UNIVERSITY OF

CALOOCAN CITY

LABOR RELATIONS AND

NEGOTIATIONS
HRM 321
 EMPLOYER – EMPLOYEE RELATIONSHIP
(GROUP 1)

PHILIPPINE COMMERCIAL INTERNATIONAL BANK

VS. ANASTACIO D. ABAD

G.R. No. 158045

February 28, 2005

FACTS:

Anastacio D. Abad was the senior Assistant Manager (Sales Head) of petitioner
Philippine Commercial International Bank (PCI Bank now Equitable PCI Bank)], when he
was dismissed from his work. Abad received a Memorandum from petitioner Bank
concerning the irregular clearing of PNB-Naval Check of Sixtu Chu, the Bank’s valued
client. Abad submitted his Answer, categorically denying that he instructed his subordinates
to validate the out-of-town checks of Sixtu Chu presented for deposit or encashment as local
clearing checks. During the actual investigation conducted by petitioner Bank, several
transactions violative of the Bank’s Policies and Rules and Regulations were uncovered by
the Fact-Finding Committee.

Consequently, the Fact-Finding Officer of petitioner Bank issued another

Memorandum to Abad asking the latter to explain the newly discovered irregularities.

Not satisfied with the explanations of Abad, petitioner Bank served another
Memorandum, terminating his employment effective immediately upon receipt of the same.
Thus, Abad instituted a Complaint for Illegal Dismissal.

ISSUE:

Whether or not awarding of separation pay equivalent to one-half (1/2)

month’s pay for every year of service to respondent is gross, the same being contrary
to law and jurisprudence.

RULING:

The award of separation pay is required for dismissals due to causes specified under
Articles 283 and 284 of the Labor Code, as well as for illegal dismissals in which
reinstatement is no longer feasible. On the other hand, an employee dismissed for any of the
just causes enumerated under Article 282 of the Labor Code is not, as a rule, entitled to
separation pay.

As an exception, allowing the grant of separation pay or some other financial

assistance to an employee dismissed for just causes is based on equity. The Court has granted
separation pay as a measure of social justice even when an employee has been validly
dismissed, as long as the dismissal was not due to serious misconduct or reflective of
personal integrity or morality.
 AGABON VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 158693
November 17, 2004

FACTS:

Private respondent Riviera Home Improvements, Inc. is engaged in the business of

selling and installing ornamental and construction materials. It employed petitioner Virgilio
Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until
February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed
a complaint for illegal dismissal. The Labor Arbiter rendered a decision declaring the
dismissal illegal. On appeal, the NLRC reversed the decision because it found that the
petitioners had abandoned their work and were not entitled to back wages and separation pay.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal
because they had abandoned their employment.

ISSUE:

Whether or not petitioners were illegally dismissed.

RULING:

The dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent, however, did not
follow the notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore. Unfortunately
for the private respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employee’s last known address.

Thus, it should be held liable for non-compliance with the procedural requirements of
due process. When the dismissal is for a just cause, the lack of statutory due process should
not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should
indemnify the employee for the violation of his statutory rights.

SAMUEL SAMARCA VS. ARC-MEN INDUSTRIES, INC.

G.R. No. 146118

September 29, 2003

FACTS:

Samuel Samarca was employed as a laborer by Arc-Men Industries, Inc. On

September 26, 1993, petitioner filed an application for an emergency leave of absence on
account of his son’s hospitalization. Upon his return for work, petitioner was immediately
served with a notice of respondent’s order suspending him for 30 days. Feeling aggrieved,
petitioner filed a complaint for illegal suspension against respondent and its owner. During
the pendency of the complaint, petitioner’s 30-day suspension ended. Consequently,
respondent, in a letter, directed petitioner to report for work immediately. However, he
refused, prompting respondent to send him a Notice to Terminate, directing him to submit,
within 5 days, a written explanation why he should not be dismissed from the service for
abandonment of work. For his part, petitioner submitted a letter-reply explaining that because
of the pendency of his complaint for illegal suspension with the Labor arbiter, he could not
report for work. Respondent, finding the petitioner’s written explanation insufficient, decided
to terminate his services via a Notice of Termination.

Consequently, petitioner filed an amended complaint for illegal dismissal.

ISSUE:

Whether or not petitioner abandoned his work.

RULING:

To constitute abandonment, two elements must concur:

(1) The failure to report for work or absence without valid or justifiable reason, and (2) a
clear intention to sever the employer-employee relationship manifested by some overt acts.
Mere absence is not sufficient. It is the employer who has the burden of proof to show a
deliberate and justified refusal of the employee to resume his employment without any
intention of returning.

The above twin essential requirements for abandonment to exist are not present in the
case at bar. Petitioner’s absence is not without a justifiable reason. It must be recalled that
upon receipt of the Notice to Terminate by reason of abandonment, petitioner sent respondent
a letter explaining that he could not go back to work because of the pendency of his
complaint for illegal suspension. And immediately after he was dismissed for abandonment
of work, he lost no time to amend his complaint to illegal dismissal. This alone negates any
intention on his part to forsake his work. It is a settled doctrine that the filing of a complaint
for illegal dismissal is inconsistent with the charge of abandonment, for an employee who
takes steps to protest his dismissal cannot by logic be said to have abandoned his work.
ABANDONMENT OF WORK; PROCEDURE FOR TERMINATING AN
EMPLOYEE; ILLEGAL DISMISSAL

WILHELMINA OROZCO VS. COURT OF APPEALS

G.R. NO. 155207

AUGUST 13, 2008

FACTS:
 In March 1990, Wilhelmina Orozco was hired as a writer by the Philippine Daily
Inquirer (PDI).

She was the columnist of “Feminist Reflections” under the Lifestyle section of the
publication. She writes on a weekly basis and on a per article basis (P250-300/article). In
1991, Leticia Magsanoc as the editor-in-chief sought to improve the Lifestyle section of the
paper. She said there were too many Lifestyle writers and that it was time to reduce the
number of writers. Orozco’s column was eventually dropped.

Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc. Orozco won
in the Labor Arbiter where the arbiter ruled that there exists an employer-employee
relationship between PDI and Orozco. The case eventually reached the Court of Appeals
where the CA ruled that there is no such relationship. Orozco insists that by applying the
four-fold test, it can be seen that she is an employee of PDI; Orozco insists that PDI had been
exercising the power of control over her because PDI provides the guidelines as to what her
article content should be; PDI sets deadlines as to when Orozco must submit her article/s;
PDI controls the number of articles to be submitted by Orozco; PDI requires a certain
discipline from their writers so as to maintain their readership.

ISSUE:

Whether or not a newspaper columnist is an employee of the newspaper which

publishes the column.

RULING:

Under Article 223 of the Labor Code:

ART. 223.  Appeal. – Decisions, awards or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders.

No. The type of control being argued by Orozco is not the type of control
contemplated under the four fold test principle in labor law. The main determinant to test
control is whether the rules set by the employer are meant to control not just the results of the
work but also the means and method to be used by the hired party in order to achieve such
results. In this case, the “control” exercised by PDI over Orozco, as mentioned earlier, is not
that “control” contemplated under the four fold test. In fact, such standards set by PDI is
merely incidental or inherent in the newspaper business and is not an exercise of control
over Orozco.

Orozco has not shown that PDI, acting through its editors, dictated how she was to
write or produce her articles each week. There were no restraints on her creativity; Orozco
was free to write her column in the manner and style she was accustomed to and to use
whatever research method she deemed suitable for her purpose. The apparent limitation that
she had to write only on subjects that befitted the Lifestyle section did not translate to control,
but was simply a logical consequence of the fact that her column appeared in that section and
therefore had to cater to the preference of the readers of that section.

EVELYN TOLOSA VS. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 149578

 April 10, 2003

FACTS:

Captain Virgilio Tolosa was master of the vessel M/V Donna owned by Quana-Kaiun,
and was hired through its manning agent, Asia Bulk Transport Phils., Inc. (Asia Bulk).
During channeling activities upon the vessel’s departure from Yokohama on November 6,
1992, Capt. Tolosa was drenched with rainwater. Subsequently, he contracted fever on
November 11 which was later on accompanied by loose bowel movement for the succeeding
12 days. His condition was reported to Asia Bulk and the US Coast Guard Headquarters in
Hawaii on November 15. However, before he could be evacuated, he died on November 18,
1992.

Evelyn Tolosa, the widow, filed a complaint before the POEA for damages against
Pedro Garate, Chief Mate of the vessel, Mario Asis, Second Mate, Asia Bulk and Quana-
Kaiun. The case was transferred to the NLRC. The Labor Arbiter ruled in favor of the widow,
awarding actual damages plus legal interest, as well as moral and exemplary damages and
attorney’s fees. On appeal to the NLRC, the decision of the Labor Arbiter was vacated and
the complaint was dismissed for lack of jurisdiction over the subject matter of the action
pursuant to the provisions of the Labor Code, as amended. Sustaining the NLRC, the CA
ruled that the labor commission had no jurisdiction over the subject matter of the action filed
by petitioner. Her cause did not arise from an employer-employee relation, but from a quasi-
delict or tort. Under Article 217 (a)(4) of the Labor Code which allows an award of damages
incident to an employer-employee relation, the damages awarded were not proper as she is
not an employee, but merely the wife of an employee.

ISSUES:

(1) Whether or not the Labor Arbiter and the NLRC had jurisdiction over
petitioner’s actiactio.
(2) Whether or not the monetary award granted by the Labor arbiter has already
reached final Held.

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

(2) On the finality of the award, the Court ruled that issues not raised in the court
below cannot be raised for the first time on appeal. Thus, the issue being not brought to the
attention of the Court of Appeals first, this cannot be considered by the Supreme Court. It
would be tantamount to denial of the right to due process against the respondents to do so.

ABANDONMENT OF WORK; REQUISITES

 WORKERS ABROAD

(GROUP 2)

PHILIPPINE AIRLINES, INC. VS. ALBERTO SANTOS, JR. HOUDIEL

MAGADLA
 G.R. NO. 77875

FEBRUARY 4, 1993

FACTS:

The private respondents, Santos, Magadia, Antonio, and Duran, were all employees of
the petitioner, Philippine Airlines (PAL), working as Port Stewards having the following
responsibilities: Preparing meal orders and check-lists, setting up standard equipment in
accordance with the requirements of the type of service for each flight; skiing, binning and
inventorying of Commissary supplies and equipment. On several occasions, certain
deductions were made from their salaries due to losses of items and mishandling of
equipment. Because of this, the private respondents were restrained to file a formal notice
contesting such deductions, which they submitted to their manager. No action was taken
regarding the matter so they filed a formal grievance on November 4, 1984 pursuant to their
Collective Bargaining Agreement (CBA) with PAL. During the time it was submitted, the
manager was on leave, hence, no action was done. The respondents, acting upon the CBA,
which stated that if no action is done within 5 days from filing, the complaint will be deemed
to be resolved in favor of the complainant, refused to do inventory. Due to this, they were
suspended. Subsequently, the respondents filed a case for illegal suspension before the labor
arbiter.

ISSUES:

Was there illegal suspension in this case?

RULING:

Yes. The Court denied the appeal of PAL and ordered the payment of the salaries
during the suspension. The Court held that the respondents properly applied the stipulations
of the CBA. PAL argued that the manager's leave was valid excuse why the complaint was
not acted upon, and that the period should have started from the receipt of the complaint and
not the filing itself. The Court held that PAL was incorrect in interpreting the CBA on the
ground that the Constitutional mandate dictates to favor the laboring classes, not just for
sympathy but to level the playing field of the employer and the employee. Social Justice
dictates that those with less privileges in life should have more privilege in law. The
manager's absence could not have been an excuse because the issue was already known to the
manager even prior to the filing of the complaint, since a formal notice was already
submitted. Furthermore, the Court stated that it would be impossible that the operations of the
office would stop just because the manager was on leave. Such excuse would mean that the
employees would be at the mercy of the employers since their petitions or complaints would
be acted upon only when they wished to and a leave would be the excuse.

The Court, in accordance to the Constitution and to the doctrine of Social Justice,
must weigh in favor of the laborers, not just for mere sympathy, but to level the playing field
in ascertaining the rights of employers and employees.

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS

 VS. HON. FRANKLIN DRILON

G.R. NO. 81958

JUNE 30, 1998

FACTS:

Philippine Association of Service Exporters, Inc. (PASEI), is a firm "engaged

principally in the recruitment of Filipino workers, male and female, for overseas placement".
They challenged the constitutionality of D.O. No. 1, 1988 of the DOLE or the "Guidelines
Governing the Temporary Suspension of Deployment of the Filipino Domestic and
Household Workers". The petitioners claimed that the Order was did not apply to all Filipino
workers but only to domestic helpers and females with similar skills, that it is violative of the
right to travel, it was likewise an invalid exercise of the law making power, police power
being legislative, and not executive, in character. The Solicitor General invoked that such was
an exercise of the police power of the Philippine State and that such was in the nature of a
police power measure.

ISSUE:

Whether or not the said Order is unconstitutional?

RULING:

No. The Court ruled that the Department Order was a valid exercise of police power
and that there was no indue discrimination against the sexes given the unhappy plight that has
befallen the female labor force abroad, especially domestic servants, amid exploitative
working conditions marked by, in not a few cases, physical and personal abuse. The sordid
tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of
torture, confirmed by testimonies of returning workers, are compelling motives for urgent
Government action. As precisely the caretaker of Constitutional rights, the Court is called
upon to protect victims of exploitation. In fulfilling that duty, the Court sustained the
Government's efforts. Unquestionably, it is the avowed objective of Department Order No. 1
to "enhance the protection for Filipino female overseas workers" the SC has no quarrel that in
the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on
deployment will be for their own good and welfare.
 The basis of the Court in ruling with the respondent is the provision of Sec. 3, Art.
XIII of the Constitution which states, "The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and equality of
employment opportunities for all." The Court explained the protection of labor as not merely
not signifying the promotion of employment alone, but that the promotion of such
employment must be above all, decent, just, and humane. The Government is duty-bound to
insure that our toiling expatriates have adequate protection, personally and economically,
while away from home.

PEOPLE OF THE PHILIPPINES (plaintiff-appellee)

VS. MARISSA BAYKER (accused-appellant)

 G.R. No. 170192

FEBRUARY 10, 2016

FACTS:

Accused-appellant Bayker together with 2 others (Nida Bermudez & Lorenz

Langreo), illegally recruited the complainants: Basilio Miparanum, Virgilio Canazares and
Reynaldo Dahab for an overseas job abroad. Complainants paid the amount of P52,000.00,
P10,000.00 and P5,000.00 respectively for the processing of their papers.

Based on their testimony, the accused-appellant represented herself to be recruiting

workers for hotel porters in Canada, then said that they were to be recruited as seamen in
HK . Then after giving their payment for medical examinations, training, seaman's book, and
placement fee, the accused-appellant just made excuses as to why they have not been
deployed. It was only after going to the POEA that they learned that the accused-appellant,
Bermudez and Langreo do not have any license to recruit overseas workers.

note: Dahab recanted his statement; Langreo was arrested, but was not given notice of
proceedings; Bermudez is still at large.

On the other hand, accused-appellant alleged that it was Bermudez and Langreo who
were directly engaged in illegal recruitment and that her only participation was to sign the
receipts as witness and to receive payments. RTC found accused-appellant guilty of illegal
recruitment and estafa.

On appeal, CA affirmed and held that the elements of illegal recruitment in a large
scale had been established.

ISSUE:

Whether or not accused-appellant is guilty of illegal recruitment in large scale.

RULING:

YES. CA decision affirmed.

RATIO:

The SC held that accused-appellant committed illegal recruitment in a large scale

since she had committed acts of recruitment against the 3 complainants despite not having
any license nor being authorized by the POEA. Illegal recruitment is committed by a person
who:

Undertakes any recruitment activity defined under Art. 13(b) or any prohibited practice
enumerated under Arts. 34 and 38 of the LC; Does not have a license or authority to lawfully
engage in the recruitment and placement of workers. Illegal recruitment in a large scale is
committed when the aforementioned were committed against 3 or more persons individually
or as a group. It was duly established that accused-appellant personally promised foreign
employment to the complainants. Her allegation that she had limited participation is also
untenable since she personally accompanied them to their medical examinations, as well as to
the office to introduce to her co-accused. Based on the testimonies of complainants regarding
their recruitment, accused-appellant was unqualifiedly depicted as having the primary and
instrumental role in recruiting them for overseas placement from inception.

Furthermore, a mere employee of a company engaged in illegal recruitment could be

held liable as a principal in illegal recruitment once it was shown that he had actively and
consciously participated in illegal recruitment. This is because recruitment and placement
includes any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, as well as referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not.

PEOPLE OF THE PHILIPPINES VS. MELISSA CHUA

 a.k.a. Clarita Ng Chua

G.R. NO. 187052

SEPTEMBER 13, 2012

FACTS:

Complainants Alberto A. Aglanao, Rey P. Tajadao, Billy R. Danan and Roylan

Ursulum filed a complaint for illegal recruitment, in large scale, against Melissa Chua for
allegedly promising to deploy them as factory workers in Taiwan. They were assured that the
earlier they pay the appropriate placement fees, the earlier they can be deployed abroad. The
complainants, on different occasions, paid Chua a placement fee in the amount of P80,000.00
and underwent medical examinations. Even after completing all the requirements and several
follow-up with Chua, on separate incidents, none of the complainants was deployed in
Taiwan. Eventually they learned that Chua was not licensed to recruit workers for overseas
employment.

On her defense, Chua denied having recruited the complainants and interposed the
defense that she was only a cashier at Golden Gate Office and that she has no knowledge of
whether the agency was licensed to recruit workers during her tenure as it has been delisted.

ISSUE:

Whether Melissa Chua's acts were enough to convict her of illegal recruitment?

LAW:

Labor Code

Article 13, par. (b) Recruitment and placement refer to any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for
profit or not: Provided, That any person or entity which, in any manner, offers or promises
for a fee employment to two or more persons shall be deemed engaged in recruitment and
placement.

Republic Act No. 8042 (R.A. 8042), otherwise known as the Migrants and Overseas Filipinos
Act of 1995
SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13 (f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-licensee or non
holder who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged. It shall likewise include the following acts:

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons individually or as a group. The
persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or direction
of their business shall be liable.

SEC. 7. Penalties. - Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than twelve (12)
years and a fine of not less than Two hundred thousand pesos (P 200,000.00) nor more than
Five hundred thousand pesos (P 500,000.00).

The penalty of life imprisonment and a fine of not less than Five hundred thousand pesos (P
500,000.00) nor more than One million pesos (P 1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the person illegally
recruited is less than eighteen (18) years of age or committed by a non-licensee or non holder
of authority.

CASE HISTORY:

 The RTC found appellant Melissa Chua, a.k.a. Clarita Ng Chua, guilty beyond
reasonable doubt of illegal recruitment in large scale and four counts of estafa.
  The Court of Appeals modified the penalty imposed upon appellant for each count of
estafa to an indeterminate penalty of imprisonment for 4 years and 2 months of prison
correctional as minimum, to 13 years of reclusion temporal, as maximum.
 Thus, this appeal brought before the SC by Melissa Chua.

RULING:

Inarguably, appellant Chua engaged in recruitment when she represented to private

complainants that she could send them to Taiwan as factory workers upon submission of the
required documents and payment of the placement fee. The four private complainants
positively identified appellant as the person who promised them employment as factory
workers in Taiwan for a fee of P 80,000. More importantly, Severino Maranan the Senior
Labor Employment Officer of the POEA, presented a Certification dated December 5, 2002,
issued by Director Felicitas Q. Bay, to the effect that appellant Chua is not licensed by the
POEA to recruit workers for overseas employment. The Court finds no reason to deviate
from the findings and conclusions of the trial court and appellate court. The prosecution
witnesses were positive and categorical in their testimonies that they personally met appellant
and that the latter promised to send them abroad for employment.

In fact, the substance of their testimonies corroborate each other on material points,
such as the amount of the placement fee, the country of destination and the nature of work.
Without any evidence to show that private complainants were propelled by any ill motive to
testify falsely against appellant, we shall accord their testimonies full faith and credit. After
all, the doctrinal rule is that findings of fact made by the trial court, which had the
opportunity to directly observe the witnesses and to determine the probative value of the
other testimonies, are entitled to great weight and respect because the trial court is in a better
position to assess the same, an opportunity not equally open to the appellate court. The
absence of any showing that the trial court plainly overlooked certain facts of substance and
value that, if considered, might affect the result of the case, or that its assessment was
arbitrary, impels the Court to defer to the trial court's determination according credibility to
the prosecution evidence.

Appellant cannot escape liability by conveniently limiting her participation as a

cashier of Golden Gate. The provisions of Article 13(b) of the Labor Code and Section 6 of
R.A. No. 8042 are unequivocal that illegal recruitment may or may not be for profit. It is
immaterial, therefore, whether appellant remitted the placement fees to "the agency's
treasurer" or appropriated them. The same provision likewise provides that the persons
criminally liable for illegal recruitment are the principals, accomplices and accessories. Just
the same, therefore, appellant can be held liable as a principal by direct participation since
she personally undertook the recruitment of private complainants without a license or
authority to do so. Worth stressing, the Migrant Workers and Overseas Filipinos Act of 1995
is a special law, a violation of which is malum prohibitum, not mala in se. Intent is thus,
immaterial and mere commission of the prohibited act is punishable.

The appeal was partly granted. Appellant Melissa Chua, a.k.a. Clarita Ng Chua was
acquitted of one count of estafa filed by private complainant Roylan Ursulum. The Decision
of the Court of Appeals was affirmed with modification as to the fine and indemnity.
 PEOPLE VS. LALLI

G.R. NO. 195419

OCTOBER 12, 2011

FACTS:

On June 6, 2005, Victim went to Zamboanga City wharf at 2:00 o’clock in the
afternoon bringing a bag containing her make-up and powder. She met at the wharf Hadja
Jarma Lalli, Ronnie Aringoy, Honey and Michele. Ronnie gave to Victim her boat ticket for
the vessel M/V Mary Joy bound for Sandakan, Malaysia; a passport in the name of Marife
Plando but with Victim’s picture on it, and ₱1,000.00 in cash. Hadja Jarma, Victim, Honey,
Michele and two other women boarded the boat M/V Mary Joy bound for Sandakan. M/V
Mary Joy arrived at Malaysia at 10:00 o’clock in the morning of June 7, 2005. Hadja Jarma
Lalli, Nestor Relampagos, Victim, boarded a van for Kota Kinabalu. At the hotel, Nestor
Relampagos introduced to Victim and her companions a Chinese Malay called “Boss” as
their employer. A Filipina woman working there said that the place is a prostitution den and
the women there are used as prostitutes. They were fetched by a van at about 7:00 o’clock in
the evening and brought to Pipen Club owned by “Boss Awa”, a Malaysian. At the club, they
were told that they owe the club 2,000 ringgits each as payment for the amount given by the
club to Hadja Jarma Lalli and Nestor Relampagos.

ISSUE:

Whether the accused conspired to commit a crime of Syndicated Illegal Recruitment.

RULING:

Yes, Section 6 of Republic Act No. 8042 (RA 8042) defines illegal recruitment, as
follows:

llegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and includes referring, contact services, promising or
advertising for employment abroad, whether for profit or not, when undertaken by a non-
licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree
No. 442, as amended, otherwise known as the Labor Code of the Philippines. Illegal
recruitment when committed by a syndicate or in large scale shall be considered an offense
involving economic sabotage. Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring or confederating with one
another.

  In this case, the trial court, found the accused to have conspired and confederated
with one another to recruit and place Victim for work in Malaysia, without a POEA
license. The three elements of syndicated illegal recruitment are present in this case, in
particular:

(1) the accused have no valid license or authority required by law to enable them to
lawfully engage in the recruitment and placement of workers;

(2) the accused engaged in this activity of recruitment and placement by actually
recruiting, deploying and transporting Victim to Malaysia; and

(3) illegal recruitment was committed by three persons (Aringoy, Lalli and
Relampagos), conspiring and confederating with one another.

 Aringoy claims and admits that he only referred Victim to Lalli for job opportunities
to Malaysia. Such act of referring, whether for profit or not, in connivance with someone
without a POEA license, is already considered illegal recruitment, given the broad definition
of recruitment and placement in the Labor Code. Lalli, on the other hand, completely denies
any involvement in the recruitment and placement of Victim to Malaysia, and claims she only
met Victim for the first time by coincidence on board the ship M/V Mary Joy. Lalli’s denial
does not deserve credence because it completely conflicts with the testimony of Aringoy who
claims he referred Victim to Lalli who had knowledge of the job opportunities in Malaysia.

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WAGES, SALARY AND SEPARATION PAY

(GROUP 3)
P.I. MANUFACTURING, INCORPORATED, Petitioner, vs. P.I. MANUFACTURING
SUPERVISORS AND FOREMAN ASSOCIATION and the NATIONAL LABOR
UNION, Respondents.

G.R. NO. 167217

FEBRUARY 04, 2008

FACTS:

Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in the

manufacture and sale of household appliances. Respondent P.I. Manufacturing Supervisors
and Foremen Association (PIMASUFA) is an organization of petitioner’s supervisors and
foremen, joined in this case by its federation, the National Labor Union (NLU).

December 10, 1987, R.A. No. 6640 was passed providing an increase in the statutory

minimum wage and salary rates of employees and workers in the private sector, to which it is
increased by P10.00 per day, except non-agricultural workers and employees outside Metro
Manila who shall receive an increase of P11.00 per day: Provided, That those already
receiving above the minimum wage up to P100.00 shall receive an increase of P10.00 per
day. Excepted from the provisions of this Act are domestic helpers and persons employed in
the personal service of another.

December 18, 1987, petitioner and respondent PIMASUFA entered into a new CBA
(1987 CBA) whereby the supervisors were granted an increase of P625.00 per month and the
foremen, P475.00 per month. The increases were made retroactive to May 12, 1987, or prior
to the passage of R.A. No. 6640, and every year thereafter until July 26, 1989.

January 26, 1989, respondents PIMASUFA and NLU filed a complaint with NLRC
charging petitioner with violation of R.A. No. 6640. Respondents attached to their complaint
a numerical illustration of wage distortion resulting from the implementation of R.A. No.
6640.

LA favored respondents ordering Petitioner to give members of respondent

PIMASUFA wage increases equivalent to 13.5% of their basic pay they were receiving prior
to December 14, 1987. On appeal by petitioner, the NLRC affirmed LA’s judgment.
Petitioner filed a petition for certiorari with SCourt. However, SC referred the petition to CA.
CA affirmed the Decision of the NLRC with modification by raising the 13.5% wage
increase to 18.5%. M.R. was denied. Petitioner went to SC but it favored respondents. Hence
this MR.
ISSUES:

1. Whether the implementation of R.A. No. 6640 resulted in a wage distortion

2. Whether such distortion was cured or remedied by the 1987 CBA.
RULING:

I. R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly defines “wage
distortion” as: “a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other
logical bases of differentiation.”
Otherwise stated, wage distortion means the disappearance or virtual
disappearance of pay differentials between lower and higher positions in an enterprise
because of compliance with a wage order. The increase in the wage rates by virtue of R.A.
No. 6640 resulted in wage distortion or the elimination of the intentional quantitative
differences in the wage rates of the supervisor employees of petitioner.

II. Yes. Wage distortions were cured or remedied when respondent PIMASUFA entered

into the 1987 CBA with petitioner after the effectivity of R.A. No. 6640. The 1987 CBA
increased the monthly salaries of the supervisors by P625.00 and the foremen, by P475.00,
effective May 12, 1987. These increases re-established and broadened the gap, not only
between the supervisors and the foremen, but also between them and the rank-and-file
employees. Significantly, the 1987 CBA wage increases almost doubled that of the P10.00
increase under R.A. No. 6640.
The P625.00/month means P24.03 increase per day for the supervisors, while
the P475.00/month means P18.26 increase per day for the foremen. Such gap as re-
established by virtue of the CBA is more than a substantial compliance with R.A. No. 6640.
CA erred in not taking into account the provisions of the CBA. The provisions of the CBA
should be read in harmony with the wage orders, whose benefits should be given only to
those employees covered thereby.
 To require petitioner to pay all the members of respondent PIMASUFA a wage
increase of 18.5%, over and above the negotiated wage increases provided under the 1987
CBA, is highly unfair and oppressive to the former. It was not the intention of R.A. No. 6640
to grant an across-the-board increase in pay to all the employees of petitioner. Only those
receiving wages P100.00 and below are entitled to the P10.00 wage increase. The apparent
intention of the law is only to upgrade the salaries or wages of the employees specified
therein. Almost all of the members of respondent PIMASUFA have been receiving wage
rates above P100.00 and, therefore, not entitled to the P10.00 increase. Only 3 of them are
receiving wage rates below P100.00, thus, entitled to such increase.
TO compel employers simply to add on legislative 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 statutory prescribed minimum rates of increases. Clearly, this would
be counter-productive so far as securing the interests of labor is concerned.
It must be stressed that a CBA constitutes the law between the
parties when freely and voluntarily entered into. Iit has not been shown that respondent
PIMASUFA was coerced or forced by petitioner to sign the 1987 CBA. All of its 13 officers
signed the CBA with the assistance of respondent NLU. They signed it fully aware of the
passage of R.A. No. 6640. The duty to bargain requires that the parties deal with each other
with open and fair minds. Respondents cannot invoke the beneficial provisions of the 1987
CBA but disregard the concessions it voluntary extended to petitioner. The goal of collective
bargaining is the making of agreements that will stabilize business conditions and fix fair
standards of working conditions. Respondents’ posture contravenes this goal.
WHEREFORE, we GRANT petitioner’s MR.
 TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner vs.
NATIONAL LABOR RELATIONS COMMISSION and  EMMANUEL NOEL A.
CRUZ, respondents.

G.R. NO. 120592

MARCH 14, 1997

FACTS:

Petitioner and private respondent Atty. Emmanuel Noel A. Cruz entered into a
retainer agreement whereby the former obligated itself to pay the latter a monthly retainer fee
of P3,000.00 in consideration of the undertaking to render the services enumerated in their
contract.
During the existence of that agreement, petitioner union referred to private respondent
the claims of its members for holiday, mid-year and year-end bonuses against their employer,
Traders Royal Bank (TRB). A complaint was filed by petitioner. NLRC favored the
employees, awarding them holiday pay differential, mid-year bonus differential, and year-end
bonus differential. TRB challenged the decision of the NLRC before the SC. The SC deleted
the award of mid-year and year-end bonus differentials while affirming the award of holiday
pay differential.
After private respondent received the decision of the SC he notified the petitioner
union, the TRB and the NLRC of his right to exercise and enforce his attorney’s lien over the
award of holiday pay differential, he filed a motion before LA for the determination of his
attorney’s fees, praying that 10% of the total award for holiday pay differential computed by
TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney’s fees, and that
petitioner union be ordered to pay and remit said amount to him.
Petitioner opposed said motion. LA favored private respondent. Petitioner appealed to
NLRC but NLRC affirmed LA’s decision. Hence the petition at bar.

ISSUE:

Is the private respondent entitled to Atty.’s fees aside from his retainer fee?
RULING:

Yes. There are 2 commonly accepted concepts of attorney’s fees, the so-called
ordinary and extraordinary.  In its ordinary concept, an attorney’s fee is the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered to the latter.
The basis of this compensation is the fact of his employment by and his agreement with the
client.
In its extraordinary concept, an attorney’s fee is an indemnity for damages ordered by
the court to be paid by the losing party in a litigation. The basis of this is any of the cases
provided by law where such award can be made, such as those authorized in Article 2208,
Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the
award shall pertain to the lawyer as additional compensation or as part thereof.
It is the first type of attorney’s fees which private respondent demanded before the
labor arbiter. A claim for attorney’s fees may be asserted either in the very action in which
the services of a lawyer had been rendered or in a separate action. While a claim for
attorney’s fees may be filed before the judgment is rendered, the determination as to the
propriety of the fees or as to the amount thereof will have to be held in abeyance until the
main case from which the lawyer’s claim for attorney’s fees may arise has become final.
Otherwise, the determination to be made by the courts will be premature.  Of course, a
petition for attorney’s fees may be filed before the judgment in favor of the client is satisfied
or the proceeds thereof delivered to the client.
Private respondent was well within his rights when he made his claim and waited for
the finality of the judgment for holiday pay differential, instead of filing it ahead of the
award’s complete resolution.
The P3,000.00 which petitioner pays monthly to private respondent does not cover the
services the latter actually rendered before the LA and the NLRC in behalf of the former. As
stipulated in their retainer’s agreement, the monthly fee is intended merely as a consideration
for the law firm’s commitment to render the services.
There are two kinds of retainer fees a client may pay his lawyer. These are a general
retainer, or a retaining fee, and a special retainer.
A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future
services as general counsel for any ordinary legal problem that may arise in the routinary
business of the client and referred to him for legal action. The future services of the lawyer
are secured and committed to the retaining client. For this, the client pays the lawyer a fixed
retainer fee. The fees are paid whether or not there are cases referred to the lawyer. The
reason for the remuneration is that the lawyer is deprived of the opportunity of rendering
services for a fee to the opposing party or other parties. In fine, it is a compensation for lost
opportunities.
A special retainer is a fee for a specific case handled or special service rendered by
the lawyer for a client. A client may have several cases demanding special or individual
attention. If for every case there is a separate and independent contract for attorney’s fees,
each fee is considered a special retainer.
The P3,000.00 monthly fee provided in the retainer agreement between the union and
the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the
law firm’s commitment to render the legal services enumerated in said agreement..
Whether there is an agreement or not, the courts can fix a reasonable compensation
which lawyers should receive for their professional services. However, the value of private
respondent’s legal services should not be established on the basis of Article 111 of the Labor
Code alone. Said article provides:
“(a) In cases of unlawful withholding of wages the culpable party may be assessed
attorney’s fees equivalent to ten percent of the amount of the wages recovered.”
The implementing provision 38 of the foregoing article further states:
“Sec. 11.     Attorney’s fees.  Attorney’s fees in any judicial or administrative
proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees
may be deducted from the total amount due the winning party.”
The fees mentioned here are the extraordinary attorney’s fees recoverable as
indemnity for damages sustained by and payable to the prevailing part. The 10% attorney’s
fees fixes only the limit on the amount of attorney’s fees the victorious party may recover in
any judicial or administrative proceedings and it does not revent the NLRC from fixing an
amount lower than 10% ceiling prescribed by the article when circumstances warrant it.
The measure of compensation for private respondent’s services as against his client
should properly be addressed by the rule of quantum meruit which means “as much as he
deserves,” which is used in the absence of a contract, but recoverable by him from his client.
Where a lawyer is employed without a price for his services being agreed upon, the courts
shall fix the amount on quantum meruit basis.
But instead of adopting the above guidelines, the labor arbiter erroneously set the
amount of attorney’s fees on the basis of Article 111 of the Labor Code. He completely relied
on the operation of Article 111 when he fixed the amount of attorney’s fees.
 Article 111 of the Labor Code may not be used as the lone standard in fixing the exact
amount payable to the lawyer by his client for the legal services he rendered. While it limits
the maximum allowable amount of attorney’s fees, it does not direct the instantaneous and
automatic award of attorney’s fees in such maximum limit. The criteria found in the Code of
Professional Responsibility are to be considered, in assessing the proper amount. These are:
(a) the time spent and the extent of services rendered or required; (b) the novelty and
difficulty of the questions involved; (c) the importance of the subject matter; (d) the skill
demanded; (e) the probability of losing other employment as a result of acceptance of the
proffered case; (f) the customary charges for similar services and the schedule of fees of the
IBP chapter to which the lawyer belongs; (g) the amount involved in the controversy and the
benefits resulting to the client from the services; (h) the contingency or certainty of
compensation; (i) the character of the employment, whether occasional or established; and (j)
the professional standing of the lawyer.
WHEREFORE, the Resolution of respondent is MODIFIED, and petitioner is hereby
ORDERED to pay the amount of P10,000.00 as attorney’s fees to private.
 DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE NATIONAL
LABOR RELATIONS COMMISSION, ONG PENG, ET AL., respondents.,

G.R. NO. 100264-81

JANUARY 29, 1993

FACTS:

November 14, 1986, private respondents filed with DOLE- Daet, Camarines Norte, 17
individual complaints against Republic Hardwood Inc. (RHI) for unpaid wages and
separation pay. These complaints were thereafter endorsed to Regional Arbitration Branch of
the NLRC since the petitioners had already been terminated from employment.
RHI alleged that it had ceased to operate in 1983 due to the government ban against
tree-cutting and that in May 24, 1981, its sawmill was totally burned resulting in enormous
losses and that due to its financial setbacks, RHI failed to pay its loan with the DBP. RHI
contended that since DBP foreclosed its mortgaged assets on September 24,1985, then any
adjudication of monetary claims in favor of its former employees must be satisfied against
DBP. Private respondent impleaded DBP.
Labor Arbiter  favored private respondents and held RHI and DBP jointly and severally liable
to private respondents. DBP appealed to the NLRC. NLRC affirmed LA’s judgment. DBP
filed M.R. but it was dismissed. Thus, this petition for certiorari.
ISSUE:

(1) Whether the private respondents are entitled to separation pay.

(2) Whether the private respondents’ separation pay should be preferred than the DBP’s lien
over the RHI’s mortgaged assets.

RULING:

Yes. Despite the enormous losses incurred by RHI due to the fire that gutted the
sawmill in 1981 and despite the logging ban in 1953, the uncontroverted claims for
separation pay show that most of the private respondents still worked up to the end of 1985.
RHI would still have continued its business had not the petitioner foreclosed all of its assets
and properties on September 24, 1985. Thus, the closure of RHI’s business was not primarily
brought about by serious business losses. Such closure was a consequence of DBP’s
foreclosure of RHI’s assets. The Supreme Court applied Article 283 which provides:
“. . . in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses, the separation pay shall be
equivalent to 1 month pay or at least 1/2 month pay for every year of service, whichever is
higher. . . .”
(2) No. Because of the petitioner’s assertion that LA and NLRC incorrectly applied
the provisions of Article 110 of the Labor Code, the Supreme Court was constrained to grant
the petition for certiorari.
Article 110 must be read in relation to the Civil Code concerning the classification,
concurrence and preference of credits, which is application in insolvency proceedings where
the claims of all creditors, preferred or non-preferred, may be adjudicated in a binding
manner. Before the workers’ preference provided by Article 110 may be invoked, there must
first be a declaration of bankruptcy or a judicial liquidation of the employer’s business.
NLRC committed grave abuse of discretion when it affirmed the LA’s ruling.
DBP’s lien on RHI’s mortgaged assets, being a mortgage credit, is a special preferred
credit under Article 2242 of the Civil Code while the workers’ preference is an ordinary
preferred credit under Article 2244.
A distinction should be made between a preference of credit and a lien. A preference
applies only to claims which do not attach to specific properties. A lien creates a charge on a
particular property. The right of first preference as regards unpaid wages recognized by
Article 110 does not constitute a lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a preference in application. It is a
method adopted to determine and specify the order in which credits should be paid in the
final distribution of the proceeds of the insolvent’s assets. It is a right to a first preference in
the discharge of the funds of the judgment debtor.
Article 110 of the Labor Code does not create a lien in favor of workers or employees
for unpaid wages either upon all of the properties or upon any particular property owned by
their employer. Claims for unpaid wages do not therefore fall at all within the category of
specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except
to the extent that such claims for unpaid wages are already covered by Article 2241, (6)-
(claims for laborers’ wages, on the goods manufactured or the work done); or by Article
2242,(3)- (claims of laborers and other workers engaged in the construction, reconstruction
or repair of buildings, canals and other works, upon said buildings, canals and other works.
Since claims for unpaid wages fall outside the scope of Article 2241 (6) and 2242 (3),
and not attached to any specific property, they would come within the category of ordinary
preferred credits under Article 2244.
(Note: SC favored DBP kasi yung mortgage nila against RHI was executed prior  to
the amendment of Article 110. The amendment can’t be given retroactive effect daw. Pero sa
present, 1st  priority na talaga ang laborer’s unpaid wages  regardless kung may mortgage or
wala ang ibang creditors ng employer)
Article 110 of the Labor Code has been amended by R.A. No. 6715 and now reads:
“Article 110. Worker preference in case of bankruptcy. – In the event of bankruptcy
or liquidation of an employers business, his workers shall enjoy first preference as regards
their unpaid wages and other monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages, and monetary claims shall be paid in full before the
claims of the Government and other creditors may be paid.”
The amendment “expands worker preference to cover not only unpaid wages but also
other monetary claims to which even claims of the Government must be deemed
subordinate.” Hence, under the new law, even mortgage credits are subordinate to workers’
claims.
R.A. No. 6715, however, took effect only on March 21, 1989. The amendment cannot
therefore be retroactively applied to, nor can it affect, the mortgage credit which was secured
by the petitioner several years prior to its effectivity.
Even if Article 110 and its Implementing Rule, as as amended, should be interpreted
to mean `absolute preference,’ the same should be given only prospective effect in line with
the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided. To
give Article 110 retroactive effect would be to wipe out the mortgage in DBP’s favor and
expose it to a risk which it sought to protect itself against by requiring a collateral in the form
of real property.
The public respondent, therefore, committed grave abuse of discretion when it
retroactively applied the amendment introduced by R.A. No. 6715 to the case at bar.
Petition GRANTED. Decision of NLRC SET ASIDE.
CENTRAL AZUCARERA DE TARLAC, Petitioner, vs CENTRAL AZUCARERA DE
TARLAC LABOR UNION-NLU, Respondent.

G.R. NO. 188949

JULY 26, 2010

FACTS:

       Petitioner is a domestic corporation engaged in the business of sugar

manufacturing, while respondent is a legitimate labor organization which serves as the
exclusive bargaining representative of petitioner’s rank-and-file employees. The controversy
stems from the interpretation of the term “basic pay,” essential in the computation of the
13th-month pay.
        In compliance with P.D. No. 851, petitioner granted its employees the mandatory
13th – month pay since 1975. The formula used by petitioner in computing it was: Total
Basic Annual Salary divided by 12.  Included in petitioner’s computation of the Total Basic
Annual Salary were the following: basic monthly salary; first 8 hours overtime pay on
Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each
year. Throughout the years, petitioner used this computation until 2006.
On November 6, 2004, respondent staged a strike. During the strike, petitioner
declared a temporary cessation of operations. December 2005, all the striking union members
were allowed to return to work. Subsequently, petitioner declared another temporary
cessation of operations for the months of April and May 2006. The suspension of operation
was lifted on June 2006, but the rank-and-file employees were allowed to report for work on
a 15 day-per-month rotation basis that lasted until September 2006. December 2006,
petitioner gave the employees their 13th-month pay based on the employee’s total earnings
during the year divided by 12.
Respondent objected to this computation. It argued that petitioner did not adhere to
the usual computation of the 13th-month pay.  It claimed that the divisor should have been
eight (8) instead of 12, because the employees worked for only 8 months in 2006. It also
asserted that petitioner did not observe the company practice of giving its employees the
guaranteed amount equivalent to their 1 month pay, in instances where the computed 13th-
month pay was less than their basic monthly pay. Petitioner explained that the change in the
computation of the 13th-month pay was intended to rectify an error in the computation,
particularly the concept of basic pay which should have included only the basic monthly pay
of the employees.
Respondent filed a complaint against petitioner for money claims based on the alleged
diminution of benefits/erroneous computation of 13th-month pay before the Regional
Arbitration Branch of the NLRC. LA favored petitioner. Respondents filed an appeal. NLRC
reversed LA’s decision. Petitioner filed MR which was denied. It went to CA but it affirmed
NLRC’s decision. Hence this petition.
ISSUE:

Whether the new computation of the 13th month pay will result in diminution of
benefits of respondents.

RULING:

Yes. The 13th-month pay represents an additional income based on wage but not part
of the wage.  It is equivalent to 1/12 of the total basic salary earned by an employee within a
calendar year. All rank-and-file employees, regardless of their designation or employment
status and irrespective of the method by which their wages are paid, are entitled to this
benefit, provided that they have worked for at least 1 month during the calendar year. If the
employee worked for only a portion of the year, the 13th-month pay is computed pro rata.
The Rules and Regulations Implementing P.D. No. 851 defines 13th-month pay as
“1/12 of the basic salary of an employee within a calendar year “ and basic salary as “shall
include all remunerations or earnings paid by an employer to an employee for services
rendered but may not include cost-of-living allowances granted pursuant to PD. 525 or
Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary
benefits which are not considered or integrated as part of the regular or basic salary of the
employee at the time of the promulgation of the Decree on December 16, 1975.”
         Supplementary Rules of  P.D. No. 851 also clarified that overtime pay, earnings,
and other remuneration that are not part of the basic salary shall not be included in the
computation of the 13th-month pay.
          A Revised Guidelines on the Implementation of the 13th-Month Pay Law was
also issued. It was specifically stated that the minimum 13th-month pay required by law shall
not be less than one-twelfth 1/12 of the total basic salary earned by an employee within a
calendar year.
The salary-related benefits should be included as part of the basic salary in the
computation of the 13th-month pay if, by individual or collective agreement, company
practice or policy, the same are treated as part of the basic salary of the employees.
The practice of petitioner in giving 13th-month pay based on the employees’ gross
annual earnings which included the basic monthly salary, premium pay for work on rest days
and special holidays, night shift differential pay and holiday pay continued for almost 30
years and has ripened into a company policy or practice which cannot be unilaterally
withdrawn.
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule,
mandates that benefits given to employees cannot be taken back or reduced unilaterally by
the employer because the benefit has become part of the employment contract, written or
unwritten. The rule against diminution of benefits applies if it is shown that the grant of the
benefit is based on an express policy or has ripened into a practice over a long period of time
and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the
practice is due to error in the construction or application of a doubtful or difficult question of
law. But even in cases of error, it should be shown that the correction is done soon after
discovery of the error.
The argument of petitioner that the grant of the benefit was not voluntary and was due
to error in the interpretation of what is included in the basic salary deserves scant
consideration. No doubtful or difficult question of law is involved in this case. The guidelines
set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was
manifested by the number of years the employer had paid the benefit to its employees.
Petitioner only changed the formula in the computation of the 13th-month pay after almost 30
years and only after the dispute between the management and employees erupted. This act of
petitioner in changing the formula at this time cannot be sanctioned, as it indicates bad faith.  
WHEREFORE, the Decision and Resolution of CA are AFFIRMED.
 SHS VS. DIAZ

G.R. NO. 185814

OCTOBER 13, 2010

FACTS:

Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized

and existing under the laws of the Republic of the Philippines and registered with the
Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn),
a German national, is its president, in which capacity he determines the administration and
direction of the day-to-day business affairs of SHS. Manuel F. Diaz (respondent) was hired
by petitioner SHS as Manager for Business Development on probationary status.
On November 29, 2005, Hartmannshenn instructed Taguiang not to release
respondent’s salary. Later that afternoon, respondent called and inquired about his salary.
Taguiang informed him that it was being withheld and that he had to immediately
communicate with Hartmannshenn. Respondent denied having received such directive.
The next day, on November 30, 2005, respondent served on SHS a demand letter and
a resignation letter. In the evening of the same day, November 30, 2005, respondent met with
Hartmannshenn in Alabang. The latter told him that he was extremely disappointed for the
following reasons: his poor work performance; his unauthorized leave and malingering from
November 16 to November 30, 2005; and failure to immediately meet Hartmannshenn upon
his arrival from Germany.
ISSUE:

WON the temporary withholding of respondent’s salary/wages by petitioners was a

valid exercise of management prerogative.
RULING:

Although management prerogative refers to “the right to regulate all aspects of

employment,” it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee. To sanction such an interpretation would
be contrary to Article 116 of the Labor Code, which provides:
 ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for
any person, directly or indirectly, to withhold any amount from the wages of a worker or
induce him to give up any part of his wages by force, stealth, intimidation, threat or by any
other means whatsoever without the worker’s consent.
 Any withholding of an employee’s wages by an employer may only be allowed in the
form of wage deductions under the circumstances provided in Article 113 of the Labor Code,
as set forth below:
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 check-off
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.
Absent a showing that the withholding of complainant’s wages falls under the
exceptions provided in Article 113, the withholding thereof is thus unlawful.
Petitioners argue that Article 116 of the Labor Code only applies if it is established
that an employee is entitled to his salary/wages and, hence, does not apply in cases where
there is an issue or uncertainty as to whether an employee has worked and is entitled to his
salary/wages, in consonance with the principle of “a fair day’s wage for a fair day’s work.”
Petitioners contend that in this case there was precisely an issue as to whether respondent was
entitled to his salary because he failed to report to work and to account for his whereabouts
and work accomplishments during the period in question.
The Court finds petitioners’ evidence insufficient to prove that respondent did not
work from November 16 to November 30, 2005. As can be gleaned from respondent’s
Contract of Probationary Employment and the exchanges of electronic mail
messages between Hartmannshenn and respondent, the latter’s duties as manager for business
development entailed cultivating business ties, connections, and clients in order to make
sales. Such duties called for meetings with prospective clients outside the office rather than
reporting for work on a regular schedule. In other words, the nature of respondent’s job did
not allow close supervision and monitoring by petitioners. Neither was there any prescribed
daily monitoring procedure established by petitioners to ensure that respondent was doing his
job. Therefore, granting that respondent failed to answer Hartmannshenn’s mobile calls and
to reply to two electronic mail messages and given the fact that he admittedly failed to report
to work at the SHS plant twice each week during the subject period, such cannot be taken to
signify that he did not work from November 16 to November 30, 2005.
COLLECTIVE BARGAINING

(GROUP 4)
 GENERAL MILLING CORPORATION VS. HON. COURT OF APPEALS

G.R. NO. 146728

FEBRUARY 11, 2004

FACTS:

General Milling Corporation employed 190 workers. All the employees were
members of a union which is a duly certified bargaining agent. The GMC and the union
entered into a collective bargaining agreement which included the issue of representation that
is effective for a term of three years which will expire on November 30, 1991. On November
29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed CBA, with
a request that a counter proposal be submitted within ten days. on October 1991, GMC
received collective and individual letters from the union members stating that they have
withdrawn from their union membership. On December 19, 1991, the union disclaimed any
massive disaffiliation of its union members. On January 13, 1992, GMC dismissed an
employee who is a union member. The union protected the employee and requested GMC to
submit to the grievance procedure provided by the CBA, but GMC argued that there was no
basis to negotiate with a union which is no longer existing. The union then filed a case with
the Labor Arbiter but the latter ruled that there must first be a certification election to
determine if the union still enjoys the support of the workers.

ISSUE:

Whether or not GMC is guilty of unfair labor practice for violating its duty to bargain
collectively and/or for interfering with the right of its employees to self-organization.

RULING:
 GMC is guilty of unfair labor practice when it refused to negotiate with the union
upon its request for the renegotiation of the economic terms of the CBA on November 29,
1991. the union's proposal was submitted within the prescribed 3-year period from the date of
effectivity of the CBA. It was obvious that GMC had no valid reason to refuse to negotiate in
good faith with the union. The refusal to send counter proposal to the union and to bargain
anew on the economic terms of the CBA is tantamount to an unfair labor practice under
Article 248 of the Labor Code.

Under Article 252 of the Labor Code, both parties are required to perform their
mutual obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. The union lived up to this obligation when it presented
proposals for a new CBA to GMC within 3 years from the effectivity of the original CBA.
But GMC failed in its duty under Article 252. What it did was to devise a flimsy excuse, by
questioning the existence of the union and the status of its membership to prevent any
negotiation. It bears stressing that the procedure in collective bargaining prescribed by the
Code is mandatory because of the basic interest of the state in ensuring lasting industrial
peace.

The Court of Appeals found that the letters between February to June, 1993 by 13
union members signifying their resignation from the union clearly indicated that GMC
exerted pressure on the employees. We agree with the Court of Appeals' conclusion that the
ill-timed letters of resignation from the union members indicate that GMC interfered with the
right of its employee to self-organization.
 BELYCA CORPORATION VS. DIR. PURA FERRER CALLEJA

GR. NO. 77395

NOVEMBER 29, 1988

FACTS:

Respondent associate Labor Union filed with the Regional office of Ministry of Labor
a petition for direct certification as the sole and exclusive bargaining agent of all the rank and
file employees of Belyca Corporation approximately having 205 rank and file employees. In
their CBA, in case of doubt of the union's majority representation, the issuance of an
immediate certification election is included

Respondent alleged that there was no CBA, that there was no certification election
conducted, that more than a majority of the rank and file workers consented to the filing of
the petition, and that due to the notice of recognition of being the sole bargaining unite, 119
members were dismissed with some officers

Petitioner alleged that:

• Due to the nature of its business, very few of its employees are permanent an majority of the
employees are seasonal.

• That 138 rank and file employees who authorized the filing:

- 14 were no longer working

- 4 resigned

- 6 withdrew their membership

- 5 were retrenched
 - 12 dismissed due to malicious insubordination

• That 128 incumbent workers were merely transferred from the agricultural section as
replacement for those who left

• The statutory requirement of holding a certification election has not been complied with

LA: granted certification election

Petitioner appealed to BLR.

ISSUE:

WON respondent is an appropriate bargaining unit.

RULING:

No. According to Rothberg, a proper bargaining unit maybe said to be a group of

employees of a given employer comprised of all or less than all o the entire body of
employees, which the collective interests of all the employees, consistent with equity to the
employer, indicate to be best suited to serve reciprocal rights and duties of the parties under
the collective bargaining provisions of the law.

Among the factors considered are:

• The will of employees

• Affinity and unity of employee's interest

• Prior collective bargaining history

• Employment status

The court took notice of the last factor for this case. Employees of the livestock and agro
division of petitioner perform work different from supermarts and cinema. To lump all the
employees of petitioner in its integrated business concerns cannot result in an efficacious
bargaining unit These two different employees should have different unions.
 COMPLEX ELECTRONICS CORP VS. NLRC, COMPLEX ELECTRONICS
EMPLOYEES ASSOCIATION (CEEA), represented by Union President, TALAVERA

G.R. NO. 122136

JULY 19, 1999

FACTS:

Due to losses on production of the petitioner, it was constrained to cease operations.

In the evening of April 6, 1992, the machinery, equipment and materials being used for
production at Complex were pulled-out from the company premises and transferred to the
premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna.  The following day, a total
closure of company operation was effected at Complex.

A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for
unfair labor practice, illegal closure/illegal lockout, money claims for vacation leave, sick
leave, unpaid wages, 13th month pay, damages and attorney’s fees.  The Union alleged that
the pull-out of the machinery, equipment and materials from the company premises, which
resulted to the sudden closure of the company was in violation of Section 3 and 8, Rule XIII,
Book V of the Labor Code of the Philippines and the existing CBA. Ionics was impleaded as
a party defendant because the officers and management personnel of Complex were also
holding office at Ionics with Lawrence Qua as the President of both companies.

The Union anchors its position on the fact that Lawrence Qua is both the president of
Complex and Ionics and that both companies have the same set of Board of Directors.  It
claims that business has not ceased at Complex but was merely transferred to Ionics, a
runaway shop.  To prove that Ionics was just a runaway shop, petitioner asserts that out of
the 80,000 shares comprising the increased capital stock of Ionics, it was Complex that owns
majority of said shares with P1,200,000.00 as its capital subscription and P448,000.00 as its
paid up investment, compared to P800,000.00 subscription andP324,560.00 paid-up owing to
the other stockholders, combined.  Thus, according to the Union, there is a clear ground to
pierce the veil of corporate fiction.

ISSSUE:

WON Ionics is merely a runaway shop.

RULING:

NO. A “runaway shop” is defined as an industrial plant moved by its owners from one
location to another to escape union labor regulations or state laws, but the term is also used to
describe a plant removed to a new location in order to discriminate against employees at the
old plant because of their union activities. It is one wherein the employer moves its business
to another location or it temporarily closes its business for anti-union purposes. A “runaway
shop” in this sense, is a relocation motivated by anti-union animus rather than for business
reasons.

In this case, however, Ionics was not set up merely for the purpose of transferring the
business of Complex.  At the time the labor dispute arose at Complex, Ionics was already
existing as an independent company.  As earlier mentioned, it has been in existence since
July 5, 1984 (8 years prior to the dispute).  It cannot, therefore, be said that the temporary
closure in Complex and its subsequent transfer of business to Ionics was for anti-union
purposes.  The Union failed to show that the primary reason for the closure of the
establishment was due to the union activities of the employees.

The mere fact that one or more corporations are owned or controlled by the same or
single stockholder is not a sufficient ground for disregarding separate corporate personalities.
Mere ownership by a single stockholder or by another corporation of all or nearly all of the
capital stock of a corporation is not of itself sufficient ground for disregarding the separate
corporate personality.
 At first glance after reading the decision a quo, it would seem that the closure of
respondent’s operation is not justified.  However, a deeper examination of the records along
with the evidence, would show that the closure, although it was done abruptly as there was no
compliance with the 30-day prior notice requirement, said closure was not intended to
circumvent the provisions of the Labor Code on termination of employment.  The closure of
operation by Complex on April 7, 1992 was not without valid reasons.  Customers of
respondent alarmed by the pending labor dispute and the imminent strike to be foisted by the
union, as shown by their strike vote, directed respondent Complex to pull-out its equipment,
machinery and materials to other safe bonded warehouse.  Respondent being mere consignees
of the equipment, machinery and materials were without any recourse but to oblige the
customers’ directive.  The pull-out was effected on April 6, 1992.  We can see here that
Complex’s action, standing alone, will not result in illegal closure that would cause the illegal
dismissal of the complainant workers.  Hence, the Labor Arbiter’s conclusion that since there
were only 2 of respondent’s customers who have expressed pull-out of business from
respondent Complex while most of the customer’s have not and, therefore, it is not justified
to close operation cannot be upheld.  The determination to cease operation is a prerogative of
management that is usually not interfered with by the State as no employer can be required to
continue operating at a loss simply to maintain the workers in employment.  That would be
taking of property without due process of law which the employer has the right to resist.
 CATHAY PACIFIC STEEL CORPORATION, BENJAMIN CHUA JR., VIRGILIO
AGERO, and LEONARDO VISORRO, JR. vs. CA, CAPASCO UNION OF
SUPERVISORY EMPLOYEES (CUSE) and ENRIQUE TAMONDONG III

G.R. NO. 164561

AUGUST 30, 2006

FACTS:

Sometime in June 1996, the supervisory personnel of CAPASCO launched a move to

organize a union among their ranks, later known as private respondent CUSE. Private
respondent Tamondong actively involved himself in the formation of the union and was even
elected as one of its officers after its creation. Consequently, petitioner CAPASCO sent a
memo to private respondent Tamondong requiring him to explain and to discontinue from his
union activities, with a warning that a continuance thereof shall adversely affect his
employment in the company. Private respondent Tamondong ignored said warning and made
a reply letter invoking his right as a supervisory employee to join and organize a labor union.
In view of that, on 6 February 1997, petitioner CAPASCO through a memo terminated the
employment of private respondent Tamondong on the ground of loss of trust and confidence,
citing his union activities as acts constituting serious disloyalty to the company.

Private respondent Tamondong challenged his dismissal for being illegal and as an act
involving unfair labor practice by filing a Complaint for Illegal Dismissal and Unfair Labor
Practice before the NLRC, Regional Arbitration Branch IV. According to him, there was no
just cause for his dismissal and it was anchored solely on his involvement and active
participation in the organization of the union of supervisory personnel in CAPASCO. Though
private respondent Tamondong admitted his active role in the formation of a union composed
of supervisory personnel in the company, he claimed that such was not a valid ground to
terminate his employment because it was a legitimate exercise of his constitutionally
guaranteed right to self-organization.

In contrast, petitioner CAPASCO contended that by virtue of private respondent

Tamondong’s position as Personnel Superintendent and the functions actually performed by
him in the company, he was considered as a managerial employee, thus, under the law he was
prohibited from joining a union as well as from being elected as one of its officers.
Accordingly, petitioners maintained their argument that the dismissal of private respondent
Tamondong was perfectly valid based on loss of trust and confidence because of the latter’s
active participation in the affairs of the union.

ISSUE:

WON the dismissal of Tamondong was valid

RULING:

INVALID

[Private respondent] Tamondong may have possessed enormous powers and was
performing important functions that goes with the position of Personnel Superintendent,
nevertheless, there was no clear showing that he is at liberty, by using his own discretion and
disposition, to lay down and execute major business and operational policies for and in behalf
of CAPASCO. [Petitioner] CAPASCO miserably failed to establish that [private respondent]
Tamondong was authorized to act in the interest of the company using his independent
judgment. Withal, [private respondent] Tamondong may have been exercising certain
important powers, such as control and supervision over erring rank-and-file employees,
however, he does not possess the power to hire, transfer, terminate, or discipline erring
employees of the company. At the most, the record merely showed that [private respondent]
Tamondong informed and warned rank-and-file employees with respect to their violations of
CAPASCO’s rules and regulations. [Also, the functions performed by private respondent
such as] issuance of warning  to employees with irregular attendance and unauthorized leave
of absences and requiring employees to explain regarding charges of abandonment of work,
are normally performed by a mere supervisor, and not by a manager.
 Being a supervisory employee of CAPASCO, he cannot be prohibited from joining or
participating in the union activities of private respondent CUSE, and in making such a
conclusion, the Court of Appeals did not act whimsically, capriciously or in a despotic
manner, rather, it was guided by the evidence submitted before it. Thus, given the foregoing
findings of the Court of Appeals that private respondent is a supervisory employee, it is
indeed an unfair labor practice on the part of petitioner CAPASCO to dismiss him on account
of his union activities, thereby curtailing his constitutionally guaranteed right to self-
organizatio

UNION OF FILIPRO EMPLOYEES VS. NLRC and NESTLE PHILIPPINES, INC.

G.R. NO. 91025
DECEMBER 19, 1990
FACTS:
On June 22, 1988, the petitioner Union of the Filipino Employees, the sole and
exclusive bargaining agent of all rank-and-file employees of Nestle Philippines, (private
respondent) filed a Notice of Strike at the DOLE raising the issues of CBA deadlock and
unfair labor practice. Private respondent assailed the legal personality of the proponents of
the said notice of strike to represent the Nestle employees, before the NCMB. This
notwithstanding, the NCMB proceeded to invite the parties to attend the conciliation
meetings and to which private respondent failed to attend contending that it will deal only
with a negotiating panel duly constituted and mandated in accordance with the UFE
Constitution and By-laws.
Thereafter, Company terminated from employment all UFE Union officers, and all
the members of the negotiating panel for instigating and knowingly participating in a strike
staged at the Makati, Alabang, Cabuyao and Cagayan de Oro on September 11, 1987 without
any notice of strike filed and a strike vote obtained for the purpose. The union filed a
complaint for illegal dismissal. LA upheld the validity of the dismissal; NLRC en banc
affirmed. Subsequently, company concluded separate CBAs with the general membership of
the union at Cebu/Davao and Cagayan de Oro units; Assailing the validity of these
agreements, the union filed a case of ULP against the company with the NLRC-NCR
Arbitration Branch Efforts to resolve the dispute amicably were taken by the NCMB but
yielded negative result. Petitioner filed a motion asking the Secretary of Labor to assume
jurisdiction over the dispute of deadlock in collective bargaining between the parties. On
October 28, 1988, Labor Secretary Franklin Drilon “certified” to the NLRC the said dispute
between the UFE and Nestle, Philippines which reads as follows: “The NLRC is further
directed to call all the parties immediately and resolve the CBA deadlock within twenty (20)
days from submission of the case for resolution.” Second Division of the NLRC promulgated
a resolution granting wage increase and other benefits to Nestle’s employees, ruling on non-
economic issues, as well as absolving the private respondent of the Unfair Labor Practice
charge. Petitioner finds said resolution to be inadequate and accordingly, does not agree
therewith. It filed a motion for reconsideration, denied. Hence, this petition.

ISSUE:
WON WHETHER OR NOT THE SECOND DIVISION OF THE NLRC ACTED
WITHOUT JURISDICTION IN RENDERING THE ASSAILED RESOLUTION, THE
SAME BEING RENDERED ONLY BY A DIVISION OF THE PUBLIC RESPONDENT
AND NOT BY EN BANC.

RULING:
This case was certified on October 28, 1988 when existing rules prescribed that, it is
incumbent upon the Commission en banc to decide or resolve a certified dispute. However,
R.A. 6715 took effect during the pendency of this case. Aside from vesting upon each
division the power to adjudicate cases filed before the Commission, said Act further provides
that the divisions of the Commission shall have exclusive appellate jurisdiction over cases
within their respective territorial jurisdiction. Section 5 of RA 6715 provides as follows: The
Commission may sit en banc or in five (5) divisions, each composed of three (3) members.
The Commission shall sit en banc only for purposes of promulgating rules and regulations
governing the hearing and disposition of cases before any of its divisions and regional
branches and formulating policies affecting its administration and operations. The
Commission shall exercise its adjudicatory and all other powers, functions and duties through
its divisions. In view of the enactment of Republic Act 6715, the aforementioned rules
requiring the Commission en banc to decide or resolve a certified dispute have accordingly
been repealed. Confirmed in Administrative Order No. 36 (Series of 1989) promulgated by
the Secretary under his delegated rule-making power. Moreover, it is to be emphasized and it
is a matter of judicial notice that since the effectivity of R.A. 6715, many cases have already
been decided by the 5 divisions of the NLRC. We find no legal justification in entertaining
petitioner’s claim considering that the clear intent of the amendatory provision is to expedite
the disposition of labor cases filed before the Commission. To rule otherwise would not be
congruous to the proper administration of justice. ACCORDINGLY, PREMISES
CONSIDERED, the petition is DISMISSED. The Resolutions of the NLRC, dated June 5,
1989 and August 8, 1989 are AFFIRMED, except insofar as the ruling absolving the private
respondent of unfair labor practice which is declared SET ASIDE.