(With Exclusions) - LABOR-Case Digest Compendium

CASE DIGEST COMPENDIUM
MATERNITY CHILDRENS HOSPITAL VS. SECRETARY OF LABOR

GR No. 78909. 30 JUNE 1984. EN BANC (Medialdea, J.)
LABOR STANDARDS. Labor standards refer to the minimum requirements prescribed by existing
laws, rules, and regulations relating to wages, hours of work, cost of living allowance and other monetary
and welfare benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules on the
Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987).
Facts
Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de
Oro Women's Club and Puericulture Center. The hospital derives its finances from the club itself as well
as from paying patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity
Sweepstakes Office and the City government. Petitioner has forty-one (41) employees who received
salary, living allowances, and are given food which was deducted from their respective salaries. On May
23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a complaint
with the Office of the Regional Director of Labor and Employment, for underpayment of their salaries
and ECOLAS, Thereafter, the Regional Director directed two of his Labor Standard and Welfare Officers
to inspect the records of the petitioner to ascertain the truth of the allegations in the complaints. Based on
their inspection report and recommendation, the Regional Director issued an Order dated August 4, 1986,
directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the
petitioner's employees. Petitioner appealed from such Order to the Minister of Labor and Employment,
who rendered a Decision modifying the said Order in that deficiency wages and ECOLAs should be
computed only from May 23, 1983 to May 23, 1986. The petitioner filed a motion for reconsideration
which was denied by the Secretary of Labor in his Order dated May 13, 1987, for lack of merit.
Issue
Whether the Regional Director had jurisdiction over the case?
Ruling
This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by
E.O. No. 111. Under the present rules, a Regional Director exercises both visitorial and enforcement
power over labor standards cases, and is therefore empowered to adjudicate money claims, provided there
still exists an employer-employee relationship, and the findings of the regional office is not contested by
the employer concerned.
Decision
ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all
persons still employed in the Hospital at the time of the filing of the complaint, but GRANTED as regards
those employees no longer employed at that time. SO ORDERED.
MAXIMO CALALANG VS. A.D. WILLIAMS, ET AL.

1 | Page

70 PHIL 726. 2 DECEMBER 1940. FIRST DIVISION (Laurel, J.)
SOCIAL JUSTICE. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy,"
but the humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent elements of society, through the maintenance
of a proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the
exercise of powers underlying the existence of all governments on the time-honored principle of salus
populi est suprema lex. Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all
persons, and of bringing about "the greatest good to the greatest number."
Facts
A resolution by the National Traffice Commission that animal drawn vehicles be prohibited from
passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmarias Street,from 7:30
a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad
crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., for a period of one year from the
date of the opening of the Colgante Bridge to traffic was approved and adopted by the Secretary of Public
Works and Communications upon indorsement by the Director of Public Works pursuant
to Commonwealth Act 548 with modifications that Rosario Street and Rizal Avenue be closed to traffic of
animal-drawn vehicles, between the points and during the hours as indicated. The Mayor of Manila and
the Acting Chief of Police of Manila have enforced and caused to been forced the rules and regulations
thus adopted. Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought
before the Supreme Court the petition for a writ of prohibition against A. D. Williams, as Chairman of the
National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting
Secretary of Public Works andCommunications; Eulogio Rodriguez, as Mayor of the City of Manila; and
Juan Dominguez, as Acting Chief of Police of Manila.
Issue
Whether the rules and regulations promulgated by the Director of Public Works infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and economic
security of all the people?
Ruling
The promotion of social justice is to be achieved not through a mistaken sympathy towards any
given group.
Decision
IN VIEW OF THE FOREGOING, the Writ of Prohibition Prayed for is hereby denied, with costs
against the petitioner. SO ORDERED.
PEOPLE OF THE PHILIPPINES VS. FRANCO VERA REYES

2 | Page

G.R. No. L-45748. 5 APRIL 1939. EN BANC (Imperial, J.)
POLICE POWER.. The power inherent in a government to enact laws, within constitutional limits, to
promote the order, safety, health, morals, and general welfare of society. In the exercise of this power the
Legislature has ample authority to approve the disputed portion of Act No. 3958 which punishes the
employer who, being able to do so, refuses to pay the salaries of his laborers or employers in the specified
periods of time. Undoubtedly, one of the purposes of the law is to suppress possible abuses on the part of
employers who hire laborers or employees without paying them the salaries agreed upon for their
services, thus causing them financial difficulties.
Facts
The defendant was charged for violation of Act No. 2549, as amended by Acts Nos. 3085 and
3958. The information alleged that from September 9 to October 28, 1936, and for the some time after,
the accused, in his capacity as president and general manager of the Consolidated Mines, having engaged
the services of Severa Velasco de Vera as stenographer, at an agreed salary of P35 a month willfully and
illegally refused to pay the salary of said stenographer corresponding to the above-mentioned period of
time, which was long due and payable, in spite of her repeated demands. The accused interposed a
demurrer on the ground that the facts alleged in the information do not constitute any offense, and that
even if they did, the laws penalizing it are unconstitutional. After the hearing, the court sustained the
demurrer, declaring unconstitutional the last part of section 1 of Act No. 2549 as last amended by Act No.
3958 for the reason that it violates the constitutional prohibition against imprisonment for debt,
and dismissed the case. The last part of Section 1 of Act No. 2549, as last amended by section 1 of Act
No. 3958 considers as illegal the refusal of an employer to pay when he can do so, the salaries of his
employers or laborers on the 15th or last day of every month or on Saturday of every week, with only two
days extension, and the non-payment of the salary within the period specified is considered as a violation
of the law. The same act exempts from criminal responsibility the employer who, having failed to pay the
salary, should prove satisfactorily that it was impossible to make such payment. The fiscal appealed from
said order. In this appeal the Solicitor-General contends that the court erred in declaring Act No. 3958
unconstitutional, and in dismissing the cause.
Issue
Whether the last part of Sec. 1 of Act No. 2594 as amended by Act No. 3958 is constitutional and
valid?
Ruling
We hold that the last part of section 1 of Act No. 2549, as last amended by section 1 of Act
No.3958, is valid. We do not believe that this constitutional provision has been correctly applied in this
case. A close perusal of the last part of section 1 of Act No. 2549, as amended by section 1of Act No.
3958, will show that its language refers only to the employer who, being able to make payment, shall
abstain or refuse to do so, without justification and to the prejudice of the laborer or employee. An
employer so circumstanced is not unlike a person who defrauds another, by refusing to pay his just debt.
In both cases the deceit or fraud is the essential element constituting the offense. The first case is
a violation of Act No. 3958, and the second is estafa punished by the Revised Penal Code. In either case
the offender cannot certainly invoke the constitutional prohibition against imprisonment for debt.
PEOPLE OF THE PHILIPPINES VS. JULIO POMAR
GR No. L-22008. 3 NOVEMBER 1924. EN BANC (Johnsons, J.)
3 | Page

POLICE POWER.. - Every law for the restraint and punishment of crimes, for the preservation of the
public peace, health, and morals, must come within this category. But the state, when providing by
legislation for the protection of the public health, the public morals, or the public safety, is subject to and
is controlled by the paramount authority of the constitution of the state, and will not be permitted to
violate rights secured or guaranteed by that instrument or interfere with the execution of the powers and
rights guaranteed to the people under their law the constitution.
Facts
Defendant was charged for violation of section 13 in connection with section 15 of Act No. 3071.
The complaint alleged that the defendant (manager) failed and refused to pay Macaria Fajardo (employed
as cigar maker) the sum of P80 to which she was entitled as her regular wages, on time of delivery and
confinement by reason of pregnancy despite and over the demands to do so. The defendant demurred,
alleging that the fact therein contained did not constitute an offense. The demurrer was overruled,
whereupon the defendant answered and admitted at the trial all of the allegations contained in the
complaint, and contended that the provisions of said Act No. 3071, upon which the complaint was based
were illegal, unconstitutional and void. Upon a consideration of the facts charged in the complaint and
admitted by the defendant, the Hon. C. A. Imperial, judge, found the defendant guilty of the alleged
offense and sentenced him to pay a fine of P50. From that sentence the defendant appealed.
Issue
Whether the provisions of sections 13 and 15 of Act No. 3071 are a reasonable and lawful
exercise of the police power of the state?
Ruling
The provisions of section 13, of Act No. 3071, is unconstitutional and void, in that they violate
and are contrary to the provisions of the first paragraph of section 3of the Act of Congress of the United
States. Said section 13 was enacted by the Legislature of the Philippine Islands in the exercise of its
supposed police power, with the praiseworthy purpose of safeguarding the health of pregnant women
laborers in "factory, shop or place of labor of any description," and of insuring to them, to a certain extent,
reasonable support for one month before and one month after their delivery.
The police power of the state is a growing and expanding power. But that power cannot grow
faster than the fundamental law of the state, nor transcend or violate the express inhibition of the people's
law the constitution. If the people desire to have the police power extended and applied to conditions
and things prohibited by the organic law, they must first amend that law.It will also be noted from an
examination of said section 13, that it takes no account of contracts for the employment of women by the
day nor by the piece. The law is equally applicable to each case.
Decision
The rule in this jurisdiction is, that the contracting parties may establish any agreements, terms,
and conditions they may deem advisable, provided they are not contrary to law, morals or public policy
(Art. 1255, Civil Code). Therefore, the sentence of the lower court is hereby revoked, the complaint is
hereby dismissed, and the defendant is hereby discharged from the custody of the law, with costs de
oficio. So ordered.
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. VS. DRILON, ET AL

G.R. No. 81958. 30 JUNE 1988. EN BANC (Sarmiento, J.)
4 | Page

POLICE POWER. The authority of the State to enact legislation that may interfere with personal liberty
or property in order to promote the general welfare.
Facts
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI), a firm "engaged
principally in the recruitment of Filipino workers for overseas placement," challenges the Constitutional
validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in
the character of "Guidelines Governing The Temporary suspension Of Deployment Of Filipino Domestic
And Household Workers," and specifically assailed for "discrimination against males or females;" that it
"does not apply to all Filipino workers but only to domestic helpers and females with similar skills;" and
that it is violative of the right to travel. On May 25, 1988, the Solicitor General, on behalf of the
respondents Secretary of Labor and Administrator of the Philippine Overseas Employment
Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor
Secretary lifted the deployment ban in several states (Iraq, Jordan, Qatar, Canada, Hongkong,
United States, Italy, Norway, Austria, and Switzerland). In submitting the validity of the challenged
"guidelines," the Solicitor General invokes the police power of the Philippine State.
Issue
Whether the challenged Department Order is a valid regulation in the nature of a police
power measure under the Constitution?
Ruling
The petitioner has shown no satisfactory reason why the contested measure should be nullified.
There is no question that Department Order No. 1 applies only to "female contract workers," but it does
not thereby make an undue discrimination between the sexes. It is well-settled that "equality before the
law" under the Constitution does not import a perfect Identity of rights among all men and
women."Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and humane. Under
these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate
protection, personally and economically, while away from home. In this case, the Government has
evidence of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an
indefinite ban on deployment. This Court understands the grave implications the questioned Order has on
the business of recruitment. The concern of the Government, however, is not necessarily to maintain
profits of business firms. In the ordinary sequence of events, it is profits that suffer as a result
of Government regulation. The interest of the State is to provide a decent living to its citizens.
Decision
The Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed
for. WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.
CLARA CEREZO VS. ATLANTIC GULF & PACIFIC COMPANY

G.R. No. L-10107. 4 FEBRUARY 1916. EN BANC (Trent, J.)
5 | Page

FOREIGN DECISIONS. Philippine labor statutes based upon or patterned after statutes in foreign
jurisdiction, the decisions of the high courts in those jurisdictions construing and interpreting the Act
should receive the careful attention of the Philippine Courts in the application of Philippine law.
Facts
Jorge Ocumen was an employee of the defendant as a day laborer on the 8th of July, 1913,
assisting in laying gas pipes on Calle Herran in the City of Manila. The digging of the trench was
completed both ways from the cross-trench in Calle Paz, and the pipes were laid therein up to that point.
The men of the Ocumen's gang were filling the west end, and there was no work in the progress at the
east end of the trench. Shortly after Ocumen entered the trench at the east end to answer a call of nature,
the bank caved in, burying him to his neck in dirt, where he died before he could be released. It has not
been shown that the Ocumen had received orders from the defendant to enter the trench at this point; nor
that the trench had been prepared by the defendant as a place to be used as a water-closet; nor that the
defendant acquiesced in the using of this place for these purposes. At the time of the accident the place
Ocumen's duty of refilling the trench required him to be was at the west end. There is no contention that
there was any danger whatever in the refilling of the trench.
Issue
Whether the plaintiff has the right to recover based on the Employers' Liability Act (Act No.
1874) or the Civil Code?
Ruling
The Court held to agree with the Supreme Court of Massachusetts that the Act should be liberally
construed in favor of employees. The main purpose of the Act was to extend the liability of employers
and to render them liable in damages for certain classes of personal injuries for which it was thought they
were liable under the law prior to the passage of the Act. In line with this, the Court had no doubt that
prior to the passage of Act No. 1874 and still is, that it was not intended that all rights to compensation
and of action against employers by injured employees or their representatives must be brought under be
governed by the Act. Under the Anglo-American law, the law applicable to the set of facts herein
provided is that the master is not responsible, under the Employers' Liability Act, for accidents to his
employees when they are outside the scope of their employment for purpose of their own.
The case under consideration does not fall within the exceptions of Art 1105 of the Civil code.
Mentioned. After providing a reasonably safe place in and about which the deceased was required to
work, the defendant's liability was then limited to those events which could have been foreseen. Article
1902 provides that a person who, by an act or omission causes damage to another when there is fault or
negligence shall be obliged to repair the damage so done. Article 1903 after providing for the liability of
principals for the acts of their employees, agents, or these for whom they are otherwise responsible,
provides that such liability shall cease when the persons mentioned therein prove that they employed all
the diligence of a good father of a family to avoid the damage. We have then, on the one hand,
nonliability of an employer for events which could not be foreseen (article 1105), and where he has
exercised the care of a good father of a family (article 1903), and, on the other hand, his liability where
fault or negligence may be attributed to him (article 1902).
ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA VS. NLRC, ET AL.

G.R. No. 71813. 20 JULY 1987. EN BANC (Paras, J.)
6 | Page

LIBERAL APPROACH. The provisions of the Labor Code and its implementing regulations shall be
interpreted under the primordial and paramount consideration of the working mans welfare. The policy is
to extend the decrees applicability to a greater number of employees to enable them to avail of the
benefits under the law, in consinance with the States avowed policy to give maximum aid and protection
to labor.
Facts
Ricardo Dionele, Sr. has been a regular farm worker since 1949 in Hacienda Danao-Ramona
located in Ponteverde, Negros Occidential. Said farm land was leased to Rosalina Abella (petitioner) for a
period of ten (10) years, renewable for another ten years. Upon the expiration of her leasehold rights,
petitioner dismissed Ricardo and another co-employee. Private respondents filed a complaint against the
petitioner at the Ministry of Labor and Employment for overtime pay, illegal dismissal and reinstatement
with backwages. After presenting their respective evidence, the Labor Arbiter ruled that the dismissal is
warranted by the cessation of business, but granted the private respondents separation pay.
Petitioner filed a motion for reconsideration but the same was denied. Hence, the present petition.
Issue
Whether Ricardo Dionele and Romeo Quitco (private respondernts) are entitled to separation
pay?
Ruling
The Court held that the petition filed by herein private respondents is devoid of merit.
The purpose of Article 284 of the Labor Code of the Philippines is obvious: the protection of the
workers whose employment is terminated because of the closure of establishment and reduction of
personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to
which they are entitled for the number of years served. Although they were absorbed by the new
management of the hacienda, in the absence of any showing that the latter has assumed the
responsibilities of the former employer, they will be considered as new employees and the years of
service behind them would amount to nothing.
.
In any event, it is well-settled that in the implementation and interpretation of the provisions of
the Labor Code and its implementing regulations, the workingmans welfare should be the primordial and
paramount consideration.
.
Decision
The instant petition is hereby dismissed and the decision of the Labor Arbiter and the Resolution
of the Ministry of Labor and Employment are hereby affirmed.
EURO-LINEA PHIL, INC. VS. NLRC and JIMMY O. PASTORAL

G.R. No. 78782. 1 DECEMBER 1987. FIRST DIVISION (Paras, J.)
7 | Page
LIBERAL APPROACH. In interpreting the protection to labor and social justice under the provisions of
the Constitution and the labor laws and rules and regulations implementing the constitutional mandate,
the Supreme Court adopts the liberal approach which favors the exercise of labor rights.
Facts
Petitioner Euro-Linea Phil, Inc. hired private respondent Jimmy Pastoral as shipping expediter on
a probationary basis for a period of six months. Prior to hiring by petitioner, Pastoral had been employed
by Fitscher Manufacturing Corporation also as shipping expediter. On the 4th of February 1984, private
respondent received a memorandum terminating his probationary employment in view of his failure to
meet the performance standards set by the company. Private respondent filed a complaint for illegal
dismissal against petitioner. On the 19th of July 1985, the Labor Arbiter found petitioner guilty of illegal
dismissal. Petitioner appealed the decision to the NLRC on the 5th of August 1985 but the appeal was
dismissed. Hence the petition for review seeking to reverse and set aside the resolution of public
respondent NLRC, affirming the decision of the Labor Arbiter, which ordered the reinstatement of
complainant with six (6) months backwages.
.
Issue
Whether the National Labor Relations Commission acted with grave abuse of discretion
amounting to excess of jurisdiction in ruling against the dismissal of herein private respondent?
Ruling
The Court held that although a probationary or temporary employee has a limited tenure, he still
enjoys the constitutional protection of security of tenure. Furthermore, what makes the dismissal highly
suspicious is the fact that while petitioner claims that respondent was inefficient, it retained his services
until the last remaining two weeks of the six months probationary employment. No less important is the
fact that private respondent had been a shipping expediter for more than one and a half years before he
was absorbed by petitioner. It therefore appears that the dismissal in question is without sufficient
justification.
It must be emphasized that the prerogative of management to dismiss or lay-off an employee
must be done without abuse of discretion, for what is at stake is not only petitioner's position but also his
means of livelihood. The right of an employer to freely select or discharge his employees is subject to
regulation by the State, basically in the exercise of its paramount police power.
Decision
In the instant case, it is evident that the NLRC correctly applied Article 282 in the light of the
foregoing and that its resolution is not tainted with unfairness or arbitrariness that would amount to grave
abuse of discretion or lack of jurisdiction (Rosario Brothers Inc. v. Ople, 131 SCRA 73 [1984]).
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, and the resolution of
the NLRC is affirmed. SO ORDERED.
MANILA ELECTRIC COMPANY VS. NLRC and APOLINARIO SIGNO

8 | Page

G.R. No. 78763. 12 July 1989. FIRST DIVISION (Medialdea, J.)
LIBERAL APPROACH. The provisions of the Labor Code and its implementing regulations shall
interpreted under the primordial and paramount consideration of the working mans welfare. The policy is
to extend the decrees applicability to a greater number of employees to enable them to avail of the
benefits under the law, in consinance with the States avowed policy to give maximum aid and protection
to labor.
Facts
Apolinario Signo (private respondent) was employed in Manila Elecctric Company (petitioner) as
supervisor-leadman since January 1963 up to the time when his services were terminated on May 18,
1983. In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical
services at his residence Private respondent Signo facilitated the processing and the required
documentation for said application. In consideration thereof, private respondent received from Fernando
de Lara the amount of P7,000.00. Signo thereafter filed the application for electric services with the
Power Sales Division of the company. It was established that the area where the residence of de Lara was
located is not yet within the serviceable point of Meralco. But In order to expedite the electrical
connections at de Lara's residence, certain employees of the company, including respondent Signo, made
it appear in the application that the sari-sari store located in the entrance to the subdivision, is applicant
de Lara's establishment, which, in reality is not owned by the latter. As a result of this scheme, the
electrical connections to de Lara's residence were installed. However, due to the fault of the Power Sales
Division of petitioner company, Fernando de Lara was not billed for more than a year. Thereafter,
petitioner company conducted an investigation of the matter and found respondent Signo responsible for
the said irregularities in the installation. Thus, the services of the latter were terminated on May 18, 1983
which prompted him to file a complaint for illegal dismissal, unpaid wages, and separation pay.
Labor Arbiter rendered a decision directing the petitioner to reinstate private respondent to his
former position without backwages. Both parties appealed from the decision to the respondent
Commission but were dismissed for lack of merit and who in turn affirmed in toto the decision of the
Labor Arbiter. Hence, this petition.
Issue
Whether or not private respondents dismissal from petitioner company is valid on grounds of
serious misconduct and loss of trust and confidence.
Ruling
This Court has held time and again, in a number of decisions, that notwithstanding the existence
of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not
be imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time
in the service of his employer. Furthermore, the power to dismiss is the normal prerogative of the
employer. An employer, generally, can dismiss or lay-off an employee for just and authorized causes
enumerated under Articles 282 and 283 of the Labor Code. However, the right of an employer to freely
discharge his employees is subject to regulation by the State.
There is no question that herein respondent Signo is guilty of breach of trust and violation of
company rules, the penalty for which ranges from reprimand to dismissal depending on the gravity of the
offense.
MANUEL SOSITO VS. AGUINALDO DEVELOPMENT CORP.
9 | Page

G.R. No. L-48926. 14 DECEMBER 1987. EN BANC (Paras, J.)
MANAGEMENT RIGHTS. - Management also has its own rights which, as such, are entitled to respect
and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life,
this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with
the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.
Facts
Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company,
and was in charge of logging importation, with a monthly salary of P675.00, 1 when he went on indefinite
leave with the consent of the company on January 16, 1976.
On July 20, 1976, the private respondent, through its president, announced a retrenchment
program and offered separation pay to employees in the active service as of June 30, 1976, who would
tender their resignations not later than July 31, 1976. The petitioner decided to accept this offer and so
submitted his resignation on July 29, 1976, "to avail himself of the gratuity benefits" promised. However,
his resignation was not acted upon and he was never given the separation pay he expected. The petitioner
complained to the Department of Labor, where he was sustained by the labor arbiter. The company was
ordered to pay Sosito the sum of P 4,387.50, representing his salary for six and a half months. On appeal
to the National Labor Relations Commission, this decision was reversed and it was held that the petitioner
was not covered by the retrenchment program.
Issue
Whether petitioner is covered by the retrenchment program and thus entitled to separation
benefits?
Ruling
It is clear from the memorandum that the offer of separation pay was extended only to those who
were in the active service of the company as of June 30, 1976. It is equally clear that the petitioner was
not eligible for the promised gratuity as he was not actually working with the company as of the said date.
Being on indefinite leave, he was not in the active service of the private respondent although, if one were
to be technical, he was still in its employ. Even so, during the period of indefinite leave, he was not
entitled to receive any salary or to enjoy any other benefits available to those in the active service.
We note that under the law then in force the private respondent could have validly reduced its
work force because of its financial reverses without the obligation to grant separation pay. This was
permitted under the original Article 272(a), of the Labor Code, which was in force at the time. To its
credit, however, the company voluntarily offered gratuities to those who would agree to be phased out
pursuant to the terms and conditions of its retrenchment program, in recognition of their loyalty and to
tide them over their own financial difficulties. The Court feels that such compassionate measure deserves
commendation and support but at the same time rules that it should be available only to those who are
qualified therefore. We hold that the petitioner is not one of them.
While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the
interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined
more often than not toward the worker and upheld his cause in his conflicts with the employer.
COLGATE PALMOLIVE PHILIPPINES, INC., VS. HON. BLAS OPLE, ET AL.
10 | P a g e

G.R. No. 73681. 30 JUNE 1988. SECOND DIVISION (Paras, J.)
MANAGEMENT RIGHTS. - Under the law, respondent Minister is duly mandated to equally protect and
respect not only the labor or workers side but also the management and/or employers side. The law, in
protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer.
Facts
On March 1, 1985, respondent Union filed a Notice of Strike with the Bureau of Labor Relation
on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union
officers/members; and coercing employees to retract their membership with the union and restraining
non-union members from joining the union. After efforts at amicable settlement proved unavailing, the
Office of the MOLE, upon petition of petitioner assumed jurisdiction over the dispute pursuant to Article
264 (g) of the Labor Code.
In its position paper, the petitioner pointed out that the infractions committed by the three
salesmen fully convinced the company, after investigation of the existence of just cause for their
dismissal, that their dismissal was carried out pursuant to the inherent right and prerogative of
management to disciplne erring employees. Moreover, the petitioner refuted the unions charge that the
membership in union and refusal to retract precipitated their dismissal was totally false and amounted to
malicious imputation of union busting. Thre respondent union, on the other hand, assailed its answers to
the petitioners position paper.
On August 9,1985, respondent Minister rendered a decision whichfound no merit in the Union's
Complaint for unfair labor practice allegedly committed by petitioner and that the the three salesmen, "not
without fault" hence "the company has grounds to dismiss above named salesmen". At the same time
respondent Minister directly certified the respondent Union as the collective bargaining agent for the sales
force in petitioner company and ordered the reinstatement of the three salesmen to the company on the
ground that the employees were first offenders.
Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in his
assailed Order, dated December 27, 1985. Hence, this petition.
Issue
Whether the respondent Minister committed a grave abuse of discretion when he ordered the
reinstatement of three (3) salesmen?
Ruling
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on
their part is not in conformity with law. Reinstatement is simply incompatible with a finding of guilt.
Where the totality of the evidence was sufficient to warrant the dismissal of the employees the law
warrants their dismissal without making any distinction between a first offender and a habitual
delinquent. Under the law, respondent Minister is duly mandated to equally protect and respect not only
the labor or workers' side but also the management and/or employers' side. The law, in protecting the
rights of the laborer, authorizes neither oppression nor self-destruction of the employer. To order the
reinstatement of the erring employees would in effect encourage unequal protection of the laws.
ELMER M. MENDOZA VS. RURAL BANK OF LUCBAN

11 | P a g e

G.R. No. 155421. 7 JULY 2004. FIRST DIVISION (Panganiban, J.)
MANAGEMENT RIGHTS. - The law protects both the welfare of employees and the prerogatives of
management. Courts will not interfere with business judgments of employers, provided they do not
violate the law, collective bargaining agreements, and general principles of fair play and justice. The
transfer of personnel from one area of operation to another is inherently a managerial prerogative that
shall be upheld if exercised in good faith -- for the purpose of advancing business interests, not of
defeating or circumventing the rights of employees.
Facts
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, providing that in line with the policy of the bank to familiarize bank
employees with the various phases of bank operations and further strengthen the existing internal control
system, all officers and employees are subject to reshuffle of assignments and that those affected branch
employees are reshuffled to their new assignments without changes in their compensation and other
benefits. On May 3, 1999, in an undated letter addressed to Daya, the Banks Board Chairman, petitioner
Elmer Mendoza expressed his opinion on the reshuffle alleging that "his reshuffling is deemed to be a
demotion without any legal basis and thus asking to be allowed to remain in his position. On May 10,
1999, Daya replied reitirating that it was never the intention (of the management) to downgrade his
position in the bank considering that due compensation is maintained and no future reduction was
intended. It was further reiterated that the conduct of reshuffle is also a prerogative of bank
management.".
On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter in which he
applied for a leave of absence from work. He then again submitted on June 21, 1999 for another leave.
On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before for
illegal dismissal, underpayment, separation pay and damages against the Rural Bank of Lucban and/or its
president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada. The labor arbiter's June 14,
2000 Decision upheld petitioner's claims. On appeal, the NLRC reversed the labor arbiter. After the
NLRC denied his Motion for Reconsideration, petitioner brought before the CA a Petition for Certiorari
assailing the foregoing Resolution. Finding that no grave abuse of discretion could be attributed to the
NLRC, the CA Decision ruled in favor of the private respondent rural bank.
Issue
Whether the reshuffling pursuant to Board Res. Nos. 99-52 and 99-53 is a valid exercise of
management prerogative?
Ruling
In the pursuit of its legitimate business interest, management has the prerogative to transfer or
assign employees from one office or area of operation to another -- provided there is no demotion in rank
or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This
privilege is inherent in the right of employers to control and manage their enterprise effectively. The right
of employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them.
GELMART INDUSTRIES PHILS., INC. VS. NLRC AND FELIX FRANCIS
12 | P a g e

G.R. No. 85668. 10 AUGUST 1989. FIRST DIVISION (Gancayco, J.)
RIGHT TO RETURN OF INVESTMENT. - Consistent with the policy of the State to bridge the gap
between the underprivileged workingmen and the more affluent employers, the NLRC rightfully tilted the
balance in favor of the workingmen - and this was done without being blind to the concomitant right of
the employer to the protection of his property.
Facts
Felix Francis started working as an auto-mechanic for petitioner Gelmart Industries Phils., Inc.
sometime in 1971. As such, his work consisted of the repair of engines and underchassis, as well as
trouble shooting and overhauling of company vehicles. He is likewise entrusted with some tools and spare
parts in furtherance of the work assigned to him.
On April 11, 1987, private respondent was caught by the security guards taking out of
GELMART's premises one (1) plastic container filled with about 16 ounces of "used' motor oil, without
the necessary gate pass which provides that theft and/or pilferage of company property merits an outright
termination from employment. By reason thereof, petitioner was placed under preventive suspension
pending investigation for violation of company rules and regulations on April 13, 1987. After due
investigation, or on May 20, 1987, private respondent was found guilty of theft of company property. As a
consequence, his services were severed.
Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a
decision dated February 26, 1988, Labor Arbiter Diosana ruled that private respondent was illegally
dismissed and, accordingly, ordered the latter's reinstatement with full backwages from April 13, 1987 up
to the time of actual reinstatement. From this decision, GELMART interposed an appeal with the NLRC.
In its decision dated October 21, 1988, the NLRC affirmed with modification the ruling of Labor Arbiter
Diosana. On December 12, 1988, GELMART filed before this Court a special civil action for certiorari
with a prayer for the issuance of a temporary restraining order. On January 18, 1989, this Court, without
necessarily giving due course to the petition, issued a temporary restraining order enjoining respondents
from enforcing the assailed decision.
Issue
Whether NLRC committed a grave abuse of discretion for rendering a decision that is contrary to
law and existing jurisprudence?
Ruling
The Court held that ,without being too harsh to the employer, and naively liberal to labor, NLRC
correctly pointed out that private respondent cannot totally escape liability for what is patently a violation
of company rules and regulations.
To reiterate, be it of big or small commercial value, intended to be re-used or altogether disposed
of or wasted, the "used" motor oil still remains, in legal contemplation, the property of GELMART. In
this score, it is very difficult for this Court to discern grave abuse of discretion on the part of the NLRC in
modifying the appealed decision. The suspension imposed upon private respondent is a sufficient penalty
for the misdemeanor committed. Thus, the penalty of preventive suspension was sufficient punishment
for the violation under the circumstance and that complainant-appellees dismissal unwarranted.
ROMEO LAGATIC VS. NLRC, ET AL.

13 | P a g e

G.R. No. 121004. 28 JANUARY 1998. THIRD DIVISION (Romero, J.)
RIGHT TO PRESCRIBE RULES. Employers have the right to make reasonable rules and regulations
for the government of their employees, and when employees, with knowledge of an established rule, enter
the service, the rule becomes a part of the contract employment.
Facts
Petitioner was employed as a marketing specialist by Cityland on May 1986, he was tasked with
soliciting sales for the company, accepting call-ins, referrals, and making client calls and cold calls.
Cityland requires all its marketing specialists to make cold calls but nonetheless requires submission of
daily progress reports on the same in order to assess to determine the results thereof.
On November 1992, petitioner was suspended for three days for failing to submit cold call.
Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call reports
for five (5) days. He was verbally reminded to submit the same. Instead of complying with said directive,
petitioner wrote a note, TO HELL WITH COLD CALLS! WHO CARES? and exhibited the same to his
co-employees. To worsen matters, he left the same lying on his desk where everyone could see it.
On February 23, 1993, petitioner received a memorandum requiring him to explain regarding his
failure to submit the said report and as regards to the damaging statement abovementioned Petitioner, in
his letter-reply, averred that his failure should not be deemed as gross insubordination; in addition, he
denied any knowledge of the damaging statement.
Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon
him. Petitioner filed a complaint against Cityland for illegal dismissal, illegal deduction, underpayment,
overtime and rest day pay, damages and attorneys fees. The labor arbiter dismissed the petition for lack of
merit. On appeal, the same was affirmed by the NLRC; hence the present recourse.
Issue
Whether the respondent NLRC gravely abused its discretion in not finding the petitioner illegally
dismissed?
Ruling
Petitioner loses sight of the fact that except as provided for, or limited by, special laws, an
employer is free to regulate, according to his discretion and judgment, all aspects of employment..
Corollarily, an employee may be validly dismissed for violation of a reasonable company rule or
regulation adopted for the conduct of the company business.
Petitioners written statement shows his open defiance and disobedience to lawful rules and
regulations of the company. Likewise, said company policy of requiring cold calls and the concomitant
reports thereon is clearly reasonable and lawful, sufficiently known to petitioner and in connection with
the duties which he had been engaged to discharge. There is, thus, just cause for his dismissal.
14 | P a g e

CHINA BANKING CORP. VS. MARIANO M. BORROMEO
G.R. No. 156515. 19 OCTOBER 2004. SECOND DIVISION (Callejo, Sr., J.)
RIGHT TO PRESCRIBE RULES. - It is well recognized that company policies and regulations are,
unless shown to be grossly oppressive or contrary to law, generally binding and valid on the parties and
must be complied with until finally revised or amended unilaterally or preferably through negotiation or
by competent authority.
Facts
Respondent joined the petitioner Bank on June 1, 1989 as Manager Level 1 assigned at the
latters Regional Office in Cebu City. Subsequently, the respondent was laterally transferred to Cagayan
de Oro City as Branch Manager of the petitioner Banks branch thereat. For the years 1989-1995 he was
promoted from Manager Level I to Senior Manager Level II. On October 16, 1996, the respondent was
promoted to the position of Assistant Vice-President, Branch Banking Group for the Mindanao area.
However, prior to his last promotion and then unknown to the petitioner Bank, the respondent,
without authority from the Executive Committee or Board of Directors, approved several DAUD/BP
accommodations amounting to P2,441,375, wherein, such checks were not sufficiently funded by cash,
are generally not honored by banks. Upon knowing of this by the bank authorities, the respondent
accepted full responsibility for committing an error in judgment, lapses in control and abuse of
discretion.. Respondent tendered his irrevocable resignation effective May 31, 1997.
His acts having constituted a violation of the Banks Code of Ethics, respondent was directed to
restitute the amount of P1,507,736.79 representing 90% of the total loss of P1,675,263.10 incurred by the
petitioner Bank.
Consequently, the respondent filed with the NLRC, the complaint for payment of separation pay,
mid-year bonus, profit share and damages against the petitioner Bank. The Labor Arbiter ruled in favor of
the bank. Respondent appealed to the NLRC but it affirmed in toto the findings of the Labor Arbiter.
However, the CA upon petition set aside the NLRC decision and alleged that repondent was denied his
rights to due process. Hence, this petition.
Issue
Whether the bank has the prerogative/right to impose the withholding of respondents benefits as
what it considered the appropriate penalty under the circumstances pursuant to its company rules and
regulations?
Ruling
The petitioner Banks business is essentially imbued with public interest and owes great fidelity
to the public it deals with. It is expected to exercise the highest degree of diligence in the selection and
supervision of their employees. As a corollary, and like all other business enterprises, its prerogative to
discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules
and regulations must be respected. The law, in protecting the rights of labor, authorized neither oppression
nor self-destruction of an employer company which itself is possessed of rights that must be entitled to
recognition and respect.
15 | P a g e

ASSOCIATED WATCHMEN AND SECURITY UNION VS. HON. JUDGE LANTING, ET AL
G.R. No. L-14120. 29 FEBRUARY 1960. EN BANC (Labrador, J.)
RIGHT TO PRESCRIBE RULES. - The refusal of the to employ guards affiliated with a security or
watchmen agency that does not furnish bond can not constitute an unfair labor practice. Such refusal is
merely the exercise of respondent's legitimate right to protect its own interests.
Facts
Three agencies were employed by certain shipping agencies in the City of Manila and private
respondent Macondray and Company Inc., in guarding ships or vessels arriving at the port of Manila. and
in discharging cargo on its piers. Thereafter, petitioner union and its members declared a strike against 19
shipping firms in the City of Manila. Thereafter, a petition was filed before the Court of Industrial
Relations asking for reinstatement of 47 strikers who belong to the petitioner Associated Watchmen and
Security Union (PTWO).
The manager of respondent Macondray and Company, Inc. provided the condition for such
reinstatement, that the agency to which the petitioners belong file a bond in the sum of P5,000 in their
favor to respond for any negligence, misfeasance or malfeasance of any of the watchmen of petitioner.
This requirement of filing a bond was also demanded of the other two security agencies, However, the
Republic Ships Security Agency failed to comply with the demands of Macondray and Company, Inc.
And the later refused to employ watchmen from the said agency. Some of the members of the agency
transferred to the other two agencies that had furnished a bond and after having joined the said agencies
they were employed as watchmen by the respondent Macondray and Company, Inc.
On November 15, 1956, Macondray and Company, Inc. was charged with unfair labor practice.
Macondray and Company, Inc. answered the complaint.
The judge of the Court of Industrial held that defendant-respondent is guilty of unfair labor
practice in view of the circumstances of the case and ordered the members of the union to be reinstated
with full back wages and prohibited the respondent from committing further acts of unfair labor practice.
The respondent appealed this decision. On the appeal, three of the judges of the court, Judges Lanting,
Martinez and Tabigne, voted to reverse the decision of the trial judge and to dismiss the petition for lack
of merit. The other two judges voted for the affirmance of the decision.
Issue
Whether or not Macondray and Company committed unfair labor practice?
Ruling
The Court held that the majority decision is fully supported by the evidence and by the
documents and papers on the record, insofar as it declares that respondent has not been guilty of unfair
labor practice.
The refusal of the respondent to employ guards affiliated with a security or watchmen agency that
does not furnish bond can not constitute an unfair labor practice. Such refusal is merely the exercise of
respondent's legitimate right to protect its own interests. It is to be noted that the requirement of filing of a
bond was not demanded from any of the labor unions, or from the petitioner union herein. We cannot
conclude that because the respondent company refused to employ the guards affiliated with the Republic
Ships Security Agency, which affiliates are members of the petitioner union, respondent committed an
unfair labor practice or a discrimination against petitioner union.
16 | P a g e

PAMPANGA BUS COMPANY, INC., VS. PAMBUSCO EMPLOYEES' UNION, INC.
G.R. No. 46739. 23 SEPTEMBER 1939. EN BANC (Moran, J.)
RIGHT TO SELECT EMPLOYEE. - The general right to make a contract in relation to one's business is
an essential part of the liberty of the citizens protected by the due-process clause of the Constitution. The
right of the laborer to sell his labor to such person as he may choose is, in its essence, the same as the
right of an employer to purchase labor from any person whom it chooses. The employer and the employee
have thus an equality of right guaranteed by the Constitution.
Facts
On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner
herein, Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco Employees' Union, Inc.,
new employees or laborers it may need to replace members of the union who may be dismissed from the
service of the company, with the proviso that, if the union fails to provide employees possessing the
necessary qualifications, the company may employ any other persons it may desire. This order, in
substance and in effect, compels the company, against its will, to employ preferentially, in its service, the
members of the union.
Issue
Whether or not the said order issued by the CIR valid and not violative of the right of the
employer to select employees.
Ruling
We hold that the court has no authority to issue such compulsory order.
The general right to make a contract in relation to one's business is an essential part of the liberty
of the citizens protected by the due-process clause of the Constitution. The right of the laborer to sell his
labor to such person as he may choose is, in its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the employee have thus an equality of right
guaranteed by the Constitution.
Section of Commonwealth Act No. 213 confers upon labor organizations the right "to collective
bargaining with employers for the purpose of seeking better working and living conditions, fair wages,
and shorter working hours for laborers, and, in general, to promote the material, social and moral wellbeing of their members." This provision in granting to labor unions merely the right of collective
bargaining, impliedly recognizes the employer's liberty to enter or not into collective agreements with
them. Indeed, we know of no provision of the law compelling such agreements. Such a fundamental
curtailment of freedom, if ever intended by law upon grounds of public policy, should be effected in a
manner that is beyond all possibility of doubt. The supreme mandates of the Constitution should not be
loosely brushed aside.
Decision
Thus considered, the order appealed from is hereby reversed, with costs against the respondent
Pambusco Employees' Union, Inc.
17 | P a g e

GREGORIO ARANETA EMPLOYEES UNION, ET AL. VS. ARSENIO C. ROLDAN, ET AL.
G.R. No. L-6846. 20 JULY 1955. EN BANC (Jugo, J.)
RIGHT TO DISCHARGE EMPLOYEE. The laying off of employees due to the retrenchment policy
adopted by a company in order to reduce the overcapitalization and minimize expenses and as a
consequence the volume of business is considerably reduced particularly when it is not aimed at the
Union or any of its members for union or labor activities, is not an unfair labor practice.
Facts
The Agricultural Division of the Gregorio Araneta, Inc., was established in 1947 with total
investment of P3,000.00. To reduce this overcapitalization, the Board of Directors had two options, either
to invite fresh capital from outside or to adopt a retrenchment policy, however, Heacock and Company
refused the invitation to invest in the enterprise, the Board took the alternative of retrenchment.
The Board decided not to import as much merchandise as usual. It also reduced credits. All these
plans required a reduction in the volume of business necessitating likewise a reduction of personnel and
caused the laying off of 17 employees. The selection of those to be laid off was made by a technical man
and approved by the Board. These employees were given one month separation pay, except Nicolas
Gonzalez who refused to receive it.
Reorganization of the Agricultural Division was adopted before the petitioner Union was
organized and; consequently, it was never directed against the union. Judge Bautista believed that
Gonzales should not have been separated because his work was shifted to another employee, who was
thus overburdened. Presiding Judge Arsenio C. Roldan modified the decision of Associate Judge Bautista,
holding that the laying off of Gonzalez was also legal.
Issue
Whether the 17 employees were legally laid off under the retrenchment policy of the company?
Ruling
The Court held that there is no reason for disturbing the decision of the Court of Industrial
Relations, en banc. The laying off of the 17 employees was due to the retrenchment policy which the
Company had to adopt in order to reduce the overcapitalization and minimize expenses. The volume of
business was considerably reduced.
In addition, It should be noted that the retrenchment policy was adopted before even the organization of
the petitioning union. It was not, therefore, aimed at the Union or any of its members for union or labor
activities. It was not an unfair labor practice.
Decision
In view of the foregoing, the petition is denied, without pronouncement as to costs. It is so
ordered.
18 | P a g e

PHILIPPINE SHEET METAL WORKERS' UNION VS. COURT OF INDUSTRIAL, ET AL.
G.R. No. L-2028. 28 APRIL 1949. EN BANC (Reyes, J.)
RIGHT TO TRANSFER OR DISCHARGE EMPLOYEE. An employer has the perfect right to
transfer or lay off personnel in order to minimize expenses and to insure the stability of the business, and
even to close the business, provided the transfer or dismissal is not abused but is done in good faith and is
due to causes beyond control, to hold otherwise would be oppressive and inhuman.
Facts
Philippine Sheet Metal filed a motion, in the case pending in the court of industrial relations.
Such motion asked for an authority to lay off at least fifteen (15) workers in the Can Department on
ground that the installation and operation of nine (9) new labour-saving machines in the said department
had rendered the services of the said workers unnecessary. Petitioner Union, on the other hand, alleged
that there was more than sufficient work in the company to keep all its workers busy.
Issue
Whether or not laying off of the fifteen (15) employees is valid?
Ruling
The Court held that the authority to lay of the said employees is valid. The introduction of
machineries in the manufacturing process of the respondents company products is a legal justification for
reducing the number of workers in the said factory. Furthermore, There is no question as to the right of
the manufacturer to use new labour-saving devices with the view to effecting more economy and
efficiency in its method of production. However, the right to reduce personnel should not be abused. It
should not be made a pretext for easing out labourers on account of their union activities. But neither
should it be denied when it is shown that they are not discharging their duties in a manner consistent with
good discipline and efficient operation of an industrial enterprise.
Decision
After a careful review of the record, we find that the Court of Industrial Relations has neither
exceeded its jurisdiction nor committed grave abuse of discretion in rendering the order complained of.
The petition for certiorari is, therefore, denied, but without costs against the petitioner for the reasons
stated in its motion to litigate as pauper.
19 | P a g e

TIONG KING V. CIR AND THE NATIONAL TAILORS ASSOCIATION
G.R. No. L-3587. 21 December 21, 1951. EN BANC (Parac, C.J.)
RIGHT TO CLOSE BUSSINESS. An employer has the perfect right to transfer or lay off personnel,
and even to close the business, provided the transfer or dismissal is not abused but is done in good faith
and is due to causes beyond control, to hold otherwise would be oppressive and inhuman.
Facts
Gaw Pun So owned and operated Army Shirt Factory, a tailor shop, In January, 1948, he had a
labor dispute with his personnel and, pending the case in the CIR, Gaw Pun So thought of dissolving the
business and selling the sewing machines. Tiong King offered to take over the business by leasing the
place and the sewing machines. The transfer was put in writing. Tiong King continued the Army Shirt
Factory with the same employees had by Gaw Pun So. This transfer was known to the personnel. The
National Tailors Association entered that all cases were terminated against the respondents. This
agreement was duly approved by the Court of Industrial Relations.
On April 27, 1948, Tiong King filed a petition in the CIR, alleging that since he operated his shop
in February, 1948, he had continually suffered losses; that as there remained only very little of the capital
originally invested, and that he was definitely closing the shop on May 30, 1948. Tiong King accordingly
prayed that he be allowed to close his tailor shop and business. Presiding Judge Arsenio C. Roldan of the
CIR issued an order enjoining the foreclosure of the factory and not to dismiss, suspend or lay off any
labourer or employee without previous authority of said court.
Upon petition for reconsideration of herein petitioner, CIR promulgated a resolution allowing
Tiong King to close his business and shop, subject to the condition that, upon reopening the same, his
former personnel would be taken back. On the other hand, upon motion for reconsideration of the
National Tailor's Association, CIR, reaffirmed their stand on the resolution of the Court of Industrial
Relations under date of July 1, 1949. Hence, the present appeal by certiorari was taken by Tiong King.
Issue
Whether petitioner had the right to file the petition to close the tailors shop?
Ruling
Upon this point, it is only sufficient to recall that the National Tailors Association entered into a
stipulation with Tiong King alone whereby they agreed that all cases against the former owners of the
business were terminated. That Tiong King was conceded to be the owner and operator of the army shirt
factory at the time his petition to close it was filed. Furthermore, the said arrangement is a very good
solution to the present conflict as it is advantageous not only to the union but also the management, and,
is in consonance with the contract entered into between the management and the new workers. Hence,
there being no question that Tiong King's capital invested in the Army Shirt Factory was almost exhausted
at the time of the filing of his petition to close it, said petition must necessity be granted. It is admitted by
all the Judges of the Court of Industrial Relations that an employer may close his business, provided the
same is done in good faith and is due beyond his control. To rule otherwise, would be oppressive and
inhuman.
20 | P a g e

RIZAL EMPIRE INSURANCE GROUP, ET AL. VS. NLRC, ET AL.
G.R. No. 73140. 29 MAY 1987. SECOND DIVISION (Paras, J.)
RULES AND REGULATIONS. It has been ruled that administrative regulation and policies enacted by
administrative bodies to interpret the law which they are entrusted to enforce have the force of law, and
are entitled to great respect.
Facts
In August, 1977, private respondent Rogelio Coria was hired by herein petitioner Insurance
Group as a casual employee with a salary of P10.00 a day. On January 1, 1978, he was made a regular
employee, having been appointed as clerk-typist, with a monthly salary of P300.00. Being a permanent
employee, he was furnished a copy of petitioner company's "General Information, Office Behavior and
Other Rules and Regulations." In the same year, without change in his position-designation, he was
transferred to the Claims Department and his salary was increased to P450.00 a month. In 1980, he was
transferred to the Underwriting Department and his salary was increased to P580.00 a month plus cost of
living allowance, until he was transferred to the Fire Department as filing clerk. In July, 1983, he was
made an inspector of the Fire Division with a monthly salary of P685.00 plus allowances and other
benefits.
On October 15, 1983, private respondent Rogelio R. Coria was dismissed from work, allegedly, on the
grounds of tardiness and unexcused absences. Accordingly, he filed a complaint with the Ministry of
Labor and Employment, and in a Decision dated March 14, 1985 Labor Arbiter Teodorico L. Ruiz
reinstated him to his position with back wages. Petitioner filed an appeal with the NLRC but, in a
Resolution dated November 15, 1985, the appeal was dismissed on the ground that the same had been
filed out of time, hence, the instant petition.
Issue
Whether NLRC committed a grave abuse of discretion amounting to lack of jurisdiction in
dismissing petitioners appeal on a technicality?
Ruling
The Revised Rules of the National Labor Relations Commission are clear and explicit and leave
no room for interpretation. Moreover, it is an elementary rule in administrative law that administrative
regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to
enforce, have the force of law, and are entitled to great respect. In addition, the decision appealed from in
this case has become final and executory and can no longer be subject to appeal.
Even on the merits, the ruling of the Labor Arbiter appears to be correct; the consistent
promotions in rank and salary of the private respondent indicate he must have been a highly efficient
worker, who should be retained despite occasional lapses in punctuality and attendance. Perfection cannot
after all be demanded.
21 | P a g e

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. VS. HON. FRANKLIN M.
DRILON AND TOMAS D. ACHACOSO
G.R. No. L-81958. 30 June 30, 1988. EN BANC (Sarmiento, J.)
RULES AND REGULATION. - Police power is the domain of the legislature, but it does not mean that
such an authority may not be lawfully delegated. The Labor Code itself in Article 5 vests the Department
of Labor and Employment with the rule-making powers in the enforcement thereof.
Facts
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI), a firm "engaged
principally in the recruitment of Filipino workers, male and female, for overseas placement," challenges
the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF
DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this petition for
certiorari and prohibition. Specifically, the measure is assailed for "discrimination against males or
females;" that it "does not apply to all Filipino workers but only to domestic helpers and females with
similar skills;" and that it is violative of the right to travel. It is held likewise to be an invalid exercise of
the lawmaking power, police power being legislative, and not executive, in character.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the
Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of
Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In
submitting the validity of the challenged "guidelines," the Solicitor General invokes the police power of
the Philippine State.
Issue
Whether Department Order No. 1 issued by the Department of Labor and Employment is a valid
regulation?
Ruling
The Court held that, while it is true, police power is the domain of the legislature, but it does not
mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself
vests the Department of Labor and Employment with rulemaking powers in the enforcement whereof.
Moreover, the Labor Code has vested the Department of Labor and Employment with the rule-making
powers in order to effectively promote the welfare and interests of Filipino workers.
The protection to labor does not only signify the promotion of employment alone, more important
is that such be decent, just and humane. The preference for female workers being covered by the said
regulation has been motivated by a growing incidence of Filipina abuses overseas.
22 | P a g e

CBTC EMPLOYEES UNION VS. HON. JACOBO C. CLAVE, ET AL.
G.R. No. L-49582 7. JANUARY 1986. FIRST DIVISION (De La Fuente, J.)
RULES AND REGULATIONS. An administrative interpretation which takes away a benefit granted in
the law is ultra vives, that is, beyond ones power.
Facts
Petitioner Union lodged a complaint with the Department of Labor, against private respondent
bank for non-payment of the holiday pay benefits provided for under Article 95 (now Article 94) of the
Labor Code. Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit
their dispute for voluntary arbitration. On 22 April 1976, the Arbitrator handed down an award on the
dispute in favor of petitioner union. The next day, the Department of Labor released Policy Instructions
No. 9, a policy regarding the implementation of the ten (10) paid legal holidays.
Private Respondent bank interposed an appeal to the NLRC contending that the Arbitrator
demonstrated gross incompetence and/or grave abuse of discretion when he failed to apply Policy
Instructions No. 9. The said appeal was dismissed. Private respondent then appealed to the Secretary of
Labor. On 30 June 1977, the Acting Secretary of Labor reversed the NLRC decision. On the principal
issue of holiday pay, the Acting Secretary, guided by Policy Instructions No. 9, applied the same
retrospectively, among other things.
Issue
Whether or not the monthly pay of the covered employees already includes what Article 94 of the
Labor Code requires as regular holiday pay benefit in the amount of his regular daily wage?
Ruling
In excluding the union members the benefits of the holiday pay law, public respondent predicated
his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 of the Labor Code
promulgated by the then Secretary of Labor and Policy Instructions No. 9.
In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, this Court's
Second Division, speaking through former Justice Makasiar, expressed the view and declared that the
section and interpretative bulletin are null and void, having been promulgated by the then Secretary of
Labor in excess of his rule-making authority.
The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy
Instruction No. 9 add another excluded group, namely, 'employees who are uniformly paid by the month'.
While the additional exclusion is only in the form of a presumption that all monthly paid employees have
already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it
is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the
statute delimits or withholds is obviously ultra vires.
23 | P a g e

NATIONAL HOUSING CORPORATION VS. BENJAMIN JUCO AND NLRC
G.R. No. L-64313. 17 JANUARY 1985. EN BANC (Gutierrez, Jr., J)
APPLICABILITY OF ARTICLE 6 (Labor Code). - For purposes of coverage in the Civil Service,
employees of government owned or controlled corporation whether created by special law or formed as
subsidiaries are covered by the Civil Service Law, not the Labor Code, and the fact that government
owned or controlled corporation by the government may be created by special charter does not mean that
such corporation not created by special law are not covered by the Civil Service.
Fact
Private respondent Benjamin Juco was an employee of herein petitioner National Housing
Corporation. The former filed a complaint for illegal dismissal w/ MOLE, however it case was dismissed
by the Labor Arbiter, on ground that private respondent is a government owned and controlled
corporation, and that jurisdiction over its employees is vested in the Civil Service Commission. On
appeal, NLRC reversed the decision and remanded the case to the Labor Arbiter for further proceedings.
Private respondent Corporation in turn appealed to the Supreme Court.
Issue
Whether the employees of the National Housing Corporation, a GOCC without original charter,
covered by the Labor Code or by laws and regulations governing the civil service?
Ruling
Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil Service embraces every
branch, agency, subdivision and instrumentality of the Government, including every government owned
and controlled corporation. The inclusion of GOCC within the embrace of the civil service shows a
deliberate effort at the framers to plug an earlier loophole which allowed GOCC to avoid the full
consequences of the civil service system. All offices and firms of the government are covered.
This constitutional provision has been implemented by statute PD 807 is unequivocal that
personnel of GOCC belong to the civil service and subject to civil service requirements."Every" means
each one of a group, without exception. This case refers to a GOCC. It does not cover cases involving
private firms taken over by the government in foreclosure or similar proceedings.
The infirmity of the respondents position lies in permitting the circumvention or emasculation of
Sec. 1, Art. XII-B [now Art IX, B, Sec. 2 (1)] of the Constitution. It would be possible for a regular
ministry of government to create a host of subsidiary corporation under the Corporation.
Conceivably, all government owned or controlled corporation could be created, no longer by
special charters, but through incorporation under the general law. The Constitutional amendment
including such corporation in the embrace of the civil service would cease to have application. Certainly,
such a situation cannot be allowed.
24 | P a g e

NATIONAL SERVICE CORPORATION (NASECO), ET AL. VS. NATIONAL NLRC , ET AL.
G.R. No. L-69870. 29 NOVEMBER 1988. EN BANC (Padilla, J.)
APPLICABILITY OF ARTICLE 6 (LABOR CODE). The government-owned and controlled
corporations with original charter refer to corporations chartered by special law from Congress as
distinguished from corporations organized under our general incorporation statute, the Corporation Code.
Thus, under the present state of law, the test in determining whether a government-owned and controlled
corporation is subject to the Civil Service Law is the manner of its creation
Facts
Civil service does not include government-owned and controlled corporations (GOCC) which are
organized as subsidiaries of said corporations under the general corporation law.
Herein petitioner Eugenio Credo, former employee of the National Service Corporation, claimed
of illegal dismissal. NLRC ruled for an order of reinstatement. NASECO, on the other hand, argued that
NLRC has no jurisdiction to order such reinstatement. NASECO as a government corporation by virtue of
it being a subsidiary of the NIDC, which is wholly owned by the Philippine National Bank, which is in
turn is a GOCC, and that its terms and conditions of employment of its employees are governed by the
Civil Service Law.
Issue
Whether the employees of NASECO, a GOCC without original charter, are governed by the Civil
Service Law?
Ruling
The Court ruled that the employees of NASECO were not governed by the provisions of the Civil
Service Law. The holding in National Housing Corporation vs. Benjamin Juco should not be given
retroactive effect, for cases that arose before its promulgation on Jan 17, 1985, to do otherwise would
be oppressive to herein petitioner Eugenio Credo and the other employees, however, prior to the ruling in
the latter case, the Court recognized the applicability of the Labor jurisdiction over disputes involving
terms and conditions of employment in GOCC's. In the matter of coverage by the civil service of GOCC,
the 1987 Constitution starkly differs from the 1973 constitution where National Housing Corporation vs.
Benjamin Juco was based. It provides that the "Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the government including government-owned and controlled
corporation with original charter." By clear implication, the Civil Service does not include GOCCs which
are organized as subsidiaries of GOCCs under the General Corporation Law.
25 | P a g e

REPUBLIC OF THE PHILIPPINES, VS. HON. COURT OF APPEALS, ET AL.
G.R. No. 87676. 20 DECEMBER 1989. FIRST DIVISION (Grio-Aquino, J.)
NON-APPLICABILITY TO GOVERNMENT AGENCIES. The National Parks Development
Committee employees are allowed under the 1987 Constitution to organize and join unions of their
choice, there is no law permitting them to strike. In case of a labor dispute between the employees and the
government, Section 15 of EO No.180, provides that the Public Sector Labor-Management Council, not
the Department of Labor and Employee, shall hear the dispute.
Facts
On March 20, 1988, herein respondent National Park Development Supervisory Association
(NPDSA) and their members staged a stake at the Rizal Park, Fort Santiago, Paco Park, and Pook ni
Mariang Makiling at Los Banos, Laguna, alleging unfair labor practices by herein petitioner National
Park Development Committee (NPDC).
On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch III, a complaint
against the union to declare the strike illegal and to restrain it on the ground that the strikers, being
government employees, have no right to strike although they may form a union.
The RTC of Manila dismissed for lack of jurisdiction, the petitioner's complaint praying for a
declaration of illegality of the strike of the private respondents and to restrain the same. The Court of
Appeals denied the petitioner's petition for certiorari, hence, this petition for review.
Issue
Whether the petitioner, National Parks Development Committee (NPDC), is a government
agency, or a private corporation?
Ruling
The Court ruled that while NPDC employees are allowed under the 1987 Constitution to organize
and join unions of their choice, there is as yet no law permitting them to strike. In case of a labor dispute
between the employees and the government, Section 15 of Executive Order No. 180 dated June 1, 1987
provides that the Public Sector Labor- Management Council, not the Department of Labor and
Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in holding
that the labor dispute between the NPDC and the members of the NPDSA is cognizable by the
Department of Labor and Employment.
26 | P a g e

LUZON DEVELOPMENT BANK VS. ASSOCIATION OF LDB EMPLOYEES, ET AL.
G.R. No. 120319. 6 OCTOBER 1995. EN BANC (Romero, J.)
NON-APPLICABILITY TO GOVERNMENT AGENCIES. The terms governmental agency or
instrumentality are synonymous in the sense that either of them is a means by which a government acts,
or b y which a certain government act or function is performed. The word instrumentality with respect
to the state, contemplates an authority to which the state delegatrs government power for the performance
of a state function.
Facts
From a submission of agreement by the herein petitioner Luzon Development Bank herein
respondent Association of Luzon Development Bank Employees (ALDBE) arise an arbitration case:
whether or not the company has violated the CBA provision and the MOA on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers. Atty.
Garcia, in her capacity as Voluntary Arbitrator, received ALDBEs Position Paper; LDB, on the other
hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to
do so. As of May 23, 1995 no Position Paper had been filed by LDB. Notwithstanding the failure to
submit the said Position Paper by LDBs, Voluntary Arbitrator rendered a decision finding that the herein
petitioner Bank has not adhered to the collective bargaining agreement nor the memorandum of
agreement on promotion.
Hence, herein petitioner Bank filed for a petition for certiorari and prohibition seeking to set
aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing the same.
Issue
Whether the decision of the Voluntary Arbitrator is appealable to the Court of Appeals and not in
the Supreme Court?
Ruling
The Court ruled that the said decision promulgated by the Voluntary Arbitrator is appealable to
the Court of Appeals.
The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite
limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the
NLRC for that matter. The decision, awards, or orders of the Labor Arbiter are final and executor unless
appealed to the Commission Hence, while there is an express mode of appeal from the decision of a
labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the decision of a voluntary
arbitrator.
27 | P a g e

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), ET AL. VS. COURT OF
APPEALS, SOCIAL SECURITY SYSTEM (SSS), ET AL.
G.R. No. 85279. 28 JULY 1989,.THIRD DIVISION (Cortes, J.)
NON-APPLICABILITY TO GOVERNMENT AGENCIES Employees of the Social Security System
are civil service employees. When they went on strike, the Regional Trial Court, not NLRC, had
jurisdiction to hear the petition to enjoin the strike.
Facts
The petitioners went on strike after the SSS failed to act upon the unions demands concerning
the implementation of their CBA. SSS filed before the court action for damages with prayer for writ of
preliminary injunction against petitioners for staging an illegal strike. The court issued a temporary
restraining order pending the resolution of the application for preliminary injunction while petitioners
filed a motion to dismiss alleging the courts lack of jurisdiction over the subject matter. Petitioners
contend that the court made reversible error in taking cognizance on the subject matter since the
jurisdiction lies on the DOLE or the National Labor Relations Commission as the case involves a labor
dispute. The SSS contends on one hand that the petitioners are covered by the Civil Service laws, rules
and regulation thus have no right to strike. They are not covered by the NLRC or DOLE therefore the
court may enjoin the petitioners from striking.
Issue
Whether the Court of Appeals erred in taking jurisdiction over the subject matter?
Ruling
The Constitutional provisions enshrined on Human Rights and Social Justice provides guarantee
among workers with the right to organize and conduct peaceful concerted activities such as strikes. On
one hand, Section 14 of E.O No. 180 provides that the Civil Service law and rules governing concerted
activities and strikes in the government service shall be observed,
subject to any legislation that may be enacted by Congress referring to Memorandum Circular No. 6, s.
1987 of the Civil Service Commission which states that prior to the enactment by Congress of applicable
laws concerning strike by government employees enjoins under pain of administrative sanctions, all
government officers and employees from staging strikes, demonstrations, mass leaves, walk-outs and
other forms of mass action which will result in temporary stoppage or disruption of public service.
Therefore in the absence of any legislation allowing govt. employees to strike they are prohibited from
doing so.
In Sec. 1 of E.O. No. 180 the employees in the civil service are denominated as
government employees and that the SSS is one such government-owned and controlled corporation
with an original charter, having been created under R.A. No. 1161, its employees are part of the civil
service and are covered by the Civil Service Commissions memorandum prohibiting strikes.
Neither the DOLE nor the NLRC has jurisdiction over the subject matter but instead it is the
Public Sector Labor-Management Council which is not granted by law authority to issue writ of
injunction in labor disputes within its jurisdiction thus the resort of SSS before the general court for the
issuance of a writ of injunction to enjoin the strike is appropriate.
28 | P a g e

ASSOCIATION OF SMALL LANDOWNERS OF THE PHILIPPINES VS. SECRETARY OF
AGRARIAN REFORM
G.R. No. 78742. 14 JULY 1989. EN BANC (Cruz, J.)
AGRARIAN REFORM AS AN EXERCISE OF EMINENT DOMAIN. - The taking contemplated is not
a mere limitation of the use of the land. What is required is the surrender of the title to and the physical
possession of the excess and all beneficial rights accruing to the owner in favor of the beneficiary.
Facts
The Association of Small Landowners in the Philippines, Inc. sought exception from the land
distribution scheme provided for in R.A. 6657. The Association is comprised of landowners of ricelands
and corn lands whose landholdings do not exceed 7 hectares. They invoke that since their landholdings
are less than 7 hectares, they should not be forced to distribute their land to their tenants under R.A. 6657
for they themselves have shown willingness to till their own land. They want to be exempted from
agrarian reform program because they claim to belong to a different class.
Issue
Whether agrarian reform is an exercise of police power or eminent domain?
Ruling
There are traditional distinctions between the police power and the power of eminent domain that
logically preclude the application of both powers at the same time on the same subject. Property
condemned under the police power is noxious or intended for a noxious purpose, such as a building on the
verge of collapse, which should be demolished for the public safety, or obscene materials, which should
be destroyed in the interest of public morals. The confiscation of such property is not compensable, unlike
the taking of property under the power of expropriation, which requires the payment of just compensation
to the owner.
The cases at bar present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in accordance
with the Constitution. But where, to carry out such regulation, it becomes necessary to deprive such
owners of whatever lands they may own in excess of the maximum area allowed, there is definitely a
taking under the power of eminent domain for which payment of just compensation is imperative. The
taking contemplated is not a mere limitation of the use of the land. What is required is the surrender of the
title to and the physical possession of the said excess and all beneficial rights accruing to the owner in
favor of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power of
eminent domain.
29 | P a g e

ARSENIO AL. ACUNA, ET. AL. VS. JOKER ARROYO, ET. AL
PRIVATE AGRICULTURAL LANDS. The expropriation affects all private agricultural whenever
found and of whatever kind as long as they are in excess of the maximum retention limits allowed their
owners. This expropriation is intended for the benefit not only of a particular community but the entire
Filipino nation.
Facts
RA No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988was signed
into law by then President Corazon Aquino. There were a number of legal questions challenging the
constitutionality of the several measures enacted to implement the CARL. In the instant case, the
petitioners are landowners and sugar planters in the Victorias Mill District in Negros Occidental. Copetitioner Planters Committee is an organization composed of 1,400 planter-members. This petition seeks
to prohibit the implementation of Proclamation No. 131 and EO No. 229.The petitioners claim that the
power to provide for a CARP as decreed by the constitution belongs to Congress and not the President.
Even assuming that the interim legislative power of the President was properly exercised, Proc. No. 131
and EO No.229 would still have to be annulled for violating the constitutional provisions on just
compensation, due process and equal protection. Section 2 of Proc. No. 131. The money needed to cover
the cost of the contemplated expropriated has yet to be raised and cannot be appropriated at this time.
Petitioners contend that taking must be simultaneous with payment of just compensation as it is
traditionally understood. The petitioners also argue that in the issuance of the two measures, no effort was
made to make a careful study of the sugar planters situation. To the extent that the sugar planters have
been lumped in the same legislation with other farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been violated.
Issue
Whether Proclamation No. 131 and Executive Order No. 229 are valid?
Ruling
The Court upheld the presumption of constitutionality in favour of Proc. No. 131 and EO
No. 229. Contrary to the petitioners contention, a pilot project to determine the feasibility of CARP
and a general survey on the peoples opinion thereon are not indispensable prerequisites to its
promulgation. On the alleged violation of the equal protection clause, the sugar planters have failed
to show that they belong to a different class and should be treated differently. Regarding the issue of
just compensation, it cannot be denied that the issue involved in the case is a revolutionary kind of
expropriation. The expropriation in the instant case affects all private agricultural lands
whenever found and of whatever kind as long as they are in excess of the maximum retention limits
allowed their owners. This kind of expropriation is intended for the benefit not only of a particular
community but of the entire Filipino nation. Such a program will involve not mere million of pesos.
We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method.
The validity of Proc. No. 131 and EO No. 229 is SUSTAINED.
30 | P a g e

INOCENTES PABICO VS. HON. PHILIP E. JUCO
Filipino nation.
Facts
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of
due process and the requirement for just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on December 24, 1986, his petition was
denied without hearing.
On February 17, 1987, he filed a motion for reconsideration, which had not been acted upon
when Executive Order Nos. 228 and 229 were issued. These orders rendered his motion moot and
academic because they directly affected the transfer of his land to the private respondents.
Issue
Whether the laws being challenged are a valid exercise of Police power or Power of Eminent
Domain?
Ruling
Police Power through the Power of Eminent Domain, though there are traditional distinction
between the police power and the power of eminent domain, property condemned under police power is
noxious or intended for noxious purpose, the compensation for the taking of such property is not subject
to compensation, unlike the taking of the property in Eminent Domain or the power of expropriation
which requires the payment of just compensation to the owner of the property expropriated.
31 | P a g e

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR. V. HON. PHILIP ELLA JUICO
Filipino nation.
Facts
Nicolas Manaay questioned the validity of the agrarian reform laws (PD 27, EO 228, and 229) on
the ground that these laws already valuated their lands for the agrarian reform program and that the
specific amount must be determined by the Department of Agrarian Reform (DAR). Manaay averred that
this violated the principle in eminent domain which provides that only courts can determine just
compensation. This, for Manaay, also violated due process for under the constitution, no property shall be
taken for public use without just compensation.
Manaay also questioned the provision which states that landowners may be paid for their land in
bonds and not necessarily in cash. Manaay averred that just compensation has always been in the form of
money and not in bonds.
Issue
Whether the laws being challenged are a valid exercise of Police power or Power of Eminent
Domain?
Ruling
Police Power through the Power of Eminent Domain, though there are traditional distinction
between the police power and the power of eminent domain, property condemned under police power is
noxious or intended for noxious purpose, the compensation for the taking of such property is not subject
to compensation, unlike the taking of the property in Eminent Domain or the power of expropriation
which requires the payment of just compensation to the owner of the property expropriated.
32 | P a g e

GABINO ALITA, ET. AL. VS. COURT OF APPEALS, ET. AL.
G.R. No. 78517. 27 FEBRUARY 1989. SECOND DIVISION (Paras, J.)
LANDS NOT COVERED The newly promulgated Comprehensive Agrarian Reform Law of 1988 or
Republic Act No. 6657 contains a proviso supporting the inapplicability of P.D. 27 to lands covered by
homestead patents Provided, that original homestead grantees or their direct compulsory heirs who still
own the original homestead at the time of the approval of the Act shall retain the same areas as long as
they continue to cultivate said homestead.
Facts
The subject matter of the case consists of two (2) parcels of land, acquired by private respondents'
predecessors-in-interest through homestead patent under the provisions of Commonwealth Act No. 141.
Private respondents are desirous of personally cultivating these lands, but petitioners refuse to vacate,
relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations issued by the then Ministry
of Agrarian Reform (DAR for short), now Department of Agrarian Reform.
On June 18, 1981, private respondents instituted a complaint against Hon. Conrado Estrella and
herein petitioners for the declaration of P.D. 27 and all other Decrees, Letters of Instructions and General
Orders issued in connection therewith as inapplicable to homestead lands. Subsequently, on July 19,
1982, plaintiffs filed an urgent motion to enjoin the defendants from declaring the lands in litigation under
Operation Land Transfer and from being issued land transfer certificates. On November 5, 1982, the
Court of Agrarian Relations dismissed the said complaint and the motion to enjoin the defendants was
denied. Thus, on April 29, 1986, the Regional Trial Court issued the decision prompting defendants to
move for reconsideration but the same was denied in its Order dated June 6, 1986. On appeal, the same
was sustained in its judgment rendered on March 3, 1987. Hence, the present petition for review on
certiorari.
Issue
Whether the lands obtained through homestead patent are covered by the Agrarian Reform under
P.D. 27.?
Ruling
The Court agreed with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants
from the bondage of the soil and transferring to them ownership of the land they till is a sweeping social
legislation, a remedial measure promulgated pursuant to the social justice precepts of the Constitution.
However, such contention cannot be invoked to defeat the very purpose of the enactment of the Public
Land Act or Commonwealth Act No. 141. In this regard, the Philippine Constitution likewise respects the
superiority of the homesteaders' rights over the rights of the tenants guaranteed by the Agrarian Reform
statute. In point is Section 6 of Article XIII of the 1987 Philippine Constitution. Additionally, it is worthy
of note that the newly promulgated Comprehensive Agrarian Reform Law of 1988 or Republic Act No.
6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to lands covered by homestead
patents like those of the property in question.
33 | P a g e

FELIX GONZALES & CARMEN GONZALES VS. COURT OF APPEALS, ET. AL
G.R. No. 36213. 26 JUNE 1989. FIRST DIVISION (Grino-Aquino, J.)
LANDS NOT COVERED. Section II of the Comprehensive Agrarian Reform Law includes private
agricultural lands, devoted to commercial livestock, poultry and swine raising under commercial farms as
invalid; Livestock or poultry raising is not similar to crop or tree farming; agricultural land.
Facts
On October 26, 1988, Lucia A. Sison filed a motion to be substituted in lieu of the private
respondents Andres Agcaoile (who died on May 20, 1976) and Leonora Agcaoile (who died on March 22,
1979) as she inherited, and is now the registered owner of, nine (9) unsold lots in the subdivision covered
by TCT Nos. 20397 and 20398 of the Agcaoile spouses, now registered in her name under TCT Nos. T98.096 up to T-98.104 . On February 22, 1989, this Court granted her motion.
Upon the evidence, it appears that in 1955 the property subject of the action ceased to be
agricultural or farmland, it having been converted as of that year into a homesite or residential
subdivision. When plaintiffs, therefore, gained possession of a portion of the land in 1956, upon
acquiescence of defendants, they were not installed as agricultural tenants on a piece of agricultural land.
Agricultural tenancy cannot be created on a homesite or residential subdivision.
Issue
Whether an agricultural tenancy relationship can be created over land embraced in an approved
residential subdivision?
Ruling
There is no merit in the petitioners' argument that inasmuch as residential and commercial lots
may be considered "agricultural" (Krivenko vs. Register of Deeds, 79 Phil. 461) an agricultural tenancy
can be established on land in a residential subdivision.
The petitioners' tactic of entering the subdivision as lessee of a homelot and thereafter cultivating
some unsold lots ostensibly for temporary use as a home garden, but covertly for the purpose of later
claiming the land as "tenanted" farm lots, recalls the fable of the camel that sought shelter inside its
master's tent during a storm, and once inside, kicked its master out of the tent. Here, the private
respondents' tolerance of the petitioners' supposedly temporary use of some vacant lots in the subdivision
was seized by the latter as a weapon to deprive the respondents of their land.
34 | P a g e

LUZ FARMS VS. SECRETARY OF DEPARTMENT OF AGRARIAN REFORM
G.R. No. 86889. 4 DECEMBER 1990. EN BANC (Paras, J.)
LANDS NOT COVERED. Section II of the Comprehensive Agrarian Reform Law includes private
agricultural lands, devoted to commercial livestock, poultry and swine raising under commercial farms as
invalid; Livestock or poultry raising is not similar to crop or tree farming; agricultural land.
Facts
Luz Farms is a corporation engaged in the livestock and poultry business allegedly stands to be
adversely affected by the enforcement of some provisions of CARP.
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to
it:
(a)
Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of
"Agricultural, Agricultural Enterprise or Agricultural Activity.
(b)
Section 11 which defines "commercial farms" as "private agricultural lands devoted to commercial,
livestock, poultry and swine raising . . ."
(c)
(d)
Section 13 which calls upon petitioner to execute a production-sharing plan.

Section 32 which spells out the production-sharing plan mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are
distributed within sixty (60) days of the end of the fiscal year as compensation to regular and
other farm workers in such lands over and above the compensation they currently receive xxx
Issue
Whether Sections 3(b), 11, 13 and 32 of R.A. No. 6657 is constitutional, insofar as it includes the
raising of livestock, poultry and swine in its coverage?
Ruling
The said provisions are unconstitutional.
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of
the word "agricultural," clearly show that it was never the intention of the framers of the Constitution to
include livestock and poultry industry in the coverage of the constitutionally-mandated agrarian reform
program of the Government.
It is evident that Section II of R.A. 6657 which includes "private agricultural lands devoted to
commercial livestock, poultry and swine raising" in the definition of "commercial farms" is invalid, to the
extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program
of the State. There is simply no reason to include livestock and poultry lands in the coverage of agrarian
reform.
35 | P a g e

PEOPLE OF THE PHILIPPINES VS. HON. DOMINGO PANIS, ET. AL.
G.R. Nos. L-58674-77. 11 JULY 1990. EN BANC (Cruz, J.)
RECRUITMENT AND PLACEMENT. - Refers to any act of canvassing, enlisting, contracting,

transporting, hiring, or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not.
Facts:
Four separate criminal complaints were filed against Abug for operating a fee-charging
employment agency without first securing a license. But Abug argued that the complaints did not charge
an offense as he was charged with illegally recruiting only one person in each of the four information,
Abug claimed that under Article 13 (b) there would be illegal recruitment only when two or more persons
in any manner were promised or offered any employment for a fee.
Issue
Whether petitioner is guilty of violating Article 13(b) of P. D. 442, otherwise known as the Labor
Code?
Ruling
Article 13(b) of P. D. 442, otherwise known as the Labor Code, states that, "(b) 'Recruitment and
placement' refers to any act of canvassing, 'enlisting, contracting, transporting, hiring, or procuring
workers, and includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed engaged in recruitment and
placement."
The proviso was intended neither to impose a condition on the basic rule nor to provide an
exception thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.
At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign
land, and investing hard-earned savings or even borrowed funds in pursuit of their dream, only to be
awakened to the reality of a cynical deception at the hands of their own countrymen.
PEOPLE OF THE PHILIPPINES V. LOMA GOCE, ET. AL.

36 | P a g e

G.R. No. 113161. 29 AUGUST 1995. SECOND DIVISION (Regalado, J.)
RECRUITMENT AND PLACEMENT. - There is illegal recruitment when one gives the impression of
having the ability to send a worker abroad." It is undisputed that appellant gave complainants the distinct
impression that she had the power or ability to send people abroad for work such that the latter were
convinced to give her the money she demanded in order to be so employed.
Facts
On January 12, 1988, an information for illegal recruitment committed by a syndicate and in large
scale, punishable under Articles 38 and 39 of the Labor Code as amended by Section 1(b) of Presidential
Decree No. 2018, was filed against spouses Dan and Loma Goce and herein accused-appellant Nelly
Agustin in the Regional Trial Court of Manila, Branch 5.
On January 21, 1987, a warrant of arrest was issued against the three accused but not one of them
was arrested. Hence, on February 2, 1989, the trial court ordered the case archived but it issued a standing
warrant of arrest against the accused.Thereafter, on learning of the whereabouts of the accused, at around
midday of February 26, 1993, Nelly Agustin was apprehended by the Paraaque police.
On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a
principal in the crime of illegal recruitment in large scale, and sentencing her to serve the penalty of life
imprisonment, as well as to pay a fine of P100,000.00.
Appellant counsel agreed to stipulate that she was neither licensed nor authorized to recruit
applicants for overseas employment. Appellant, however, denies that she was in any way guilty of illegal
recruitment. It is appellant's defensive theory that all she did was to introduce complainants to the Goce
spouses. Being a neighbor of said couple, and owing to the fact that her son's overseas job application was
processed and facilitated by them, the complainants asked her to introduce them to said spouses.
Allegedly out of the goodness of her heart, she complied with their request.
Issue
Whether appellant Agustin actions in relation with the Goce couple constitute illegal recruitment?
Ruling
Recruitment and placement refers to 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 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. On the other hand, referral is the act of passing along or forwarding of an
applicant for employment after an initial interview of a selected applicant for employment to a selected
employer, placement officer or bureau.
IMELDA DARVIN VS. COURT OFAPPEALS and PEOPLE OF THE PHILIPPINES

37 | P a g e

G.R. No. 125044, 13 JULY 1998,
RECRUITMENT AND PLACEMENT. - There is illegal recruitment when one gives the impression of
having the ability to send a worker abroad." It is undisputed that appellant gave complainants the distinct
impression that she had the power or ability to send people abroad for work such that the latter were
convinced to give her the money she demanded in order to be so employed.
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 appellant is guilty beyond reasonable doubt of illegal recruitment?
Ruling
Art. 13 of the Labor Code provides the definition of recruitment and placement when 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.
EASTERN SHIPPING LINES VS. POEA, ET. AL.

38 | P a g e

G.R. No. 76633. 18 October 1988. FIRST DIVISION (Cruz, J.)
OVERSEAS EMPLOYMENT. - Employment of a worker outside the Philippines, including employment
on board vessels plying international waters, covered by a valid contract.
Facts
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in
Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and
Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the
complaint was cognizable not by the POEA but by the Social Security System and should have been filed
against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the
position papers of the parties ruled in favor of the complainant. The award consisted of P180,000.00 as
death benefits and P12,000.00 for burial expenses.
The petitioner immediately came to this Court, prompting the Solicitor General to move for
dismissal on the ground of non-exhaustion of administrative remedies.
Issue
Whether Saco is an overseas worker or a domestic employee?
Ruling
The Court see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an
overseas employee of the petitioner at the time he met with the fatal accident in Japan in 1985. Under the
1985 Rules and Regulations on Overseas Employment, overseas employment is defined as "employment
of a worker outside the Philippines, including employment on board vessels plying international waters,
covered by a valid contract. A contract worker is described as "any person working or who has worked
overseas under a valid employment contract and shall include seamen" or "any person working overseas
or who has been employed by another which may be a local employer, foreign employer, principal or
partner under a valid employment contract and shall include seamen." These definitions clearly apply to
Vitaliano Saco for it is not disputed that he died while under a contract of employment with the petitioner
and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country.
It is worth observing that the petitioner performed at least two acts which constitute implied or
tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is its
submission of its shipping articles to the POEA for processing, formalization and approval in the exercise
of its regulatory power over overseas employment under Executive Order NO. 797. The second is its
payment of the contributions mandated by law and regulations to the Welfare Fund for Overseas Workers,
which was created by P.D. No. 1694 "for the purpose of providing social and welfare services to Filipino
overseas workers."
PHILSA INTERNATIONAL PLACEMENT VS. SECRETARY OF LABOR
G.R. No. 103144. 4 APRIL 2001. THIRD DIVISION (Gonzaga-Reyes, J.)
39 | P a g e

Facts
Sometime in January 1985, private respondents were required to pay placement fees for private
respondent Rodrigo L. Mikin. After the execution of their respective work contracts, private respondents
left for Saudi Arabia. They then began work for Al-Hejailan Consultants A/E, the foreign principal of
petitioner. While in Saudi Arabia, private respondents were allegedly made to sign contracts on which
changed some of the provisions of their original contract resulting in the reduction of some of their
benefits and privileges and increased their work hours from 48 hours to 60 hours a week without any
corresponding increase in their basic monthly salary. When they refused to sign this third contract, the
services of private respondents were terminated by Al-Hejailan and they were repatriated to the
Philippines. Upon their arrival in the Philippines, private respondents demanded from petitioner PHILSA
the return of their placement fees and for the payment of their salaries for the unexpired portion of their
contract. When petitioner refused, they filed a case before the POEA. After the denial of its motion for
reconsideration, petitioner appealed the August 21, 1988 Order to the Secretary of Labor and
Employment. However, it only affirmed in toto the assailed Order. Petitioner filed a Motion for
Reconsideration but this was likewise denied in an Order dated November 25, 1991.
Issue
Whether the public respondent committed grave abuse of discretion in holding petitioner liable
for illegal deductions/withholding of salaries considering that the Supreme Court itself has already
absolved petitioner from this charge?
Ruling
The Court affirm the ruling of the POEA and the Secretary of Labor and Employment that
petitioner should be held administratively liable for two (2) counts of contract substitution and one (1)
count of withholding or unlawful deduction of salary.
Under the applicable schedule of penalties imposed by the POEA, the penalty for each count of
contract substitution is suspension of license for two (2) months or a fine of P10,000.00 while the penalty
for withholding or unlawful deduction of salaries is suspension of license for two (2) months or fine equal
to the salary withheld but not less than P10,000.00 plus restitution of the amount in both
instances.36 Applying the said schedule on the instant case, the license of petitioner should be suspended
for six (6) months or, in lieu thereof, it should be ordered to pay fine in the amount of P30,000.00.
PACIFIC ASIA OVERSEAS SHIPPING CORP. VS. NLRC

G.R. No. 76559. 6 MAY 1988. THIRD DIVISION (Feliciano, J.)
40 | P a g e
CASES NOT WITHIN THE JURISDICTION OF POEA. - POEA has no jurisdiction to enforce foreign
judgments. Its the regular courts that have jurisdiction. The POEA is not a court; it is an administrative
agency exercising, inter alia, adjudicatory or quasi-judicial functions.
Facts
Pacific Asia is an overseas employment agency that provided Rances work abroad. Rances was
engaged by Gulf-East Ship Management a Radio Operator but due to insubordination he was dismissed
our months later. According to Rances he sued Gulf-East in Dubai and the Gulf-East compromised with
him that instead of paying him $9k+ theyll just pay him $5.5k plus his fare going home to the Philippines
plus if in case Rances wife does not agree with the amount of the allowance being sent to her via Pacific
Asia, Rances is entitled to have $1.5k more from pacific Asia.
Back in the Philippines, Rances was sued by Pacific Asia for acts unbecoming of a marine officer
(due in part to his insubordination to Pacific Asias client). Rances filed a counterclaim for the $1.5k as
his wife did not agree with the monthly allowance sent by Pacific Asia to her. POEA ruled in favor of
Pacific Asia but did not rule on Rances counterclaim. Rances then filed a separate case for his $1.5k
claim. Rances produced the original copy of the Dubai court decision awarding him the compromised
amount of $5.5k. The said court decision was in Arabic but it came with an English translation. It also
came with a certification from a certain Mohd Bin Saleh who was purportedly an Honorary Consul for the
Philippines. This time he won. Pacific Asia appealed but its appeal was one day late after the
reglementary period. POEA denied the appeal. NLRC likewise denied the appeal.
Issue
Whether Pacific Asia can be allowed to appeal?
Ruling
Yes. The delay was due to an excusable mistake. Apparently, there was a mistake in the filing of
the appeal when the new messenger honestly thought that the appeal was supposed to be filed in NLRC
Intramuros but actually it was supposed to be in POEA Ortigas (that happened to be the last day as well,
and when he was advised to go to Ortigas, offices were already closed).
Also, on the merits; POEA has no jurisdiction to enforce foreign judgments. Its the regular courts
that have jurisdiction. The POEA is not a court; it is an administrative agency exercising, inter alia,
adjudicatory or quasi-judicial functions. Further, Rances is not suing on the strength of an employeremployee relationship between him and Gulf-East, but rather on the strength of a foreign judgment.
And, even if the POEA has jurisdiction over the matter, it cannot take in evidence the alleged
original copy o the court decision from Dubai as it was not properly authenticated pursuant to the Rules
of Court (Sect 25, 26 Rule 132). The translation was also not duly authenticated. And an honorary consul
is not authorized to make authentication of foreign public records.
DOUGLAS MILLARES and ROGELION LEGARDA VS. NLRC, ET. AL.

G.R. No. 110524. 29 JULY 2002. SPECIAL FIRST DIVISION (Kapunan, J.)
41 | P a g e

JURISDICTION OF NLRC. The allocation of jurisdiction includes (a) Recruitment violation and
related cases consisting of all preemployment cases which are administrative in nature; (b) employeremployee relations cases consisting of all claims arising out of an employer-employee relationship; and
(c) disciplinary action cases consisting of all complaints against a contract worker for breach of
discipline.
Facts
Douglas Millares was employed by ESSO International through its local manning agency, TransGlobal, in 1968 as a machinist. In 1975, he was promoted as Chief Engineer which position he occupied
until he opted to retire in 1989. In 1989, petitioner filed a leave of absence and applied for optional
retirement plan under the Consecutive Enlistment Incentive Plan (CEIP), Esso International denied
Millares request for optional retirement. Subsequently, after failing to return to work after the expiration
of his leave of absence, Millares was dropped from the roster of crew members effective September 1,
1989. On the other hand, petitioner Lagda was employed by Esso International as wiper/oiler in 1969. He
was promoted as Chief Engineer in 1980, a position he continued to occupy until his last COE expired in
1989. In 1989, Lagda likewise filed a leave of absence and applied to avail of the optional early
retirement plan in view of his twenty years continuous service in the company. Trans-global similarly
denied Lagdas request for availment of the optional early retirement scheme on the same grounds upon
which Millares request was denied. Unable to return for contractual sea service after his leave of absence
expire, Lagda was also dropped from the roster of crew members effective September 1, 1989.
Millares and Lagda filed a complaint-affidavit for illegal dismissal and non-payment
of employee benefits against Esso International and Trans-Global before the POEA. The POEA rendered
a decision dismissing the complaint. On appeal, NLRC affirmed the decision of the POEA dismissing the
complaint. NLRC ratiocinated that Millares and Lagda, as seamen and overseas contract workers are not
covered by the term regular employment as defined under Article 280 of the Labor Code.
Issue
Whether seafarers are considered regular employees under Article 280 of the Labor Code?
Ruling
The Court ruled that Seafarers are considered contractual employees. Their employment is
governed by the contracts they sign every time they are rehired and their employment is terminated when
the contract expires. Their employment is contractually fixed for a certain period of time. They fall under
the exception of Article 280 whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of engagement of the employee
where the work or services to be performed is seasonal in nature and the employment is for the duration
of the season.
42 | P a g e

TIERRA INTERNATIONAL CORPORATION VS. NLRC, ET AL.
G.R. No. 101825. 2 APRIL 1996. SECOND DIVISION (Padill, J.)
discipline.
Facts
Private respondents Manuel Cruz, Raymundo Nepa and Rolando Carino were recruited by the
petitioner Tierra International Construction to work as a transit mixer, truck driver and batch plant
operator. Private respondents had barely started work in the foreign assignment when they had a
disagreement with the plant supervisor, Engr. Terrance Filby. What exactly they had been ordered to do
which they refused to execute whether to dig and excavate canals and to haul bags of cement, cement
pipes, heavy plumbing equipments and large electric cables, as they claimed, or only to do household
chores consisting of keeling the workplace clean, as the company alleges. The fact is that the private
respondents refused to work as ordered and for this, they were dismissed and sent back to the Philippines.
The company offered to pay the final fees representing their salaries but private respondents demanded as
well as the payment of their salaries corresponding to the balance of their employment contracts. Private
respondents made their formal demand, claiming that, in violation of their contract of employment, they
had been required to perform work not related to the jobs for which they had been hired. As their demand
was denied, private respondents filed a complaint for illegal dismissal with the POEA. They sought
recovery of unpaid salaries and salaries corresponding to the unexpired portion of their employment
contracts. Petitioners denied the allegations of private respondents and claimed that the latters dismissal
was for a cause. Petitioners claimed that, private respondents were merely requested by the plant
supervisor to do housekeeping job since they were idle for the rest of the day.
The POEA dismissed private respondents claim that they had been required to do work other
than that for which they had been hired. POEA said no evidence had been presented to support this
allegation, but finding that private respondents had not been paid their salaries, it order petitioners their
salaries. Private respondents appealed to the NLRC and in its decision found that the private respondents
to have been illegally dismissed.
Issue
Whether the National Labor Relations Commission had jurisdiction over the case?
Ruling
Yes. The NLRC had jurisdiction, therefore the basis for the finding of the NLRC that private
respondents had been required to dig canals, make excavations, and haul construction materials. It is not
disputed that to make them do this would require them to do work not connected to their employment as
transit mixer, truck driver and batch operator. They were therefore fully justified in refusing to do the
assignment.
43 | P a g e

ANDRES DITAN VS. POEA ADMINISTRATOR, ET AL.
G.R. No. 79560, 3 DECEMBER 1990. FIRST DIVISION (Cruz, J.)
SOCIAL JUSTICE POLICY. - The law bends over backward to accommodate the interests of the
working class on the humane justification that those with less privileged in life should have more
privileges in law.
Facts
Andres E. Ditan was recruited by private respondent Intraco Sales Corporation. The contract was
for nine months, at a monthly salary of US$1,100.00 or US$275.00 weekly, and contained the required
standard stipulations for the protection of our overseas workers.
Arriving on November 30, 1984, in Luanda, capital of Angola, the petitioner was assigned as an
ordinary welder in the INTRACO central maintenance shop from December 2 to 25, 1984. On December
26, 1984, he was informed, to his distress that would be transferred to Kafunfo, some 350 kilometers east
of Luanda. This was the place where, earlier that year, the rebels had attacked and kidnapped expatriate
workers, killing two Filipinos in the raid. On December 29, 1984, his fears were confirmed. The Unita
rebels attacked the diamond mining site where Ditan was working and took him and sixteen other Filipino
hostages, along with other foreign workers. They trekked for almost a thousand kilometers. They
subsisted on meager fare. Some of them had diarrhea. Their feet were blistered. It was only on March 16,
1985, that the hostages were finally released after the intercession of their governments and the
International Red Cross. Six days later, Ditan and the other Filipino hostages were back in the Philippines.
The repatriated workers had been assured by INTRACO that they would be given priority in reemployment abroad, and eventually eleven of them were taken back. Ditan having been excluded, he filed
in June 1985 a complaint against the private respondents for breach of contract and various other claims.
All these claims were dismissed by POEA Administrator Tomas D. Achacoso. This was affirmed in toto
by respondent NLRC in a resolution dated July 14, 1987, 3 which is now being challenged in this petition.
Issue
Whether Ditan is entitled to any relief?
Ruling
Yes. The fact that stands out most prominently in the record is the risk to which the petitioner was
subjected when he was assigned, after his reluctant consent, to the rebel-infested region of Kafunfo. This
was a dangerous area.
Private respondents stressed that the contract Ditan entered into called for his employment in
Angola, without indication of any particular place of assignment in the country. This meant he agreed to
be assigned to work anywhere in that country, including Kafunfo. When INTRACO assigned Ditan to that
place in the regular course of its business, it was merely exercising its rights under the employment
contract that Ditan had freely entered into. Hence, it is argued, he cannot now complain that there was a
breach of that contract for which he is entitled to monetary redress.
VINTA MARITIME CO. VS. NLRC and LEONIDES BASCONCILLO
G.R. No. 11391. 23 JANUARY, 1998. THIRD DIVISION (Panganiban, J.)
44 | P a g e

discipline.
Facts
On April 20, 1987, Leonides C. Basconcillo, herein private respondent, filed a complaint with the
Philippine Overseas Employment Administration (POEA) Workers' Assistance and Adjudication Office
for illegal dismissal against Vinta Maritime Co., Inc. and Elkano Ship Management, Inc., herein
petitioners. In their answer, petitioners alleged that private respondent was dismissed for his gross
negligence and incompetent performance as chief engineer of the M/V Boracay.
On March 9, 1990, POEA Administrator Tomas D. Achacoso ruled that private respondent was
illegally dismissed. The NLRC affirmed the decision of the POEA.
Issue
Whether the Commission erred in affirming the decision of the POEA?
Ruling
Using these legal criteria, we hold that private respondent was illegally dismissed. No notice was
ever given to him prior to his dismissal. This fact alone disproves petitioners' allegation that "private
respondent was given fair warning and enough opportunity to explain his side [regarding] the incidents
that led to his dismissal." These requisites cannot be replaced as they are not mere technicalities, but
requirements of due process to which every employee is entitled to ensure that the employer's prerogative
to dismiss is not exercised arbitrarily.
Illegally dismissed workers are entitled to the payment of their salaries corresponding to the
unexpired portion of their employment where the employment is for a definite period. Conformably, the
administrator and the Respondent Commission properly awarded private respondent salaries for the
period beginning April 9, 1987, the date of his illegal dismissal, until February 18, 1988, the expiration of
his contract.
Dispositive Portion
WHEREFORE, the petition is hereby DISMISSED. The challenged Decision and Resolution are
AFFIRMED. Costs against petitioners. SO ORDERED.
MARSAMAN MANNING AGENCY VS. NLRC

45 | P a g e

G.R. No. 127195. 25 AUGUST 1999. SECOND DIVISION (Bellosillo, J.)

Facts
Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, as Chief Cook
Steward on the MV Prigipos, for a contract period of ten (10) months with a monthly salary of
US$600.00, evidenced by a contract between the parties dated 15 June 1995. Cajeras started work on 8
August 1995 but less than two (2) months later, or on 28 September 1995, he was repatriated to the
Philippines allegedly by mutual consent.
On 17 November 1995 private respondent Cajeras filed a complaint for illegal dismissal against
petitioners with the NLRC National Capital Region Arbitration Branch alleging that he was dismissed
illegally, denying that his repatriation was by mutual consent, and asking for his unpaid wages, overtime
pay, damages, and attorneys fees.
Private respondent was then sent to the Medical Center for Seamen at Rotterdam where he was
examined by Dr. Wden Hoed whose diagnosis appeared in a Medical Report as paranoia and other mental
problems. Consequently, upon Dr. Hoeds recommendation, Cajeras was repatriated to the Philippines on
28 September 1995.
Issue
Whether there is illegal dismissal?
Ruling
The questioned Decision and Resolution dated 16 September 1996 and 12 November 1996,
respectively, of public respondent National Labor Relations Commission are AFFIRMED.
Petitioners Marsaman Manning Agency, Inc., and Diamantides Maritime, Inc., are ordered, jointly
and severally, to pay private respondent Wilfredo T. Cajeras his salaries for the unexpired portion of his
employment contract or USD$5,100.00, reimburse the latter's placement fee with twelve percent (12%)
interest per annum conformably with Sec. 10 of RA 8042, as well as attorney's fees of ten percent (10%)
of the total monetary award
ASIAN CENTER FOR CAREER AND EMPLOYMENT SERVICES VS. NLRC, ET AL.
46 | P a g e

G.R. No. 131656. 12 OCTOBER, 1998, SECOND DIVISION (Puno, J.)
Facts
Petitioner hired respondent IBNO MEDIALES to work as a mason in Jeddah, Saudi Arabia, with a
monthly salary of 1,200 Saudi Riyals (SR) with a term of contract for two (2) years, from February 28,
1995 until February 28, 1997. On May 26, 1996, respondent applied with petitioner for vacation leave
with pay which he earned after working for more than a year. His application for leave was granted.
While en route to the Philippines, his co-workers informed him that he has been dismissed from service.
On June 17, 1996, respondent filed a complaint with the labor arbiter. On March 17, 1997, the labor
arbiter found petitioner guilty of illegal dismissal. On appeal by petitioner, the NLRC affirmed the
factual findings of the labor arbiter. Petitioner moved for reconsideration with respect to the labor
arbiters award representing respondents salary for the unexpired portion of his contract invoking
Section 10 R.A. 8042. Petitioner urged that its liability for respondents salary is for only three (3)
months.
The NLRC DENIED petitioners motion. It ruled that R.A. 8042 does NOT apply as respondents
employment which started in February 1995 occurred prior to its effectivity on July 15, 1995. Hence, this
petition for certiorari.
Issue
Whether Republic Act No. 8042 applies to the case of the respondent?
Ruling
As a rule, jurisdiction is determined by the law at the time of the commencement of the action. In the
case at bar, private respondents cause of action did not accrue on the date of his date of his employment
or on February 28, 1995. His cause of action arose only from the-time he was illegally dismissed by
petitioner from service in June 1996, after his vacation leave expired. It is thus clear that R.A. 8042
which took effect a year earlier in July 1995 applies to the case at bar.
ATHENA INTERNARTIONAL MANPOWER SERVICES INC VS. NONITO VILLANOS

47 | P a g e

G.R. No. 151303. 15 APRIL 2005. FIRST DIVISION (Quisimbing, J.)
Facts
The petitioner is a domestic corporation engaged in recruitment and placement of workers for
overseas employment. Respondent applied to work overseas as caretaker thru petitioner. The petitioner
asked for a placement fee amounting to P100,000 but the respondent begged to reduced the fee and it was
reduced to P94,000 with the petitioner paying only P30,000 and the remaining will be paid through salary
deductions. Upon arrival on Taiwan, he was assigned to a mechanical shop, owned by Hsien, as a
hydraulic installer/repairer for car lifters, instead of the job for which he was hired. He did not, however,
complain because he needed money to pay for the debts he incurred back home. Barely a month after his
placement, he was terminated by Hsien and received his salary and instructed for departure to the
Philippines. Upon arrival, the respondent went to petitioners office and demanded for the reimbursement
of P30,000 but instead the petitioner gave him a summary of expenses relating his deployment
In its defense, petitioner alleged that under the employment contract, respondent was to undergo a
probationary period of forty (40) days. However, at the job site, respondent was found to be unfit for his
work, thus he resigned from his employment and requested for his repatriation signing a statement to that
effect. The Labor Arbiter rendered a Decision holding petitioner and Wei Yu Hsien solidarily liable for the
wages representing the unserved portion of the employment contract, the amount unlawfully deducted
from respondents monthly wage, moral damages, exemplary damages and attorneys fees. On appeal, the
NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. It found that respondent
was not at all dismissed, much less illegally. Respondent seasonably filed a motion for reconsideration,
which the NLRC denied in its second resolution. respondent appealed to the Court of Appeals and granted
the petition and reversing the questioned resolutions of the NLRC.
Issue
Whether the respondent voluntarily resign or was he illegally dismissed?
Ruling
The Supreme Court denied the petition and affirmed with modification the resolution by the
Court of Appeals. As to the first issue, an employee voluntarily resigns when he finds himself in a
situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the
service; thus, he has no other choice but to disassociate himself from his employment. In this case
respondent avers that petitioner did not explain why he was unqualified nor inform of any qualifications
needed for the job prior to his deployment as mandated by Art 281[9] of the Labor Code and failed to
prove the legality of the dismissal, despite the fact that the burden of proof lies on the employment and
recruitment agency.
48 | P a g e

EASTERN SHIPPING LINES VS. POEA, ET. AL.
G.R. No. 76633. 18 October 1988. EN BANC (Vitug, J.)
Facts
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in
Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and
Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the
complaint was cognizable not by the POEA but by the Social Security System and should have been filed
against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the
position papers of the parties ruled in favor of the complainant. The award consisted of P180,000.00 as
death benefits and P12,000.00 for burial expenses.
The petitioner immediately came to this Court, prompting the Solicitor General to move for
dismissal on the ground of non-exhaustion of administrative remedies.
Issue
Whether Saco is an overseas worker or a domestic employee?
Ruling
The Court see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an
overseas employee of the petitioner at the time he met with the fatal accident in Japan in 1985. Under the
1985 Rules and Regulations on Overseas Employment, overseas employment is defined as "employment
of a worker outside the Philippines, including employment on board vessels plying international waters,
covered by a valid contract. A contract worker is described as "any person working or who has worked
overseas under a valid employment contract and shall include seamen" or "any person working overseas
or who has been employed by another which may be a local employer, foreign employer, principal or
partner under a valid employment contract and shall include seamen." These definitions clearly apply to
Vitaliano Saco for it is not disputed that he died while under a contract of employment with the petitioner
and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country.
It is worth observing that the petitioner performed at least two acts which constitute implied or
tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is its
submission of its shipping articles to the POEA for processing, formalization and approval in the exercise
of its regulatory power over overseas employment under Executive Order NO. 797. The second is its
payment of the contributions mandated by law and regulations to the Welfare Fund for Overseas Workers,
which was created by P.D. No. 1694 "for the purpose of providing social and welfare services to Filipino
overseas workers."
INTER ORIENT MARITIME ENTERPRISES INC. ET AL. VS. NLRC
49 | P a g e

G.R. No. 115497. 10 SEPTEMBER 1996. THIRD DIVISION (Feliciano, J.)
CONFIDENTIAL AND MANAGERIAL EMPLOYEES. The captain of a vessel is a confidential and
managerial employee within the meaning of the above doctrine. A master or captain, for purposes of
maritime commerce, is one who has command of a vessel. A captain commonly performs three (3)
distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical director
of the vessel; and (3) he is a representative of the country under whose flag he navigates.
Facts
Private respondent Captain Rizalino Tayong, a licensed Master Mariner with experience in
commanding ocean-going vessels, was employed on 6 July 1989 by petitioners Trenda World Shipping
(Manila), Inc. and Sea Horse Ship Management, Inc. through petitioner Inter-Orient Maritime
Enterprises, Inc. as Master of the vessel M/VOceanic Mindoro, for a period of one (1) year, as evidenced
by an employment contract. On 16 July 1989, while at the Port of Hongkong and in the process of
unloading cargo, Captain Tayong received a weather report that a storm code-named "Gordon" would
shortly hit Hongkong.
On the night of 31 July 1989, Mr. Clark received a call from Captain Tayong informing him that the
vessel cannot sail without the oxygen and acetylene for safety reasons due to the problems with the turbo
charger and economizer. Mr. Clark responded that by shutting off the water to the turbo chargers and
using the auxiliary boiler, there should be no further problems. He was thereafter repatriated to the
Philippines, after serving petitioners for a little more than two weeks On 5 October 1989, Captain Tayong
instituted a complaint for illegal dismissal before the POEA, claiming his unpaid salary for the unexpired
portion of the written employment contract, plus attorney's fees.
Issue
Whether there is illegal dismissal?
Ruling
Under all the circumstances of this case, we, along with the NLRC, are unable to hold that
Captain Tayong's decision to wait seven (7) hours in Singapore for the delivery on board the Oceanic
Mindoro of the requisitioned supplies needed for the welding-repair, on board the ship, of the turbocharger and the economizer equipment of the vessel, constituted merely arbitrary, capricious or grossly
insubordinate behavior on his part. In the view of the NLRC, that decision of Captain Tayong did not
constitute a legal basis for the summary dismissal of Captain Tayong and for termination of his contract
with petitioners prior to the expiration of the term thereof. We cannot hold this conclusion of the NLRC to
be a grave abuse of discretion amounting to an excess or loss of jurisdiction; indeed, we share that
conclusion and make it our own.
Clearly, petitioners were angered at Captain Tayong's decision to wait for delivery of the needed
supplies before sailing from Singapore, and may have changed their estimate of their ability to work with
him and of his capabilities as a ship captain. Assuming that to be petitioners' management prerogative,
that prerogative is nevertheless not to be exercised, in the case at bar, at the cost of loss of Captain
Tayong's rights under his contract with petitioners and under Philippine law.
NORSE MANAGEMENT CORPORATIONS VS. NATIONAL SEAMEN BOARD

50 | P a g e

G.R. No. L-54204. 30 September 1982. FIRST DIVISION (Relova, J.)
INTERPRETATION.- All doubts in the implementation and interpretation of the provisions of the Labor
Code, including its implementing rules and regulations shall be resolved in favor of labor.
Facts
Napoleon B. Abordo, the deceased husband of private respondent Restituta C. Abordo, was the
Second Engineer of M.T. "Cherry Earl" when he died from an apoplectic stroke in the course of his
employment with petitioner Norse Management Company. The M.T. "Cherry Earl" is a vessel of
Singaporean Registry. The late Napoleon B. Abordo at the time of his death was receiving a monthly
salary of US$850.00
In her complaint for "death compensation benefits, accrued leave pay and time-off allowances,
funeral expenses, attorney's fees and other benefits and reliefs available in connection with the death of
Napoleon B. Abordo," filed before the National Seamen Board, Restituta C. Abordo alleged that the
amount of compensation due her from petitioners Norse Management Co. (PTE) and Pacific Seamen
Services, Inc., principal and agent, respectively, should be based on the law where the vessel is registered.
On the other hand, petitioners contend that the law of Singapore should not be applied in this case
because the National Seamen Board cannot take judicial notice of the Workmen's Insurance Law of
Singapore. As an alternative, they offered to pay private respondent Restituta C. Abordo the sum of
P30,000.00 as death benefits based on the Board's Memorandum Circular No. 25 which they claim should
apply in this case.
The Hearing Officer of the Ministry of Labor and Employment, after hearing the case, rendered
judgment, ordering herein petitioners "to pay jointly and severally. Petitioners appealed to the Ministry of
Labor. On December 11, 1979, the Ministry rendered its affirmative decision.
Issue
Whether or not the law of Singapore ought to be applied in this case?
Ruling
The foregoing decision was assailed as null and void for allegedly having been rendered without
jurisdiction and for awarding compensation benefits beyond the maximum allowable and on the ground
of res judicata. This Court in its resolution dated October 27, 1975 and December 12, 1975, respectively
dismissed for lack of merit the petition as well as the motion for reconsideration in said G.R. No. L41297.
Furthermore, Article 20, Labor Code of the Philippines, provides that the National Seamen Board
has original and exclusive jurisdiction over all matters or cases including money claims, involving
employer-employee relations, arising out of or by virtue of any law or contracts involving Filipino
seamen for overseas employment. Thus, it is safe to assume that the Board is familiar with pertinent
Singapore maritime laws relative to workmen's compensation. Moreover, the Board may apply the rule on
judicial notice and, "in administrative proceedings, the technical rules of procedure, particularly of
evidence, applied in judicial trials, do not strictly apply."
51 | P a g e

NFD INTERNATIONAL MANNING AGENTS VS. NLRC, ET. AL.
G.R. No. 116629. 16 JANUARY 1998. SECOND DIVISION (Puno, J.)
DEATH BENEFITS; LIABILITY OF EMPLOYER - The employer becomes liable once it is established
that the employee died during the effectivity of his employment contract. This rule, however, is not
absolute. The employer may be exempt from liability if he can successfully prove that the employee's
death was caused by an injury directly attributable to his deliberate or wilful act.
Facts
Petitioner NFD International Manning Agents, Inc., a domestic manning corporation, engaged
the services of Eduardo P. Misada and Enrico A. Envidiado to work for petitioner Barber International
A/S (Barber), a Norwegian shipping company. Misada and Envidiado were hired as second and third
officers, respectively, on board the vessel M/V Pan Victoria. They were to travel from Sweden to South
Korea for a period of ten months from January 1991 to November 1991. On July 5, 1991, private
respondent Nelia Misada received notice that her husband, Eduardo Misada, died on June 28, 1991 while
on board the M/V Pan Victoria. On July 12, 1991, private respondent Himaya Envidiado likewise
received notice that her husband, Enrico Envidiado, died on board the vessel.
As heirs of the deceased seamen, private respondents, in their behalf and in behalf of their minor
children, filed for death compensation benefits under the Philippine Overseas Employment Agency
(POEA) Standard Contract of Employment and the Norwegian National Insurance Scheme (NIS) for
Filipino Officers. Their claims were denied by petitioners. Private respondents filed separate complaints
before the POEA Adjudication Office. In their Answer, petitioners claimed that private respondents are
not entitled to death benefits on the ground that the seamen's deaths were due to their own wilful act.
The complaints were consolidated. On October 20, 1993, the POEA Administrator dismissed the
case for lack of merit. Private respondents appealed to respondent Commission. On April 25, 1994,
respondent Commission reversed the POEA Administrator and ordered petitioners to pay private
respondents
Issue
Whether the NLRC committed grave abuse of discretion in reversing the POEA decision on the
basis of documents which at best is not conclusive as to the cause of death of subject seamen?
Ruling
The death of a seaman during the term of his employment makes the employer liable to the
former's heirs for death compensation benefits. The POEA Standard Employment Contract fixes the
amount at U.S.$50,000.00 and an additional amount of U.S.$7,000.00 for each child, not exceeding four,
under twenty-one years of age. In the instant case, petitioners claim that the deaths of the two seamen
came as a result of their self-inflicted injuries. As proof, petitioners presented written statements from the
master of the M/V Pan Victoria, the medical reports of Misada, Envidiado and Arturo Fajardo, the seaman
who survived the infection, and the written statements of three (3) officers of the vessel taken during a
special inquiry conducted after their deaths.
As correctly found by respondent Commission, petitioners' evidence insufficiently proves the fact
that the deaths of the two seamen were caused by their own wilful and deliberate act. And even if the
seamen implanted fragments of reindeer horn in their sex organs, the evidence does not substantially
prove that they contracted tetanus as a result of the unsanitary surgical procedures they performed on their
bodies. Neither does the evidence show that the tetanus was the direct cause of their deaths.
52 | P a g e

PHILIPPINE INTERNATIONAL SHIPPING CORPORATION VS. NLRC
G.R. No. L-63535. 27 May 1985. FIRST DIVISION (Alampay, J.)
LIABILITY OF EMPLOYER - The employer becomes liable once it is established that the employee
suffered injury or died during the effectivity of his employment contract. This rule, however, is not
absolute. The employer may be exempt from liability if he can successfully prove that the employee's
injury or death was caused by an incidents directly attributable to his deliberate or wilful act.
Facts
The case at bar stems from a claim for disability compensation benefits and hospitalization
expenses under employment contract, filed by private respondent herein, Brigido Samson, against the
petitioner before the National Seaman's Board (NSB).
Not satisfied with the foregoing judgment, petitioner appealed to the NLRC. During the pendency
of said appeal, petitioner offered P18,000.00 to private respondent. On May 7, 1981, private respondent
received said amount and executed a "Release" document.
Issue
Whether the submission of petitioner that the directive in the decision, affirmed by the NLRC,
ordering payment of the award using the dollar standard is in violation of law.?
Ruling
As to petitioner's principal contention that its payment of P18,000.00 under the document of
release executed by private respondent constitutes full satisfaction of the award, We uphold the ruling of
the public respondent NLRC on this matter and find no error, much less grave abuse of discretion on the
part of respondent NLRC in rejecting such assertion.
The Court also note that the release document was executed by private respondent on May 7,
1981 during the pendency of the appeal made to the NLRC by petitioner Philippine International
Shipping Corporation from the decision of the National Seamen Board, dated April 2, 1981. Despite the
execution of said release document, the petitioner herein did not file any motion to dismiss its appeal or to
have said appealed case declared terminated due to the alleged satisfaction of the judgment. This omission
negates an inference that the parties had actually agreed that the payment of the P18,000.00 would be
equivalent to a full satisfaction of the award and/or a waiver of the balance on the award.
It is also worth noting that the questioned decision of the NLRC dated December 17, 1981,
affirming the decision of the National Seamen Board, does not appear to have been the subject of any
challenge or appeal whatsoever. It was only after the National Seamen Board had issued its order of June
17, 1982 directing petitioner to pay the balance still remaining on its previous decision award and
directing the issuance of an amended writ of execution that petitioner took exception to the decision of the
NLRC which had long become final by alleging that the decision of the National Seamen Board which
the NLRC had affirmed, is in violation of law. Petitioner may not now evade the effects of a final NLRC
decision by assailing the writ of execution issued pursuant thereto.
53 | P a g e

MC KENZIE, ET AL. VS. CUI
G.R. No. 48831. 6 FEBRUARY 1989
POEA; NO JURISDICTION OVER TORTS. In cases wherein the items demanded by the employee
consist of damages, the trial court has jurisdiction. On the other hand, where the item items demanded are
labor benefits such as wages, overtime, or separation pay, POEA has jurisdiction.
Facts
Aguedo, a licensed seaman, filed with the Regional Trial Court a complaint for recovery of certain
sums of money, with damages against Kennet and Kraamer as Administrative Manager and master of
M.V. Carbay, and its operator Wallem Philppines, pursuant to Article 2180 of the Civil Code. He alleged
that while M.V. Carbay was dry-docked in Japna, he was attacked by his co-worker, an alleged protg of
Kraamerl that without investigation, Kraamer summarily dismissed him without paying his salary and
thereafter compelled him to Manila, incurring expenses in the amount of $320.
Defendants moved to dismiss the complaint, arguing that the court has no jurisdiction over cases in
connecgtion with the employment of Filipino seamen on board vessels engaged in overseas trade.
But the RTC Judge denied the motion
Issue
Whether the Regional Trial Court have jurisdiction over the compaliant and not POEA?
Ruling
The Supreme Court affirmed the order of the trial court, tyhat is, the court (not POEA) has
jurisdiction over the case. Aguedos complaint reveals his intention to seek and claim protection under the
Civil Code and not under the Labor Code. The items demanded are not labor benefits such as wages,
overtime, or separation pay but are items claimed as natural consequences of such dismissal. His
complaint is denominated as damages as a consequence of his alleged summary dismissal by Kraamer.
Moreover, in his opposition to the motion to dismiss, he cites Articles 2197, 2200 and 2219 adds the
relevant articles on Human Relations. Articles 19, 21, 24 and 32 of the Civil Code to support his claim for
damages.
54 | P a g e

VIRJEN SHIPPING BOARD AND MARINE SERVICES VS. NLRC
G.R. No. L-58011 & L-58012. 18 NOVEMBER 1983. EN BANC (Gutierrez, J.)
NATIONAL SEAMEN BOARD. As a matter of policy, is precluded from legitimizing and enforcing
dubious arrangements where ship owners and seamen enter into fictitious contracts similar to the
addendum agreements or side contracts for the purpose of deceiving.
Facts
Certain seamen entered into a contract of employment for a 12-month period. Some three months
after the commencement of their employment, the seamen demanded a 50% increase of their salaries and
benefits. The seamen demanded this increase while their vessels, was en route to a port in Australia
controlled by the International Transport Workers Federation (ITF) where the ITF could detain the vessel
unless it paid its seamen the ITF rates.
The agent of the owner of the vessel agreed to pay a 25% increase, but when the vessel arrived in
Japan shortly afterwards, the seamen were repatriated to Manila and their contracts were terminated. The
NSB upheld the cancellation of the contracts of the employment of the seamen but on appeal the NLRC
ruled that the termination was illegal.
The Second Division of the Supreme Court reversed the NLRC Decision that is , the seamens
dismissal was held legal. The Division denied the motions for reconsideration but another motion for
reconsideration was filed with Supreme Court En Banc which gave it due course because there was a
need to reconcile the decision of the Second Division with that of the First Division in Wallen Shipping
Inc. vs. Minister of Labor, which had ruled that the termination of the seaman was illegal.
Issue
Whether the seamen where illegally dismissed?
Ruling
Yes. The contention that manning industries in the Philippines would not survive if the instant
case is not decided in favour of the petitioner is not supported by evidence. There have been no severe
repercussions, no drying up of employment opportunities for seamen, and non if the dire consequences
repeatedly emphasized by the petitioner.
55 | P a g e

RESURRECCION SUZARA, ET AL. VS. HON. JUDGE ALFREDO BENEPAYO, ET AL.;
RESURRECCION SUZARRA, ET AL VS. NLRC, ET AL.
G.R. No. 57999. 1 AUGUST 1989. EN BANC (Gutierrez, J.)
NATIONAL SEAMEN BOARD. As a matter of policy, is precluded from legitimizing and enforcing
dubious arrangements where ship owners and seamen enter into fictitious contracts similar to the
addendum agreements or side contracts for the purpose of deceiving.
Facts
A group of Filipino seamen entered into separate contracts of employment with Magsaysay Lines
at specified salary rates. When they arrived at Vancouver, Canada, the seamen demanded and received
additional wages as prescribed by the International Transport Workers Foundation (ITF) in amounts over
and above the rates appearing in their employment contract approved earlier by the National Seamen
Board.
When the vessel docked at Nagoya, an NSB representative boarded the vessel. He called a
meeting among the seamen, and urged them to sign an agreement, which they did. It turned out that in the
agreement the following statement was inserted; the amounts were received and held by crew members
in trust for ship owners.
When the vessel reached Manila, Magsaysay Lines demanded from the seamen the
overpayments made to them in Canada. When they refused, it filed charges against the before the NSB.
NSB declared the seamen guilty of breach of their employment contracts and suspended the
seamen for three years, prompting the workers to bring the case up to the Supreme Court
Issue
Whether there is a breach of contract by the seamen?
Ruling
The Supreme Court reversed and set aside the decision of the NSB and the NLRC. It held that the
seamen were not guilty of the offenses for which they were charged and ordered Magsaysay Lines to pay
the seamen their earned but unpaid wages and overtime pay according to the rates in the Special
Agreement of the parties entered into in Vancouver. The criminal cases were ordered dismissed. The
Court reiterated the Vir-Jen pronouncements.
56 | P a g e

ESALYN CHAVEZ VS. HON. EDNA BONTO-PEREZ, ET. AL.
G.R. No. 109808. 1 MARCH 1995. SECOND DIVISION (Puno, J.)
INVALID SIDE AGREEMENT. An agreement that diminishes the employees pay and benefits as
contained in a POEA-approved contract is void, unless such subsequent agreement is approved by POEA.
Facts
Petitioner Chavez, hired as an entertainer dancer in Japan, entered into a standard employment
contract thorugh a Philippiine placement agency for two (2) to six (6) months, at a monthly compensation
of US $1,5000.00. The POEA approved the contract. Subsequently, however, petitioner executed a side
agreement with her Japanese employer stipulating a monthly salary of $750, and authorizing the employer
to deduct $250 as comiission of her manager. The salary therefore became Five hundred dollars ($500)
only.
She returned to the Philippines on June 14, 1989.
On February 21, 1991, she filed a complaint, seeking payment of US $6,000.00 representing the
unpaid portion of her basic salary for six months.
The POEA Administrator dismissed the complaint, holding that the agreement for a monthly
salary of $750 was valid. Moreover, POEA adjudged the complaint-petitioner guilty of latches or delay in
filling her complaint about two years after her employment. On appeal, the NLRC upheld the POEAs
decision. Chavez petitioned for review.
Issue
Whether the side agreement entered in to is valid?
Ruling
The Supreme Court reversed the decisions of POEA and NLRC.
The managerial commissions agreement executed by petitioner to authorize her Japanese
employer to deduct US $250.00 from her monthly basic salary is void because it is against our existing
laws, morals and public policy. It cannot supersede the standard employment contract of December 1,
1988 approved by the POEA. The basic salary of US $1,500.00 guaranteed to petitioner under the parties
standard employment contract is in accordance with the minimum employment standards with respect to
wages set by the POEA. Thus, the side agreement which reduced petitioners basic wage is null and void.
57 | P a g e

FINMAN GENERAL ASSURANCE VS. INNOCENCIO
G.R. Nos 90273-75. 15 NOVEMBER 1989. THIRD DIVISION (Feliciano, J.)
JURISDICTION OF POEA. - The POEA possess the power to enforce liability under cash or surety
bonds.
Facts
The fundamental argument of Finman is that its liability under its own bond must be determined
and enforced, not by the POEA or the Secretary of Labor, but by the Insurance Commission or by the
regular court.
Issue
Whether POEA has jurisdiction over claim of Finman General Assurance?
Ruling
There is nothing so special or unique about the determination of a suretys liability under its bond
as to restrict that determination to the office of the Insurance Commissioner and to the regular courts of
justice, exclusively. The exact opposite is stressed by the second paragraph of Article 31 of the Labor
Code.
To compel the POEA and the beneficiaries of Finmans bond to go to the Insurance
Commissioner or to a regular court of law to enforce that bond would be to collide within the public
policy which requires prompt resolution of claims against private recruitment and placement agencies.
The Supreme Court will take judicial notice of the appalling frequency with which some, perhaps many,
of such agencies have cheated workers avid for them at all, extracting exorbitant fees or kickbacks from
those for whom employment is actually obtained, abandoning hapless and unlettered workers to
exploitative foreign principals, and so on.
Cash and surety bond are required by the POEA and its predecessor agencies from recruitment
and employment companies precisely as a means of ensuring prompt and effective recourse against such
companies when held liable for applicants or workers claims.
58 | P a g e

EASTERN ASSURANCE AND SURETY CORP. VS. SECRETARY OF LABOR
G.R. No. 79436-50. 17 JANUARY 1990. FIRST DIVISION (Narvasa, J.)
REFUND OF FEES. POEA has the power to order refund of illegally collected fees. Implicit in its
power to regulate the recruitment and placement activities of all agencies is the award of appropriate
relief to the victims of the offenses committed by the respondent agency contractor.
Facts
In connection with the application with the Philippine Overseas Employment Administration
(POEA) of J & B Manpower Specialist, Inc. for a license to engage in business as a recruitment agency, a
surety bond was filed on January 2, 1985 by the applicant and the Eastern Assurance and Surety
Corporation.
Issue
Whether the POEA had jurisdiction to order forfeiture of the bond?
Ruling
Pursuant to this rule-making power thus granted, the Secretary of Labor gave the POEA "on its
own initiative or upon filing of a complaint or report or upon request for investigation by any aggrieved
person the 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 including the imposition or
acceptance, directly or indirectly, of any amount of money, goods or services, or any fee or bond in excess
of what is prescribed by the Administration, and any other violation of pertinent provisions of the Labor
Code and other relevant laws, rules and regulations.
The Administrator was also given the power to "order the dismissal of the case or the suspension
of the license or authority of the respondent agency or contractor or recommend to the Minister the
cancellation thereof."
Dispositive Portion
WHEREFORE, the petition is DISMISSED for lack of merit, and this decision is declared to be
immediately executory. Costs against petitioner.
59 | P a g e

HORTENCIA SALAZAR VS. TOMAS ACHOSO AND FERDIE MARQUEZ
G.R. No. 82252, 28 FEBRUARY 1989. EN BANC (Sarmiento, J.)
ISSUANCE OF ARREST AND SEIZURE - Under the new Constitution, no search warrant or warrant
of arrest shall issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be seized. It is only a judge
who may issue warrants of search and arrest.
Facts
A complaint against the petitioner Salazar was filed for withholding the complainants PECC
Card, it was further alleged that Salazar did not posses a license to operate as a recruitment agency. POEA
through its Director on Licensing and Regulation, issued a warrant of arrest and seizure against the
petitioner.
ISSUE:
Whether the power of the Secretary of Labor to issue warrants of arrest and seizure is valid?
HELD:
No. Under the new Constitution, "no search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after examination under oath or affirmation of
the complainant and the witnesses he may produce, and particularly describing the place to be searched
and the persons or things to be seized. It is only a judge who may issue warrants of search and arrest."
Mayors may not exercise this power. Neither may it be done by a mere prosecuting body. The Secretary
of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go
through the judicial process.
60 | P a g e

NORBERTO SORIANO VS. OFFSHORE SHIPPING AND MARKETING CORP., ET AL.
G.R. No. 78409. 14 SEPTEMBER 1989. THIRD DIVISION (Fernan, C.J.)
PROHIBITED PRACTICES. The purpose is to protect both parties. The rule that there should be
concern, sympathy and solicitude for the rights and welfare of the working class, is meet and proper.
Facts
In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed
Second Marine Engineer, sought employment and was hired by private respondent Knut Knutsen O.A.S.
through its authorized shipping agent in the Philippines, Offshore Shipping and Manning Corporation. As
evidenced by the Crew Agreement, petitioner was hired to work as Third Marine Engineer on board Knut
Provider" with a salary of US$800.00 a month on a conduction basis for a period of fifteen (15) days. He
admitted that the term of the contract was extended to six (6) months by mutual agreement on the promise
of the employer to the petitioner that he will be promoted to Second Engineer. Thus, while it appears that
petitioner joined the aforesaid vessel on July 23, 1985 he signed off on November 27, 1985 due to the
alleged failure of private respondent-employer to fulfill its promise to promote petitioner to the position
of Second Engineer and for the unilateral decision to reduce petitioner's basic salary from US$800.00 to
US$560.00. Petitioner was made to shoulder his return airfare to Manila.
In the Philippines, petitioner filed with the Philippine Overseas Employment Administration, a
complaint against private respondent for payment of salary differential, overtime pay, unpaid salary for
November, 1985 and refund of his return airfare and cash bond contending therein that private respondent
unilaterally altered the employment contract by reducing his salary causing him to request for his
repatriation to the Philippines.
In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas Employment
Administration or POEA found that petitioner-complainant's total monthly emolument is US$800.00
inclusive of fixed overtime as shown and proved in the Wage Scale submitted to the Accreditation
Department of its Office which would therefore not entitle petitioner to any salary differential.
Dissatisfied, both parties appealed the aforementioned decision of the POEA to the National Labor
Relations Commission. Complainant-petitioner's appeal was dismissed for lack of merit while
respondents' appeal was dismissed for having been filed out of time. Petitioner's motion for
reconsideration was likewise denied.
Issue
Whether POEA acted in excess of its jurisdiction?
Ruling
No. The law empowers POEA to approve and verify a contract under Article 34 of the Labor
Code to insure that the employee shall not be placed in a disadvantageous position and that the contract
contains the minimum standards of such employment contract set by the POEA. This is why a standard
format for employment contracts has been adopted by the Department of Labor.
61 | P a g e

SEAGULL MARITIME CROP VS. NERRIE BALATONGNAN, ET. AL.
G.R. No. 82252. 28 FEBRUARY 1989. FIRST DIVISION (Gancayco, J.)
PROHIBITES PRACTICES. - The law empowers POEA to approve and verify a contract under Article
34 of the Labor Code to insure that the employee shall not be placed in a disadvantageous position and
that the contract contains the minimum standards of such employment contract set by the POEA. This is
why a standard format for employment contracts has been adopted by the Department of Labor.
Facts
In this case, the private respondent met the accident on October 6, 1983. Since then, he was
hospitalized at the Suez Canal Authority Hospital and thereafter be was repatriated to the Philippines
wherein he was also hospitalized from October 22, 1983 to March 27, 1984. It was only on August 19,
1985 that he was issued a medical certificate describing his disability to be permanent in nature. It was
not possible for private respondent to file a claim for permanent disability with the insurance company
within the one-year period from the time of the injury, as his disability was ascertained to be permanent
only thereafter. Petitioners did not exert any effort to assist private respondent to recover payment of his
claim from the insurance company. They did not even care to dispute the finding of the insurer that the
claim was not flied on time. 14 Petitioners must, therefore, be held responsible for its omission, if not
negligence, by requiring them to pay the claim of private respondent.
Issue
Whether the public respondent commit a grave abuse of discretion in denying petitioners, motion
for leave to file third party complaint and substitution inclusion of party respondent?
Ruling
The Court finds that the respondent NLRC did not commit a grave abuse of discretion in denying
petitioners, motion for leave to file third-party complaint and substitution inclusion of party respondent.
Such motion is largely addressed to the discretion of the said Commission. Inasmuch as the alleged
transfer of interest took place only after the POEA had rendered its decision, the denial of the motion so
as to avoid further delay in the settlement of the claim of private respondent was well-taken. At any rate,
petitioners may pursue their claim against their alleged successor-in-interest in a separate suit.
Dispositive Portion
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the temporary
restraining order issued by this Court on March 21, 1988 is hereby LIFTED. No costs. This decision is
immediately executory.
62 | P a g e

MANUELA S. CATAN PLACEMENT AGENCY VS. NLRC and FRANCISCO REYES
G.R. No. 772749. 15 APRIL 1988. THIRD DIVISION (Cortes, J.)
SUSPENSION/CANCELLATION OF LICENSE. The DOLE Secretary and the POEA Administrator

have concurrent jurisdiction to suspend or Cancel a license. The Secretary of Labor has the power under
Article 35 to apply these sanctions, and pursuant to his rule making power, he authorized the POEA
Administrator to conduct the necessary proceedings for the suspension or cancellation of license or
authority of any agency or entity for certain enumerated offenses.
Facts
Petitioner Catan, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group,
recruited private respondent Francisco D. Reyes to work in Saudi Arabia. The term of contract is for one
(1) year, however, the contract provided for automatic renewal.
The said contract was automatically renewed when private respondent was not repatriated by his
Saudi employer but instead was assigned to work as a crusher plant operator. On March 30, 1983 while he
was working, his ankle was crushed under the machine he was operating. On May 15, 1983 after
expiration of renewed term, private respondent returned to the Philippines. His ankle was operated for
which he incurred expenses. On September 9, 1983, he returned to Saudi and resume to his work and on
May 15, 1984, he was repatriated. And upon his return, he had ankle treated for which he incurred further
expenses. Private respondent filed a claim against Catan placement agency on the basis of the provision in
the employment contract that the employer shall compensate the employee if he is injured or permanently
disabled in the course of employment.
POEA rendered judgment in favor of the complainant. On appeal, respondent NLRC affirmed the
decision of the POEA.
Issue
Whether the Placement Agency is liable for disability benefits to private respondent, since the
time he was injured his original contract had already expired?
Held
Yes, Catan Placement Agency is liable for disability benefits to private respondent.
Private respondents contract of employment cannot be said to have expired as it was automatically
renewed since no notice of its termination was given by either or both parties at a month before its
termination. As stipulated in their contract.
M. S. Catan Agency was at the time of complainant's accident resulting in his permanent partial
disability was (sic) no longer the accredited agent of its foreign principal, foreign respondent herein, yet
its responsibility over the proper implementation of complainant's employment/service contract and the
welfare of complainant himself in the foreign job site, still existed, the contract of employment in
question not having expired yet.
63 | P a g e

ROYAL CROWN INTERNATIONALE VS. NLRC and VIRGILIO P. NACIONALES
G.R. No. 78085,. 16 OCTOBER 1989. THIRD DIVISION (Cortes, J.)
SOLIDARY LIABILITY ASSUMED BY RECRUITMENT AGENCY. In applying for a license to
operate a private employment agency for overseas recruitment and placement, such agencies are required
to submit verified various contractual undertakings.
Facts
In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private
respondent for employment with ZAMEL as an architectural draftsman in Saudi Arabia.
On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground
that his performance was below par. For three (3) successive days thereafter, he was detained at his
quarters and was not allowed to report to work until his exit papers were ready. On February 16, 1984, he
was made to board a plane bound for the Philippines. Private respondent then filed on April 23, 1984 a
complaint for illegal termination against petitioner and ZAMEL.
Based on a finding that petitioner and ZAMEL failed to establish that private respondent was
terminated for just and valid cause, the Workers' Assistance and Adjudication Office of the POEA issued a
decision ordering the former to pay, jointly and severally, the complainant.
Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor
Relations Commission (NLRC) which affirmed a decision of the Philippine Overseas Employment
Administration (POEA) holding it liable to pay, jointly and severally with Zamel-Turbag Engineering and
Architectural Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary and vacation pay
corresponding to the unexpired portion of his employment contract with ZAMEL.
Issue
Whether petitioner as a private employment agency may be held jointly and severally liable with
the foreign-based employer for any claim which may arise in connection with the implementation of the
employment contracts of the employees recruited and deployed abroad?
Ruling
In applying for its license to operate a private employment agency for overseas recruitment and
placement, petitioner was required to submit, among others, a document or verified undertaking whereby
it assumed all responsibilities for the proper use of its license and the implementation of the contracts of
employment with the workers it recruited and deployed for overseas employment [Section 2(e), Rule V,
Book 1, Rules to Implement the Labor Code (1976)]. It was also required to file with the Bureau a formal
appointment or agency contract executed by the foreign-based employer in its favor to recruit and hire
personnel for the former, which contained a provision empowering it to sue and be sued jointly and
solidarily with the foreign principal for any of the violations of the recruitment agreement and the
contracts of employment [Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code
(1976)].
64 | P a g e

FACILITIES MANAGEMENT CORP. V. LEONARDO DE LA ROSA
89 SCRA 131. 26 MARCH 1979. FIRST DIVISION (Makasiar, J.)
SUABILITY OF A FOREIGN CORPORATION WHICH HIRES FILIFINO WORKERS. A foreign

corporation which, through unlicensed agents recruits workers in the country may be sued in and found
liable by Philippine Courts.
Facts
Leonardo De La Rosa sought his reinstatement, with full backwages, as well as the recovery of
his overtime compensation, swing shift and graveyard shift differentials. He alleged that he was employed
by Facilities Management as a painter, a houseboy, and a cashier.
Respondents filed their letter-answer without substantially denying the material allegations, but
interposed that Facilities Management and J.S. Dreyer are domiciled in Wake Island which is beyond
territorial jurisdiction of the Philippine Government, and that J.V. Catuira, though an employee of
Facilities presently stationed in Manila, is without power and authority of legal representation, and that
the employment contract between De La Osa and the Facilities carries the approval of the Department of
Labor of the Philippines.
Issue
Whether the foreign corporation can be sued?
Ruling
The Supreme Court held that a foreign corporation not doing business in the Philippines can be
sued here for acts done against persons in the Philippines. If a foreign corporation, not engaged in
business in the Philippines, is not banned from seeking redress from courts in the Philippines, a fortiori,
that same corporation cannot claim exemption from being sued in Philippine courts for acts done against
a person or persons in the Philippines.
65 | P a g e

PEOPLE OF THE PHILIPPINES VS. BULU CHOWDRY, ET AL.
G.R. Nos. 129577-80. 15 FEBRUARY 2000. FIRST DIVISION (Puno, J.)
WHEN EMPLOYEE IS LIABLE. When an employee is merely acting under the direction of his
superiors and was aware that his acts constituted a crime, he may be liable for act done for and in behalf
of his employer.
Facts
Chowdury and Ong represented themselves to have the capacity to contract, enlist and transport
workers for employment abroad, conspiring, confederating and mutually helping one another, they did
recruit herein complainants: Estrella B. Calleja, Melvin C. Miranda and Aser S. Sasis, individually or as a
group for employment in Korea without first obtaining the required license and/or authority from the
Philippine Overseas Employment Administration.
They were likewise charged with three counts of estafa committed against private complainants.
The State Prosecutor, however, later dismissed the estafa charges against Chowdury and filed an amended
information indicting only Ong for the offense.
Chowdury was arraigned on April 16, 1996 while Ong remained at large. He pleaded "not guilty"
to the charge of illegal recruitment in large scale. However, the trial court found Chowdury guilty beyond
reasonable doubt of the crime of illegal recruitment in large scale. Chowdury appealed.
Issue
Whether accused-appellant knowingly and intentionally participated in the commission of the
crime charged?
Ruling
The Court found that he did not.
Upon examination of the records, however, we find that the prosecution failed to prove that
accused-appellant was aware of Craftrade's failure to register his name with the POEA and that he
actively engaged in recruitment despite this knowledge. The obligation to register its personnel with the
POEA belongs to the officers of the agency. A mere employee of the agency cannot be expected to know
the legal requirements for its operation. The evidence at hand shows that accused-appellant carried out his
duties as interviewer of Craftrade believing that the agency was duly licensed by the POEA and he, in
turn, was duly authorized by his agency to deal with the applicants in its behalf. Accused-appellant in fact
confined his actions to his job description. He merely interviewed the applicants and informed them of the
requirements for deployment but he never received money from them. Their payments were received by
the agency's cashier, Josephine Ong. Furthermore, he performed his tasks under the supervision of its
president and managing director. Hence, we hold that the prosecution failed to prove beyond reasonable
doubt accused-appellant's conscious and active participation in the commission of the crime of illegal
recruitment. His conviction, therefore, is without basis.
66 | P a g e

PEOPLE OF THE PHILIPPINES VS. NELLIE CABAIS y GAMUELA
G.R. No. 129070, 16 MARCH 2001. FIRST DIVISION (Pardo, J.)
ILLEGAL RECRUITMENT IN LARGE SCALE; ELEMENTS. - (1) that the accused engaged in acts of
recruitment and placement of workers as defined under Article 13 (b) or in any prohibited activities under
Article 34 of the Labor Code; (2) that the accused had not complied with the guidelines issued by the
Secretary of Labor and Employment, particularly with respect to the requirement to secure a license or an
authority to recruit and deploy workers, either locally or overseas; and (3) that the accused committed the
unlawful acts against three (3) or more persons, individually or as a group.
Facts
Accused was convicted of illegal recruitment committed in large scale by a syndicate, and
sentenced to life imprisonment and a fine. She was also convicted for two counts of estafa, and sentenced
to (a) in Criminal Case No. 13999-R, to six (6) months and one (1) day of prision correccional, as
minimum, to seven (7) years, eight (8) months and twenty-one (21) days of prision mayor, as maximum,
and to indemnify the offended party Joan Merante, in the amount of P40,000.00 as actual damages, and
costs; (b) in Criminal Case No. 14000-R, to six (6) months and one (1) day of prision correccional, as
minimum, to six (6) years, eight (8) months and twenty (20) days of prision mayor, as maximum, and to
indemnify the offended party, Nancy Oidi, in the amount of P21,000.00 as actual damages, and costs.
Issue
Whether accused is liable for illegal recruitment in large scale?
Ruling
Accused-appellant contends that she was not involved in recruitment but was merely an employee
of a recruitment agency. An employee of a company or corporation engaged in illegal recruitment may be
held liable as principal, together with his employer, if it is shown that he actively and consciously
participated in illegal recruitment. In this case, accused was the one who informed complainants of job
prospects in Korea and the requirements for deployment. She also received money from them as
placement fees. All of the complainants testified that they personally met accused-appellant and
transacted with her regarding the overseas job placement offers. Furthermore, accused-appellant did not
possess any license to engage in recruitment activities, as evidenced by a certification from the POEA and
the testimony of a representative of said government agency. Her acts constituted recruitment, and
considering that she admittedly had no license or authority to recruit workers for overseas employment,
accused-appellant is guilty of illegal recruitment. Despite the fact that she was just an ordinary employee
of the company, her criminal liability would still stand for being a conspirator with the corporate officers
in undertaking illegal recruitment activities. Since the recruitment involves three or more persons,
accused-appellant is guilty of illegal recruitment in a large scale punishable under Article 39 of the Labor
Code with life imprisonment and a fine of one hundred thousand pesos.
67 | P a g e

PEOPLE OF THE PHILIPPINES VS. LUZ GONZALES-FLORES
G.R. Nos. 138535-38. 19 APRIL 2001. SECOND DIVISION (Mendoza, J.)
ABSENCE OF RECEIPTS. - The fact that no receipts were presented to prove the amounts paid by
complainants to accused-appellant does not prevent an award of actual damages in view of the fact that
complainants were able to prove by their respective testimonies and affidavits that accused-appellant was
involved in the recruitment process and succeeded in inveigling them to give their money to her. The
award of moral damages should likewise be upheld as it was shown to have factual basis.
Facts
On August, 1994, in Quezon City, Philippines, the said accused, confederating with
several persons contract and promise employment to Ronald Frederizo y Husenia, Larry Tibor y
Mabilangan, and Felixberto Leongson, Jr. y Castaeda. After requiring them to submit certain
documentary requirements and exacting from them the total amount of P128,000.00, Philippine Currency,
as recruitment fees, such recruitment activities being done without the required license or authority from
the Department of Labor. The crime described above is committed in large scale as the same was
perpetrated against three (3) or more persons individually or as group as penalized under Articles 38 and
39, as amended by P.D. 2018, of the Labor Code.
Issue
Whether accused is liable for illegal recruitment in large scale?
Ruling
In sum, we are of the opinion that the trial court correctly found accused-appellant guilty of illegal
recruitment in large scale. The imposition on accused-appellant of the penalty of life imprisonment and a
fine of P100,000.00 is thus justified.
Accused-appellant was likewise found guilty of estafa under Art. 315 (2) (a) of the Revised Penal
Code committed -By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of other similar
deceits.
Both elements of the crime were established in these cases, namely, (a) accused-appellant defrauded
complainant by abuse of confidence or by means of deceit and (b) complainant suffered damage or
prejudice capable of pecuniary estimation as a result. Complainants parted with their money upon the
prodding and enticement of accused-appellant on the false pretense that she had the capacity to deploy
them for employment abroad. In the end, complainants were neither able to leave for work overseas nor
did they get their money back, thus causing them damage and prejudice.
68 | P a g e
PEOPLE OF THE PHILIPPINES VS. LINDA SAGAYADO

G.R. Nos. 124671-75, 29 SEPTEMBER. 2000
Facts
Accused Linda Sagayado was convicted before the regional trial court of illegal recruitment in
large scale and fur charges ofestafa. Complainants Gina Cleto, Rogelio Tebeb, Nata Pita and Jessie
Bolinao recounted that the accused Sagayado propsed and encourage them for employment abroad in
Korea. Complainants gave their respective payments to the accused for the processing of their travel
papers and passport. They were assured of their flight and of employment abroad. However, months have
passed but their flight never pushed through. They then inquired at the Baguio POEA office whether the
accused was a license recruiter to which they receive certification that the accused was not a license
recruiter.
In her defense, the accused denied having recruited any of the private complainants. She claimed
that they came to her voluntarily after being informed that she was able to send her three (3) sons to
Korea. When asked why she was not able to return the money of Gina and Naty, accused said that she
returned the plane tickets to the Tour Master travel Agency for refund but said agency did not make
reimbursements. With respect to complainants Jessie Bolinao and Rogelio Tibeb, the accused denied
having received money from them.
Issue
Whether the accused is guilty of illegal recruitment in large scale?
Held
Yes, all the requisites are present in this case. The accused representations to the private
complainants that she could send them to Korea to work as factory workers, constituting a promise of
employment which amounted to recruitment as defined under Article 13(b) of the Labor Code. From the
testimonies of the private complainants, there is no denying that accused gave the complainants the
distinct impression that she had the power or ability to send them abroad for work such that the latter
were convinced to part with their money in order to be employed. As against the positive and categorical
testimonies of the complainants, mere denial of accused cannot prevail. As to the license requirement, the
record showed that accused-appellant did not have the authority to recruit for employment abroad as the
certification issued by the POEA in Baguio City.
69 | P a g e
PEOPLE OF THE PHILIPPINES VS. BENZON ONG, ET. AL.

G.R. No. 119594. 18 JANUARY 2000. SECOND DIVISION (Mendoza, J./)
Facts
That sometime during and between the period from November, 1993 to January, 1994, in the City of
Baguio, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused,
representing himself to have the capacity to contract, enlist, hire and transport Filipino workers for
employment abroad, did then and there wilfully, unlawfully and feloniously, for a fee, recruit and promise
employment/job placement in Taiwan, without first obtaining or securing license or authority from the
proper governmental agency. Accused-appellant never fulfilled his promise. When complainants sought to
inquire about their application, they discovered that accused-appellant no longer held office at the place in
the upper story of Marios Restaurant on Session Road. Apparently, accused-appellant was already into
hiding.
Issue
Whether the accused is guilty of illegal recruitment?
Ruling
To prove illegal recruitment, it must be shown that the accused-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. Accused-appellant represented
himself to complainants as one capable of deploying workers abroad and even quoted the alleged salary
rates of factory and construction workers in Taiwan. He advised Bacasnot to accept a job as a factory
worker first because it would be then easier for him to transfer jobs once he got to Taiwan. Accusedappellant said his mother, who was based in Taiwan, could help Bacasnot. Bacasnot paid accusedappellant an initial placement fee agreeing to pay the balance through salary deductions once he was
employed. Accused-appellant also promised jobs to Eliw and the other complainants. He accompanied
them to Manila so that they could be interviewed and physically examined at the Steadfast Recruitment
Agency with which accused-appellant represented he was connected. These acts of accused-appellant
created the distinct impression on the eight complainants that he was a recruiter for overseas employment.
There is no question that he was neither licensed nor authorized to recruit workers for overseas
employment. Nor is there any question that he dealt with complainants. What he claims is that he merely
"suggested" to complainants to apply at the Steadfast Recruitment Agency, which is a recruitment agency.
70 | P a g e

Even if accused-appellant did no more than "suggest" to complainants where they could apply for
overseas employment, his act constituted "referral" within the meaning of Art. 13(b) of the Labor Code.
Indeed, the testimonial and documentary evidence in the record shows that accused-appellant did more
than just make referrals. The evidence shows that he made misrepresentations to them concerning his
authority to recruit for overseas employment and collected various amounts from them for placement
fees. Clearly, accused-appellant committed acts constitutive of large scale illegal recruitment.
PEOPLE OF THE PHILIPPINES VS REYDANTE CALONZO y AMBROSIO
G.R. Nos. 115150-55. 27 SEPTEMBER 1996. FIRST DIVISION (Bellosillo, J.)
Facts
Calonzo was charged with Illegal Recruitment in Large Scale and five (5) counts
of Estafa by Bernardo Miranda, Danilo de los Reyes, Elmer Clamor, Belarmino Torregrosa and Hazel de
Paula. On 5 April 1994 the Regional Trial Court of Pasig found the accused guilty as charged and
sentenced
Accused-appellant in this appeal assails his conviction by the trial court. He claims that the court
below erred in disregarding the testimony of Nenita Mercado, an employee of the Philippine Overseas
Employment Administration (POEA), who categorically stated that their records indicated that Calonzo
never processed complainants' applications for employment abroad. He concludes from that fact alone
that he cannot be deemed to have engaged in the recruitment of workers for employment abroad.
As regards the estafa cases, accused-appellant contends that the court a quo erred in giving credence
to the testimonies of prosecution witnesses considering that the amounts claimed to have been collected
by him did not correspond to the amounts indicated in the receipts presented by the complaining
witnesses.
Issue
Whether the accused is guilty of illegal recruitment?
Ruling
In the case before us, we are convinced that Calonzo defrauded complainants through
deceit. They were obviously misled into believing that he could provide them employment in Italy. As a
71 | P a g e

result, the five (5) complainants who desperately wanted to augment their income and improve their lot
parted with their hard-earned money.
As regards the conviction of Calonzo for estafa on five (5) counts the Court ruled in People v.
Turda that recruitmentof persons for overseas employment without the necessary recruiting permit or
authority from the POEA constitutes illegal recruitment; however, where some other crimes or felonies
are committed in the process, conviction under the Labor Code does not preclude punishment under other
statutes. In People v. Romero we said that the elements of estafa were: (a) that the accused defrauded
another by abuse of confidence or by means of deceit, and (b) that damage or prejudice capable of
pecuniary estimation is caused to the offended party or third person.
PEOPLE OF THE PHILIPPINES VS. FRANCISCO HERNANDEZ, ET AL.
G.R. No. 141221-36. 7 MARCH 2000. FIRST DIVISION (Puno, J.)
ESTAFA. Under Article 315, paragraph 2 of the Revised Penal Code, it is committed by any person who
defrauds another by using fictitious name, or falsely pretends to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of similar deceits executed prior
to or simultaneously with the commission of the fraud.
Facts
In April 1993, eight (8) informations for syndicated and large scale illegal recruitment and eight
(8) informations for estafa were filed against accused-appellants, spouses Karl and Yolanda Reichl,
together with Francisco Hernandez. Only the Reichl spouses were tried and convicted by the trial court as
Francisco Hernandez remained at large.
Issue
Whether the respondents are guilty of illegal recruitment?
Ruling
In the case at bar, the prosecution was able to prove beyond reasonable doubt that accusedappellants engaged in activities that fall within the definition of recruitment and placement under the
Labor Code. The evidence on record shows that they promised overseas employment to private
complainants and required them to prepare the necessary documents and to pay the placement fee,
although they did not have any license to do so. There is illegal recruitment when one who does not
possess the necessary authority or license gives the impression of having the ability to send a worker
abroad.
72 | P a g e
PEOPLE OF THE PHILIPPINES VS. F. FRANCISCO HERNANDEZ, KARL REICHL, ET. AL.
G.R. Nos. 141221-36. 7 MARCH 2000. FIRST DIVISION (Puno, J.)
ESTAFA. Under Article 315, paragraph 2 of the Revised Penal Code, it is committed by any person who
defrauds another by using fictitious name, or falsely pretends to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of similar deceits executed prior
to or simultaneously with the commission of the fraud.
Facts
In April 1993, eight (8) informations for syndicated and large scale illegal recruitment and eight
(8) informations for estafa were filed against accused-appellants, spouses Karl and Yolanda Reichl,
together with Francisco Hernandez. Only the Reichl spouses were tried and convicted by the trial court as
Francisco Hernandez remained at large.1wphi1.nt
Issue
Ruling
In the case at bar, the prosecution was able to prove beyond reasonable doubt that accusedappellants engaged in activities that fall within the definition of recruitment and placement under the
Labor Code. The evidence on record shows that they promised overseas employment to private
complainants and required them to prepare the necessary documents and to pay the placement fee,
although they did not have any license to do so. There is illegal recruitment when one who does not
possess the necessary authority or license gives the impression of having the ability to send a worker
abroad.
73 | P a g e
PEOPLE OF THE PHILIPPINES VS. TAN TIONG MENG alias TOMMY TAN
G.R. Nos. 120835-40. 10 APRIL 1997. FIRST DIVISION (Padilla, J.)
ILLEGAL RECRUITMENT; SEPRATE CATEGORIES. When the complaint filed is against an
individual only, there is no illegal recruitment in large scale; but the three conspiring recruiters can be
held guilty of illegal recruitment by a syndicate.
Facts
That on or about the period comprising June 1993 to August, 1993, in the City of Cavite,
Republic of the Philippines and within the jurisdiction of this Honorable Court, the above-named accused,
using a business name RAINBOW SIM FACTORY, a private employment recruiting agency, and
misrepresenting himself to have the capacity to contract, enlist and transport Filipino workers for
employment abroad with the ability to facilitate the issuance and approval of the necessary papers in
connection therewith, when in fact he did not possess the authority or license from the Philippine
Overseas Employment Administration to do so, did, then and there, wilfully, unlawfully and knowingly
for a fee, recruit in a large scale and promise employment in Taiwan to the following persons,
On appeal to this Court, accused-appellant assigns a single error allegedly committed by the trial
court, thus:
Issue
Ruling
It is clear that accused-appellant's acts of accepting placement fees from job applicants and
representing to said applicants that he could get them jobs in Taiwan constitute recruitment and placement
under the above provision of the Labor Code. The Labor Code prohibits any person or entity, not
authorized by the POEA, from engaging in recruitment and placement activities
74 | P a g e

The POEA having certified that accused-appellant is not authorized to recruit workers for overseas
employment, it is clear that the offense committed against the six (6) complainants in this case is illegal
recruitment in large scale punishable under Article 39 (a) of the Labor Code with life imprisonment and a
fine of One Hundred Thousand Pesos (P100,000.00). Accused-appellant's guilt of six (6) separate crimes
of estafa has likewise been proven. The argument that the deceit was employed by Jose Percival Borja
and not by accused-appellant is specious, even ridiculous. All the complainants agreed that it was
accused-appellant Tan who assured them of jobs in Taiwan. The assurances were made intentionally to
deceive the would-be job applicants to part with their money.
In People v. Calonzo, the Court reiterated the rule that a person convicted for illegal recruitment
under the Labor Code can be convicted for violation of the Revised Penal Code provisions on estafa
provided the elements of the crime are present. In People v. Romero the elements of the crime were
(a) that the accused defrauded another by abuse of confidence or by means of deceit, and (b) that damage
or prejudice capable of pecuniary estimation is caused to the offended party or third person. Both
elements have been proven in this case.
PEOPLE OF THE PHILIPPINES VS. DIOSCORA ARABIA and FRANCISCA TOMAS
G.R. Nos. 138431-36. 12 SEPTEMBER 2001. THIRD DIVISION (Gonzales-Reyes, J.)
LARGE SCALE ILLEGAL RECRUITMENT. - When the accused undertook recruitment activity
defined under Article 13 (b) or any prohibited practice under Art. 34 of the Labor Code; He did not have
the license or the authority to lawfully engage in the recruitment and placement of workers; He
committed the same against three or more persons, individually or as a group.
Facts
This is an appeal from the decision 1 of the Regional Trial Court of Quezon City, Branch 102,
finding accused-appellants Dioscora M. Arabia and Francisca L. Tomas both guilty of illegal recruitment
in large scale and sentencing them to each suffer the penalty of life imprisonment and to each pay a fine
of P100,000.00; and five (5) counts each of estafa for which both were sentenced to suffer an
indeterminate prison term of one (1) year, eight (8) months and twenty-one (21) days of prision
correccional as minimum, to five (5) years, five (5) months and eleven (11) days of prision correccional
as maximum for each of the four counts. In another count of estafa, they were each sentenced to suffer an
indeterminate prison term of two (2) years, eleven (11) months and eleven (11 ) days of prision
correccional as minimum, to six (6) years, eight (8) months and twenty-one (21) days of prision
correccional as maximum. They were further ordered to solidarily pay the complainants the following
amounts by way of actual damages: (1) P3,000.00 to Rolando Rustia; (2) P16,000.00 to Noel de la Cruz;
(3) P16,000.00 to Teresita Julva Lorenzo; (4) P16,000.00 to Violeta S. de la Cruz; and (5) P16,000.00 to
Remelyn Nona Jacinto.
Appellants argued that receipts were never presented to prove the allegations against them. Hence
this appeal.
Issue
Whether large-scale illegal recruitment exist ?
75 | P a g e

Held
There is no doubt as to accused-appellants' guilt for all the essential elements of the crime of
Illegal Recruitment in Large Scale have been established beyond reasonable doubt. Accused-appellants
recruited at least four persons, giving them the impression that they had the capability to send them to
Taiwan for employment. They collected various amounts allegedly for recruitment and placement fees
without license or authority to do so. It is settled that "the fact that an accused in an illegal recruitment
case did not issue the receipts for amounts received from the complainants has no bearing on his
culpability so long as complainants show through their respective testimonies and affidavits that the
accused was involved in the prohibited recruitment. It has also been held that the Statute of Frauds and
the rules of evidence do not require the presentations of receipts in order to prove the existence of a
recruitment agreement and the procurement of fees in illegal recruitment cases. The amounts may
consequently be proved by the testimony of witnesses.
PEOPLE OF THE PHILIPPINES VS. ELENA VERANO y ABANES

G.R. No. 90017-18. 1 March 1994. THIRD DIVISION (Bellosillo, J.)
LARGE SCALE ILLEGAL RECRUITMENT. - When the accused undertook recruitment activity
defined under Article 13 (b) or any prohibited practice under Art. 34 of the Labor Code; He did not have
the license or the authority to lawfully engage in the recruitment and placement of workers; He
committed the same against three or more persons, individually or as a group.
Facts
On October 1987, accused-appellant persuaded the three (3) private complainants to accept
overseas employment as salesmen in Bahrain. In consideration thereof, Alfonso, Arturo and Jose were
required to pay P10,000.00 each to cover the expenses for the processing of their travel papers, i.e.,
passports, visas and the cost of their plane tickets, medical examination and recruitment fees. Jose paid
the total amount of P15,000.00, while Arturo and Alfonso paid P10,000.00 and P7,150.00 respectively.
They were issued separate receipts by accused-appellant. To further convince them of her capacity to
send them abroad, accused-appellant even signed a contract of employment with her as employer and
Arturo as employee.
Assured that they could depart for Bahrain on 27 December 1987, Alfonso, Jose and Arturo went
to the Ninoy Aquino International Airport and waited for accused-appellant who was supposed to meet
them there to deliver their passports, visas and plane tickets. When she failed to show up, the three (3)
recruits proceeded to her residence and there waited for her until she returned four (4) days later. By way
of explanation, they were told that their passports and visas were still being processed but were promised
they were promised they could leave for their overseas jobs on 15 January 1988.
Again, the three (3) hopefuls proceeded to the NAIA but, like before, accused-appellant failed to
show up. This time they were told that they could definitely leave on 13 February 1988. However, on the
appointed date and time, accused-appellant failed to show up for the third time. Jose, Arturo and Alfonso
then went to the Western Police District Headquarters to lodge their complaint. Accused-appellant was
arrested on the same day and charged with illegal recruitment committed in large scale, and estafa, with
76 | P a g e

Jose Daep as the lone complainant in the latter case. After trial, Elena Verano y Abanes was found guilty
in both cases.
Issue
Whether large-scale illegal recruitment exists?
Ruling
Appellant's argument is obviously without merit in the light of the well-settled doctrine that
findings of fact made by the trial court are final and conclusive and cannot be reviewed on
appeal. Except for a few recognized instances, which do not apply in the case at bench, such findings are
bindings and will not be reviewed by us for this Court is not a trier of facts. The issues raised by appellant
are purely and undisputably factual, as she herself admits. Considering that none of the exceptions apply,
as aforesaid, we would not be justified in reversing the judgment of conviction. Hence, the appeal must
fail.
PEOPLE OF THE PHILIPPINES VS. ESPANOL

CRIMINAL CASE NO. Q-88 4444
ILLEGAL RECRUITMENT. A person convicted for illegal recruitment under the Labor Code can be
convicted for violation of the Revised Penal Code provisions on estafa provided the elements of the crime
are present.
Facts
In or about February and August 1988, at Quezon City, accused J. Espanol canvassed, enlisted,
contracted and promised employment to 14 persons, exacting a total of P21,500.00 as recruitment fees,
without authority or license from the POEA. Accused introduced himself to the 14 private complainants
as one who had rich and influential relatives in California, U.S.A. The positions promised were for a
dressmaker, cook, dishwasher, driver and housemaid, and accused exacted payments for processing of
travel documents in amounts ranging from P1,000 P3,000.
On September 3, 1988, the birthday of accused, he informed the 14 applicants that a certain Atty.
Dizon, who was working for their documents, would definitely be coming and would advise them to their
departure. The lawyer never appeared. The birthday turned out to be a grand affair, applicants donating
pigs, dogs, goats, and some other items. After the party, complainants became apprehensive.
On several occasions, complainants talked to the accused, who kept promising that he could send
them abroad. When the complainants sensed that they were deceived, they demanded return of their
money, but accused failed and started hiding. They chanced on him and forcibly took him to the police
station where they gave their sworn statements. Accuseds defense was that he did not know the
77 | P a g e

applicants except one, that he had no brother or sister in California, U.S.A. and that the house where he
celebrated his birthday was owned by one de la Pasion, who shouldered all the expenses.
Issue
Whether the accused committed illegal recruitment?
Held
The accused is a dangerous member of society who feels happy and comfortable victimizing the
poor, innocent and the gullible, of their hard-earned money. Evidence woven together proves the pattern
for illegal recruitment, hence, mere denial must necessarily fall.
The Court found the accused guilty beyond reasonable doubt of the crime charged and sentenced
him to suffer eight years imprisonment and to pay a fine of P50,000 and the costs. The accused was
likewise ordered to reimburse the amount of P21,500.00 to the 14 private complainants listed in the
criminal information.
PEOPLE OF THE PHILIPPINES VS. F.C ROXAS

CRIMINAL CASE No. 87-52583
CHARGEABLE FEES. The placement and documentation costs are yhe only authorized payments that
may be collected from a hired worker. No other charges in whatever form, manner or purpose, shall be
imposed on and be paid by the worker without prior approval of the POEA
Facts
Accused Roxas, doing business under the and style of F.C. Roxas Construction, with office
address at Rm. 212 Manufacturer Building. Sta. Cruz, Manila was a licensed private recruitment entity
(service contractor) whose authority was issued on February 20, 1984 and expired on march 25, 1988, (a
Service contractor acts as employer of its recruits with respect to project it contracted to service abroad).
As a service contractor, it is not allowed to charge, directly or indirectly, any fee from the workers
except the authorized documentation fee of P1,5000.00.
During the period from January 1984 to July 1986, the accused F.C. construction co. demanded
and received from its applicants, herein private complainants numbering about 22, various sums of money
ranging from P1,500.00. in excess of the limits set forth by law. The complainants, furthermore. Were not
able to work abroad, were not issued any travel documents, and despite efforts, were not refunded the
money paid to and received by the accused. The accused Roxas did not deny the receipts covering the
different sums of money paid by private complainants. He resorted out that the amounts paid to and
received by him were for pass-porting and ticketing of the private complainants.
Issue
78 | P a g e

Whether t the accused is guilty beyond reasonable doubt of violation Article 32 of P.D. 442?
Ruling
Court found the excuse of accused to be highly unjustified and definitely unconvincing. Besides,
the accused has jumped bail. And despite the issuance of a warrant of arrest, he has not been apprehended.
As a matter of fact, he was tried in absentia. The fundamental rule that the plight of the accused is
consistent with his guilt was made applicable in his case.
Accused Roxas is guilty beyond reasonable doubt of violation of Article 32 of P.D. No. 442,as
amended and its implanting rules and regulations, as charged in the information and was sentenced of
suffer a penalty of imprisonment for a period of five years and to pay a fine of fifty thousand pesos
(P50,000.00)
PEOPLE OF PHILIPPINES VS. NIMFA REMULLO

G.R. No. 124443. 6 JUNE 2002. SECOND DIVISION (Quisumbing, J.)
LARGE SCALE ILLEGAL RECRUITMENT. - The elements of large scale illegal recruitment are as
follows: (1) the accused was engaged in recruitment activity under Article 13 b, or any prohibited practice
under Article 34 of the Labor Code; (2) he or she lacks the requisite license or authority to lawfully
engage in the recruitment and placement of workers; and (3) he or she committed such acts against three
or more persons, individually or as a group. In this case, such elements have been fulfilled in the case of
the accused.
Facts
Petitioner falsely represented herself as an employee of a recruitment agency to have the capacity
and power to contract, enlist and recruit workers for job placement abroad, and willfully, unlawfully, and
feloniously collected fees, and promised employment abroad to multiple (4) complainants. Complainants
paid sums of money to accused for the promise of employment and scheduled flights abroad. When
complainants had their flights cancelled repeatedly, they decided to inquire their status to the recruitment
agency allegedly being represented by accused. There, complainants have been informed that accused
was not anymore an employee and such role she handled did not authorize her to recruit workers and
more so accept payment and other fees.
79 | P a g e

Issue
Whether accused is guilty of large-scale illegal recruitment?
Held
Accused is guilty of large-scale illegal recruitment. The court is convinced that private
complainants were enticed by appellate to apply for jobs abroad. However, she acted without license or
lawful authority to conduct recruitment of workers for overseas placement. The POEAs licensing branch
issued a certification that applicant, in her personal capacity, was not authorized to engage in recruitment
activities. The general manager of the placement agency where appellant used to work denied that the
scope of appellants work included recruiting workers and receiving placement fees. Such lack of
authority to recruit is also apparent from a reading of the job description of a marketing consultant.
PEOPLE OF THE PHILIPPINES VS. SAMILA ANGELES

G.R. No. 132376. 11 APRIL 2002. FIRST DIVISION (Ynares, Santiago, J.)
ILLEGAL RECRUITMENT. - To prove illegal recruitment, it must be shown that the accused gave
complainants the distinct impression that he had the power or ability to send money in order to be
employed.
Facts
Maria Tolosa Sardea was working in Saudi Arabia when she received a call from her sister,
Priscilla Agoncillo, who was in Paris, France. Priscilla advised Maria to return to the Philippines and
await the arrival of her friend, accused-appellant Samina Angeles, who will assist in processing her travel
and employment documents to Paris, France.
Analyn Olpindo met accused-appellant in Belgium. At that time, Analyn was working in Canada
but she went to Belgium to visit her in-laws. After meeting accused-appellant, Analyn Olpindo called up
her sister, Precila Olpindo, in the Philippines and told her to meet accused-appellant upon the latters
arrival in the Philippines because accused-appellant can help process her documents for employment in
Canada.
In both instance accused appellant promised to help process their papers for travel abroad but
never made a promise of employment. Accused-appellant told Precila Olpindo and Vilma Brina that it
was easier to complete the processing of their papers if they start from Jakarta, Indonesia rather than from
Manila. Precila Olpindo, Vilma Brina and accused-appellant flew to Jakarta, Indonesia. However,
accused-appellant returned to the Philippines after two days, leaving behind Precila and Vilma. They
waited for accused-appellant in Jakarta but the latter never returned. Precila and Vilma eventually came
home to the Philippines. They started looking for her but they could not reach her.
80 | P a g e

Issue
Whether accused Samina Angeles is guilty of illegal recruitment?
Held
No. To prove illegal recruitment, it must be shown that the accused gave complainants the distinct
impression that he had the power or ability to send money in order to be employed. To be engaged in the
practice of recruitment and placement, it is plain that there must be at least be a promise or offer of an
employment from the person posing as a recruiter whether locally or abroad, In the case at bar none of the
complainants testified that the accused lured them to part with their money with promises of jobs abroad.
On the contrary, they were all consistent in saying that their relatives abroad were the ones contacted them
and urged them to meet the accused who would assist them in processing their travel documents. The
accused did not have to make promises if employment as these were already done by complainants
relatives.
FARLE P. ALMODIEL VS. NLRC and RAYTHEON PHILS, INC.

G.R. No. 100641. 1993 JUNE 14. SECOND DIVISION (Nocon, J.)
EMPLOYMENT OF NON-RESIDENT ALIENS. Article 40 of P.D. No. 442, as amended, requires only
non-resident aliens to secure employment permit
Facts
Petitioner Almodiel is a certified public accountant who was hired in October, 1987 as Cost
Accounting Manager of respondent Raytheon Philippines, Inc. through a reputable placement firm, John
Clements Consultants, Inc. Before said employment, he was the accounts executive of Integrated
Microelectronics, Inc. for several years. He left his lucrative job therein in view of the promising career
offered by Raytheon. He started as a probationary or temporary employee. On August 17, 1988, he
recommended and submitted a Cost Accounting/Finance Reorganization, affecting the whole finance
group but the same was disapproved by the Controller. However, he was assured by the Controller that
should his position or department which was apparently a one-man department with no staff becomes
untenable or unable to deliver the needed service due to manpower constraint, he would be given a three
(3) year advance notice.
In the meantime, the standard cost accounting system was installed and used at the Raytheon
plants and subsidiaries worldwide. On January 27, 1989, petitioner was summoned by his immediate boss
and in the presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition of his position on
the ground of redundancy. He pleaded with management to defer its action or transfer him to another
department, but he was told that the decision of management was final and that the same has been
conveyed to the Department of Labor and Employment. Thus, he was constrained to file the complaint for
illegal dismissal before the Arbitration Branch of the National Capital Region, NLRC, Department of
Labor and Employment.
81 | P a g e

Issues
Whether the public respondent committed grave abuse of discretion amounting to (lack of) or in
excess of jurisdiction in declaring as valid and justified the termination of petitioner on the ground of
redundancy in the face of clearly established finding that petitioner's termination was tainted with malice,
bad faith and irregularity?
Held
Finding no grave abuse of discretion on the part of the National Labor Relations Commission in
reversing and annulling the decision of the Labor Arbiter and that on the contrary, the termination of
petitioner's employment was anchored on a valid and authorized cause under Article 283 of the Labor
Code, the instant petition for certiorari must fail.
GENERAL MILLING CORPORATION VS. HON. RUBEN TORRES

G.R. No. 9366, 22 APRIL 1991. THIRD DIVISION (Feliciano, J.)
EMPLOYMENT OF NON-RESIDENT ALIENS. - . 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.
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 the Secretary of Labor acted 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
82 | P a g e

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 who 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.
DEE C. CHUAN and SONS VS. COURT OF INDUSTRIAL RELATIONS

G.R. No. L-2548. 31 JANUARY 1950. EN BANC (Paras, J.)
EMPLOYMENT OF NON-RESIDENT ALIENS. - . 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.
Facts
Dee C. Chuan & Sons, Inc. assails the validity of an order of the Court of Industrial Relations.
The order made upon petitioner's request for authority to hire" about twelve(12) more laborers from time
to time and on a temporary basis," contains the proviso that "the majority of the laborers to be employed
should be native." The petition was filed pending settlement by the court of a labor dispute (strike)
between the petitioner and Kaisahan Ng Mga Manggagawa sa Kahoy sa Pilipinas.
It is next said that "The Court of Industrial Relations cannot intervene in questions of selection of
employees and workers so as to impose unconstitutional restrictions," and that "The restrictions of the
number of aliens that may be employed in any business, occupation, trade or profession of any kind, is a
denial of the equal protection of the laws." Although the brief does not name the persons who are
supposed to be denied the equal protection of the laws, it is clearly to be inferred that aliens in general are
in petitioner's mind. Certainly, the order does not, directly or indirectly, immediately or remotely,
discriminate against the petitioner on account of race or citizenship. The order could have been issued in a
case in which the employer was a Filipino. As a matter of fact the petitioner insists that 75 % of its shares
of stock are held by Philippine citizens, a statement which is here assumed to be correct.
Issue
Whether the order of CIR is valid and constitutional?
Ruling
83 | P a g e

Yes, an alien may question the constitutionality of a statute only when and so far as it is being, or
is about to be, applied to his disadvantage. The prospective employees whom the petitioner may
contemplate employing have not come forward to seek redress; their identity has not even been revealed.
Clearly the petitioner has no case in so far as it strives to protect the rights of others, much less others
who are unknown and undetermined.
We are of the opinion that the order under consideration meets the test of reasonableness and
public interest. The passage of Commonwealth Act No. 103 was "in conformity with the constitutional
objective and the historical fact that industrial and agricultural disputes have given rise to disquietude,
bloodshed and revolution in our country." Commonwealth Act No. 103 has precisely vested the Court of
Industrial Relations with authority to intervene in all disputes between employees or strikes arising from
the difference as regards wages, compensation, and other labor conditions which it may take cognizance
of. Thus it has jurisdiction to determine the number of men to be laid off during off-seasons. By the same
token, the court may specify that a certain proportion of the additional laborers to be employed should be
Filipinos, if such condition, in the court's opinion, is necessary or expedient for the purpose of settling
disputes or doing justice to the parties.
NITTO ENTERPRISES VS. NLRC and ROBERTO CAPILI, ET AL
G.R. No. 114337. 29 September 1995. FIRST DIVISION (Kapunan, J.)
APPRENTICESHIP PROGRAMS. - It is mandated that apprenticeship agreements entered into by the
employer and apprentice shall be entered only in accordance wirth the apprenticeship program duly
approved by the Minister of Labor and Employment.
Facts
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum, products,
hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and coremaker as
evidenced by an apprenticeship agreement for a period of six (6) months from May 28, 1990 to
November 28, 1990 with a daily wage rate of P 66.75 which was 75% of the applicable minimum wage.
On August 2, 1990, Roberty Capili who was handling a piece of glass which he was working on,
accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital. Further,
Capili entered a workshop within the office premises which was not his work station. There, he operated
one of the power press machines without authority and in the processed injured his left thumb. The
following day he was asked to resign. Three days after, private respondent formally filed before the
NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal and payment of other
monetary benefits,
The Labor Arbiter rendered his decision finding the termination of private respondent as valid
and dismissing the money claim for lack of merit. On appeal, NLRC issued an order reversing the
decision of the Labor Arbiter. The NLRC declared that Capili was a regular employee of Nitto Enterprises
and not an apprentices. Consequently, Labor Arbiter issued a Writ of Execution ordering for the
reinstatement of Capili and to coollect his back wages. Petitioner Enterprises filesd a case to the Supreme
Court
Issue
Whether public respondent NLRC committed grave abuse of discretion in holding that private
respondent was not an apprentice?
84 | P a g e
Held
No. The apprenticeship agreement between petitioner and private respondent was executed on
may 28, 1990, allegedly employing the latter as an apprentice in the trade of care make/m older.
However, the apprenticeship agreement was filed only on June 7, 1990. Notwithstanding the absence of
approval by filling the proposed apprenticeship program with the Department of Labor and Employment
is a preliminary step towards its final approval and does not instantaneously give rise to an employer
apprentice relationship.
Nitto Enterprises did not comply with the requirements of the law. It is mandated that
apprenticeship agreements entered into by the employer and apprentice shall be entered only in
accordance wirth the apprenticeship program duly approved by the Minister of Labor and Employment.
Thus, the apprenticeship agreement has no force and effect; and Capili is considered to be a regular
employee of the company.
85 | P a g e

FILAMER CHRISTIAN INSTITUTE VS. INTERMEDIATE APPELLATE COURTS
G.R. No. 75112. 17 August 1992. THIRD DIVISION (GUTIERREZ, JR., J.)
ESSENTIALITY OF EMPLOYER-EMPLOYEE RELATIONSHIP. - Some businessmen try to avoid the

bringing about of an employer employee relationship in their enterprises because that judicial relation
spawns obligations connected with workmens compensation, social security, Medicare, termination pay,
and unionism.
Facts
Funtecha is a part time janitor and student, while Allan Masa is a driver. Both employed in
Filamer Christian Institute. Funtecha having a student drivers license requested Allan, and was allowed
to take over the vehicle while the latter in on his way home. Negotiating a sharp dangerous curb, a fast
moving truck with glaring lights nearly hit them so that they have to swerve to the right to avoid the
collision. As a result, Potenciano Kapunan who was walking in his lane was hit by the vehicle driven by
Funtecha. Kapunan died on the said accident. The heirs of Kapunan instituted an action for damages. The
lower court rendered judgment in favor of the heirs of Potenciano, ordering Filamer liable for the acts of
Funtecha as their employee. The Intermediate Appellate Court affirmed the decision of the lower court.
Issue
Whether there exists an employer-employee relationship between Funtecha who was a part time
Janitor of Filamer?
Ruling
The Supreme Court held that there exists an employer-employee relationship between Funtecha
who was a part time Janitor of Filamer. The Fact that Funtecha was not the school driver or was acting
within the scope of his janitorial duties does not relieve the petitioner of the burden of rebutting the
presumption Juris tantum that there was negligence on its part either in the selection of a servant or
employee, or in the supervision over him.
86 | P a g e

BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHIL. VS. HON. ZAMORA, ET. AL.
G.R. No. 48645. 7 JANUARY 1987. SECOND DIVISION (Gutierrez, Jr., J.)
ESSENTIALITY OF EMPLOYER-EMPLOYEE RELATIONSHIP. - Some businessmen try to avoid the
bringing about of an employer employee relationship in their enterprises because that judicial relation
spawns obligations connected with workmens compensation, social security, Medicare, termination pay,
and unionism.
Facts
Petitioner Union have been reporting as loaders for San Miguel Parola Glass Factory under the
supervision of a certain Camahort. Job orders for work came from Camahort and petitioners were also
supplied with tools and other equipment for the fulfilment of their duties. With the job orders being
dependent on the volume of production of the factory, work was not necessarily eight (8) hours but at
times petitioners would be asked to work more than eight (8) hours and at times also on Saturdays and
Sundays. The workers were not paid for their overtime and rendered work during Saturdays and Sundays.
Petitioners organized and held union activities to push management to pay for their overtime and holiday
compensation as well as other grievances. Some members were then dismissed from work due to their
membership with the union. Due to this, Petitioners filed a notice of strike on the Bureau of Labour
Relations and a meeting was held between the parties wherein petitioners gave proposals for recognition
and collective bargaining. San Miguel Corporations, on the other hand, refused to bargain with petitioners
alleging that there was no employer employee relationship. NLRC decided in favour of the petitioners
to receive one year salary. However, upon appeal by San Miguel Corporations, the Secretary stressed
upon the decision that there was no employer employee relationship. Hence, an appeal was filed by the
petitioners.
Issue
Whether or not the employer employee relationship exists between Brotherhood Labor Union
Movement and San Miguel Corporation?
Ruling
In determining the existence of an employer-employee relationship, the following elements must
be considered: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control the employee with respect to the means and
methods by which the work is to be accomplished. It. is the called "control test" that is the most important
element.
The existence of an independent contractor relationship is generally established by the following
criteria: whether or not (a) contractor is carrying on an independent business; (b) the nature and extent of
the work; (c) the skill required; the term and duration of the relationship; (d) the right to assign the
performance of a specified piece of work; (e) the control and supervision of the work to another; (f) the
employer's power with respect to the hiring, (g) firing and payment of the contractor's workers; (h) the
control of the premises; (i) the duty to supply the premises tools, appliances, materials and labour; and (j)
the mode, manner and terms of payment.
87 | P a g e

DANILO TABAS, ET., AL, VS. CALIFORNIA MANUFACTURING COMPANY INC., ET., AL.
G.R. NO. L-80680, 26 JANUARY 1989 SECOND DIVISION (Sarmiento, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP; STANDARDS. - This Court has consistently ruled that the
determination of whether or not there is an employer-employee relation depends upon four standards: (1)
the manner of selection and engagement of the putative employee; (2) the mode of payment of wages;(3)
the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the
putative employee's conduct.
Facts
On July 21, 23, and 28, 1986, the petitioners petitioned the NLRC for reinstatement and payment
of various benefits, including minimum wage, overtime pay, holiday pay, thirteen-month pay, and
emergency cost of living allowance pay, against the respondent. On October 7, 1986, after the cases had
been consolidated, the respondent filed a motion to dismiss as well as a position paper denying the
existence of an employer-employee relation between the petitioners and the respondents and,
consequently, any liability for payment of money claims.
It appears that the petitioners were, prior to their stint with respondents, employees of Livi, which
subsequently assigned them to work as "promotional merchandisers" 3 for the former firm pursuant to a
manpower supply agreement. The petitioners were made to sign employment contracts with durations of
six months, upon the expiration of which they signed new agreements with the same period, and so on.
The petitioners now allege that they had become regular California employees and demand, as a
consequence whereof, similar benefits. They likewise claim that pending further proceedings below, they
were notified by California that they would not be rehired. As a result, they filed an amended complaint
charging California with illegal dismissal.
California admits having refused to accept the petitioners back to work but deny liability therefor
for the reason that it is not, to begin with, the petitioners' employer and that the "retrenchment" had been
forced by business losses as well as expiration of contracts. 9
Issue
Whether there exist an employer-employee relation between the petitioners and the respondents
based on the manpower supply contract agreement between repondent California and Livi.
Held:
The existence of an employer-employees relation is a question of law and being such, it cannot be
made the subject of agreement. Hence, the fact that the manpower supply agreement between Livi and
California had specifically designated the former as the petitioners' employer and had absolved the latter
from any liability as an employer, will not erase either party's obligations as an employer, if an employeremployee relation otherwise exists between the workers and either firm. At any rate, since the agreement
was between Livi and California, they alone are bound by it, and the petitioners cannot be made to suffer
from its adverse consequences.
88 | P a g e

DR. CARLOS L. SEVILLA and LINA O. SEVILLA VS. COURT OF APPEALS, ET AL.
G.R. No. 411482-3. 16 APRIL 1968. SECOND DIVISION (Sarmiento, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP; STANDARDS. - This Court has consistently ruled that the
determination of whether or not there is an employer-employee relation depends upon four standards: (1)
the manner of selection and engagement of the putative employee; (2) the mode of payment of wages;(3)
the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the
putative employee's conduct.
Facts
On the strength of a contract entered into on Oct. 19, 1960 by and between Mrs. Segundina
Noguera, party of the first part; the Tourist World Service, Inc., represented by Mr. Eliseo Canilao as party
of the second part, and hereinafter referred to as appellants, the Tourist World Service, Inc. leased the
premises belonging to the party of the first part at Mabini St., Manila for the former-s use as a branch
office. In the said contract the party of the third part held herself solidarily liable with the party of the part
for the prompt payment of the monthly rental agreed on. When the branch office was opened, the same
was run by the herein appellant Una 0. Sevilla. On or about November 24, 1961 the Tourist World
Service, Inc. appears to have been informed that Lina Sevilla was connected with a rival firm, the
Philippine Travel Bureau, and, since the branch office was anyhow losing, the Tourist World Service
considered closing down its office. This was firmed up by two resolutions of the board of directors of
Tourist World Service, Inc. dated Dec. 2, 1961, the first abolishing the office of the manager and vicepresident of the Tourist World Service, Inc., Ermita Branch, and the second,authorizing the corporate
secretary to receive the properties of the Tourist World Service then located at the said branch office. The
appellants used it since Nov. 1961. Because of this, and to comply with the mandate of the Tourist World
Service, the corporate secretary Gabino Canilao went over to the branch office, and, finding the premises
locked, and, being unable to contact Lina Sevilla, he padlocked the premises on June 4, 1962 to protect
the interests of the Tourist World Service. When neither the appellant Lina Sevilla nor any of her
employees could enter the locked premises, a complaint wall filed by the herein appellants against the
appellees with a prayer for the issuance of mandatory preliminary injunction. For apparent lack of interest
of the parties therein, the trial court ordered the dismissal of the case without prejudice. Trial court ruled
in favor of the respondent, hence this petition.
Issue
Whether there is an employer-employee relationship that exist?
Held
No, there was no employer-employee relationship. The records will show that the petitioner, Lina
Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either as to the
result of the enterprise or as to the means used in connection therewith. In the first place, under the
contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for
rental payments, an arrangement that would be like claims of a master-servant relationship. True the
respondent Court would later minimize her participation in the lease as one of mere guaranty, that does
not make her an employee of Tourist World, since in any case, a true employee cannot be made to part
with his own money in pursuance of his employer's business, or otherwise, assume any liability thereof.
In that event, the parties must be bound by some other relation, but certainly not employment.
89 | P a g e

CONTINENTAL MARBLE CORP. and FELIPE DAVID vs. NLRC, ET AL.
G.R. No. L-43825. 9 May 1988. SECOND DIVISION (Padilla, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP; STANDARDS; CONTROL TEST. - Absent the power to
control the employee with respect to the means and methods by which his work was to be accomplished,
there was no employer-employee relationship between the parties.
Facts
Rodito Nasayao filed a motion to dismiss the appeal on the ground that the decision of the
voluntary arbitrator is final, unappealable, and immediately executory; and, on filed a motion for the
issuance of a writ of execution. Acting on the motions, the respondent Commission dismissed the appeal
on the ground that the decision appealed from is final, unappealable and immediately executory. As
prayed for, the Court issued a temporary restraining order, restraining herein respondents from enforcing
and/or carrying out the questioned decision and resolution.
Issue
Whether the private respondent was employed as plant manager of petitioner Continental Marble
Corporation?
Ruling
The Court agree with the petitioner that the decisions of voluntary arbitrators must be given the
highest respect and as a general rule must be accorded a certain measure of finality. This is especially true
where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth Pineda
Romero, Director of the U.P. Law Center and an academician of unquestioned expertise in the field of
Labor Law. It is not correct, however, that this respect precludes the exercise of judicial review over their
decisions. Article 262 of the Labor Code making voluntary arbitration awards final, inappealable, and
executory except where the money claims exceed P l 00,000.00 or 40% of paid-up capital of the employer
or where there is abuse of discretion or gross incompetence refers to appeals to the National Labor
Relations Commission and not to judicial review.
Inspite of statutory provisions making 'final' the decisions of certain administrative agencies, we
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law
were brought to our attention. There is no provision for appeal in the statute creating the Sandiganbayan
but this has not precluded us from examining decisions of this special court brought to us in proper
petitions.
ENCYCLOPEDIA BRITTANICA INC. VS. NLRC, ET AL.

90 | P a g e

G.R. No.87098. 4 NOVEMBER 1996. SECOND DIVISION (Torres, Jr., J.)
EMPLOYER-EMPLOYEE RELATIONSHIP; STANDARDS; CONTROL TEST. - Absent the power to
control the employee with respect to the means and methods by which his work was to be accomplished,
there was no employer-employee relationship between the parties.
Facts
Private respondent was a sales division manager of private petitioner and was in charge of selling
the latters products through sales representatives. As compensation, private respondent receive
commissions from the products sold by his agents. After resigning from office to pursue his private
business, he filed a complaint against the petitioner, claiming for non-payment of separation pay and other
benefits.
Petitioner alleged that complainant was not its employee but an independent dealer authorized to promote
and sell its products and in return, received commissions therefrom. Petitioner did not have any salary and
his income from petitioner was dependent on the volume of sales accomplished. He had his own office,
financed the business expense, and maintained his own workforce. Thus petitioner argued that it had no
control and supervision over the complainant as to the manner and means he conducted his business
operations.
The Labor Arbiter ruled that complainant was an employee of the petitioner company. Petioner
had control over the complainant since the latter was required to make periodic reports of his sales
activities to the company.
Issue
Whether there exists an employer-employee relationship.
Held:
No. Control of employees conduct is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship. Under this, an employeremployee relationship exists where the person for whom the services are performed reserves the right to
control not only the end to be achieved, but also the manner and means to be used in reaching that end.
The fact that petitioner issued memoranda to private respondent and to other division sales managers did
not prove that petitioner had actual control over them. The different memoranda were merely guidelines
on company policies which the sales managers follow and impose on their respective agents.
DY KEH BENG VS. INTERNATIONAL LABOR AND MARINE UNION ET. AL.
91 | P a g e

G.R. No. L-32245. 25 May 1979. FIRST DIVISION (De Castro, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP. - The test is whether there is an understanding between the
parties that one is to render personal services to or for the benefit of the other and recognition by them of
the right of one to order and control the other in the performance of the work and to direct the manner and
method of its performance.
Facts
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory,
for discriminatory by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and
Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case was filed in
the Court of Industrial Relations. Dy Keh Beng contended that he did not know Tudla and that Solano
was not his employee because the latter came to the establishment only when there was work which he
did on pakiaw basis, each piece of work being done under a separate contract. Moreover, Dy Keh Beng
countered with a special defense of simple extortion committed by the head of the labor union,
Bienvenido Onayan.
After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by
the Court of Industrial Relations. An employee-employer relationship was found to have existed between
Dy Keh Beng and complainants Tudla and Solano, although Solano was admitted to have worked on
piece basis. According to the Hearing Examiner, the evidence for the complainant Union tended to show
that Solano and Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955,
respectively, and that except in the event of illness, their work with the establishment was continuous
although their services were compensated on piece basis.
Petitioner really anchors his contention of the non-existence of employee-employer relationship
on the control test. He points to the case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et
al., L-13130, October 31, 1959, where the Court ruled that:
Issue
Whether there existed an employee employer relationship?
Ruling
While this Court upholds the control test under which an employer-employee relationship exists
"where the person for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end, " it finds no merit with petitioner's
arguments as stated above. It should be borne in mind that the control test calls merely for the existence of
the right to control the manner of doing the work, not the actual exercise of the right. Considering the
finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture
of baskets known as kaing, it is natural to expect that those working under Dy would have to observe,
among others, Dy's requirements of size and quality of the kaing. Some control would necessarily be
exercised by Dy as the making of the kaing would be subject to Dy's specifications. Parenthetically, since
the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could
easily exercise control on the men he employed.
ZANOTTE SHOES/LEONARDO LORENZO VS. NLRC, ET AL.
92 | P a g e

G.R. No. 100665.13 FEBRUARY 1995. THIRD DIVISION (Vitug, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP; STANDARDS. - The indicia used for determining the

existence of an employer-employee relationship, depends upon four standards: (1) the manner of selection
and engagement of the putative employee; (2) the mode of payment of wages;(3) the presence or absence
of a power of dismissal; and (4) the presence or absence of a power to control the putative employee's
conduct.
Facts
Private respondents filed a complaint for illegal dismissal and for various monetary claims,
including the recovery of damages and attorney's fees, against petitioners. In their supplemental position
paper, the complainants subsequently confined themselves to the illegal dismissal charge and abandoned
the monetary claims.
Private respondents averred that they worked for a minimum of twelve hours daily, including
Sundays and holidays when needed; that they were paid on piece-work basis; that it "angered" petitioner
Lorenzo when they requested to be made members of the Social Security System ("SSS"); and that, when
they demanded an increase in their pay rates, they were prevented (starting 24 October 1988) from
entering the work premises.
Petitioners, in turn, claimed that their business operations were only seasonal, normally twice a
year, one in June (coinciding with the opening of school classes) and another in December (during the
Christmas holidays), when heavy job orders would come in. Private respondents, according to petitioners,
were engaged on purely contractual basis and paid the rates conformably with their respective
agreements.
Issues
Whether the employer-employee relationship exists between petitioner and respondents?
Held
The work of private respondents is clearly related to, and in the pursuit of, the principal business
activity of petitioners. The indicia used for determining the existence of an employer-employee
relationship, all extant in the case at bench, include: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee
with respect to the result of the work to be done and to the means and methods by which the work to be
done and to the means and methods by which the work is to be accomplished.
AIR MATERIAL WING SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC, ET AL.
93 | P a g e

G.R. No. 111870. 30 JUNE 1994. FIRST DIVISION (Cruz, J.)
EMPLOYER-EMPLOYER RELATIONSHIP. - The elements are: (1) selection and engagement of the
employee; (2) payment of wages; (3) power of dismissal; and (4) employer's own power to control
employee's conduct.
Facts
Private respondent Luis S. Salas was appointed "notarial and legal counsel" for the petitioner. The
appointment was renewed for three years.
The petitioner issued an order reminding Salas of the approaching termination of his legal
services under their contract. This prompted Salas to lodge a complaint against AMWSLAI for separation
pay, vacation and sick leave benefits, cost of living allowances, refund of SSS premiums, moral and
exemplary damages, payment of notarial services, and attorney's fees.
AMWSLAI moved to dismiss for lack of jurisdiction. It averred that there was no employeremployee relationship between it and Salas and that his monetary claims properly fell within the
jurisdiction of the regular courts. It was there held that Salas was not illegally dismissed and so not
entitled to collect separation benefits. His claims were rejected on the ground that he was a managerial
employee. He was also denied moral and exemplary damages for lack of evidence of bad faith on the part
of AMWSLAI. Neither was he allowed to collect his notarial fees because the claim therefor had already
prescribed. However, the petitioner was ordered to pay Salas his notarial fees, and attorney's fee
equivalent to 10% of the judgment award. On appeal, the decision was affirmed in toto by the respondent
Commission
Issue
Whether Salas can be considered an employee of the petitioner company?
Held
The Court have held in a long line of decisions that the elements of an employer-employee
relationship are: (1) selection and engagement of the employee; (2) payment of wages; (3) power of
dismissal; and (4) employer's own power to control employee's conduct.
The terms and conditions set out in the letter-contract entered into by the parties on, clearly show
that Salas was an employee of the petitioner. His selection as the company counsel was done by the board
of directors in one of its regular meetings. The petitioner paid him a monthly compensation/retainer's fee
for his services. Though his appointment was for a fixed term of three years, the petitioner reserved its
power of dismissal for cause or as it might deem necessary for its interest and protection. No less
importantly, AMWSLAI also exercised its power of control over Salas by defining his duties and
94 | P a g e

HYDRO RESOURCES CONTRACTORS CORP. VS. HON. ADRIAN PAGALILAUAN, ET AL.
G.R. No. L-62909. 18 April 1989. THIRD DIVISION (Gutierrez, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP. - This Court has consistently ruled that the determination
of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of
selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence
or absence of a power of dismissal; and (4) the presence or absence of a power to control the putative
employee's conduct.
Facts
On October 24, 1978, Petitioner Corporation hired the private respondent Aban as its "Legal
Assistant." He received a basic monthly salary of P l,500.00 plus an initial living allowance of P50.00
which gradually increased to P320.00.On September 4, 1980, Aban received a letter from the corporation
informing him that he would be considered terminated effective October 4, 1980 because of his alleged
failure to perform his duties well.On October 6, 1980, Aban filed a complaint against the petitioner for
illegal dismissal. The labor arbiter ruled that Aban was illegally dismissed. This ruling was affirmed by
the NLRC on appeal.
The petitioner questions the jurisdiction of the public respondents considering the alleged
absence of an employer-employee relationship. The petitioner contends that its relationship with Aban is
that of a client with his lawyer. It is its position that "(a) lawyer as long as he is acting as such, as long as
he is performing acts constituting practice of law, can never be considered an employee. His relationship
with those to whom he renders services, as such lawyer, can never be governed by the labor laws. For a
lawyer to so argue is not only demeaning to himself, but also his profession and to his brothers in the
profession." Thus, the petitioner argues that the labor arbiter and NLRC have no jurisdiction over the
instant case. Hence, this present petition.
Issue
Whether there was an employer-employee relationship?
Held
A lawyer, like any other professional, may very well be an employee of a private corporation or
even of the government. It is not unusual for a big corporation to hire a staff of lawyers as its in-house
counsel, pay them regular salaries, rank them in its table of organization, and otherwise treat them like its
other officers and employees. At the same time, it may also contract with a law firm to act as outside
counsel on a retainer basis. The two classes of lawyers often work closely together but one group is made
up of employees while the other is not. A similar arrangement may exist as to doctors, nurses, dentists,
public relations practitioners, and other professionals.
Aban was employed by the petitioner to be its Legal Assistant as evidenced by his appointment
paper. The petitioner paid him a basic salary plus living allowance. Thereafter, Aban was dismissed on his
alleged failure to perform his duties well. Aban worked solely for the petitioner and dealt only with legal
matters involving the said corporation and its employees. He also assisted the Personnel Officer in
processing appointment papers of employees. This latter duty is not an act of a lawyer in the exercise of
his profession but rather a duty for the benefit of the corporation.
95 | P a g e

INSULAR ASSURANCE CO. VS. NLRC, ET AL.
G.R. No. 119930, 4 NOVEMBER 1996. FIRST DIVISION (Bellosillo, J.)
FOUR-FOLD TEST. - Exclusivity of service, control of assignments and removal of agents under private
respondents unit, collection of premiums, furnishing of company facilities and materials as well as capital
described as Unit Development Fund are but hallmarks of the management system in which herein private
respondent worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon
de los Reyes was an employee of herein petitioner.
Facts
On 21 August 1992 petitioner entered into an agency contract with respondent Pantaleon de los
Reyesauthorizing the latter to solicit within the Philippines applications for life insurance and annuities
for which he would be paid compensation in the form of commissions. The contract was prepared by
petitioner in its entirety and De los Reyes merely signed his conformity thereto. It contained the
stipulation that no employer-employee relationship shall be created between the parties and that the agent
shall be free to exercise his own judgment as to time, place and means of soliciting insurance. De los
Reyes however was prohibited by petitioner from working for any other life insurance company, and
violation of this stipulation was sufficient ground for termination of the contract. In a written
communication by petitioner to respondent De los Reyes, the latter was urged to register with the Social
Security System as a self-employed individual as provided under PD No. 1636. On 1 March 1993
petitioner and private respondent entered into another contract where the latter was appointed as Acting
Unit Manager under its office the Cebu DSO V (157). As such, the duties and responsibilities of De los
Reyes included the recruitment, training, organization and development within his designated territory of
a sufficient number of qualified, competent and trustworthy underwriters, and to supervise and coordinate
the sales efforts of the underwriters in the active solicitation of new business and in the furtherance of the
agencys assigned goals.
Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by
petitioner on 18 November 1993 that his services were terminated effective 18 December 1993. On 7
March 1994 he filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed
and that he was not paid his salaries and separation pay.
Issue
Whether there was an employer-employee relationship?
Ruling
The Court was not convinced that the cited case is on all fours with the case at bar. Unlike Basiao,
herein respondent De los Reyes was appointed Acting Unit Manager, not agency manager. There is no
evidence that to implement his obligations under the management contract, De los Reyes had organized
an office. Petitioner in fact has admitted that it provided De los Reyes a place and a table at its office
where he reported for and worked whenever he was not out in the field. Under the managership contract,
De los Reyes was obliged to work exclusively for petitioner in life insurance solicitation and was imposed
96 | P a g e

premium production quotas. Of course, the acting unit manager could not underwrite other lines of
insurance because his Permanent Certificate of Authority was for life insurance only and for no other. De
los Reyes could only be promoted to permanent unit manager if he met certain requirements and his
promotion was recommended by the petitioners District Manager and Regional Manager and approved by
its Division Manager. As Acting Unit Manager, De los Reyes performed functions beyond mere
solicitation of insurance business for petitioner. As found by the NLRC, he exercised administrative
functions which were necessary and beneficial to the business of INSULAR LIFE.
ANGELINA FRANCISCO VS. NLRC, KASEI CORP., ET. AL.
G.R. No. 170087. 31 AUGUST 2006. FIRST DIVISION (Ynares-Santiago, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP. - The determination of regular and casual employment is

not affected by the fact that the employee's regular presence in the place of work is not required, the more
significant consideration being that the work of the employee is usually necessary or desirable in the
business of the employer.
Facts
When formed in 1995, KASEI Corporation hired Angelina Franciso as Accountant, Corporate
Secretary, and Liason Officer. In 1996, she was replaced as Accountant and designated instead as Acting
Manager. She performed managerial administrative functions and represented the company indealing with
government agencies such as BIR, SSS, and Makati City Government. Her monthly salart was P
27,500.00, with housing allowance and 10% profit share. But in January 2001, she was replaced as a
manager, was instead designated as Technical Consultant, and her pay was reduced by P 2, 500.00 a
month. Finallym in October 2001, KASEI officials told her she was no longer connected with the
company
The Labor Arbiter declared that she was an employee and entitled to reinstatement. The NLRC
affirmed the Labor Arbiters decision but did not order a reinstatement. The Ccourt of Appeals took an
opposite view as it ruled that the complainant-petitioner was not an employee.
Issue
Whether there was an employer-employee relationship between petitioner and private respondent
Kasei Corporation;
Ruling
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporations Technical
Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job
functions, that is, rendering accounting and tax services to the company and performing functions
necessary and desirable for the proper operation of the corporation such as securing business permits and
other licenses over an indefinite period of engagement.
97 | P a g e

Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well
as deductions and Social Security contributions from August 1, 1999 to December 18, 2000.
OPULENCIA ICE PLANT STORAGE AND/OR DR. MELCHORA OPULENCIA VS. NLRC
G.R. No. 98368. 15 DECEMBER 1993. THIRD DIVISION (Bellosillo, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP. - The determination of regular and casual employment is

not affected by the fact that the employee's regular presence in the place of work is not required, the more
significant consideration being that the work of the employee is usually necessary or desirable in the
business of the employer.
Facts
Manuel P. Esita was hired as compressor operator-mechanic for the ice plants of petitioner Dr.
Melchor Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially assigned at the ice plant
in Tanauan, Esita would work from seven o'clock in the morning to five o'clock in the afternoon receiving
a daily wage of P35.00. In 1986, Esita was transferred to the ice plant in Calamba, which was then
undergoing overhauling. For less than a month, Esita helped in the construction-remodeling of Dr.
Opulencia's house.
For demanding the correct amount of wages due him, Esita was dismissed from service.
Consequently, he filed a complaint for illegal dismissal, underpayment, non-payment for overtime, legal
holiday, premium for holiday and rest day, 13th month, separation/retirement pay and allowances against
petitioners. Petitioners deny that Esita is an employee. They claim that Esita could not have been
employed in 1980 because the Tanauan ice plant was not in operation due to low voltage of electricity and
that Esita was merely a helper/peon of one of the contractors they had engaged to do major repairs and
renovation of the Tanauan ice plant in 1986. Labor Arbiter rendered a decision finding the existence of an
employer-employee relationship.
Issue
Whether there exists employer-employee relationship?
Ruling
No particular form of evidence is required to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted. For, if only
documentary evidence would be required to show that relationship, no scheming employer would ever be
brought before the bar of justice, as no employer would wish to come out with any trace of the illegality
he has authored considering that it should take much weightier proof to invalidate a written
instrument. Thus, as in this case where the employer-employee relationship between petitioners and Esita
98 | P a g e

was sufficiently proved by testimonial evidence, the absence of time sheet, time record or payroll has
become inconsequential.
The petitioners' reliance on Sevilla v. Court of Appeals is misplaced. In that case, we did not
consider the inclusion of employer's name in the payroll as an independently crucial evidence to prove an
employer-employee relation. Moreover, for a payroll to be utilized to disprove the employment of a
person, it must contain a true and complete list of the employees. But, in this case, the testimonies of
petitioners' witnesses admit that not all the names of the employees were reflected in the payroll.
EDDIE DOMASIG VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

G.R. No. 118101. 16 SEPTEMBER 1996. FIRST DIVISION (Padilla, J.)
employee's conduct.
Facts
The complaint was instituted by Eddie Domasig against respondent Cata Garments Corporation,
Accompany engaged in garments business and its owner/ Manager Otto Ong and Catalina Co. for Illegal
dismissal, unpaid commission and other monetary claims.
Complaint alleged that he started working with the respondent on July 6, 1986 as Salesman
when the company was still named Cata Garments Corporation, that three (3 years ago, because of
complaint against respondent by its workers, it changed its name to Cata Garments Corporation, and that
on August 29, 1992, he was dismissed when respondent learned that he was being pirated by rival
corporation which offer he refused. Prior to his dismissal complaint alleged that he was receiving a salary
of P1, 500 a month plus commission.
Issue
Whether or not complainant was illegally dismissed?
Held
The Labor arbiter held that complainant was illegally dismissed and entitled to reinstatement and
back wages as well as under payment of salary, 13 th month pay service incentive leave and legal holiday.
The arbiter also awarded complainant his claim for unpaid commission in the amount of P143, 955.
99 | P a g e
EQUITABLE BANKING CORPORATION VS. NLRC and RICARDO L. SADAC

G.R. No102467. 13 JUNE 1997. FIRST DIVISION (Vitug, J.)
employee's conduct.
Facts
This is a petition to go against the decision of NLRC in holding that Sadac as the VP for the legal
department of bank a regular employee of the bank. Sadac was appointed VP for the legal department of
bank with monthly salary, allowance and Christmas bonus, with specific legal tasks to perform for the
bank. Later, nine lawyers of the bank's legal department addressed a petition-letter to the chairman of the
board of directors accusing Sadac of abusive conduct, inefficiency, mismanagement, ineffectiveness and
indecisiveness. Sadac promptly minifested to file criminal, civil and administrative chrges against the
nine lawyers. Then Chairman Morales called the lawyers in attempt to resolve the differences, but didn't
result positively. On 10 August 1989, Sadac was removed from his office. Labor Arbiter rendered
decision that Sadacs termination was illegal and entitled to reinstatement and payment of full back
wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for execution of judgment
where it gave its computation which amounted to P 6.03 M representing his back wages and the increases
he should have received during the time he was illegally dismissed. The Bank opposed to Sadacs
computation. The Labor Arbiter favor Sadacs computation. NLRC, upon appeal by the bank, reversed the
decision. CA reversed the decision of NLRC.
Issue
Whether the computation of back wages shall include the general increases?
Ruling
To resolve the issue, the court revisits its pronouncements on the interpretation of the term
backwages. Backwages in general are granted on grounds of equity for earnings which a worker or
100 | P a g e

employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in
furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right
but rather in the nature of a command to the employer to make public reparation for dismissing an
employee either due to the formers unlawful act or bad faith.
There is no vested right to salary increases. Sadac may have received salary increases in the past
only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages.
The conclusion is that Sadacs computation of his full backwages which includes his prospective salary
increases cannot be permitted.
EFREN P. PAGUIO VS. NLRC, METROMEDIA TIMES CORPORATION, ET AL

G.R. NO. 147816. 9 MAY 2003. FIRST DIVISION (VITUG, J.)
employee's conduct.
Facts
On 22 June, 1992, respondent Metro Media Times Corporation entered into an agreement with
petitioner, Efren P. Paguio, appointing the latter to be an account executive of the firm. The petitioner was
to solicit advertisements for the Manila Times, a newspaper published by the respondent company. On
15 August, 1992, barely two months after the renewal of his contract, petitioner received a notice of
termination from the respondent firm. There was no given definite cause for the petitioners termination.
Aggrieved, Paguio filed a case before the labor arbiter, asking that his dismissal be declared unlawful and
prayed that respondent company officials be held accountable for acts of unfair labor practices,
P500,000.0 moral damages, and for P20,000.0 exemplary damages.
The Labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered
respondent company and its officers to reinstate Paguio to his former position and to pay him his
commissions and other remunerations. He likewise adjudged that the general manager of the respondent
corporation be held liable to Paguio for moral damages in the amount of P20,000.0. On appeal, NLRC
reversed the ruling of the labor arbiter and declared the contractual relationship between the parties as a
fixed-term employment. Petitioner Paguio appealed the ruling of the NLRC before the Court of Appeals.
Issue
Whether there is an employer-employee relationship?
Ruling
As defined in Article 280 of the Labor Code, a regular employee is one who is engaged to
perform activities which are necessary and desirable in the usual business or trade of the employer as
against those which are undertaken for a specific project or are seasonal. Even in these latter cases, where
such person has rendered at least one year of service, regardless of the nature of the activity performed or
of whether it is continuous or intermittent, the employment is considered regular as long as the activity
101 | P a g e

exists, it not being indispensable that he be first issued a regular appointment or be formally declared as
such before acquiring a regular status.
The law in defining their contractual relationship, does not necessarily or exclusively upon the
terms of their written or oral contract, but also on the basis of the nature of the work petitioner has been
called upon to perform.
A lawful dismissal must meet both substantive and procedural requirements; in fine, the dismissal
must be for a just or authorized cause and must comply with the rudimentary due process of notice and
hearing. It is not shown that respondent company has fully bothered itself with either of these
requirements in terminating the services of petitioner. The notice of termination recites no valid or just
cause for the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard
in his defense.
102 | P a g e

GREAT PACIFIC LIFE ASSURANCE VS. HONORATO JUDICO and NLRC
G.R. NO. 73887. 21 DECEMBER 21. SECOND DIVISION (PARAS, J.)
employee's conduct.
Facts
Honorato Judico filed a complaint against Grepalife insurance for award of money claims
consisting of separation pay, unpaid salary and 13th month pay.
Judico entered into an agreement of agency with Grepalife to become a debit agent attached to the
Industrial Life Agency in Cebu City. He had definite work assignments including but not limited to
collection of premiums from policy holders and selling insurance to prospective clients. He received a
definite minimum amount per week as his wage known as Sales Reserve wherein the failure to
maintain the same would bring him back to the beginners employment with fixed weekly wage of P200
for 13 weeks regardless of production. He was assigned a definite a definite place in the office to work on
when he is not in the field; and in addition to his canvassing work he was burdened with the job
collection. In both cases he was required to make a regular report to the company regarding their duties.
He was then promoted to Zone Supervisor with additional allowance. On June 28, 1982 he was dismissed
by way of Termination of his agency contract.
Issue
Whether there is an employer-employee relationship between insurance agents and their
principal?
Ruling
Yes, there is an employer-employee relationship between Grepalife and Judico because the
element of control by Grepalife over Judico is Present.
The facts shows that Judico was controlled by Grepalife insurance company not only as to the
kind of work; that amount of results, the kind of performance but also the power of dismissal. Judico by
nature and his position and work has been a regular employee and therefore entitled to the protection of
the law and not to be terminated without valid and justifiable cause.
103 | P a g e

FEATI UNIVERSITY VS. HON. JOSE S. BAUTISTA, FEATI UNIVERSITY FACULTY CLUB
G.R. NO. L-21278. 27 DECEMBER 1966. EN BANC (Zaldivar, J.)
JURISDICTION OF COURT OF INDUSTRIAL RELATIONS. It includes unfair labor practice charges
against educational institutions that are organized, operated and maintained for profit. Industrial Peace
Act is applicable to any organization or entity whatever may its purpose when it was created that is
operated for profit or gain.
Facts
On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU
hereinafter referred to as Faculty Club wrote a letter to the, President of petitioner Feati University
hereinafter referred to as University informing her of the organization of the Faculty Club into a
registered labor union. The Faculty Club is composed of members who are professors and/or instructors
of the University. On January 22, 1963, the President of the Faculty Club sent another letter containing
twenty-six demands that have connection with the employment of the members of the Faculty Club by the
University, and requesting an answer within ten days from receipt thereof. The President of the University
answered the two letters, requesting that she be given at least thirty days to study thoroughly the different
phases of the demands. On February 18, 1963, the members of the Faculty Club declared a strike and
established picket lines in the premises of the University, resulting in the disruption of classes in the
University. Despite further efforts of the officials from the Department of Labor to effect a settlement of
the differences between the management of the University and the striking faculty members no
satisfactory agreement was arrived at. FEATI University Faculty Club held a strike against FEATI
University upon the latters failure to comply with its demands. Since they were not able to settle, the case
was brought to the Court of Industrial Relations (CIR) which ordered the faculty members to return to
work. FEATI filed a motion to dismiss maintaining that the CIR Did not have jurisdiction over the case.
Issue
Whether FEATI University is not an employer and the members of the Faculty Club, are not
employers within the purview of the Industrial Peace Act.
Ruling
For the purposes of the Industrial Peace Act the University is an industrial establishment because
it is operated for profit and it employs persons who work to earn a living. The term industry, for the
purposes of the application of our labor laws should be given a broad meaning so as to cover all
enterprises which are operated for profit and which engage the services of persons who work to earn a
living. Professors and instructors, who are under contract to teach particular courses and are paid for their
services, are employees under the Industrial Peace Act. Striking professors and/or instructors of the
University are employees because striking employees retain their status as employees. Professors and
instructors are not independent contractors. The Court takes judicial notice that a university controls the
work of the members of its faculty; that a university prescribes the courses or subjects that professors
teach, and when and where to teach; that the professors work is characterized by regularity and
continuity for a fixed duration; that professors are compensated for their services by wages and salaries,
rather than by profits; that the professors and/or instructors cannot substitute others to do their work
without the consent of the university; and that the professors can be laid off if their work is found not
satisfactory.
104 | P a g e

CITIZENS LEAGUE OF FREE WORKERS ET. AL. VS. ABBAS
G.R. No. L-21212. 26 SEPTEMBER 1996. EN BANC (Dizon, J.)
employee's conduct.
Facts
The owner and operator of passenger jeepneys and the drivers were under contract that they
would pay P7.50 for 10 hours use under the so-called boundary system. The drivers did not receive
salaries or wages from the owner. Their days earnings were the excess over the P7.50 they paid for the
use of the jeepneys. In the event that they did not earn more than P7.50, the owner did not have to pay
them anything.
Issue
Whether there is an employer-employee relationship between the owner/operator and the drivers?
Ruling
The employer-employee relationship exists between the owner of the jeepneys and the drivers
even if the latter work under the boundary-system.
The only feature that would make the relationship lessor and lessee between the respondent,
owner of the jeeps, and the drivers, members of the petitioning union, are the fact that he does not pay
them any fixed wage bu their compensation is the excess amount of the total amount of fares earned or
collected by them over and above the P 7.50 which they agreed to pay to the respondent, and the fact that
the gasoline burned by the jeeps is for the account of the drivers, These two features are not, however
sufficient to withdraw the relationship between them from that of employer-employee, because the
estimated earnings for fares must be over and above the amount agreed to pay to the respondent for a tenhour shift or ten hours a day operation of the jeeps. Not having any interest in the business because they
did not invest in anything in the acquisition of the jeeps and did not participate in the management
thereof, their service as drivers of the jeeps being their only contribution to the business, relationship of
lessor and lessee cannot be sustained.
105 | P a g e

OSCAR VILLAMARIA VS. COUR OF APPEALS and JERRY BUSTAMANTE
G.R. NO. 165881. 19 APRIL 2006. FIRST DIVISION (CALLEJO, J.)
employee's conduct.
Facts
Petitioner Villamaria and respondent Bustamante executed a contract entitled Kasunduan ng
Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog Under the Kasunduan, respondent was
required to remit P550 daily to petitioner, with the amount representing the boundary and the partial
payment for the purchase of the jeepney. Any excess would be kept by the driver as his daily wage. Under
the Kasunduan, the petitioner retained ownership with the material possession vested in the driver. Also
in the Kasunduan if the driver failed to remit P550 for a week, the agreement would be of no force and
effect with the driver to return the jeepney to the owner. If still allowed to drive, owner and driver would
revert to a daily P550 Boundary only.
Sometime in 1999, petitioner issued a Paalala to all their drivers reminding them about the
Kasunduan. July 24, 2000, respondent Bustamante was barred by petitioner to drive the vehicle that
was already taken back. Respondent filed an illegal dismissal complaint. Villamaria countered that there
was no dismissal because the Kasunduan transformed the employer employee relationship to that of a
buyer seller.
The Labor Arbiter decided in favor of petitioner with the reason that the Kasunduan was in
effect between the parties and with the Paalala it was shown that respondent had violated the terms of
the contract and is not entitled to damages. Respondent appealed to NLRC which then was then dismissed
not because of the arbiters decision but because of jurisdictional issues pertaining to the Kasunduan
which gives way to the juridical relationship as vendor vendee meaning that the Labor Arbiter had no
jurisdiction over the case. Respondents motion for reconsideration was also denied.
Issue
Whether or not the employer employee relationship exists even with the Kasunduan?
Ruling
The juridical relationship of employer employee was not negated by the Kasunduan,
considering that the petitioner retained control of respondents conduct as driver of the vehicle.
106 | P a g e

VICENTE SY, ET. AL. VS. COURT OF APPEALS and JAMES SAHOT
G.R. No. 142293. 27 February 2003. SECOND DIVISION (Quisimbing, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP. - The elements to determine the existence of an
employment relationship are: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The
most important element is the employers control of the employees conduct, not only as to the result of
the work to be done, but also as to the means and methods to accomplish it.
Facts
Sometime in 1958, private respondent Jaime Sahot started working as a truck helper for
petitioners family-owned trucking business. In 1965, he became a truck driver of the same family
business. Throughout all for 36 years, private respondent continuously served the trucking business of
petitioners. However, starting in April 1994, Sahot had been incurring absences as he was suffering from
various ailments which greatly affected the performance of his task as a driver. He inquired about his
medical and retirement benefits with the Social Security System (SSS) on April 25, 1994, but discovered
that his premium payments had not been remitted by his employer. And due to his absences, he was
dismissed from work. On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a
complaint for illegal dismissal praying for the recovery of separation pay and attorneys fees against herein
petitioners.
For their part, petitioners admitted they had a trucking business in the 1950s but denied
employing helpers and drivers. They contend that private respondent was not illegally dismissed as a
driver because he was in fact petitioners industrial partner. They add that it was not until the year 1994,
when SBT Trucking Corporation was established, and only then did respondent Sahot become an
employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation.
Issue
Whether an employer-employee relationship exists?
Held
The Court agrees with complainant that there was error committed by the Labor Arbiter when he
concluded that complainant was an industrial partner prior to 1994. A computation of the age of
complainant shows that he was only twenty-three (23) years when he started working with respondent as
truck helper. How can we entertain in our mind that a twenty-three (23) year old man, working as a truck
helper, be considered an industrial partner. Hence we rule that complainant was only an employee, not a
partner of respondents from the time complainant started working for respondent.
Furthermore, if doubt exists between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter. Here, we entertain no doubt. Private respondent
since the beginning was an employee of, not an industrial partner in, the trucking business.
107 | P a g e

MAKATI HABERDASHERY, INC., ET AL. VS. NLRC, ET AL.
G.R. No. 83380-81. 15 NOVEMBER 1989. THIRD DIVISION (Fernan, C.J.)
EMPLOYER-EMPLOYER RELATIONSHIP. - The test of employer-employee relationship is four-fold:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employee's conduct. It is the so called "control test" that is the most
important element.
Facts
Individual complainants, private respondents herein, have been working for petitioner Makati
Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on
a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition
to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work
before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from
Monday to Saturday and during peak periods even on Sundays and holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the
respondent workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment
of the basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) nonpayment of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits.
Issue
Whether employer employee relationship exist?
Ruling
Yes, there was employer-employee relationship that existed. The first issue which is the pivotal
issue in this case is resolved in favor of private respondents. The determination is whether the employer
controls or has reserved the right to control the employee not only as to the result of the work but also as
to the means and method by which the same is to be accomplished.
The facts at bar indubitably reveal that the most important requisite of control is present. As
gleaned from the operations of petitioner, when a customer enters into a contract with the haberdashery or
its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to
take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer.
Supervision is actively manifested in all these aspects the manner and quality of cutting, sewing and
ironing.
108 | P a g e

CAUDDANETAAN PIECE WORKERS UNION VS. UNDERSECRETARY LAGUESMA
G.R. No. 113542, 24 FEBRUARY 1998. FIRST DIVISION (Panganiban, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP. - To determine the existence of an employer-employee
relation, this Court has consistently applied the four-fold test which has the following elements: (1) the
power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control -- the last
being the most important element.
Facts
Petitioner union has ninety-two (92) members who worked as cargador at the warehouse and
rice mills of private respondent [referring to Respondent Corfarm at Umingan, Pangasinan since 1982.
As cargadores, they loaded unloaded and piled sacks of palay from the warehouse to the cargo trucks and
those brought by cargo trucks for delivery to different places. They were paid by private respondent on a
piece rate basis. When private respondent denied some benefits to its cargadores, the latter organized
union. Upon learning of its formation, private respondent barred its members from working with them
and replaced them with non-members of the union sometime in the middle of 1992.
A complaint for illegal dismissal, unfair labor practice, refund of illegal deductions, payment of
wage differentials, various pecuniary benefits provided by laws, damages, legal interest, reinstatement
and attorneys fees, against private respondent
Issue
Whether an employer-employee relationship between the Cargadores and Corfarm?
Ruling
The Court considers the cargadores as regular employees. It is undeniabkle that petitioners
members worked as cargadores for private respondent. They loaded unloaded and piled sacks of palay
from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work is directly
related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much
less prove, that petitioners members have substantial capital or investment in the form of tools,
equipments, machineries and work premises, among others. Furthermore, said respondent did not
contradict petitioners allegation that it paid wages directly to those workers without the intervention of
any third-party independent contractor. It is also wielded the power of dismissal over petitioners, in fact,
its exercise of this power. Clearly, the worker are not independent contractors
109 | P a g e

ALIPION RUGA ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
G.R. No. L-72654-61. 22 JANUARY 1990. THIRD DIVISION (Fernan, C.J.)

Facts
Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II, one of
several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which
is primarily engaged in the fishing business with port and office at Camaligan, Camarines Sur. For
services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners
were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private
respondent.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de
Guzman, president of private respondent, to proceed to the police station at Camaligan, Camarines Sur,
for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private
respondent. Petitioners denied the charge claiming that the same was a countermove to their having
formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations
and General Workers Union (DIALOGWU) on September 3, 1983.
On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde
rendered a joint decision dismissing all the complaints of petitioners on a finding that a "joint fishing
venture" and not one of employer-employee relationship existed between private respondent and
petitioners.
Issue
Whether fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of
its owner-operator?
Held
Fishermen crew members who were recruited by one master fisherman locally known as
"maestro" in charge of recruiting others to complete the crew members are considered employees, not
industrial partners, of the boat-owners. Also, there existed an employer-employee relationship between
the boat-owner and the fishermen crew members not only because they worked for and in the interest of
the business of the boat-owner but also because they were subject to the control, supervision and
dismissal of the boat-owner.
110 | P a g e

ALEJANDRO MARAGUINOT and PAULINO ENERO VS. NLRC, ET AL
G.R. No. 120969. 22 JANUARY 1998. THIRD DIVISION (Davide, J.)
Facts
Petitioner Maraguinot and Enero were employed by Viva Films as part of the filming crew and
performing other tasks that the cameraman and/or the director may assign. Their tasks consisted of
loading, unloading and arranging movie equipments in the shooting area, assisting in the fixing of the
lighting system, and performing other tasks that the cameraman and/or director may assign.
Sometime in May 1992, they asked that their salary be adjusted to the minimum wage rate.
Instead of getting a pay increase they were asked to sign a blank employment contract, and when they
refused, their services were terminated on 20 July 1992. They sued for illegal dismissal.
On the other hand, the respondent, Viva Films denied being the employer. It explained that I was
primarily engaged in the distribution and exhibition, but not the making of movies. It also asserted that it
contracted with persons called producers to produce or make movies. Hence, the petitioners were
project employees of the associate producers who acts as independent contractors. The Labor Arbiter
found that complainants were employees of the respondents Viva Films and Mr. Del Rosario and that the
complainants were illegally dismissed. But on appeal, the NLRC found that complainants were hired only
for specific movie projects and their employment was co-terminus with each movie project.
Issue
Ruling
The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening
the labor sector, but, we stress, not at the expense of management. Lest it be misunderstood, this ruling
does not mean that simply because an employee is a project or work pool employee even outside the
construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a
project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the
same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a regular
employee, pursuant to Article 280 of the Labor Code and jurisprudence.
To rule otherwise would allow circumvention of labor laws in industries not falling within the
ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of
acquisition of tenurial security by project or work pool employees who have already gained the status of
regular employees by the employer's conduct.
111 | P a g e

ORLANDO FARM GROVES ASSOCIATION/GLICERIO ANOVER VS. NLRC, ET AL.
GR NO 129076. 25 NOVEMBER 1998. THIRD DIVISION (Romero, J.)
Facts
Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Aover as its
President, is an association of landowners engaged in the production of export quality bananas located in
Kinamayan, Sto. Tomas, Davao del Norte, established for the sole purpose of dealing collectively with
Stanfilco on matters concerning technical services, canal maintenance, irrigation and pest control, among
others. Respondents, on the other hand, were hired as farm workers by several member-landowners but;
nonetheless, were made to perform functions as packers and harvesters in the plantation of petitioner
association.
After respondents were dismissed on various dates from January 8, 1993 to July 30, 1994, several
complaints were filed against petitioner for illegal dismissal and monetary benefits.
Issue
Ruling
It is settled that in termination disputes, the employer bears the burden of proving that the
dismissal is for just cause, failing which it would mean that the dismissal is not justified and the employer
is entitled to reinstatement. The dismissal of employees must be made within the parameters of the law
and pursuant to the basic tenets of equity, justice and fair play. In Brahm Industries, Inc. v. NLRC, the
Court explained that there are two (2) facets of valid termination of employment: (a) the legality of the act
of dismissal, i.e., the dismissal must be under any of the just causes provided under Art. 282 of the Labor
Code; and (b) the legality of the manner of dismissal, which means that there must be observance of the
requirements of due process, otherwise known as the two-notice rule.
Thus, the employer is required to furnish the employee with a written notice containing a
statement of the cause for termination and to afford said employee ample opportunity to be heard and to
defend himself with the assistance of his representative, if he so desires. The employer is also required to
notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore.
112 | P a g e

NATIONAL SUGAR REFINERIES CORPORATION VS. NLRC, ET AL.
G.R. No. 10176. 24 MARCH 1993. SECOND DIVISION (Regalado, J.)
MANAGERIAL EMPLOYEES. - They are not covered because they are employed by reason of their
special training, experience or knowledge, and then value of their work cannot be measured in terms of
hours.
Facts
Petitioner National Sugar Refineries Corporation, a corporation which is fully owned and
controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees,
from rank-and-file to department heads. As a result, all positions were re-evaluated, and all employees
including the members of respondent union were granted salary adjustments and increases in benefits
commensurate to their actual duties and functions. Two years after the implementation of the JE Program,
the members of herein respondent union filed a complainant with the executive labor arbiter for nonpayment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.
Executive Labor Arbiter decided in favour of labor.
Respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor
arbiter on the ground that the members of respondent union are not managerial employees, as defined
under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday
pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory
powers subject to the evaluation, review and final action by their department heads; their responsibilities
do not require the exercise of discretion and independent judgment; they do not participate in the
formulation of management policies nor in the hiring or firing of employees; and their main function is to
carry out the ready policies and plans of the corporation.
Issue
Whether supervisory employees should be considered as officers or members of the managerial
staff under Article 82, PD 442?
Ruling
The Court ruled that a perusal of the Job Value Contribution Statements of the union members
would readily show that these supervisory employees were under the direct supervision of their respective
department superintendents and that, generally, they assisted the latter in planning, organizing, staffing,
directing, controlling , communicating and in making decisions in attaining the companys set goal and
objectives. These supervisory employees were likewise responsible for the effective and efficient
operation of their respective departments.
113 | P a g e

CHARLITO PENARANDA VS. BANGANGA PLYWOOD CORP. and HUDSON CHUA
G.R. No. 159577, 3 MAY 2006. FIRST DIVISION (Panganiban, C.J.)
MANAGERIAL EMPLOYEES. - They are not covered because they are employed by reason of their
special training, experience or knowledge, and then value of their work cannot be measured in terms of
hours.
Facts
Charlito Penaranda was hired as an employee of Baganga Corporation with a monthly salary of
P5,000 as Foreman/Boiler Head/ Shift Engineer to take charge of the operations and maintenance of its
steam plant boiler. He alleges that he was illegally terminated and that his termination was without due
process and valid grounds. Furthermore, he was not paid his OT pay, premium pay for working during
holidays, and night shift differentials. So he filed an action for illegal dismissal.
Hudson Chua, the General Manager of Baganga alleges that Penarandas separation was done
pursuant to Art. 238 of the Labor Code. The company was on temporary closure due to repair and general
maintenance and it applied for clearance with the DOLE to shut down and dismiss employees. He claims
that due to the insistence of complainant, he was paid his separation benefits. But when the company
partially re-opened, Penaranda faild to re-apply. Chua also alleges that since he is a managerial employee,
he is not entitled to OT pay and if ever he rendered services beyond the normal hours of work, there was
no office order/authorization for him to do so.
The Labor Arbiter ruled that there was no illegal dismissal and that Penarandas complaint was
premature because he was still employed with Baganga. As regards the benefits, the Labor Arbiter found
petitioner entitled to OT pay, premium pay for working on rest days and attorneys fees. On appeal,
NLRC deleted the award of OT pay, premium pay and attorneys fees. The CA dismissed Penarandas
Petition for Certiorari based on procedural failures.
Issue
Whether Penaranda is a regular employee?
Held
No, Penaranda is part of the managerial staff which takes him out of the coverage of labor
standards. Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the engineering section.
This work necessarily required the use of discretion and independent judgment to ensure the proper
functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial
staff. Even Penaranda admitted that he was a supervisor. In his Position Paper, he stated that he was the
foreman responsible for the operation of the boiler. The term foreman implies that he was the
representative of management over the workers and the operation of the department. His classification as
supervisor is further evident from the manner his salary was paid. He belonged to the 10% of
respondents 354 employees who were paid on a monthly basis; the others were paid only on a daily
basis.
114 | P a g e

AUTO BUS TRANSPORT SYSTEMS, INC. VS. ANTONIO BAUTISTA
G.R. No. 156367, 16. MAY 2005. THIRD DIVISION (Chico-Nazareno, J.)
FIELD PERSONNEL. - 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 employees time and
performance are constantly supervised by the employer.
Facts
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.
(Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via
Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, 7% of the total gross
income per travel, on a twice a month basis. While he was driving he accidentally bumped the rear
portion of Autobus No. 124. 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 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 respondents pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of termination. Bautista instituted a Complaint
for Illegal Dismissal with Money Claims for nonpayment of 13 th month pay and service incentive leave
pay against Autobus.
Issue
Whether or not Bautista, who is paid on purely commission basis?
Held
The respondent is not a field personnel but a regular employee who performs tasks usually
necessary and desirable to the usual trade of petitioners business. Accordingly, respondent is entitled to
the grant of service incentive leave. It is of judicial notice that along the routes that are plied by these bus
companies, there are its inspectors assigned at strategic places who board the bus and inspect the
passengers. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly
checked as to its mechanical, electrical. They too, must be at specific place at specified time, as they
generally observe prompt departure and arrival from their point of origin to their point of destination. In
each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus
and its crew leave the premises at specific times and arrive at the estimated proper time. These, are
present in the case at bar. The driver, the complainant herein, was therefore under constant supervision
while in the performance of this work. He cannot be considered a field personnel.
Employees engaged on task or contract basis or purely commission basis are not automatically
exempted from the grant of service incentive leave, unless, they fall under the classification of field
personnel. Field personnel" is not merely concerned with the location where the employee regularly
performs his duties but also with the fact that the employees performance is unsupervised by the
employer. They 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.
115 | P a g e

UNION OF FILIPRO EMPLOYEES VS. BENIGNO VIVAR, JR.
G.R. No. 79255. 20 JANUARY 1992. EN BANC (Guttierrez, J.)
FIELD PERSONNEL. - 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 employees time and
performance are constantly supervised by the employer.
Facts
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its
rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of the
Court's decision in Chartered Bank Employees Association v. Ople. Arbitrator Vivar rendered a decision
directing Filipro to pay its monthly paid employees holiday pay pursuant to Article 94 of the Code,
subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as
are provided for in the Code.
Filipro filed a motion for clarification. Petitioner UFE answered that the award should be made
effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel
and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee
benefit which cannot be diminished.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a
resolution remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code. However, in a
letter the respondent arbitrator refused to take cognizance of the case reasoning that he had no more
jurisdiction to continue as arbitrator because he had resigned from service.
Issue
Whether Nestle's sales personnel are entitled to holiday pay.
Held
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agritultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty."
The Court finds that the clause "whose time and performance is unsupervised by the employer"
did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty." The former clause is still within the scope and purview
of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual
working hours in the field can be determined with reasonable certainty, query must be made as to whether
or not such employee's time and performance is constantly supervised by the employer.
116 | P a g e

SAN MIGUEL BREWERY, INC. VS. DEMOCRATIC LABOR ORGANIZATION, ET AL.
G.R. No. L-18353. 31 July 1963. EN BANC (Bautista Angelo, J.)
FIELD PERSONNEL. - The reasons for excluding an outside salesman are fairly apparent. Such
salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall
work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu
of overtime he ordinarily receives commissions as extra compensation. He works away from his
employer's place of business, is not subject to the personal supervision of his employer, and his employer
has no way of knowing the number of hours he works per day.
Facts
Where after the morning roll call the outside or field sales personnel leave the plant of the
company to go on their respective sales routes and they do not have a daily time record but the sales
routes are so planned that they can be completed within 8 hours at most, and they received monthly
salaries and sales commissions in variable amounts, so they are made to work beyond the required eight
hours similar to piece-rate work, pakiao, or commission basis regardless of the time employed, and the
employees participation depends on their industry, it is held that the Eight Hour Labor Law has no
application to said outside or field sales personnel and that they are not entitled to overtime compensation.
Issue
Whether the Eight Hour Labor Law has application to Outside or Field Sales Personnel?
Ruling
The Eight-Hour Labor Law only has application where an employee or laborer is paid on a
monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work
beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law.
This law has no application when the employee or laborer is paid on a piece-work, "pakiao", or
commission basis, regardless of the time employed. The philosophy behind this exemption is that his
earnings in the form of commission based on the gross receipts of the day. His participation depends upon
his industry so that the more hours he employs in the work the greater are his gross returns and the higher
his commission.
117 | P a g e

MANUEL L. LARA, ET AL. VS PETRONILO DEL ROSARIO, JR.
GR NO. L-6339. 20 APRIL 1954. EN BANC (MONTEMAYOR, J.)
WORKERS PAID BY RESULT. Such as on pice rates or task basis who are not covered under this Title
because their compensation is based on the work completed and not on the time spent in working
Facts
On 1950, Petronilo Del Rosario Jr,, owner of the twenty five taxi cabs, operated a taxi business,
of which he employed three mechanics and 49 chauffeurs. On September 4, 1950, without giving the said
mechanics and chauffeurs 30 days advance notice, Del Rosario sold his 25 cabs to another transportation
company which resulted to unemployment to the three mechanics and 49 chauffeurs. They brought this
action against Del Rosario to recover compensation for overtime work rendered beyond eight and on
Sundays and legal holidays, and one month salary. Subsequently, the three mechanics withdrew their
claims, so only the 49 chauffeurs remained as plaintiffs. The defendant filed a motion for dismissal of the
complaint on the ground that it stated no cause of action and the trial court for the time being denied the
motion saying that it will be considered when the case was heard on the merits. After trial the complaint
was dismissed. Plaintiffs appealed from the order of dismissal to the Court of Appeals.
The parties agreed that the plaintiffs as chauffeurs received no fixed compensation based on the
hours or the period of time that they worked. Rather, they were paid on the commission basis, that is to
say, each driver received 20 per cent of the gross returns or earnings from the operation of his taxi cab.
Plaintiffs claim that as a rule, each drive operated a taxi 12 hours a day with gross earnings ranging from
P20 to P25, receiving therefrom the corresponding 20 per cent share ranging from P4 to P5, and that in
some cases, especially during Saturdays, Sundays, and holidays when a driver worked 24 hours a day he
grossed from P40 to P50, thereby receiving a share of from P8 to P10 for the period of twenty-four hours.
Issue
Whether the chauffeurs are workers paid by result?
Ruling
The reason given by the trial court in dismissing the complaint is that the defendant being
engaged in the taxi or transportation business which is a public utility, came under the exception provided
by the Eight-Hour Labor Law (Commonwealth Act No. 444); and because plaintiffs did not work on a
salary basis, that is to say, they had no fixed or regular salary or remuneration other than the 20 per cent
of their gross earnings "their situation was therefore practically similar to piece workers.
The plaintiffs herein had no fixed salary either by the day, week or month, and then computation
of the month's salary payable would be impossible. Article 302 refers to employees receiving a fixed
salary. Dr. Arturo M. Tolentino in his book entitled "Commentaries and Jurisprudence on the Commercial
Laws of the Philippines," Vol. 1, 4th edition, p. 160, says that article 302 is not applicable to employees
without fixed salary.
118 | P a g e

MANILA TERMINAL CO. INC. VS. COURT OF INDUSTRIAL RELATIONS
G.R. No. L-4148. 16 July 1952. EN BANC (Paras, C. J.)
NORMAL HOURS OF WORK. The normal hours of work of an employee shall not exceed eight (8)
hours a day.
Facts
Manila Terminal Company, Inc. undertook the arrastre service in some of the piers in Manila's
Port Area at the request and under the control of the United States Army. The petitioner hired some thirty
men as watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per day
for the night shift.
The watchmen of the petitioner continued in the service with a number of substitutions and
additions, their salaries having been raised during the month of February to P4 per day for the day shift
and P6.25 per day for the nightshift. The private respondent sent a letter to Department of Labor
requesting that the matter of overtime pay be investigated. But nothing was done by the Department of
Labor. Later on, the petitioner instituted the system of strict eight-hour shifts.
Issue
Whether the agreement under which its police force were paid certain specific wages for twelvehour shifts, included overtime compensation?
Ruling
The Supreme Court affirmed the appealed decision that the petitioner's watchmen is entitled to
extra compensation only from the dates they respectively entered the service of the petitioner, hereafter to
be duly determined by the Court of Industrial Relations.
Based on the case of Detective & Protective Bureau, Inc. vs. Court of Industrial Relations and
United Employees Welfare Association, the law gives them the right to extra compensation. And they
could not be held to have impliedly waived such extra compensation, since it can not expressly be
waived.
Sections 3 and 5 of Commonwealth Act 444 expressly provides for the payment of extra
Compensation in cases where overtime services are required, with the result that the employees or
laborers are entitled to collect such extra compensation for past overtime work. To hold otherwise would
be to allow an employer to violate the law by simply, as in this case, failing to provide for and pay
overtime compensation.
119 | P a g e

INTERPHIL LAB. EMPLOYEES UNION-FFW, ET AL VS. INTERPHIL LAB. INC.
G.R. No. 142824. 19 December 2001. FIRST DIVISION (Kapunan, J.)
NORMAL HOURS OF WORK. The normal hours of work of an employee shall not exceed eight (8)
hours a day.
Facts
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the
rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining Agreement
(CBA) effective from 01 August 1990 to 31 July 1993. Prior to the expiration of the CBA the VicePresident-Human Resources Department of respondent company, was approached by Nestor Ocampo, the
union president, and Hernando Clemente, a union director.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about
the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting
to discuss the duration and effectivity of the CBA. All the rank-and-file employees of the company
refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m.
to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their
workplace without sealing the containers and securing the raw materials they were working on. When
Salazar inquired about the reason for their refusal to follow their normal work schedule, the employees
told him to "ask the union officers." To minimize the damage the overtime boycott was causing the
company, Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico
Gonzales, a union director, told Salazar that the employees would only return to their normal work
schedule if the company would agree to their demands as to the effectivity and duration of the new CBA.
Salazar again told the union officers that the matter could be better discussed during the formal
renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company,
the overtime boycott continued. In addition, the employees started to engage in a work slowdown
campaign during the time they were working, thus substantially delaying the production of the company.
Issue
Whether Honorable Fifth Division of Court of Appeals committed grave abuse?
Ruling
On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule
on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike
illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued
the assumption order on 14 February 1994. However, it cannot be denied that the issues of "overtime
boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are intertwined
with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner union even asked
Labor Arbiter Caday to suspend the proceedings before him and consolidate the same with the case before
the Secretary of Labor.
120 | P a g e

PAN AMERICAN WORLD AIRWAYS SYSTEM VS. PAN AMERICAN EMPLOYEES ASSOC.
G.R. No. L-16275. 23 FEBRUARY 1961. EN BANC (Reyes, J.B.L., J.)
HOURS WORKED . It includes (a) all time during which an employee is required to be on duty or to be
at a prescribed workplace; (b) all time during which an employee is suffered or permitted to work; (c) rest
periods of short duration during working hours which shall not be more than twenty minutes; and (d)
meal periods of less than twenty minutes are only a rest periods of short duration and are thus considered
as hours worked.
Facts
The employees of Pan American World Airways System alleged that the company does not
provide them of a one-hour break period. The employees were asked to wait in case of any emergencies
while having their break or they will be reprimanded, thus the petition of the employees to ask the court
for a proper compensation from the employers. The employees allege that the said one-hour break
actually constitutes working over time.
Issue
Whether the time given to the employees for break is considered an over time?
Ruling
The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal
period was but a consequence of its finding that the meal hour was not one of complete rest, but was
actually a work hour, since for its duration, the laborers had to be on ready call. Of course, if the
Company practices in this regard should be modified to afford the mechanics a real rest during that hour,
then the modification of this part of the decision may be sought from the Court below. As things now
stand, we see no warrant for altering the decision. The judgment appealed from is affirmed.
121 | P a g e

UNIVERSITY OF PANGASINAN FACULTY UNION VS. UNIVERSITY OF PANGASINAN
G.R. No. L-63122. 20 FEBURUARY 1984. FIRST DIVISION (Gutierrez, J.)
HOURS WORKED. It includes (a) all time during which an employee is required to be on duty or to be
as hours worked.
Facts
The petitioners members are full time professors, instructors, and teachers of the respondent
University. The teachers in the college level teach for a normal duration of ten (10) months in a school
year, divided into two (2) semesters of five months each, excluding the two-month summer vacation.
These teachers are paid their salaries on a regular monthly basis.
In November and December, 1981, the petitioners members were fully paid their regular
monthly salaries. However, from November 7 to December 5, during the semestral break, they were not
paid their emergency cost of living allowance (ECOLA). The University claims that the teachers are not
entitled thereto because the semestral break is not an integral part of the school year and there being no
actual services rendered by the teachers during said period, the principle of No work, no pay appllies.
Issue
Whether petitioner members are not entitled to ECOLA under No work, no pay principle?
Ruling
The No work, no pay does not apply in the instant case. The petitioners members received
their regular salaries during this period. It is clear from the aforeqouted provision of the law that it
contemplates a no work situation where the employees voluntarily absent themselves. Petitioners, in the
case at bar certainly do not, ad voluntatem, absent themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this, they cannot be faulted nor can they be
begrudged that which is due them under the law. To a certain extent, the private respondent can specify
dates when no classes would be held.. Surely, it was not the intention of the framers of the law to allow
employers to withhold employee benefits by simple expedient of unilaterally imposing no work days
and consequently avoiding compliance with the mandate of the law for these days.
Thus, the legal principles of No work, no pay; No pay, no ECOLA must necessarily give way
to the purpose of the law to augment the income of the employees to enable them to cope with the harsh
living conditions brought about by inflation; and to protect employees and their wages against the ravages
brought by these conditions.
122 | P a g e

LUZON STEVEDORING CO., INC. VS. LUZON MARINE DEPARTMENT UNION, ET AL.
G.R. No. L-9265. 29 APRIL 1957. EN BANC (Felix, J.)
as hours worked.
Facts
On June 21, 1948, herein respondent Luzon Marine Department Union filed a petition with the
Court of Industrial Relations containing several demands against herein petitioner Luzon Stevedoring
Co., Inc., among which were the petition for full recognition of the right of COLLECTIVE bargaining,
close shop and check off. However, on July 18, 1948, while the case was still pending with the CIR, said
labor union declared a strike which was ruled down as illegal by this Court in G.R. No. L-2660
promulgated on May 30, 1950.
After the parties had submitted exhaustive memoranda, the trial Judge rendered a decision on
February 10, 1955, finding that the company gave said employees 3 free meals every day and about 20
minutes rest after each mealtime; that they worked from 6:00 am. to 6:00 p.m. every day including
Sundays and holidays, and for work performed in excess of 8 hours, the officers, patrons and radio
operators were given overtime pay in the amount of P4 each and P2 each for the rest of the crew up to
March, 1947, and after said date, these payments were increased to P5 and P2.50, respectively, until the
time of their separation or the strike of July 19, 1948; that when the tugboats underwent repairs, their
personnel worked only 8 hours a day excluding Sundays and holidays; that although there was an effort
on the part of claimants to show that some had worked beyond 6:00 p.m., the evidence was uncertain and
indefinite and that demand was, therefore, denied.
Luzon Stevedoring Co., Inc. also sought for the reconsideration of the decision only in so far as it
interpreted that the period during which a seaman is aboard a tugboat shall be considered as "working
time" for the purpose of the Eight-Hour-Labor Law.
Issue
Whether time spent by a seaman on the ship shall be considered hours worked?
Ruling
The rule is that a seaman is not required to leave the premises of the boat in order of period of rest
shall not be counted, it being enough that he ceases to work, mar rest completely and leave at his will the
spot where he actually stas while working, go somewhere else, whether within or outside the premises of
said boat. If these requisites are complied with, the period of rest shall not be counted.
123 | P a g e

JULIO N. CAGAMPAN, ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
G.R. No. Nos. 85122-24. 22 March 1991. SECOND DIVISION (Paras, J.)
as hours worked.
Facts
Petitioners were deployed on May 7, 1985, and discharged on July 26, 1986,
thereafter, petitioners collectively and/or individually filed complaints for non-payment of overtime pay,
vacation pay and terminal pay against private respondent. In addition, they claimed that they were made
to sign their contracts in blank. Likewise, petitioners averred that although they agreed to render services
on board the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they
actually boarded was MV "SOIC I" managed by Columbus Navigation. Two (2) petitioners, Jorge de
Castro and Juanito de Jesus, charged that although they were employed as ordinary seamen (OS), they
actually performed the work and duties of Able Seamen (AB).
The judgment rendered ordered respondent Ace Maritime Agencies, Inc. to pay the complainants
in the amounts opposite their names. Private respondent appealed from the POEA's Decision to the NLRC
on August 24, 1987. On March 16, 1988, the NLRC promulgated a Decision, which revised the prior
decision dismissing these cases for lack of merit. Petitioners filed an Urgent Motion for Reconsideration
of the NLRC's Decision, but the same was denied by the NLRC for lack of merit in its Resolution dated
September 12, 1988.
Issue
whether petitioners should be entitled to terminal pay?
Ruling
We cannot agree with the Court that respondent Malondras should be paid overtime
compensation for every hour in excess of the regular working hours that he was on board his vessel or
barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are
required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in
addition to their regular compensation, they are given free living quarters and subsistence allowances
when required to be on board.
124 | P a g e

NATIONAL DEVELOPMENT COMPANY VS. COURT OF INDUSTRIAL RELATIONS
G.R. No. L-15422. 30 NOVEMBER 1962. EN BANC (Regala, J.)
as hours worked.
Facts
At the National Development Co., a government-owned and controlled corporation, there were
four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2
p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there was a one-hour
mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and
from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.
The records disclose that although there was a one-hour mealtime, petitioner nevertheless
credited the workers with eight hours of work for each shift and paid them for the same number of hours.
However, since 1953, whenever workers in one shift were required to continue working until the next
shift, petitioner instead of crediting them with eight hours of overtime work, has been paying them for six
hours only, petitioner that the two hours corresponding to the mealtime periods should not be included in
computing compensation.
After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19, 1959,
holding that mealtime should be counted in the determination of overtime work and accordingly ordered
petitioner to pay P101,407.96 by way of overtime compensation. Petitioner filed a motion for
reconsideration but the same was dismissed by the CIR en banc on the ground that petitioner failed to
furnish the union a copy of its motion.
Issue
Whether the Court of Industrial Relations have jurisdiction and correct in deciding the case.
Ruling
The CIR correctly concluded that work in petitioner company was continuous and therefore the
mealtime breaks should be counted as working time for purposes of overtime compensation. Also,
petitioner's motion for reconsideration having been dismissed for its failure to serve a copy of the same on
the union, there is no decision of the CIR en banc that petitioner can bring to this Court for review.
125 | P a g e

SIME DARBY PILIPINAS, INC. VS. NLRC, ET AL.
G.R. No. 119205. 15 APRIL 1988. FIRSTDIVISION (Bellosillo, J.)
HOURS WORKED; EMPLOYERS PREROGATIVES. - Management retains the prerogative, whenever
exigencies of the service so require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements,
Facts
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
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 in Sime Darby International Tire Co., Inc. v. NLRC. However, the Labor Arbiter
dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30minute 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 the change of work schedule, which management deems necessary to increase
production, constitutes unfair labor practice?
Ruling
Every business enterprise endeavors to increase its profits. In the process, it may devise means to
attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right
of an employer to exercise what are clearly management prerogatives. Thus, 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. Further, management retains the prerogative, whenever exigencies of the
service so require, to change the working hours of its employees. So long as such prerogative is exercised
in good faith for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, this Court will
uphold such exercise.
126 | P a g e

MERCURY DRUG CO., INC. VS. NARDO DAYAO, ET AL.,
GR No. L-30452. 30 SEPTEMBER 1982. SECOND DIVISION (Gutierrez, Jr., J.)
as hours worked.
Facts
After the passage of Republic Act 875, the Court has not only upheld the industrial court's
assumption of jurisdiction over cases for salary differentials and overtime or for payment of additional
compensation for work rendered on Sundays and holidays and for night, but has also supported such
court's ruling that work performed at night should be paid more than work done at daytime, and that if
that work is done beyond the worker's regular hours of duty, he should also be paid additional
compensation for overtime work. Besides, to hold that this case for extra compensation now falls beyond
the powers of the industrial court to decide, would amount to a further curtailment of the jurisdiction of
said court to an extent which may defeat the purpose of the Magna Carta to the prejudice of labor.'
The petitioner's contention that its employees fully understood what they signed when they
entered into the contracts of employment and that they should be bound by their voluntary commitments
is anachronistic in this time and age.
Issue
Whether work performed at night should be paid more than work done at daytime?
Ruling
The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week
and, for some stores, up to very late at night because of the nature of the pharmaceutical retail business.
The respondents knew that they had to work Sundays and holidays and at night, not as exceptions to the
rule but as part of the regular course of employment. Presented with contracts setting their compensation
on an annual basis with an express waiver of extra compensation for work on Sundays and holidays, the
workers did not have much choice. The private respondents were at a disadvantage insofar as the
contractual relationship was concerned.
Workers in our country do not have the luxury or freedom of declining job openings or filing
resignations even when some terms and conditions of employment are not only onerous and iniquitous
but illegal. It is precisely because of this situation that the framers of the Constitution embodied the
provisions on social justice and protection to labor in the Declaration of Principles and State Policies. It is
pursuant to these constitutional mandates that the courts are ever vigilant to protect the rights of workers
who are placed in contractually disadvantageous positions and who sign waivers or provisions contrary to
law and public policy.
127 | P a g e

NATIONAL SHIPYARDS AND STEEL CORPORATION VS. CIR, ET AL.
G.R. No. L-17068. 30 December 1961. EN BANC (REYES, J.B.L., J.)
HOURS WORKED. - The correct criterion in determining whether or not sailors are entitled to overtime
pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working
hours a day, but whether they actually rendered service in excess of said number of hours.
Facts
The petitioner NASSCO, a government-owned and controlled corporation, is the owner of several
barges and tugboats used in the transportation of cargoes and personnel in connection with its business of
shipbuilding and repair. In order that its bargeman could immediately be called to duty whenever their
services are needed, they are required to stay in their respective barges, for which reason they are given
living quarters therein as well as subsistence allowance of P1.50 per day during the time they are on
board. However, upon prior authority of their superior officers, they may leave their barges when said
barges are idle.
The 39 crew members of petitioner's tugboat service, including therein respondent Dominador
Malondras, filed a complaint for the payment of overtime compensation .In the course of the proceeding,
the parties entered into a stipulation of facts wherein the NASSCO recognized and admitted that to meet
the exigencies of the service in the performance of the above work, petitioners have to work when so
required in excess of eight (8) hours a day and/or during Sundays and legal holidays; and that the
petitioners are paid by the respondent their regular salaries and subsistence allowance, without additional
compensation for overtime work;
The examiner, on April 23, 1960, submitted a report giving Malondras an average of sixteen (16)
overtime hours a day, on the basis of his time sheets, and recommending the payment to him of the total
amount of P15,242.15 as overtime compensation during the periods covered by the report.
Issue
Whether Malondras is entitled to the 16 hours overtime as a worker in a barge?
Ruling
The Court do not agree that respondent Malondras should be paid overtime compensation for
every hour in excess of the regular working hours that he was on board his vessel or barge each day,
irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on
board their vessels by the very nature of their duties, and it is for this reason that, in addition to their
regular compensation, they are given free living quarters and subsistence allowances when required to be
on board. It could not have been the purpose of our law to require their employers to pay them overtime
even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to
overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk,
after his regular tour of duty.
128 | P a g e

BISIG NG MANGGAGAWA NG PHIL. REFINING CO., INC. VS. PHIL. REFINING CO., INC.
G.R. No. L-27761. 30 SEPTEMBER 1981. SECOND DIVISION (Abad Santos, J.)
REGULAR BASE PAY. It is clear, unequivocal and requires no interpretation. It means regular basic
pay and necessarily excludes money received in different concepts such as Christmas bonus and other
fringe benefits.
Facts
On April 15,1966, the petitioner as the representative union of the rank and file employees of the
respondent filed with the Court of First Instance of Manila a petition for declaratory relief praying.
Petitioner union contended that the respondent company was under obligation to include the employees'
Christmas bonus and other fringe benefits in the computation of their overtime pay by virtue of the ruling
of this Court in the case of NAWASA vs. NAWASA Consolidated Unions. The Court of First Instance of
Manila rendered a decision declaring that the term "regular base pay" in Section 6, Article VI of Exhibit A
refers only to "regular base pay" and does not include Christmas bonus and other fringe benefits. It
declared that "regular base pay" referred only to the basic or monthly pay exclusive of Christmas bonus
and other fringe benefits. Furthermore, the validity of the provision of the 1965 collective bargaining
agreement concerning the computation of the employees' overtime pay on the basis of their "regular base
pay" was upheld by the court for the reason that the same was even higher than the overtime pay
prescribed by law. The court emphasized that contracts are binding on the parties insofar as they are not
contrary to law, morals and public order.
This is an appeal from the decision of the Court of First Instance of Manila dated December 8,
1966, in Civil Case No. 65082, holding that Christmas bonus and other fringe benefits are excluded in the
computation of the overtime pay of the members of the appellant union under Section 6, Article VI of the
1965 collective bargaining agreement.
Issue
Whether the phrase "regular base pay" includes Christmas bonus and other fringe benefits?
Ruling
No, the phrase "regular base pay" is clear, unequivocal and requires no interpretation. It means
regular basic pay and necessarily excludes money received in different concepts such as Christmas bonus
and other fringe benefits. In this connection it is necessary to remember that in the enforcement of
previous collective bargaining agreements containing the same provision of overtime pay at the rate of
regular base pay plus 50@'c thereof", the overtime compensation was invariably based only on the
regular basic pay, exclusive of Christmas bonus and other tinge benefits. The appellant union could not
question the intended definition of the phrase but could only claim that the same violated the NAWASA
doctrine and insist that the phrase should be redefined to conform to said doctrine.
In the case at bar, it is admitted that the contractual formula of "regular base pay plus 50%
thereof" yields an overtime compensation which is higher than the result in applying the statutory formula
as elaborated in the NAWASA case. Consequently, its validity is upheld and the parties are enjoined to
accord due respect to it.
129 | P a g e

PNB VS. PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION and CIR
G.R. No. L-30279, 30 July 1982. EN BANC (Barredo, J.)
OVERTIME PAY; BASIS FOR DETERMINATION FOR COMPUTATION. - What are decisive in
determining the basis for the computation of overtime pay are two very germane considerations, namely,
(1) whether or not the additional pay is for extra work done or service rendered; and (2) whether or not
the same is intended to be permanent and regular, not contingent nor temporary and given only to remedy
a situation which can change any time.
Facts
The case involves a 25 year dispute. PNB assails the decision of the Court of Industrial Relations
pursuant to jurisprudence, NAWASA vs. NAWASA Consolidated Unions, that in the computation of
overtime pay the cost of living pay and longevity pay be taken into account. PNB questions the ruling
doctrine as well as asks the court for the correct interpretation of CA 444 or the eight hour law in the
determination of the overtime pay.
Issue
Whether the cost of living allowance and longevity pay be included in the computation of
overtime pay?
Ruling
The cost-of-living allowance began to be granted in 1958 and the longevity pay in 1981. In other
words, they were granted by PNB upon realizing the difficult plight of its labor force in the face of the
unusual inflationary situation in the economy of the country, which, however acute, was nevertheless
expected to improve. There was thus evident an inherently contingent character in said allowances. They
were not intended to be regular, much less permanent additional part of the compensation of the
employees and workers. Also with the longevity pay; manifestly, this was not based on the daily or
monthly amount of work done or service rendered it was more of a gratuity for their loyalty, or their
having been in the bank's employment for consideration periods of time. What are decisive in determining
the basis for the computation of overtime pay are two very germane considerations, namely, (1) whether
or not the additional pay is for extra work done or service rendered and (2) whether or not the same is
intended to be permanent and regular, not contingent nor temporary and given only to remedy a situation
which can change any time. Overtime pay is for extra effort beyond that contemplated in the employment
contract; hence when additional pay is given for any other purpose, it is illogical to include the same in
the basis for the computation of overtime pay. This holding supersedes NAWASA.
130 | P a g e

PAMPANGA SUGAR DEVELOPMENT COMPANY VS. CIR, ET AL.
G.R. No. L-13178, 25 March 1961. EN BANC (BAUTISTA ANGELO, J.)
MINORITY UNION. - It is the right of a minority to be protected against the abuses of the majority,
failure on the part of the union representative to secure the best terms and conditions of employment as
the circumstances may demand, or whether the time has come to order a new certification election.
Facts
This is a petition to set aside an order entered by respondent court assuming jurisdiction to take
cognizance of the labor dispute certified to it by the President of the Philippines between the Pampanga
Sugar Development Corporation and its employees under Section 10 of Republic Act 875. It appears that
previous to such certification a voluntary certification election was conducted by the Department of Labor
wherein the PASUDECO Workers Union was chosen as the exclusive bargaining representative of all the
employees of the company as against another union named Sugar Workers Association. Subsequently, a
collective bargaining agreement with respect to the terms and conditions of employment was entered into
between the winning union and the Pampanga Sugar Development Corporation, which agreement as well
as the certification of the PASUDECO Workers Union as the exclusive bargaining representative was
approved by the Court of Industrial Relations.
It is true, as petitioner contends, that the Sugar Workers Association is a minor union which lost
in the certification election conducted by the Department of Labor wherein another union was chosen as
the exclusive representative of all the employees of the company and that, under the law, the union thus
selected is deemed to be the exclusive representative of said employees for the purpose of collective
bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment.2
The fact, however, is that because of the strike declared by the members of the minority union which
threatens a major industry the President deemed it wise to certify the controversy to the Court of
Industrial Relations for adjudication. This is a power that the law gives to the President the propriety of its
exercise being a matter that only devolves upon him. The same is not the concern of the industrial court.
What matters is that by virtue of the certification made by the President the case was placed under the
jurisdiction of said court.
Issue
Whether a minority union may create a labor dispute cognizable by the Court of Industrial
Relations?
Ruling
This is an issue that the court should determine once the dispute is submitted for decision. Here
may come in many other matters that are worth looking into, such as the right of a minority to be
protected against the abuses of the majority, failure on the part of the union representative to secure the
best terms and conditions of employment as the circumstances may demand, or whether the time has
come to order a new certification election. As a matter of fact, there is an intimation by the government
counsel that the collective bargaining agreement concluded between the company and PASUDECO
Workers Union already expired on December 1, 1957 thereby implying that new terms and conditions of
employment may be the subject of new negotiations. These are matters that come within the jurisdiction
of the court.
131 | P a g e

NAWASA VS. NAWSA CONSOLIDATED UNIONS, ET AL.
G.R. No. L-18939. 31 AUGUST 1964. EN BANC (Bautista Angelo, J.)
UNDERTIME HOURS. - The proper method should be to deduct the under time hours from the accrued
leave but to pay the employee the overtime compensation to which he is entitled. Where the employee has
exhausted his leave credits, his under time hours may simply be deducted from his days wage, but he
should still be paid his overtime compensation for work in excess of eight hours a day.
Facts
Petitioner and respondent unions submitted a joint stipulation of facts on the issues concerning
the 40-Hour Week Law, "distress pay," minimum wage, filling of vacancies, night compensation, and
salary adjustments, reserving the right to present evidence on matters not covered therein. On December
4, 1957, respondent interveners filed a petition in intervention on the issue for additional compensation
for night work. Later, however, they amended their petition by including a new demand for overtime pay
in favor of Jesus Centeno, Cesar Cabrera, Feliciano Duiguan, Cecilio Remotigue, and other employees
receiving P4,200.00 per annum or more.
On February 5, 1958, petitioner filed a motion to dismiss the claim for overtime pay alleging that
respondent Court of Industrial Relations was without jurisdiction to pass upon the same because, as mere
interveners, the latter cannot raise new issues not litigated in the principal case, the same not being the lis
mota therein involved. To this motion the interveners filed an opposition. Thereafter, respondent court
issued an order allowing the issue to be litigated. Petitioner's motion to reconsider having been denied, it
filed its answer to the petition for intervention
Issue
Whether under time work shall be offset by overtime work?
Ruling
Where a worker incurs under ime hours during his regular daily work, said under time hours
should not be offset against the overtime hours. If it were otherwise, the unfairness would be evident from
the fact that the under time hours represent only the employees hourly rate of pay while the overtime
hours reflect both the employees hourly rate of pay and the appropriate premium such that, not being of
equal value, offsetting the under time hours against the overtime hours would result in the undue
deprivation of the employees overtime premium.
The situation is even more acceptable where the under time hours are not only offset against the
overtime hours but are also charged against the accrued leave of the employee, for under this method the
employee is made to pay twice the for his under time hours with work beyond the regular working hours.
The proper method should be to deduct the under time hours from the accrued leave but to pay the
employee the overtime compensation to which he is entitled. Where the employee has exhausted his leave
credits, his under time hours may simply be deducted from his days wage, but he should still be paid his
overtime compensation for work in excess of eight hours a day.
132 | P a g e

FELIPE DE LEON, ET AL. VS. PAMPANGA SUGAR DEVELOPMENT COMPANY, INC.
G.R. No. L-26844. 30 SEPTEMBER 1969. EN BANC (Castro, J.)
REST PERIOD. The employer may not require the employees to work on a rest day. Establishments
and enteprises may operate or open for business on Sundays and holidays provided that the employees are
given the weekly rest day and the benefits provided under the law.
Facts
The respondent Pampanga Sugar Development Company (PASUDECO) operates a sugar central at
San Fernando, Pampanga. The petitioners were its security guards required to work eight hours a day,
seven days a week.
On November 28, 1961 the petitioners filed with the CIR a complaint seeking payment to them of
premium or differential pay in the total amount P49,581.79, plus attorney's fees of P3,000 and costs of
suit. Upon the finding that the "petitioners were paid their monthly salaries plus 25% additional
compensation for work on Sundays and Holidays as provided for by law and that work on said days is one
of the terms and conditions of their employment as security guards." CIR Judge Joaquin M. Salvador
dismissed the case. Acting on the petitioners' motion for reconsideration, the court en banc affirmed Judge
Salvador's order. Hence this appeal.
Issue
Whether the petitioners' are entitled to (1) regular remuneration, or 100%; and (2) an additional
sum of at least 25% of the regular remuneration, for work on Sundays and Holidays?
Ruling
The import of the law for work on Sundays and legal holidays, the employer must pay the
employee: (1) his regular remuneration, or 100%; and (2) an additional sum of at least 25% of the regular
remuneration, which is called the "premium pay." In other words, the pay for Sundays and legal holidays
is 125% of the pay for ordinary days, but only the excess of 25% is premium pay. With respect to
employees paid on a monthly basis, the first 100% (of the 125%), corresponding to the regular
remuneration, may or may not be included in the monthly salary. If it is, then the employee is entitled to
collect only the premium of 25%. If it is not, then the employee has a right to receive the entire 125%.
Since the security guards of PASUDECO are paid on a monthly basis, the first 100% (of the 125%),
corresponding to the regular remuneration, is already included in the monthly salary. Accordingly, the
employees are entitled to collect only the premium of 25%.
The only question remaining is whether the 25% premium pay has also been paid. In the order of
Judge Salvador, affirmed by the court en banc, there is a finding that the "petitioners were paid their
monthly salaries plus 25% additional compensation for work on Sundays and holidays." The factual
findings of the trial judge, unaltered or unmodified by the court en banc, cannot be reviewed by this
Court. The findings of fact of the CIR are conclusive on this Court, where they are supported by
substantial evidence, and the lower court has not acted with grave abuse of discretion in reaching them.
133 | P a g e

JOSE RIZAL COLLEGE, VS. NLRC and NATIONAL ALLIANCE OF TEACHERS/OFFICE
G.R. No. L-65482 1, December 1987. FIRST DIVISION (Paras, J.)
HOLIDAY PAY FOR TEACHING PERSONNEL. They are not entitled to payment of holiday pay
because they are paid only for work actually done. They are however entitled to their regular, hourly rate
on days declared as special holidays or when classes are called of or shortened on account of typhoons,
floods, rallies and the like.
Facts
Petitioner is a non-stock, non-profit educational institution duly organized and existing under the
laws of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly
basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual number
of working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on
actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the
basis of student contract hour. Before the start of the semester they sign contracts with the college
undertaking to meet their classes as per schedule. Unable to receive their corresponding holiday pay, as
claimed, from 1975 to 1977, private respondent National Alliance of Teachers and Office Workers in
behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint
against the college for said alleged non-payment of holiday pay. Due to the failure of the parties to settle
their differences on conciliation, the case was certified for compulsory arbitration.
The Labor Arbiter rendered a decision on February 5, 1979, stating that (1) the faculty and
personnel of the respondent Jose Rizal College who are paid their salary by the month uniformly in a
school year, irrespective of the number of working days in a month, without deduction for holidays, are
presumed to be already paid the 10 paid legal holidays and are no longer entitled to separate payment for
the said regular holidays; (2) The personnel of the respondent Jose Rizal College who are paid their
wages daily are entitled to be paid the 10 unworked regular holidays according to the pertinent provisions
of the Rules and Regulations Implementing the Labor Code; and (3) Collegiate faculty of the respondent
Jose Rizal College who by contract are paid compensation per student contract hour are not entitled to
unworked regular holiday pay considering that these regular holidays have been excluded in the
programming of the student contact hours.
On appeal, respondent National Labor Relations Commission in a decision promulgated on June
2, 1982, modified the decision appealed from, in the sense that teaching personnel paid by the hour are
declared to be entitled to holiday pay. Hence, this petition.
Issue
Whether the school faculty who according to their contracts are paid per lecture hour are entitled
to unworked holiday pay?
Ruling
The Court set aside the decision of NLRC and a new one was rendered to wit: (a) exempting
petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same be
during the regular semesters of the school year or during semestral, Christmas, or Holy Week
vacations; and (b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the hours they are
supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said
faculty members shall likewise be paid their hourly rates should they teach during said extensions.
134 | P a g e

SAN MIGUEL CORPORATION VS. COURT OF APPEALS
GR. No. 146775. 30 JANUARY 2002. FIRST DIVISION (Kapunan, J.)
HOLIDAYS. There must be no distinction between Muslims and non-Muslims as regards payment of
benefits for Muslim Holiday wages and other emoluments are laid down by law and not biased on faith or
religion.
Facts
It was October 17, 1992, the Department of Labor and Employment, Illiigan district office,
conducted a routine inspection in San Miguel Corporation in Illigan city. DOLE discovered that there was
an underpayment by SMC of regular Muslim holiday pay to its employees. SMC contested the findings
and DOLE conducted summary hearings. SMC failed to submit proof that it was paying regular Muslim
holiday pay to its employees. DOLE issued a compliance order to consider Muslim holidays as regular
holidays and to pay both its Muslim and non-Muslim employees a holiday pay within 30 days from the
receipt of the order. SMC appealed to the DOLE main office in Manila, but its appeal was dismissed for
lack of merit. SMC, then, went to the Court of Appeals for a relief via a petition for certiorari.
Issue
Whether there is a distinction between Muslims and non-Muslims as regards to the payment of
benefits for Muslim holidays?
Ruling
Muslim holidays are legally observed within the area of jurisdiction of the ARMM. It is only
upon presidential proclamations that Muslim holidays may be officially observed outside the ARMM and
generally extends to Muslims to enable them to observe the said holidays.
There must be no distinction between Muslims and non-Muslims as regards payment of benefits
for Muslim holidays; wages and other emoluments are laid down by law and not based on faith or
religion.
135 | P a g e

INSULAR BANK OF ASIA and AMERICAN EMPLOYEES UNION v. Hon. AMADO INCIONG
G.R. No. L- 52415. 23 October 1984. SECOND DIVISION (Makasiar, J.)
HOLIDAY PAY OF MONTHLY PAID EMPLOYEES. Pursuant to Article 92 of the Labor Code, it is
clear that monthly paid employees are not excluded from the benefits of holiday pay.
Facts
On June 20, 1975, the Union filed a complaint against the bank for the payment of holiday pay
before the then Department of Labor, NLRC, Regional Office IV in Manila. Conciliation having failed,
and upon the request of both parties, the case was certified for arbitration on July 7, 1975. On August 25,
1975, Labor Arbiter Ricarte T. Soriano rendered a decision granting petitioners complaint for payment of
holiday pay. Respondent bank did not appeal from the said decision. Instead, it complied with the order
of the Labor Arbiter by paying their holiday pay up to and including January 1976.
P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday pay.
Accordingly by authority of Article 5 of the Labor Code, the Department of Labor (now Ministry of
Labor) promulgated the rules and regulations for the implementation of holidays with pay.
On August 30,1976, the Union filed a motion for a writ of execution to enforce the arbiters
decision which the bank opposed. The Labor Arbiter, instead of issuing a writ of execution, issued an
order enjoining the bank to continue paying its employees their regular holiday pay. The bank appealed
from the order of the Labor Arbiter to the NLRC. NLRC promulgated its resolution dismissing the banks
appeal, and ordering the issuance of the proper writ of execution. The bank filed with the Office of the
Minister of Labor a motion for reconsideration/appeal with urgent prayer to stay execution. NLRC issued
an order directing the Chief of Research and Information of the Commission to compute the holiday pay
of the IBAA employees from April 1976 to the present in accordance with the Labor Arbiter. Office of the
Minister of Labor, through Deputy Minister Amado Inciong, issued an order setting aside the resolution of
the NLRC dated June 20, 1978, and dismissing the case for lack of merit.
Issue
Whether the Ministry of Labor is correct in determining that monthly paid employees are
excluded from the benefits of holiday pay?
Ruling
From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article 82 of the
same Code, it is clear that monthly paid employees are not excluded from the benefits of holiday pay.
However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting, under Rule IV, Book Ill of the implementing
rules, Section 2. Even if contemporaneous construction placed upon a statute by executive officers whose
duty is to enforce it is given great weight by the courts, still if such construction is so erroneous, the same
must be declared as null and void. So long, as the regulations relate solely to carrying into effect the
provisions of the law, they are valid. Where an administrative order betrays inconsistency or repugnancy
to the provisions of the Act, the mandate of the Act must prevail and must be followed. A rule is binding
on the Courts so long as the procedure fixed for its promulgation is followed and its scope is within the
statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated
therein or its innate wisdom. Further, administrative interpretation of the law is at best merely advisory,
for it is the courts that finally determine what the law means.
136 | P a g e

CHARTERED BANK EMPLOYEES ASSOCIATION VS. HON. BLAS OPLE
G.R. No. L-44717. 28 AUGUST 1985. EN BANC (Gutierrez, Jr., J.)
HOLIDAY PAY. - Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy
Instruction No. 9 add another excluded group, namely, "employees who are uniformly paid by the
month." While the additional exclusion is only in the form of a presumption that all monthly paid
employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must
be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor
more than what the statute delimits or withholds is obviously ultra vires.
Facts
On May 20, 1975, the Chartered Bank Employees Association, in representation of its monthly
paid employees/members, instituted a complaint with the Ministry of Labor and Employment against
private respondent Bank, for the payment of ten (10) unworked legal holidays, as well as for premium and
overtime differentials for worked legal holidays from November 1, 1974.
On the bases of the foregoing facts, both the arbitrator and the National Labor Relations
Commission (NLRC) ruled in favor of the petitioners ordering the respondent bank to pay its monthly
paid employees, holiday pay for the ten (10) legal holidays effective November 1, 1974 and to pay
premium or overtime pay differentials to all employees who rendered work during said legal holidays. On
appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the petitioner's claim for
lack of merit basing its decision on Section 2, Rule IV, Book Ill of the Integrated Rules and Policy
Instruction No. 9,
Issue
Whether the Secretary of Labor erred and acted contrary to law in promulgating Sec. 2, Rule IV,
Book III of the Integrated Rules and Policy Instruction No. 9. ?
Ruling
Presidential Decree No. 850 states who are excluded from the holiday provisions of that law.
While it is true that the contemporaneous construction placed upon a statute by executive officers
whose duty is to enforce it should be given great weight by the courts, still if such construction is so
erroneous, as in the instant case, the same must be declared as null and void. It is the role of the Judiciary
to refine and, when necessary correct constitutional (and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost always in situations where some agency of
the State has engaged in action that stems ultimately from some legitimate area of governmental power.
Since the private respondent premises its action on the invalidated rule and policy instruction, it is
clear that the employees belonging to the petitioner association are entitled to the payment of ten (10)
legal holidays under Articles 82 and 94 of the Labor Code, aside from their monthly salary. They are not
among those excluded by law from the benefits of such holiday pay.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in
computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working
days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the
total number of calendar days in a year. If the employees are already paid for all non-working days, the
divisor should be 365 and not 251.
137 | P a g e

CEZAR ODANGO VS. NLRC and ANTIQUE ELECTRIC COOPERATIVE INC.
G.R. No. L-147420. 10 JUNE 2004. FIRST DIVISION (Carpio, J.)
HOLIDAY PAY OF MONTHLY PAID EMPLOYEES. Pursuant to Article 92 of the Labor Code, it is
clear that monthly paid employees are not excluded from the benefits of holiday pay.
Facts
Petitioners argue that monthly-paid employees are considered paid for all days of the month
including un-worked days. Petitioners assert that they should be paid for all the 365 days in a year. They
argue that since in the computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not
paying them 61 days every year. Petitioners base their claim on Section 2, Rule IV of Book III of the
Omnibus Rules Implementing the Labor Code.
On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting
them wage differentials amounting to P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the
Decision to the NLRC on 24 December 1996. On 27 November 1997, the NLRC reversed the Labor
Arbiters Decision.
Issue
Whether the petitioners are entitled to their money claim?
Ruling
Petitioners claim is without basis. Section 2, Rule IV, Book III of the Implementing Rules and
Policy Instructions No. 9 issued by the Secretary (then Minister) of Labor are null and void since in the
guise of clarifying the Labor Codes provisions on holiday pay, they in effect amended them by enlarging
the scope of their exclusion.
The Labor Code is clear that monthly-paid employees are not excluded from the benefits of
holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor
excludes monthly-paid employees from the said benefits by inserting, under Rule IV, Book III of the
implementing rules, Section 2 which provides that monthly-paid employees are presumed to be paid for
all days in the month whether worked or not.
Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis,
petitioners claim for wage differentials must fail. The basic rule in this jurisdiction is "no work, no pay."
The right to be paid for un-worked days is generally limited to the ten legal holidays in a year.
138 | P a g e

UNION OF FILIPRO EMPLOYEES VS. BENIGNO VIVAR., ET AL
G.R. NO. 79255. 20 JANUARY 1992. EN BANC (Gutierrez, Jr. J.)
HOLIDAY PAY. - Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy
Instruction No. 9 add another excluded group, namely, "employees who are uniformly paid by the
month." While the additional exclusion is only in the form of a presumption that all monthly paid
employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must
be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor
more than what the statute delimits or withholds is obviously ultra vires.
Facts
Petitioner union assails the ruling of the arbitrator that, in the award of holiday pay, the divisor
should be changed from 251 to 261 days to include additional 10 holidays and that the employees should
reimburse the amounts overpaid by Filipro due to the use of 251 days divisor.
Upon the payment of the ordered payment of holidays by Filipro (Nestle), it was then established
that the divisor for the computation of daily pay is no longer 251 but 261 because of the inclusion of 10
paid holidays. Thus, the retaining of 251 as divisor would accelerate the basis of conversion and
computation by 10 days. Filipro would have been overpaying the Petitioner members and thus the
members were required to reimburse the same under the concept of solution indebiti
Issue
Whether Employer can be reimbursed of overpayment because of the 251 day divisor?
Ruling
There is no merit to claim for overpayment of overtime and night differential pay and sick and
vacation leave benefits, which all computation is based on the daily rate. The daily rate is still the same
since the change in the divisor would also lead to a change to the dividend that will be used. The daily
rate is still the same before and after the grant of holiday pay.
139 | P a g e

WELLINGTON INVESTMENT AND MANUFACTURING CORP., VS TRAJANO
G.R. No. 114698. 3 JULY 1995. SECOND DIVISION (NARVASA, C.J.)
HOLIDAY PAY. - The law requires employers who opt to pay by the month is to assure that "the monthly
minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by
twelve," and to pay that salary "for all days in the month whether worked or not," and "irrespective of the
number of working days therein."
Facts
The case arose from a routine inspection conducted by a Labor Enforcement Officer on August 6,
1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner Wellington
Investment and Manufacturing Corporation. The officer thereafter drew up a report, a copy of which was
"explained to and received by" Wellington's personnel manager, in which he set forth his finding of nonpayment of regular holidays falling on a Sunday for monthly-paid employees."
Wellington sought reconsideration of the Labor Inspector's report, by letter dated August 10,
1991. However, respondents arguments failed to persuade the Regional Director who, in an Order issued
on July 28, 1992, ruled and accordingly directed Wellington to pay its employees compensation
corresponding to four (4) extra working days. Wellington timely filed a motion for reconsideration of this
Order of August 10, 1992. Its motion was treated as an appeal and was acted on by respondent
Undersecretary. By Order dated September 22, the latter affirmed the challenged order of the Regional
Director." 6 Again, Wellington moved for reconsideration, and again was rebuffed.
Wellington then instituted the special civil action of certiorari at bar in an attempt to nullify the
orders above mentioned. By Resolution dated July 4, 1994, this Court authorized the issuance of a
temporary restraining order enjoining the respondents from enforcing the questioned orders.
Issue
Whether a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an
additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday?
Ruling
In the case of Wellington, it complied with the minimum norm laid down by law. Apparently the
monthly salary was fixed by Wellington to provide for compensation for every working day of the year
including the holidays specified by law and excluding only Sundays. In fixing the salary, Wellington
used what it calls the "314 factor;" that is to say, it simply deducted 51 Sundays from the 365 days
normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The
monthly salary thus fixed actually covers payment for 314 days of the year, including regular and special
holidays, as well as days when no work is done by reason of fortuitous cause, as above specified, or
causes not attributable to the employees.
There is no provision of law requiring any employer to make such adjustments in the monthly
salary rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to
the legal provisions bearing on the point, otherwise to reckon a year at more than 365 days.
140 | P a g e

JOSE RIZAL COLLEGE, VS. NLRC and NATIONAL ALLIANCE OF TEACHERS/OFFICE
G.R. No. L-65482. 1 December 1987. FIRST DIVISION (Paras, J.)
HOLIDAY PAY FOR TEACHING PERSONNEL. They are not entitled to payment of holiday pay
because they are paid only for work actually done. They are however entitled to their regular, hourly rate
on days declared as special holidays or when classes are called of or shortened on account of typhoons,
floods, rallies and the like.
Facts
Petitioner is a non-stock, non-profit educational institution duly organized and existing under the
laws of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly
basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual number
of working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on
actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the
basis of student contract hour. Before the start of the semester they sign contracts with the college
undertaking to meet their classes as per schedule. Unable to receive their corresponding holiday pay, as
claimed, from 1975 to 1977, private respondent National Alliance of Teachers and Office Workers in
behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint
against the college for said alleged non-payment of holiday pay. Due to the failure of the parties to settle
their differences on conciliation, the case was certified for compulsory arbitration.
The Labor Arbiter rendered a decision on February 5, 1979, stating that (1) the faculty and
personnel of the respondent Jose Rizal College who are paid their salary by the month uniformly in a
school year, irrespective of the number of working days in a month, without deduction for holidays, are
presumed to be already paid the 10 paid legal holidays and are no longer entitled to separate payment for
the said regular holidays; (2) The personnel of the respondent Jose Rizal College who are paid their
wages daily are entitled to be paid the 10 unworked regular holidays according to the pertinent provisions
of the Rules and Regulations Implementing the Labor Code; and (3) Collegiate faculty of the respondent
Jose Rizal College who by contract are paid compensation per student contract hour are not entitled to
unworked regular holiday pay considering that these regular holidays have been excluded in the
programming of the student contact hours.
On appeal, respondent National Labor Relations Commission in a decision promulgated on June
2, 1982, modified the decision appealed from, in the sense that teaching personnel paid by the hour are
declared to be entitled to holiday pay. Hence, this petition.
Issue
Whether the school faculty who according to their contracts are paid per lecture hour are entitled
to unworked holiday pay?
Ruling
The Court set aside the decision of NLRC and a new one was rendered to wit: (a) exempting
petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same be
during the regular semesters of the school year or during semestral, Christmas, or Holy Week
vacations; and (b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the hours they are
supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said
faculty members shall likewise be paid their hourly rates should they teach during said extensions.
141 | P a g e

NICANOR M. BALTAZAR VS. SAN MIGUEL BREWERY, INC.
G.R. No. L-23076. 27 FEBRUARY 1969 EN BANC (Dizon, J.)
SICK LEAVE. Benefits are non-commulative and non-commutative; it must be enjoyed by the
employee within one (1) year, otherwise, they are considered waived or forfeited.
Facts
On October 9, 1956 sixteen regular workers at appellant's Dagupan warehouse went on a strike. For
the purpose of relieving the tension prevailing at the place because it was alleged that the unfair
treatment dispensed to the employees by Baltazar was the cause of the strike. When Baltazar reported at
appellant's main office in Manila on October 15, 1956, the latter's sales supervisor informed him that he
was not to return to Dagupan anymore. Thereafter, he reported for work at the main office aforesaid from
October 16, 1956 until November 2 of the same year, apparently without being given any specific work or
assignment. From November 3, 1956 up to December 19 of the same year, or a period of more than one
and one-half months, he absented himself from work without prior authority from his superiors and
without advising them or anybody else of the reason for his prolonged absence.
Four months later, or more specifically on May 2, 1957, Baltazar commenced the present action.
After trial upon the issues arising from the parties' pleadings, the trial court ruled that Baltazar's dismissal
was justified, and, as a consequence, dismissed his complaint. For insufficiency of evidence, the court
also dismissed appellant's counterclaim. The trial court found that appellee's absence for forty-eight
successive days was without permission or authority of his superiors and, as a result, ruled that it was
sufficient cause for his dismissal in accordance with the rules and regulations of his employer. This must
be deemed final, because Baltazar did not appeal.
It is settled in this jurisdiction that one not employed for a definite period is not entitled to onemonth notice or to one-month salary in lieu thereof if his dismissal was for cause.
Issue
Whether Republic Act No. 1052 makes reference to termination of employment, instead of
dismissal, precisely to exclude employees separated from the service for causes attributable to their own
fault.
Ruling
The Court ruled therefore that appellee is not entitled to one month separation pay.The only
meaning and import of said rule and regulation is that if an employee does not choose to enjoy his yearly
sick leave of thirty days, he may accumulate such sick leave up to a maximum of six months and enjoy
this six months sick leave at the end of the sixth year but may not commute it to cash.
142 | P a g e

DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. RUBEN ABARQUEZ, ET AL.
G.R. No. 102132. 19 MARCH 1993. THIRD DIVISION (Romero, J.)
SICK LEAVE. Benefits are non-commulative and non-commutative; it must be enjoyed by the
employee within one (1) year, otherwise, they are considered waived or forfeited.
Facts
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private
respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of
petitioner-company, entered into a collective bargaining agreement (CBA) on October 16, 1985 which,
under Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year to its
employees who have rendered at least one (1) year of service with the company,
The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent workers
or its conversion to cash was, however, discontinued or withdrawn when petitioner-company under a new
assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's
resignation in June 1989), stopped the payment of its cash equivalent on the ground that they are not
entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.
The public respondent favored the commutation of unenjoyed sick leave with pay benefits.
Issue
Whether the public respondent erred in interpreting Sections 1 and 3?
Ruling
The petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his
decision is misplaced.
Article 261 of the Labor Code is clear. The questioned directive of the herein public respondent is
the necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261
of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement." The Court, therefore, find that no grave abuse
of discretion was committed by public respondent in issuing the award. Moreover, his interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.
143 | P a g e

DONALD KWOK VS. PHILIPPINE CARPET MANUFACTURING CORPORATION
G.R. No. 102132. 19 MARCH 1993. THIRD DIVISION (Romero, J.)
SICK LEAVE. Benefits are non-cumulative and non-commutative; it must be enjoyed by the employee
within one (1) year, otherwise, they are considered waived or forfeited.
Facts
In 1965, petitioner Donald Kwok and his father-in-law Patricio L. Lim, along with some other
stockholders, established a corporation, the respondent Philippine Carpet Manufacturing Corporation
(PCMC). The petitioner became its general manager, executive vice-president and chief operations
officer. Lim, on the other hand, was its president and chairman of the board of directors. When the
petitioner retired 36 years later or on October 31, 1996, he was receiving a monthly salary of
P160,000.00. He demanded the cash equivalent of what he believed to be his accumulated vacation and
sick leave credits during the entire length of his service with the respondent corporation. However, the
respondent corporation refused to accede to the petitioner's demands, claiming that the latter was not
entitled thereto.
The petitioner filed a complaint against the respondent corporation for the payment of his
accumulated vacation and sick leave credits before the NLRC. He claimed that Lim made a verbal
promise to give him unlimited sick leave and vacation leave benefits and its cash conversion upon his
retirement or resignation without the need for any application therefore. In addition, Lim also promised to
grant him other benefits, such as golf and country club membership; the privilege to charge the
respondent corporation's account; 6% profit-sharing in the net income of the respondent corporation; and
other corporate perquisites. According to the petitioner, all of these promises were complied with, except
for the grant of the cash equivalent of his accumulated vacation and sick leave credits upon his retirement.
The respondent corporation denied all these, claiming that upon the petitioner's retirement, he received
the amount of P6,902,387.19 representing all the benefits due him. Despite this, the petitioner again
demanded P7,080,546.00, which demand was without factual and legal basis.
Issue
Whether the petitioner is entitled, based on the documentary and testimonial evidence on record,
to the cash value of his vacation and sick leave credits in the total amount of P7,080,546.00?
Ruling
The general rule is that, in the absence of authority from the board of directors, no person, not
even its officers, can validly bind a corporation. A corporation is a juridical person, separate and distinct
from its stockholders and members, 'having xxx powers, attributes and properties expressly authorized by
law or incident to its existence. The power and the responsibility to decide whether the corporation should
enter into a contract that will bind the corporation is lodged in the board, subject to the articles of
incorporation, by-laws, or relevant provisions of law.
144 | P a g e

JOSE SONGCO ET AL VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
G.R. No. 50999-5100. 25 MARCH 1990. FIRST DIVISION (Madialdea, J.)
WAGE INCLUDES COMMISSION. Wage generally refers to a reward or recompense for services
performed, and commission is included in the definition of wage, the logical conclusion is, in the
computation of the separation pay, the salary base should include also the earned sales commission.
Facts
Zuelig terminated the services of Songco, and other, on the ground of retrenchment due to
financial loses. During the hearing, the parties agreed that the sole issue to be resolved was the bases of
computation of the separation pay. The salesman received monthly salaries of at least P400.00 and
commission for every sale they made.
The Collective Bargaining Agreement between Zuelig and the union of which Songco, et al, were
members contained the following provisions Any employee who is separated from employment due to
old age, sickness, death or permanent lay-off, not due to the fault of said employee, shall receive from the
company a retirement gratuity in an amount equivalent to one (1) months salary per year of service.
The Labor Arbiter ordered Zuelig to pay Songco, et al, separation pay equivalent to their one
month salary for every of service with the company.
Issue
Whether the earned sales commission and allowances should be included in the monthly salary of
Songco, et al, for the purpose of computing their separation pay?
Ruling
In the computation of back wages and separation pay, account must be taken not only of the basic
salary of the employee but also of the transportation and emergency living allowances.
Even if the commissions were in the form of incentives or encouragement, so that the salesman
would be inspired to put a little more industry on the jobs particularly assigned to them, still these
commissions are direct remunerations for services rendered which contributed to the increase of income
of the employer. Commission is the recompense compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage of the work of a
salesman and the reason for such type of remuneration for services rendered demonstrate that
commissions are part of Songco, et als wage or salary.
The Court takes judicial notice of the fact that some salesman does not receive any basic salary
but depend on commissions and allowances or commissions alone through an employer-employee
relationship exists.
145 | P a g e

ALIPIO RUGA, ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
G.R. No. 72654-61. 22 JANUARY 1990. THIRD DIVISION (Fernan, C.J.)
WAGE. - Paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered, and included the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee.
Facts
Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels
owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in
the fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard
said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio
Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor
Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen. For services rendered in
the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on
percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent.
Upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private
respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report
that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied
the charge claiming that the same was a countermove to their having formed a labor union and becoming
members of Defender of Industrial Agricultural Labor Organizations and General Workers Union
(DIALOGWU) on September 3, 1983.
Issue
Whether or not they were illegally dismissed from their employment?
Ruling
We rule in favor of petitioners. It must be noted that petitioners received compensation on a
percentage commission based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the
total proceeds exceeded the cost of the crude oil consumed during the fishing trip, otherwise only 10% of
the proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage" as
defined under Article 97(f) of the Labor Code,
The claim of private respondent, which was given credence by public respondent, that petitioners
get paid in the form of share in the fish-catch which the patron/pilot as head of the team distributes to his
crew members in accordance with their own understanding 15 is not supported by recorded evidence.
Except that such claim appears as an allegation in private respondent's position paper, there is nothing in
the records showing such a sharing scheme as preferred by private respondent.
146 | P a g e

STATES MARINE CORPORATION ET AL. VS. CEBU SEAMEN'S ASSOC, INC.
G.R. No. L-12444. 28 February 1963. EN BANC (Paredes, J.)
SUPPLEMENT AND FACILITIES. The former constitute extra remuneration or special privileges or
benefits given to or received by the labourers over and above their ordinary earnings or wages. The latter,
are items of expense necessary for the laborers and his family existence and subsistence, so that by
express provision of law, they form part of the wage and when furnished by the employer are deductable
there from, since they are not if they are not so furnished the labourer would spend and pay for them just
the same.
Facts
Petitioners were engaged in the business of marine coastwise transportation, employing therein
several steamships of Philippine registry. After the Minimum Wage Law had taken effect, the petitioners
required their employees on board their vessels, to pay the sum of P.40 for every meal, while the masters
and officers were not required to pay their meals.
The petitioners' shipping companies, answering, averred that in enacting Rep. Act No. 602
(Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal, furnished the
employees should be deducted from the daily wages.
Issue
Whether meals or food in question are facilities or supplements?
Ruling
The Court held that such deductions are not authorized. In the coastwise business of
transportation of passengers and freight, the men who compose the complement of a vessel are provided
with free meals by the shipowners, operators or agents, because they hold on to their work and duties,
regardless of "the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk ahead
in the midst of the high seas."
If there are no supplements given, within the meaning and contemplation of section 19, but
merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as they should be
harmonized. And even if there is such a conflict, the respondent CIR should resolve the same in favor of
the safety and decent living laborers.
The benefit or privilege given to the employee which constitutes an extra remuneration above and
over his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the
laborers' basic wages, it is a facility. The criterion is not so much with the kind of the benefit or item
(food, lodging, bonus or sick leave) given, but its purpose. Considering, therefore, as definitely found by
the respondent court that the meals were freely given to crew members prior to August 4, 1951, while
they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the
health and efficiency of the crew personnel during the voyage", the deductions therein made for the meals
given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected
should continue giving the same benefit..
It has been found and held that the meals or food in question are not facilities but supplements.
147 | P a g e

PHILIPPINE AIRLINES, INC. VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
G.R. No. 55159. 22 JUNE 1989. THIRD DIVISION (Pardo, J.)
FAIR DAYS WAGE FOR A FAIR DAYS LABOR. If there is no work performed by the employee
there can be no wage or pay unless the labourer was able, willing and ready to go to work but was
prevented by the management or was illegally locked out, suspended or dismissed.
Facts
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
Discipline. The Code was circulated among the employees and was immediately implemented, and some
employees were forthwith subjected to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No.
NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of
Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its position
paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of unfair
labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code.
Issue
Whether the formulation of a Code of Discipline among employees is a shared responsibility of
the employer and the employees?
Ruling
Petitioner's assertion that it needed the implementation of a new Code of Discipline considering
the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business
demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever
disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation of
the employees. Such cooperation cannot be attained if the employees are restive on account, of their being
left out in the determination of cardinal and fundamental matters affecting their employment.
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS VS. HON. QUISUMBING, ET AL.

148 | P a g e

G.R. No. 128845.1 JUNE 2000. FIRST DIVISION (Kapunan, J.)
PRINCIPLE OF EQUAL PAY FOR EQUAL WORK. Employees working in the Philippnes, if they are
performing similar functions and responsibilities under similar working conditions, should be paid under
the principle of equal pay for equal work.
Facts
Private respondent International School, Inc is a domestic educational institution established
primarily for dependents of foreign diplomatic personnel and other temporary residents. Accordingly, the
School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1)
foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member
should be classified as a foreign-hire or a local hire. The School grants foreign-hires certain benefits not
accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave travel
allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure,
namely: (a) the "dislocation factor" and (b) limited tenure.
When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members" of the School, contested the difference in salary rates between
foreign and local-hires. Petitioner filed a notice of strike. Petitioner claims that the point-of-hire
classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to
foreign-hires constitutes racial discrimination.
Issue
Whether there was an equal pay for an equal work?
Ruling
The Court cannot agree. The foregoing provisions impregnably institutionalize in this jurisdiction
the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries.
This rule applies to the School, its "international character" notwithstanding.
In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no
reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the
School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not
deserve the sympathy of this Court.
149 | P a g e

ATOK-BIG WEDGE MINING CO. INC. VS. ATOK-BIG WEDGE MUTUAL BENEFIT ASSOC.
G.R. No. L-5276. 3 MARCH 1953. EN BANC (Labrador, J.)
MINIMUM WAGE. It can by no means impy only the actual minimum. Some margin or leeway must
be provided, over and above the minimum, to take care of the contigencies, such as increase of prices of
commodities and increase in wants, and to provide means for a desirable improvements in his mode of
living.
Facts
Demand was submitted to petitioner by respondent union through its officers for various
concession, among which were (a) an increase of P0.50 in wages, (b) commutation of sick and vacation
leave if not enjoyed during the year, (c) various privileges, such as free medical care, medicine, and
hospitalization, (d) right to a closed shop, check off, etc., (e) no dismissal without prior just cause and
with a prior investigation, etc. Some of the demands, were granted by the petitioner, and the other were
rejected, and so hearings were held and evidence submitted on the latter. After the hearing the respondent
court rendered a decision, the most important provisions of which were those fixing the minimum wage
for the laborers at P3.20, declaring that additional compensation representing efficiency bonus should not
be included as part of the wage, and making the award effective from September 4, 1950. It is against
these portion of the decision that this appeal is taken.
On the issue of the wage, it is contended by petitioner that as the respondent court found that the
laborer and his family at least need the amount of P2.58 for food, this should be the basis for the
determination of his wage, not what he actually spends; that it is not justifiable to fix a wage higher than
that provided by Republic Act No. 602; and that respondent union made the demand in accordance with a
pernicious practice of claiming more after an original demand is granted. The respondent court found that
P2.58 is the minimum amount actually needed by the laborer and his family
Issue
What will be the basis to determine the minimum wage.
Ruling
A person's needs increase as his means increase. This is true not only as to food but as to
everything else education, clothing, entertainment, etc. The law guarantees the laborer a fair and just
wage. The minimum must be fair and just. The "minimum wage" can by no means imply only the actual
minimum. Some margin or leeway must be provided, over and above the minimum, to take care of
contingencies such as increase of prices of commodities and desirable improvement in his mode of living.
150 | P a g e

JUANA T. VDA. DE RACHO VS. MUNICIPALITY OF ILIGAN
G.R. No. L-23442. 2 JANUARY 1968. EN BANC (Bengzon, J.P., J.)
MINIMUM WAGE. It can by no means impy only the actual minimum. Some margin or leeway must
be provided, over and above the minimum, to take care of the contigencies, such as increase of prices of
commodities and increase in wants, and to provide means for a desirable improvements in his mode of
living.
Facts
The plaintiff and the decedent were spouses and had five minor children. On July 1, 1954 the
decedent was appointed as market cleaner in the Municipality of Ilagan, Isabela, at the rate of P660.00 per
annum (P55.00 monthly) which amount he received up to June 30, 1958. On July 1, 1958, decedent's
salary was increased to P720.00 per annum (P60.00 monthly) by virtue of a promotional appointment
extended to him by the Municipal Mayor. He received this amount until January 6, 1960 when he
tendered his resignation effective July 7, 1960. Decedent was then paid the money value of his
accumulated leaves from January 7, 1960 to May 23, 1960 at the rate of P60.00 a month.
On October 5, 1960, decedent died intestate at Ilagan. Plaintiff then filed on December 9, 1960 a
claim for salary differentials with the Regional Office of the Department of Labor which dropped the case
later for lack of jurisdiction.
Issue
Whether the shortage and lack of available funds and expected revenue validly exempted it from
complying with the Minimum Wage Law?
Ruling
The appeal must be dismissed. We have already answered the question posed in Rivera vs.
Colago, L-12323, February 24, 1961, wherein We ruled that lack of funds of a municipality does not
excuse it from paying the statutory minimum wages to its employees, which, after all, is a mandatory
statutory obligation of the municipality. To uphold such defense of lack of available funds would render
the Minimum Wage Law futile and defeat its purpose. This also disposes of the implication appellant is
trying to make that its duty to pay minimum wages is not a statutory obligation which would command
preference in the municipal budget and appropriation ordinance. 2
Moreover, We cannot sanction appellant's proposition that it would eventually and gradually
implement the Minimum Wage Law, "if and when its revenues can afford."
151 | P a g e

C. PLANAS COMMERCIAL and/or MARCIAL COHU VS. NLRC, ET AL.
G.R. No. 144619. 11 NOVEMBER 2005. SECOND DIVISION (Austria-Martinez, J.)
PAYMENT OF MINIMUM WAGES. Yhe employer cannot exempt himself from liability to pay
minimum wages because of poor financial condition of the company, the payment of minimum wages not
being dependent on the employers ability to pay.
Facts
A complaint for underpayment of wages, non-payment of overtime pay, holiday pay, service
incentive leave pay and premium pay for holiday and rest day and night shift differential was filed against
petitioners with the Arbitration Branch of the NLRC. In their position paper, private respondents alleged
that petitioner Cohu, owner of C. Planas Commercial, is engaged in wholesale of plastic products and
fruits of different kinds with more than 24 employees; that they were required to work for more than 8
hours a day without overtime pay; that they never enjoyed holiday pay and did not have a rest day as they
worked for 7 days a week; and they were not paid service incentive leave pay although they had been
working for more than one year. A decision was rendered by the Labor Arbiter dismissing private
respondents money claims for lack of factual and legal basis; On September 30, 1997, the NLRC
modified Labor Arbiters decision by directing C. Planas Commercial to pay the total amount of SeventyFive Thousand One Hundred Twenty Five Pesos (P75,125.00) representing their combined salary
differentials, holiday pay, and service incentive leave pay.
In the instant case, complainants alleged that despite employing more than twenty-four (24)
workers in his establishment, hence covered by the minimum wage law, nevertheless the individual
respondent did not pay his workers the legal rates and benefits due them since their employment.
Petitioners filed a petition for certiorari with prayer for temporary restraining order and preliminary
injunction to the Supreme Court, the petition was referred to the CA which denied the petition for lack of
merit and affirmed in toto the NLRC decision. Hence, the instant petition for review on certiorari filed
by petitioners.
Issue
Whether C. Planas Commercial is a retail establishment principally engaged in the sale of
plastic products and fruits regularly employing not more than ten (10) workers, thus exempted
from the application of the minimum wage law?
Ruling
Clearly, for a retail/service establishment to be exempted from the coverage of the minimum
wage law, it must be shown that the establishment is regularly employing not more than ten (10) workers
and had applied for exemptions with and as determined by the appropriate Regional Board in accordance
with the applicable rules and regulations issued by the Commission. Petitioners main defense in
controverting private respondents claim for underpayment of wages is that they are exempted from the
application of the minimum wage law, thus the burden of proving such exemption rests on petitioners.
Petitioners had not shown any evidence to show that they had applied for such exemption and if they had
applied, the same was granted.
152 | P a g e

DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. RUBEN ABARQUEZ, ET AL,
G.R. NO. 102132. 19 MARCH 1993. THIRD DIVISION (Romero, J.)
ELIMINATION OR DIMINUITION. Cash conversion of unused sick leave paid by the company to its
intermittent workers, if ripened into a practice, may no longer be withdrawn or diminished byb the
employer unilaterally.
Facts
The petitioner and respondents entered into a collective bargaining agreement which provides that
sick leave with pay benefits each year to its employees who have rendered at least one (1) year of service
with the company.
During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on
April 15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field workers of
petitioner who are members of the regular labor pool and the present regular extra labor pool who had
rendered at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed
portion thereof at the end of the current year was converted to cash and paid at the end of the said oneyear period .
The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company
under a new assistant manager, Mr. Benjamin Marzo, stopped the payment of its cash equivalent on the
ground that they are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA. The Union
objected to the said discontinuance of commutation or conversion to cash of the unenjoyed sick leave
with pay benefits of petitioner's intermittent workers contending that it is a deviation from the true intent
of the parties that negotiated the CBA; that it would violate the principle in labor laws that benefits
already extended shall not be taken away and that it would result in discrimination between the nonintermittent and the intermittent workers of the petitioner-company.
Issue
Whether benefits granted pursuant to company practice or policy can peremptorily be withdrawn?
Ruling
Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed
portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner-company may not unilaterally
withdraw, or diminish such benefits. It is a fact that petitioner-company had, on several instances in the
past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some
intermittent workers.
153 | P a g e

CEBU AUTOBUS COMPANY VS. UNITED CEBU AUTOBUS EMPLOYEES ASSN.
G.R. No. L-12444. 28 February 1963. EN BANC (Paredes, J.)
SUPPLEMENT AND FACILITIES. The former constitute extra remuneration or special privileges or
benefits given to or received by the labourers over and above their ordinary earnings or wages. The latter,
are items of expense necessary for the laborers and his family existence and subsistence, so that by
express provision of law, they form part of the wage and when furnished by the employer are deductable
there from, since they are not if they are not so furnished the labourer would spend and pay for them just
the same.
Facts
Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of
marine coastwise transportation, employing therein several steamships of Philippine registry. They had a
collective bargaining contract with the respondent Cebu Seamen's Association, Inc. On September 12,
1952, the respondent union filed with the Court of Industrial Relations (CIR), a petition (Case No. 740-V)
against the States Marine Corporation, later amended on May 4, 1953, by including as party respondent,
the petitioner Royal Line, Inc. The Union alleged that the officers and men working on board the
petitioners' vessels have not been paid their sick leave, vacation leave and overtime pay; that the
petitioners threatened or coerced them to accept a reduction of salaries, observed by other shipowners;
that after the Minimum Wage Law had taken effect, the petitioners required their employees on board
their vessels, to pay the sum of P.40 for every meal, while the masters and officers were not required to
pay their meals and that because Captain Carlos Asensi had refused to yield to the general reduction of
salaries, the petitioners dismissed said captain who now claims for reinstatement and the payment of back
wages from December 25, 1952, at the rate of P540.00, monthly.
Issue
Whether cost of said meals may not be legally deducted from the wages or salaries of the
aforesaid crew members by the herein petitioners?
Ruling
The benefit or privilege given to the employee which constitutes an extra remuneration above and
over his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the
laborers' basic wages, it is a facility. The criterion is not so much with the kind of the benefit or item
(food, lodging, bonus or sick leave) given, but its purpose. Considering, therefore, as definitely found by
the respondent court that the meals were freely given to crew members prior to August 4, 1951, while
they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the
health and efficiency of the crew personnel during the voyage", the deductions therein made for the meals
given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected
should continue giving the same benefit..
154 | P a g e

NESTLE PHILIPPINES, INC. V. NLRC AND UFE
G.R. No. 91231. 4 FEBRUARY 1991. FIRST DIVISION (Grio- Aquino. J. )
NON-CONTRIBUTORY RETIREMENT PLAN. - The fact that the retirement plan is non-contributory,
the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA.
Salary increases, rice allowances, mid-year bonuses, 13 th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick and other Leaves with pay are noncontributory benefits. Since the retirement plan has been an integral part of the CBA.
Facts
UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees of Nestle Phils. Cagayan De Oro factory as well as its Cebu/Davao Sales office.
While the parties negotiating their CBA, the employees of Cabuyao resorted to a slow down
and walk-outs prompting the petitioner to shut down the factory, subsequently, the Sec. of Labor
assumed jurisdiction and issued a return to work order, in spite of the order, the union struck without
notice. The company retaliated by dismissing the union officers and members of negotiating panel who
participated in the illegal strike. UFE declared a bargaining deadlock. Thereafter, the union filed a notice
of strike and filed a case of unfair labor practice against the company. After conciliation efforts the
NCMB yielded negative results, the dispute was certified to the NLRC by the Sec. of Labor.
The NLRC issued a resolution that the company shall continue implementing its retirement Plan
modified as follows: (1) For 15 years of service or less- an amount equal to 100% of the employees
monthly salary for every year of service; (2) For more that 15 but not less than 20 years in service 125%
of the employees monthly salary for every year of service; and (3) For 29 years or more 150% of the
employees monthly salary for every year of service.
Issue
Whether the employees have not vested demandable right to a contributory retirement plan?
Ruling
The Supreme Court held that the employees have vested and demandable right over existing
benefits Voluntary granted to them by their employer. The employer may not unilaterally withdraw,
eliminate or diminish such benefits.
The NLRC correctly observed that the inclusion of the retirement plan in the CBA as part of the
package of economic benefit extended by the company to its employees to provide them a measure of
financial security after they shall have ceased to be employed in the company, reward their loyalty, boost
their morale and efficiency and promote industrial peace, gives consensual character to the plan so that
it may not be terminated or modified at the will by either party.
155 | P a g e

REYNALDO TIANGCO and VICTORIA TIANGCO VS. HON. VICENTE LEOGARDO, ET AL.
G.R. No. L-57636. 16 MAY 1983. SECOND DIVISION (Conception, Jr. J.)
ELIMINATION OR DIMINUITION; ECOLA. Discontinuance of the practice and/or verbal

agreement between the parties contravened the provisions of the Labor Code, particularly Article 100. It
prohibits the elimination or diminution of existing benefits such as the ECOLA.
Facts
Petitioner R. Tiangco was a fishing operator engaged in deep sea fishing while V. Tiangco was a
fishbroker.
Mr. Ilustrisimo and 26 others were batillios engaged by petitioners to unload fishcatch from the
vessels and take them to the fish stall. The work of these bastillios was limited to days of arrival of the
fishing vessels; hence, they work only a few days in a month averaging 4 hours a day.
In April 1980, Mr. Ilustrisimo and others filed a complaint against the Tinagcos for (1) nonpayment of legal holiday; (2) service incentive leave pay, as well as (3) underpayment of emergency costof-living allowances , which used to be paid in full irrespective of their work days
The Tiangcos denied laborers contention. But as regards the claim for emergency allowances
differentials, they admitted that they discriminated their practice of paying a fixed monthly allowance,
and allowances for nonworking days. They invoked the principle of No work, no pay.
Issue
Whether the contention of the workers is valid?
Ruling
The workers claim is valid. Since the Tiangcos had been paying the workers a fixed monthly
emergency allowance since November 1976 to February 1980, as a matter of practice and .or verbal
agreement between the parties, the discontinuance of the practice and/or verbal agreement between the
petitioners and the private respondents contravened the provisions of the Labor Code, particularly Article
100. It prohibits the elimination or diminution of existing benefits such as the ECOLA..
Section 15 of the rules on PD No. 525 and Sec. 16 of the rules on PD No. 1125 also prohibit the
diminution of any benefit granted to the employees under existing laws, agreements and voluntary
employer practice.
156 | P a g e

GLOBE MACKAY CABLE AND RADIO CORPORATION, ET. AL. VS. NLRC, ET AL.
G.R. No. 74156. 29 JUNE 1988. SECOND DIVISION (Melencho-Herrera, J.)
PRINCLE OF NO PAY, NO ECOLA. It is evident that the intention of the law is to grant ECOLA upon
the payment of basic wages.
Facts
On October 30, 1984 Wage Order No. 6 mandated an increased in the cost-of-living allowance of
non-agricultural workers in the private sector for P3.00. The order was compiled by the petitioner
Corporation by multiplying the same by 22 days, equivalent to the number of working days in the
company.
Respondent union alleges that instead of multiplying the COLA by 22 it should be multiplied by 30
representing the number of days in a month, as what the corporation's normal practice prior to the said
Wage Order. Thus the union filed a complaint against the Corporation for illegal deduction,
underpayment, unpaid allowances, and violation of Wage Order No. 6.
Issue
Whether the COLA under Wage Order No. 6 should be multiplied by 22 or 30 representing the
number of working days in a month?
Ruling
Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that
since the individual petitioners acted in their corporate capacity they should not have been impleaded; and
that the monthly COLA should be computed on the basis of twenty two (22) days, since the evidence
showed that there are only 22 paid days in a month for monthly-paid employees in the company. To
compel the respondent company to use 30 days in a month to compute the allowance and retain 22 days
for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably unjust. If 30 days
is used as divisor, then it must be used for the computation of all benefits, not just the allowance. But this
is not fair to complainants, not to mention that it will contravene the provision of the parties' CBA.
Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:
Section 5. Allowance for Unworked Days. All covered employees shall be entitled to their daily
living allowance during the days that they are paid their basic wage, even if unworked.
It is evident that the intention of the law is to grant ECOLA upon the payment of basic wages.
Hence, we have the principle of No Pay, No ECOLA.
SAMAHANG MANGGAGAWA SA TOP FARM MANUFACTURING UNITED WORKERS OF

157 | P a g e

THE PHILIPPINES (SNTFM-UWP) VS. NLRC, ET AL.
G.R. No. 113856. 7 SEPTEMBER 1998. THIRD DIVISION (Romero, J.)
EXCEPTION TO THE APPLICATION OF ARTICLE 100; CORRECTION OF ERROR. The acrossthe-boar wage increased is not an established company practice, ergo, it can be considered as the
implementation of wage orders.
Facts
The employer granted an across-the-board wage increase to its employees when the minimum
wage was raised by Republic Act No. 6727 in 1989. When the regional wage board issued W.O No. 01 in
October 1990 followed by W.O No. 02 in December of the same year, the union demanded that the wage
increases be implemented again across-the-board, i.e. wage increase should be given to all even those
whose pay was above the minimum. When the employer refused to do so, the union charged the company
with Unfair Labor Practice and violation of Article 100 of the Labor Code.
Issue
Whether the contention of the workers is valid?
Ruling
The Supreme Court dismissed the complaint. They agree with the Labor Arbiter and the NLRC
that no benefit or privilege was previously enjoyed by the petitioner union and the other employees were
withdrawn as a result of the manner by which private respondent implemented the wage orders. Granted
that private respondent had granted an across-the-board increase pursuant to Republic Act No. 6727, that
single instance may not be considered an established company practice.
PAG-ASA STEEL WORKS, INC. VS. COURT OF APPEALS, ET AL.

G.R. No. 166647. 31 MARCH 2006. FIRST DIVISION (Callejo, Sr., J.)
158 | P a g e
WAGE ORDER COMPLIANCE. Employers are not obliged to grant the wage increase under Wage
Order No. NCR-08 either by virtue of the CBA, or as a matter of company practice. There is no legal
basis to implement the same across-the board.
Facts
Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under
Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers
Union is the duly authorized bargaining agent of the rank-and-file employees of petitioner.
On January 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of the National
Capital Region (NCR) issued Wage Order No. NCR-06. It provided for an increase of P13.00 per day in
the salaries of employees receiving the minimum wage, and a consequent increase in the minimum wage
rate to P198.00 per day. On September 23, 1999, petitioner and the Union entered into a Collective
Bargaining Agreement (CBA), effective July 1, 1999 until July 1, 2004 to grant all workers the increase
however if no wage increase given by the Wage Board within six (6) month the management is willing to
give increase. On October 14, 1999, Wage Order No. NCR-07 was issued, and on October 26, 1999, its
Implementing Rules and Regulations. It provided for a P25.50 per day increase in the salary of employees
receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the
P25.50 per day increase to all of its rank-and-file employees. On July 1, 2000, the rank-and-file
employees were granted the second year increase provided in the CBA in the amount of P25.00 per day.
On November 1, 2000, Wage Order No. NCR-08 took effect. Thereby setting the minimum wage rate at
(P250.00) per day. On July 1, 2000, the rank-and-file employees were granted the second year increase
provided in the CBA in the amount of P25.00 per day. Then Union president Lucenio Brin requested
petitioner to implement the increase under Wage Order No. NCR-08 in favor of the companys rank-andfile employees. Petitioner rejected the request, the Union elevated the matter to the National Conciliation
and Mediation Board. When the parties failed to settle, they agreed to refer the case to voluntary
arbitration.
Issue
Whether the company was obliged to grant the wage increase under Wage Order No. NCR-08 as
a matter of practice?
Ruling
Petitioner is not obliged to grant the wage increase under Wage Order No. NCR-08 either by
virtue of the CBA, or as a matter of company practice. There is no legal basis to implement the same
across-the board. A perusal of the record shows that the lowest paid employee before the implementation
of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only
mean that the union can no longer demand for any wage distortion adjustment.
LEXAL LABORATORIES VS. COURT OF INDUSTRIAL RELATIONS, ET AL.

G.R. No. L- 24632. 26 OCTOBER1968. EN BANC (Sanchez, J.)
159 | P a g e
BENEFIT ON REIMBURSEMENT BASIS. - Per diem is a daily allowance given for each day when an
officer or employer is away on official travel. It is intended to cover the cost of lodging and subsistence of
officers and employees on duty outside of their permanent station,
Facts
The Court of Industrial Relations (CIR) decided to reinstate Guillermo Ponseca, a dismissed
employee, to his former position with full back wages from the day of his dismissal up to the time he is
reinstated without loss of his seniority rights and of such other rights and privileges enjoyed by him prior
to his lay-off. Ponseca was entitled to back wages from the day he ceased reporting for work, to a day
prior to his reinstatement. Petitioners objected to the inclusion of P4.00 per diem in the computation of
Ponsecas back wages because he did not spend for his meals and lodgings for he was all the time in
Manila, his station. CIR stated that per diems should be paid as part of the back wages because they were
paid to him regularly.
Per diem is intended to cover the cost of lodging and subsistence of officers and employees when
the latter are on duty outside of their permanent station. Ponseca, during the period involved, did not
leave Manila. Since he spent nothing for meals and lodging outside of Manila, there is nothing to be
reimbursed. Since per diem is in the nature of reimbursement, Ponseca should not be entitled to per
diems.
Issue
Whether per diems are included in back pay?
Ruling
Another exception to the non-diminution rule of Article 100 pertains to reimbursement benefits.
Per diem is a daily allowance given for each day when an officer or employer is away on official travel. It
is intended to cover the cost of lodging and subsistence of officers and employees on duty outside of their
permanent station. Therefore, if the employee did not leave his permanent station and spent nothing for
meals and lodging, then he is not entitled to per diem as there is nothing to reimburse.
NATIONAL SUGAR REFINERIES CORPORATION VS. NLRC, ET AL.

G.R. No. 101761. 24 MARCH 1993. SECOND DIVISION (Regalado, J.)
160 | P a g e

RECLASSIFICATION OF POSITION. Must be done in good faith. The personnel movement should
not be intended to circumvent the law to deprive employees of the benefits they used to receive.
Facts
The petitioner employer implemented a Job Evaluation Programs affecting all employees, from
rank-and-file to department heads. Jobs were ranked according to effort, responsibility, training and
working conditions and relative worth of the jobs. All positions were re-evaluated, and all employees
including the members of respondent union were granted salary adjustments and increases in benefits
commensurate to their actual duties and functions.
For about ten years prior to JE Program, the members of respondent supervisors union were
treated in the same manner as rank-and-file employees. They used to bed paid overtime , rest days and
holiday pay pursuant to Article 87, 93 and 94 of the Labor Code. They lost these benefits because through
the JE program their positions were reclassified from rand-and-file to supervisory or managerial. But it
was also shown that they received upward adjustments in basic pay and allowances.
The members of the union filed a complaint to recover overtime, rest day and holiday pay. The
Labor Arbiter ruled that the long period during which those benefits were being paid to the supervisors
has caused the payment to ripen into a contractual obligation. He also ruled that the P100.00 special
allowance given by NASUREFCO fell short of what the supervisors sought to received had the overtime
pay, rest day and holiday pay not been discontinued, which arrangement, therefore, amounted to a
diminution of benefits.
Issue
Whether there is diminution of benefits?
Ruling
The Court do not subscribe with the finding of the labor arbiter that the payment of the
questioned benefits to the union members has ripened into a contractual obligation. Prior to the JE
Program, the union members, while being supervisors, received benefits similar to those of the rank-andfile employees such as overtime, rest day and holiday pay.
The members of respondent union were paid the questioned benefits for the reason that, at that
time, they were rightfully entitled therein. Prior to the JE Programs they could not be categorically
classified as members or officials of the managerial staff considering that they were then treated merely
on the same level as rank-and-file. After the JE Program, there was an ascent in position, rank and salary.
This in essence is a promotion which is defined as the advancement from one position to another with an
increase in duties and responsibilities as authorized by law and usually accompanied by an increase in
salary.
Quintessentially with the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their former positions.
AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION VS. AMERICAN WIRE
AND CABLE CO., INC. and the COURT OF THE APPEALS
G.R. No. 155059. 29 APRIL 2005. SECOND DIVISION (Chico-Nazario, J.)
161 | P a g e
CONTINGENT OR CONDITIONAL BENEFITS; BONUS. Bonus is an amount granted and paid to an

employee for his industry and loyalty which contributed to the success of the employers business and
made possible the realization of profits. I t is an act of gratitude.
Facts
The union contends that the withdrawal of the 35% premium pay for selected days during the
Holy Week and Christmas season, the holding of the Christmas Party and its incidental benefits, and the
giving of the benefits were customary practices that can no longer be unilaterally withdrawn.
In answer, the corporation avers that the grant of all those benefits has not ripened into practice
and that the employees concerned cannot claim a demandable right over them. It explains that the grant if
these benefits was conditioned upon the financial performance of the company and that the
discontinuance of those grants.
Issue
Whether bonus is a demandable right?
Ruling
It is obvious that the benefits/entitlements subjects of the instant case are all bonuses which were
given by the employer out of its generosity and munificence. The additional 35% premium pay for work
done during selected days of the Holy Week and Christmas season, the holding of Christmas Parties with
raffles, and the cash incentives given together with the service awards are all in excess of what the law
requires. Since they are above what is strictly due to the members of petitioner-union, the granting of the
same was a management prerogative, which whenever management sees necessary, may be withdrawn,
unless they have been made part of the wage or salary or compensation of the employees.
For a bonus to be enforceable, it must have been promised by the employer ad expressly agrees
by the parties, or it must have had a fixed amount and had been a long and regular practice on the part of
the employer.
The benefits or entitlements in question were never subject of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreements.
LOURDES G. MARCOS, ET AL. vs. NLRC ET AL.

G.R. No. 111744. 8 SEPTEMBER 1995. SECOND DIVISION (Regalado, J.)
162 | P a g e

BONUS. - A bonus is not a gift or gratuity, but is paid for some services or consideration and is in
addition to what would ordinarily be given. The term "bonus" as used in employment contracts, also
conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and
above the prescribed wage which the employer agrees to pay.
Facts
Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but
they were dismissed when their positions were declared redundant. A special redundancy benefit was paid
to them, which included payment of accrued vacation leave and fifty percent (50%) of unused current sick
leave, special redundancy benefit, equivalent to three (3) months salary for every year of service; and
additional cash benefits, in lieu of other benefits provided by the company or required by law. Private
respondent celebrated its 80th anniversary wherein the management approved the grant of an anniversary
bonus equivalent to one (1) month salary only to permanent and probationary employees as of November
15, 1990. On March 26, 1991, respondent company announced the grant of performance bonus to both
rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2)
months salary and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus,
however, would be given only to permanent employees as of March 30, 1991.
In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay
petitioners their service awards, anniversary bonuses and prorated performance bonuses, including ten
percent (10%) thereof as attorney's fees.
Issue
Whether respondent NLRC committed reversible error or grave abuse of discretion in affirming
the validity of the "Release and Quitclaim" and, consequently, that petitioners are not entitled to payment
of service awards and other bonuses.
Ruling
Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for his
claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement
whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of
release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled.
Furthermore, in the instant case, it is an undisputed fact that when petitioners signed the
instrument of release and quitclaim, they made a written manifestation reserving their right to demand the
payment of their service awards. The element of total voluntariness in executing that instrument is
negated by the fact that they expressly stated therein their claim for the service awards, a manifestation
equivalent to a protest and a disavowal of any waiver thereof. The grant of service awards in favor of
petitioners is more importantly underscored in the precedent case of Insular Life Assurance Co., Ltd., et
al. vs. NLRC, et al., where this Court ruled that "as to the service award differentials claimed by some
respondent union members, the company policy shall likewise prevail, the same being based on the
employment contracts or collective bargaining agreements between the parties. As the petitioners had
explained, pursuant to their policies on the matter, the service award differential is given at the end of the
year to an employee who has completed years of service divisible by 5.
TRADERS ROYAL BANK VS NLRC AND TRADERS ROYAL BANK EMPLOYEES UNION
GR No. 88168. 30 AUGUST 1990. FIRST DIVISION (Grio-Aquino, J)
163 | P a g e
BONUS. - A bonus is not a gift or gratuity, but is paid for some services or consideration and is in
addition to what would ordinarily be given. The term "bonus" as used in employment contracts, also
conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and
above the prescribed wage which the employer agrees to pay.
Facts
Respondent Traders Royal Bank Employees Union filed a complaint to the NLRC on the account
of diminution of their benefits by the petitioner. Said diminution was effected through; mid-year bonus,
from two (2) months gross pay to two (2) months basic and year-end bonus from three (3) months gross
to only two (2) months.
NLRC rendered a decision in favor of the Employees union and ordered Traders Royal Bank to
pay to employees the mid-year bonus differential representing the difference between two (2) months
gross pay and two (2) months basic pay and end-year bonus differential of one (1) month gross pay for
1986.
The motion for reconsideration of Traders Royal Bank was then denied. Thus, a petition for
certiorari was filed.
Issue
Whether or not the reduction in bonuses is tantamount to diminution of benefits?
Ruling
The petition for Certiorari was granted.
A bonus is a gratuity or act of liberality of the giver which the recipient has no right to demand
as a matter of right. The discretion of giving bonuses rests upon the management and the income of the
operations of the past year.
It has been claimed that the income of the petitioner has indeed decreased yet the bank still gave
out the usual bonuses. Any claim that the receipt of the employees of bonuses has been a company
tradition and cannot be adjusted to its fiscal position is without merit. The company cannot be forced to
give bonuses which it can no longer afford and in effect, be penalized for its past generosity. Bonuses are
not part of labor standards like salaries, cost of living allowances, and leave benefits, which are provided
by the Labor Code.
NATIONAL FEDERATION OF SUGAR WORKERS VS. ETHELWOLDO OVEJERA, ET AL.

G.R. No. L-59743. 31 MAY 1982, EN BANC (Plana, J.)
164 | P a g e

13TH MONTH PAY. PD 851 exempts from the payment of 13 th month pay employers of those who are
paid a fixed amount for performing specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the
13th month pay to such workers
Facts
National Federation of Sugar Workers (NFSW) has been the bargaining agent of CENTRAL
AZUCARERA DE LA CARLOTA (CAC) rank and file employees and has concluded with CAC a
collective bargaining agreement stipulating a provision regarding the grant of bonuses. On November 28,
1981, NFSW struck allegedly to compel the payment of the 13th month pay under PD 851, in addition to
the Christmas, milling and amelioration bonuses being enjoyed by CAC workers.
To settle the strike, a compromise agreement was concluded between CAC and NFSW on November
stipulating that the parties agree to abide by the final decision of the Supreme Court in any case involving
the 13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate
and distinct from the bonuses already given.
Meanwhile, a motion for reconsideration on the case of Marcopper Mining Corp. vs. Blas Ople
et. al. (G.R. No. 51254) for the payment of 13th month pay under PD 851 was denied and an entry of
judgment was made in favor of the Union. After the Marcopper decision had become final, NFSW
renewed its demand that CAC give the 13th month pay. CAC refused. A notice of strike was filed with the
Ministry of Labor and Employment and was subsequently commenced based on the non-payment of the
13th month pay.
Issue
Whether under PD 851, CAC is obliged to give its workers a 13th month salary in addition to
Christmas, milling and amelioration bonuses stipulated in a collective bargaining agreement amounting to
more than a month's pay?
Ruling
The evident intention of the law, as revealed by the law itself, was to grant an additional income
in the form of a 13th month pay to employees not already receiving the same. Otherwise put, the intention
was to grant some relief not to all workers but only to the unfortunate ones not actually paid a 13th
month salary or what amounts to it, by whatever name called; but it was not envisioned that a double
burden would be imposed on the employer already paying his employees a 13th month pay or its
equivalent whether out of pure generosity or on the basis of a binding agreement and, in the latter ease,
regardless of the conditional character of the grant (such as making the payment dependent on profit), so
long as there is actual payment. Otherwise, what was conceived to be a 13th month salary would in effect
become a 14th or possibly 15th month pay. This view is justified by the law itself which makes no
distinction in the grant of exemption: "Employers already paying their employees a 13th month pay or its
equivalent are not covered by this Decree." (P.D. 851.)
UNIVERSAL CORN PRODUCTS VS. NLRC ET. AL

G.R. No. L-60337. 21 AUGUST 1987. SECOND DIVISION (Sarmiento, J.)
165 | P a g e

13TH MONTH PAY. - The evident intention of the law, as revealed by the law itself, was to grant an
additional income in the form of a 13th month pay to employees not already receiving the same.
Facts
Sometime in May, 1972, the petitioner and the Universal Corn Products Workers Union entered
into a collective bargaining agreement in which it was provided, among other things, that: (1) the
COMPANY agrees to grant all regular workers within the bargaining unit with at least one year of
continuous service, a Christmas bonus equivalent to the regular wages for seven working days, effective
December, 1972. The bonus shall be given to the workers on the second week of December. Provided
further that, in the event that the service of a worker is not continuous due to factory shutdown, machine
breakdown or prolonged absences or leaves, the Christmas bonus shall be prorated in accordance with the
length of services that worker concerned has served during the year . The agreement had a duration of
three years, effective June 1, 1971, or until June 1, 1974.
Simultaneously, they entered into a new collective bargaining agreement. According to the
petitioner, the new agreements deliberately excluded the grant of Christmas bonus with the enactment of
Presidential Decree No. 851 on December 16, 1975. It further claims that since 1975, it had been paying
its employees 13th-month pay pursuant to the Decree.
For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978 inclusive, in
accordance with the 1972 CBA, the union went to the labor arbiter for relief. In his decision, the labor
arbiter ruled that the payment of the 13th month pay precluded the payment of further Christmas bonus.
The union appealed to the National Labor Relations Commission (NLRC). The NLRC set aside the
decision of the labor arbiter appealed from and entered another one, "directing respondent company [now
the petitioner] to pay the members concerned of complainants [sic] union their 7-day wage bonus in
accordance with the 1972 CBA from 1975 to 1978. .
Issue
Whether the additional bonuses shall constitute 13th month pay benefits?
Ruling
No, the seven-day bonus here demanded "to be in addition to the legal requirement." Although
unlike the Valenzuela CBA, which took effect after the promulgation of Presidential Decree No. 851 in
1975, the subject agreement was entered into as early as 1972, that is no bar to our application of
Valenzuela. What is significant for us is the fact that, like the Valenzuela, agreement, the Christmas bonus
provided in the collective bargaining agreement accords a reward, in this case, for loyalty, to certain
employees. This is evident from the stipulation granting the bonus in question to workers "with at least
one (1) year of continuous service." As we said in Valenzuela" this is "a purpose not found in P.D. 851.
PHILIPPINE AIRLINES, INC. (PAL) vs. NLRC, ET AL

G.R. No. 114280. 26 JULY 1996. THIRD DIVISION (Francisco, J.)
166 | P a g e

13TH MONTH PAY. - The term "bonus" was in turn interpreted to as an amount granted and paid to an
employee for his industry and loyalty which contributed to the success of the employer's business and
made possible the realization of profits. It is an act of generosity of the employer.
Facts
ALPAP filed its complaint 2 on September, 1991, charging PAL of violating Presidential Decree
No. 851, its Implementing Rules and Regulations and Memorandum Order No. 28 issued by then
President Corazon C. Aquino, for unlawfully refusing and failing to pay the pilots their thirteenth month
pay from 1988 to 1990. Aside from their accumulated thirteenth month pay, ALPAP prayed for an award
of P500,000.00 as moral damages and P100,000.00 as exemplary damages to each of their pilots, plus
attorney's fees equivalent to ten percent (10%) of the total awards adjudged. Subsequently, however,
ALPAP expanded the coverage of its claim from 1986 to 1990 upon filing its position paper.
In answer to the complaint, PAL denied any liability to ALPAP and maintained that it was not
obliged to give its pilots a thirteenth month pay under P.D. 851 as it was already paying said employees
the equivalent of a thirteenth month pay in the form of a year-end bonus.
In the aforecited decision, the Labor Arbiter discarded PAL's contentions and took note of the fact
that the payment of the year-end bonus is conditional and uncertain. the parties sought reconsideration
which, however, were both denied by the NLRC in this resolution dated February 28, 1994. 10 The
NLRC also reduced the award of attorney's fees to five percent (5%) and deleted the payment of legal
interest for lack of basis.
Issue
Whether pilots cannot be classified as rank and file employees since the nature of their job
includes the exercise of supervision over the cabin crew and the power to recommend disciplinary actions
over the latter?
Ruling
The absence of an express provision in the CBA between PAL and ALPAP obligating the former
to pay the members of the latter a thirteenth month pay is immaterial. It cannot be disputed that the tenor
of P.D. 851 as amended by Memorandum Order No. 28 is mandatory in so providing that "all employers
are hereby required to pay all their rank and file employees a thirteenth month pay not later than
December 24 of every year."
The term "bonus" was in turn interpreted to as an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the employer's business and made possible the
realization of profits. It is an act of generosity of the employer, it is also granted by an enlightened
employer to spur the employee to greater efforts for the success of the business and realization of bigger
profits.
FRAMANLIS FARMS INC. VS. MINISTER OF LABOR
G.R. No. 72616-17. 8 MARCH 1989. FIRST DIVISION (Grio-Aquino, J.)
167 | P a g e

made possible the realization of profits. It is an act of generosity of the employer
Facts
In April 1980, eighteen (18) employees of the petitioners filed against their employer, and the
other petitioners two labor standard cases which were docketed in the Regional Office of the Ministry of
Labor in Bacolod City as FAD Cases Nos. 179180 and 0792-80 ("PAFLU SEPTEMBER CONVENTION
VS. FRAMANLIS FARMS"), alleging that in 1977 to 1979 they were not paid emergency cost of living
allowance (ECOLA) minimum wage, 13th month pay, holiday pay, and service incentive leave pay. The
Deputy Minister of Labor favored the employees of the petitioner.
Issue
Whetherthe Deputy Minister of Labor erred in requiring the petitioners to pay 13th month pay
despite the fact that petitioners had substantially complied with the requirement by extending yearly
bonuses and other benefits in kind and in cash to the complainants, pursuant to Section 3(c) of PD 851
which exempts the employer from paying 13th month pay when its equivalent has already been given?
Ruling
The respondent Minister did not err in requiring the petitioners to pay wage differentials to their
pakyaw workers. With regard to the 13th month pay, petitioners admitted that they failed to pay their
workers 13th month pay in 1978 and 1979. Benefits in the form of food or free electricity, assuming they
were given, were not a proper substitute for the 13th month pay required by law. Neither may year-end
rewards for loyalty and service be considered in lieu of 13th month pay.
The failure of the Minister's decision to identify the pakyaw and non-pakyaw workers does not
render said decision invalid. The workers may be identified or determined in the proceedings for
execution of the judgment.
SAN MIGUEL CORPORATION VS. HON. AMADO G. INCIONG, ET AL.

G.R. No. L-49774. 24 February 1981. FIRST DIVISION (De Castro, J.)
168 | P a g e

Facts
Private respondent herein, filed a complaint against San Miguel Corporation (Cagayan Coca-Cola
Plant), petitioner herein, alleging failure or refusal of the latter to include in the computation of 13thmonth pay such items as sick, vacation or maternity leaves, premium for work done on rest days and
special holidays, including pay for regular holidays and night differentials. Public respondent's consistent
stand on the matter since the effectivity of Presidential Decree 851 is that "payments for sick leave,
vacation leave, and maternity benefits, as well as salaries paid to employees for work performed on rest
days, special and regular holidays are included in the computation of the 13th-month pay. On its part,
private respondent cited innumerable past rulings, opinions and decisions rendered by then Acting Labor
Secretary Amado G. Inciong to the effect that, "in computing the mandatory bonus, the basis is the total
gross basic salary paid by the employer during the calendar year. Such gross basic salary includes: (1)
regular salary or wage; (2) payments for sick, vacation and maternity leaves; (3) premium for work
performed on rest days or holidays: (4) holiday pay for worked or unworked regular holiday; and (5)
emergency allowance if given in the form of a wage adjustment."
Issue
Whether or not in the computation of the 13th-month pay under Presidential Decree 851,
payments for sick, vacation or maternity leaves, premium for work done on rest days and special
holidays, including pay for regular holidays and night differentials should be considered?
Ruling
The Court finds petitioner's contention meritorious. All employers are hereby required to pay all
their employees receiving a basic salary of not more than Pl,000 a month, regardless of the nature of the
employment, a 13th-month pay not later than December 24 of every year.
All exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as
part of the basic salary" shows also the intention to strip basic salary of any and all additions which may
be in the form of allowances or "fringe" benefits. The all-embracing phrase "earnings and other
remuneration" which are deemed not part of the basic salary includes within its meaning payments for
sick, vacation, or maternity leaves. Maternity premium for works performed on rest days and special
holidays pays for regular holidays and night differentials. As such they are deemed not part of the basic
salary and shall not be considered in the computation of the 13th-month pay they, were not so excluded, it
is hard to find any "earnings and other remunerations" expressly excluded in the computation of the 13thmonth pay. Then the exclusionary provision would prove to be Idle and with no purpose.
It is clear that overtime pay is an additional compensation other than and added to the regular
wage or basic salary, for reason of which such is categorically excluded from the definition of basic salary
under the Supplementary Rules and Regulations Implementing Presidential Decree 851.
It is likewise clear that premium for special holiday which is at least 30% of the regular wage is
an additional compensation other than and added to the regular wage or basic salary. For similar reason it
shall not be considered in the computation of the 13th- month pay.
ISALAMA MACHINE WORKS CORPORATION VS. NLRC, ET AL.
G.R. No. 100167. 2 MARCH 1995. THIRD DIVISION (Vitug, J.)
169 | P a g e

Facts
Isalama Machine Works Corporation and private respondent Isalama Machine Works Corporation
Labor Union-Workers Alliance Trade Union entered into a collective bargaining agreement ("CBA") , i.e.,
to furnish the workers with safety shoes and free company laminated IDs and, in general, to improve the
employees' working conditions.
On 21 December 1987, the corporation paid the workers the 13th month pay based on the average
number of days actually worked during the year. The union, through its president, private respondent
Henry Baygan, demanded that the 13th month pay should, instead, be made on the basis of a full one
month basic salary. The corporation countered that its own computation of the 13th month pay accorded
with the CBA provisions and Presidential Decree No. 851.
On 05 January 1988, the union filed a notice of strike with the Department of Labor and
Employment, Region X, Cagayan de Oro, alleging the commission of unfair labor practice and CBA
violation by the corporation. After several conferences, the National Conciliation and Mediation Board
("NCMB") succeeded in having the dispute amicably settled except for the 13th month pay differential
which remained in contention. The union insisted that the failure of the corporation to implement fully the
13th month pay provision of the CBA amounted to unfair labor practice. The corporation argued that the
13th month pay was a mere money claim and therefore not a "strikeable issue." The case was ultimately
indorsed to the NLRC for compulsory arbitration.
Issue
Whether the 13th month pay can be a basis for strike?
Ruling
In this case, the real reason for the strike is clearly traceable to the unresolved dispute between
the parties on 13th month pay differentials under Presidential Decree No. 851, i.e., the proper manner of
its application and computation. The Court does not see this issue, given the aforequoted provisions of the
law and its implementing rules, to be constitutive of unfair labor practice. Section 9 of Rules and
Regulations Implementing Presidential Decree No. 851, in fact, specifically states that "nonpayment of
the thirteenth-month pay provided by the Decree and the rules shall be treated as money claims cases and
shall be processed in accordance with the Rules Implementing the Labor Code of the Philippines and the
Rules of the National Labor Relations Commission."
ALLIANCE OF GOVERNMENT WORKERS (AGW) VS. MINISTER OF LABOR, ET AL.
G.R. No. L-60403. 3 AUGUST 1983. EN BANC (Gutierrez, Jr., J):
170 | P a g e

Facts
According to the petitioners, P.D. No. 851 requires all employers to pay the 13th-month pay to
their employees with one sole exception found in Section 2 which states that "Employers already paying
their employees a 13th month pay or its equivalent are not covered by this Decree. " The petitioners
contend that Section 3 of the Rules and Regulations Implementing Presidential Decree No. 851 included
other types of employers not exempted by the decree. They state that nowhere in the decree is the
secretary, now Minister of Labor and Employment, authorized to exempt other types of employers from
the requirement.
The petitioners assail this rule as ultra vires and void. Citing Philippine Apparel Workers'Union v.
NIRC et al., (106 SCRA 444); Teoxon v. Members of the Board of' Administators (33 SCRA 585); Santos
u. Hon. Estenzo et al., (109 Phil. 419); Hilado u. Collector of Internal Revenue (100 Phil. 288), and Olsen
& Co. Inc. v. Aldanese and Trinidad (43 Phil. 259), the petitioners argue that regulations adopted under
legislative authority must be in harmony with the provisions of the law and for the sole purpose of
carrying into effect its general provisions. They state that a legislative act cannot be amended by a rule
and an administrative officer cannot change the law. Section 3 is challenged as a substantial modification
by rule of a Presidential Decree and an unlawful exercise of legislative power.
Issue
Whether the branches, agencies, subdivisions, and instrumentalities of the Government,
including government owned or controlled corporations included among the 4 "employers under
Presidential Decree No. 851 which are required to pay an their employees receiving a basic salary of not
more than P1,000.00 a month, a thirteenth 13th month pay not later than December 24 of every year?
Ruling
Presidential Decree No. 851 is a labor standard law which requires covered employers to pay
their employees receiving not more than P1,000.00 a month an additional thirteenth-month pay. Its
purpose is to increase the real wage of the worker.
It is an old rule of statutory construction that restrictive statutes and acts which impose burdens
on the public treasury or which diminish rights and interests, no matter how broad their terms do not
embrace the Sovereign, unless the Sovereign is specifically mentioned. The Republic of the Philippines,
as sovereign, cannot be covered by a general term like "employer" unless the language used in the law is
clear and specific to that effect.
ROLANDO Y. TAN VS. LEOVIGILDO LAGRAMA, ET AL.

171 | P a g e

G.R. No. 151228. 15 AUGUST 2002. SECOND DIVSION (Mendoza, J.)
PAYMENT BY RESULT. A method of compensation and does not define the essence of the relation. It
is a method of computing compensation, not a basis for determining existence or absence of employeremployee relationship.
Facts
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager
of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter,
making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown
Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998,
private respondent Lagrama was summoned by Tan. Lagrama denied the charge against him. He claimed
that he was not the only one who entered the drawing area and that, even if the charge was true, it was a
minor infraction to warrant his dismissal. Lagrama filed a complaint with the Sub-Regional Arbitration
Branch No. X of the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he
had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive
leave pay, salary differential, and damages.
Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an
independent contractor who did his work according to his methods, while he (petitioner) was only
interested in the result thereof. He cited the admission of Lagrama during the conferences before the
Labor Arbiter that he was paid on a fixed piece-work basis, i.e., that he was paid for every painting turned
out as ad billboard or mural for the pictures shown in the three theaters, on the basis of a "no
mural/billboard drawn, no pay" policy. He submitted the affidavits of other cinema owners, an amusement
park owner, and those supervising the construction of a church to prove that the services of Lagrama were
contracted by them. He denied having dismissed Lagrama and alleged that it was the latter who refused to
paint for him after he was scolded for his habits.
Issue
Whether an employer-employee relationship existed between petitioner and private respondent,
and whether petitioner is guilty of illegally dismissing private respondent?
Ruling
In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an
independent contractor and never his employee, the evidence shows that the latter performed his work as
painter under the supervision and control of petitioner. Lagrama worked in a designated work area inside
the Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the
observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place
other than the toilet or the rest rooms. Petitioner's control over Lagrama's work extended not only to the
use of the work area, but also to the result of Lagrama's work, and the manner and means by which the
work was to be accomplished. Moreover, it would appear that petitioner not only provided the workplace,
but supplied as well the materials used for the paintings, because he admitted that he paid Lagrama only
for the latter's services.
AVELINO LAMBO, ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
G.R. No. 111042. 26 OCTOBER 1999. SECOND DIVISION (Mendoza, J.)
172 | P a g e

PAYMENT BY RESULT. A method of compensation and does not define the essence of the relation. It
is a method of computing compensation, not a basis for determining existence or absence of employeremployee relationship.
Facts
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents
J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100
employees of private respondents, petitioners were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service
incentive leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter Jose
G. Gutierrez found private respondents guilty of illegal dismissal and accordingly ordered them to pay
petitioners claims. On appeal by private respondents, the NLRC reversed the decision of the Labor
Arbiter. It found that petitioners had not been dismissed from employment but merely threatened with a
closure of the business if they insisted on their demand for a "straight payment of their minimum wage,"
Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. The NLRC
held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for
13th month pay. Petitioners allege that they were dismissed by private respondents as they were about to
file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as
Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned
their work.
Issue
Whether the petitioner may validly claim payment by result.
Ruling
The petition is meritorious. In this case, private respondents exercised control over the work of
petitioners. As tailors, petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate
their status as regular employees of private respondents. The term "wage" is broadly defined in Art. 97 of
the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed
or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations. Nor does the fact that petitioners are not
covered by the SSS affect the employer-employee relationship.
MAKATI HABERDASHERY, INC. VS NATIONAL LABOR RELATIONS COMMISSION
G.R. Nos. 83380-81. 15 NOVEMBER 1989. THIRD DIVISION (Fernan, C.J.)
173 | P a g e

PIECE RATE WORKERS; PAYMENT OF SERVICE INCENTIVE LEAVE. The rules implementing
the Labor Code on Service Incentive Leave do not apply to employees whose time and performance is
unsupervised by the employers, including those who are engaged on task or contract basis, purely
commission or those who are paid a fixed amount for performing work irrespective of the time consumed
in the performance thereof.
Facts
Individual complainants have been working for petitioner Makati Haberdashery, Inc. as tailors,
seamstress, sewers, basters and "plantsadoras". They are paid on a piece-rate basis except Maria Angeles
and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a
daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. every day. Private
respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to
Saturday and during peak periods even on Sundays and holidays. The Sandigan ng Manggagawang
Pilipino, a labor organization of the respondent workers, filed a complaint for (a) underpayment of the
basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment
of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits provided
for under Wage Orders Nos. 1, 2, 3, 4 and 5. Labor Arbiter rendered judgment in favor of complainants.
The NLRC affirmed the arbiters decision. Petitioner urged that the NLRC erred in concluding that an
employer-employee relationship existed between petitioner and the workers.
Issue
Whether employees paid on piece-rate basis are entitled to service incentive pay?
Ruling
The facts at bar indubitably reveal that the most important requisite of control is present. As
gleaned from the operations of petitioner, when a customer enters into a contract with the haberdashery or
its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to
take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer.
Supervision is actively manifested in all these aspects the manner and quality of cutting, sewing and
ironing. Petitioner has reserved the right to control its employees not only as to the result but also the
means and methods by which the same are to be accomplished. That private respondents are regular
employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00
or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m.
and which is forfeited when they arrive at or after 9:30 a.m.
The workers did not exercise independence in their own methods, but on the contrary were
subject to the control of petitioners from the beginning of their tasks to their completion. Unlike
independent contractors who generally rely on their own resources, the equipment, tools, accessories, and
paraphernalia used by private respondents are supplied and owned by petitioners. Private respondents are
totally dependent on petitioners in all these aspects. The piece-rate workers in the case at bar are
employees which fall under exceptions set forth in the implementing rules and therefore not entitled to
service incentive leave and holiday pay.
LABOR CONGRESS OF THE PHILIPPINES VS. NLRC

G.R. No. 123938. 21 MAY 1998. FIRST DIVISION (Davide, Jr. J.)
174 | P a g e

PIECE RATE WORKERS; PAYMENT OF SERVICE INCENTIVE LEAVE. The rules implementing
the Labor Code on Service Incentive Leave do not apply to employees whose time and performance is
unsupervised by the employers, including those who are engaged on task or contract basis, purely
commission or those who are paid a fixed amount for performing work irrespective of the time consumed
in the performance thereof.
Facts
The 99 persons named as petitioners in this proceeding were rank-and-file employees of
respondent Empire Food Products, which hired them on various dates. Petitioners filed against private
respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws. On
January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against
private respondents for:
After the submission by the parties of their respective position papers and presentation of
testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair
labor practice, union busting, violation of the memorandum of agreement, underpayment of wages and
denied petitioners' prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however,
directed the reinstatement of the individual complainants:
Issue
Whether the petitioners are pakyao or per piece workers and therefore not entitled to benefits as
that of a regular employee?
Ruling
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such
as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, "field personnel and
other employees whose time and performance is unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof." Plainly, petitioners as
piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under
the control of private respondents as their employer, likewise did petitioners toil throughout the year with
the fulfilment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book
III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay.
The supreme court in its decision held declaring petitioners to have been illegally dismissed by
private respondents, thus entitled to full back wages and other privileges, and separation pay in lieu of
reinstatement at the rate of one month's salary for every year of service with a fraction of six months of
service considered as one year
BERNARDO JIMENEZ VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL
G.R. No. 116960. 2 APRIL 1996. SECOND DIVISION (Regalado, J.)
175 | P a g e

PROOF OF WAGE PAYMENT. - As a general rule, one who pleads payment has the burden of proving
it. Even where the plaintiff must allege non-payment, the burden of evidence rests on the defendant to
prove payment, rather than on the plaintiff to prove non-payment.
Facts
On June 29, 1990, private respondents Pedro and Fredelito Juanatas, father and son, filed a claim
for unpaid wages/commissions, separation pay and damages against JJ's Trucking and/or Dr. Bernardo
Jimenez. Said respondents, as complainants therein, alleged that in December, 1987, they were hired by
herein petitioner Bernardo Jimenez as driver/mechanic and helper, respectively, in his trucking firm, JJ
Trucking. They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola Bottling Company
and paid on commission basis, initially fixed at 17% but later increased to 20% in 1988. After hearings
duly conducted, and with the submission of the parties' position/supporting papers, Labor Arbiter Rogue
B. de Guzman rendered a decision ordering respondents JJ's Trucking and/or Dr. Bernardo Jimenez to pay
jointly and severally complainant Pedro Juanatas a separation pay of P15,050.00, plus attorney's fee
equivalent to 10% of the award. The complaint of Fredelito Juanatas is hereby dismissed for lack of merit.
On appeal filed by private respondents, the NLRC modified the decision of the labor arbiter
declaring Fredelito Juanatas as respondents' employee and shares in the commission and separation pay
awarded to complainant Pedro Juanatas, his father. Further, respondent JJ's Trucking and Dr. Bernardo
Jimenez are jointly and severally liable to pay complainants their unpaid commissions in the total amount
of P84,387.05. Hence, this petition for certiorari, seeking the annulment of the decision of respondent
NLRC denying petitioners' motion for reconsideration.
Issue
Whether respondent NLRC committed grave abuse of discretion in ruling that private
respondents were not paid their commissions in full?
Ruling
There is no reason to disturb the findings of respondent NLRC that the entire amount of
commissions was not paid, because of the evident failure of petitioners to present evidence that full
payment thereof has been made.
As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff
must allege non-payment, the burden of evidence rests on the defendant to prove payment, rather than on
the plaintiff to prove non-payment. In the instant case, the right of respondent Pedro Juanatas to be paid a
commission equivalent to 17%, later increased to 20%, of the gross income is not disputed by petitioners.
Although private respondents admit receipt of partial payment, petitioners still have to present proof of
full payment. The testimony of petitioners which merely denied the claim of private respondents,
unsupported by documentary evidence, is not sufficient to establish payment. Although petitioners
submitted a notebook showing the alleged vales of private respondents for the year 1990, the same is
inadmissible and cannot be given probative value considering that it is not properly accomplished, is
undated and unsigned, and is thus uncertain as to its origin and authenticity. Hence, for failure to present
evidence to prove payment, petitioners defaulted in their defense and in effect admitted the allegations of
private respondents.
VIRGINIA G. NERI and JOSE CABELIN VS. NLRC, ET AL.

G.R. No. 97008-09. 23 JULY 1993. FIRST DIVISION (Bellosillo, J.)
176 | P a g e

LABOR ONLY CONTRACTING. The arrangement is merely to recruit or place people to be
employed, supervised and paid by another, who therefore, is the employer.
Facts
Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had
substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter
ruled that BCC was only job contracting and that consequently its employees were not employees of Far
East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual finding was affirmed by
respondent National Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist
before us that BCC is engaged in "labor-only" contracting hence, they conclude, they are employees of
respondent FEBTC. Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were
hired by, respondent BCC, a corporation engaged in providing technical, maintenance, engineering,
housekeeping, security and other specific services to its clientele. They were assigned to work in the
Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri
an radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1 April 1989.
Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it failed
to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work
premises and other materials which are necessary in the conduct of its business. Moreover, petitioners
argue that they perform duties which are directly related to the principal business or operation of FEBTC.
If the definition of "labor-only" contracting is to be read in conjunction with job contracting, then the
only logical conclusion is that BCC is a "labor only" contractor. ISSUE:
Issue
Whether or not FEBTC should be considered the employer of petitioners who are deemed its
employees through its agent, labor-only BCC.
Ruling
BCC cannot be considered a "labor-only" contractor because it has substantial capital. While
there may be no evidence that it has investment in the form of tools, equipment, machineries, work
premises, among others, it is enough that it has substantial capital, as was established before the Labor
Arbiter as well as the NLRC. Even assuming ex argumenti that petitioners were performing activities
directly related to the principal business of the bank; under the "right of control" test they must still be
considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job
description which detailed her functions as a radio/telex operator. However, a cursory reading of the job
description shows that what was sought to be controlled by FEBTC was actually the end-result of the
task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her,
respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the
desired end-result was achieved. It did not, however, tell Neri how the radio/telex machine should be
operated.
MANILA WATER COMPANY VS. HERMINIO D. PENA, ET AL.

G.R. No. 158255. 8 JULY 2004. FIRST DIVISION (Ynares-Santiago, J.)
177 | P a g e

LABOR ONLY CONTRACTING. The arrangement is merely to recruit or place people to be
employed, supervised and paid by another, who therefore, is the employer.
Facts
On August 1, 1997, under the concession agreement, petitioner, Manila Water Company,
undertook to absorb former employees of the Metropolitan Waterworks and Sewerage System (MWSS)
and positions were in the list furnished by the latter, while the employment of those not in the list was
terminated on that day.
Private respondents, who were contractual collectors of the MWSS, were among the 121
employees not included in the list, but still the petitioner engaged their services without written contract.
On September 1, 1997, they signed a three-month contract to perform collection services for eight
branches of petitioner in the East Zone. Before the end of the three month contract, the 121 collectors
incorporated the Association Collectors Group, Inc. (ACGI) which was contracted by the Petitioner to
collect charges for the Balara Branch. Most of the 121 collectors were asked by the petitioner to transfer
to the First Class Courier Services, a newly registered corporation. Only private respondents herein
remained with ACGI. Petitioner continued to transact with ACGI to do its collection needs until February
8, 1999, when petitioner terminated its contract with ACGI. Private respondents filed a complaint for
illegal dismissal and money claims against the petitioner.
Issue
Whether the employment of the respondents was labor-only contracting?
Ruling
Labor-Only Contracting refers to an arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform job, work or service for a principal, and any of the
following elements are present: (1) The contractor or the subcontractor does not have substantial capital
or investments which relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities which are directly related
to the main business of the principal; or (2) the contractor does not exercise the right to control over the
performance of the work of the contractual employee. There is no doubt that ACGI was engaged in laboronly contracting, and as such, is considered merely an agent of the petitioner. In labor-only contracting,
the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the principal employer and
the latter is responsible to the employees of the labor-only contractor as if such employees had been
directly employed by the principal employer. Since ACGI is only a labor-only contractor, the workers it
supplied should be considered as employees of the petitioner. As private respondents employer, petitioner
has the burden of proving that the dismissal was for a cause allowed under the law and that they were
afforded procedural due process. Petitioner failed to discharge this burden by substantial evidence as it
maintained the defense that it was not the employer of private respondents. Having established that the
schemes employed by petitioner were devious attempts to defeat the tenurial rights of private respondents
and that it failed to comply with the requirements of termination under the Labor Code, the dismissal of
the private respondent is tainted with illegality.
178 | P a g e

SAN MIGUEL CORPORATION V. PROSPERO ABALLA, ET AL.
G.R. No. 149011. 28 June 2005. THIRD DIVISION (Carpio-Morales, J.)
LABOR ONLY CONTRACTING. - The test to determine the existence of independent contractorship is
whether one claiming to be an independent contractor has contracted to do the work according to his own
methods and without being subject to the control of the employer, except only as to the results of the
work.
Facts
Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative(Sunflower)
entered into a one-year Contract of Service and such contract is renewed on a monthly basis until
terminated. Pursuant to this, respondent Prospero Aballa rendered services to SMC. After one year of
service, Aballa filed a complaint before NLRC praying that they be declared as regular employees of
SMC. On the other hand, SMC filed before the DOLE a Notice of Closure due to serious business losses.
Hence, the labor arbiter dismissed the complaint and ruled in favor of SMC. Aballa then appealed before
the NLRC. The NLRC dismissed the appeal finding that Sunflower is an independent contractor. On
appeal, the Court of Appeals reversed NLRCs decision on the ground that the agreement between
SMC and Sunflower showed a clear intent to abstain from establishing an employer-employee
relationship.
Issue
Whether Aballa and other employees of Sunflower are employees of SMC?
Ruling
The contractor is considered merely an agent of the principal employer and the latter
is responsible to the employees of the labor-only contractor as if such employees had been directly
employed by the principal employer. What appears is that Sunflower does not have substantial
capitalization or investment in the form of tools, equipment, machineries, work premises and other
materials to qualify it as an independent contractor. On the other hand, it is gathered that the lot, building,
machineries and all other working tools utilized by Aballa et al. in carrying out their tasks were owned
and provided by SMC. From the job description provided by SMC itself, the work assigned to Aballa et
al.wasdirectly related to the aquaculture operations of SMC. As for janitorial and messengerialservices,
that they are considered directly related to the principal business of the employer has been
jurisprudentially recognized.
Furthermore, Sunflower did not carry on an independent business or undertake the performance
of its service contract according to its own manner and method, free from the control and supervision of
its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. All the
foregoing considerations affirm by more than substantial evidence the existence of an employeremployee relationship between SMC and Aballa. Since Aballa who were engaged in shrimp processing
performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be
deemed regular employees of the latter and as such are entitled to all the benefits and rights appurtenant
to regular employment. They should thus be awarded differential pay corresponding to the difference
between the wages and benefits given them and those accorded SMCs other regular employees.
179 | P a g e

PHILIPPINE BANK OF COMMUNICATION VS. NLRC, ET AL.
GR No. L-66598. 19 DECEMBER 1986 (Feliciano, J.)
work.
Facts
Philippine Bank of Communications (PBC) and the Corporate Executive Search Inc. (CESI)
entered into a letter agreement dated January 1976 under which CESI undertook to provide temporary
services to PBC consisting of the temporary services of 11 messengers. Attached to the letter was a list of
messengers to be assigned, which included Ricardo Orpiada Ricardo Orpiada was thus assigned to work
with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and
alongside other people also rendering services to the bank.
There was some question as to when Ricardo Orpiada commenced rendering services to the bank. As
noted above, the letter agreement was dated January 1976.However,4.the position paper submitted by
(CESI) to the National Labor Relations Commission stated that (CESI) hired Ricardo Orpiada on 25 June
1975 as a Temporary Service employee, and assigned him to work with the petitioner bank "as evidenced
by the appointment memo issued to him on 25 June 1975. "
October 1976, PBC requested CESI to withdraw Orpiadas assignment because his services were
no longer needed. Orpiada instituted a complaint with the Dept of Labor for illegal dismissal and failure
to pay 13th month pay. After investigation, the Office of the Regional Director issued an order dismissing
Orpiadas complaint for failure to show existence of an employer-employee relationship between the
bank and himself. Orpiada succeeded in having his complaint certified for compulsory arbitration, CESI
was made an additional respondent. Labor Arbiter Dogelio rendered a decision ordering PBC to reinstated
Orpiada to the same or equivalent position with full back wages and to pay his 13th month pay. On
appeal, NLRC modified the lBaor Arbiters decision limiting back wages to two years
Issue
Whether or not an employer-employee relationship existed
Ruling
Yes, there was an employer-employee relationship. The court affirmed the NLRC decision. There
are four factors to verify the existence of an employer-employee relationship; selection and engagement
of the putative employee, payment of wages, power of dismissal, and power to control the putative
employees' conduct.
With respect to the selection and engagement of the employee, although Orpiada was not personally
selected by PBC, his selection was still subject to the acceptance of the bank. With respect to wages, PBC
remitted to CESI amounts corresponding to the daily service rate and CESI paid the wages. Orpiada did
not even appear in the payroll of PBC, but was listed in the payroll of CESI. With respect to power of
dismissal, after withdrawal from his assignment, he was also terminated by CESI. It would appear that he
was hired by CESI specifically for assignment with PBC. With regards to control, since Orpiada
performed his functions within the banks premises, not within CESIs premises, he must have been
subject to at least the same control and supervision that the bank exercises.
180 | P a g e

DANILO TABAS, ET AL. VS. CALIFORNIA MANUFACTURING COMPANY, ET AL.
G.R. No. 80680, 26 JUNE 1989. SECOND DIVISION (Saermiento, J.)
work.
Facts
Petitioners were the employees of Livi Manpower Services. They were assigned to the respondent
pursuant to a manpower supply agreement as promotional merchandisers. It was provided in the
agreement that: (1) California would have no control or supervision over the workers as to how they
perform or accomplish their work, (2) Livi is an independent contractor and that it has the sole
responsibility of complying with all the existing as well as future laws, rules and regulations pertinent to
employment of labor, (3) the assignment to California was seasonal and contractual, and (4) payroll,
including COLA and holiday pay shall be delivered Livi at Californias premises.
Petitioners were made to sign 6-month employment contracts which were renewed for the same
period. Unlike regular employees of California, they did not receive fringe benefits and bonuses and were
paid only a daily. Petitioners contend that they have become regular employees of California. Subsequent
to their claim for regularization, California no longer re-hired them. Livi, on the other hand, claims the
workers as its employees and that it is an independent contractor. Labor Arbiter found that no employeremployee relationship existed. The NLRC affirmed the ruling.
Issue
Whether there is an employer-employee relationship between California and the petitioners?
Ruling
Yes. The existence of an employer-employee relationship is a question of law and cannot be made
subject to agreement. The stipulations in the manpower supply agreement will not erase either partys
obligations as an employer. Livi is a labor-only contractor, notwithstanding the provisions in the
agreement. The nature of ones business is not determined by self-serving appellations but by test
provided by statute and the prevailing case law. Californias contention that the workers are not
performing activities which are directly related to its general business of manufacturing is untenable. The
promotion or sale of products, including the task of occasional price tagging, is an integral part of the
manufacturing business. Livi as a placement agency had simply supplied the manpower necessary for
California to carry out its merchandising activities, using the latters premises and equipment.
Merchandising is likewise not a specific project because it is an activity related to the day-to-day
operations of California. Based on Article 106 of the Labor Code, the labor-only contractor is considered
merely an agent of the employer and liability must be shouldered by either one or by both. Petitioners are
ordered reinstated as regular employees.
181 | P a g e

INSULAR LIFE INSURANCE CO., LTD. VS. NATIONAL LABOR RELAITONS COMMISSION
G.R. No. 84484, 15 NOVEMBER 1989. FIRST DIVISION (Bellosillo, J.)
work.
Facts
Insular Life and Basiao entered into a contract by which Basiao was authorized to solicit for
insurance in accordance with the rules of the company. He would also receive compensation, in the form
of commissions. The contract also contained the relations of the parties, duties of the agent and the acts
prohibited to him including the modes of termination. After 4 years, the parties entered into another
contract an Agency Managers Contact and to implement his end of it, Basiao organized an agency
while concurrently fulfilling his commitment under the first contract. The company terminated the
Agency Managers Contract. Basiao sued the company in a civil action. Thus, the company terminated
Basiaos engagement under the first contract and stopped payment of his commissions.
Issue
Whether Basiao had become the companys employee by virtue of the contract, thereby
placing his claim for unpaid commissions?
Ruling
No. The rules and regulations governing the conduct of the business are provided for in the
Insurance Code. These rules merely serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employedin attaining it. Its aim is only to promote the
result, thereby creating no employer-employee relationship. It is usual and expected foran insurance
company to promulgate a set of rules to guide its commission agents in selling its policies which prescribe
thequalifications of persons who may be insured. None of these really invades the agents contractual
prerogative to adopt his ownselling methods or to sell insurance at his own time and convenience, hence
cannot justifiable be said to establish an employer-employee relationship between Basiao and the
company. The respondents limit themselves to pointing out that Basiaos contract with the company
bound him to observe andconform to such rules. No showing that such rules were in fact promulgated
which effectively controlled or restricted his choice ofmethods of selling insurance.Therefore, Basiao was
not an employee of the petitioner, but a commission agent, an independent contract whose claimfor
unpaid commissions should have been litigated in an ordinary civil action.Wherefore, the complain of
Basiao is dismissed
182 | P a g e

ROLANDA ESCARIO, ET. AL. VS. NLRC, ET AL.
G.R. No. 124055. 8 JUNE 2000. FIRST DIVISION (Kapunan, J.)
WAGE DEDUCTION. The employer may deduct the wages corresponding to the days taken off from
the work week, consistent with the principle of no work, no pay
Facts
Petitioners are merchandisers of respondent company. They withdraw stocks from the warehouse
fix the prices, price-tagging, displaying the products and inventory. They were paid by the company
through an agent to avoid liability. They claim that they were under the control and supervision of the
company. They asked for regularization of their status. They were then given notice of their termination.
The company denied any employer-employee relationship. They claim that they used an agent or
independent contractors to sell the merchandise. The Labor Arbiter ruled that there was an employeremployee relationship. The NLRC set aside the decision and said that there was no such relationship. The
agent was a legitimate independent contractor.
Issue
Whether the petitioners are employees of the company?
Ruling
The Court ruled that there is no employer-employee relationship and that petitioners are
employees of the agent. The agent is a legitimate independent contractor. Labor-only contractor occurs
only when the contractor merely recruits, supplies or places workers to perform a job for a principal. The
labor-only contractor doesnt have substantial capital or investment and the workers recruited perform
activities directly related to the principal business of the employer. There is permissible contracting only
when the contractor carries an independent business and undertakes the contract in his own manner
and method, free from the control of the principal and the contractor has substantial capital or investment.
The agent, and not the company, also exercises control over the petitioners. No documents were submitted
to prove that the company exercised control over them. The agent hired the petitioners. The agent also
pays the petitioners, no evidence was submitted showing that it was the company paying them and not the
agent. It was also the agent who terminated their services. By petitioning for regularization, the
petitioners concede that they are not regular employees.
183 | P a g e

RADIO COMMUNICATION OF THE PHIL. INC. VS. SECRETARY OF LABOR, ET AL.
G.R. No. 77959. 9 JANUARY 1989. SECOND DIVISION (Regalado, J.)
WAGE DISTORTION. A situation where an increase in prescribed wage rates results in the elimination
or severe contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions emnbodies in such wage
structure based on skills, length of service, or other logical bases of differentiation.
Facts
On May 4, 1981, petitioner, a domestic corporation engaged in the telecommunications business,
filed with the National Wages Council an application for exemption from the coverage of Wage Order No.
1. The application was opposed by respondent United RCPI Communications Labor Association
(URCPICLA-FUR), a labor organization affiliated with the Federation of Unions of Rizal (FUR).
As early as March 13, 1985, before the aforesaid case was elevated to this
Court, respondent union filed a motion for the issuance of a writ of execution, asserting therein
its claim to 15% of the total backpay due to all its members as "union service fee" for having successfully
prosecuted the latter's claim for payment of wages and for reimbursement of expenses incurred by FUR
and prayed for thesegregation and remittance of said amount to FUR thru its National President. On
October 24, 1985, without the knowledge and consent of respondent union, petitioner entered into
a compromise agreement with Buklod ng Manggagawa sa RCPI-NFL (BMRCPI-NFL) as the new
bargaining agent of oppositors RCPI employees. Thereupon, the parties filed a joint motion praying for
the dismissal of the decision of the National Wages Council for it had already been novated by
the Compromise Agreement re-defining the rights and obligations of the parties. Director Severo M.
Pucan issued an Order dated November 25, 1985 awarding to URCPICLA-FUR and FUR 15% of the
total backpay of RCPI employees as their union service fees, and directing RCPI to deposit said amount
with the cashier of the Regional Office for proper disposition to said awardees. Despite said order,
petitioner paid in full the covered employees on November 29, 1985, without deducting the union service
fee of 15%. Secretary of Labor and Employment issued an order on August 18, 1986 modifying the order
appealed from by holding petitioner solely liable to respondent union for 10% of the awarded amounts as
attorney's fees.
Issue
Whether public respondents acted with grave abuse of discretion?
Ruling
No. Attorney's fee due the oppositor is chargeable against RCPI. The defaulting employer or
government agency remains liable for attorney's fees because it compelled the complainant to employ the
services of counsel by unjustly refusing to recognize the validity of the claim. It is undisputed that
oppositor was the counsel on record of the RCPI employees in their claim for EC0LA under Wage Order
No. 1 since the inception of the proceedings at the National Wages Council up to the Supreme Court. It
had, therefore, a valid claim for attorney's fee which it called union service fee.
We agree that the Labor Code in requiring an individual written authorization as a prerequisite to
wage deductions seeks to protect the employee against unwarranted practices that would diminish his
compensation without his knowledge and consent. However, for all intents and purposes, the deductions
required of the petitioner and the employees do not run counter to the express mandate of the law since
the same are not unwarranted or without their knowledge and consent. Also, the deductions for the union
service fees in question are authorized by law and do not require individual check-off authorizations.
ERNESTO M. APODACA VS. NATIONAL LABOR RELATIONS COMMISSION, ET AL.
184 | P a g e

G.R. No. 80039. 18 APRIL 1989. FIRST DIVISION (Gancayco, J.)
Facts
Petitioner was employed in Respondent Corporation. He was persuaded by respondent Mirasol to
subscribe to 1,500 shares or for a total of P150,000.00. He paid P37,500.00. On September 1, 1975,
petitioner was appointed President and General Manager of the respondent corporation. However, on
January 2, 1986, he resigned. petitioner instituted with the NLRC a complaint against private respondents
for the payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and
representation expenses and his bonus compensation for 1986. Private respondents admitted that
there is due to petitioner the amountof P17,060.07 but this was applied to the unpaid balance of his
subscription in the amount ofP95,439.93. Petitioner questioned the set-off alleging that there was no call
or notice for the payment of the unpaid subscription and that, accordingly, the alleged
obligation is not enforceable.
Issues
Whether an obligation arising there from can be offset against a money claim of an employee
against the employer?
Ruling
No, the unpaid subscriptions are not due and payable until a call is made by the corporation for
payment. Private respondents have not presented a resolution of the board of directors of Respondent
Corporation calling for the payment of the unpaid subscriptions. It does not even appear that a notice of
such call has been sent to petitioner by the respondent corporation. As there was no notice or call for the
payment of unpaid subscriptions, the same is not yet due and payable. Even if there was a call for
payment, the NLRC cannot validly set it off against the wages andother benefits due petitioner. Article
113 of the Labor Code allows such a deduction from the wages of the employees by the employer, only in
three instances.
185 | P a g e

METROPOLITAN BANK AND TRUST COMPANY EMPLOYEES VS. NLRC
G.R. No. 102636. 10 SEPTEMBER 1993. THIRD DIVISION (Vitug, J.)
Facts
On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU,
granting a monthly P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990,
and P200 wage increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of
probationary employees in the list of employees who would benefit from the first P900 increase but the
bank had adamantly refused to accede thereto. Consequently, only regular employees as of 01 January
1989 were given the increase to the exclusion of probationary employees. Barely a month later, or on 01
January 1989, Republic Act 6727, "an act to rationalize wage policy determination be establishing the
mechanism and proper standards thereof, . . . fixing new wage rates, providing wage incentives for
industrial dispersal to the countryside, and for other purposes,"
Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its
probationary employees and to those who had been promoted to regular or permanent status before 01
July 1989 but whose daily rate was P100 and below. The bank refused to give the same increase to its
regular employees who were receiving more than P100 per day and recipients of the P900 CBA increase.
Issue
Whether a wage distortion exists as a consequence of the grant of a wage increase to certain
employees?
Ruling
In keeping then with the intendment of the law and the agreement of the parties themselves, along
with the often repeated rule that all doubts in the interpretation and implementation of labor laws should
be resolved in favor of labor, we must approximate an acceptable quantitative difference between and
among the CBA agreed work levels. We, however, do not subscribe to the labor arbiter's exacting
prescription in correcting the wage distortion. Like the majority of the members of the NLRC, we are also
of the view that giving the employees an across-the-board increase of P750 may not be conducive to the
policy of encouraging "employers to grant wage and allowance increases to their employees higher than
the minimum rates of increases prescribed by statute or administrative regulation," particularly in this
case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance.
The Court find the formula suggested then by Commissioner Bonto-Perez, which has also been
the standard considered by the regional Tripartite Wages and Productivity Commission for the correction
of pay scale structures in cases of wage distortion, to well be the appropriate measure to balance the
respective contentions of the parties in this instance. We also view it as being just and equitable.
186 | P a g e

NATIONAL FEDERATION OF LABOR VS. NLRC, ET AL.
G.R. No. 103586. 21 July 1994. THIRD DIVISION (Feliciano, J.)
Facts
Wage orders 3, 4, 5 & 6 were implemented for a year which effectively icnreased the statutory
minimum wages of workers. In the private respondent's company (Franklin Baker Corp.) the wage rates
of the regular employees and casuals were such that there wasa positive differential between 2 in the
amount of P4.56. After Wage Order No. 5, this differential is not zero. As a result, grievance meetings
were held between the parties. It resulted to the following action on the part of the employer: (a)
regularization of casual employees; (b) increase in the wages of the regular employees; and the (c) grant
of across the board increase of P2 to all the regular employees.
The company experienced output slowdown resulting to the dismissal of 205 employees. The
petitioner union went on strike and demand the rectification of the wage distortion. The NLRC in its
decision found the existence of a wage distortion and ordered the respondent company to increase wage
by P1.00. However, the NLRC Fifth division held (after an MR) that the wage distortion only existed for
15 days and has ceased.
Issue:
Whether it is within management prerogative or discretion to implement a new classification of
its employees?
Ruling
Yes. It is a decision that lies outside the concept of 'wage distortion.' It is a decision that the
company must make either in conjuction with employee negotiation. It is not therefore within the power
of the NLRC to impose unilaterally a new scheme for the classification of employees under the guise of
rectifying a wage distortion when none has been established either by CBA or by management decision.
The court held that wage increases given by employers either unilaterally or as a result of collective
bargaining negotiations should be validated as an action on the part of the employer to correct the wage
distortion caused by the implementation of the wage orders. Moreover, the regularization of the casual
employees with the increases in the wages of the regulars made the issue on wage distortion academic.
187 | P a g e

MANILA MANDARIN EMPLOYEES UNION VS. NLRC, ET AL.
G.R. 108556. 19 NOVEMBER 1996. THIRD DIVISION (Narvasa, C.J.)
Facts
The Union filed with NLRC Arbitration Branch a complaint on wage distortions. The Labor
Arbiter ruled in favor of the Union while the NLRC Commissioner Zapanata reversed the same.
The Union contends that the Mandarin hotel file its appeal three days beyond the reglementary period.
Issue
Whether NLRC acquired jurisdiction to take cognizance of Mandarins appeal from Labor
Arbiter?
Ruling
The court rules that the Commission acted correctly in accepting and acting on Mandarins
appeal. The employee who was authorized to receive payment so the respondent, was allowed to pay
docketing fee on the next business day which was February 4, 1991. In review of the considerations and
in the interest of justice was quite served when Mandarins appeal was given due course despite delayed
payment of feesd, the reglementary period confers a directory, not a mandatory, power to dismiss an
appeal.
188 | P a g e

EMPLOYERS CONFEDERATION OF THE PHILIPPINES (ECOP) VS. NWPC, ET AL.
G.R. No. 96169. 24 SEPTEMBER 1991. SECOND DIVISION (Sarmiento, J.)
MINIMUM WAGE; REASONS. Minimum wages underlie the effort od the State, as Republic Act No.
6727 expresses it, to promote productivity-improvement and gain-sharing measures to ensure a decent
standard of living for the workers and their families.
Facts
October 15, 1990, the Regional Board of NCR issued Wage Order No. NCR-01, increasing the
minimum wage of P17 daily in NCR. TUCP moved for reconsideration. So did PMAP. October 23, 1990
Regional Board issued Wage Order No.01-A amending NCR-01. All workers even those who already
reach the minimum wage of P125 shall receive an increase by P17. ECOP questions the validity of Wage
Order NCR-01-A promulgated pursuant to RA No.6727
RA 6727: An Act to rationalize wage policy determination by establishing the Mechanism and
Proper Standards. Therefore, amending for the purpose Art. 99 of and incorporating Articles 120, 121,
123, 124, 126, and 127, into, Presidential Decree no. 442 as amended, otherwise known as the labor Code
of the Philippines for Industrial dispersal to the countryside and for other purposes, RA 6727 according
to ECOP should impose minimum wages not ceilings, promotes CBA and cannot pre-empt the same by
implementing ceilings.
Issue
Whether there is invalid delegation of wage as a legislative function by RA 6727 to the Regional
Board or unlawful act of legislation?
Ruling
NO. The board did not act in excess in authority. The court is in opinion that Congress meant
boards to be creative in resolving the annual question of Act is not an effort to pass the buck or abdicate
its duty but to leave questions of wages to the Court noted the increasing trend is the salary-cap
method(ceiling) not the floor-wage method. CBA wages w/out the labor and management knocking on
the legislation door every time. Expertise of the experts did not help much in the Wage Distortion
problems but the cap-method did. RA 6727 intended to rationalize wages: Provide full-time boards to
police wages round the clock; and giving the boards enough power to achieve goal.
189 | P a g e

MEYCAUAYAN COLLEGE VS. HON. FRANKLIN DRILONM ET AL.
G.R.No. 81144. 7 MAY 1990. THIRD DIVISION (Fernan, C.J.)
COLLECTIVE BARGAINING AGREEMENT. - A contractual obligation. It is distinct from an
obligation imposed by law. The terms and conditions of a collective bargaining contract constitute the law
between the parties. Beneficiaries thereof are therefore, by right, entitled to the fulfillment of the
obligation prescribed therein.
Facts
Petitioner is a private educational institution duly organized and existing under Philippine laws,
and operating in Meycauayan, Bulacan. On January 16, 1987, its board of trustees recognized the
Meycauayan College Faculty and Personnel Association as the employees' union in the Meycauayan
College. Prior to said recognition or on July 17, 1983, petitioner and the union, then headed by Mrs.
Teresita V. Lim, entered into a collective bargaining agreement for 1983-1986.
When the collective bargaining agreement was entered into, the following presidential decrees
were in effect: (a) P.D No. 1389 adjusting the existing statutory minimum wages; (b) P.D. No. 1713
providing for an increase in the minimum daily wage rates and for additional mandatory living
allowances, and (c) P.D. No. 1751 increasing the statutory daily minimum wage at all levels by P4.00
after integrating the mandatory emergency living allowance under P.D. Nos. 525 and 1123 into the basic
pay of all covered workers. Wage Order No. 2 increasing the mandatory basic minimum wage and living
allowance was also issued just before the collective bargaining agreement herein involved was entered
into. The union admits herein that its members were paid all these increases in pay mandated by law. It
appears, however, that in 1987, shortly after union president Mrs. Teresita V. Lim, who held the
managerial position of registrar of the college, had turned over the presidency of the union to Mrs. Fe
Villarico, the latter unintentionally got a copy of the collective bargaining agreement and discovered that
Article IV thereof had not been implemented by the petitioner.
Issue
Whether increases in employees' salaries resulting from the implementation of presidential
decrees and wage orders, which are over and above the agreed salary scale contracted for between the
employer and the employees in a collective bargaining agreement, preclude the employees from claiming
the difference between their old salaries and those provided for under said salary scale?
Ruling
The petition has no merit.Increments to the laborers' financial gratification, be they in the form of
salary increases or changes in the salary scale are aimed at one thing, improvement of the economic
predicament of the laborers. As such, they should be viewed in the light of the State's avowed policy to
protect labor. Thus, having entered into an agreement with its employees, an employer may not be
allowed to renege on its obligation under a collective bargaining agreement should, at the same time, the
law grant the employees the same or better terms and conditions of employment. Employee benefits
derived from law are exclusive of benefits arrived at through negotiation and agreement unless otherwise
provided by the agreement itself or by law.
190 | P a g e

ST. JOSEPHS COLLEGE VS. ST. JOSEPHSS COLLEGE WORKERS ASSOCIATION
G.R.No. 155609. 17 JANUARY 2005. THIRD DIVISION (Panganiban, J.)
TEACHERS SHARE IN TUITION INCREASE. Also covered by DOLEs visitorial enforcement is
the compliance with the law requiring a school to give the teachers a share in tuition increase.
Facts
Petitioner is a non-stock, non-profit Catholic educational institution while respondent is a
legitimate labor organization which is currently the official bargaining representative of all employees of
petitioner except the faculty and consultants of the Graduate School, managerial employees and those
who occupy confidential positions. Respondent has an existing CBA with petitioner for the period from
June 1, 1999 to May 31, 2004. For the SY 2000-2001, petitioner increased its tuition fees for all its
departments. Based on petitioners computation, the incremental proceeds from the tuition fees increase
for SY 2000-2001 is P1,560,942.74, 85% of which is equivalent to P1,326,801.33. Consequently,
respondent averred that 85% of P4,906,307.58, which is P4,170,360.59 should have been released to its
members as provided for in their CBA effective June 1, 2000.
Issue
Whether a 70%-30% tuition fee increase can be allocated?
Ruling
The law allows an increase in school tuition fees on the condition that 70 percent of the increase
shall go to the payment of personnel benefits. Plainly unsupported by the law or jurisprudence is
petitioners contention that the payment of such benefits should be based not only on the rate of tuition
fee increases, but also on other factors like the decrease in the number of enrollees; the number of those
exempt from paying the fees, like scholars; the number of dropouts who, as such, do not pay the whole
fees; and the bad debts incurred by the school. The financial dilemma of petitioner may deserve sympathy
and support, but its remedy lies not in the judiciary but in the lawmaking body.
The law plainly states that 70 percent of the tuition fee increase shall be allotted for the teaching
and the nonteaching personnel; and that the payment of other costs of operation, together with the
improvement of the schools infrastructure, shall be taken only from the remaining 30 percent. The law
does not speak, directly or indirectly, of the contention of petitioner that in the event that its total tuition
income is lesser than that in the previous year, then the whole amount of the increase in tuition fee, and
not merely up to 30 percent as provided by law, may be used for the improvement and modernization of
infrastructure and for the payment of other costs of operation.
191 | P a g e

COCOFED ET AL. VS. HON. CRESENCIANO B. TRAJANO, ET AL.
G.R. No. 982767. 15 FEBRUARY 1995, THIRD DIVISION (Romero, J.)
ENFORCEMENT. Under RA No. 6727, otherwise known as the Wage Rationalization Act and its
implementing rules, the Department of Labor and Employment shall conduct inspection as often as
possible or necessary, within its manpower constraint, of the payroll and other financial records kept by
the company or business, to determine whether the workers are paid the prescribed minimum wage rates
and other benefits granted by law or any wage order.
Facts
An inspection conducted by the Department in response to the complaints filed by two
employees, revealed that COCOFED was guilty of underpayment of wages, emergency cost of living
allowance (ECOLA) and 130-month pay. A notice of inspection results was issued requiring COCOFED
to effect restitution or correction within five (5) days from notice. Thereafter, summary investigations
were conducted. COCOFED alleged that complainants worked for less than eight hours minimum of four
and a maximum of six, and that, therefore, COCOFED was justified in paying an amount less than the
statutory minimum wage. The Regional Director issued a Compliance Order, ruling that the documents
confirmed the manifestation by the counsel of complainants that the workers paid on a daily and monthly
basis are receiving wages below the statutory minimum.
COCOFED appealed to the Secretary of Labor and Employment who denied the appeal and ruled
that:
On the basis of the payrolls submitted by the respondents, we find that the Regional Director
was correct in ruling that the complainants are daily-paid workers. While respondents claims that in 1985
these workers were paid on a piece-rate-basis, still the payrolls show that from March 1985 to February
1989, the complainants were paid on a daily basis. Granting that these workers were indeed converted to
piece-rate-workers, said conversion is an outright violation of the Labor Code. An employer cannot
unilaterally decrease the salary being given to the employees pursuant to Article 100 of the Labor Code.
What it has voluntarily given cannot be unilaterally withdrawn. Besides, the implementing rules are
explicit to the effect that nothing therein shall justify an employer from withdrawing or reducing benefits
or supplements provided in existing individual or collective agreement or employer practice or policy.
Issue
Whether the Regional Director and the Secretary of Labor committed grave abuse of discretion in
not categorizing COCOFED as an establishment with less than 30 employees and with a paid-up capital
of P500,000.00 or less, and in not finding that complainants are piece-rate workers or paid by results?
Ruling
The Court found no grave abuse of discretion on the part of the public respondent.
The petitioner would have the Court overturn the factual finding of public
respondents, in that its contention is that the employees are daily paid workers. The Court however ruled
to the contrary, since the payroll submitted does not support the petitioners contention. Findings of
administrative agencies which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but finality. Moreover, there is absolutely nothing in the
records which show that petitioner's employees worked for less than eight hours. Finally, there would
have been no need for petitioner to make an offer increasing the wage to P45.00 per day if complainants
were indeed piece rate workers, as it claimed and if their wages were not underpaid, as found by public
respondents.
CEBU OXYGEN & ACETEYLENE CO., INC. VS. HON. FRANKLIN DRILON
192 | P a g e

G.R. No. 82849. 2 AUGUST 1989. EN BANC (Gnacayco, J.)
ENFORCEMENT. - The provisions of Republic Act No. 6640, do not prohibit the crediting of CBA
anniversary wage increases for purposes of compliance with Republic Act No. 6640. The implementing
rules cannot provide for such a prohibition not contemplated by the law. Administrative regulations
adopted under legislative authority by a particular department must be in harmony with the provisions of
the law, and should be for the sole purpose of carrying into effect its general provisions. The law itself
cannot be expanded by such regulations. An administrative agency cannot amend an act of Congress.
Facts
RA No. 6640, passed on December 14, 1987, increased by ten pesos the statutory minimum daily
wage rate of workers and employees in the private sector, whether agricultural or non-agricultural. The
Secretary of Labor issued the pertinent rules implementing RA No. 6640, Sec. 8 of which provides: No
wage increase shall be credited as compliance with the increase prescribed herein unless expressly
provided under valid individual written/ collective agreements; and, Provided further, That such wage
increase was granted in anticipation of the legislated wage increase under the Act. Such increases shall
not include anniversary wage increase provided in collective bargaining agreements.
Cebu Oxygen Co. and the union of its rank-and-file employees entered into a collective
bargaining agreement covering the years 1986 to 1988. Under the CBA, the management gave salary
increases. The Regional Director ordered Cebu Oxygen Co. to pay the deficiency of P200 in the monthly
salary and P231 in the 13th-month pay of its employees for the period stated. Cebu Oxygen protested the
directors order, saying that the anniversary wage increase under the CBA could be credited against the
wage increase mandated by RA No. 6640. It argued that the payment of the differentials constituted full
compliance with RA No. 6640.
Issue
Whether the wage increase under the CBA can be credited as compliance with the statutory wage
increase?
Ruling
Cebu Oxygen correctly contended that the salary increases granted by it pursuant to the existing
CBA including anniversary wage increase should be considered in determining compliance with the wage
increase mandated by RA No. 6640. It therefore correctly credited its employees P62 for the differential
of two (2) months increase and P31.00 each for the differential in the 13 th-month pay after deducting the
P200 anniversary wage increase for 1987 under the Collective Bargaining Agreement.
Section 8 of the Rules Implementing RA No. 6640 is declared null and void insofar as it excluded
the anniversary wage increases negotiated under collective bargaining agreements from being credited to
the wage increases provided for under RA No. 6640.
ODIN SECURITY AGENCY VS. HON. DIONISIO DE LA SERNA ET AL.

193 | P a g e

G.R No. 87439. 21 FEBRUARY 1990. FIRST DIVISION (Grio-Aquino, J.)
DUE PROCESS. - Requirement of the process is satisfied when the parties are given an opportunity to
submit position papers; what the fundamental law abhors is not absence of previous notice but the
absolute lack of opportunity to be heard.
Facts
The private respondents (employee) filed with the Department of Labor and Employment, a
complaint charging the petitioner employer with underpayment of wages, illegal deductions, non-payment
of night shift defferential, overtime pay,etc. When conciliation efforts failed, the parties were required to
submit their position papers. Based on the position papers, the Regional Director issued an order directing
the employer to pay the employees the benefits prayed for.
Claiming that he was denied due process, the petitioner filed a motion for reconsideration which
was treated as an appeal. The Undersecretary affirmed with with modification then order of the Regional
Director. Hence, this petition for certiorari and prohibition.
Issue
Whether the requirement of due process had been satisfied?
Ruling
Requirement of the process is satisfied when the parties are given an opportunity to submit
position papers; what the fundamental law abhors is not absence of previous notice but the absolute lack
of opportunity to be heard. The petitioner was not denied due process, for several hearings were in fact
conducted by the hearing officer of the Regional Office of the DOLE and the parties submitted position
papers upon which in the Regional Director based his decision in the case. The requirements of due
process are satisfied when the parties are given an opportunity to submit position papers.
Principle of jurisdiction by estoppel. The petitioner is stopped from questioning the alleged lack
of jurisdiction of the Regional Director over the private respondents claims. Petitioner submitted to the
jurisdiction of the Regional Director by taking part in the hearings before him and by submitting a
position paper. This act of participation amounts to estoppels, that is, action speaks louder than words; the
law does not allow a person to speak against his own act or deed.
PLACIDO URBANES, ET AL. VS. HON. SECRETARY OF LABOR

194 | P a g e

G.R. No. 12279. 19 FEBRUARY 2003. THIRD DIVISION (Carpio Morales, J.)
JURISDICTION; REGULAR COURTS. - The Court ruled that it is well settled in law and jurisprudence
that where no employer-employee relationship exists between the parties and no issue is involved which
may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction.
Facts
When the relief sought is not under the Labor Code but for payment of a sum of money and
damages on a breach of contract, it is within the realm of civil law and jurisdiction belongs to the regular
courts. Petitioner Placido O. Urbanes agreed to provide security services to Social Security Systems
(SSS). During the pendency of their agreement, Urbanes requested SSS for an upward adjustment of their
contract rate in compliance with the mandated wage increases. SSS ignored the request which led
Urbanes to pull out his agencys services and to subsequently file a complaint against SSS for the
implementation of the wage increase. The Regional Director of the DOLENCR issued an order in favor of
Urbanes. SSS filed an appeal to the Secretary of Labor who later on set aside the order of the Regional
Director. Urbanes filed an appeal by certiorari to the Supreme Court.
Issue
Whether the DOLE Secretary can exercise jurisdiction over decisions of Regional Directors
involving complaints for recovery of wages
Ruling
Neither the Ubanes contention nor the SSS is impressed with merit. The Court ruled that it is
well settled in law and jurisprudence that where no employer-employee relationship exists between the
parties and no issue is involved which may be resolved by reference to the Labor Code, other labor
statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its
complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum
of money and damages on account of petitioner's alleged breach of its obligation under their Guard
Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to
the regular courts. While the resolution of the issue involves the application of labor laws, reference to the
labor code was only for the determination of the solidary liability of the petitioner to the respondent
where no employer-employee relation exists. In the case at bar, even if Urbanes filed the complaint on his
and also on behalf of the security guards, the relief sought has to do with the enforcement of the contract
between him and the SSS which was deemed amended by virtue of Wage Order No. NCR-03. The
controversy subject of the case at bar is thus a civil dispute, the proper forum for the resolution of which
is the civil courts. But even assuming arguendo that Urbanes complaint were filed with the proper forum,
for lack of cause of action it must be dismissed. In fine, the liability of the SSS to reimburse Urbanes
arises only if and when Urbanes pays his employee-security guards the increases mandated by Wage
Order No. NCR-03. The Court in Lapanday Agricultural Development Corporation v. Court of Appeals
held that: It is only when the contractor pays the increases mandated that it can claim an adjustment from
the principal to cover the increases payable to the security guards.
ZIALCITA, AT AL. VS. PHILIPPINE AIRLINES
195 | P a g e

RO4-3-3398-76. 20 FEBRUARY 1977 (Office of the President Decision)
NONDISCRIMINATION; POLICY AGAINST MARRIED STATUS. Article 135 of the Labor Code
prohibits discrimination against women employees as regards terms and conditions of employment on
account of sex and marital status.
Facts
Complainant Zialcita, an international flight stewardess of PAL, was discharged from the service
on account of her marriage. In separating Zialcita, PAL invoked its policy which stated that flight
attendants must be single, and shall be automatically separated from employment in the event
they subsequently get married. They claimed that this policy was in accordance with Article 132 of the
Labor Code. On the other hand, Zialcita questioned her termination on account of her marriage, invoking
Article 136 of the same law.
Issue
Whether Zialcita was validly terminated on account of her marriage?
Ruling
No. When Presidential Decree No. 148, otherwise known as theWomen and Child Labor Law,
was promulgated in 13 March 1973, PALs policy had met its doom. However, since no one challenged its
validity, the said policy was able to obtain a momentary reprieve. Section 8 of PD148 is exactly the same
provision reproduced verbatim in Article 136 of the Labor Code, which waspromulgated on 1 May 1974
and took effect six months later. Although Article 132 enjoins the Secretary of Labor to establish
standards that will ensure the safety and health of women employees and in appropriate cases shall
by regulation require employers to determine appropriate minimum standards for termination in special
occupations, such as those of flight attendants, it is logical to presume that, in the absence of said
standards or regulations which are yet to be established, the policy of PAL against marriage is
patently illegal.
Article 136 of the Labor Code is not intended to apply only to women employed in ordinary
occupations, or it should have categorically expressed so. The sweepingintendment of the law, be it on
special or ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks of
non-discrimination on the employment of women.
OLYMPIA GUALBERTO VS. MARINDUQUE MINING INDUSTRIAL CORPORATION

196 | P a g e

G.R. No. 52753-R. 28 JUNE 1978
NONDISCRIMINATION; POLICY AGAINST MARRIED STATUS. Article 135 of the Labor Code
prohibits discrimination against women employees as regards terms and conditions of employment on
account of sex and status.
Facts
The company employed plaintiff Olympia Gualberto as a dentist in 1971 while she was still single. She
married Roberto, another employee (electrical engineer) of the company, in 1972. The company informed
her that she was regarded to have resigned her office, invoking the firms policy that stipulated that
female employees were regarded to automatically terminate their employment the moment they got
married. Olympia filed a claim for compensation.
The Court of Appeals not only upheld her claim for damages but also awarded exemplary
damages, and held, inter alia: No employer may require female applicants for jobs to enter into preemployment arrangements that they would be dismissed once they get married and afterwards expect the
Courts to sustain such an agreement.
Issue
Whether an employer may terminate an employee by reason of marriage?
Ruling
No. The Court made references to the Civil Code, the Woman and Child Labor Act and the 1935
Constitution of the Philippines. In light of this the Court further stated: The agreement which the
appellants want this Court to sustain on appeal is an example of discriminatory chauvinism. Acts which
deny equal employment opportunities to women because of their sex are inherently odious and must be
struck down.
197 | P a g e

APEX MINING CO. INC. VS. NLRC and SINCLITICA CANDIDO
G.R. No. 94951. 22 APRIL 1991. FIRST DIVISION (Gancayco, J.)
EMPLOYMENT OF HOUSEHELPERS. - The criterion is the personal comfort and enjoyment of
the family of the employer in the home of said employer.

Facts
Sinclita Candida was employed by Apex Mining Company, Inc. to perform laundry services at its
staff house. At first, she was paid on a piece rate basis. Later, she was paid on a monthly basis. - While
she was hanging her laundry, she accidentally slipped and hit her back on a stone. She reported the
accident to her immediate supervisor and to the personnel officer. As a result of the accident she was not
able to continue with her work. - She was permitted to go on leave for medication and was offered P2k
which was eventually increased to P5k to persuade her to quit her job, but she refused the offer and
preferred to return to work. Petitioner did not allow her to return to work and dismissed her. The Labor
arbiter ordered Apex Mining Company to pay the complainant Salary Differential, Emergency Living
Allowance, 13th Month Pay Differential and separation pay of one month for every year of service NLRC
affirmed.
Issue
Whether the househelper in the staff houses of an industrial company is a domestic helper?
Ruling
No, the petitioner is a regular employee - Rule XIII, Section l (b), Book 3 of the Labor Code: The
term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to any
person, whether male or female, who renders services in and about the employer's home and which
services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employer's family. The foregoing definition
clearly contemplates such househelper or domestic servant who is employed in the employer's home to
minister exclusively to the personal comfort and enjoyment of the employer's family. The definition
cannot be interpreted to include househelp or laundrywomen working in staffhouses of a company. The
criterion is the personal comfort and enjoyment of the family of the employer in the home of said
employer. While it may be true that the nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the family while in the latter case,
whether it is a corporation or a single proprietorship engaged in business or industry or any other
agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the
business of the employer. In such instance, they are employees of the company or employer in the
business concerned entitled to the privileges of a regular employee.
198 | P a g e

PHILIPPINE GLOBAL COMMUNICATION, INC VS. RICARDO DE VERA
G,R, No. 157214. 7 JUNE 2005. THIRD DIVISION (Garcia, J.)
EMPLOYER-EMPLOYEE RELATIONSHIP; FOUR FOLD TEST. - This Court has consistently ruled
that the determination of whether or not there is an employer-employee relation depends upon four
standards: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment
of wages;(3) the presence or absence of a power of dismissal; and (4) the presence or absence of a power
to control the putative employee's conduct.
Facts
De Vera was a physician by profession. He entered into a contract with Philippine Global
Communications Inc., in which his skills is needed in the service in industrial medicine. It stated in the
contract that the respondent will hold clinic hours in the morning and the afternoon for a total of 5 hours
daily for consultation services and will conduct home visits when necessary. The parties agreed to the
contract which was dominated as the Retainers Contract. It will be valid for a period of one year,
renewable and that the respondents fee will be Php 4,000 a month.
In 1996, PHILCOM sent a letter to Dr. De Vera regarding the termination of the contract. The
company when decided that it would be more practical to provide medical services to its employees
through accredited hospitals.Dr. De Vera further filed a complaint of illegal dismissal before the National
Labor Relations Commission. He averred that he was designated as a company physician on retainer
basis for reasons known only by the PHILCOM and likewise professed that he was not conversant with
the law he didnt much give attention when he worked in a full-time basis and was paid a basic monthly
salary plus a fringe benefits. The complaint was held lack of merit by the court. De Vera in his appeal, the
labor arbiter found out that De vera is PHILCOMs Regular Employee and accordingly reinstate him to
his former position without the loss of seniority rights and privileges with full back wages.
Issue
Whether de Vera is considered an employee of Philippine Global Communications, Inc.?
Ruling
No. Applying the four fold test, de Vera is not an employee. According to the erring of the court,
from the time he started to work with petitioner, he never was included in its payroll and was never
deducted any contribution for remittance to the Social Security System (SSS). The power to terminate the
relationship of the parties was mutually vested on both and may terminate either with or without cause.
Petitioner also had no control over the means and methods by which respondent went about in performing
his work at the company premises.
199 | P a g e

JOSE B. SARMIENTO VS. EMPLOYEES COMPENSATION COMMISSION, ET AL.
G.R. No. 65680. 11 MAY 1988. THIRD DIVISION (Gutierrez, J.)
PRESIDENTIAL DECREE No. 626. It amended extensively the Labor Code provision on Employees
Compensation and State Insurance Fund. It applies to illnesses contracted on or after its effectivity. For
those not covered, the applicable law is the previous Workmens Compensation Act.
Facts
The late Flordeliza Sarmiento was employed by the National Power Corporation in Quezon City
as accounting clerk in May 1974. At the time of her death on August 12, 1981 she was manager of the
budget division. The deceaseds illness was a cancer known as differential squarrous cell carcinoma,
and sought treatment in various hospitals. And on August 12, 1981, she succumbed to cardiorespiratory
arrest due to parotid carcinoma, and she was 20 years old. Believing that the deceaseds fatal illness
having been contracted during her employment was service-connected, Jose B. Sarmiento filed a
claim for death benefits under PD 626. On September 9, 1982, the GSIS, through its Medical Services
Center, denied the claim. It was pointed out thatthe illness of Flordeliza was not caused by
employment and employment conditions.
Dissatisfied with the respondents decision of denial, Jose Sarmiento wrote a letter to the
GSISrequesting that the records of the claim be elevated to the Employees Compensation
Commission for review pursuant to the law and the Amended Rules on Employees
Compensation. The respondent Commission affirmed the GSIS decision, it found that thedeceaseds
death is not compensable because she did not contract nor suffer from the samereason of her work but by
reason of embryonic rests and epithelial growth.
Issue
Whether the deceaseds illness under PD 626 is compensable?
Ruling
Under PD 626, a compensable illness means illness accepted as an occupational disease andlisted
by the Employees Compensation Commission, or any illness caused by employmentsubject to proof by
the employee that the risk of contracting the same is increased by workingconditions
200 | P a g e

ZAIDA G. RARO VS. EMPLOYEES' COMPENSATION COMMISSION, ET AL.
G.R. No. L-58445. 27 APRIL 1989. EN BANC (Gutierrez, Jr., J.)
TRUST FUND. It is now the trust fund and not the employer which suffers if benefits are paid to
claimants who are not entitled under the law. The employer joins the employee in trying to have their
claims approved. The employer is spared the problem of proving, a negative proposition that the disease
was not caused by employment.
Facts
The petitioner states that she was in perfect health when employed as a clerk by the Bureau of
Mines and Geo-Sciences at its Daet, Camarines Norte regional office on March 17, 1975. About four
years later, she began suffering from severe and recurrent headaches coupled with blurring of vision.
Forced to take sick leaves every now and then, she sought medical treatment in Manila. The petitioner
was diagnosed at the Makati Medical Center to be suffering from brain tumor. By that time, her memory,
sense of time, vision, and reasoning power had been lost. A claim for disability benefits filed by her
husband with the Government Service Insurance System (GSIS) was denied.
A motion for reconsideration was similarly denied. An appeal to the Employees'
Compensation Commission resulted in the Commission's affirming the GSIS decision. On
January 1, 1975, the Workmen's Compensation Act was replaced by a novel scheme under the new Labor
Code. The new law discarded, among others, the concepts of "presumption of compensability" and
"aggravation" and substituted a system based on social security principles. The present system is also
administered by social insurance agencies the Government Service Insurance System and Social Security
System under the Employees' Compensation Commission. The intent was to restore a sensible
equilibrium between the employer's obligation to pay workmens compensation and the employees
right to receive reparation for work-connected death or disability.
Issue
Whether the presumption of compensability is absolutely inapplicable under the present
compensation laws when a disease is not listed as occupational disease?
Ruling
The Court saw no arbitrariness in the Commission's allowing vinyl chloride workers or plastic
workers to be compensated for brain cancer. What the law requires for others is proof. The law, as it now
stands requires the claimant to prove a positive thing. The illness was caused by employment and the risk
of contracting the disease is increased by the working conditions. To say that since the proof is not
available, therefore, the trust fund has the obligation to pay is contrary to the legal requirement that proof
must be adduced. The existence of otherwise non-existent proof cannot be presumed .The Court has
recognized the validity of the present law and has granted and rejected claims according to its provisions.
We find in it no infringement of the worker's constitutional rights.
201 | P a g e

MANUEL BELARMINO VS. EMPLOYEES COMPENSATION and GSIS
G.R. No. 90204. 11 May 1990. FIRST DIVISION (Grio-Aquino, J.)
PROXIMATE CAUSE. It does not imply the nearest in point of time or relation but rather, is the
sufficient cause, which may be the most remote of an operation chain. It must be that which sets the
others in motion. It is to be distinguished from a mere pre-existing condition upon which the effective
cause operates, and must have been adequate to produce the resultant damage without the intervention of
an independent cause
Facts
Oania Belarmino was a classroom teacher of the Department of Education Culture and Sports
assigned at the Burucan Elementary School in Dimasalang, Masbate for11 years. On January 14, 1982,
Mrs. Belarmino was in her 8th month of pregnancy, accidentally slipped and fell on the classroom
floor. She complained of abdominal pain and stomach cramps but she continued reporting for
work because there was much work to do. On January 25, 1982, she went into labor and prematurely
delivered a baby girl at home .Her abdominal pain persisted even after delivery .When she was brought to
the hospital, her physician informed her that she was suffering from septicemia post partum due to
infected lacerations of the vagina .After she was discharged from the hospital, she died three days
thereafter.
The GSIS denied the claim on the ground that septicemia post partum, the cause of death is an
occupational disease and neither was there any showing that the ailment was contracted by reason of her
employment. On appeal to the Employees Compensation Commission, latter also denied the claim
affirming the denial of the claim by GSIS.
Issue
Whether the cause death of Mrs. Belarmino is not work-related and therefore not
compensable?
Ruling
No, the death of Mrs. Belarmino from septicemia post partum is compensable because an
employment accident and the conditions of her employment contributed to its development. The condition
of the classroom floor caused Mrs. Belarmino to slip and fall and suffer injury as a result. The fall
precipitated the onset of recurrent abdominal pains which culminated in the premature termination of
her pregnancy with tragic consequences to her. Her fall on the classroom floor brought
about her premature delivery which caused the development of postpartum septicemia which
resulted in death. Her fall therefore was the proximate cause
That set in motion an unbroken chain of events, leading to her demise. The right
to compensation extends to disability due to disease supervening upon and proximately and
naturally resulting from a compensable injury. Where the primary injury is shown to have arisen in the
course of employment, every natural consequence that flows from the injury likewise arises out of the
employment, unless it is the result of an independent intervening cause attributable to claimants
own negligence or misconduct. Mrs. Belarminos fall was the primary injury that arose in the course of
her employment as a classroom teacher, hence, all the medical consequences flowing from it: her
recurrent abdominal pains, the premature delivery of herbaby, her septicemia post partum and death are
compensable.
202 | P a g e

CIRIACO HINOGUIN VS. EMPLOYEES COMPENSATION COMMISSION and GSIS (AFP)
G.R. No. 8430. 17 APRIL 1989. THIRD DIVISION (Feliciano, J.)
WORKPLACE; CONCEPT. It cannot always be literally applied to a soldier on active duty status. In
the case of soldiers, they must go where his company is stationed. A place which soldiers have secured
lawful permission to be at cannot be very different from a place where they are requested to go by
commanding officer.
Facts
Sgt. Lemick Hinoguin was a sergeant in A company, 14 th Infantry Battalion, 5 th
Infantry Division .The headquarters of the 14 th Infantry Battalion was located at Bical, Muoz, Nueva
Ecija.. On August 1, 1985, Sgt. Hinoguin, Cpl. Rogelio Clavo and Dft. Nicomedes Alibuyog sought
permission from Capt. Frankie Besas, to go on overnight pass to Aritao, Nueva Viscaya. Capt. Besas
orally granted them permission to go to Aritao and to take their issued firearms with them considering that
Aritao was regarded as a critical place..The three soldiers went to Dft. Alibuyogs home for a meal and
some drinks. At around 7:00 PM, the soldiers headed back to the headquarters. They boarded a tricycle,
Hinoguin and Clavo seating themselves in the tricycle cab while Alibuyog occupied the seat behind
the tricycle driver. When they reached the poblacion, Alibuyog dismounted from the tricycle. Not noticing
that his rifles safety lever was on semi-automatic, he accidentally touched the trigger, firing a single
shot in the process and hitting Sgt. Hinoguin in the left lower abdomen. Sgt. Hinoguin died
a few days after the incident.8. In the investigation conducted by the 14 th Infantry Battalion, it was
found that the shooting of Sgt. Hinoguin was purely accidental in nature and that he died in the lineof
duty. The Life of Duty Board of Officers recommended that all benefits due the legal dependents of the
late Sgt. Hinoguin be given.9.However, when the father of the deceased made a claim from GSIS, the
same was denied on the ground that the deceased was not at his work place nor performing his duty as a
soldier of the Philippine Army at the time of his death. This denial was confirmed by the ECC.
Issue
Whether the death of Sgt. Hinoguin compensable under the applicable statute and regulations?
Ruling
Yes, the amended Implementing Rules provides in part as follows:
SEC. 1. Conditions to Entitlement
(a) The beneficiaries of a deceased
employee shall be entitled to an income benefit if all of the following conditions
are satisfied: The employee had been duly reported to the System; He died as a
result of injury or sickness; and The System has been duly notified of his death, as
well as the injury or sickness which caused his death. His employer shall be liable
for the benefit if such death occurred before the employer is duly reported for
coverage of the System. Art. 167.
Grounds (a) For the injury and resulting disability or death to be compensable,
the injury must be the result of an employment accident satisfying all of the
following grounds:(1)The employee must have been injured at the place where his
work requires him to be.(2)The employee must have been performing his official
functions; and(3)If the injury is sustained elsewhere, the employee must have been
executing an order for the employer.
203 | P a g e

GSIS VS. COURT OF APPEALS and FELONILA ALEGRE
G.R. No. 1285424. 20 APRIL 1999. THIRD DIVISION (Romero, J.)
24-HOUR DUTY DOCTRINE; CONDITIONS. - (a) that the employee must be at the place where his
work requires him to be; (b) that the employee must have been performing his official functions; and (c)
that if the injury is sustained elsewhere, the employee must have been executing an order for the
employer.
Facts
Private respondent Felonila Alegres deceased husband, SPO2 Florencio A. Alegre, was a
police officer assigned to the Philippine National Police station in the town of Vigan, Ilocos Sur.On
December 6, 1994, he was driving his tricycle and ferrying passengers within the vicinity of Imelda
Commercial Complex when SPO4 Alejandro Tenorio, Jr., Team/Desk Officer of the Police Assistance
Center located at said complex, confronted him regarding his tour of duty.SPO2 Alegre
allegedly snubbed SPO4 Tenorio and even directed curse words upon the latter. A verbal tussle then
ensued between the two which led to the fatal shooting of the deceased police officer.
On account of her husbands death, private respondent seasonably filed a claim for death benefits
with petitioner Government Service Insurance System (GSIS) pursuant to Presidential Decree No. 626. In
its decision on August 7, 1995, the GSIS, denied the claim on the ground that at the time of SPO2
Alegres death, he was performing a personal activity which was notwork-connected which was
later on affirmed by the Employees Compensation Commission. Private respondent finally
obtained a favorable ruling in the Court of Appeals when it reversed the ECCs decision and ruled that
SPO2 Alegres death was work-connected and, therefore, compensable. Hence; GSIS filed a
petition for review on certiorari to the Supreme Court; reiterating its position that SPO2 Alegres
death lacks the requisite element of compensability which is, that the activity being performed at the time
of death must be work-connected.
Issue
Whether SPO2 Alegres death is compensable pursuant to the applicable laws and regulations?
Ruling
Taking together existing jurisprudence and the pertinent guidelines of the ECC with respect to
claims for death benefits, namely: (a) that the employee must be at the place where his work requires him
to be; (b) that the employee must have been performing his official functions; and (c) that if the injury is
sustained elsewhere, the employee must have been executing an order for the employer, it is not difficult
to understand then why SPO2 Alegres widow should be denied the claims otherwise due her. Obviously,
the matter SPO2 Alegre was attending to at the time he met his death, that of ferrying passengers for
a fee, was intrinsically private and unofficial in nature proceeding as it did from no particular directive
or permission of his superior officer. That he may be called upon at any time to render police work as he
is considered to be on a round-the-clock duty and was not on an approved vacation leave will not change
the conclusion arrived at considering that he was not placed in a situation where he was required to
exercise his authority and duty as a policeman. In fact, he was refusing to render one pointing out that he
already complied with the duty detail. At any rate, the 24-hour duty doctrine, as applied to policemen and
soldiers, serves more as an after-the-fact validation of their acts to place them within the scope of the
guidelines rather than a blanket license to benefit them in all situations that may give rise to their deaths.
204 | P a g e

CELERINO VALERIANO VS. EMPLOYEES COMPENSATION COMMISSION and GSIS
G.R. No. 136200. 8 JUNE 2000. THIRD DIVISION (Panganiban, J.)
24-HOUR DOCTRINE;WORK CONNECTION. The 24-hour doctrine should not sweepingly applied
to all acts and circumstances causing death of a police officers, but only those which, although not on
official line of duty, are nonetheless basically police service character.
Facts
Celerino S. Valeriano was employed as a fire truck driver assigned at the San Juan Fire Station.
Sometime on the evening of July 3, 1985, petitioner was standing along Santolan Road,
Quezon City, when he met a friend by the name of Alexander Agawin. They decided to proceed to
Bonanza Restaurant in EDSA, Quezon City, for dinner. On their way home at around 9:30PM, the ownertype jeepney they were riding in figured in a head-on collision with another vehicle at the intersection of
N. Domingo and Broadway streets in Quezon City. Due to the strong impact of the collision, petitioner
was thrown out of the vehicle and was severely injured. As a result of the mishap, petitioner was brought
to several hospitals for treatment. On September 16, 1985, he filed a claim for income benefits under PD
626, with the Government Security Insurance Service. His claim for benefits was opposed on the ground
that the injuries he sustained did not directly arise or result from the nature of his work .Under the present
compensation law, injury and the resulting disability or death is compensable if the injury resulted from
an accident arising out of and in the course of employment. It means that the injury or death must be
sustained while the employee is in the performance of his official duty; that the injury is sustained at the
place where his work requires him to be; and if the injury is sustained elsewhere, that the employee is
executing an order for the employer. The aforementioned conditions are found wanting in the instant case.
The accident that the appellant met in the instant case occurred outside of his time and place of
work. Neither was appellant performing his official duties as a fireman at the time of the accident. In fact,
appellant just left the Bonanza Restaurant where he and his friends had dinner. Apparently, the injuries
appellant sustained from the accident did not arise out of [and] in the course of his employment
Issue
Whether petitioner's injuries are work-connected?
Ruling
Thus, for injury to be compensable, the standard of "work connection" must be substantially satisfied.
The injury and the resulting disability sustained by reason of employment are compensable
regardless of the place where the injured occurred, if it can be proven that at the time of the injury, the
employee was acting within the purview of his or her employment and performing an act reasonably
necessary or incidental thereto .Petitioner Valeriano was not able to demonstrate solidly how his job as a
fire truck driver was related to the injuries he had suffered. That he sustained the injuries after pursuing a
purely personal and social function, having dinner with some friends, is clear from the records of the case.
His injuries were no acquired at his work place; nor were they sustained while he was performing an act
within the scope of his employment or in pursuit of an order of his superior. Thus, we agree with the
conclusion reached by the appellate court that his injuries and consequent disability were not workconnected and thus not compensable.
205 | P a g e

ILOILO DOCK AND ENGINEERING CORPORATION VS. WORKMEN COMPENSATION
COMMISSION, ET AL.
G.R. No. L- 26341. 27 NOVEMBER 1968. EN BANC (Castro, J.)
PROXIMITY RULE; AND EXCEPTIONS. The general rule is that in the absence of special
circumstances, an employee injured in, going to, or coming from his place of work is excluded from the
benefits of workmen's compensation acts." This rule, however, admits of four well-recognized exceptions,
to wit: (1) where the employee is proceeding to or from his work on the premises of his employer; (2)
where the employee is about to enter or about to leave the premises of his employer by way of the
exclusive or customary means of ingress and egress; (3) where the employee is charged, while on his way
to or from his place of employment or at his home, or during his employment, with some duty or special
errand connected with his employment; and (4) where the employer, as an incident of the employment,
provides the means of transportation to and from the place of employment.
Facts
At about 5:02 o'clock in the afternoon of January 29, 1960, Pablo, who was employed as a
mechanic of the IDECO, while walking on his way home, was shot to death in front of, and about 20
meters away from, the main IDECO gate, on a private road commonly called the IDECO road. The slayer,
Martin Cordero, was not heard to say anything before or after the killing. The motive for the crime was
and still is unknown as Cordero was himself killed before he could be tried for Pablo's death. At the time
of the killing, Pablo's companion was Rodolfo Galopez, another employee, who, like Pablo, had finished
overtime work at 5:00 p.m. and was going home. From the main IDECO gate to the spot where Pablo was
killed, there were four "carinderias" on the left side of the road and two "carinderias" and a residential
house on the right side. The entire length of the road is nowhere stated in the record .According to the
IDECO, the Commission erred (1) in holding that Pablo's death occurred in the course of employment
and in presuming that it arose out of the employment; (2) in applying the "proximity rule;" and (3) in
holding that Pablo's death was an accident within the purview of the Workmen's Compensation Act.
Issue
Whether the injuries are "in the course of" and not "out of" the employment?
Ruling
The point where Pablo was shot was barely twenty meters away from the main IDECO gate,
certainly nearer than a stones throw there from. The spot is immediately proximate to the IDECOs
premises. However, the Courts question is whether the injury was sustained in the course of employment.
The Court found that it was, and so conclude that the assault arose out of the employment, even though
said assault is unexplained.
206 | P a g e

GENEROSO ALANO V. EMPLOYEES COMPENSATION COMMISSION
G.R. No. L-48594, 16 MARCH 1988. THIRD DIVISION (Guttierrez, Jr. J.)
STREET PERIL PRINCIPLE; ACCIDENT ON THE WAY TO WORK. The act of the employee of
going to, or coming from , the work place, must have been continuing act, that is, he had not departed
from his usual route to, or from, his workplace.
Facts
Dedicacion de Vera, a government employee during her lifetime, worked as principal of Salinap
Community School in San Carlos City, Pangasinan. Her tour of duty was from 7:30 a.m. to 5:30p.m. On
November 29, 1976, at 7:00 A.M., while she was waiting for a ride at Plaza Jaycee in San Carlos City on
her way to the school, she was bumped and run over by a speeding Toyota mini-bus which resulted in her
instantaneous death. She is survived by her four sons and a daughter. On June 27, 1977, Generoso C.
Alano, brother of the deceased, filed the instant claim for income benefit with the GSIS for and in behalf
of the decedent's children. The claim was, however, denied on the same date on the ground
that the "injury upon which compensation is being claimed is not an employment accident
satisfying all the conditions prescribed by law." On July 19, 1977 appellant requested for a
reconsideration of the system's decision, but the same was denied and the records of the
case were elevated to this Commission for review.
Issue
Whether death of Dedicacion De Vera can be compensable?
Ruling
In this case, it is not disputed that the deceased died while going to her place of work. She was at
the place where, as the petitioner puts it, her job necessarily required her to be if she was to reach her
place of work on time. There was nothing private or personal about the school principal's being at the
place of the accident. She was there because her employment required her to be there. As to the
Government Service Insurance System's manifestation, we hold that it is not fatal to this case that it was
not impleaded as a party respondent. As early as the case of Lao v. .Employees' Compensation
Commission, (97 SCRA 782) up to Cabanero v. Employees' Compensation Commission (111 SCRA 413)
and recently, Clemente v. Government Service Insurance System (G.R. No. L-47521, August 31z,
1987), this Court has ruled that the Government Service Insurance System is a proper party in
employees' compensation cases as the ultimate implementing agency of the Employees' Compensation
Commission. We held in the aforecited cases that "the law and the rules refer to the said System in all
aspects of employee compensation including enforcement of decisions.
207 | P a g e

SALVADOR LAZO VS. EMPLOYEES COMPENSATION COMMISSION and GSIS
G.R. No. 78671. 18 JUNE 1990. SECOND DIVISION (Padilla, J.)
STREET PERIL PRINCIPLE; ACCIDENT ON THE WAY TO WORK. The act of the employee of
going to, or coming from , the work place, must have been continuing act, that is, he had not departed
from his usual route to, or from, his workplace.
Facts
Salvador Lazo, is a security guard of the Central Bank of the Philippines assigned to its main
office in Malate, Manila. His regular tour of duty is from 2:00 o'clock in the afternoon to 10:00 o'clock in
the evening. On 18 June 1986, the petitioner rendered duty from2:00 o'clock in the afternoon to 10:00
o'clock in the evening. But, as the security guard who was to relieve him failed to arrive, the petitioner
rendered overtime duty up to 5:00 o'clock in the morning of 19 June 1986, when he asked permission
from his superior to leave early in order to take home to Binangonan, Rizal, his sack of rice. On his way
home, at about 6:00 o'clock in the morning of 19 June 1986, the passenger jeepney the petitioner was
riding on turned turtle due to slippery road.
As a result, he sustained injuries and was taken to the Angono Emergency Hospital
for treatment. He was later transferred to the National Orthopedic Hospital where he was confined until
25 July 1986.For the injuries he sustained, petitioner filed a claim for disability benefits under PD 626, as
amended. His claim, however, was denied by the GSIS for the reason that, it appears that after
performing your regular duties as Security Guard from 2:00 P.M. to 10:00P.M. on June 18,
1986, you rendered overtime duty from 10:00 P.M. to 5:06 A.M. of the following day; that at about 5:06
A.M. after asking permission from your superior you were allowed to leave the Office to do certain
personal matter, that of bringing home a sack of rice and that, while on your way home, you met a
vehicular accident that resulted to your injuries. From the foregoing information, it is evident that you
were not at your work place performing your duties when the incident occurred. 1It was held
that the condition for compensability had not been satisfied. Upon review of the case, the respondent
Employees Compensation Commission affirmed the decision since the accident which
involved the petitioner occurred far from his work place and while he was attending to a personal matter.
Issue
Whether petitioner's injury comes within the meaning of and intendment of the phrase arising
out of and in the course of employment?
Ruling
We held that 'where an employee, after working hours, attempted to ride on the platform of a
service truck of the company near his place of work, and, while thus attempting, slipped and fell to the
ground and was run over by the truck, resulting in his death, the accident may be said to have arisen out
of or in the course of employment, for which reason his death is compensable. The fact standing alone,
that the truck was in motion when the employee boarded, is insufficient to justify the conclusion that he
had been notoriously negligent, where it does not appear that the truck was running at a great speed.' And,
in a later case, Iloilo Dock &Engineering Co. vs. Workmen's Compensation Commission, 26 SCRA
102, 103, We ruled that employment includes not only the actual doing of the work, but a reasonable
margin of time and space necessary to be used in passing to and from the place where the work is to be
done. If the employee be injured while passing, with the express or implied consent of the employer, to or
from his work by a way over the employer's premises, or over those of another in such proximity and
relation as to be in practical effect a part of the employer's premises, the injury is one arising out of and in
the course of the employment as much as though it had happened while the employee was engaged in his
work at the place of its performance.
208 | P a g e

GLORIA MENEZ VS. EMPLOYEES COMPENSATION COMMISSION, ET AL.
G.R. No. L- 48488. 25 APRIL 1980. FIRST DIVISION (Makasiar, J.)
OCCUPATIONAL DISEASE. An illness caused by employment subject to proof by the employee that
the risk of contracting the same is increased by working conditions.
Facts
Petition for review on certiorari from the decision en banc dated March 1, 1978
of the Employees' Compensation Commission in ECC Case No. 0462, affirming the denial by the
Government Service Insurance System of the claim of petitioner for benefits under Presidential Decree
No. 626 and dismissing said claim. Petitioner Gloria D. Menez was employed by the Department of
Education& Culture as a school teacher. She retired on August 31, 1975 under the disability retirement
plan at the age of 54 years after 32 years of teaching, due to rheumatoid arthritis and pneumonitis.
Before her retirement, she was assigned at Raja Soliman High School in Tondo-Binondo, Manila near a
dirty creek.
On October 21, 1976, petitioner filed a claim for disability benefits under Presidential Decree No.
626, as amended, with respondent Government Service Insurance System. On October 25, 1976,
respondent GSIS denied said claim on the ground that petitioner's ailments, rheumatoid arthritis and
pneumonitis, are not occupational diseases taking into consideration the nature of her particular
work. In denying aforesaid claim, respondent GSIS thus resolved: Upon evaluation based on
general accepted medical authorities, your ailments are found to be the least causally related to your
duties and conditions of work. We believe that your ailments are principally traceable to factors which are
definitely not work-connected. Moreover, the evidences you have, submitted have not shown that the said
ailments directly resulted from your occupation as Teacher IV of Raja Soliman High School, Manila
Issue
Whether the petitioners ailments are causally related to her duties and conditions of work, hence,
she is entitled to disability benefit from the GSIS?
Ruling
Republic Act 4670, otherwise known as the Magna Charta for Public School
Teachers, recognized the enervating effects of these factors (duties and activities of a school teacher
certainly involve physical, mental and emotional stresses) on the health of school teachers when it
directed in one of its provisions that "Teachers shall be protected against the consequences
of employment injury in accordance with existing laws. The effects of the physical and
nervous strain on the teachers' health shall be recognized as compensable occupational
diseases in accordance with laws."
209 | P a g e

MABUHAY SHIPPING SERVICES AND SKIPPERS MARITIME CO. VS. NLRC, ET AL.
G.R. No. 94167. 21 JANUARY 1991. FIRST DIVISION (Gancayco, J.)
SUICIDE OR PROVOKED DEATH ; NOT COMPENSABLE. There are limitations to the liability to
pay death benefits. One instance is when the death of an employee resulted from a deliberate or wilful act
on his own life, and it is directly attributable to the employee, such death is not compensable.
Facts
Romulo Sentina was hired as a 4th Engineer by petitioner Mabuhay Shipping Services, Inc.
(MSSI) for and in behalf of co-petitioner, Skippers Maritime Co., Ltd. to work aboard the M/V Harmony
I for a period of one year. He reported for duty aboard said vessel on July 13, 1987.On January 16,
1988 at about 3 p.m., while the vessel was docked alongside Drapetona Pier, Piraeus,
Greece, Sentina arrived aboard the ship from shore leave visibly drunk. He went to the mess hall and took
a fire axe and challenged those eating therein. He was pacified by his shipmates who led him to his cabin.
However, later he went out of his cabin and proceeded to the mess hall. He became violent. He smashed
and threw a cup towards the head of an oiler Emmanuel Ero, who was then eating. Ero touched his head
and noticed blood. This infuriated Ero which led to a fight between the two. After the shipmates broke the
fight, Sentina was taken to the hospital where he passed away on January 17, 1988. Ero was arrested by
the Greek authorities and was jailed in Piraeus. On October 26, 1988, private respondents filed a
complaint against petitioners with the Philippine Overseas Employment Administration (POEA) for
payment of death benefits, burial expenses, and unpaid salaries on board and overtime pay with damages
docketed as POEA Case No. (M) 88-10-896. POEA rendered a decision favouring Sentina.
A motion for reconsideration and/or appeal was filed by petitioners which the
respondent First Division of the National Labor Relations Commission (NLRC) disposed of in a
resolution dated March 31, 1990 dismissing the appeal and affirming the appealed decision.
Issue
Whether an employer is required to pay death benefits to an employee who ran amuck
that resulted to his death?
Ruling
The mere death of the seaman during the term of his employment does not automatically give rise
to compensation. The circumstances which led to the death as well as the provisions of the contract, and
the right and obligation of the employer and seaman must be taken into consideration, in
consonance with the due process and equal protection clauses of the Constitution. There are
limitations to the liability to pay death benefits. When the death of the seaman resulted from a deliberate
or wilful act on his own life, and it is directly attributable to the seaman, such death is not compensable.
No doubt a case of suicide is covered by this provision. By the same token, when as in this case the
seaman, in a state of intoxication, ran amuck, or committed an unlawful aggression against another,
inflicting injury on the latter, so that in his own defense the latter fought back and in the process killed
the seaman, the circumstances of the death of the seaman could be categorized as a deliberate and wilful
act on his own life directly attributable to him. First he challenged everyone to a fight with an axe.
Thereafter, here turned to the mess hall picked up and broke a cup and hurled it at an oiler Ero who
suffered injury. Thus provoked, the oiler fought back the death of seaman Sentina is attributable to his
unlawful aggression and thus is not compensable
210 | P a g e

INTERORIENT MARITIME ENTERPRISES VS. C. PINEDA, ET AL.
G.R. No. 115497. 16 SEPTEMBER 1996 (Panganiban, J.)
DEATH NOT THE RESULT OF A WORKERS WILFUL ACT. The obligation and liabilities of the
employer do not end upon the expiration of the contracted period as , in the case where, emlopyers are
duty bound to repatriate the employee to the point of hire to effectively terminate the contract of
employment.
Facts
The proceedings below originated as a claim for death compensation benefits filed
by Constancia Pineda as heir of her deceased son, Seaman Jeremias Pineda, against Interorient Maritime
Enterprises, Inc. and its foreign principal, Fircroft Shipping Corporation and the Times Surety and
Insurance Co., Inc. The following facts were found by the POEA Administrator: As can be gathered from
the records of the case, it was alleged that deceased seaman, Jeremias Pineda was contracted to work as
Oiler on board the vessels, "MV Amazonia", owned and operated by its foreign principal, Fircroft
Shipping Corporation for a period of nine months with additional three months upon mutual consent of
both parties with a monthly basic salary of US$276.00 plus fixed overtime rate of US$83.00 and a leave
pay of 2 1/2 days per month; that on October 2, 1989, he met his death when he was shot by a Thai
Policeman in Bangkok, Thailand; that considering that the deceased seaman was suffering from
mental disorders aggravated by threats on his life by his fellow seamen, the Ship Captain should not have
allowed him to travel alone.
The instant petition seeks the reversal and/or modification of the Resolution dated March30, 1994
of public respondent National Labor Relations Commission dismissing the appeals of petitioners and
affirming the decision dated November 16, 1992 of Philippine Overseas Employment Administration
(POEA) Administrator Felicisimo C. Joson, which ordered that. WHEREFORE, in view of the foregoing
consideration, respondents are hereby jointly and severally held liable to pay the complainant
the following amounts: (1) P130, 000.00 as death compensation benefits; and (2) P18,000.00 as burial
expenses.
Issue
Whether local crewing or manning agent and its foreign principal liable for the death of a Filipino
seaman-employee who, after having been discharged, was killed in transit while being repatriated home?
Ruling
De Jesus is misplaced, as the death and burial benefits being claimed in this case are not payable
by the Employee's Compensation Commission and chargeable against the State Insurance
Fund. These claims arose from the responsibility of the foreign employer together with the local agency
for the safety of the employee during his repatriation and until his arrival in this country, the point of
hire. Through the termination of the employment contract was duly effected in Dubai, still, the
responsibility of the foreign employer to see to it that Pineda was duly repatriated to the point of hiring
subsisted. Section 4, Rule VIII of the Rules and Regulations Governing Overseas Employment clearly
provides for the duration of the mandatory personal accident and life insurance covering accident death,
dismemberment and disability of overseas workers.
211 | P a g e

NAESS SHIPPING PHILIPPINES VS. NLRC and ZENAIDA DUBLIN
G.R. No. 73441. 4 SEPTEMBER 1987. FIRST DIVISION (Narvasa, J.)
SUICIDE; COMPENSABLE. (a) When it results from insanity resulting from compensable work injury
or disease; (b) when it occurs during adelirium resulting from compensable disease
Facts
On the night of September 3, 1983, while the vessel M/V DYVI PACIFIC was plying the seas
enroute from Santos, Brazil to Port Said, Egypt, Pablo Dublin the vessel's chief steward, fatally stabbed
the second cook, Rodolfo Fernandez, during a quarrel, then ran to the deck from which he jumped or fell
overboard. An alarm was immediately raised, and the vessel turned to comb the surrounding area for
Dublin. After some time his floating body was briefly sighted, but it disappeared from view even as
preparations to retrieve it were being made, and was never seen again although the search went on
through the night and was called off only at 6:00o'clock the next morning. Under a Special
Agreement in the employment contract, between the International Workers Federation (ITF) and
NAESS Shipping, NAESS is bound to pay cash\ benefits for loss of life the of workers enrolled therein.
For the death of Dublin his widow Zenaida, by whom he had one child, Ivy, born January
22,1971, collected the amount
of P75,000.00 under Clause A of the ITF Collective Bargaining
Agreement. She also filed with thePhilippine Overseas Employment Administration (POEA) a
complaint against NAESS for payment of death benefits to US$74,512.00 under both paragraph 17
of the cited Special Agreement and what she claimed to be the also applicable Singapore
Workmens' Compensation Ordinance. The POEA rendered judgment for the complainant, holding
Dublin's death compensable under said Special Agreement and ordering NAESS to pay complainant and
her child compensation benefits totalling US$31,962.00 and her attorneys of record fees
amounting to US$3,196.00, the equivalents of said sums in Philippine pesos at prevailing rates of
exchange .NAESS filed a motion for reconsideration but was dismissed by the NLRC for lack of merit,
with an express affirmance of the POEA decision.
Issue
Whether the POEA and the NLRC acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in adjudging that death by suicide is compensable?
Ruling
No law or rule has been cited which would make it illegal for an employer to assume such
obligation in favor of his or its employee in their contract of employment. Thus, contract which are the
private laws of the contracting parties, should be fulfilled according to the literal sense of their
stipulations, if their terms are clear and leave no room for doubt as to the intention of the contracting
parties, for contracts are obligatory, no matter what their form may be, whenever the essential requisites
for their validity are present. To compel payment of death benefits in this case would amount not only to
rewarding the act of murder or homicide, but also inequitably to placing on NAESS the twin burdens of
compensating both the killer and his victim, who allegedly had also been employed under a contract
with a similar death benefits clause. This argument, in confusing the legal implications and effects of two
distinct and independent agreements, carries within itself the seeds of its own refutation. On Dublin's part,
entitlement to death benefits resulted from his death while serving out his contract of employment; it was
not a consequence of his killing of the second cook, Rodolfo Fernandez. If the latter's death is also
compensable, that is due to the solitary fact of his death while covered by a similar contract, not precisely
to the fact that he met death at the hands of Dublin That both deaths may be related by cause and effect
and NAESS is the single obligor liable for compensation in both cases must, insofar as the factual and
legal bases of such liability is concerned, be regarded as purely accidental circumstances.
212 | P a g e

YSMAEL MARITIME CORPORATION VS. HON. CELSO AVELINO, ET AL.
G.R. No. 43674, 30 JUNE 1987. EN BANC (Fernan, C.J.)
OPTIONS AVAILABLE; BENEFITS UNDER THE COMPENSATION LAW OR UNDER THE CIVIL
CODE. - One view is that the injured employee or his heirs, if case of death, may initiate an action to
recover damages with the regular courts on the basis of negligence of the employer pursuant to Civil
Code. Another view, the remedy of an employee for work-connected injury or accident is exclusive in
accordance with Section 5 of the Employees Compensation Law, The third view is that the action is
selective and the employee or his heirs have a choice of availing themselves of the benefits under the
WCA or of suing in the regular courts under the Code for higher damages from the employer by reason of
his negligence. But once the election has been exercised, the employee or his heirs are no longer free to
opt for the other remedy.
Facts
On December 22, 1971, Rolando Lim, a licensed second mate, died when the vessel he was on
board ran aground and sank near Sabtan, Batanes. The vessel was owned by petitioner Ysmael Maritime
Corporation. The parents of the deceased claiming that the untimely death of their son was due to the
negligence of the petitioner, sued the petitioner in the CFI for damages. By way of affirmative defense,
petitioner claimed that the private respondents had already been compensated by the
Workmans Compensation Commission (WCC) for the same incident, for which reason they are now
precluded from seeking other remedies against the same employer under the Civil Code.
Issue
Whether the compensation remedy under the Workmens Compensation Act (WCA), and now
under the Labor Code, for work-connected death or injuries sustained by an employee,is
exclusive of the other remedies under the Civil Code?
Ruling
In the recent case of Floresca v. Philex Mining Company, the Court was confronted with three
divergent opinions on the exclusivity rule. One view is that the injured employee or his heirs, in case of
death, may initiate an action tore cover damages (not compensation under the Workmans
Compensation Act) with the regular courts on the basis of negligence of the employer
pursuant to the Civil Code. Another view is that the remedy of an employee for work-connected injury or
accident is exclusive in accordance with Section 5 of WCA. The third view is that the action is selective
and the employee or his heirs have a choice of availing themselves of the benefits under the WCA or of
suing in the regular courts under the Code for higher damages from the employer by reason of his
negligence. But once the election has been exercised, the employee or his heirs are no longer free to opt
for the other remedy.
It is therefore clear that the respondents had not only opted to recover under the Act but they had
also been duly paid. At the very least, a sense of fair play would demand that if a person entitled to a
choice of remedies made a first election and accepted the benefits thereof; he should no longer be allowed
to exercise the second option. Having staked his fortunes on a particular remedy, he is precluded from
pursuing the alternate course, at least until the prior claim is rejected by the Compensation Commission.
213 | P a g e

DOMINGO VICENTE VS. EMPLOYEES COMPENSATION COMMISSION
G.R. No. 85024. 23 JANUARY 1991. EN BANC (Sarmiento, J.)
PERMANENT TOTAL DISABILITY. An injury or sickness is unable to perform any gainful
occupation for continuous period exceeding 120 days except as otherwise provided for in Rule X of the
ECC.
Facts
Petitioner was formerly employed as a nursing attendant at the Veterans Memorial Medical
Center in Quezon City. At the age of forty-five, and after having rendered more than twenty-five years of
government service, he applied for optional retirement under the provisions of Section 12(c) of Republic
Act No. 1616, giving as reason therefor his inability to continue working as a result of his physical
disability. The petitioner likewise filed with the Government Service Insurance System (GSIS) an
application for income benefits claim for payment under Presidential Decree (PD) No. 626, as
amended. Both applications were accompanied by the necessary supporting papers, among them being a
Physicians Certification issued by the petitioners attending doctor. The petitioners application for
income benefits claim payment was granted but only for permanent partial disability (PPD) compensation
or for a period of nineteen months
Issue
Whether the petitioner suffers from permanent total disability?
Ruling
Yes, the decision of the respondent Employees Compensation Commission (ECC) was set aside.
The petitioners permanent total disability is established beyond doubt by several factors and
circumstances. Noteworthy is the fact that from all available indications, it appears that the petitioners
application for optional retirement on the basis of his ailments had been approved. Considering that the
petitioner was only 45 years old when he retired and still entitled, under good behavior, to 20 more years
in service, the approval of his optional retirement application proves that he was no longer fit to continue
in his employment. For optional retirement is allowed only upon proof that the employee-applicant is
already physically incapacitated to render sound and efficient service.
The sympathy of law on social security is towards its beneficiaries and the law by its own terms,
requires a construction of utmost liberality in its favor.
214 | P a g e

EVARISTO ABAYA VS. EMPLOYEES COMPENSATION COMMISSION
G.R. No. 64255. 16 AUGUST 1989. FIRST DIVISION (Cruz, J.)
PERMANENT TOTAL. Total disability may either be temporary or permanent. Total disability does not
mean a state of absolute helplessness, but means disablement of an employee to earn wages in the same
kind of work, or a work of similar nature, that he was trained for or accustomed to perform, or any kind of
work which a person of his mentality and attainment could do.
Facts
After serving the government in various capacities for 38-1/2 years, Evaristo Abaya, Jr. retired as
a principal teacher at the age of 60 on October 15, 1975. Thereafter, pursuant to PD No. 626, he applied
with the Government Service Insurance System for medical services, appliance and supplies and
permanent total disability benefits. The basis of his application was his claimed service-connected
ailment, initially diagnosed as cardio-vascular disease and aggravating later for cerebral encephalopathy
secondary to hypertension.
On June 3, 1976, the GSIS rejected his application on the ground that his ailment was not an
occupational disease. Upon appeal to the Employees' Compensation Commission, the case was on April
19, 1978, remanded to the GSIS for reception of additional evidence showing that the applicant's illness
was work-connected. On June 17, 1979, the GSIS delivered to the petitioner a check in the amount of P
l,218.25, representing his permanent partial disability benefits for the period from October 15,1975, to
March 1976.
Issue
Whether the petitioner's ailment is permanent total or permanent partial?
Ruling
It is important to consider that the petitioner opted to retire when he was only 60 years of age
although he was entitled to continue during good behavior for five more years. This fact, it is urged,
should indicate that he was no longer able to cope with his work because of his illness. It is also noted
that the GSIS paid him what it called his partial permanent benefits for a total of 150 days.
Permanent partial disability, on the other hand, is defined as a disability is partial permanent if as
a result of the injury or sickness the employee suffers a permanent partial loss of the use of any part of his
body.
The Court hold, therefore, that the petitioner is entitled to permanent total compensation benefits
to be determined in accordance with Section 5, Rule XI of the Amended Rules on Employees'
Compensation Furthermore, the petitioner is entitled to reimbursement for his expenses incurred for
medical services, appliances and other supplies in connection with his ailment,
215 | P a g e

DOMINGO VICENTE VS. EMPLOYEES COMPENSATION COMMISSION
G.R. No. 85024. 23 JANUARY 1991. EN BANC (Sarmiento, J.)
ECC.
Facts
Petitioner was formerly employed as a nursing attendant at the Veterans Memorial Medical
Center in Quezon City. At the age of forty-five, and after having rendered more than twenty-five years of
government service, he applied for optional retirement under the provisions of Section 12(c) of Republic
Act No. 1616, giving as reason therefor his inability to continue working as a result of his physical
disability. The petitioner likewise filed with the Government Service Insurance System (GSIS) an
application for income benefits claim for payment under Presidential Decree (PD) No. 626, as
amended. Both applications were accompanied by the necessary supporting papers, among them being a
Physicians Certification issued by the petitioners attending doctor. The petitioners application for
income benefits claim payment was granted but only for permanent partial disability (PPD) compensation
or for a period of nineteen months
Issue
Whether the petitioner suffers from permanent total disability?
Ruling
Yes, the decision of the respondent Employees Compensation Commission (ECC) was set aside.
The petitioners permanent total disability is established beyond doubt by several factors and
circumstances. Noteworthy is the fact that from all available indications, it appears that the petitioners
application for optional retirement on the basis of his ailments had been approved. Considering that the
petitioner was only 45 years old when he retired and still entitled, under good behavior, to 20 more years
in service, the approval of his optional retirement application proves that he was no longer fit to continue
in his employment. For optional retirement is allowed only upon proof that the employee-applicant is
already physically incapacitated to render sound and efficient service.
The sympathy of law on social security is towards its beneficiaries and the law by its own terms,
requires a construction of utmost liberality in its favor.
216 | P a g e

GSIS VS. COURT OF APPEALS and ROSA BALAIS
G,R, No. 117572, 29 JANUARY 1998. THIRD DIVISION (Romero, J.)
ECC.
Facts
Private respondent Rosa Balais an employee of National Housing Authority suffered from
Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm, because of this she can no longer perform
efficiently. For this reason, she retired and filed for disability benefits. GSIS granted her application for
temporary total disability and later was changed to permanent partial disability. She again filed with GSIS
an application for permanent total disability, which GSIS denied on the ground that her condition does not
qualify for permanent total disability.
Issue
Whether respondent Rosa Balais is entitled of her permanent total disability?
Ruling
A persons disability may not manifest fully at one precise moment in time but rather over a
period of time. It is possible that an injury which at first was considered to be temporary may later on
become permanent or one suffers a partial disability becomes totally and permanently disabled from the
same cause.
In the case at bar, the denial of the claim for permanent total disability benefit of private
respondent who, for 38 long years during her prime had rendered her best service with an unblemished
record and who was compelled to retire on account of her worsening conditioning would indeed subvert
the salutary intentions of the law in favor of the worker. The court, therefore, affirms the decision of the
respondent Court of Appeals decreeing conversion of private respondents disability from permanent
partial disability to permanent total disability.
217 | P a g e

CONSORCIA MANUZON VS. EMPLOYEES COMPENSATION COMMISSION and GSIS
G.R. No. 88573. 25 JUNE 1990. FIRST DIVISION (Gancayco, J.)
SPOUSE AS DEPENDENT. The status of dependency of a spouse arises from the fact that a marriage
exists. This status subsists even of the spouse is gainfully employed, so long as there is still financial
need for support.
Facts
In a letter dated March 20, 1988, petitioner requested the GSIS for a continued pension
considering that her husband died of a lingering illness which was found to be work connected by the
GSIS and that her husband became paralyzed while in service. Her husband was granted monthly
pension, but it stopped in 1985. She was granted additional pension up to January of 1988 only. GSIS
denied petitioner's request. The case was appealed to the Employees' Compensation Commission. In a
decision dated April 12, 1989, it was approved unanimously.
Issue
Whether an employee who has been declared or acknowledged by the Government Service
Insurance System (GSIS) as permanently and totally disabled, who was forced to retire from the service
and who died four and a half (4-) years later?
Ruling
We agree that a permanent and totally disabled employee who is receiving pension cannot work.
He was compelled to retire from the service because of disability that was work-oriented. Permanent total
disability means incapacity to perform gainful work which is expected to be permanent. The covered
employee referred to in Section 194(b) Presidential Decree No. 626, as amended, includes an employee
who has retired from work because of permanent and total disability and who subsequently dies.
We believe otherwise. The evidence clearly shows that during his employment, the deceased
suffered from a stroke, a cardio vascular accident. It was caused by "thrombosis," or blockage of arteries.
He had to retire because of paralysis caused by that cardio vascular attack when he was an assistant
professor. He died after his compulsory retirement due to total disability, caused by cardio vascular attack
or myocardial infraction. Stated otherwise, the cause of his compulsory retirement due to paralysis arising
from cardio vascular accident is closely related to the cause of his death, which was also a cardio vascular
attack or myocardial infraction. That heart disease developed when he was still working as a professor. It
caused his paralysis and his total permanent disability. The disease was work-oriented because of the
nature of his employment as a professor. The same disease eventually caused his death, contrary to the
conclusion of both the GSIS and the Employees Compensation Commission. The Court holds that the
heirs of Mr. Manuzon are entitled to the benefits they are claiming.
This Court is aware that death benefits must be granted to the primary beneficiaries of the
decedent to help the family of a permanent and totally disabled person who was so disabled because of
causes that are work-oriented. The rule applies all the more when that disabled person later dies because
of the same cause or related cause.
218 | P a g e

EMPLOYEES COMPENSATION COMMISSION and SSS VS. EDMUND SANICO
G.R. No. 13428. 17 DECEMBER 1999. FIRST DIVISION (Kapunan, J.)
PERIOD TO FILE CLAIM. The High Court has ruled that the 10-year period applies. The
liability of the employer to pay compensation under the Workmens Compensation Act is an
obligation created by law, and under paragrapg (2) of Article 1144 of the Civil Code of the
Philippines, the action to enforce this obligation can be brought within ten years frim the time the
right of action accrues.
Facts
Edmund Sanico was a former employee of John Gotamco and Sons. He was a wood filer
until he was separated from employment on December 31, 1991 due to his illness.2.His medical
evaluation report dated September 31, 1991 showed that he was suffering from pulmonary
tuberculosis (PTB).3.On November 9, 1994 Sanico filed with the SSS a claim for compensation
benefits.4.SSS denied the claim on the ground that of prescription. Under Article 201 of the Labor
Code, a claim for compensation shall be given due course only when the same is filed with the
System 3 years from the time the cause of action accrued.5.SSS reckoned the three-year
prescriptive period on September 31, 1991 when PTB first become manifest.6.Sanico appealed to
the ECC. ECC affirmed the decision of the SSS.7.When the case was elevated to the CA, it ruled
that the private respondents claim was filed within the prescriptive period under the law. The CA
reconciled Article 201of the Labor Code with Artticle 1144(2) of the Civil Code. Under the latter
provision of law, an action upon an obligation created by law must be filed within 10 years from the
time the cause of action accrues
Issue
Whether private respondents claim for compensation benefit had already prescribed when
he filed his claim on November 9, 1994?
Ruling
No, the prescriptive period for filing compensation claims should be reckoned from the time
the employee lost his earning capacity, i.e. terminated from employment, due to his illness and not
when the same first became manifest. Indeed, a persons disability might note merge at one precise
moment in time but rather over a period of time. In this case, private respondents employment was
terminated on December 31, 1991 due to his illness; he filed his claim for compensation benefits on
November 9, 1994. Accordingly, private respondents claim was filed within the three-year
prescriptive period under Article 201 of the Labor Code.
219 | P a g e

ROSARIO VDA. DE SUANES VS. WORKMENS COMPENSATION COMMISSION, ET AL.
G.R. No. 42808. 31 JANUARY 1989. THIRD DIVISION (Feliciano, J.)
PERIOD TO FILE CLAIM. The High Court has ruled that the 10-year period applies. The
liability of the employer to pay compensation under the Workmens Compensation Act is an
obligation created by law, and under paragrapg (2) of Article 1144 of the Civil Code of the
Philippines, the action to enforce this obligation can be brought within ten years frim the time the
right of action accrues.
Facts
Artemio A. Suanes was a government employee for most of his life. From 1933 to 1945, he
served as market collector of the Municipal Government of the Municipality of Rosario, Batangas. He
served as a Municipal Councilor in Rosario, Batangas. His Service Record further shows that thereafter,
from 1 July 1970 up to the time of his death on 21 June 1973. Artemio Suanes was a construction capataz
in the Office of the Provincial Engineer, Batangas Province. The certificate of death issued by Dr.
Salvacion Altamira of the Magsino General Hospital in Lipa City, Batangas, attributed Artemio's demise
to 'Cardio-respiratory Arrest due to Cerebrovascular Accident'.
On 5 March 1975, petitioner, as surviving spouse of Artemio Suanes, filed with Regional Office
No. IV of the Workmen's Compensation Unit (WCU), Department of Labor, a claim for compensation
under the applicable provisions of the Workmen's Compensation Act (Act No. 3428, as amended). In this
claim, the decedent's illness was described as "Internal Hemorrhage due to Hypertension. Petitioner's
claim was referred by the WCU to the BPH which, however, controverted the claim of petitioner. In a
letter dated 26 June 1975, BPH asserted that there was "lack of causative relation of the illness alleged in
[petitioner's] claim with the nature of the decedent's employment" and that petitioner had failed to comply
with the requirements of Section 24, Act No. 3428, as amended, regarding the giving of notice and
subsequent filing of claim.The Referee of the WCU dismissed petitioner's claim "for lack of interest,
claimant having failed to appear for the scheduled hearing despite notice.
Issue
Whether or not petitioner's Motion to Set Aside the Order of Dismissal issued by the WCC
Referee was properly denied simply upon the ground that it had not been accompanied by an affidavit of
merits?
Ruling
The Court believed that this issue has to be resolved in favor of the petitioner. Section 3 of Rule 22 of the
Rules of the respondent Commission provides as follows:
Sec. 3. Time for Filing Petition; Contents and Verification. The petition under Section I
hereof must be verified, filed within thirty (30) days after the petitioner learns-of the decision,
award, or order or other proceedings sought to be set aside and not more than three (3) months
after such decision or award was entered or such proceedings were taken, and must be
accompanied with (sic) affidavits showing the fraud, accident, mistake' or excusable
220 | P a g e

negligence relied upon and the facts constituting the petitioner's good and substantial cause of
action or defense, as the case may be.
221 | P a g e

(With Exclusions) - LABOR-Case Digest Compendium

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

(With Exclusions) - LABOR-Case Digest Compendium

Uploaded by

Copyright:

Available Formats

CASE DIGEST COMPENDIUM

MATERNITY CHILDRENS HOSPITAL VS. SECRETARY OF LABOR

MAXIMO CALALANG VS. A.D. WILLIAMS, ET AL.

CASE DIGEST COMPENDIUM

PEOPLE OF THE PHILIPPINES VS. FRANCO VERA REYES

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. VS. DRILON, ET AL

CASE DIGEST COMPENDIUM

CLARA CEREZO VS. ATLANTIC GULF & PACIFIC COMPANY

CASE DIGEST COMPENDIUM

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA VS. NLRC, ET AL.

CASE DIGEST COMPENDIUM

EURO-LINEA PHIL, INC. VS. NLRC and JIMMY O. PASTORAL

CASE DIGEST COMPENDIUM

MANILA ELECTRIC COMPANY VS. NLRC and APOLINARIO SIGNO

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

ELMER M. MENDOZA VS. RURAL BANK OF LUCBAN

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

ROMEO LAGATIC VS. NLRC, ET AL.

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

Section 13 which calls upon petitioner to execute a production-sharing plan.

CASE DIGEST COMPENDIUM

RECRUITMENT AND PLACEMENT. - Refers to any act of canvassing, enlisting, contracting,

PEOPLE OF THE PHILIPPINES V. LOMA GOCE, ET. AL.

CASE DIGEST COMPENDIUM

IMELDA DARVIN VS. COURT OFAPPEALS and PEOPLE OF THE PHILIPPINES

CASE DIGEST COMPENDIUM

EASTERN SHIPPING LINES VS. POEA, ET. AL.

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

PACIFIC ASIA OVERSEAS SHIPPING CORP. VS. NLRC

CASE DIGEST COMPENDIUM

DOUGLAS MILLARES and ROGELION LEGARDA VS. NLRC, ET. AL.

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM

CASE DIGEST COMPENDIUM