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G.R. No. 93699 September 10, 1993

RAMON PRIETO, PACIFICO CANILLO, and WILFREDO AZUELA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, AR and SONS INTERNATIONAL DEVELOPMENT CORP., SAUDI SERVICES
and OPERATING COMPANY, LTD., and SAUDI ARABIAN MORRISON, respondents.
Facts:
Ramon Prieto, Pacifico Canillo and Wilfredo Azuela were recruited by AR and Sons International Development Corporation
(AR and Sons) for employment for a period of 24 months with Saudi Services and Operating Co., Ltd. (SSOC) in Saudi Arabia.
Their employment contract provided for the following compensation: Prieto-Mechanic - $370.00; Azuela - Mechanic - $370.00;
Canillo - Clerk - $420.00. Later however, the respondent agency coerced them into signing another contract with Saudi Arabia
Morrison (SAM) without the knowledge and approval of POEA. The salaries under the second contract were much smaller.
When they reached Jeddah, they were again asked to sign a contract which would further lower their salary. They refused to
sign the same. They were confined in a small room and given spoiled food for about a month, after which, they were
repatriated. They filed a complaint for non payment of wages, illegal dismissal, illegal exaction of placement fees, illegal
imposition of performance bond and substitution of contract against AR and Sons. In its Answer, AR and Sons claimed that the
petitioners misrepresented themselves to be qualified for the position they applied for. That it was only found out when they
arrived in Jeddah that they are not qualified. The respondent also claimed that in order to accommodate the petitioners, they
were transferred to SAM to work as assistant cooks, but were also not qualified. The LA ruled in favor of the petitioners, but
NLRC reversed the same, contending that there was never an EER.
Issue:
Is there an employer employee relationship?
Held:
Yes. The petitioners became an employee of SSOC and later SAM which are both represented by AR and Sons. It was admitted
in the comment that the petitioners were hired and deployed abroad. The relationship is even more firmly supported by the
Agency Agreement between petitioners and AR and Sons.
Since EER was established, the burden of proof of termination in termination cases lies with the employer. This burden was
not discharged by private respondents. The petitioners were hired as mechanics and clerks, after presumably passing a
corresponding trade test conducted by the recruitment agency. If AR and Sons felt that the petitioners were not qualified, they
should have rejected the applications.
BPI Credit Corp vs NLRC
G.R. 106027
July 25, 1994
Facts:

1. Benjamin Jovellanos is the Marketing Assistant of petitioner BPI Family Bank, Dagupan City branch. Ricardo Torio
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

worked as Credit Investigator Appraiser in the same bank.

On July 8, 1987, a certain Alex Racimo executed an Affidavit linking Jovellanos and Torio to certain anomalies.
It was claimed that Racimo obtained a loan from the bank through his friend Torio.
Torio claimed that no charges will be collected except for the application fee of P500.
When the loan was released, Torio approached Racimo and asked for what he termed for the boys and mentioned
the name of Jovellanos.
That Racimo was only able to give P1,000 which appears to have been not taken well by Torio, who only walked away.
Later, Racimo was surprised to find out that he was being charged of a certain percentage of his loan.
The AVP of BPI, Gaspar Antonio de los Santos brought the subjects as he and Jovellanos was on their way home from a
meeting. He told Jovellanos about the affidavit but did not reveal the identity of the person who executed it.
Jovellanos was served a notice of preventive suspension thereafter.
Jovellanos asked that his suspension be lifted. He denied the charges against him. He also submitted an affidavit by
Racimo stating that he was never personally approached by Jovellanos.
The suspension was however not ifted, intead, BPI formed a committee to investigate on previous clients about said
anomalous transactions.
Of the ten interviewed, only two confirmed that they were approached by some employees for some consideration.
Respondent Jovellanos was then served a Notice of Termination effective November 25, 1987 on the ground of wilfull
breach of trust. Jovellanos countered by filing a complaint for illegal dismissal with damages. On September 5, 1990,
the Labor Arbiter ruled in favor of Respondent Jovellanos.

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Issue:
Was Jovellanos illegally dismissed?
Held:
Yes. Petitioner's submissions ignore the prosecution accorded by our Constitution to the worker's precious right to
security of tenure. Section 3 of its Article XIII mandates that the State shall afford full protection to labor and declares
that all workers shall be entitled to security of tenure. Among the enunciated State policies are the promotion of social
justice 11 and a just and dynamic social order. 12 In contrast, the prerogative of management to dismiss a worker, as an
aspect of property right, has never been endowed with a constitutional status.
we affirm the ruling of the NLRC that private respondent was dismissed; in violation of his right to procedural due
process. Article 277(b) of the Labor Code provides the procedure for terminating a worker. Petitioner did not give fair
notice to private respondent of the charges against him. According to the petitioner, on August 12, 1987, its Assistant
Vice President de los Santos ". . . brought up the subject as he and Jovellanos were on their way home from a staff
presentation at about 9:45 p.m." He also ". . . confronted Jovellanos about the contents of the affidavit without naming g
Racimo as its author." Such casualness and incompleteness of information cannot satisfy the requirements of due
process. Neither could the notice of preventive suspension served on private respondent on August 17, 1987 have any
curative effect. A reading of said notice will show that it required private respondent to explain his participation in
certain ". . . reported irregular transactions pertaining to Real Estate Mortgage Loans of which you are CI-Appraiser . .
." The lack of specificity or the generality of the charge speaks for itself. Worse still, petitioner thereafter conducted its
own ex parte investigation without the participation of the private respondent.
Globe Mackay Cable and Radio Corporation vs. NLRC
FACTS:
Private respondent, Imelda Salazar, was employed by globed-mackay cable and radio corporation as general system analyst.
Also employed by the petitioner was delfin saldivar and manager for technical support operations support with whom private
respondent was allegedly very close.
Sometime 1984, conducted an investigation on saldivars activities the report indicated that saldivar entered into a
partnership with a supplier of petitioner often recommended by saldivar. The report also disclosed that saldivar was in
possession of several air conditioned units owned by the company.
The report likewise showed that Salazar violated company regulations by involving into activities in conflict with the
companys interest. Moreover, it showed that Salazar signed as a witness in the partnership entered by saldivar and also had
knowledge of the loss of the air conditioner units and failed to report to the employer.
Consequently, Salazar was placed under preventive suspension and was asked for an explanation but instead of submitting an
explanation. Private respondent filed a complaint for illegal dismissal after petitioner notified her into writing that she was
dismissed for failure to refute and disprove these findings.
Labor arbiter ordered petitioner to reinstate Salazar to her former and equivalent position and to ay full backwages
and other benefits plus P50.000 for moral damages. NLRC affirmed the decision with respect to reinstatement but limited the
backwages to two yerars.
ISSUE

I.

preventive suspension was the proper remedial recourse available to the company pending
salazars investigation it does not signify that the company has adjudge the employee guilty of
the charges. Such disciplinary measure is resorted to for the protection of the companys
property pending investigation of any alleged malfeasance or misfeasance committed by the
employee.
II.
Whether private respondent was illegally dismissed petitioner
has predicated its
dismissal of Salazar on loss of confidence. While loss of confidence or breach of trust is a valid
ground for termination, it must rest on some basis which must be convincingly established an
employee may not be dismissed on mere presumptions or suppositions.
III.
Employees illegally dismissed entitled to reinstatement and full backwages
the intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is to
restore the employee of her status before she lost her job and to give her back the income lost during the period of
unemployment. Both remedies, looking to the past, would perforce make her whole.
The principle of strained relations cannot be applied indiscriminately. Here it has not been proven that the
position of the private respondent as system analyst may be characterized as a position of trust and confidence
such that if reinstated, it may well lead to strained relations between employer and employee

G.R. No. 201701

June 3, 2013

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UNILEVER PHILIPPINES, INC., Petitioner,
vs.
MARIA RUBY M. RIVERA, Respondent.
Rivera was employed as its Area Activation Executive for Area 9 South in the cities of Cotabato and Davao. She was primarily
tasked with managing the sales, distribution and promotional activities in her area and supervising Ventureslink International,
Inc. (Ventureslink), a third party service provider for the companys activation projects. Sometime in 2007, Unilevers internal
auditor conducted a random audit and found out that there were fictitious billings and fabricated receipts supposedly from
Ventureslink amounting to P11,200,000.00. . Upon further verification, Ventureslink reported that the fund deviations were
upon the instruction of Rivera.
Unilever issued a show-cause notice to Rivera asking her to explain the following charges, to wit: a) Conversion and
Misappropriation of Resources; b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity Issues.
Responding through an email, dated July 16, 2007, Rivera admitted the fund diversions, but explained that such actions were
mere resourceful utilization of budget because of the difficulty of procuring funds from the head office. 5 She insisted that the
diverted funds were all utilized in the companys promotional ventures in her area of coverage.
,Unilever found Rivera guilty of serious breach of the companys Code of Business Principles causing her dismissal. Rivera
asked for reconsideration and requested Unilever to allow her to receive retirement benefits having served the company for
fourteen (14) years already. Unilever denied her request
Rivera filed a complaint for Illegal Dismissal and other monetary claims against Unilever. The Labor Arbiter (LA) dismissed
her complaint for lack of merit. NLRC partially granted Riveras prayer. In its Resolution, dated November 28, 2008, the NLRC
held that although she was legally dismissed from the service for a just cause, Unilever was guilty of violating the twin notice
requirement in labor cases.
Issues:
A) Whether or not a validly dismissed?
B)
Is Rivera entitled to an award of separation pay?

Held:
A) ) Rivera was not validly dismissed. the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their defense.
This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees
an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2)
present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees a written
notice of termination indicating that: (1) all circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of their employment. 29
In this case, Unilever was not direct and specific in its first notice to Rivera. The words it used were couched in general
terms and were in no way informative of the charges against her that may result in her dismissal from employment.
Evidently, there was a violation of her right to statutory due process warranting the payment of indemnity in the form
of nominal damages.
B) As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article
28215of the Labor Code is not entitled to a separation pay.16 In exceptional cases, however, the Court has granted
separation pay to a legally dismissed employee as an act of "social justice" or on "equitable grounds." In both
instances, it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral
character of the employee.17 In this case, Rivera was dismissed from work because she intentionally circumvented a
strict company policy, manipulated another entity to carry out her instructions without the companys knowledge
and approval, and directed the diversion of funds, which she even admitted doing under the guise of shortening the

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laborious process of securing funds for promotional activities from the head office. These transgressions were
serious offenses that warranted her dismissal from employment and proved that her termination from work was
for a just cause. Hence, she is not entitled to a separation pay. The policy of social justice is not intended to
countenance wrongdoing simply because it is committed by the underprivileged. At best, it may mitigate the penalty
but it certainly will not condone the offense.

PNB vs. Cabansag

Date: June 21, 2005
Ponente: J. Panganiban
Facts:
Florence Cabansag went to Singapore as a tourist. While she was there, she looked for a job and eventually applied with the
Singapore Branch of the Philippine National Bank. PNB is a private banking corporation organized and existing under
Philippine laws. She was eventually employed and was issued an employment pass. In her job offer, it was stated, among
others, that she was to be put on probation for 3 months and termination of her employment may be made by either party
after 1 day notice while on probation, and 1 month notice or 1 month pay in lieu of notice upon confirmation. She accepted the
terms and was issued an OEC by the POEA. She was commended for her good work. However, she was informed by Ruben
Tobias, the bank president, that she would have to resign in line with some cost cutting and realignment measures of the
company. She refused but was informed by Tobias that if she does not resign, he will terminate her instead.
Issues:
1. W/N the arbitration branch of the NLRC has jurisdiction
2. W/N the arbitration of the NLRC in the NCR is the proper venue
3. W/N Cabansag was illegally dismissed
Ruling:
1.

Labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations
including termination disputes involving all workers, including OFWs. Here, Cabansag applied for and secured an OEC
from the POEA through the Philippine Embassy. The OEC authorized her working status in a foreign country and
entitled her to all benefits and processes under our statutes. Although she may been a direct hire at the
commencement of her employment, she became an OFW who was covered by Philippine labor laws and policies upon
certification by the POEA. When she was illegally terminated, she already possessed the POEA employment certificate.

2.

A migrant worker refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity
in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker. Here,
Cabansag was a Filipino, not a legal resident of Singapore, and employed by petitioner in its branch office in
Singapore. She is clearly an OFW/migrant worker. Thus, she has the option where to file her Complaint for illegal
dismissal. She can either file at the Regional Arbitration Branch where she resides or the RAB where the employer is
situated. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice of proper
venue.

3.

The appellate court was correct in holding that respondent was already a regular employee at the time of her
dismissal, because her three-month probationary period of employment had already ended. This ruling is in
accordance with Article 281 of the Labor Code: An employee who is allowed to work after a probationary period shall
be considered a regular employee. Indeed, petitioner recognized respondent as such at the time it dismissed her, by
giving her one months salary in lieu of a one-month notice, consistent with provision No. 6 of her employment
Contract.

ANTONIO M. SERRANO
VS.
GALLANT MARITIME SERVICES, INC.
FACTS:
Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., under a
POEA-approved contract of employment for 12 months, as Chief Officer, with the basic monthly salary of US$1,400, plus
$700/month overtime pay, and 7 days paid vacation leave per month.

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On the date of his departure, Serrano was constrained to accept a downgraded employment contract upon the assurance and
representation of respondents that he would be Chief Officer by the end of April 1998.
Respondents did not deliver on their promise to make Serrano Chief Officer.
Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines, serving only two months and 7
days, leaving an unexpired portion of nine months and twenty-three days.
Upon complaint filed by Serrano before the Labor Arbiter (LA), the dismissal was declared illegal.
On appeal, the NLRC modified the LA decision based on the provision of RA 8042.
Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th
paragraph of Section 10 of RA 8042.
ISSUES:
1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment of contracts;
2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3,
Article XIII on labor as a protected sector.
HELD:
On the first issue.
The answer is in the negative. Petitioners claim that the subject clause unduly interferes with the stipulations in his contract
on the term of his employment and the fixed salary package he will receive is not tenable.
The subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law
was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs
wherever they may be employed.
On the second issue.
The answer is in the affirmative.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and
parity.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination
reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other
OFWs to equal protection.
The subject clause or for three months for every year of the unexpired term, whichever is less in the 5th paragraph of Section
10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.
Batong Buhay Goldmines Inc vs De la Serna 312 SCRA 22 (1999)
FACTS:
5 February 1987 - Elsie Rosalinda B. Ty, Antonia L. Mendelebar, Ma. Concepcion O. Reyes and 1,247 others filed a
complaint against Batong Buhay Gold Mines, Inc. for:
1. Non-payment of their basic pay and allowances for the period of 6 July 1983 to 5 July 1984, inclusive, under
Wage Order No. 2
2. Non-payment of their basic pay and allowances for the period 16 June 1984 to 5 October 1986, inclusive
under Wage Order No. 5
3. Non-payment of their salaries for the period 16 March 1986 to the present
4. Non-payment of their 13th month pay for 1985, 1986 and 1987
5. Non-payment of their vacation and sick leave, and the compensatory leaves of mine site employees
6. Non-payment of the salaries of employees who were placed on forced leaves since November, 1985 to the
present, if this is not feasible, the affected employees be awarded corresponding separation pay.
On 27 February 1987, the complainants filed a Motion for the issuance of an inspection authority.
On 13 July 1987, the Labor Standards and Welfare Officers submitted their report recommending that an Order of
Compliance be issued directing respondent Batong Buhay Gold Mines Inc. to pay complainants' Elsie Rosalina Ty, et al.
(P4,818,746.40) by way of unpaid salaries of workers from March 16, 1987 to present, unpaid and ECOLA differentials
under Wage Order Nos. 2 and 5 unpaid 13th months pay for 1985 and 1986, and unpaid (sic)
vacation/sick/compensatory leave benefits. And on 31 July 1987, the Regional Director 1 adopted the recommendation
of the LSWOs and issued an order directing the respondent to pay the complainants of the said amount
On 31 July 1987, the Regional Director1 adopted the recommendation of the LSWOs and issued an order directing the
respondent to pay the complainants
When the respondent failed to post a cash/surety bond, and upon motion for the issuance of a writ of execution by the
complainants, the Regional Director, on 14 September 1987 issued a writ of execution appointing Mr. John Espiridion

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C. Ramos as Special Sheriff and directing him to collect the amount, otherwise he has to execute this writ by attaching
the goods and chattels of BBGMI and not exempt from execution or in case of insufficiency thereof against the real or
immovable property of the respondent.
The Special Sheriff proceeded to execute the appealed Order on 17 September 1987 and seized three (3) units of
Peterbuilt trucks and then sold the same by public auction. Various materials and motor vehicles were also seized on
different dates and sold at public auction by said sheriff.
BBGMI appealed the Order dated July 31, 1987 of Regional Director Luna C. Piezas to respondent Undersecretary
Dionisio de la Serna, contending that the Regional Director had no jurisdiction over the case.
ISSUE: Whether Regional Director has jurisdiction over the complaint filed by the employees of BBGMI.
HELD:
The Regional Director has jurisdiction over the BBGMI employees who are the complainants. The subject labor standards case
of the petition arose from the visitorial and enforcement powers by the Regional Director of Department of Labor and
Employment (DOLE). Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations
relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational,
safety and health standards.4 Labor standards cases are governed by Article 128(b) of the Labor Code.
Art. 128 (b) Visitorial and enforcement powers
(b) The Minister of Labor or his duly authorized representative shall have the power to order and administer,
after due notice and hearing, compliance with the labor standards provisions of this Code based on the
findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to
issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where
the employer contests the findings of the labor regulations officers and raises issues which cannot be
resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection.
Respondent Undersecretary Dionisio C. Dela Serna, on the other hand, upheld the jurisdiction of Regional Director Luna C.
Piezas by relying on E.O. 111, to quote:
Considering therefore that there still exists an employer-employee relationship between the parties; that the case
involves violations of the labor standard provisions of the labor code; that the issues therein could be resolved
without considering evidentiary matters that are not verifiable in the normal course of inspection; and, if only to give
meaning and not render nugatory and meaningless the visitorial and enforcement powers of the Secretary of Labor
and Employment as provided by Article 128(b) of the Labor Code, as amended by Section 2 of Executive Order No.
111 which states:
The provisions of article 217 of this code to the contrary notwithstanding and in cases where the relationship
of employer-employee still exists, the Minister of Labor and Employment or his duly authorized
representative shall have the power to order and administer, after due notice and hearing, compliance with
the labor standards provision of this Code based on the findings of the findings of labor regulation officers or
industrial safety engineers made in the course of inspection, and to issue writs of execution to the
appropriate authority for the enforcement of their order, except in cases where the employer contests the
findings of the labor regulations officers and raises issues which cannot be resolved without considering
evidentiary matters that are not verifiable in the ordinary course of inspection.
We agree with the complainants that the regional office a quo has jurisdiction to hear and decide the instant labor standard
case.
The Court in reinforcing its conclusion that Regional Director has jurisdiction over labor standards cases, treated E.O. 111 as a
curative statute, ruling as follows:
E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the Secretary of Labor's decision
upholding private respondents' salary differentials and ECOLAs on September 24, 1986. The amendment of the visitorial and
enforcement powers of the Regional Director (Article 128(b)) by said E.O. 111 reflects the intention enunciated in Policy
Instructions Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where an
employer-employee relationship still exists. This intention must be given weight and entitled to great respect
Republic Act 7730, the law governing the visitorial and enforcement powers of the Labor Secretary and his representatives
reads:
Art. 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. The Secretary or his duly authorized representative shall issue
writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.
The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director has
jurisdiction over the present labor standards case. Well-settled is the rule that jurisdiction over the subject matter is

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determined by the law in force when the action was commenced, unless a subsequent statute provides for its retroactive
application, as when it is a curative legislation.
Sime Darby Pilipinas, Inc. vs. NLRC
[289 SCRA 86 (1998)]
Facts:
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products.
Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees
of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including
members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a
change in work schedule effective 14 September 1992 thus
7:45 A.M. 4:45 P.M. (Mon to Fri) 7:45 A.M. 11:45 P.M. (Sat).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and 2:30 P.M. 3:30 P.M.
Lunch break will be between: 12:00 NN 1:00 P.M. (Mon to Fri).
Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break time
schedules will be maintained as it is now.
Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid
on call lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice,
discrimination and evasion of liability pursuant to the resolution of this Court the Labor Arbiter dismissed the complaint on
the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers
constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break
did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8)
hours.
Issue:
Whether or not the act of management in revising the work schedule of its employees and discarding their paid lunch break
constitutive of unfair labor practice?
SC Ruling:
The Court ruled that the revision of work schedule is a management prerogative and does not amount to unfair labor practice
in discarding the paid lunch break.
The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the
employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production.
It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to
do jobs during that period as they were on call. Even if denominated as lunch break, this period could very well be
considered as working time because the factory employees were required to work if necessary and were paid accordingly for
working.
With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their
employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for
eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work.
Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be
compensated for this period. The Court agrees with the Labor Arbiter that the new work schedule fully complies with the
daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in
the factory similarly situated whether they are union members or not.
Paloma vs. Philippine Airlines
[G.R. No. 148415, G.R. No. 156764, July 14, 2008]
Facts:
Paloma worked with PAL for 35 years. PAL had become privatized before Paloma retired. PAL paid separation/retirement gratuity and
accrued vacation leave pay, evidenced by the Release and Quitclaim. Paloma claims that PAL excluded his 450-day accrued sick
leave credits. He based his claim on EO 1077, which allows retiring government employees to commute, without limit, all his accrued
vacation and sick leave credits. According to him, only 58 days of the 450-day credit, he had commuted only 58 days, leaving him a
balance of 392 days of accrued sick leave credits for commutation.
Issue:
Considering that PAL has been privatized before his retirement, is EO 1077 applicable to Paloma?

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Held:
PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service
Law.
The Court can allow that PAL, during the period material, was a government-controlled corporation in the sense that the GSIS owned a
controlling interest over its stocks. One stubborn fact, however, remains: Through the years, PAL functioned as a private corporation and
managed as such for profit. Their personnel were never considered government employees. It may perhaps not be amiss for the Court to
take judicial notice of the fact that the civil service law and rules and regulations have not actually been made to apply to PAL and its
employees. Of governing application to them was the Labor Code.
However, what governs Palomas entitlement to sick leave benefits and the computation and commutation of creditable benefits is not
EO 1077, but PALs company policy on the matter which, took effect in 1990.
RAUL C. COSARE VS. BROADCOM ASIA, INC., ET AL.
G.R. No. 201298. February 5, 2014
FACTS:
The case stems from a complaint4 for constructive dismissal, illegal suspension and monetary claims filed with the National
Capital Region Arbitration Branch of the National Labor Relations
Commission (NLRC) by Cosare against the respondents.
Cosare claimed that sometime in April 1993, he was employed as a salesman by Arevalo, who was then in the business of
selling broadcast equipment needed by television networks and production houses. In December 2000, Arevalo set up the
company Broadcom, still to continue the business of trading communication and broadcast equipment. Cosare was named an
incorporator of Broadcom, having been assigned 100 shares of stock with par value of P1.00 per share. 5 In October 2001,
Cosare was promoted to the position of Assistant Vice President for Sales (AVP for Sales) and Head of the Technical
Coordination, having a monthly basic net salary and average commissions of P18, 000.00 and P37, 000.00, respectively.
Sometime in 2003, Alex F. Abiog (Abiog) was appointed as Broadcoms Vice President for Sales and thus, became Cosares
immediate superior. On March 23, 2009, Cosare sent a confidential memo 7 to Arevalo to inform him of the following anomalies
which were allegedly being committed by Abiog against the company: (a) he failed to report to work on time, and would
immediately leave the office on the pretext of client visits; (b) he advised the clients of Broadcom to purchase camera units
from its competitors, and received commissions therefor; (c) he shared in the under thetable dealings or confidential
commissions which Broadcom extended to its clients personnel and engineers; and (d) he expressed his complaints and
disgust over Broadcoms uncompetitive salaries and wages and delay in the payment of other benefits, even in the presence of
office staff. Cosare ended his memo by clarifying that he was not interested in Abiogs position, but only wanted Arevalo to
know
of
the
irregularities
for
the
corporations
sake.
Apparently, Arevalo failed to act on Cosares accusations. Cosare claimed that he was instead called for a meeting by Arevalo
on March 25, 2009, wherein he was asked to tender his resignation in exchange for financial assistance in the amount of
P300, 000.00. Cosare refused to comply with the directive, as signified in a letter 9 dated March 26, 2009 which he sent to
Arevalo.
ISSUE:

Whether or not Cosare was constructively and illegally dismissed from employment by the respondents
HELD: YES.
Given the circumstances, the Court agrees with Cosares claim of constructive and illegal dismissal.
Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible,
unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to
quit. In Dimagan v. Dacworks United, Incorporated, it was explained that:
The test of constructive dismissal is whether a reasonable person in the employees position would have felt compelled to give
up his position under the circumstances. It is an act amounting to dismissal but is made to appear as if it were not.
Constructive dismissal is therefore a dismissal in disguise. The law recognizes and resolves this situation in favor of employees
in order to protect their rights and interests from the coercive acts of the employer.

9
It is clear from the cited circumstances that the respondents already rejected Cosares continued involvement with the
company. Even their refusal to accept the explanation which Cosare tried to tender on April 2, 2009 further evidenced the
resolve to deny Cosare of the opportunity to be heard prior to any decision on the termination of his employment. The
respondents allegedly refused acceptance of the explanation as it was filed beyond the mere 48hour period which they
granted to Cosare under the memo dated March 30, 2009. However, even this limitation was a flaw in the memo or notice to
explain which only further signified the respondents discrimination, disdain and insensibility towards Cosare, apparently
resorted to by the respondents in order to deny their employee of the opportunity to fully explain his defenses and ultimately,
retain his employment.
G.R. No. 154213
August 23, 2012
EASTERN
MEDITERRANEAN
MARITIME
LTD.
AND
AGEMAR
MANNING
AGENCY,
INC., Petitioners,
vs.
ESTANISLAO SURIO, FREDDIE PALGUIRAN, GRACIANO MORALES, HENRY CASTILLO, ARISTOTLE ARREOLA, ALEXANDER
YGOT, ANRIQUE BA TTUNG, GREGORIO ALDOVINO, NARCISO FRIAS, VICTOR FLORES, SAMUEL MARCIAL, CARLITO
PALGUIRAN, DUQUE VINLUAN, .JESUS MENDEGORIN, NEIL FLORES, ROMEO MANGALIAG, JOE GARFIN and SALESTINO
SUSA, Respondents.
FACTS:
Respondents were former crewmembers of MT Seadance, a vessel owned by petitioner Eastern Mediterranean
Maritime Ltd., and manned and operated by petitioner Agemar Manning Agency, Inc.
While on board the vessel, the respondents had experienced delays in payment of their wages and in the remittance of
their allotments and they were not paid for extra work or extra overtime; they also complained of inadequate
equipment and poor working conditions
When the vessel came to dock in Switzerland, authorities from the International Transport Federation (ITF) boarded
and found out that indeed the respondents were receiving less than the prevailing wage rates negotiations
followed between ITF and the vessel owner which resulted in payment of differentials to the respondents and their
subsequent repatriation to the Philippines
A few days after, however, Eastern Mediterranean filed at the POEA a complaint for disciplinary action against the
newly-repatriated respondents based on breach of discipline and for the reimbursement of wage increases
During pendency of the action, R.A. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) took effect on July 15,
1995, vesting with the Labor Arbiter original and exclusive jurisdiction over money claims arising out of employeremployee relationships involving overseas Filipino workers (jurisdiction was formerly exercised by POEA)
POEA dismissed the complaint appeal made with NLRC, which also dismissed, saying they had no jurisdiction
petitioners filed pet. For certiorari and mandamus with SC which referred the same to CA CA dismissed ruling that
jurisdiction lay with POEA, to the exclusion of NLRC
ISSUE: WON the NLRC has jurisdiction to review on appeal cases decided by the POEA on matters pertaining to disciplinary
actions
HELD/RATIO:
Perusal of the POEA rules and the IRR of R.A. 8042 show that NLRC has no jurisdiction to review disciplinary cases
decided by the POEA; the matter of inclusion and deletion of overseas contract workers in the POEA
Blacklist/Watchlist is within the exclusive jurisdiction of the POEA to the exclusion of NLRC
Although the passage of the new law transferred jurisdiction over money claims from POEA to the Labor Arbiter,
POEA retained jurisdiction over disciplinary/administrative cases involving overseas workers
Petitioners should have appealed the adverse decision of the POEA to the Secretary of Labor instead of to the NLRC.
Consequently, the CA, being correct on its conclusions, committed no error in upholding the NLRC [When Republic Act
No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate
jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and control under
Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987]
G.R. No. 109583 September 5, 1997
TRANS ACTION OVERSEAS CORPORATION, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON, JENELYN CASA, PEACHY LANIOG,
VERDELINA BELGIRA, ELMA FLORES, RAMONA LITURCO, GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ,
CANDELARIA NONO, NITA BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE AGUILAR, DIGNA PANAGUITON, VERONICA
BAYOGOS, JULIANITA ARANADOR, LEONORA CABALLERO, NANCY BOLIVAR, NIMFA BUCOL, ZITA GALINDO, ESTELITA
BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA, ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO, LENIROSE

10
ABANGAN, SELFA PALMA, ANTONIA NAVARRO, ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA
MAYO,respondents.
Facts:
From July 24 to Sep 9, 1987, petitioner Trans Action scoured Ilo Ilo City for possible recruits for alleged job vacancies in Hong
Kong. However, it failed to deploy the applicants, prompting the aggrieved complainants to institute a case against petitioner
for violation of Art. 32 and 34 of the Labor Code. On April 5, 1991, Labor Undersecretary Nievess Confesor found the complaint
meritorious as granted the prayer of private respondents for the return of the fees they paid. The license of Trans Action was
also cancelled. Petitioner filed a motion to temporarily lift the order of cancellation. Undersecretary Confesor provisionally
lifted the cancellation pending the resolution of the MR filed by petitioner. However, when the MR was denied for lac of merit,
the order revoking the license of petitioner was reinstated.
Petitioner questioned the revocation, cotending that the Sec of Labor does not have the authority to revoe licenses. The power
is said to be lodged with the POEA.
Issue: Can the Secretary of Labor revoke the license of petitioner?
Held: Yes. The power to suspend or cancel and license or authority to recruit for overseas employment is vested upon the
Secretary of Labor as provided under Art 35 of the Labor Law. This was already settled in several cases. It has been previously
emphasized that "The penalties of suspension and cancellation of license or authority are prescribed for violations of the
above quoted provisions, among others. And the Secretary of Labor has the power under Section 35 of the law to apply these
sanctions, as well as the authority, conferred by Section 36, not only to "restrict and regulate the recruitment and placement
activities of all agencies," but also to "promulgate rules and regulations to carry out the objectives and implement the
provisions" governing said activities. Pursuant to this rule-making power thus granted, the Secretary of Labor gave the
POEA, 6 "on its own initiative or upon filing of a complaint or report or upon request for investigation by any aggrieved person,
. . (authority to) conduct the necessary proceedings for the suspension or cancellation of the license or authority of any agency
or entity" for certain enumerated offenses
CECILIA T. MANESE, JULIETES E. CRUZ, AND EUFEMIO PEANO II VS. JOLLIBEE FOODS CORPORATION,
TONY TAN CAKTIONG, ELIZABETH DELA CRUZ, DIVINA EVANGELISTA AND SYLVIA M. MARIANO (G.R. NO.
170454, 11 OCT 2012)
Petitioners were employees of respondent Jollibee Foods Corporation (Jollibee). At the time of their termination, petitioner
Manese, Cruz and Peano were managerial employees.
Petitioners were part of the team tasked to open a new Jollibee branch at Festival Mall, Level 4, in Alabang,
Muntinlupa City on December 12, 2000. However, the opening of the store was postponed thrice. In preparation for the
opening of the new branch, petitioner Cruz requested the commissary for the delivery of the product called Chickenjoy.
When the opening was rescheduled to December 24, 2000, petitioner Cruz made another requisition for the delivery
of the food on December 23, 2000, but the opening date was again postponed to December 28, 2000. Petitioner Cruz did not
cancel the request for delivery of the products.
On December 23, 2000, 450 packs of Chickenjoy were delivered and petitioners placed them in the freezer. On
December 26, 2000, petitioner Cruz thawed the 450 packs of Chickenjoy (ten pieces in each pack), or 4,500 pieces of
Chickenjoy, in time for the branch opening on December 28, 2000. The shelf life of the Chickenjoy is 25 days from the time it is
marinated; and, once thawed, it should be served on the third day. Its shelf life cannot go beyond three days from thawing.
After that, the remaining Chickenjoy products are no longer served. Within the period provided for in the company policy,
valid Chickenjoy rejects are usually returned to the commissary, while rejects which are unreturnable are wasted and
disposed of properly.
The sales targets of for the first and second day were not reached.
Sometime in January 2001, petitioner Cruz attempted to return 150 pieces of Chickenjoy rejects to the commissary,
but the driver of the commissary refused to accept them due to its discoloration and deteriorated condition, and for fear that
the rejects may be charged against him. Thus, the Chickenjoy rejects were returned to the freezer.
During the first week of March 2001, the team of petitioners had a meeting on what to do with the stored Chickenjoy
rejects. They decided to soak and clean the Chickenjoy rejects in soda water and segregate the valid rejects from the wastes.
On April 2, 2001, petitioner Cruz was transferred to Jollibee Shell South Luzon Tollway branch in Alabang, Muntinlupa. She
failed to make the proper indorsement as the area manager directed her to report immediately to her new assignment.
On May 3, 2001, the area manager, Evangelista visited the subject Jollibee branch at Festival Mall. Evangelista told
petitioner Manese to dispose of the Chickenjoy rejects, but Manese replied that they be allowed to find a way to return them to
the Commissary.5
On May 8, 2001, Evangelista required petitioners Cruz and Manese to submit an incident report on the Chickenjoy
rejects. On May 10, 2001, a corporate audit was conducted to spot check the waste products. According to the audit, 2,130
pieces of Chickenjoy rejects were declared wastage.
On May 15, 2001, Evangelista issued a memorandum with a charge sheet,6 requiring petitioners to explain in writing
within 48 hours from receipt why they should not be meted the appropriate penalty under the respondent company's Code of

11
Discipline for extremely serious misconduct, gross negligence, product tampering, fraud or falsification of company records
and insubordination in connection with their findings that 2,130 pieces of Chickenjoy rejects were kept inside the walk-in
freezer, which could cause product contamination and threat to food safety.
The petitioners and other store managers submitted their respective letters of explanation. Thereafter, respondents
Investigating Committee conducted an administrative hearing on the incident.
Subsequently, the Investigating Committee sent petitioners Cruz, Manese and Peano each received a Memorandum10
on its administrative findings and decision, notifying each of their termination from employment due to loss of trust and
confidence.
Thereafter, petitioners Manese, Cruz and Peano filed a Complaint12 against respondents for illegal dismissal.
On July 31, 2003, the Labor Arbiter (LA) rendered a Decision15 dismissing the complaints for illegal dismissal of
complainants Manese and Peano for want of merit. However, the complaint for illegal dismissal filed by Cruz is resolved in
her favor, against Jollibee. Jollibee was held liable for separation pay instead of reinstatement. The LA stated that at the time
the incident was discovered on May 3, 2001, Cruz was no longer working at Jollibee Festival Mall, Level 4, as she was already
transferred to a different Jollibee branch on April 2, 2001. Thus, the LA held that Cruz could not be held liable therefor; hence,
her dismissal was illegal.
Further, the LA held that petitioner Manese was not entitled to her money claims, particularly unpaid salary, sick
leave for the period from May 16-31, 2001, cooperative savings, maternity benefit, mid-year bonus and retirement pay. The LA
took note of respondents' argument alleging that such benefits due her were not given because of a car loan given by the
company which still has an outstanding balance. Even after computing the amount due her vis-a-vis the car loan balance, she
would still owe a balance of P14,262.76.
Petitioners appealed the Decision of the LA to the NLRC. Respondents filed an Opposition to Appeal18 on October 10,
2003. NLRC issued a Resolution19 dismissing the appeal and affirming the LAs Decision in toto.20 However, the NLRC held
that
the Labor Arbiter erred in ruling that petitioner Cruz was illegally dismissed as it found that she committed the offenses
enumerated in paragraphs 1.1 to 1.5 and paragraph 2 of the Memorandum21 sent to her. Nevertheless, since respondents
failed to interpose a timely appeal, the NLRC stated that it was constrained to affirm the findings and award of separation pay
granted to petitioner Cruz by the Labor Arbiter.
Petitioners' motion for reconsideration was denied by the NLRC.
Petitioners appealed the Resolutions of the NLRC to the Court of Appeals (CA) via a petition for certiorari under Rule
65 of the Rules of Court.
The CA rendered a Decision affirming the Resolutions of the NLRC with modification. The CA found that (1) petitioner
Cruz was legally dismissed in accordance with Article 282, par. (c) of the Labor Code; and (2) Jollibee is liable for the payment
of petitioner Manese's unpaid salary for the period of June 1-15, 2001, sick leave for the period of May 16-31, 2001, and
cooperative savings.
Petitioners' motion for reconsideration was denied by the CA. Hence, petitioners filed the present petition.
ISSUE:
(1) Whether the CA exceeded its jurisdiction in dismissing petitioner Cruz.
(2) Whether the CA erred in its appreciation of facts when it affirmed their dismissal on the ground of loss of trust and
confidence when the records show that they were dismissed based on the allegation of causing product contamination and
gross negligence.
RULING:
Failure to file a timely appeal by respondents caused the LAs ruling to become final and executory. In this case,
respondents did not appeal from the decision of the LA who ruled that the dismissal of petitioner Cruz was illegal.
Respondents only filed an Opposition to Appeal, which prayed for the reversal of the Labor Arbiters orders declaring as illegal
the dismissal of Cruz and directing payment of her separation pay. The NLRC stated that respondents' opposition could have
been treated as an appeal, but it was filed only in October, way beyond the ten-day reglementary period within which an
appeal may be filed. Although the NLRC found that Cruz was legally dismissed, it stated that it was constrained to affirm the
findings and award of separation pay granted to Cruz by the Labor Arbiter, since respondents failed to interpose a timely
appeal. Hence, the NLRC affirmed the decision of the Labor Arbiter in toto. In view of the foregoing, the Court holds that the
Court of Appeals exceeded its jurisdiction when it adjudged that petitioner Cruz was legally dismissed.
Mere existence of a basis for the loss of trust and confidence justifies the dismissal of a managerial employee. The mere
existence of a basis for the loss of trust and confidence justifies the dismissal of the managerial employee because when an
employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, such employee gives
up some of the rigid guaranties available to ordinary workers.29 Infractions, which if committed by others would be
overlooked or condoned or penalties mitigated, may be visited with more severe disciplinary action.30 Proof beyond
reasonable doubt is not required provided there is a valid reason for the loss of trust and confidence, such as when the
employer has a reasonable ground to believe that the managerial employee concerned is responsible for the purported
misconduct and the nature of his participation renders him unworthy of the trust and confidence demanded by his position.31
However, the right of the management to dismiss must be balanced against the managerial employees right to
security of tenure which is not one of the guaranties he gives up.32 This Court has consistently ruled that managerial

12
employees enjoy security of tenure and, although the standards for their dismissal are less stringent, the loss of trust and
confidence must be substantial and founded on clearly established facts sufficient to warrant the managerial employees
separation from the company.33
As regards the monetary claims of petitioner Manese, the CA found that petitioner Manese had already earned the
same, except for the maternity leave. Manese's unpaid balance on her car loan cannot be set off against the monetary benefits
due her. The Court has held in Nestl Philippines, Inc. v. NLRC38 that the employer's demand for payment of the employees'
amortization on their car loans, or, in the alternative, the return of the cars to the employer, is not a labor, but a civil, dispute. It
involves debtor-creditor relations, rather than employee-employer relations.39
MATLING INDUSTRIAL AND COMMERCIAL CORPORATION vs. RICARDO COROS
G.R. No. 157802
October 13, 2010
FACTS: After respondent Ricardo Coros dismissal by Matling as its Vice President for Finance and Administration, he filed on
August 10, 2000 a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate officers in
the NLRC, Sub-Regional Arbitration Branch XII, Iligan City. The petitioners moved to dismiss the complaint, raising the ground,
among others, that the complaint pertained to the jurisdiction of the Securities and Exchange Commission due to the
controversy being intra-corporate inasmuch as the respondent was a member of Matlings Board of Directors aside from being
its Vice-President for Finance and Administration prior to his termination. The respondent opposed the petitioners motion to
dismiss, insisting that his status as a member of Matlings Board of Directors was doubtful, considering that he had not been
formally elected as such; that he did not own a single share of stock in Matling, considering that he had been made to sign in
blank an undated indorsement of the certificate of stock he had been given in 1992; that Matling had taken back and retained
the certificate of stock in its custody; and that even assuming that he had been a Director of Matling, he had been removed as
the Vice President for Finance and Administration, not as a Director, a fact that the notice of his termination dated April 10,
2000 showed. On October 16, 2000, the Labor Arbiter granted the petitioners motion to dismiss, ruling that the respondent
was a corporate officer. On March 13, 2001, the NLRC set aside the dismissal, concluding that the respondents complaint for
illegal dismissal was properly cognizable by the LA, not by the SEC, because he was not a corporate officer by virtue of his
position in Matling, albeit high ranking and managerial, not being among the positions listed in Matlings Constitution and ByLaws. On motion for reconsideration, petitioners submitted a certified machine copies of Matlings Amended Articles of
Incorporation and By Laws to prove that the President of Matling was thereby granted "full power to create new offices and
appoint the officers thereto and the minutes of special meeting held on June 7, 1999 by Matlings Board of Directors to prove
that the respondent was, indeed, a Member of the Board of Directors. Nonetheless, the NLRC denied the petitioners motion for
reconsideration. The petitioners elevated the issue to the CA by petition for certiorari. The CA dismissed the petition for
certiorari and ruled that for a position to be considered as a corporate office, or, for that matter, for one to be considered
as a corporate officer, the position must, if not listed in the by-laws, have been created by the corporation's board of
directors, and the occupant thereof appointed or elected by the same board of directors or stockholders. Motion for
reconsideration was likewise denied. Hence this petition for review on certiorari.
ISSUE: Whether or not respondent was a corporate officer of Matling Industrial and Commercial Corporation.
RULING: Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order to be considered as a
corporate office. Thus, the creation of an office pursuant to or under a By-Law enabling provision is not enough to make a
position a corporate office. Guerrea v. Lezama, the first ruling on the matter, held that the only officers of a corporation were
those given that character either by the Corporation Code or by the By-Laws; the rest of the corporate officers could be
considered only as employees or subordinate officials.
It is relevant to state in this connection that the SEC, the primary agency administering the Corporation Code, adopted a
similar interpretation of Section 25 of the Corporation Code in its Opinion dated November 25, 1993, to wit:
Thus, pursuant to Section 25 of the Corporation Code, whoever are the corporate officers enumerated in the by-laws are the
exclusive Officers of the corporation and the Board has no power to create other Offices without amending first the corporate
By-laws. However, the Board may create appointive positions other than the positions of corporate Officers, but the persons
occupying such positions are not considered as corporate officers within the meaning of Section 25 of the Corporation
Code and are not empowered to exercise the functions of the corporate Officers, except those functions lawfully delegated to
them. Their functions and duties are to be determined by the Board of Directors/Trustees.
Moreover, the Board of Directors of Matling could not validly delegate the power to create a corporate office to the President,
in light of Section 25 of the Corporation Code requiring the Board of Directors itself to elect the corporate officers. Verily, the
power to elect the corporate officers was a discretionary power that the law exclusively vested in the Board of Directors, and
could not be delegated to subordinate officers or agents. The office of Vice President for Finance and Administration created
by Matlings President pursuant to By Law No. V was an ordinary, not a corporate, office.
To emphasize, the power to create new offices and the power to appoint the officers to occupy them vested by By-Law No. V
merely allowed Matlings President to create non-corporate offices to be occupied by ordinary employees of Matling. Such
powers were incidental to the Presidents duties as the executive head of Matling to assist him in the daily operations of the
business.
PERT/CPM MANPOWER EXPONENT CO., INC., petitioner, vs. ARMANDO A. VINUYA, et al, respondents.

13
G.R. No. 197528. September 5, 2012. BRION, J
FACTS:
On March 5, 2008, respondent Vinuya et al. filed a complaint for illegal dismissal against the petitioner
Pert/CPM and its President with labor arbiter alleging among others that the agency deployed them to work as aluminium
fabricator/installer for the agencys principal,
Modern Metal in Dubai, United Arab Emirates for a two-year employment whose contracts were approved by the POEA
providing for nine-hours working day, salary of 1,350 AED with overtime pay, food allowance, free and suitable housing
(four to a room), free transportation, free laundry and free medical and dental services. However, on April 2, 2007,
Modern Metal gave respondents, except Era, appointment letters different from that of originally signed, increasing their
employment terms and reducing their salaries and allowances and removing certain benefits. Further, the working
conditions were not as promised and they repeatedly complained with their agency about their predicament but to no
avail. Respondents resigned from their job citing personal/family problems for their resignation except for Era who
mentioned the real reason which is due to the company policy.
After several weeks, petitioner repatriated the respondent to the Philippines who shouldered their own airfare except for
Ordovez and Enjambre. The agency countered that the respondents were not illegally dismissed alleging that the
respondents voluntarily resigned from their employment
to seek a better paying job. The agency furthered alleged that the respondents even voluntarily signed affidavits of
quitclaim and release.
Labor Arbiter dismissed the complaint finding that the respondent voluntarily resigned from their job. Respondent
appealed to the NLRC which reversed the decision of the Labor Arbiter and found that the respondents were illegally
dismissed. NLRC also pointed out that the signing of a different employment contract in Dubai is illegal. Consequently
NLRC ordered the agency and the principal to pay, jointly and severally the respondents salary, placement fee, and
exemplary damages. The petitioner filed a motion for reconsideration which was denied by the NLRC but modified their
judgment adjusting the awards particularly the payment of their salaries in the light of the Courts ruling in Serrano
striking down the clause in Section 10, paragraph 5 of the RA
8042 which limits the entitlement of illegally dismissed OFW. The agency again moved for reconsideration reiterating
its earlier argument and questioned the applicability of the Serrano ruling because it is not yet final and effective but
was denied by the NLRC. Petitioner appealed with CA which upheld the decision of the NLRC finding the resignation
letter as dubious.
ISSUE:
Whether or not the Serrano ruling which declared the subject Section 10 of RA
8042 unconstitutional can be given retroactive application in the present case
Whether or not RA 10022, which was enacted on March 8, 2010 restoring the subject clause in
Section 10 of RA 8042 being amendatory in nature can be applied retroactively
RULING:
The SC held that the Serrano ruling can be given retroactive application as resolved in Yap vs.
Thenamaris Ships Management in the interest of equity and that the Serrano ruling is an exemption to the doctrine of
operative fact.
Moreover, the SC held that the amendment introduced by R.A. 10022 cannot be given retroactive effect not only because
there is no express declaration of retroactivity of the law, but because the retroactive application will result in an
impairment of right that had accrued to the respondents by virtue of the Serrano Ruling. The SC reiterated that all statutes
are to be construed as having
only a prospective application, unless the purpose and intention of the legislature to give them retrospective effect are
expressly declared or are necessarily implied from the language used.
HELD:
The petition is DENIED. The assailed decision and resolution were AFFIRMED.
Marsaman Manning Agency vs. NLRC
Marsaman Manning Agency vs. NLRC
G.R. No. 127195, August 25, 1999
R.A. 8042 (Migrant Workers Act)
Facts:
Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of petitioner

14
DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by DIAMANTIDES, for a contract period of ten
(10) months. Cajeras started work on 8 August 1995, but less than two (2) months later, he was repatriated to the Philippines
allegedly by "mutual consent."
Private respondent Cajeras filed a complaint for illegal dismissal against petitioners with the NLRC alleging that he was
dismissed illegally, denying that his repatriation was by mutual consent, and asking for his unpaid wages, overtime pay,
damages, and attorney's fees.
On 29 January 1996 Labor Arbiter resolved the dispute in favor of private respondent Cajeras ruling that the latter's discharge
from the MV Prigipos allegedly by "mutual consent" was not proved by convincing evidence.
Petitioners appealed to the NLRC. On 16 September 1996 the NLRC affirmed the appealed findings and conclusions of the
Labor Arbiter. Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996.
Hence, the petition contending that, among other things, the NLRC committed grave abuse of discretion in ordering a
monetary award beyond the maximum of three (3) months' salary for every year of service set by RA 8042.
Issue:
Whether or not the NLRC committed grave abuse of discretion
Ruling:
On the amount of salaries due private respondent, the rule has always been that an illegally dismissed worker whose
employment is for a fixed period is entitled to payment of his salaries corresponding to the unexpired portion of his
employment. On 15 July 1995, RA 8042 otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995" took
effect, Sec. 10 of which provides:
Sec. 10. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract,
the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum,
plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired
term whichever is less.
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract
worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months' salary for every
year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at
least one (1) year or more.
To follow petitioners' thinking that private respondent is entitled to three (3) months salary only simply because it is the
lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is
contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part
or word thereof be given effect since the law-making body is presumed to know the meaning of the words employed in the
statue and to have used them advisedly.
The questioned Decision and Resolution of public respondent National Labor Relations Commission are AFFIRMED.
People vs Capt. Gasacao (2005) G.R. 168449
Facts:
Appellant was the Crewing Manager of Great Eastern Shipping Agency Inc., a licensed local manning agency, while his nephew
and co-accused, Jose Gasacao, was the President. As the crewing manager, appellant's duties included receiving job
applications, interviewing the applicants and informing them of the agency's requirement of payment of performance or cash
bond prior to deployment.
On August 4, 2000, appellant and Jose Gasacao were charged with Large Scale Illegal Recruitment defined under Section 6,
paragraphs (a), (l) and (m) of Republic Act (RA) No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, and
penalized under Section 7 (b) of the same law, before the RTC of Quezon City.
Only the appellant was arrested while Jose Gasacao remained at large. When arraigned, appellant pleaded not guilty to the
offense charged. Thereafter, trial on the merits ensued. On March 5, 2001, the RTC of Quezon City, Branch 218, rendered its
Joint Decision convicting appellant of Large Scale Illegal Recruitment in Crim. Case No. Q-00-94240 and acquitting him of the
charge in Crim. Case No. Q-00-94241.

15
Conformably with our pronouncement in People v. Mateo, 6 which modified pertinent provisions of the Rules of Court insofar
as they provide for direct appeals from the RTC to the Supreme Court in cases where the penalty imposed is death, reclusion
perpetua or life imprisonment, as in this case, as well as this Court's Resolution dated September 19, 1995, we resolved on
February 2, 2005 to transfer the case to the Court of Appeals for appropriate action and disposition.
Issue: WON an error attended the trial court's findings, as affirmed by the Court of Appeals, that appellant was guilty beyond
reasonable doubt of the crime of large scale illegal recruitment.
Held:
ILLEGAL RECRUITMENT
Sec. 6. DEFINITIONS. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, procuring workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated
under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines:
Provided, that such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any persons,
whether a non-licensee, non-holder, licensee or holder of authority.
(a)
To charge or accept directly or indirectly any amount greater than the specified in the schedule of allowable fees
prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually
received by him as a loan or advance;
(l)
Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and
(m)
Failure to reimburse expenses incurred by the workers in connection with his documentation and processing for
purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be considered as offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons conspiring or
confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons
individually or as a group.
REPUBLIC ACT NO. 8042 (THE MIGRANT WORKERS AND OVERSEAS FILIPINO ACT OF 1995); LICENSE DIFFERENTIATED
FROM AUTHORITY - A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person
or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person
or association to engage in recruitment and placement activities as a private recruitment entity. However, it appears that even
licensees or holders of authority can be held liable for illegal recruitment should they commit any of the above-enumerated
acts.
Thus, it is inconsequential that appellant committed large scale illegal recruitment while Great Eastern Shipping Agency, Inc.
was holding a valid authority. We thus find that the court below committed no reversible error in not appreciating that the
manning agency was a holder of a valid authority when appellant recruited the private complainants.
There is no merit in appellant's contention that he could not be held liable for illegal recruitment since he was a mere
employee of the manning agency, pursuant to Section 6 of RA No. 8042 which provides:
The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or direction of their business shall be liable.
ILLEGAL RECRUITMENT IN LARGE SCALE, CREWING MANAGER OF A SHIPPING AGENCY PROMISED THE COMPLAINANTS
THAT THEY WILL BE DEPLOYED ABROAD AFTER THEY HAVE PAID THE CASH BOND Contrary to appellant's claim, he is
not a mere employee of the manning agency but the crewing manager. As such, he receives job applications, interviews
applicants and informs them of the agency's requirement of payment of performance or cash bond prior to the applicant's
deployment. As the crewing manager, he was at the forefront of the company's recruitment activities.
The testimonies of the private complainants clearly established that appellant is not a mere employee of Great Eastern
Shipping Agency Inc. As the crewing manager, it was appellant who made representations with the private complainants that
he can secure overseas employment for them upon payment of the cash bond.
It is well settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression
that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their
money in order to be employed. 10 Appellant's act of promising the private complainants that they will be deployed abroad
within three months after they have paid the cash bond clearly shows that he is engaged in illegal recruitment.
AN EMPLOYEE OF A COMPANY OR CORPORATION ENGAGED THEREIN MAY BE HELD LIABLE AS PRINCIPAL TOGETHER
WITH HIS EMPLOYER. The trial court's appreciation of the complainants' testimonies deserves the highest respect since it
was in a better position to assess their credibility.
Even assuming that appellant was a mere employee, such fact is not a shield against his conviction for large scale illegal
recruitment. In the case of People vs. Cabais, we have held that an employee of a company or corporation engaged in illegal
recruitment may be held liable as principal, together with the employer, if it is shown that he actively and consciously
participated in the recruitment process.
Clearly, the acts of appellant vis--vis the private complainants, either as the crewing manager of Great Eastern Shipping
Agency Inc. or as a mere employee of the same, constitute acts of large scale illegal recruitment which should not be

16
countenanced.
We find no reason to deviate from the findings of the trial court that appellant is guilty beyond reasonable doubt of large scale
illegal recruitment. It was established that he promised overseas employment to five applicants, herein private complainants.
He interviewed and required them to complete and submit documents purportedly needed for their employment. Although he
informed them that it is optional, he collected cash bonds and promised their deployment notwithstanding the proscription
against its collection under Section 60 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 13 which state that:
SEC. 60. Prohibition on Bonds and Deposits. In no case shall an employment agency require any bond or cash deposit from
the worker to guarantee performance under the contract or his/her repatriation.
Darvin v Court of Appeals
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 accused-appellant, 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.

17
General Milling Corporation vs. Torres
Posted by she lamsen
196 SCRA 215 [G.R No. 9366, April 22, 1991]
FACTS:
Earl Timothy Cone is a US citizen, who was hired by General Milling as a sports consultant and assistant coach. He possessed
an alien employment permit which was changed to pre-arranged employee by the Board of Special Inquiry of the Commission
on Immigration and Deportation. GMC requested that Cones employment permit be changed to a full-fledged coach, which
was contested by The Basketball Coaches Association of the Philippines. Alleging that GMC failed to show that there is no
competent person in the Philippines to do the coaching job. Secretary of Labor cancelled Cones employment permit.
ISSUE:
Whether or not the Secretary of Labor act with grave abuse of discretion in revoking Cones Alien Employment Permit?
HELD:
The Secretary of Labor did not act with grave abuse of discretion in revoking Cones Alien Employment Permit. GMCs claim
that hiring of a foreign coach is an employers prerogative has no legal basis. Under Section 40 of the Labor Code, an employer
seeking employment of an alien must first obtain an employment permit from the Department of labor.
GMCs right to choose whom to employ is limited by the statutory requirement of an employment permit. The Labor Code
empowers the Labor Secretary to determine as to the availability of the services of a person in the Philippines who is
competent, able and willing at the time of the application to perform the services for which an alien is desired. DOLE is the
agency vested with jurisdiction to determine the question of availability of local workers.
Bernardo et al v. NLRC & FEBTC
GR No. 122917, 12 July 1999
Facts:
The dismissed complainants, numbering 43, are deaf-mutes who were hired on various periods from 1988 to 1993 by
respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called
"Employment Contract for Handicapped Workers". Disclaiming that complainants were regular employees, respondent Far
East Bank and Trust Company maintained that complainants were hired temporarily under a special employment
arrangement which was a result of overtures made by some civic and political personalities to the respondent Bank; that
complainant[s] were hired due to "pakiusap"; that the tellers themselves already did the sorting and counting chore as a
regular feature and integral part of their duties; that through the "pakiusap" of Arturo Borjal, the tellers were relieved of this
task of counting and sorting bills in favor of deaf-mutes without creating new positions as there is no position either in the
respondent or in any other bank in the Philippines which deals with purely counting and sorting of bills in banking operations.
The LA &, on appeal, the NLRC ruled against petitioners, holding that they could not be deemed regular employees since they
were hired as an accommodation to the recommendation of civic oriented personalities whose employments were covered by
Employment Contracts w/ special provisions on duration of contract as specified under Art. 80. Hence, the terms of the
contract shall be the law between the parties.
Issue:
Whether petitioners have become regular employees
Held:
Only the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence,
their dismissal from employment was illegal. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled
Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular employees.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after
which the employer shall determine whether or not they should be allowed to finish the 6-month term of the contract.
Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless renewed in writing
by the employer, the contract shall automatically expire at the end of the term.
The stipulations in the employment contracts indubitably conform with Art. 80 LC w/c provides for the requisites in the
employment agreement between an employer who employs handicapped workers. Succeeding events and the enactment of
RA No. 7277 (the Magna Carta for Disabled Persons), 13 however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37
of them. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that

18
their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform
the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks
assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same
terms and conditions of employment as a qualified able-bodied person.
The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of
Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article
280 of the Labor Code.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the
exception of sixteen of them, petitioners performed these tasks for more than six months. Thus, the twenty-seven petitioners
should be deemed regular employees.
The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees'
fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the employees
thereby became regular employees. 16 No employer is allowed to determine indefinitely the fitness of its employees.
Moreover, it must be emphasized that a contract of employment is impressed with public interest. Provisions of applicable
statutes are deemed written into the contract, and the "parties are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply contracting with each other." Clearly, the agreement of the parties
regarding the period of employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which
mandate that petitioners must be treated as qualified able-bodied employees.
An employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for
hiring them.
PAPER INDUSTRIES V. LAGUESMA
G. R. No.101738, April 12, 2000
On August 9, 1989, PBSTSEU [PICOP-Bislig Supervisory and Technical Staff Employees Union] instituted a Petition for
Certification Election to determine the sole and exclusive bargaining agent of the supervisory and technical staff employees of
PICOP [Paper Industries Corporation of the Philippines]. The initial hearing of the petition was reset as per request of PICOP
(15 days) in order to file its comment, but it failed to do so. Meanwhile, FFW and ALU intervened and as a result, the holding of
the certification election was granted by the med-arbiter. On appeal, the Secretary of Labor upheld the med-arbiter with
modifications, allowing the supervising staff in Cebu, Davao and Iligan to participate. During the pre-election conference,
PICOP questioned the inclusion of some supervisors in the list of voters and averred that they were classified as managerial
employees.
MED ARBITER: Held the supervisors and section heads of the petitioner are managerial employees and therefore excluded
from the list of voters for purposes of certification election; On appeal, the SECRETARY of Labor: declared them as supervisory
employees eligible to vote in the certification election.
Whether or not the employees are managerial employees. No. Under ARTICLE 212 (m) Managerial Employees, is one who is
vested with the powers or prerogatives to lay down and execute management policies and/or to Hire, Transfer, Suspend,
Layoff, Recall, Discharge, Assign or Discipline employees. The job description of the employees show that they are not actually
managerial but only supervisory employees since they do not lay down company policies. The authority of the subject
employees is not supreme but merely advisory in character. Thus, the mere fact that an employee is designated "manager"
does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee, for it is
the job description that determines the nature of employment. (United Pepsi-Cola Supevisory Union vs Laguesma)
G.R. No. 178184
January 29, 2014
GRAND ASIAN SHIPPING LINES, INC., EDUARDO P. FRANCISCO and WILLIAM HOW, Petitioners,
vs.
WILFREDO GALVEZ, JOEL SALES, CRISTITO GRUTA, DANILO ARGUELLES, RENATO BATAYOLA, PATRICIO
FRESMILLO,* JOVY NOBLE, EMILIO DOMINICO, BENNY NILMAO, and JOSE AUSTRAL,Respondents.
Facts:
Petitioner Grand Asian Shipping Lines, Inc. (GASLI) is a domestic corporation engaged in transporting liquified petroleum gas
(LPG) from Petron Corporations refinery in Limay, Bataan to Petrons Plant in Ugong, Pasig and Petrons Depot in Rosario,
Cavite. Petitioners William How and Eduardo Francisco are its President and General Manager, respectively. Respondents, on
the other hand, are crewmembers of one of GASLIs vessels, M/T Dorothy Uno, with the following designations: Wilfredo

19
Galvez (Galvez) as Captain; Joel Sales (Sales) as Chief Mate; Cristito Gruta (Gruta) as Chief Engineer; Danilo Arguelles
(Arguelles) as Radio Operator; Renato Batayola (Batayola), Patricio Fresmillo (Fresmillo) and Jovy Noble (Noble) as Able
Seamen; Emilio Dominico (Dominico) and Benny Nilmao (Nilmao) as Oilers; and Jose Austral (Austral) as 2nd Engineer.
Sometime in January 2000, one of the vessels Oilers, Richard Abis (Abis), reported to GASLIs Office and Crewing Manager,
Elsa Montegrico (Montegrico), an alleged illegal activity being committed by respondents aboard the vessel. Abis revealed that
after about four to five voyages a week, a substantial volume of fuel oil is unconsumed and stored in the vessels fuel tanks.
However, Gruta would misdeclare it as consumed fuel in the Engineers Voyage Reports. Then, the saved fuel oil is siphoned
and sold to other vessels out at sea usually at nighttime. Respondents would then divide among themselves the proceeds of the
sale.
An investigation on the alleged pilferage was conducted. After audit and examination the auditor issued a Certification of
Overstatement of Fuel Oil Consumption9 for M/T Dorothy Uno stating that for the period June 30, 1999 to February 15, 2000
fuel oil consumption was overstated by 6,954.3 liters amounting to P74,737.86.
On February 11, 2000, a formal complaint11 for qualified theft was filed with the Criminal Investigation and Detection Group
(CIDG) at Camp Crame against respondents.
GASLI placed respondents under preventive suspension. After conducting administrative hearings, petitioners decided to
terminate respondents from employment. Respondents (except Sales) were thus served with notices 22 informing them of their
termination for serious misconduct, willful breach of trust, and commission of a crime or offense against their employer. It
appears that several other employees and crewmembers of GASLIs two other vessels were likewise suspended and
terminated from employment.
A case for illegal dismissal was filed against GASLI. The Labor Arbiter rendered a Decision26 finding the dismissal of all 21
complainants illegal. The Labor Arbiter ordered petitioners to reinstate complainants with full backwages and to pay their
money claims for unpaid salary, overtime pay, premium pay for holidays and rest days, holiday and service incentive leave
pay.
NLRC found the appeal meritorious and ruled that petitioners presented sufficient evidence to show just causes for
terminating complainants employment and compliance with due process. Accordingly, complainants dismissal was valid,
with the exception of Sales. CA however reinstated the ruling of the LA.
Issue: Were the respondents validly dismissed?
Are repondents entitled to 13th month pay, unpaid salaries and salary differentials?
Held:1) Galvez and Gruta were validly dismissed on the ground of loss of trust and confidence; there were no valid grounds for the
dismissal of Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and
Austral.
The respondents were dismissed on the grounds of (i) serious misconduct, particularly in engaging in pilferage while
navigating at sea, (ii) willful breach of the trust reposed by the company, and (iii) commission of a crime or offense against
their employer. After examination of the evidence presented, however, we find that petitioners failed to substantiate
adequately the charges of pilferage against respondents. Unsubstantiated suspicions, accusations, and conclusions of
employers do not provide for legal justification for dismissing employees.
As for the second ground for respondents termination, which is loss of trust and confidence, distinction should be made
between managerial and rank and file employees. "[W]ith respect to rank-and-file personnel, loss of trust and confidence, as
ground for valid dismissal, requires proof of involvement in the alleged events x x x [while for] managerial employees, the
mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his
dismissal."55
In the case before us, Galvez, as the ship captain, is considered a managerial employee since his duties involve the governance,
care and management of the vessel.56 Gruta, as chief engineer, is also a managerial employee for he is tasked to take complete
charge of the technical operations of the vessel.57 As captain and as chief engineer, Galvez and Gruta perform functions vested
with authority to execute management policies and thereby hold positions of responsibility over the activities in the vessel.
Indeed, their position requires the full trust and confidence of their employer for they are entrusted with the custody, handling
and care of company property and exercise authority over it.
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, proof of involvement in the loss of the vessels fuel
as well as their participation in the alleged theft is required for they are ordinary rank and file employees. And as discussed
above, no substantial evidence exists in the records that would establish their participation in the offense charged. This
renders their dismissal illegal, thus, entitling them to reinstatement plus full backwages, inclusive of allowances and other
benefits, computed from the time of their dismissal up to the time of actual reinstatement.
2) Galvez and Gruta, as managerial employees, are not entitled to their claims for holiday pay, service incentive leave pay and
premium pay for holiday and restday. Article 82 of the Labor Code specifically excludes managerial employees from the
coverage of the law regarding conditions of employment which include hours of work, weekly rest periods, holidays, service
incentive leaves and service charges.62

20
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, we cannot sustain the argument that they are
classified as field personnel under Article 82 of the Labor Code who are likewise excluded. respondents, during the entire
course of their voyage, remain on board the vessel. They are not field personnel inasmuch as they were constantly supervised
and under the effective control of the petitioners through the vessels ship captain.
Nevertheless, we cannot grant them their claims for holiday pay, premium pay for holiday and restday, overtime pay and
service incentive leave pay. Respondents do not dispute petitioners assertion that in computing respondents salaries,
petitioners use 365 days as divisor.
On the other hand, for failure to effectively refute the awards for 13th month pay for the period that respondents were illegally
dismissed, unpaid salaries and salary differentials,68 we affirm the grant thereof as computed by the Labor Arbiter.
Autobus Transport System vs Bautista (G.R. No. 156364. May 16, 2005)
Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May 1995, as driverconductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio.
Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving
accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back
to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas,
Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty
percent (30%) of the cost of repair of the damaged buses and that despite respondent's pleas for reconsideration, the same
was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000,
respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service
incentive leave pay against Autobus.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter decided that
the complaint be dismissed where the respondent must pay to the complainant.
Issue:
Whether or not respondent is entitled to service incentive leave.
Ruling:
The respondent is entitled to service incentive leave.
The disposition of the 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: 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.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that 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 examination 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

21
interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field
cannot be determined with reasonable certainty."
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. 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.
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. This definition is further elaborated in the Bureau of Working
Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association 10 which states that:
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.
At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with the fact that the employee's performance is unsupervised by the
employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of
business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in
order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field
can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised by the employer. Respondent is not a field personnel but a
regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly,
respondent is entitled to the grant of service incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few
exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "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."
Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or
broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless
the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less
than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if
not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may
use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general
recommends, is to unduly restrict such right.
Chavez v. NLRC
448 SCRA 478
Facts

Issue
1.
2.
Held
1.

Petitioner Pedro Chavez was hired as truck driver of Private Respondent Supreme Packaging, Inc.
Chavez requested to avail himself of the benefits that a regular employees were receiving but his request was denied
Chavez filed before NLRC a complaint for regularization. Later on he was dismissed by SPI
He later on filed an amended complaint for illegal dismissal
W/N there existed an employer-employee relationship between SPI and Chavez?
W/N Chavez is an independent contractor?
Yes, there existed an employer-employee relationship between SPI and Chavez

22

Applying four-fold test, all elements are present

1. selection and engagement of the employee
- it was SPI who engaged the services of Chavez without intervention of third party
2. payment of wages
- that petitioner was paid on per trip basis is not significant, this is merely a method of computing compensation and
not a basis for determining the existence or absence of er-ee relationship
3. power of dismissal
- power to dismiss was inherent in the fact that they engaged the services of Chavez as driver
4. power to control employee's conduct
- an employee is subject to employer's power to control the means and method by which the work is to be performed
while an independent contractor is free from control and supervision of employer
* Manifestation of Power of Control of SPI to Chavez
1. truck was owned by SPI
2. express instruction in the method of delivery
3. instruction on parking of delivery truck
4. instruction on when and where Chavez would perform his task by issuing to him gate passes and routing slips
2. Chavez is not and Independent Contractor
* Proof that Chavez is not an Independent Contractor
1. Chavez did not own the truck
2. SPI did not have substantial capitalization or investment
3. Delivery was exclusively done for SPI for 10years
* Er-Ee Relationship cannot be negated by expressly repudiating it in contract and providing therein that the employee is an
independent contractor. Indeed the employment status of the person is defined and prescribed by law and not by what parties
say it should be.
LEGEND HOTEL (MANILA), OLWNED BY TITANIUM CORPORATION AND/OR, NELSON NAPUD, IN HIS CAPACITY AS THE
PRESIDENT OF PETITIONER CORPORATION, PETITIONER,
VS.
HERNANI S. REALUYO, ALSO KNOWN AS JOEY ROA, RESPONDENT.
G.R. No. 153511, July 18, 2012
FACTS:
- This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel.
- August 9, 1999: Realuyo, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice,
constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay,
service incentive leave pay, and 13th month pay. He prayed for attorneys fees, moral damages of P100,000.00 and
exemplary damages for P100,000.00
- Roa averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from September 1992 with an
initial rate of P400.00/night; and that it had increased to P750.00/night. During his employment, he could not choose
the time of performance, which had been fixed from 7:00PM to 10:00pm for three to six times a week.
- July 9, 1999: the management had notified him that as a cost-cutting measure, his services as a pianist would no
longer be required effective July 30, 1999.
- In its defense, petitioner denied the existence of an employer-employee relationship with Roa, insisting that he had
been only a talent engaged to provide live music at Legend Hotels Madison Coffee Shop for three hours/day on two
days each week; and stated that the economic crisis that had hit the country constrained management to dispense
with his services.
- December 29,1999: the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that the parties had
no employer-employee relationship, because Roa was receiving talent fee and not salary, which was reinforced by
the fact that Roa received his talent fee nightly, unlike the regular employees of the hotel who are paid monthly.
- NLRC affirmed the LAs decision on May 31, 2001.
- CA set aside the decision of the NLRC, saying CA failed to take into consideration that in Roas line of work, he was
supervised and controlled by the hotels restaurant manager who at certain times would require him to perform only
tagalong songs or music, or wear barong tagalong to conform with the Filipinana motif of the place and the time of his
performance is fixed. As to the status of Roa, he is considered a regular employee of the hotel since his job was in
furtherance of the restaurant business of the hotel. Granting that Roa was initially a contractual employee, by the
sheer length of service he had rendered for the company, he had been converted into a regular employee.
- CA held that the dismissal was due to retrenchment in order to avoid or minimize business losses, which is recognized
by law under Art. 283 of the Labor Code.
ISSUES:

23
-

WON there was employer-employee relationship between the two, and if so,
WON Roa was validly terminated

RULING:
- YES. Employer-employee relationship existed between the parties.
o Roa was undeniably employed as a pianist of the restaurant. The hotel wielded the power of selection at the
time it entered into the service contract dated Sept. 1, 1992 with Roa. The hotel could not seek refuge behind
the service contract entered into with Roa. It is the law that defines and governs an employment relationship,
whose terms are not restricted to those fixed in the written contract, for other factors, like the nature of the
work the employee has been called upon to perform, are also considered.
o The law affords protection to an employee, and does not countenance any attempt to subvert its spirit and
intent. Any stipulation in writing can be ignored when the employer utilizes the stipulation to deprive the
employee of his security of tenure. The inequality that characterizes employer-employee relationship
generally tips the scales in favor of the employer, such that the employee is often scarcely provided
real and better options.
o The argument that Roa was receiving talent fee and not salary is baseless. There is no denying that the
remuneration denominated as talent fees was fixed on the basis of his talent, skill, and the quality of music he
played during the hours of his performance. Roas remuneration, albeit denominated as talent fees, was still
considered as included in the term wage in the sense and context of the Labor Code, regardless of how
petitioner chose to designate the remuneration, as per Article 97(f) of the Labor Code.
o The power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This is the so-called control test, and is
premised on whether the person for whom the services are performed reserves the right to control both the
end achieved and the manner and means used to achieve that end.
o Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject to its
Code of Discipline, and that the power to terminate the working relationship was mutually vested in the
parties, in that either party might terminate at will, with or without cause. This claim is contrary to the
records. Indeed, the memorandum informing respondent of the discountinuance of his service because of the
financial condition of petitioner showed the latter had the power to dismiss him from employment.
- NO. Roa was not validly terminated.
o The conclusion that Roas termination was by reason of retrenchment due to an authorized cause under the
labor Code is inevitable.
o Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code. It
is a management prerogative resorted to by employers to avoid ro to minimize business losses. On this
matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. xxx. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
o Justifications for retrenchment:
a. The expected losses should be substantial and not merely de minimis in extent;
b. The substantial losses apprehended must be reasonably imminent;
c. The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
d. The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be
proved by sufficient and convincing evidence.
o In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon
the employer. Here, petitioner did not submit evidence of the losses to its business operations and the
economic havoc it would thereby imminently sustain. It only claimed that Roas termination was due to its
present business/financial condition. This bare statement fell short of the norm to show a valid
retrenchment. Hence, there was no valid cause for the retrenchment of respondent. Since the lapse of
time since the retrenchment might have rendered Roas reinstatement to his former job no longer feasible,
Legend Hotel should pay him separation pay at the rate of one month pay for every year of service computed
from September 1992 until the finality of this decision, and full backwages from the time his compensation
was withheld until the finality of this decision.

24
Petition denied.
Avelino Alilin et al vs. Petron Corporation
G.R. 177592
June 9, 2014
Facts:
In 1968, Gindang Contractor started recruiting laborers for fielding to Petron's Mandaue Bulk Plant. When the proprietor
Romualdo Gindang died, his son Romeo took over through Romeo Gindang Services (RDG). It continued to provide manpower
services for the plant. On June 1, 2000, a Contract for Services was entered into between Petron and RDG. This was extended
until September 2002. After the expiration however, Petron did not renew the contract. Due to the unrenewed contract,
petitioners were not allowed to work for Petron anymore. They then field a case for illegal dismissal against Petron. They
claimed to be regular employees. Their claim the corroborated by RDG, claiming that it is a labor only contractor and that it is
not liable for the claim of the workers. Petron denied that there is an EER. Petron claimed that RDG is an independent
contractor and the real employer of the petitioners. The Labor Arbiter ruled in favor of the petitioners. It found that the jobs of
the petitioners were directly related to the Petron's business operations; they worked under the direct supervision of Petron;
and that the tools and equipment for their job was provided by Petron. NLRC affirmed the findings of the LA. CA however
reversed the decision, contending that there is no EER. CA found RDG to be an independent contractor, responsible for the
claims of the petitioners.
Issue:
Is RDG a legitimate job contractor?
Held: No. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out with
a contractor or subcontractor the performance of a specific job, work, or service within a definite or predetermined period,
regardless of whether such job, work or, service is to be performed or completed within or outside the premises of the
principal. Under this arrangement, the following conditions must be met: (a) the contractor carries on a distinct and
independent business and undertakes the contract work on his account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or principal in all matters connected with the
performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the
agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor
and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social
welfare benefits.
Petron forwarded evidence that RDG has substantial capital by audited funancial documents from 1999 to 2001. However,
RDG has been providing manpower for Petron for as far as 1968. In other words, Petron was only able to prove that RDG has
substantial capital for the contract entered into in 2000 but failed to prove the same for the other contracting years. Petron
failed to discharge it duty to prove financial capability of RDG.
Additionally, Petron exercised control over the petitioners' work. Petron could order petitioners to do work outside their
regular "maintenance" job. Also, petitioners were required to report to work everyday at the bulk plant, observe the work
schedule, and wear uniforms and safety helmets as prescribed by the rules of the plant. All these imply control.
Finally, petitioners are regular employees. The Court finds, that while the jobs performed by petitioners may be menial and
mechanical, they are nevertheless necessary and related to Petrons business operations. the Court notes the undisputed fact
that for many years, it was the same able-bodied individuals (petitioners) who performed the tasks for Petron. The
engagement of petitioners for the same works for a long period of time is a strong indication that such works were indeed
necessary to Petrons business. In view of these, and considering further that petitioners length of service entitles them to
become regular employees under the Labor Code.
San Juan de Dios Hospital Employees Association-AFW vs. NLRC
[282 SCRA 316 (1997)]
Facts:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association sent a
four (4)-page letter with attached support signatures requesting and pleading for the expeditious implementation and
payment by respondent Juan De Dios Hospital of the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days
off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labors Policy Instructions No. 54 dated
April 12, 1988.
Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their claims for statutory
benefits under the above-cited law and policy issuance. On February 26, 1992, the Labor Arbiter dismissed the complaint.
Petitioners appealed before public respondent National Labor Relations Commission which affirmed the Labor Arbiters
decision.
Issue:
Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is valid or not.
SC Ruling:

25
The policy instruction is not valid. This issuance clarifies the enforcement policy of this Department on the working hours and
compensation of personnel employed by hospital/clinics with a bed capacity of 100 or more and those located in cities and
municipalities with a population of one million or more.
Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, and has
long been repealed with the passage of the Labor Code on May 1, 1974. Article 302 of which explicitly provide: All labor laws
not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders,
decrees, rules and regulations inconsistent herewith are likewise repealed. Accordingly, only Article 83 of the Labor Code
which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support
Policy Instructions No. 54 on which the latters validity may be gauged. Article 83 of the Labor Code states: Normal Hours of
Work. -- The normal hours of work of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics
with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days
or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For purposes of this Article, health personnel shall include: resident
physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic personnel.
A cursory reading of Article 83 of the Labor Code betrays petitioners position that hospital employees are entitled to a full
weekly salary with paid two (2) days off if they have completed the 40-hour/5-day workweek. What Article 83 merely
provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the
exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be
entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is
nothing in the law that supports then Secretary of Labors assertion that personnel in subject hospitals and clinics are entitled
to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek.
Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the
clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court will not
hesitate to strike down an administrative interpretation that deviates from the provision of the statute.
Traders Royal Bank Employees Union vs NLRC (1997) G.R. 120592
Facts:
Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz
and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay
the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services enumerated
in their contract. During the existence of that agreement, petitioner union referred to private respondent the claims of its
members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). These employees
obtained favorable decision from their complaint which went through the SC.
The Supreme Court, in its decision promulgated on August 30, 1990, modified the decision of the NLRC by deleting the award
of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. The bank voluntarily
complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner
never contested the amount thus found by TRB. The latter duly paid its concerned employees their respective entitlement in
said sum through their payroll. After private respondent received the above decision of the Supreme Court on September 18,
1990, he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's
lien over the award of holiday pay differential through a letter dated October 8, 1990.
Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his
attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at
P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay and
remit said amount to him. The LA and the NLRC affirmed Atty. Cruz motion.
Petitioner union filed a comment and opposition to said motion on July 15, 1991. Petitioner maintains that the NLRC
committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount
of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the
retainer agreement; and that the challenged resolution of the NLRC is null and void, for the reasons hereunder stated.
Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the
award for attorney' s fees should have been incorporated in the main case and not after the Supreme Court had already
reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither
taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC. Thus, petitioner
posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of
a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court
declaring that a decision which has become final and executory can no longer be altered or modified even by the court which
rendered the same.

26
Issue: Whether or not Atty. Cruz is entitled to 10 % of the judgment award as his attorneys fees even if it was not taken up in
the main decision of the SC.
Held: Yes, not in the concept contemplatedin Article 111 of the Labor Code. The Labor Arbiter erroneously set the amount of
attorney's fees on the basis of Art. 111 of the Labor Code; a hearing should have been conducted for the proper determination
of attorney's fees.
There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary
concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered
to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client.
In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party
in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in
Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain
to the lawyer as additional compensation or as part thereof.
It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy
stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its
judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the former may no longer entertain claims for
attorney's fees. It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted
on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after
the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before
the NLRC for a percentage thereof as attorney's fees.
It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court
thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only
on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of
attorney's fees, he did not in any way modify the judgment of the Supreme Court.
A CLAIM FOR ATTORNEY'S FEES MAY BE ASSERTED EITHER IN THE VERY ACTION IN WHICH THE SERVICES OF A LAWYER
HAD BEEN RENDERED OR IN A SEPARATE ACTION - It is well settled that a claim for attorney's fees may be asserted either in
the very action in which the services of a lawyer had been rendered or in a separate action. Attorney's fees cannot be
determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court.
The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. While a claim
for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the
amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may
arise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for
attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the
client. It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional
fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment
for holiday pay differential, instead of filing it ahead of the award's complete resolution. To declare that a lawyer may file a
claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his
aforestated options and render ineffective the foregoing pronouncements of this Court.
The provisions of the contract entered into between petitioner and respondents are clear and need no further interpretation;
all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to
private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of
the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's
commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer
agreement.
The difference between a compensation for a commitment to render legal services and a remuneration for legal services
actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer.
These are a general retainer, or a retaining fee, and a special retainer.
RETAINER FEES, GENERAL RETAINER AND A SPECIAL RETAINER A general retainer, or retaining fee, is the fee paid to a
lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business
of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining
client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their
arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that
the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a
compensation for lost opportunities. A special retainer is a fee for a specific case handled or special service rendered by the
lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a
separate and independent contract for attorney's fees, each fee is considered a special retainer.
THE P3,000.00 MONTHLY FEE PROVIDED IN THE RETAINER AGREEMENT BETWEEN THE UNION AND THE LAW FIRM
REFERS TO A GENERAL RETAINER OR A RETAINING FEE. The P3,000.00 which petitioner pays monthly to private
respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the
former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's
commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer

27
agreement. Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm
refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated
therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution
or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there. We
have already shown that the P3,000.00 is independent and different from the compensation which private respondent should
receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to
extend services, they were not able to come into agreement as to the law firm's actual performance of services in favor of the
union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services.
PRIVATE RESPONDENT'S ENTITLEMENT TO AN ADDITIONAL REMUNERATION FOR SPECIAL SERVICES RENDERED IN THE
INTEREST OF PETITIONER IS BASED ON QUASI-CONTRACT. The fact that petitioner and private respondent failed to reach
a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil
liability for the corresponding remuneration therefor in favor of the latter. Obligations do not emanate only from contracts.
One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim
that nemo cum alterius detrimento locupletari protest. As embodied in our law, certain lawful, voluntary and unilateral acts
give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense
of another. A quasi-contract between the parties in the case at bar arose from private respondent's lawful, voluntary and
unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it
did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of
the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as
demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount.
THE LABOR ARBITER ERRONEOUSLY SET THE AMOUNT OF ATTORNEY'S FEES ON THE BASIS OF ART. 111 OF THE LABOR
CODE; A HEARING SHOULD HAVE BEEN CONDUCTED FOR THE PROPER DETERMINATION OF ATTORNEY'S FEES. - Here,
then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above
guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the
Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of attorney's fees at P17,574.43. As
already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages
sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount
payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of
attorney's fees, it does not direct instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore,
behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between
lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and
quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of
Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do
not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's
fees.
As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages
sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount
payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of
attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit.
It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict
between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract
and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code
of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do
not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's
fees.
It is axiomatic that the reasonableness of attorney's fees is a question of fact. Ordinarily, therefore, we would have remanded
this case for further reception of evidence as to the extent and value of the services rendered by private respondent to
petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and
equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of private respondent. For that purpose,
we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the
records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold
that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to
petitioner before the labor arbiter and the NLRC.
Philippine Airlines, Inc., vs. NLRC
[302 SCRA 582 (1999)]
Facts:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at
Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at around 7:00 in the evening,
private respondent left the clinic to have his dinner at his residence, which was about five-minute drive away. A few minutes
later, the clinic received an emergency call from the PAL Cargo Services.

28
One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private
respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio
immediately rushed him to the hospital.
When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr.
Acosta died the following day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the
Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon required private respondent to explain why no
disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his
residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr.
Eusebio panicked and brought the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged private respondent with abandonment of
post while on duty. He was given ten days to submit a written answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he abandoned
his post on February 17, 1994. He said that he only left the clinic to have his dinner at home.
In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency. After evaluating the charge as
well as the answer of private respondent, petitioner company decided to suspend private respondent for three months
effective December 16, 1994.
Issue:
Whether or not being a full-time employee is obliged to stay in the company premises for not less than eight (8) hours. Hence,
he may not leave the company premises during such time, even to take his meals.
SC Ruling:
The Court does not agree with the petitioner. Articles 83 and 85 of the Labor Code read: Normal hours of workThe normal
hours of work of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics
with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days
or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For purposes of this Article, health personnel shall include: resident physicians,
nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic personnel.
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every
employer to give his employees not less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not less than one (1) hour timeoff for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by
the employer provided that such shorter meal period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must
take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they
return to their posts on time. Private respondents act of going home to take his dinner does not constitute abandonment.
G.R. No. 122240. November 18, 1999 | Legahi v. NLRC | KAPUNAN, J.:
Facts: In a complaint filed with the Philippine Overseas Employment Administration (POEA), Cristonico B. Legahi alleged that
he was hired as Chief Cook aboard M/V Federal Nord by the Northsouth Ship Management (PTE), Ltd., Singapore and
represented by its local agent United Philippine Lines, Inc. (UPLI).
The contract of employment stipulated that his term of employment was for ten months beginning October 9, 1992 with a
basic monthly salary of US$450.00 with 44 hours weekly as minimum number of hours worked with a fixed overtime pay (OT)
of $185.00 and three (3) days leave with pay every month.
Sometime in November, 1992 petitioner was asked by the Shipmaster to prepare a victualling cost statement for the month of
October, 1992. After learning that such preparation involves mathematical skills, as it would require estimation of food cost,
value of stocks, etc. he intimated that he did not know how to do such work as it was not part of the duties of a chief cook. He
was told that it was not a difficult job and that he only needed to copy the previous forms. After much reluctance, petitioner
nonetheless prepared the statement in deference to the Shipmaster.
In December, petitioner was requested again to prepare the victualling cost statement for the month of November. He obeyed
since he was afraid he would earn the ire of his superiors if he refused.

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Sometime in January, 1993, the Shipmaster asked petitioner to do the victualling cost statement for December which he
complied. On January 6, 1993, the Shipmaster requested the petitioner to prepare a corrected victualling statement for the
same month of December. Petitioner asked the Shipmaster if he could defer the correction as he was busy doing his chores.
The response certainly did not sit well with the Shipmaster so he was called for a meeting which petitioner did not attend.
On January 14, 1993, a committee was formed headed by the Shipmaster himself with the Chief Officer, Chief Engineer and
Bosun as members.
In this meeting, the Shipmaster read to him the offenses he committed on board. He was asked to answer the charges but
petitioner opted to remain silent. Thereafter, petitioner was informed that he was dismissed.
The next day, petitioner was repatriated to the Philippine through the assistance of the Philippine Consulate.
Upon arrival or on February 16, 1993, petitioner filed with the POEA a complaint for illegal dismissal against private
respondents. He sought the payment of his salary corresponding to the unexpired portion of his contract, unpaid overtime pay,
leave pay, salary differential and damages.
In answer to the complaint, private respondent stated that prior to petitioners deployment, he was asked if he knew how to
prepare the victualling cost statement which he answered yes. On January 6, 1993, petitioner was asked to prepare the
statement. He refused and even arrogantly replied that the Shipmaster should let some other officer do the job since he only
came to the ship to cook. On January 13, 1993, petitioner left the vessel without permission and did not perform his job that
day. On January 14, 1993, a committee was formed to hear the case of petitioner. Petitioner remained silent so the committee
decided to send him home. Contrary to petitioners allegation, it was not the Philippine Consulate, but the shipowners agent,
Navios Ship Agencies, which arranged his repatriation. The respondent noticed petitioner to be very homesick and surmised
that he deliberately committed the offenses just so he could be sent home. Upon his return, petitioner did not even report to
the local representative UPLI implying that he had no cause of action against them. Petitioner was terminated for just cause
and must, therefore, reimburse private respondent for the cost of repatriation.
On April 6, 1994, the POEA promulgated a decision finding that there was just cause for petitioners dismissal.
On appeal to the National Labor Relations Commission (NLRC), the Commission affirmed in toto the POEA decision.
Issue: The validity of petitioners dismissal from his employment
Held: To constitute a valid dismissal from employment, two (2) requisites must concur: (a) the dismissal must be for any of
the causes provided in Article 282 of the Labor Code, and (b) the employee must be accorded due process, the elements of
which are notice and the opportunity to be heard and to defend himself.
Procedural due process requires that the employee must be apprised of the charges against him. He must be given reasonable
time to answer the charges, allowed ample opportunity to be heard and defend himself, and assisted by a representative if the
employee so desires. Two written notices are required before termination of employment can be legally effected. They are: (1)
notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and (2) the
subsequent notice which informs the employee of the employers decision to dismiss him; not to mention the opportunity to
answer and rebut the charges against him, in between such notices.
In the case at bar, the evidence on record belies private respondents claim that petitioner was afforded due process. It is
rather apparent that as early as January 6, 1993, the employer had already decided to dismiss petitioner and sent home for his
alleged refusal to obey the orders of his superiors. On January 14, 1993, the committee read to petitioner his alleged offenses
which were his refusal to take orders from his superior on January 6 and his leaving the vessel without permission on January
13. When petitioner remained silent, the committee informed him that he was dismissed. He was sent home that same day.
Petitioner was not given reasonable time to answer the charges hurled against him or to defend himself. The notice apprising
him of the charges and the notice of dismissal were done in one morning all in the January 14 committee hearing. The
submission that the entry in the logbook made on January 6 which stated that for petitioners refusal to take orders from the
master of the ship he will be sent home in first possible port was sufficient compliance of the first notice requirement is not
well-taken. This is not the kind of notice that satisfies due process contemplated by law.
On the substantive issue, we find no just cause for petitioners dismissal. According to the POEA, petitioner was found guilty
for insubordination for his refusal to obey the order of the master to prepare the victual statement on January 6,
1993,[6 which was presumably for the month of January.
The NLRC, which simply adopted in toto the findings of the POEA, concluded that complainant refused albeit in a bad manner
the request of the Shipmaster to prepare a correct victualling cost statement for the month of December. Based on the POEA
findings, petitioner was dismissed because of his refusal to prepare the victualling statement for the month of January, 1993.
The facts as found by the POEA are all muddled up.
On the other hand, the NLRCs conclusion that petitioner refused to correct the victualling statement for the month of
December as ordered to, was also not sufficient basis for his dismissal. There is no doubt that petitioner had complied with his
superiors orders to prepare the statement for December. It was only the correction of the December statement that he
requested to defer which the Shipmaster took as a downright refusal to make and considered such act as a serious and gross
insubordination.
For willful disobedience to be considered as just cause for dismissal, the employees conduct must be willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude and the order violated must have been reasonable, lawful,
made known to the employee and must pertain to the duties which he has been engaged to discharge.

30
In the instant case, it was actually not petitioners duty to prepare the victualling statement. The allegation that this was part of
his duty as chief cook and the fact that he was aware of such duty when he was interviewed for the post is only self-serving
and without basis. The employment contract does not mention anything that this was part of his duty as chief cook. Even
assuming that petitioner refused to obey the order of his superior to prepare a corrected victualling cost statement for
December, although he maintained that he just asked for time to do it, as he was then busy performing his usual duty, which
we believe to be the case, his refusal cannot be considered as one being characterized by a wrongful and perverse attitude.
From the beginning, petitioner already intimated that he did not know how to accomplish the victual cost statement since it
entailed some mathematical skills which he admittedly did not have.
Petitioners dismissal without a valid cause constitute a breach of contract. Consequently, he should only be paid the unexpired
portion of his employment contract. In the same vein, the claim for the days leave pay for the unexpired portion of the contract
is unwarranted since the same is given during the actual service of the seamen.
The claim for moral and exemplary damages are deleted for lack of sufficient basis. Considering that petitioner was forced to
litigate, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by
counsel. The petition is GRANTED.
G.R. No. 144664 | March 15, 2004 | ASIAN TRANSMISSION CORPORATION, petitioner, vs. The Hon. COURT OF APPEALS |
J. Carpio-Morales
Facts: The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an
Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their basic
wage on April 9, 1993, whether unworked, which, apart from being Good Friday [and, therefore, a legal holiday], is also
Araw ng Kagitingan [which is also a legal holiday]. Said bulletin was reproduced on January 23, 1998, when April 9, 1998
was both Maundy Thursday and Araw ng Kagitingan.
Petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only 100% of their basic pay on April 9,
1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested, saying:
ART. 94. 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; and
(c) As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good Friday, the ninth of April, the
first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of
December and the day designated by law for holding a general election, which was amended by Executive Order No.
203 issued on June 30, 1987
The Court of Appeals upheld the findings of the Voluntary Arbitrator, holding that the Collective Bargaining Agreement (CBA)
between petitioner and BATLU, the law governing the relations between them, clearly recognizes their intent to consider Araw
ng Kagitingan and Maundy Thursday, on whatever date they may fall in any calendar year, as paid legal holidays during the
effectivity of the CBA and that "[t]here is no condition, qualification or exception for any variance from the clear intent that all
holidays shall be compensated."
Issue: WON the CA committed grave abuse of discretion in its decision
Held: Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection
to labor.7 Its purpose is not merely "to prevent diminution of the monthly income of the workers on account of work
interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday
pay."
It is also intended to enable the worker to participate in the national celebrations held during the days identified as with great
historical and cultural significance.
As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays. The
provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis.
Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law. Since a
worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date should not
operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.
In Wellington, the issue was whether monthly-paid employees are entitled to an additional days pay if a holiday falls on a
Sunday. This Court, in answering the issue in the negative, observed that in fixing the monthly salary of its employees,
Wellington took into account "every working day of the year including the holidays specified by law and excluding only
Sunday." In the instant case, the issue is whether daily-paid employees are entitled to be paid for two regular holidays which
fall on the same day.

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Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its
implementing rules and regulations, shall be resolved in favor of labor.
MAYON HOTEL & RESTAURANT vs. ADANA
MAYON HOTEL & RESTAURANT, PACITA O. PO vs. ROLANDO ADANA, et al.
G.R. No. 157634
May 16, 2005
FACTS:
Petitioner Mayon Hotel & Restaurant (MHR) hired herein 16 respondents as employees in its business in Legaspi City. Its
operation was suspended on March 31, 1997 due to the expiration and non-renewal of the lease contract for the space it
rented. While waiting for the completion of the construction of its new site, MHR continued its operation in another site with 9
of the 16 employees. When the new site constructed and MHR resumed its business operation, none of the 16 employees was
recalled to work.
MHR alleged business losses as the reason for not reinstating the respondents. On various dates, respondents filed complaints
for underpayment of wages, money claims and illegal dismissal.
ISSUES:
1. Whether or not respondents were illegally dismissed by petitioner;
2. Whether or not respondents are entitled to their money claims due to underpayment of wages, and nonpayment of holiday
pay, rest day premium, SILP, COLA, overtime pay, and night shift differential pay.
HELD:
1. Illegal Dismissal: claim for separation pay
Since April 1997 until the time the Labor Arbiter rendered its decision in July 2000, or more than three (3) years after the
supposed temporary lay-off, the employment of all the respondents with petitioner had ceased, notwithstanding that the
new premises had been completed and the same resumed its operation. This is clearly dismissal or the permanent severance
or complete separation of the worker from the service on the initiative of the employer regardless of the reasons therefor.
Article 286 of the Labor Code is clear there is termination of employment when an otherwise bona fide suspension of work
exceeds six (6) months. The cessation of employment for more than six months was patent and the employer has the burden of
proving that the termination was for a just or authorized cause.
While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, the
dismissal of employees must be made within the parameters of law and pursuant to the tenets of fair play. And in termination
disputes, the burden of proof is always on the employer to prove that the dismissal was for a just or authorized cause. Where
there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of
illegal dismissal.
If doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor
of the latter the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and writing should be resolved in the former's favor. The policy is to extend
the doctrine 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 of labor.
2. Money claims
The Supreme Court reinstated the award of monetary claims granted by the Labor Arbiter.
The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents' minimum
wage. As stated in the Labor Arbiter's decision.
Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted
without compliance with certain legal requirements. As stated in Mabeza v. NLRC, the employer simply cannot deduct the
value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily furnished by
the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are
charged at fair and reasonable value. The law is clear that mere availment is not sufficient to allow deductions from

32
employees' wages.
As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment of labor
standard benefits. The employer cannot exempt himself from liability to pay minimum wages because of poor financial
condition of the company. The payment of minimum wages is not dependent on the employer's ability to pay.
Producers Bank vs NLRC (335 SCRA 506)
Facts:
Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a conservator for the purpose of
protecting its assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and
pertaining to uniform allowance, the acting conservator of the petition expressed objection resulting an impasse between the
petitioner bank and respondent union. The deadlock continued for at least six months. The private respondent, to resolve the
issue filed a case against petitioner for unfair labor practice and flagrant violation of the CBA.
The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the implementation of the CBA.
Issue:
Whether or not the employees who have retired have no personality to file an action since there is no longer an employeremployee relationship.
Ruling:
The Court rules that employees who have retired still have the personality to file a complaint.
Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a
certain age agrees to sever his employment with the former. The very essence of retirement is the termination of employeremployee relationship.
Retirement of the employee does not in itself affect his employment status especially when it involves all rights and benefits
due to him, since these must be protected as though there had been no interruption of service. It must be borne in mind that
the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted as it were a
continuing consideration of services rendered as well as an effective inducement foe remaining with the corporation. It is
intended to help the employee enjoy the remaining years of his life.
When the retired employees were requesting that their retirement benefits be granted, they were not pleading for generosity
but merely demanding that their rights, embodied in the CBA, be recognized. When an employee has retired but his benefits
under the law or CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the status of an
employee entitled to the protection of the Labor Code, one of which is the protection of the labor union.
ROYAL PLANT WORKERS UNION vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT
G.R. No. 198783, April 15, 2013, THIRD DIVISION, (J. MENDOZA)
Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the manufacture, sale and
distribution of softdrink products. It has several bottling plants all over the country employing bottling operators for each
bottling plant. The bottling operators, who are all members of Royal Plant Workers Union (ROPWU), were provided with
chairs upon their request; however, the chairs provided for the operators were removed pursuant to a national directive of
CCBPI in line with the "I Operate, I Maintain, I Clean" program for bottling operators, wherein every bottling operator is given
the responsibility to keep the machinery and equipment assigned to him clean and safe. The bottling operators took issue with
the removal of the chairs. Through the representation of CCBPI, they initiated the grievance machinery of the Collective
Bargaining Agreement (CBA). Even after exhausting the remedies contained in the grievance machinery, the parties submitted
the same for mediation and, then, for arbitration. Upon submission for arbitration, CCBPI argued that the removal of the chairs
is valid as it is a legitimate exercise of management prerogative, it does not violate the Labor Code and it does not violate the
CBA it contracted with respondent. On the other hand, respondent espoused the contrary view. It contended that the bottling
operators have been performing their assigned duties satisfactorily with the presence of the chairs; the removal of the chairs
constitutes a violation of the Occupational Health and Safety Standards, the policy of the State to assure the right of workers to
just and humane conditions of work as stated in Article 3 of the Labor Code and the Global Workplace Rights Policy.

33
ISSUE:
1) Whether or not CCBPI validly exercised its management prerogative in removing the chairs previously granted
2) Whether or not there is a violation of Article 100 of the Labor Code, covering employees benefits
RULING:
A Valid Exercise of Management Prerogative
The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time, place, and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and
discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be
exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their duties and
responsibilities more efficiently. The chairs were not removed indiscriminately. They were carefully studied with due regard
to the welfare of the members of the Union. The removal of the chairs was compensated by: a) a reduction of the operating
hours of the bottling operators from a two-and-one-half (2 )-hour rotation period to a one-and-a-half (1 ) hour rotation
period; and b) an increase of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances of
operators sleeping on the job while in the performance of their duties and responsibilities and because of the fact that the
chairs were not necessary considering that the operators constantly move about while working. In short, the removal of the
chairs was designed to increase work efficiency. Hence, CCBPIs exercise of its management prerogative was made in good
faith without doing any harm to the workers rights.
No Violation of Article 100 of the Labor Code
The operators chairs cannot be considered as one of the employee benefits covered in Article 100 of the Labor Code.
In the Courts view, the term "benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given
to the employee with monetary equivalents. Such benefits or privileges form part of the employees wage, salary or
compensation making them enforceable obligations.
Without a doubt, equating the provision of chairs to the bottling operators is something within the ambit of "benefits''
in the context of Article 100 of the Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100
of the Labor Code do not show even with the slightest hint that such provision of chairs for the bottling operators may be
sheltered under its mantle.
Sonza VS ABS-CBN
G.R. No. 138051 June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
CARPIO, J.:
FACTS:
In May 1994, respondent ABS-CBN signed an Agreement with the Mel and Jay Management and Development
Corporation(MJMDC) represented by Jose Y. Sonza and Carmela Tiangco. Referred to in the Agreement as AGENT, MJMDC
agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television. On 1 April 1996, SONZA wrote a
letter to ABS-CBNs President, Eugenio Lopez III, saying that he irrevocably resigns in view of recent events concerning his
programs and career. The acts of the station are violative of the Agreement and said letter will serve as notice of rescission of
said contract. The letter also contained the waiver and renunciation for recovery of the remaining amount stipulated but
reserves the right to seek recovery of the other benefits under said Agreement. On 30 April 1996, SONZA filed a complaint
against ABS-CBN before the DOLE- NCR Q.C.. SONZA complained for none payment of his salaries, separation pay, service
incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan
(ESOP). ABS-CBN filed a Motion to Dismiss on the ground that no employee-employer relationship existed between the
parties. The Labor Arbiter denied the motion to dismiss by respondents but later dismissed the complaint for lack of
jurisdiction. SONZA appealed to the NLRC but it affirmed the Labor Arbiters decision. SONZA filed a motion for
reconsideration, which the NLRC also denied. The Court of Appeals affirmed the Decision. Hence, this petition.
ISSUE

34
Whether or not there exist an employer-employee relationship between Sonza and ABS-CBN.
HELD
There is no employer-employee relationship between Sonza and ABS-CBN. The specific selection and hiring of SONZA, because
of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. Applying the control test, SONZA is not an employee but an
independent contractor. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided
he did not attack ABS-CBN or its interests. ABS-CBNs control was limited only to the result of SONZAs work, whether to
broadcast the final product or not. The records do not show that ABS-CBN exercised any supervision and control over how
SONZA utilized his skills and talent in his shows. Even an independent contractor can validly provide his services exclusively
to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to
deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor.
An individual like an artist or talent has a right to render his services without any one controlling the means and methods by
which he performs his art or craft. If radio and television program hosts can render their services only as employees, the
station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive
to freedom of the press. SONZAs claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor
Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a
civil dispute cognizable by the regular courts.
Barayoga vs Asset Privatization Trust (2005) G.R. 160073
Facts:
Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development Corporation
(BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur.On December 8, 1986, [Respondent] Asset
Privatization Trust (APT), a public trust was created under Proclamation No. 50, as amended, mandated to take title to and
possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine government identified
for privatization or disposition.
Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino issued Administrative Order No. 14
identifying certain assets of government institutions that were to be transferred to the National Government. Among the
assets transferred was the financial claim of the Philippine National Bank against BISUDECO in the form of a secured loan.
Consequently, by virtue of a Trust Agreement executed between the National Government and APT on February 27, 1987, APT
was constituted as trustee over BISUDECO's account with the PNB.
Sometime later, on August 28, 1988, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take
over the management of the sugar plantation and milling operations until August 31, 1992. Meanwhile, because of the
continued failure of BISUDECO to pay its outstanding loan with PNB, its mortgaged properties were foreclosed and
subsequently sold in a public auction to APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriff's Certificate of Sale.
On July 23, 1991, the union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment of
wages and other labor standard benefits plus damages. In the meantime, on July 15, 1992, APT's Board of Trustees issued a
resolution accepting the offer of Bicol-Agro-Industrial Cooperative (BAPCI) to buy the sugar plantation and mill. Again, on
September 23, 1992, the board passed another resolution authorizing the payment of separation benefits to BISUDECO's
employees in the event of the company's privatization. Then, on October 30, 1992, BAPCI purchased the foreclosed assets of
BISUDECO from APT and took over its sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil).
On December 17, 1992, the union filed a similar complaint, later to be consolidated with its earlier complaint and docketed as
RAB V Case No. 07-00184-91. On March 2, 1993, it filed an amended complaint, impleading as additional party respondents
APT and Pensumil.
In their Position Paper, the union alleged that when Philsucor initially took over the operations of the company, it retained
BISUDECO's existing personnel under the same terms and conditions of employment. Nonetheless, at the start of the season
sometime in May 1991, Philsucor started recalling workers back to work, to the exception of the union members. Management
told them that they will be re-hired only if they resign from the union. Just the same, thereafter, the company started to employ
the services of outsiders under the 'pakyaw' system.
BISUDECO, Pensumil and APT all interposed the defense of lack of employer-employee relationship.After due proceedings, on
April 30, 1998, Labor Arbiter Fructuoso T. Aurellano disposed as follows:
'WHEREFORE, premises considered, respondent APT is hereby ordered to pay herein complainants of the mandated
employment benefits provided for under Section 27 of Proclamation No. 50 which benefits had been earlier extended to other
employees similarly situated.
The NLRC affirmed APT's liability for petitioners' money claims. While no employer-employee relationship existed between
members of the petitioner union and APT, at the time of the employees' illegal dismissal, the assets of BISUDECO had been
transferred to the national government through APT. Moreover, the NLRC held that APT should have treated petitioners' claim
as a lien on the assets of BISUDECO. The Commission opined that APT should have done so, considering its awareness of the
pending complaint of petitioners at the time BISUDECO sold its assets to BAPCI, and APT started paying separation pay to the
workers.

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Finding their computation to be in order, the NLRC awarded to petitioners their money claims for underpayment, laborstandard benefits, and ECOLA. It also awarded them their back wages, computed at the prevailing minimum wage, for the
period May 1, 1991 (the date of their illegal dismissal) until October 30, 1992 (the sale of BISUDECO assets to the BAPCI). On
the other hand, the NLRC ruled that petitioners were not entitled to separation pay because of the huge business losses
incurred by BISUDECO, which had resulted in its bankruptcy.
Respondent sought relief from the CA via a Petition for Certiorari under Rule 65 of the Rules of Court. The CA ruled that APT
should not be held liable for petitioners' claims for unfair labor practice, illegal dismissal, illegal deduction and underpayment
of wages, as well as other labor-standard benefits plus damages. As found by the NLRC, APT was not the employer of
petitioners, but was impleaded only for possessing BISUDECO's mortgaged properties as trustee and, later, as the highest
bidder in the foreclosure sale of those assets.
Citing Batong Buhay Gold Mines v. Dela Serna, 8 the CA concluded that petitioners' claims could not be enforced against APT as
mortgagee of the foreclosed properties of BISUDECO.
Clarification of the facts according to the SC: It should be stressed at the outset that, pursuant to Administrative Order No. 14,
Series of 1987, PNB's assets, loans and receivables from its borrowers were transferred to APT as trustee of the national
government. Among the liabilities transferred to APT was PNB's financial claim against BISUDECO, not the latter's assets and
chattel. Contrary to petitioners' assertions, BISUDECO remained the owner of the mortgaged properties in August 1988, when
the Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar plantation until August
31, 1992, under a so-called Contract of Lease between the two corporations. At the time, APT was merely a secured creditor of
BISUDECO.
It was only in April 1991 that APT foreclosed the assets and chattels of BISUDECO because of the latter's continued failure to
pay outstanding loan obligations to PNB/APT. The properties were sold at public auction to APT, the highest bidder, as
indicated in the Sheriff's Certificate of Sale issued on April 2, 1991. It was only in September 1992 (after the expiration of the
lease/management Contract with Philsucor in August 1992), however, when APT took over BISUDECO assets, preparatory to
the latter's privatization.
In the present case, petitioner-union's members who were not recalled to work by Philsucor in May 1991 seek to hold APT
liable for their monetary claims and allegedly illegal dismissal. Significantly, prior to the actual sale of BISUDECO assets to
BAPCI on October 30, 1992, the APT board of trustees had approved a Resolution on September 23, 1992. The Resolution
authorized the payment of separation benefits to the employees of the corporation in the event of its privatization. Not
included in the Resolution, though, were petitioner-union's members who had not been recalled to work in May 1991.
Issues and Rulings:
I.
Whether or not APT is liable to pay petitioners' monetary claims, including back wages from May 1, 1991, to October
30, 1992 (the date of the sale of BISUDECO assets to BAPCI).
We rule in the negative. The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were not all
automatically assumed by APT as purchaser of the foreclosed properties at the auction sale. Any assumption of liability must
be specifically and categorically agreed upon. In Sundowner Development Corp. v. Drilon, the Court ruled that, unless
expressly assumed, labor contracts like collective bargaining agreements are not enforceable against the transferee of an
enterprise. Labor contracts are in personam and thus binding only between the parties.
No succession of employment rights and obligations can be said to have taken place between the two. Between the employees
of BISUDECO and APT, there is no privity of contract that would make the latter a substitute employer that should be
burdened with the obligations of the corporation. To rule otherwise would result in unduly imposing upon APT an
unwarranted assumption of accounts not contemplated in Proclamation No. 50 or in the Deed of Transfer between the
national government and PNB.
Furthermore, under the principle of absorption, a bona fide buyer or transferee of all, or substantially all, the properties of the
seller or transferor is not obliged to absorb the latter's employees. The most that the purchasing company may do, for reasons
of public policy and social justice, is to give preference of reemployment to the selling company's qualified separated
employees, who in its judgment are necessary to the continued operation of the business establishment.
In any event, the national government (in whose trust APT previously held the mortgage credits of BISUDECO) is not the
employer of petitioner-union's members, who had been dismissed sometime in May 1991, even before APT took over the
assets of the corporation. Hence, under existing law and jurisprudence, there is no reason to expect any kind of bailout by the
national government. Even the NLRC found that no employer-employee relationship existed between APT and petitioners.
Thus, the Commission gravely abused its discretion in nevertheless holding that APT, as the transferee of the assets of
BISUDECO, was liable to petitioners.
A careful reading of the Court's Decision in that case plainly shows that it does not contain the words quoted by counsel for
petitioners. At this juncture, we admonish their counsel of his bounden duty as an officer of the Court to refrain from
misquoting or misrepresenting the text of its decisions. Ever present is the danger that, if not faithfully and exactly quoted,
they may lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may thereby be
misled.
In that case, contrary to the assertions of petitioners, the Court held as follows:
"There can be no controversy for it is a principle well-recognized, that it is within the employer's legitimate sphere of
management control of the business to adopt economic policies or make some changes or adjustments in their organization or

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operations that would insure profit to itself or protect the investment of its stockholders. As in the exercise of such
management prerogative, the employer may merge or consolidate its business with another, or sell or dispose all or
substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the
process. Such dismissal or termination should not however be interpreted in such a manner as to permit the employer to
escape payment of termination pay. . . . .
"In a number of cases on this point, the rule has been laid down that the sale or disposition must be motivated by good faith as
an element of exemption from liability. Indeed, an innocent transferee of a business establishment has no liability to the
employees of the transferor to continue employing them. Nor is the transferee liable for past unfair labor practices of the
previous owner, except, when the liability therefor is assumed by the new employer under the contract of sale, or when
liability arises because of the new owner's participation in thwarting or defeating the rights of the employees."
In other words, the liabilities of the previous owner to its employees are not enforceable against the buyer or transferee,
unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made in bad faith. Thus, APT cannot be held
responsible for the monetary claims of petitioners who had been dismissed even before it actually took over BISUDECO's
assets.
II.
Whether or not the claims of herein petitioners can be enforced against the foreclosed properties of BISUDECO.
No. It should be remembered that APT merely became a transferee of BISUDECO's assets for purposes of conservation because
of its lien on those assets a lien it assumed as assignee of the loan secured by the corporation from PNB. Subsequently, APT,
as the highest bidder in the auction sale, acquired ownership of the foreclosed properties.
Relevant to this transfer of assets is Article 110 of the Labor Code, as amended by Republic Act No. 6715, which reads:
"Article 110. Worker's preference in case of bankruptcy. In the event of bankruptcy or liquidation of the employer's
business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims shall be paid in full
before the claims of the Government and other creditors may be paid."
This Court has ruled in a long line of cases that under Articles 2241 and 2242 of the Civil Code, a mortgage credit is a special
preferred credit that enjoys preference with respect to a specific/determinate property of the debtor. On the other hand, the
worker's preference under Article 110 of the Labor Code is an ordinary preferred credit. While this provision raises the
worker's money claim to first priority in the order of preference established under Article 2244 of the Civil Code, the claim has
no preference over special preferred credits.
Thus, the right of employees to be paid benefits due them from the properties of their employer cannot have any preference
over the latter's mortgage credit. In other words, being a mortgage credit, APT's lien on BISUDECO's mortgaged assets is a
special preferred lien that must be satisfied first before the claims of the workers.
Development Bank of the Philippines v. NLRC explained the rationale of this ruling as follows:
". . . . A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular
property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the
property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It
is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the
proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. . . ."
Furthermore, workers' claims for unpaid wages and monetary benefits cannot be paid outside of a bankruptcy or judicial
liquidation proceedings against the employer. 26 It is settled that the application of Article 110 of the Labor Code is contingent
upon the institution of those proceedings, during which all creditors are convened, their claims ascertained and inventoried,
and their preferences determined. Assured thereby is an orderly determination of the preference given to creditors' claims;
and preserved in harmony is the legal scheme of classification, concurrence and preference of credits in the Civil Code, the
Insolvency Law, and the Labor Code.
The Court hastens to add that the present Petition was brought against APT alone. In holding that the latter, which has never
really been an employer of petitioners, is not liable for their claims, this Court is not reversing or ruling upon their entitlement
to back wages and other unpaid benefits from their previous employer.