thereon in
writing.It is clear then from these provisions that any issue regarding the
compulsory coverage ofthe SSS is well within the exclusive jurisdiction of
the SSC. It is important to note also that themandatory coverage under the
SSS Law is premised on the existence of an ER-EE relationshipexcept in
cases of compulsory coverage of the self-employed.
Further, it is axiomatic that the allegations in the complaintnot
the defenses set upin the Answer or in the Motion to Dismiss,
determine which court has jurisdiction over anaction; otherwise,
the question of jurisdiction would depend almost entirely upon
thedefendant.
In this case, the complaint filed by SSS before the SSC against Asiapro
alleges that owners-members of the Asiapro and Stanfilco alleges that the

47
owners-members of Asiapro are subject tothe compulsory coverage of the
SSS because they are employees of the respondent cooperative.
Hence, based on the allegations in the complaint, the case clearly
falls within its jurisdiction.On the NLRC jurisdiction:
The question on the existence of an ER-EE relationship is not within the
exclusive jurisdictionof the NLRC. Article 217 of the Labor Code,
enumerating the jurisdiction of NLRC and Labor Arbitersprovide that:Art.
217. Jurisdiction of Labor Arbiters and the Commission
Except claims for EmployeeCompensation, Social Security, Medicare
and maternity benefits, all other claims arising from ER-EE relations,
including those of persons in domestic or household service, involving an
amount ofP5,000.00 regardless of whether accompanied with a claim for
reinstatement Hence, the question of determining the existence of
ER-EE relationship FOR THEPURPOSE OF DETERMINING THE SSS
COVERAGE is explicitly excluded from the NLRC
PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND CARLOS
CABAL, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
ROSALINA M. PULPULAAN AND EMELITA SALONGA,respondents. G.R. No. 80737 September 29, 1988
FACTS: petitioner corporation was forced by economic circumstances to
require its workers to go on mandatory vacation leave. The workers were
paid while on leave but the pay was charged against their respective
earned leaves. As a result, the private respondents filed complaints for
unfair labor practice and discrimination.
Labor Arbiter rendered a decision dismissing the complaint for ULP.
Ordering the Philippine Graphic arts, inc to restore and grant to all its
employees the company policy regarding groceries previously enjoyed by
them.
The private respondents filed a "partial appeal" with (NLRC) questioning
the Labor Arbiter's dismissal of their complaint for ULP and the resultant
forced vacation leaves which were actually without pay.
NLRC affirmed the arbiter's decision with modification ordering the
employers to refund the amount equivalent to the earned leave of the
employees.

Issue: whether or not the forced vacation leave without pay is unfair labor
practice and if not an unfair labor practice, whether or not it was tainted
with arbitrariness.
Held: The Court is convinced from the records now before it, that there was
no unfair labor practice. As found by the NLRC, the private respondents
themselves never questioned the existence of an economic crisis but, in
fact, admitted its existence.
There is also no showing that the imposition of forced leave was exercised
for the purpose of defeating or circumventing the rights of employees
under special laws or under valid agreements.
Petitioner contends that before the implementation of the forced leave a
consensus on how to deal with deteriorating economic conditions was
reached between the employer and employees, and such in consonance
with their collective bargaining agreement. Thus the Court finds that the
decision to resort to forced leaves was, under the circumstances, a
management prerogative.
Private respondents contend that the petitioners should discuss said
management's plan in the grievance procedure so that the Union members
thereof may well be apprised of the reason therefor. The Court however do
not agree.
The statutory law on grievance procedure provides that:
ART. 261. Grievance machinery. Whenever a grievance arises from the
interpretation or implementation of a collective agreement, including
disciplinary actions imposed on members of the bargaining unit, the
employer and the bargaining representative shall meet to adjust the
grievance. Where the grievance procedure as provided herein does not
apply, grievances shall be subject to negotiation, conciliation or arbitration
as provided elsewhere in this Code.
As the law stands, both employers and bargaining representative of the
employees are required to go through the grievance machinery in case a
grievance arises. And though the law does not provide who, as between
labor and capital, should initiate that said grievance be brought first to the,
grievance machinery, it is only logical, just and equitable that whoever is
aggrieved should initiate settlement of the grievance through the
grievance machinery. To impose the compulsory procedure on employers
alone would be oppressive of capital, notwithstanding the fact that in most
cases the grievance is of the employees

48
In the case at bar private respondents instituted a case before the Labor
Arbiter for unfair labor practices and discrimination, prior to any referral to
the grievance machinery, which they are equally mandated to go through
and under the circumstances they were better situated to initiate.
The SC ordered the decision of the Labor Arbiter is REINSTATED

49
METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALUTUCP AND ANTONIO V. BALINANG, PETITIONERS, VS. NATIONAL
LABOR
RELATIONS
COMMISSION
(2ND
DIVISION)
AND
METROPOLITAN BANK & TRUST COMPANY, RESPONDENTS. - G.R.
No. 102636, September 10, 1993
On 25 May 1989, the bank entered into a collective bargaining agreement
with the MBTCEU, granting a monthly P900 wage increase effective 01
January 1989, P600 wage increase effective 01 January 1990, and P200
wage increase effective 01 January 1991. The MBTCEU had also bargained
for the inclusion of probationary employees in the list of employees who
would benefit from the first P900 increase but the bank had adamantly
refused to accede thereto. Consequently, only regular employees as of 01
January 1989 were given the increase to the exclusion of probationary
employees.
Barely a month later, or on 01 July 1989, Republic Act 6727, "an act to
rationalize wage policy determination by establishing the mechanism and
proper standards therefor, x x x fixing new wage rates, providing wage
incentives for industrial dispersal to the countryside, and for other
purposes," took effect
the bank gave the P25 increase per day, or P750 a month, to its
probationary employees and to those who had been promoted to regular or
permanent status before 01 July 1989 but whose daily rate was P100 and
below. The bank refused to give the same increase to its regular
employees who were receiving more than P100 per day and recipients of
the P900 CBA increase.
WON a wage distortion exists as a consequence of the grant of a wage
increase to certain employees
SC - yes

The term "wage distortion", under the Rules Implementing Republic Act
6727, is defined, thus:
"(p) Wage Distortion means 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."
The definition of "wage distortion,"[10] aforequoted, shows that such
distortion can so exist when, as a result of an increase in the prescribed
wage rate, an "elimination or severe contraction of intentional quantitative
differences in wage or salary rates" would occur "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 keeping then with the intendment of the law and the agreement of the
parties themselves, along with the often repeated rule that all doubts in
the interpretation and implementation of labor laws should be resolved in
favor of labor,[13] we must approximate an acceptable quantitative
difference between and among the CBA agreed work levels.
We find the formula suggested then by Commissioner Bonto-Perez, which
has also been the standard considered by the regional Tripartite Wages and
Productivity Commission for the correction of pay scale structures in cases
of wage distortion,[15] to well be the appropriate measure to balance the
respective contentions of the parties in this instance. We also view it as
being just and equitable.