LABOR STANDARDS

16. Wage deductions

RCPI v SEC (1989)

FACTS: On May 4, 1981, RCPI, a domestic corporation engaged in the

telecommunications business, filed with the National Wages Council (NWC) an
application for exemption from the coverage of Wage Order No. 1.
The application was opposed by United RCPI Communications Labor Association
(URCPICLA-FUR), a labor organization affiliated with the Federation of Unions of
Rizal (FUR).

The NWC disapproved the application and ordered RCPI to pay its covered
employees the mandatory living allowance of P2.00 daily, effective March 22,
1981.

As early as March 1985, before the case was elevated to the SC, FUR filed a
motion for the issuance of a writ of execution, asserting 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 the segregation and remittance of said
amount to FUR thru its National President.

On October 1985, without the knowledge and consent of FUR, RCPI entered into
a compromise agreement with Buklod ng Manggagawasa RCPI-NFL (BMRCPI-
NFL) as the new bargaining agent of RCPI employees. Thereupon, the parties filed
a joint motion praying for the dismissal of the decision of the NWC for it had already
been novated by the Compromise Agreement re-defining the rights and
obligations of the parties.

FUR countered alleging that one of the signatories thereof - BMRCPI-NFL is not a
party in interest in the case, but that it was FUR which represented RCPI
employees all the way from the level of the National Wages Council up the
Supreme Court.

FUR, therefore, claimed that the Compromise Agreement is irregular and invalid,
apart from the fact that there was nothing to compromise in the face of a final and
executory decision.
 LABOR STANDARDS

An Order was issued awarding to 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, RCPI paid in full the covered employees in November 1985,
without deducting the union service fee of 15%.

NCR officer-in-charge found RCPI and its employees jointly and severally liable
for the payment of the 15% union service fee amounting to P427,845.60 to FUR
and consequently ordered the garnishment of RCPIs bank account to enforce said
claim.
It was his position that although the decision of the NWC did not categorically
require payment of the 15% service fee directly to FUR, it had acted as the counsel
of record of RCPIs employees, hence said payment could be authorized. The
order further noted that the transaction entered into by RCPI in favor of BMRCPI-
NFL in the guise of a compromise agreement, was made without the consent of
FUR in clear defraudation of the latter's right to the 15% union service fee justly
due it.

Secretary of Labor and Employment modified the order appealed from by holding
RCPI solely liable to FUR for 10% of the awarded amounts as attorney's fees.

ISSUE: WON RCPI is solely liable for attorneys fee or "union service fee to
respondent URCPICLA-FUR. YES

Petitioners (RCPI) 1st contention: They have been imposed an additional

obligation in the form of attorney's fees not contemplated in the decision of the
National Wages Council.

RULING: While it is true that the original decision of NWC did not expressly provide
for payment of attorney's fees, that particular is deemed to have been supplied by
the compromise agreement subsequently executed between the parties.

The agreement shows an unqualified admission by RCPI:

"from the aforesaid total amount due every employee, 10% thereof shall be
considered as attorney's fee, although, as hereinafter discussed, it sought to
withhold it from respondent union. Considering, however, that respondent union
was categorically found by the Labor Secretary to have been responsible for the
successful prosecution of the case to its ultimate conclusion in behalf of its
 LABOR STANDARDS

member, employees of herein petitioner, its right to fees for services rendered, or
what it termed as "union service fee,

Pettitioners 2nd contention: RCPI failed to deduct the 15% attorney's fee from
the total amount due its employees and to deposit the same with the Regional
Labor Office allegedly because of the absence of individual written authorizations.

RULING: Petitioner cannot invoke the lack of an individual written authorization

from the employees as a shield for its fraudulent refusal to pay the service fee of
FUR. Prior to the payment made to its employees, RCPI was ordered by the
Regional Director to deduct the 15% attorney's fee from the total amount due its
employees and to deposit the same with the Regional Labor Office. The lack of
individual written authorizations was remedied by the execution of the compromise
agreement whereby the employees, expressly approved the 10% deduction and
held RCPI free from any claim or complaint arising from the deduction thereof.
When RCPI was thereafter again ordered to pay the 10% fees to FUR, it no longer
had any legal basis for refusing to pay the latter.

We agree that Article 222 of the Labor Code 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, the deductions required of the RCPI 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 fee are authorized by law and do not require individual check-
off authorizations.

APODACA v NLRC

FACTS: Apodaca was employed by respondent corporation Intrans Phil. Inc. He

subscribed to 1,500 shares of respondent corporation at P100.00 per share or a
total of P150,000.00. He made an initial payment of 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.

On December 19, 1986, petitioner instituted with the NLRC a complaint against
the corporation for the payment of his unpaid wages, his cost of living allowance,
 LABOR STANDARDS

the balance of his gasoline and representation expenses and his bonus
compensation for 1986.

Private respondents admitted that there is due to petitioner the amount of

P17,060.07 but this was applied to the unpaid balance of his subscription in the
amount of P95,439.93.

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.

Labor Arbiter sustained the claim of petitioner for P17,060.07 on the ground that
the employer has no right to withhold payment of wages already earned under
Article 103 of the Labor Code.

Upon the appeal, the decision of the labor arbiter was reversed.

NLRC held that a stockholder who fails to pay his unpaid subscription on call
becomes a debtor of the corporation and that the set-off of said obligation against
the wages and others due to petitioner is not contrary to law, morals and public
policy.

ISSUE: WON the non-payment of stock subscription can be offset against a money
claim of an employee against the employer. No.

RULING NLRC has no jurisdiction in the matter of unpaid subscriptions. This is

within the exclusive jurisdiction of SEC.
Assuming arguendo that NLRC has jurisdiction, the unpaid subscriptions are not
due and payable until a call is made by the corporation for payment.

Respondent Corporation did not call 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.

No doubt such set-off was without lawful basis, if not premature. As there was no
notice or call for the payment of unpaid subscriptions, the same is not yet due and
payable.
 LABOR STANDARDS

***Lastly, assuming further that there was a call for payment of the unpaid
subscription, the NLRC cannot validly set it off against the wages and other
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, to wit:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff
has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.

MABEZA v NLRC (1997)

FACTS: Norma Mabeza was an employee hired by Hotel Supreme in Baguio City.
In 1991, an inspection was made by the Department of Labor and Employment
(DOLE) at Hotel Supreme and the DOLE inspectors discovered several violations
by the hotel management. Immediately, the owner of the hotel, Peter Ng, directed
his employees to execute an affidavit which would purport that they have no
complaints whatsoever against Hotel Supreme particularly the latter's compliance
with minimum wage and other labor standard provisions of law. Mabeza signed
the affidavit but she refused to certify it with the prosecutors office.

Petitioners contention: That same day, as she refused to go to the City

Prosecutors Office, she was ordered by the hotel management to turn over the
keys to her living quarters and to remove her belongings to the hotels premises.
She then filed a leave of absence which was denied by her employer. She
attempted to return to work but the hotels cashier told her that she should not
report to work and instead continue with her unofficial leave of absence.
Three days after her attempt to return to work, she filed a complaint against the
management for illegal dismissal before the Arbitration Branch of the NLRC in
Baguio City. In addition to that, she alleged underpayment of wages, non-payment
 LABOR STANDARDS

of holiday pay, service incentive leave pay, 13th month pay, night differential and
other benefits.

Private respondents contention: Peter Ng, in their Answer, argued that her
unauthorized leave of absence from work is the ground for her dismissal. He even
maintained that her allegation of underpayment and non-payment of benefits had
no legal basis. He raises a new ground of loss of confidence, which was supported
by his filing of criminal case for the alleged qualified theft of the petitioner (Peter
Ng filed a criminal complaint against Mabeza as he alleged that she had stolen a
blanket and some other stuff from the hotel)

The Labor Arbiter ruled in favor of the hotel management on the ground of loss
of confidence. She appealed to the NLRC which affirmed the Labor Arbiters
decision. Hence, this petition.

MAIN ISSUE: Whether or not Mabezas certain facilities may be deducted from
her wage. NO

The labor arbiters contention that the reason for the monetary benefits received
by the petitioner between 1981 to 1987 were less than the minimum wage was
because petitioner did not factor in the meals, lodging, electric consumption and
water she received during the period of computations. Granting that meals and
lodging were provided and indeed constituted facilities, such facilities could not be
deducted without the employer complying first with certain legal requirements.
Without satisfying these requirements, the employer simply cannot deduct the
value from the employees wages.

First, proof must be shown that such facilities are customarily furnished by the
trade. Second, the provision of deductible facilities must be voluntary accepted in
writing by the employee. Finally, facilities must be charged at fair and reasonable
value. These requirements were not met in the instant case. Private respondent
failed to present any company policy to show that the meal and lodging are part of
the salary. He also failed to provide proof of the employees written authorization
and he failed to show how he arrived at the valuations. More significantly, the food
and lodging, or electricity and water consumed by the petitioner were not facilities
but supplements. A benefit or privilege granted to an employee for the convenience
of the employer is not a facility. The criterion in making a distinction between the
two not so much lies in the kind but the purpose. Considering, therefore, that hotel
workers are required to work on different shifts and are expected to be available
 LABOR STANDARDS

at various odd hours, their ready availability is a necessary matter in the operations
of a small hotel, such as the private respondents hotel.
SECONDARY ISSUES:
a. Whether or not there is unfair labor practice. YES
The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in the
form of restraint, interference or coercion, against his employees right to institute
concerted action for better terms and conditions of employment. Without doubt,
the act of compelling employees to sign an instrument indicating that the employer
observed labor standard provisions of the law when he might not have, together
with the act of terminating or coercing those who refuse to cooperate with the
employees scheme constitutes unfair labor practice.

b. Whether or not there is abandonment. NO.

Abandonment is not present. Mabeza returned several times to inquire about the
status of her work or her employment status. She even asked for a leave but was
not granted. Her asking for leave is a clear indication that she has no intention to
abandon her work with the hotel. Even the employer knows that his purported
reason of dismissing her due to abandonment will not fly so he amended his reply
to indicate that it is actually loss of confidence that led to Mabezas dismissal.

c. Whether or not there is loss of confidence as a valid ground for dismissal.

NO.

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

18. Liability for wages and benefits in case of corporation

 LABOR STANDARDS

YU v NLRC

FACTS: Petitioner Benjamin Yu was formerly the Assistant General Manager of

the marble quarrying and export business operated by Jade Mountain Products
Company Limited" ("Jade Mountain"). The partnership was originally organized on
28 June 1984 with Lea Bendal and Rhodora Bendal as general partners and Chin
Shian Jeng, Chen Ho-Fu and Yu Chang, all citizens of the Republic of China
(Taiwan), as limited partners.

The partnership business consisted of exploiting a marble deposit found on land

owned by the Sps. Ricardo and Guillerma Cruz, situated in Bulacan Province,
under a Memorandum Agreement dated 26 June 1984 with the Cruz spouses. Its
main office is in Makati, Metropolitan Manila.

Benjamin Yu was hired by virtue of a Partnership Resolution dated 14 March 1985,

as Assistant General Manager with a monthly salary of P4,000.00.

Yu: received only half of his stipulated monthly salary, since he had accepted the
promise of the partners that the balance would be paid when the firm shall have
secured additional operating funds from abroad.
-managed the operations and finances of the business;
-had overall supervision of the workers at the marble quarry in Bulacan and took
charge of the preparation of papers relating to the exportation of the firm's
products.

1988: without the knowledge of Yu, the general partners sold and transferred their
interests in the partnership to private respondent Willy Co and to one Emmanuel
Zapanta.
-The partnership now constituted solely by Willy Co and Emmanuel Zapanta
continued to use the old firm name of Jade Mountain, though they moved the firm's
main office from Makati to Mandaluyong, Metropolitan Manila.
-The actual operations of the business enterprise continued as before. All the
employees of the partnership continued working in the business, all, save Yu as it
turned out.

16 November 1987, Yu reported to the Mandaluyong office for work and there met
private respondent Willy Co for the first time. He was informed by Willy Co that the
latter had bought the business from the original partners and that it was for him to
 LABOR STANDARDS

decide whether or not he was responsible for the obligations of the old partnership,
including petitioner's unpaid salaries.

Yu was in fact not allowed to work anymore in the Jade Mountain business
enterprise. His unpaid salaries remained unpaid.

On 21 December 1988. Yu filed a complaint for illegal dismissal and recovery of

unpaid salaries accruing from November 1984 to October 1988, moral and
exemplary damages and attorney's fees, against Jade Mountain, Mr. Willy Co and
the other private respondents.

The partnership and Willy Co denied petitioner's charges, contending in the main
that Benjamin Yu was never hired as an employee by the present or new
partnership.

Labor Arbiter: Yu had been illegally dismissed and awarded him his claim for
unpaid salaries, backwages and attorney's fees.

NLRC: reversed LA's decision.

A new partnership consisting of Mr. Willy Co and Mr. Emmanuel Zapanta had
bought the Jade Mountain business, that the new partnership had not retained
petitioner Yu in his original position as Assistant General Manager, and that there
was no law requiring the new partnership to absorb the employees of the old
partnership.
Yu had not been illegally dismissed by the new partnership which had simply
declined to retain him in his former managerial position or any other position.
Held that Yu's claim for unpaid wages should be asserted against the original
members of the preceding partnership

ISSUES: (1) whether the partnership which had hired petitioner Yu as Assistant
General Manager had been extinguished and replaced by a new partnerships
composed of Willy Co and Emmanuel Zapanta;

(2) if indeed a new partnership had come into existence, whether petitioner Yu
could nonetheless assert his rights under his employment contract as against the
new partnership.

RULING
 LABOR STANDARDS

1. YES. the legal effect of the changes in the membership of the partnership was
the dissolution of the old partnership which had hired petitioner in 1984 and the
emergence of a new firm composed of Willy Co and Emmanuel Zapanta in 1987.

Art. 1828. The dissolution of a partnership is the change in the relation of the
partners caused by any partner ceasing to be associated in the carrying on
as distinguished from the winding up of the business.

Art. 1830. Dissolution is caused:

(1) without violation of the agreement between the partners;

(b) by the express will of any partner, who must act in good faith, when no
definite term or particular undertaking is specified;

(2) in contravention of the agreement between the partners, where the

circumstances do not permit a dissolution under any other provision of this
article, by the express will of any partner at any time;

In the case at bar, all of the partners had sold their partnership interests (amounting
to 82% of the total partnership interest) to Mr. Willy Co and Emmanuel Zapanta.
The record does not show what happened to the remaining 18% of the original
partnership interest. The acquisition of 82% of the partnership interest by new
partners, coupled with the retirement or withdrawal of the partners who had
originally owned such 82% interest, was enough to constitute a new partnership.

The occurrence of events which precipitate the legal consequence of dissolution

of a partnership do not, however, automatically result in the termination of the legal
personality of the old partnership. Article 1829 of the Civil Code states that:

[o]n dissolution the partnership is not terminated, but continues until the
winding up of partnership affairs is completed.

The legal personality of the expiring partnership persists for the limited purpose of
winding up and closing of the affairs of the partnership. In the case at bar, it is
important to underscore the fact that the business of the old partnership was simply
continued by the new partners, without the old partnership undergoing the
procedures relating to dissolution and winding up of its business affairs.
 LABOR STANDARDS

2. YES. not only the retiring partners (Rhodora Bendal, et al.) but also the new
partnership are liable for the debts of the preceding partnership pursuant to Art
1840, NCC.

Under Article 1840 NCC, creditors of the old Jade Mountain are also creditors of
the new Jade Mountain which continued the business of the old one without
liquidation of the partnership affairs.
-Indeed, a creditor of the old Jade Mountain, like Benjamin Yu is entitled to enforce
his claim for unpaid salaries, as well as other claims relating to his employment
with the previous partnership, against the new Jade Mountain.

It is at the same time also evident to the Court that the new partnership was entitled
to appoint and hire a new general or assistant general manager to run the affairs
of the business enterprise take over. The non-retention of Benjamin Yu as
Assistant General Manager did not therefore constitute unlawful termination. Yu's
old position as Assistant General Manager thus became superfluous or redundant.

It follows that petitioner Yu is entitled to separation pay at the rate of one month's
pay for each year of service that he had rendered to the old partnership, a fraction
of at least six (6) months being considered as a whole year.

The old partnership certainly benefitted from the services of Benjamin Yu who, as
noted, previously ran the whole marble quarrying, processing and exporting
enterprise. His work constituted value-added to the business itself and therefore,
the new partnership similarly benefitted from the labors of Benjamin Yu.

Nonetheless, the new Jade Mountain did not notify him of the change in ownership
of the business, the relocation of the main office of Jade Mountain from Makati to
Mandaluyong and the assumption by Mr. Willy Co of control of operations. The
treatment (including the refusal to honor his claim for unpaid wages) accorded to
Yu amounted to arbitrary, bad faith treatment.

SC: Jade Mountain Products Company Limited to pay to petitioner Benjamin Yu

the following amounts:

(a) for unpaid wages which, as found by the Labor Arbiter, shall be computed at
the rate of P2,000.00 per month multiplied by thirty-six (36) months (November
1984 to December 1987) in the total amount of P72,000.00;
 LABOR STANDARDS

(b) separation pay computed at the rate of P4,000.00 monthly pay multiplied by
three (3) years of service or a total of P12,000.00;

(c) indemnity for moral damages in the amount of P20,000.00;

(d) six percent (6%) per annum legal interest computed on items (a) and (b)
above, commencing on 26 December 1989 and until fully paid; and

(e) ten percent (10%) attorney's fees on the total amount due from private
respondent Jade Mountain.

ROBLEDO v NLRC

AVONDALE v NLRC

FACTS Private respondents were employees of petitioner Avon Dale Garments,

Inc. and its predecessor-in-interest, Avon Dale Shirt Factory. Following a dispute
brought about by the rotation of workers, a compromise agreement was entered
into between petitioner and private respondents wherein the latter were terminated
from service and given their corresponding separation pay.

However, upon refusal of the petitioner to include in the computation of private

respondents' separation pay the period during which the latter were employed by
Avon Dale Shirt Factory, private respondents filed a complaint with the labor arbiter
claiming a deficiency in their separation pay.

According to private respondents, their previous employment with petitioner's

predecessor-in-interest, Avon Dale Shirt Factory, should be credited in computing
their separation pay considering that Avon Dale Shirt factory was not dissolved
and they were not in turn hired as new employees by Avon Dale Garments, Inc.

Labor arbiter dismissed employees' complaint and held that Avon Dale Shirt
Factory and Avon Dale Garments, Inc. are not one and the same entity as the
former was in fact dissolved on December 27, 1978, when it filed its Articles of
Dissolution with the Securities and Exchange Commission.

Upon appeal, NLRC reversed the decision of the labor arbiter after finding that
upon dissolution of Avon Dale Shirt Factory, Inc., there was no showing that its
terminated employees, as creditors insofar as their separation pay were
 LABOR STANDARDS

concerned, were ever paid. Thus, petitioner Avon Dale Garments, Inc., as
successor-in-interest, was held liable for private respondents' unpaid claim.

ISSUES
1. WON Avon Dale Garments is a separate and distinct entity from Avon Dale
Shirt.
2. WON Avon Dale Garments should be held liable for private respondents
separation pay from Avon Dale Shirt Factory.
RULING
1. Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and
distinct entity from Avon Dale Shirt Factory, absent any showing that there
was indeed an actual closure and cessation of the operations of the latter.
The mere filing of the Articles of Dissolution with the Securities and Exchange
Commission, without more, is not enough to support the conclusion that
actual dissolution of an entity in fact took place.
On the contrary, the prevailing circumstances in this case indicated that petitioner
company is not distinct from its predecessor Avon Dale Shirt Factory, but in fact
merely continued the operations of the latter under the same owners, the same
business venture, at same address 6, and even continued to hire the same
employees (herein private respondents).

Thus, conformably with established jurisprudence, the two entities cannot be

deemed as separate and distinct where there is a showing that one is merely the
continuation of the other.

In fact, even a change in the corporate name does not make a new corporation,
whether effected by a special act or under a general law, it has no effect on the
identity of the corporation, or on its property, rights, or liabilities.

2. Petitioner should likewise include private respondents' employment with

Avon Dale Shirt Factory in computing private respondents' separation pay as
petitioner failed to substantiate its claim that it is a distinct entity.
DOLE PHILS v ESTEVA (2006)

FACTS: Petitioner is a corporation duly recognized and existing in accordance

with Philippine laws, engaged principally in the production and processing of
pineapple for the export market.
 LABOR STANDARDS

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO).

CAMPCO was organized in accordance with R.A. No. 6938, otherwise known as
the Cooperative Code of the Philippines, and duly registered with the Cooperative
Development Authority (CDA).

Petitioner and CAMPCO entered into a Service Contract (August 17, 1993). The
Service Contract referred to petitioner as the Company, while CAMPCO was the
Contractor. The said contract was good for six months for the amount of P220K.

Pursuant to the contract, CAMPCO members rendered services to petitioner. The

parties apparently extended or renewed the same for the succeeding years without
executing another written contract.

However, due to investigations and reliable information, the Regional Director of

DOLE exercised his visitorial and enforcement power and found out that CAMPCO
is engaged in labor-only contracting together with two other cooperatives.

The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules Implementing
the Labor Code. (pertaining to Labor-only contracting 1. no substantial capital;
2. work is directly related to the principal business of the principal; in such case, the
one who alleges as contractor is deemed an agent of the principal while the latter
is considered the indirect employer for purposes of enforcement of the labor rights.)

Before the NLRC, respondents contended that they have been working more than
one year to petitioner. While some of the respondents were still working for
petitioner, others were put on stay home status on varying dates in the years
1994, 1995, and 1996 and were no longer furnished with work thereafter. They,
then, filed a case before the NLRC for illegal dismissal, regularization, wage
differentials, damages and attorneys fees.

Respondents argued that they should be considered regular employees of

petitioner given that: 1) they were performing jobs that were usually necessary and
desirable in the usual business of petitioner(can processing attendant, feeder of
canned pineapple at pineapple processing, nata de coco processing attendant, fruit
cocktail processing attendant); 2) petitioner exercised control over respondents, not
only as to the results, but also as to the manner by which they performed their
assigned tasks; and 3) CAMPCO, a labor-only contractor, was merely a conduit of
petitioner. As regular employees of petitioner, respondents asserted that they were
 LABOR STANDARDS

entitled to security of tenure and those placed on stay home status for more than
six months had been constructively and illegally dismissed. Respondents further
claimed entitlement to wage differential, moral damages, and attorneys fees.

Petitioner contended that respondents were owners-members of CAMPCO; that

CAMPCO was a duly-organized and registered cooperative which had already
grown into a multi-million enterprise; that CAMPCO was engaged in legitimate job-
contracting with its own owners-members rendering the contract work; that under
the express terms and conditions of the Service Contract executed between
petitioner (the principal) and CAMPCO (the contractor), the latter shall undertake
the contract work on its own account, under its own responsibility, and according to
its own manner and method free from the control and direction of the petitioner in
all matters connected with the performance of the work, except as to the result
thereof; and since CAMPCO held itself out to petitioner as a legitimate job
contractor, respondents, as owners-members of CAMPCO, were estopped from
denying or refuting the same.

Petitioner further averred that Department Order No. 10, amending the rules
implementing Books III and VI of the Labor Code, as amended, promulgated by the
DOLE on 30 May 1997, explicitly recognized the arrangement between petitioner
and CAMPCO as permissible contracting and subcontracting, to wit

Section 6. Permissible contracting and subcontracting. Subject to the

conditions set forth in Section 3(d) and (e) and Section 5 hereof, the principal
may engage the services of a contractor or subcontractor for the performance of
any of the following;

(a) Works or services temporarily or occasionally needed to meet abnormal

increase in the demand of products or services, provided that the normal
production capacity or regular workforce of the principal cannot reasonably cope
with such demands;

(b) Services temporarily needed for the introduction or promotion of new

products, only for the duration of the introductory or promotional period;

(g) Unless a reliever system is in place among the regular workforce, substitute
services for absent regular employees, provided that the period of service shall
be coextensive with the period of absence and the same is made clear to the
 LABOR STANDARDS

substitute employee at the time of engagement. The phrase "absent regular

employees" includes those who are serving suspensions or other disciplinary
measures not amounting to termination of employment meted out by the
principal, but excludes those on strike where all the formal requisites for the
legality of the strike have been prima facie complied with based on the records
filed with the National Conciliation and Mediation Board.

According to petitioner, the services rendered by CAMPCO constituted

permissible job contracting under the afore-quoted paragraphs (a), (c), and (g),
Section 6 of DOLE Department Order No. 10, series of 1997.

LA ruled in favor of petitioner CAMPCO is not engaged in labor-only contracting

and respondents are not regular employees of petitioner.

NLRC affirmed the Labor Arbiters decision.

CA reversed not established that CAMPCO is engaged or carries an

independent business. The respondents performed activities directly related to the
principal business.

ISSUE: WON Petitioner is the employer of respondents and that CAMPCO be

considered merely as agent of the company.

RULING: YES. CAMPCO was a labor-only contractor and, thus, petitioner is the
real employer of the respondents, with CAMPCO acting only as the agent or
intermediary of petitioner. Due to the nature of their work and length of their
service, respondents should be considered as regular employees of petitioner.
Petitioner constructively dismissed a number of the respondents by placing them
on "stay home status" for over six months, and was therefore guilty of illegal
dismissal. Petitioner must accord respondents the status of regular employees,
and reinstate the respondents who it constructively and illegally dismissed, to their
previous positions, without loss of seniority rights and other benefits, and pay
these respondents backwages from the date of filing of the Complaint with the
NLRC up to actual reinstatement.

The ff. are the factors present which established a labor-only contracting:

While there is present in the relationship of petitioner and CAMPCO some factors
suggestive of an independent contractor relationship (i.e., CAMPCO chose who
 LABOR STANDARDS

among its members should be sent to work for petitioner; petitioner paid CAMPCO
the wages of the members, plus a percentage thereof as administrative charge;
CAMPCO paid the wages of the members who rendered service to petitioner),
many other factors are present which would indicate a labor-only contracting
arrangement between petitioner and CAMPCO.

(1) Although petitioner touts the multi-million pesos assets of CAMPCO, it does
well to remember that such were amassed in the years following its establishment.
In 1993, when CAMPCO was established and the Service Contract between
petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up
capital, which could hardly be considered substantial. It only managed to increase
its capitalization and assets in the succeeding years by continually and defiantly
engaging in what had been declared by authorized DOLE officials as labor-only
contracting.

(2) CAMPCO did not carry out an independent business from petitioner. It was
precisely established to render services to petitioner to augment its workforce
during peak seasons. Petitioner was its only client. Even as CAMPCO had its own
office and office equipment, these were mainly used for administrative purposes;
the tools, machineries, and equipment actually used by CAMPCO members when
rendering services to the petitioner belonged to the latter.

(3) Petitioner exercised control over the CAMPCO members, including

respondents. Petitioner attempts to refute control by alleging the presence of a
CAMPCO supervisor in the work premises. Yet, the mere presence within the
premises of a supervisor from the cooperative did not necessarily mean that
CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the
implementing rules of the Labor Code, as amended, required for permissible job
contracting that the contractor undertakes the contract work on his account, under
his own responsibility, according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof. As alleged by the
respondents, and unrebutted by petitioner, CAMPCO members, before working for
the petitioner, had to undergo instructions and pass the training provided by
petitioners personnel. It was petitioner who determined and prepared the work
assignments of the CAMPCO members. CAMPCO members worked within
petitioners plantation and processing plants alongside regular employees
performing identical jobs, a circumstance recognized as an indicium of a labor-only
contractorship.
 LABOR STANDARDS

(4) CAMPCO was not engaged to perform a specific and special job or service. In
the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily
operations, and perform odd jobs as may be assigned. CAMPCO complied with
this venture by assigning members to petitioner. Apart from that, no other particular
job, work or service was required from CAMPCO, and it is apparent, with such an
arrangement, that CAMPCO merely acted as a recruitment agency for petitioner.
Since the undertaking of CAMPCO did not involve the performance of a specific
job, but rather the supply of manpower only, CAMPCO clearly conducted itself as
a labor-only contractor.

(5) CAMPCO members, including respondents, performed activities directly

related to the principal business of petitioner. They worked as can processing
attendant, feeder of canned pineapple and pineapple processing, nata de coco
processing attendant, fruit cocktail processing attendant, and etc., functions which
were, not only directly related, but were very vital to petitioners business of
production and processing of pineapple products for export.

The declaration that CAMPCO is indeed engaged in the prohibited activities of

labor-only contracting, then consequently, an employer-employee relationship is
deemed to exist between petitioner and respondents, since CAMPCO shall be
considered as a mere agent or intermediary of petitioner.

ISSUE: Whether or not Department Order No. 10, series of 1997 is the applicable
regulation in this case.

HELD: NO. DO No.10 is not applicable in this case.

Department Order No. 3, series of 2001, revoked Department Order No. 10, series
of 1997, and reiterated the prohibition on labor-only contracting.

The acts complained of by the respondents occurred well before the issuance of
the two DOLE department orders in 1997 and 2001. The Service Contract between
DOLE and CAMPCO was executed on 17 August 1993. Respondents started
working for petitioner sometime in 1993 and 1994. While some of them continued
to work for petitioner, at least until the filing of the Complaint, others were put on
"stay home status" at various times in 1994, 1995, and 1996. Respondents filed
their Complaint with the NLRC on 19 December 1996.
 LABOR STANDARDS

19. Wage studies, agreements, determination

ECOP v NWPC (1991)

FACTS: October 15, 1990 - Regional Board of the National Capital Region
issued Wage Order No. NCR-01, increasing the minimum wage by P17.00 daily
in the National Capital Region.
a. The Trade Union Congress of the Philippines (TUCP) moved for
reconsideration; so did the Personnel Management Association of the
Philippines (PMAP).
b. ECOP opposed.

October 23, 1990 - the Board issued Wage Order No. NCR-01-A amending
Wage Order No. NCR-01, as follows:

Section 1. Upon the effectivity of this Wage Order, all workers and employees in
the private sector in the National Capital Region already receiving wages above
the statutory minimum wage rates up to one hundred and twenty-five pesos
(P125.00) per day shall also receive an increase of seventeen pesos (P17.00)
per day.
a. ECOP appealed to the National Wages and Productivity Commission but
was dismissed for lack of merits by the commission.

1st CONTENTION OF ECOP:

1. Contention 1: ECOP assails the board's grant of an "across-the-board" wage
increase to workers already being paid more than existing minimum wage
rates (up to P125. 00 a day) as an alleged excess of authority, and alleges
that under the Republic Act No. 6727, the boards may only prescribe
"minimum wages," not determine "salary ceilings."

a. ARGUMENT OF SOL. GEN representing NWPC:

Republic Act No. 6727 is intended to correct "wage distortions" and the
salary-ceiling method (of determining wages) is meant, precisely, to rectify
wage distortions.

1st ISSUE: WON the BOARD may use the Salary Ceiling Method? YES

The Court is inclined to agree with the Government.

 LABOR STANDARDS

In the National Wages and Productivity Commission's Order of November 6,

1990, the Commission noted that the determination of wages has generally
involved two methods, the "floor-wage" method and the "salary-ceiling" method.

Floor Wage Salary-ceiling

Involves the fixing The wage
of determinate adjustment is
amount that applied to
would be added employees
to the prevailing receiving a
statutory certain
minimum wage. denominated
salary ceiling.
adopted in the used in R.A. Nos.
earlier wage 6640 and 6727
orders
salary-ceiling
method was also
used in no less
than eleven
issuances
mandating the
grant of cost-of-
living allowances
(P.D. Nos. 525,
1123, 1614,
1634, 1678, 1713
and Wage Order
Nos. 1, 2, 3, 5
and 6).

The shift from the first method to the second method was brought about by labor
disputes arising from wage distortions, a consequence of the implementation of
the said wage orders.

2nd CONTENTION OF ECOP:

2. ECOP likewise claims that Republic Act No. 6727 is meant to promote
collective bargaining as the primary mode of settling wages, and in its opinion,
the boards cannot preempt collective bargaining agreements by establishing
 LABOR STANDARDS

ceilings. ECOP prays for the nullification of Wage Order No. NCR 01-A and for
the "reinstatement" of Wage Order No. NCR-01.
2nd ISSUE: WON the wage order is valid? YES
Apparently, the wage order provisions that wage distortions shall be resolved
through the grievance procedure (the collective bargaining) was perceived by
legislators as ineffective in checking industrial unrest resulting from wage order
implementations. With the establishment of the second method (mentioned
above) as a practice in minimum wage fixing, wage distortion disputes were
minimized.

Precisely, Republic Act No. 6727 was intended to rationalize wages,

1. first, by providing for full-time boards to police wages round-the-clock, and
2. second, by giving the boards enough powers to achieve this objective.

The question of whether the salary-cap method utilized by the Board may serve
the purposes of Republic Act No. 6727 in future cases and whether that method
is after all, a lasting policy of the Board; however, it is a question on which we
may only speculate at the moment. At the moment, we find it to be reasonable
policy (apparently, it has since been Government policy); and if in the future it
would be perceptibly unfair to management, we will take it up then.

The Court's opinion is that if Republic No. 6727 intended the boards alone to set
floor wages, the Act would have no need for a board but an accountant to keep
track of the latest consumer price index, or better, would have Congress done it
as the need arises, as the legislature, prior to the Act, has done so for years. The
fact of the matter is that the Act sought a "thinking" group of men and women
bound by statutory standards.

3rd CONTENTION OF ECOP:

3. ECOP insist that wage is a legislative function, and Republic Act No. 6727
delegated to the regional boards no more "than the power to grant minimum
wage adjustments" 7 and "in the absence of clear statutory authority," 8 the
boards may no more than adjust "floor wages."
b. ARGUMENT OF SOL GEN:
The Board, in prescribing an across-the-board hike did not, in reality, "grant
additional or other benefits to workers and employees, such as the
extension of wage increases to employees and workers already receiving
 LABOR STANDARDS

more than minimum wages ..." but rather, fixed minimum wages according
to the "salary-ceiling method."

3rd ISSUE: WON the Board acted in excess of its authority? NO.
The Court is not convinced that the Regional Board of the National Capital
Region, in decreeing an across-the-board hike, performed an unlawful act of
legislation.

It is true that wage-fixing, like rate constitutes an act Congress; it is also true,
however, that Congress may delegate the power to fix rates provided that, as in
all delegations cases, Congress leaves sufficient standards. As this Court has
indicated, it is impressed that the above-quoted standards are sufficient, and in
the light of the floor-wage method's failure, the Court believes that the
Commission correctly upheld the Regional Board of the National Capital Region.

Apparently, ECOP is of the mistaken impression that Republic Act No. 6727 is
meant to "get the Government out of the industry" and leave labor and
management alone in deciding wages.

It is the Court's thinking, reached after the Court's own study of the Act, that the
Act is meant to rationalize wages, that is, by having permanent boards to decide
wages rather than leaving wage determination to Congress year after year and
law after law. The Court is not of course saying that the Act is an effort of
Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave the
question of wages to the expertise of experts.

As Justice Cruz observed, "[w]ith the proliferation of specialized activities and

their attendant peculiar problems, the national legislature has found it more
necessary to entrust to administrative agencies the power of subordinate
legislation' as it is caned."

The Labor Code defines "wage" as follows:

"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 includes the fair and reasonably value,
 LABOR STANDARDS

as determined by the Secretary of Labor, of board, lodging, or other facilities

customarily furnished by the employer to the employee. "Fair and reasonable
value" shall not include any profit to the employer or to any person affiliated with
the employer.

The concept of "minimum wage" is, however, a different thing, and certainly, it
means more than setting a floor wage to upgrade existing wages, as ECOP
takes it to mean. "Minimum wages" underlies the effort of 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; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through
industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth," 25 and as the Constitution expresses it, to
affirm "labor as a primary social economic force." 26 As the Court indicated, the
statute would have no need for a board if the question were simply "how much".
The State is concerned, in addition, that wages are not distributed unevenly, and
more important, that social justice is subserved.

ART. 124. Standards / Criteria for Minimum Wage Fixing. The regional
minimum wages to be established by the Regional Board shall be as nearly
adequate as is economically feasible to maintain the minimum standards of living
necessary for the health, efficiency and general well-being of the employees
within the framework of the national economic and social development program.
In the determination of such regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:
1. The demand for living wages;
2. Wage adjustment vis-a-vis the consumer price index;
3. The cost of living and changes or increases therein;
4. The needs of workers and their families;
5. The need to induce industries to invest in the countryside;
6. Improvements in standards of living;
7. The prevailing wage levels;
8. Fair return of the capital invested and capacity to pay of emphasis employers;
9. Effects of employment generation and family income; and
10. The equitable distribution of income and wealth along the imperatives of
economic and social development. 12
 LABOR STANDARDS

NASIPIT v NWPC

FACTS Petitioners are separate and distinct corporations engaged in logging and
wood processing.

October 1990 Region X Tripartite Wages and Productivity Board issued Wage
Order RX-01 which sets an increase in minimum wage to workers and employees
in the private sector in Northern Mindanao in the amounts of P13, P11, and P9, in
three groups of provinces.

November 1990 the RTWPB issued Guidelines No. 3, which provides for
exemption to establishments belonging to a distressed industry, due to conditions
beyond its control as may be determined by the Board in consultation with DTI and
NWPC.

Petitioners applied for exemption for the following reasons: they are distressed
due to conditions beyond their control, to wit: are distressed due to conditions
beyond their control, to wit: 1) Depressed economic conditions due to 1) recession;
2) Emergency-related problems causing disruption and suspension of operations;
3) Imposition of environmental fee in addition to regular forest charges; 4) Logging
moratorium in Bukidnon; 5) A reduction in the annual allowable volume of cut logs;
6) Highly insufficient raw material; 7) Extraordinary increases in the cost of fuel,
oil, spare parts, and maintenance; 8) Excessive labor cost/production ratio and 9)
Lumber export ban.

Respondents contended that the companies are not distressed establishments

since their capitalization has not been impaired by 25%.

The RTWPB granted the applications, rationating that while their capital
impairments are only by 1.89% (NALCO), 28.72% (ALCO) and 5.03% (PWC), they
applied for exemption on the basis of belonging to a distressed industry; That as
per Provincial Trade & Industry Development Plan for the provinces where
petitioners operate, there is a slump in their industry due to the scarcity of raw
materials. In fact, a lot of firms have closed; that most of the circumstances
responsible for their financial straits are largely external.

NWPC affirmed one firm (ALCO)s application, but reversed that of petitioners
because Guidelines No. 3 cannot be used as valid basis for granting exemption
 LABOR STANDARDS

since it did not pass the approval of the Commission. That under the Rules on
Minimum Wage Fixing dated June 1990, whenever a wage order provides for
exemption, applications shall be filed with the appropriate Board which shall
process the same, subject to guidelines issued by the Commission. As it is the
Commission which is empowered to set criteria, and the Boards may issue
supplementary guidelines, the Board should first pass such to the Commission for
the latter to determine conformity with policies. Therefore, the applicable guidelines
are those issued in February 1991, which requires at least an accumulated 25%
of losses in their paid-up capital for corporations.

Fact that applicant companies relied in good faith upon Guidelines No. 3 is not
sufficient reason that they should be assessed based on the criteria of said
Guidelines considering that it does not conform to the policies and guidelines
issued by this Commission

Petitioners contentions: that under Art. 122 (e) of the Labor Code, the RTWPB
has the power [t]o receive, process and act on applications for exemption as may
be provided by law or any wage order.
No law expressly requires the approval of the NWPC for the effectivity of the
RTWPBs Guideline No. 3. Assuming arguendo that the approval of the NWPC was
legally necessary, petitioners should not be prejudiced by their observance of
Guideline No 3 as NWCPs own guidelines took effect long after Guideline No. 3
was issued and NWPCs guidelines cannot be given retroactive effect

ISSUE Is a guideline issued by an RTWPB without the approval of or, worse,

contrary to the guidelines promulgated by the NWPC valid?

RULING NO. NWPCs decision is affirmed. Article 121, which lists the powers
and functions of the NWPC, provide:
(c) To prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or industry
levels;

While the RTWPB has the power to issue wage orders under Article 122, such
orders are subject to the guidelines prescribed by the NWPC. One of these
guidelines is the Rules on Minimum Wage Fixing issued on June 1990. Rule IV,
Section 2 thereof, allows RTWPB to issue wage orders exempting enterprises
 LABOR STANDARDS

However, the NWPC has the power not only to prescribe guidelines to govern
wage orders, but also to issue exemptions the NWPC lays down the guidelines
which the RTWPB implements.

The NWPC authorized the RTWPB to issue exemptions from wage orders, but
subject to its review and approval. Since the NWPC never assented to Guideline
No. 3, said guideline is inoperative

Moreover, NWPCs Rules of Procedure issued in June 1990 -- which was prior to
the effectivity of RTWPB Guideline No. 3 -- requires that an application for
exemption should be processed by the RTWPB, subject specifically to the
guidelines issued by the NWPC.

It is a hornbook doctrine that the issuance of an administrative rule or regulation

must be in harmony with the enabling law.

Article 122 (e) of the Labor Code cannot be construed to enable the RTWPB to
decide applications for exemption on the basis of its own guidelines which were
not reviewed and approved by the NWPC, there is no basis for petitioners claim
that their vested rights were prejudiced by the NWPCs alleged retroactive
application of its own rules because Guideline No. 3 was not valid and, thus,
cannot be a source of a right, much less a vested one.

To justify the exemption of a distressed establishment from effects of wage orders,

the NWPC requires the applicant, if a stock corporation like petitioners, to prove
that its accumulated losses impaired its paid-up capital by at least 25 percent in
the last full accounting period preceding the application or the effectivity of the
order. In the case at bar, it is undisputed that during the relevant accounting period,
only ALCO which met the exemption standard.

CAGAYAN v SEC

FACTS On November 16, 1993, Regional Wage Order (WO) No. RO2-02 was
issued by the Regional Tripartite Wage and Productivity Board, Regional Office
No. II of DOLE. It provides:

"Section 1. Upon effectivity of this Wage Order, the statutory minimum wage
rates applicable to workers and employees in the private sector in Region II
shall be increased as follows: x x x
 LABOR STANDARDS

1.2 P14.00 per day .... Cagayan x x x"

Labor inspectors from the DOLE Regional Office examined the books of Cagayan
Sugar Milling and found there was a violation. Cagayan Sugar Milling did not
implement an across the board increase in the salary of its employees.

Cagayan maintained that it complied with Wage Order No. RO2-02 as it paid the
mandated increase in the minimum wage.

RD ruled that Cagayan violated WO RO2-02 by failing to implement an across the

board increase in the salary of its employees. He ordered the payment of the
deficiency in the salary of its employees of P555,133.41.

While on appeal to the Labor Secretary, the Regional Wage Board issued WO No.
RO2-02-A, amending the earlier wage order, thus:

"Section 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon
effectivity of this Wage Order, the workers and employees in the private
sector in Region 2 shall receive an across the board wage increase as
follows: x x x

1.2 P14.00 per day .... Cagayan x x x

"Section 2. This amendment is curative in nature and shall retroact to the

date of the effectivity of WO No. RO2-02."

The Sec of Labor dismissed the appeal and affirmed the Order RD.

Private resp. CARSUMCO EMPLOYEES UNION moved for execution of the order
of the RD.

Cagayans Contention: It assails the validity of WO RO2-02-A on the ground that

it was passed without the required public consultation and newspaper publication.
Thus, the Labor Sec abused his discretion in upholding the validity of said WO.

Sec of Labors Contention: there was no need to comply with the legal req of
consultation and newspaper publication as WO No. RO2-02-A merely clarified the
ambiguous provision of the original WO
 LABOR STANDARDS

ISSUE WON WO RO2-02 is null and void for having been issued in violation of
petitioner's right to due process of law.

RULING YES. The record shows that there was no prior public consultation or
hearings and newspaper publication insofar as WO No. RO2-02-A is concerned.
In fact, these allegations were not denied by public respondents in their Comment.

There was no ambiguity in the provision of WO RO2-02. The subsequent passage

of RO2-02-A providing instead for an across the board increase in wages did not
clarify the earlier Order but amended the same. In truth, it changed the essence of
the original Order. In passing RO2-02-A without going through the process of
public consultation and hearings, the Regional Board deprived petitioner and other
employers of due process as they were not given the opportunity to ventilate their
positions regarding the proposed wage increase. In wage-fixing, factors must be
taken into consideration.

Article 123 of the Labor Code also provides that in the performance of their wage-
determining functions, the Regional Board shall conduct public hearings and
consultations, giving notices to interested parties. Moreover, it mandates that the
Wage Order shall take effect only after publication in a newspaper of general
circulation in the region.

In the case at bar, it is indisputable that there was no public consultation or hearing
conducted prior to the passage of RO2-02-A. Neither was it published in a
newspaper of general circulation. Hence, RO2-02-A must be struck down for
violation of Article 123 of the Labor Code

Cagayans Contention: WO no. RO2-02 clearly provided for the fixing of a

statutory minimum wage rate and not an across the board increase in wages.

Secretary of Labors Contention: despite the wording of WO RO2-02 providing

for a statutory increase in minimum wage, the real intention of the Reg Board was
to provide for an across the board increase. Hence, they urge that Cagayan is
liable for merely providing an increase in the statutory minimum wage rates of its
employees.

Issue: WON Cagayn could be held liable under the original wage order, RO2-02.
 LABOR STANDARDS

Held: NO. Cagayan clearly complied with WO RO2-02 which provided for an
increase in statutory min wage rates for employees in Region II. It is not just to
expect to interpret Wage RO2-02 to mean that it granted an across the board
increase as such interpretation is not sustained by its text.

Summary of the Decision: We hold that RO2-02-A is invalid for lack of public
consultations and hearings and non-publication in a newspaper of general
circulation, in violation of Article 123 of the Labor Code. We likewise find that
Secretary of Labor committed grave abuse of discretion in upholding the findings
of Regional Director Ricardo S. Martinez, Sr. that petitioner violated Wage Order
RO2-02.

METROBANK v NLRC (1993)

ALU v NLRC (1994)

FACTS: 1989, Republic Act No. 6727, otherwise known as the Wage
Rationalization Act, took effect, granting a P25.00/day increase in the statutory
minimum wage of all workers and employees in the private sector.

In implementation of the law, private respondent Del Monte Philippines, Inc. gave
a P25.00/day increase to the P54.00/day wages of its temporary employees or
"broilers." Because the regular employees, members of petitioner union, who were
then receiving P100.80 a day were not granted a similar increase, they complained
to the management of private respondent.

The parties executed a Memorandum Agreement wherein private respondent,

granted the members of petitioner union a P10.00/day wage increase subject to
the latter's right to claim P15.00/day as balance, through compulsory arbitration.

Petitioners filed a complaint against private respondent in the National Labor

Relations Commission. They alleged that a wage distortion had been created by
the grant to its temporary employees of a P25.00/day salary increase under
Republic Act No. 6727, thereby reducing to P21.80 from the previous P46.80, the
difference in salaries between the regular employees (herein petitioners) and the
temporary employees.

LA DECISION: Dismissed the complaint. He found no wage distortion in view of a

series of salary increases which respondent had granted to petitioners vis-a-vis
the temporary employees.
 LABOR STANDARDS

NLRC: Affirmed LA.

ISSUE: W/N there is a wage distortion? NO.

ALUs contention: the increases mandated by the parties' Collective Bargaining

Agreement and the voluntary agreement should not be considered as having
corrected the wage distortion, since employee benefits derived from law are
exclusive, distinct, and separate from those obtained through negotiation and
agreement.

RULING: Art. 124 of the Labor Code, as amended by Republic Act No. 6727,
expressly provides that where the application of any prescribed wage increase by
virtue of a law or wage order issued by any Regional Board results in distortions
of the wage structure within an establishment, the employer and the union shall
negotiate to correct the distortions. The law recognizes, therefore, the validity of
negotiated wage increases to correct wage distortions.

The legislative intent is to encourage the parties to seek solution to the problem of
wage distortions through voluntary negotiation or arbitration, rather than strikes,
lockouts, or other concerted activities of the employees or management.

Whether or not a wage distortion exists by reason of the grant of a wage increase
to certain employees is essentially a question of fact. In this case, the findings of
the Labor Arbiter, affirmed by the NLRC, that no wage distortion exists being based
on substantial evidence, are entitled to respect and finality.

APEX v NLRC (1992)

FACTS: Sandigan ng Manggagawang Pilipino filed before the Labor Arbiter a

claim for ECOLA differential against Apex Mining, Inc.

Sandigans allegations: Apex paid its employees in its Maco, Davao del Norte
operations, between 1 Nov 1954 until 28 Mar 1985, an aggregate cumulative daily
ECOLA of only P15 which was P2 below the cumulative minimum ECOLA of P17
(for non-agricultural workers) established under Wage Order No. 6; and that Apex
had belatedly granted the additional P2 starting on 29 Mar 1985 only.
 LABOR STANDARDS

Apex denied having failed to comply with Wage Order No. 6, contending that it had
by previous agreement, incorporated the alleged P2 deficiency into the basic
salary of its employees.

Sandigan denies that such agreement had been made but conceded that a P2
increase in basic salary had been made by Apex, in compliance with a provision
of the CBA between Apex and Sandigan, and not in fulfillment of Apexs obligation
under Wage Order No. 6. It also pointed out that Wage Order No. 6 took effect on
1 Nov 1984 or several months after the increase had been integrated by Apex into
the basic salary.

Apexs contentions: The daily salary increase of P2 provided in the CBA to take
effect on 1 Feb 1984 had been subsequently credited as partial compliance with
the P5 increment mandated by Wage Order No. 5. Thus, in compliance of Wage
Order No. 5, Apex increased the daily ECOLA of its workers by P3 (from P9 to
P12), or P2 less than the legislated ECOLA increase of P5. The integration of P2
alowance into the basic salary provided in the CBA has been conformed to by the
National President of Sandigan, and that in any event, Wage Order No. 5 has itself
authorized such integration. Since Apex had integrated P2 (out of P5) ECOLA
provided for in Wage Order No. 5, when Apex complied with the additional ECOLA
increase mandated by Wage Order No. 6, the resulting figure for the total or
cumulative ECOLA paid by Apex appeared to be only P15.

LAs Decision: The wage increase given in accordance with the CBA could not
be credited as compliance with increases mandate in the Wage Orders. It ordered
Apex to pay Sandigan the claimed ECOLA differential of P2 for the period from 1
Nov 1984 to 28 Mar 1985.
NLRC affirmed.

ISSUE: WON the P2/day increase in basic salary effective 1 Feb 1984 granted by
Apex pursuant to the CBA, was lawfully credited towards compliance with
increases in ECOLA required under the Wage Orders

Sandigans contentions: To consider the P2 increase in basic salary effective 1

Feb 1984 provided by the CBA as compliance with the Wage Orders would be
violative of Article 100.

RULING: NO. The prohibition against elimination or diminution of benefits set out
in Article 100 is specifically concerned with benefits already enjoyed at the time of
 LABOR STANDARDS

the promulgation of the Labor Code. Article 100 does not, in other words, purport
to apply to situations arising after the promulgation date of the Labor Code. Section
6 of the Rules Implementing Wage Order No. 6 relates to "supplements and other
benefits" which employees are already "enjoying without cost at the time of the
effectivity of [Wage] Order [No. 6]." Such benefits which employees are already
enjoying "without cost" could not, under Section 6, suddenly be ascribed monetary
value so as to offset or diminish increases in the minimum wage rates prescribed
by statute. Clearly, once more, Section 6 does not relate to the problem at hand.

The P2 increase integrated in the basic salary of Apex's, employees, effective on

and after 1 Feb 1984, was concededly given under the provisions of the CBA.

Both Wage Order No. 5 and Wage Order No. 6 expressly allowed the crediting
of increases in wages or allowances granted under collective bargaining
agreements towards compliance with increases in ECOLA requirements
prescribed by those Wage Orders. (All increases in wages and/or allowances
granted by employers between and the effectivity of this order shall be credited
as compliance with the minimum wage and allowance adjustments prescribed
herein.)

The public policy of the Wage Orders may be seen to be the encouragement of
employers to grant wage and allowance increases to their employees higher than
the minimum rates of increases prescribed by statute or administrative regulation.
To obliterate the creditability provisions in the Wage Orders through interpretation
or otherwise, and to compel employers simply to add on legislated increases in
salaries or allowances without regard to what is already being paid, would be to
penalize employers who grant their workers more than the statutorily prescribed
minimum rates of increases.

Sandigans contention: The 1 Feb 1984 P2 increase in basic salary was actually
an anniversary wage increase and therefore, not creditable under Sec. 7 of Wage
Order No. 5 and under Sec. 4 of Wage Order No. 6. Hence, there was no
compliance with the Wage Orders.

RULING The P2.00 increase was given by Apex under Section 3, Rule VI of the
CBA. The P2 increase effective on 1 Feb 1984 was distinguishable from the 2
increases of P1.50 each, the first being effective on the first anniversary date of
the CBA (1 February 1985) and the second being effective on the second
anniversary date (1 February 1986). In other words, the two (2) increases of 1.50
 LABOR STANDARDS

each, one being effective on 1 February 1985 and the second effective on 1
February 1986, were precisely the non-creditable "anniversary wage increases.

In respect of Wage Order No. 5, Apex credited the P2.00 increase in basic salary,
effective 1 February 1984, towards compliance with the statutorily prescribed
ECOLA increase of P5.00. Thus, the apparent cumulated increase in ECOLA, as
shown in Apex's books, was only P12.00. However, the actual increases the
composite of basic salary and ECOLA aggregated P14.00. Since such crediting
was expressly allowed under Wage Order No. 5, it follows that petitioner Apex was
in compliance with Wage Order No. 5. No differential was therefore due
thereunder.
When Wage Order No. 6 was promulgated, it prescribed an increase of P3.00 in
ECOLA. Apex paid this mandatory increase and denominated all of it as ECOLA.
Thus, the apparent cumulated increase was P15.00. Since, however, Apex had
previously increased the basic salary by P2.00 effective 1 February 1984, the
aggregate actual increase (in basic salary plus ECOLA) was P17.00, the same
total or cumulated increase contemplated by Wage Orders Nos. 5 and 6. Thus,
again, Apex was actually in compliance with the requirements of Wage Order No.
6, with the result that no differential was actually due from it.

Thus, the fact that Apex had denominated the P2.00 increase effective 1
February 1984, as an increase in basic salary, rather than in ECOLA, made no
legal difference so far as concerns the creditability of such increase. Indeed,
integration of the P2.00 into the basic salary of the employees was more beneficial
to them than granting the P2.00 as part of their ECOLA. In fact, the Implementing
Rules of Wage Order No. 5, and Wage Order No. 6 itself, expressly authorized
increases in basic salary in lieu of increases in ECOLA, provided the amounts
thereof were not less than the amounts required by the Wage Orders.

Wherefore, Apex lawfully credited the P2.00 increase in basic salary towards
compliance of the increase in ECOLA prescribed by Wage Orders Nos. 5 and 6.
Hence, Sandigans claim to a differential in ECOLA lacks basis.

METRO v NLRC (1995)

COCOFED v TRAJANO (1995)

 LABOR STANDARDS

FACTS: Philippine Coconut Producers Federation operates petitioner COCOFED

(Kalamansig), a coconut plantation utilized as a demonstration farm for replanting
and/or training area for coconut farmers, located in Kalamansig, Sultan Kudarat.

On November 15, 1988, a complaint inspection was conducted by the Department

of Labor and Employment, Region XII, Cotabato City in response to complaints
filed by two of petitioner's employees, Alex Edicto and Delia Pahuwayan. The
inspection revealed that petitioner was guilty of underpayment of wages,
emergency cost of living allowance (ECOLA) and 13th month pay. Accordingly,
notice of inspection results were issued: requiring petitioner to effect restitution or
correction within five (5) days from notice.

Allegation of the complainant: They were not receiving the statutory minimum
wage since 1984 and COCOFED should not be categorized as an establishment
with paid-up capital of P50,000.00 or less inasmuch as it erroneously based its
claim on the value of its declared real property and not its paid-up capital.

Defense by COCOFED: It should be classified as an establishment with less than

30 employees and with a paid-up capital of P500,000.00 or less as evidenced by
the assessment of the municipal treasurer. Moreover, complainants worked for
less than eight hours, a minimum of four and maximum of six. Hence, petitioner
was justified in paying an amount less than the statutory minimum wage.

On November 13, 1989, petitioner filed a motion to conduct a time and motion
study to determine the fair and reasonable wage rates to be paid to complainants.

On March 22, 1990, Director Melencio Q. Balanag of the DOLE Regional Office in
Cotabato City, issued a Compliance Order which ordered COCOFED to pay the
Twenty One (21) workers their entitlements for underpayment of wages,
underpayment of ECOLA, and underpayment of 13th month pay.

This case was raised to the Sec. Of Labor.

On July 30, 1990, Undersecretary Cresenciano B. Trajano denied the motion of

the COCOfed rationating that:

On the basis of the payrolls submitted by the respondent, we find that Regional
Director was correct in ruling that the complainants are daily paid workers. While
respondent claims the in 1985 these workers were paid on piece rate basis still the
payrolls show that from March 1985 to February 1989, the complainants were paid
 LABOR STANDARDS

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
Art. 100 of the Labor Code. What it has voluntarily given cannot be unilaterally
withdrawn. Besides, the implementing rules are explicit to the effect that nothinzg
therein shall justify an employer from withdrawing or reducing benefits or
supplements provided in existing individual or collective agreement or employer
practice or policy. (Oceanic Phamacal Employees Union v. Hon. A. Inciong, G.R.
No. L-50568, November 7, 1979)

Lastly, we find that respondent's claim that it falls within the category of
establishments with paid-up capital of P500,000.00 remains a bare allegation
without a scintilla of evidence to stand on. Obviously, the same is bereft of merit.

1st ISSUE W/n public respondents committed grave abuse of discretion in not
categorizing it as an establishment with less than 30 employees and with a paid
up capital of P500,000.00 or less

There is no question that it employs only twenty-one employees. Petitioner argues

that to have a paid-up capital of P500,000.00, it should have a subscribed capital
of at least P2,000,000.00 and authorized capital stock of P8,000,000.00.
Petitioners total capital asset based on an assessment from the Municipal
Treasurer of Kalamansig and the receipts of payment of its realty taxes is only
P1,365,430.00. If categorized as such, petitioner should pay the following wages:

Per W.O. No. 6

Effective Nov. May Oct. 1

11984 1198 1987 Jan.
7 198
8
b. 32.00 35.0 38.50
Agricultu 0 44.0
re 0
Plantatio
n

instead of the following rates used by public respondents:

Per W.O. No. 6

 LABOR STANDARDS

1 Nov. 1 May 1
EFFECT 1984 1987 Oct.198
IVE 7
b. 32.00 38.50 44.00 8
Agricultu
re
Plantatio
n

The allegation of petitioner that it has capital assets of P1,365,430.00 to support

its position that it has a paid-up capitalization of less than P500,000.00 is totally
without basis.

ISSUE: Whether or not compainants are daily paid workers. YES

Allegation of COCOFED: Employees are paid by result or are; piece rate workers
who work for less than eight hours, that is, a minimum of four and a maximum of
six. Thus, they should be paid a proportionate amount of the applicable statutory
minimum wage.

RULING: The findings of administrative agencies which have acquired expertise

because their jurisdiction is confined to specific matters are generally accorded not
only respect but finality 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.

ABOITIZ v DELA SERNA (1990)

FACTS: A complaint was filed by the Aboitiz Shipping Employees Association

against Aboitiz Shipping Corporation for non-compliance of the mandated
minimum wage rates and allowances. Accordingly, the Labor Regulation Officers
of the Regional Office a quo inspected the respondent's employment records.
Series of hearings were conducted whereby the respondent was directed to
present and submit all its pertinent papers/employment records covered by the
investigation. However, on several occasions, the respondent failed to appear.
 LABOR STANDARDS

Aboitiz Shipping Corporation was required for quite a number of times to present
in evidence its employees payrolls and vouchers. However, Aboitiz Shipping failed
to do so.

The Regional Director of DOLE-NCR rendered a decision ordering Aboitiz

Shipping to pay the complainants the total amount of PhP1,350,828.00
representing underpayment of daily allowance of PhP 2.00per day reckoned from
16 February 1982 to 15 February 1985.
On appeal to the Office of the Secretary of Labor and Employment, in which Aboitiz
Shipping questioned the jurisdiction of respondent Regional Director over the
instant claims, respondent Undersecretary issued the Order dismissing petitioner's
appeal and affirming the Order of the respondent Director.

ISSUE: Whether the Regional Director of DOLE-NCR correctly assumed

jurisdiction over the money claims filed with him by the complainants.

RULING Under the foregoing provisions of Articles 129 and 217 of the Labor Code,
as amended, the Regional Director is empowered, through summary proceeding
and after due notice, to hear and decide cases involving recovery of wages and
other monetary claims and benefits, including legal interest, provided the following
requisites are present, to wit:

1) the claim is presented by an employee or person employed in domestic or

household service, or househelper;
2) the claim arises from employer-employee relations;
3) the claimant does not seek reinstatement; and
4) the aggregate money claim of each employee or househelper does not
exceed P5,000.00 (Art. 129, Labor Code, as amended by R.A. 6715).

In the absence of any of the requisites above enumerated, it is the Labor Arbiter
who shall have exclusive original jurisdiction over claims arising from employer-
employee relations, except claims for employees' compensation, social security,
medicare and maternity benefits, all these pursuant to Article 217 of the Labor
Code, particularly paragraph six (6) thereof.

In the case at bar, it is noted that in the Order of the Regional Director, the latter
found each of the seven hundred seventeen (717) complainants entitled to a
uniform amount of P1,884.00.. All the other requisites for the exercise of the power
of the Regional Director under Article 129 of the Labor Code, as amended by R.A.
 LABOR STANDARDS

6715, are present. It follows that the respondent Regional Director properly took
cognizance of the claims, subject of this petition.

As to the petitioner's contention that it was denied due process of law as it was not
afforded time and opportunity to present its evidence, the records show that on
several occasions despite due notice, petitioner failed to either appear at the
scheduled hearings, or to present its employees' payrolls and vouchers for wages
and salaries, particularly. Therefore, petitioner was not denied due process of law.

The Court also does not agree with Aboitiz Shippings allegation that it was
improper for the respondent Regional Director to order in the questioned Order,
compliance with P.D. 1678 as the issue on the said decree was never raised by
private respondent in its complaint filed before the Regional Director. While it may
be true that P.D. 1678 is not one of the laws where non-compliance therewith was
complained of, still, the Regional Director correctly acted in ordering petitioner to
comply therewith, as he (Regional Director) has such power under his visitorial and
enforcement authority provided under Article 128(a) of the Labor Code.

The Court also finds no merit in Aboitiz Shippings contention that the case should
have dismissed outright by virtue of the Compromise Agreement entered into by
the parties. Said Compromise Agreement shall not bind the complainant union
since it was entered into by one Mr. Manuel in his personal capacity and a
representative of Aboitiz Shipping.

BROKENSHIRE v MOLE (1990)

FACTS A complaint filed by private respondents (BROKENSHIRE MEMORIAL

HOSPITAL EMPLOYEES AND WORKER'S UNION-FFW) against petitioner
(BROKENSHIRE MEMORIAL HOSPITAL, INC.) on September 21, 1984 with the
Regional Office of the MOLE, Region XI, Davao City for non-compliance with the
provisions of Wage Order No. 5. After due healing the Regional Director (Eugenio
I. Sagmit, Jr.) rendered a decision dated November 16, 1984 in favor of private
respondents. Judgment having become final and executory, the Regional Director
issued a Writ of Execution whereby some movable properties of the hospital
(petitioner herein) were levied upon and its operating expenses kept with the bank
were garnished. The levy and garnishment were lifted when petitioner hospital paid
the claim of the private respondents (281 hospital employees) directly, in the total
amount of P163,047.50 covering the period from June 16 to October 15, 1984.
 LABOR STANDARDS

After making said payment, petitioner hospital failed to continue to comply with
Wage Order No. 5 and likewise, failed to comply with the new Wage Order No. 6
which took effect on November 1, 1984, prompting private respondents to file
against petitioner another complaint docketed as ROXI-LSED-14-85, which is now
the case at bar.

In its answer, petitioner raised the following affirmative defenses:

1) That the Regional Office of the Ministry of Labor did not acquire
jurisdiction over it for want of allegation that it has the capacity to be
sued and
2) That Wage Order Nos. 5 and 6 are non-constitutional and therefore
void.

1st ISSUE Whether or not the Regional Director has jurisdiction over money claims
of workers concurrent with the Labor Arbiter.

RULING RA 6715 amended Art. 129 and Art. 217 of the Labor Code, to read as
follows:
ART. 129. Recovery of wages, simple money claims and other
benefits.Upon complaint of any interested party, the Regional
Director of the Department of Labor and Employment or any of the duly
authorized hearing officers of the Department is empowered,
through summary proceeding and after due notice, to hear and decide
any matter involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or person
employed in domestic or household service or househelper under this
code, arising from employer-employee relations, Provided, That such
complaint does not include a claim for reinstatement; Provided, further,
That the aggregate money claims of each employee or househelper do
not exceed five thousand pesos (P5,000.00). The Regional Director or
hearing officer shall decide or resolve the complaint within thirty (30)
calendar days from the date of the filing of the same . . .

ART. 217. Jurisdiction of Labor Arbiters and the Commission. Except

as otherwise provided under this code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decidethe following
cases involving all workers, whether agricultural or non-agricultural:

XXX
 LABOR STANDARDS

(6) Except claims for employees compensation, social security,

medicare and maternity benefits, all other claims arising from employer-
employee relations, including those of persons in domestic or
household service, involving an amount not exceeding five thousand
pesos (P5,000.00), whether or not accompanied with a claim for
reinstatement.

It will be observed that what in fact conferred upon Regional Directors and other
hearing officers of the Department of Labor (aside from the Labor Arbiters)
adjudicative powers, i.e., the power to try and decide, or hear and determine any
claim brought before them for recovery of wages, simple money claims, and other
benefits, is Republic Act 6715, provided that the following requisites concur, to wit:

1) The claim is presented by an employee or person employed in

domestic or household service, or househelper under the code;
2) The claimant, no longer being employed, does not seek
reinstatement; and
3) The aggregate money claim of the employee or househelper does
not exceed five thousand pesos (P5,000.00).

In the absence of any of the three (3) requisites, the Labor Arbiters have exclusive
original jurisdiction over all claims arising from employer-employee relations, other
than claims for employee's compensation, social security, medicare and maternity
benefits.

2nd ISSUE Can the NLRC pass upon the constitutionality of the wage orders?

RULING The Supreme Court is vested by the Constitution with the power to
ultimately declare a law unconstitutional. Without such declaration, the assailed
legislation remains operative and can be the source of rights and duties especially
so in the case at bar when petitioner complied with Wage Order No. 5 by paying
the claimants the total amount of P163,047.50, representing the latter's minimum
wage increases up to October 16, 1984, instead of questioning immediately at that
stage before paying the amount due, the validity of the order on grounds of
constitutionality. The Regional Director is plainly ,without the authority to declare
an order or law unconstitutional and his duty is merely to enforce the law which
stands valid, unless otherwise declared by this Tribunal to be unconstitutional. On
our part, We hereby declare the assailed Wage Orders as constitutional, there
 LABOR STANDARDS

being no provision of the 1973 Constitution (or even of both the Freedom
Constitution and the 1987 Constitution) violated by said Wage Orders, which
Orders are without doubt for the benefit of labor.

ODIN v DELA SERNA (1990)

FACTS A complaint was filed by Sergio Apilado and 55 others charging the
petitioner Odin Security Agency, underpayment of wages, illegal deductions, non-
payment of night shift differential, overtime pay, premium pay for holiday work, rest
days and Sundays, service incentive leaves, vacation and sick leaves, and 13th-
month pay.

When conciliation efforts failed, the parties were required to submit their position
papers.

Private respondents alleged in their position paper that their latest monthly salary
was P1,600; that from this amount, petitioner deducted P100 as administrative cost
and P20 as bond; that they were not paid their premium pay and overtime pay for
working on the 11 legal holidays per year; and, that since private respondents were
relieved or constructively dismissed, they must also be paid backwages.

Petitioner, on the other hand, contended that some 48 security guards threatened
mass action against it. Alarmed by a possible abandonment of post by the guards,
Petitioner relieved and re-assigned the complaining guards to other posts in Metro
Manila. Those relieved were ordered to report to the agency's main office for
reassignment. Only few complied, so those who failed to comply were placed on
"AWOL" status. Petitioner claimed it complied with the Labor Code provisions, and
in support thereof, it submitted the "Quitclaim and Waiver" of 34 complainants. It
further alleged that complainants who rendered over-time work as shown by their
time sheets were paid accordingly; that service incentive leaves not availed of,
night shift differential, rest days, and holidays were paid in cash.

Petitioner filed an ex parte manifestation alleging that 19 complainants had

withdrawn their complaints.

17 complainants repudiated their quitclaim and waiver. They alleged that

management pressured them to sign documents which they were not allowed to
read and that if such waiver existed, they did not have any intention of waiving their
rights under the law.
 LABOR STANDARDS

Petitioner argued that complainants were estopped from denying their quitclaims
on the ground of equity; that being high school graduates, complainants fully
understood the document they signed; and that complainant's allegation of
coercion or threat was a mere afterthought.

Regional Director(DOLE), NCR Luna C. Piezas issued an order directing

respondent to pay complainants

The Undersecretary affirmed the order of the Regional Director with modifications
- added 16 other complainants to the list of whom should be paid; and respondent
is directed to reinstate the complainants to their former positions without loss of
seniority rights plus backwages from the time of their relief from work until their
actual reinstatement.

Petitioner alleges that it was deprived of due process of law, both substantive and
procedural; that the Orders is contrary to law

ISSUE: WON petitioner was denied due process

RULING: NO. 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 the Regional Director based
his decision in the case. Requirements of due process are satisfied when the
parties are given an opportunity to submit position papers. What the fundamental
law abhors is not the absence of previous notice but rather the absolute lack of
opportunity to be heard. There is no denial of due process where a party is given
an opportunity to be heard and present his case. Since petitioner herein
participated in the hearings, submitted a position paper, and filed a motion for
reconsideration of the decision of the Labor Undersecretary, it was not denied due
process.

ISSUE: WON the Regional Director has jurisdiction over private respondents
claims.

HELD: YES. The petitioner is estopped 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. When the Regional Director issued
his order requiring petitioner to pay the private respondents the benefits they were
claiming, petitioner was silent. Only the private respondents filed a motion for
 LABOR STANDARDS

reconsideration. It was only after the Undersecretary modified the order of the
Regional Director that the petitioner moved for reconsideration and questioned the
jurisdiction of the public respondents to hear and decide the case. The principle of
jurisdiction by estoppel bars it from doing this which provides - A party cannot
invoke the jurisdiction of a court to secure affirmative relief against his opponent
and, after obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction

The jurisdiction of public respondents over the complaints is clear from a reading
of Article 128(b) of the Labor Code, as amended by Executive Order No. 111, thus:

(b) The provisions of Article 217 of this Code to the contrary notwithstanding
and in cases where the relationship of employer-employee still exists, the
Minister of Labor and Employment or his duly authorized representatives
shall have the power to order and administer, after due notice and hearing,
compliance with the labor standards provisions of this Code and other labor
legislation based on the findings of labor regulation officers or industrial
safety engineers made in the course of inspection, and to issue writs of
execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the labor
regulation officer and raises issues which cannot be resolved without
considering evidentiary matters that are not verifiable in the normal course of
inspection.

In Briad Agro Development Corp. vs. Hon. Dionisio De la Serna, the Court clarified
the amendment when we ruled, thus:

To recapitulate under EO 111, the Regional Directors, in representation of

the Secretary of Labor and notwithstanding the grant of exclusive original
jurisdiction to Labor Arbiters by Article 217 of the Labor Code, as amended
have power to hear cases involving violations of labor standards
provisions of the Labor Code or other legislation discovered in the course of
normal inspection, and order compliance therewith, provided that:

l) the alleged violations of the employer involve persons who are still his
employees, i.e., not dismissed, and

2) the employer does not contest the findings of the labor regulations
officer or raise issues which cannot be resolved without considering
 LABOR STANDARDS

evidentiary matters that are not verifiable in the normal course of

inspection

The ruling in Briad Agro was reiterated in Maternity Children's Hospital vs.
Secretary of Labor, which provided - 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.

IBM v NLRC (1998)

FACTS:
1. IBM, representing 4500 employees of SMC, demanded for correction of the
significant distortion in the workers wages pursuant to Sec. 4 (d), RA 6727.
2. IBM alleged that SMC ignored the demand by offering a measly across-the-
board wage increase of P7/day as against the IBMs proposal of P25/day, which
was later reduced to P15/day by way of an amicable settlement.
3. Because of SMCs rejection, IBM members refused to render overtime services
as their means of compelling SMC to correct the wage distortion.
4. SMC claimed that the abandonment of the long-standing work schedule caused
substantial losses (P174,657,598 in sales and P48,904,311 in revenues), work
disruption, and lower efficiency to the prejudice of SMC. Hence, it filed a
complaint before the NLRC to declare the strike or slowdown illegal.

ISSUE: W/N IBMs concerted acts of reducing their work time, thereby causing
financial losses to SMC in order to compel it to yield to the demand for correction
of wage distortions, are illegal.

HELD: YES. IBMs concerted acts are illegal. It is prohibited under RA 6727 and
the CBA.

SMCs contention: The concerted acts are contrary to law and to the CBA
between it and IBM.

RULING: Although Art. 263, LC gives the workers the right to engage in concerted
activities for purposes of CBA or for their mutual benefit and protection, these
activities may be forbidden or restricted by law or contract.
 LABOR STANDARDS

Sec. 3, RA 6727 prescribes a specific, detailed, and comprehensive procedure for

the correction of wage distortion. And it implicitly excludes strikes, lockouts, or
other concerted activities as modes of settlement of the issues.
The legislative intent that solution of the problem of wage distortion shall be sought
by voluntary negotiation or arbitration, and not by strikes, lockouts, or other
concerted activities of the employees or management, is made clear in Sec. 16,
Chapter I, RA 6727 IRR: Any issue involving wage distortion shall NOT be a
ground for a strike/lockout.

Moreover, under the CBA, IBM was prohibited to declare and hold a strike or
otherwise engage in non-peaceful concerted activities for the settlement of its
controversy with SMC in respect of wage distortions.

IBMs acts are in the nature of a slowdown which is a strike on the installment
plan, a willful reduction in the rate of work by concerted action of workers for the
purpose of restricting the output of the employer, in relation to a labor dispute; an
activity by which workers, without a complete stoppage of work, retard production
or their performance of duties and functions to compel management to grant their
demands.

Thus, the partial strike or concerted refusal by the IBM to follow the 5-year-old work
schedule is tantamount to a slowdown which is forbidden by law and contract,
hence, illegal.

B. Working conditions for special groups xx

1. Women

PT & T v NLRC (1997)

FACTS: Petitioner Philippine Telegraph and Telephone Company (hereafter, PT

& T) invokes the alleged concealment of civil status and defalcation of company
funds as grounds to terminate the services of an employee. That employee, herein
private respondent Grace de Guzman, contrarily argues that what really motivated
PT & T to terminate her services was her having contracted marriage during her
employment, which is prohibited by petitioner in its company policies. She thus
claims that she was discriminated against in gross violation of law, such a
proscription by an employer being outlawed by Article 136 of the Labor Code.
 LABOR STANDARDS

ISSUE: WON ART 136 of the Labor Code was violated

RULING: Petitioner's policy of not accepting or considering as disqualified from

work any woman worker who contracts marriage runs afoul of the test of, and the
right against, discrimination, afforded all women workers by our labor laws and by
no less than the Constitution. Contrary to petitioner's assertion that it dismissed
private respondent from employment on account of her dishonesty, the record
discloses clearly that her ties with the company were dissolved principally because
of the company's policy that married women are not qualified for employment in
PT & T, and not merely because of her supposed acts of dishonesty.

Petitioner's policy is not only in derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good morals
and public policy, tending as it does to deprive a woman of the freedom to choose
her status, a privilege that by all accounts inheres in the individual as an intangible
and inalienable right. 38 Hence, while it is true that the parties to a contract may
establish any agreements, terms, and conditions that they may deem convenient,
the same should not be contrary to law, morals, good customs, public order, or
public policy. 39 Carried to its logical consequences, it may even be said that
petitioner's policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.

It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita,
et al. vs. Philippine Air Lines, 33 a decision that emanated from the Office of the
President. There, a policy of Philippine Air Lines requiring that prospective flight
attendants must be single and that they will be automatically separated from the
service once they marry was declared void, it being violative of the clear mandate
in Article 136 of the Labor Code with regard to discrimination against married
women.

GUALBERTO v MARINDUQUE (1978)

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.
 LABOR STANDARDS

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 pre-employment arrangements that they would be
dismissed once they get married and afterwards expect the Courts to sustain such
an agreement.

ISSUE: WON 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.

3. Househelpers

APEX v NLRC

FACTS: Candida was employed by Apex Mining Company to perform laundry

services at its staff house. In the beginning, she was paid on a piece rate basis.
However, on January 17, 1982, she was paid on a monthly basis at P250.00 a
month which was ultimately increased to P575.00 a month.

While she was attending to her assigned task and she was hanging her
laundry, she accidentally slipped and hit her back on a stone. As a result of the
accident she was not able to continue with her work. She was permitted to go on
leave for medication. De la Rosa offered her the amount of P 2,000.00 which was
eventually increased to P5,000.00 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.

ISSUE: Is the househelper in the staff houses of an industrial company a domestic

helper or a regular employee of the said firm?

RULING: Candida is a REGULAR EMPLOYEE of Apex

Petitoners contention: Private respondent should be treated as a mere

househelper or domestic servant and not as a regular employee of petitioner.
 LABOR STANDARDS

Petitioner contends that it is only when the househelper or domestic servant is

assigned to certain aspects of the business of the employer that such househelper
or domestic servant may be considered as such as employee.

Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms
"househelper" or "domestic servant" are defined as follows:

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.3

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. Such definition covers
family drivers, domestic servants, laundry women, yayas, gardeners, houseboys
and other similar househelps.

The definition cannot be interpreted to include househelp or laundrywomen

working in staffhouses of a company, like petitioner who attends to the needs of
the company's guest and other persons availing of said facilities. By the same
token, it cannot be considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its premises. They may
not be considered as within the meaning of a "househelper" or "domestic servant"
as above-defined by law.

The criteria 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.
 LABOR STANDARDS

The mere fact that the househelper or domestic servant is working within the
premises of the business of the employer and in relation to or in connection with
its business, as in its staffhouses for its guest or even for its officers and
employees, warrants the conclusion that such househelper or domestic servant is
and should be considered as a regular employee of the employer and not as a
mere family househelper or domestic servant as contemplated in Rule XIII, Section
l(b), Book 3 of the Labor Code, as amended.

C. RA 7877

LIBRES v NLRC (1999)

FACTS: Petitioner Carlos G. Libres, an electrical engineer, was holding a

managerial position with National Steel Corporation (NSC) as Assistant
Manager. On 3 August 1993 he received a Notice of Investigation from Assistant
Vice President Isidro F. Hynson Jr., his immediate superior, requesting him to
submit a written explanation relative to the charge of sexual harassment made by
Susan D. Capiral, Hynsons secretary, allegedly committed by Libres sometime in
May 1992, and subsequently to answer clarificatory questions on the matter.

On 14 August 1993 petitioner submitted his written explanation denying the

accusation against him and offering to submit himself for clarificatory interrogation.

Hynson Jr. conducted an internal investigation to which Capiral and Libres were
invited to ventilate their respective sides of the issue. The Management Evaluation
Committee (MEC), after deliberation, concluded that the charges against petitioner
constituted a violation of Item 2, Table V, of the Plants Rules and Regulations.

It opined that touching a female subordinates hand and shoulder, caressing her
nape and telling other people that Capiral was the one who hugged and kissed or
that she responded to the sexual advances are unauthorized acts that damaged
her honor. Referring to the Manual of the Philippine Daily Inquirer in defining sexual
harassment, the MEC finally concluded that petitioners acts clearly constituted
sexual harassment as charged and recommended petitioners suspension for thirty
days without pay.

Seeking to reverse his misfortune, Libres filed a complaint for illegal suspension
and unjust discrimination against respondent NSC and its officers, private
 LABOR STANDARDS

respondents herein, before the Labor Arbiter. He claimed that he was denied due
process when MEC did not grant his request for audience/confrontation.

Labor Arbiters decision: Due process was properly observed and that there was
a positive finding of sexual harassment to justify petitioners suspension. The Labor
Arbiter found that aside from a few facts which were controverted by Capiral in her
complaint-affidavit, petitioners admissions approximated the truth; consequently,
he ruled that the MEC was correct in including that sexual harassment had indeed
transpired. The Labor Arbiter observed that petitioner should welcome that his
penalty was only for suspension of thirty days as opposed to termination imposed
in Villarama v. NLRC and Golden Donuts.

NLRC affirmed the Labor Arbiters decision and denied Libres motion for
reconsideration.

Petitioners contention: Petitioner primarily disputes the failure of the NLRC to

apply RA No. 7877 (An Act Declaring Sexual Harassment Unlawful in the
Employment, Education or Training Environment and for Other Purposes), in
determining whether he actually committed sexual harassment. He asserts that his
acts did not fall within the definition and criteria of sexual harassment as laid down
in Sec. 3 of the law. Specifically, he cites public respondents failure to show that
his acts of fondling the hand and massaging the shoulders of Capiral discriminated
against her continued employment, impaired her rights and privileges under the
Labor Code, or created a hostile, intimidating or offensive environment.

ISSUE W/N the NLRC erred when it affirmed the decision of the Labor Arbiter
finding Libres guilty of sexual harassment and that his suspension was valid. NO

RULING Petitioner assails the failure of the NLRC to strictly apply RA No. 7877 to
the instant case. However, petitioner never raised the applicability of the law in his
appeal to the NLRC nor in his motion for reconsideration. Issues or arguments
must chiefly be raised before the court or agency concerned so as to allow it to
pass upon and correct its mistakes without the intervention of a higher court.
Having failed to indicate his effort along this line, petitioner cannot now belatedly
raise its application in this petition.

Republic Act No. 7877 was not yet in effect at the time of the occurrence of the act
complained of. It was still being deliberated upon in Congress when petitioners
case was decided by the Labor Arbiter. As a rule, laws shall have no retroactive
 LABOR STANDARDS

effect unless otherwise provided, or except in a criminal case when their

application will favor the accused. Hence, the Labor Arbiter has to rely on the MEC
report and the common connotation of sexual harassment as it is generally
understood by the public. Faced with the same predicament, the NLRC had to
agree with the Labor Arbiter. In so doing, the NLRC did not commit any abuse of
discretion in affirming the decision of the Labor Arbiter.

Petitioner next trains his gun on the reliance by the NLRC on Villarama and claims
it was erroneous. The SC ruled otherwise and hold that it was both fitting and
appropriate since it singularly addressed the issue of a managerial employee
committing sexual harassment on a subordinate. The disparity in the periods of
filing the complaints in the two cases did not in any way reduce this case into
insignificance. On the contrary, it even invited the attention of the Court to focus
on sexual harassment as a just and valid cause for termination. Whereas petitioner
Libres was only meted a 30-day suspension by the NLRC, Villarama, in the other
case was penalized with termination. As Mr. Justice Puno elucidated, as a
managerial employee, petitioner is bound by more exacting work ethics. He failed
to live up to his higher standard of responsibility when he succumbed to his moral
perversity. And when such moral perversity is perpetrated against his subordinate,
he provides a justifiable ground for his dismissal for lack of trust and confidence. It
is the right, nay, the duty of every employer to protect its employees from
oversexed superiors. Public respondent therefore is correct in its observation that
the Labor Arbiter was in fact lenient in his application of the law and jurisprudence
for which petitioner must be grateful and not gripe against.

BIBOSO v VILLANUEVA (2007)

FACTS Complainant Lucita E. Biboso, 33, claimed that at around 11 oclock in the
morning of August 20, 1996, she went to see Judge Villanueva at the MCTC in
Esperanza, Sultan Kudarat to follow up her case but she was molested by the
respondent. Lucita claimed that Judge Villanueva embraced and kissed her,
removed her blouse and caressed her breasts, and began unzipping her pants,
and that she could not do anything because of respondent's strength. What she
did then is evade the sexual advances of respondent and ran outside the chamber
and went home. Biboso further alleged that the respondent molested her again on
September 4 of the same year while she was in his chambers.

Judge Villanueva's contention: Respondent, on the other hand, claimed that the
allegations made by the complainant is false. He claimed that complainant and her
 LABOR STANDARDS

father-in-law, Cipriano Biboso, trumped up charges against him because he had

dismissed two cases filed by complainant and her father-in-law. He contended that
he could not have sexually molested complainant on August 20, 1996 in
Esperanza because he was in Lebak, Sultan Kudarat from August 19-23, 1996,
discharging his duties as Acting Presiding Judge of the First Municipal Circuit Trial
Court for Lebak-Kalamansig, Sultan Kudarat. To support his alibi, he submitted
several documentary evidence of him being in Lebak.

As to the second incident of sexual harassment which allegedly took place on

September 4, 1996, respondent stated that such could not have been committed
as there was no session in Esperanza on that date.

RTC: Executive Judge German M. Malcampo found complainants claim of sexual

harassment to be unsubstantiated due to material inconsistencies between
complainants affidavit-complaint and her testimony during the investigation of the
case. Nevertheless, in view of his finding that respondent gave assistance to
complainants father-in-law in filing a case in his sala, Judge Malcampo
recommended that respondent be reprimanded and ordered to pay a fine in the
amount of P20,000.00.

ISSUE Whether or not respondent commit sexual harassment towards

complainant. No.

RULING Complainant thus failed to prove her charges against respondent. The
inconsistencies between her testimony and complaint-affidavit, in contrast to the
credible testimonial and documentary evidence presented by respondent, put in
serious doubt the veracity of her claims. Indeed, it appears, as respondent judge
claims, that this case was filed to punish him for having dismissed the cases filed
by complainant and her father-in-law, especially as the filing of this case came on
the heels of the dismissal of the latter. There could no other reason for complainant
to turn against respondent when the latter had previously helped complainant in
her legal problems to the extent of preparing her father-in-laws complaint-affidavit
for estafa against Navarra and even issuing a writ of execution in one case (Civil
Case No. 71) and a warrant of arrest in another (Criminal Case No. 1662-B).

Furthermore, it took complainant more than a year after the commission of the
alleged sexual harassment on September 4, 1996 to file the instant administrative
complaint. Even complainant's explanation as to why she executed her affidavit-
complaint only on October 16, 1997 was conflicting. She initially stated that she
 LABOR STANDARDS

was only able to execute her complaint-affidavit for this case on said late date
because rumors had spread by that time that she was respondents lover (kabit).
During her cross-examination, however, she stated that she had to defer the
execution of her complaint because she had to wait for her husband to come back
from Manila.

It was established that a meeting in the courthouse between the Judge and Biboso
took place on 27 August 1996 during which the respondent only shook her hand.
The Court held: In any event, the incident does not constitute sexual harassment
for, as she herself stated, respondent merely shook her hand.

JACUTIN v PEOPPLE (2002)

FACTS Jacutin, a City Health Officer of Cagayan de Oro City allegedly committed
the offense in relation to his official functions by requesting sexual favors from Ms.
Juliet Q. Yee, a young 22 year-old woman, single and fresh graduate in Bachelor
of Science in Nursing who was seeking employment in the office of the accused
which sexual favor was made as a condition for her employment.

Sandiganbayan: Jacutin is guilty of the crime of Sexual Harassment under

Republic Act No. 7877.

ISSUE: WON Jacutin violated RA 7877.

RULING: YES

Section 3 of Republic Act 7877 provides:

SEC. 3. Work, Education or Training-related Sexual Harassment Defined. Work,

education or training-related sexual harassment is committed by an employer,
employee, manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having authority, influence or
moral ascendancy over another in a work or training or education environment,
demands, requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for submission is
accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed

when:
 LABOR STANDARDS

(1) The sexual favor is made as a condition in the hiring or in the employment, re-
employment or continued employment of said individual, or in granting said
individual favorable compensation, terms, conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in limiting, segregating or classifying
the employee which in any way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said employee.

In the case at bar, Jacutin would appear to have conveyed, by his words and
actions, an impression that he could facilitate Juliets employment. Indeed, he
would not have been able to take undue liberalities on the person of Juliet had it
not been for his high position in the City Health Office of Cagayan de Oro City.

He demanded from Ms. Yee that she should, expose her body and allow her
private parts to be mashed and stimulated by him, which sexual favor was made
as a condition for her employment. Hence, his actions fall within the ambit of Sec
3, RA 7877.

SC: Jacutin is GUILTY of the crime of Sexual Harassment defined and punished
under Republic Act No. 7877, particularly Sections 3 and 7 thereof, and penalizing
him with imprisonment of six (6) months and to pay a fine of Twenty Thousand
(P20,000.00) Pesos, with subsidiary imprisonment in case of insolvency;petitioner
is ordered to indemnify the offended party, Juliet Yee, in the amount of P30,000.00
and P20,000.00 by way of, respectively, moral damages and exemplary damages.
Costs against petitioner.