DE LEON v. NLRCFACTS:Petitioner Moises De Leon was employed by private respondent La Tondeña, Inc. at the Maintenance Section of its Engineering Department. His work consisted mainly of painting company building and equipment, and other odd jobs relating to maintenance. He was paid on daily basis through petty cash vouchers.

In the early part of January 1983, after a service of more than 1 year, petitioner requested from respondent company that he be included in the payroll of regular workers, instead of being paid through petty cash vouchers. Private respondent’s response to this request was to dismiss petitioner from his employment on 16 january 1983. Having been refused reinstatement despite repeated demands, petitioner filed a complaint for illegal dismissal, reinstatement and payment of backwages before the Office of the Labor Arbiter of the then Ministry now Department of Labor and Employment.

Petitioner alleged that he was dismissed following his request to be treated as a regular employee and that after dismissal, he was rehired by the respondent company indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agency of respondent company, and was made to perform the tasks which he used to do.

On the other hand, private respondent claimed that petitioner was not a regular employee but only a casual worker hired allegedly only to paint a certain building in the company premises, and that his work as a painter terminated upon the completion of the painting job.

LABOR ARBITER – reinstate petitionerFIRST DIV. OF NLRC – reversedSOLICITOR GENERAL – recommends that the petitioner be given due course in view of evidence on record supporting petitioner’s contention

ISSUE: whether De Leon is a regular employee of the private respondent company

HELD: Yes. The primary standard of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least 1 year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business.

In case at bar, the respondent company, which is engaged in the business of manufacture and distillery of wines and liquors, claims that petitioner was contracted on a casual basis specifically to paint a certain company building and that its completion rendered petitioner’s employment terminated. This may have been true at the beginning, and had it been shown that petitioner’s activity was exclusively limited to painting that certain building, respondent company’s theory of casual employment would have been worthy of consideration.

1

However, during petitioner’s period of employment, the records reveal that the tasks assigned to him included not only painting of company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and other odd jobs assigned to him when he had no painting job.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the NLRC are hereby annulled and set aside. The Order of Labor Arbiter is reinstated.

BETA ELECTRIC CORPORATION v. NATIONAL LABOR RELATIONS COMMISSIONFACTS:1. The petitioner hired the private respondent as clerk typist III effective December 15,1986 until January 16, 1987, and was subsequently rehired on January 16, 1987 up to February 15, 1987. On February 15, 1987, it gave her another extension up to March 15, 1987. On March 15, 1987, it gave her a further extension until April 30, 1987. On May 1, 1987, she was given until May 31, 1987. On June 1, 1987, she was given up to June 30, 1987.2. Her appointments were covered by corresponding written contracts.3. On June 22, 1987, her services were terminated without notice or investigation.4. On the same day, she went to the labor arbiter on a complaint for  illegal dismissal. As the court has indicated, both the labor arbiter and the respondent National Labor Relations Commission ruled for her.5.The petitioner argues mainly that the private respondent's appointment was temporary and hence she may be terminated at will.

ISSUE:Whether or not private respondent is temporary employee .

HELD: NO. The private respondent was to all intents and purposes, and at the very least, a probationary employee, who became regular upon the expiration of six months. Under Article 281 of the Labor Code, a probationary employee is "considered a regular employee" if he has been "allowed to work after the probationary period." The fact that her employment has been a contract-to- contract basis can not alter the character of employment, because contracts can not override the mandate of law. Hence, by operation of law, she has become a regular employee. In the case at bar, the private employee was employed from December15, 1986 until June 22, 1987 when she was ordered laid off. Her tenure having exceeded six months, she attained regular employment.

WHEREFORE, the petition is DISMISSED. The private respondent is ordered REINSTATED with backwages equivalent to 3 years with no qualification or deductions.

ROMARES v. NLRC

2

FACTS: Facts: Complainant alleged that he was hired by respondent Pilmico Foods Corporation in its Maintenance/Projects/Engineering Department during the periods and at respective rates. That having rendered a total service of more than 1 year and by operation of law, complainant has become a regular employee of respondent; that complainant has performed tasks and functions which were necessary and desirable in the operation of respondent’s business which include painting, maintenance, repair and other related jobs; that complainant was never reprimanded nor subjected to any disciplinary action during his engagement with the respondent; that without any legal cause or justification and in the absence of any time to know of the charge or notice nor any opportunity to be heard, respondent terminated him; that his termination is violative to security of tenure clause provided by law.

Respondent on the other hand maintains that complainant was a former contractual employee of respondent and as such his employment was covered by contracts; that complainant was hired as mason in the Maintenance/Project Department and that he was engaged only for a specific project under such department; that complainant’s services as mason was not continuous, in fact, he was employed with International Pharmaceuticals; that when his last contract expired, it was no longer renewed.

LABOR ARBITER – in favor of Romares and ordered the respondent to reinstate him.NLRC – set aside the decision of the Labor Arbiter. They ruled that the case at bar is applicable in par1 of article 280 of the labor code. That complainant’s employment contracts were for fixed or temporary periods. Thus, when complainant’s employment with respondent was terminated, such cannot be considered as illegal since the termination was due to the expiration of the contract.

ISSUE: Whether the petitioner is a regular employee

HELD: Yes. In determining he status of petitioner as a regular employee, reference is made to Article 280 of the Labor Code. Thus, the two kinds of regular employees are (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.

Facts show that petitioner’s work with PILMICO as a mason was definitely necessary and desirable to is business. PILMICO cannot claim the petitioner’s work as a mason was entirely foreign or irrelevant to its line of business in the production of flour, yeast, feeds and other flour products. It is noteworthy that during each rehiring, the summation of which exceeded 1 year, petitioner was assigned to PILMICO’s Maintenance/Projects/Engineering Department performing the same kind of maintenance work. Such a continuing need for the services of petitioner is sufficient evidence of the necessity and indispensability of his services to PILMICO’s business or trade.

3

We cannot subscribe to the erroneous ruling of the NLRC that the applicable provision is par 1 of Article 280 of the Labor Code, which makes the petitioner’s employment contracts for fixed or temporary periods.The Brent case ruled that the decisive determinant in “term employment” should not be the activities that the employee is called upon to perform but the day certain agreed upon by the parties for the commencement and termination of their employment relationship. But this court went on to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals.

WHEREFORE, the present petition is GRANTED. The challenged Resolution of the NLRC is REVERSED and SET ASIDE, and the Decision of the Labor Arbiter is REINSTATED.

BERNARDO v. NLRCFacts:Complainants numbering 43 are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called 'Employment Contract for Handicapped Workers.' Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article 280 and to bar them from becoming regular employees. Private respondent, on the other hand, submits that petitioners were hired only as "special workers and should not in any way be considered as part of the regular complement of the Bank." Rather, they were "special" workers under Article 80 of the Labor Code. Private respondent contends that it never solicited the services of petitioners, whose employment was merely an "accommodation" in response to the requests of government officials and civic-minded citizens. They were told from the start, "with the assistance of government representatives," that they could not become regular employees because there were no plantilla positions for "money sorters," whose task used to beperformed by tellers. Their contracts were renewed several times, not because of need "but merely for humanitarian reasons." Respondent submits that "as of the present, the 'special position' that was created for the petitioners no longer exists in private respondent bank, after the latter had decided not to renew anymore their special employment contracts."In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows:

"We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were hired as an accommodation to [the] recommendation of civic oriented personalities whose employment[s] were covered by . . . Employment

4

Contract[s] with special provisions on duration of contract as specified under Art. 80.Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the parties."The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing circumstances/milieu of the case."

Issues:1. Whether or not petitioners have become regular employees.2. Whether or not the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscriptionagainst discrimination against disabled persons is applicable in this case.

Held:Yes. The petition is meritorious. However, only the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal.

The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular employees. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and justice.

The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after which the employer shall determine whether or not they should be allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term.

According to private respondent, the employment contracts were prepared in accordance with Article 80 of the Labor Code, which provides:

"ARTICLE 80. Employment agreement. — Any employer who employs handicapped workers shall enter into an employment agreement with them, which agreement shall include:(a) The names and addresses of the handicapped workers to be employed;(b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the applicable legal minimum wage;(c) The duration of employment period; and(d) The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representatives."The stipulations in the employment contracts indubitably conform with the afore cited provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), however, justify the application of Article 280 of the Labor Code.

5

Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them.

QUALIFIED DISABLED PERSONS REMOVE CONTRACT FROM AMBIT OF ARTICLE 80 OF LABORCODE. - In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employees hould be given the same terms and conditions of employment as a qualified able-bodied person. Section 5of the Magna Carta provides:

"SECTION 5. Equal Opportunity for Employment.—No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person."

The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:

"ARTICLE 280.  Regular and Casual Employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists."

6

TEST WHETHER EMPLOYEE IS REGULAR - The test of whether an employee is regular was laid down in De Leonv. NLRC , in which this Court held:

"The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists."

Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than six months.

As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum." The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees' fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the employees thereby became regular employees. No employer is allowed to determine in definitely the fitness of its employees.

As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized cause. Because respondent failed to show such cause, these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other privileges. Considering the allegation of respondent that the job of money sorting is no longer available because it has been assigned back to the tellers to whom it originally belonged, petitioners are hereby awarded separation pay in lieu of reinstatement.

Because the other sixteen worked only for six months, they are not deemed regular employees and hence not entitled to the same benefits.

EMPLOYMENT CONTRACT WITH FIXED TERM; RULING IN BRENT CASE NOT APPLICABLE INCASE AT BAR - Respondent bank, citing Brent School v. Zamora,

7

in which the Court upheld the validity of an employment contract with a fixed term, argues that the parties entered into the contract on equal footing. It adds that the petitioners had in fact an advantage, because they were backed by then DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal.

We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to be qualified disabled persons who, under the Magna Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners are qualified for their positions. The validation of the limit imposed on their contracts, imposed by reason of their disability, was a glaring instance of the very mischief sought to be addressed by the new law.

·Employment contract; impressed with public interest; parties are not at liberty to insulate themselves. - Moreover, it must be emphasized that a contract of employment is impressed with public interest. Provisions of applicable statutes are deemed written into the contract, and the "parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other." Clearly, the agreement of the parties regarding the period of employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied employees.

Respondent's reason for terminating the employment of petitioners is instructive. Because the Bangko Sentral ngPilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours from 8:00 a.m. to 5:00p.m., respondent resorted to nighttime sorting and counting of money. Thus, it reasons that this task "could not be done by deaf mutes because of their physical limitations as it is very risky for them to travel at night." We find no basis for this argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their employment.

EMPLOYMENT; CHARACTER OF EMPLOYMENT; HOW DETERMINED - Respondent argues that petitioners were merely "accommodated" employees. This fact does not change the nature of their employment. As earlier noted, an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them.

Equally unavailing are private respondent's arguments that it did not go out of its way to recruit petitioners, and that its plantilla did not contain their positions. In L. T . Datu v.

8

NLRC, the Court held that "the determination of whether employment is casual or regular does not depend on the will or word of the employer, and the procedure of hiring . .. but on the nature of the activities performed by the employee, and to some extent, the length of performance and its continued existence."

Private respondent argues that the petitioners were informed from the start that they could not become regular employees. In fact, the bank adds, they agreed with the stipulation in the contract regarding this point. Still, we are not persuaded.

In this light, we iterate our ruling in Romares v. NLRC :

Article 280 was emplaced in our statute books to prevent the circumvention of the employee's right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. Where an employee has been engaged to perform activities which are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment.

"At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term employment. It ruled that the decisive determinant in 'term employment' should not be the activities that the employee is called upon to perform but the day certain agreed upon the parties for the commencement and termination of their employment relationship. But this Court went on to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals."

In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class, but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any other regular employees.

COLUMBUS PHILIPPINES BUS CORPORATION v. NLRC

9

FACTS: Petitioner Columbus Philippines Bus Corporation is engaged in the business of operating passenger buses. Since the start of its operations in 1990, it has maintained a list of drivers and conductors who rendered service in its bus units allegedly on a “first come first server” basis and compensated purely on commission. The drivers and conductors worked for about 10 to 15 days a month and were allegedly not required to work everyday.

Private Respondent Roman Domasig start working as a driver with the petitioner on 30 August 1990 with a daily income ranging from P350 to P650, while his wife and co-respodent was employed as a bus conductress on 1 October 1990 with a daily income of P250 to P500. The employment of private respondents with the petitioner was abruptly terminated on 21, 22 January 1992 respectively, for their having allegedly formed a labor union.

Thus, 2 related cases of unfair labor practice, illegal dismissal, illegal deductions from salary, and non-payment of service incentive leave pay and 13 th month pay were instituted by private respondents against petitioner.

LABOR ARBITER – in favor of the private respondents and ordered the petitioner to reinstate the same.

NLRC – affirmed in toto

ISSUE: whether the private respondents is a regular employee

HELD: Yes. It appears that the employment of private respondents is regular. They perform work necessary and desirable in the business of the petitioner. Without the services of bus drivers and conductors, like the private respondents, the petitioner could not have operated and managed its business of providing transportation services to the public.

WHEREFORE, the petition is DISMISSED and the challenged Resolution of public respondent NLRC is AFFIRMED.

PHILLIPINE AIRLINES v. NLRC

FACTS: Sometime in 1997, PAL, a local air carrier, entered in to a service agreement with STELLAR, a domestic corporation engaged, among other, in the business of job contracting janitorial services.

Pursuant to their service agreement, which was impliedly renewed year after year, STELLAR hired workers to perform janitorial and maintenance services for PAL. Among

10

those employed were the complainants, who were assigned at PAL’s various premises under the supervision of STELLAR’s supervisor/foremen and timekeepers. The workers were also furnished by STELLAR with janitorial supplies, such as vacuum cleaner and polisher.

On 31 December 1990, the service agreement between PAL and STELLAR expired. PAL, then called for the bidding of its janitorial requirements. This notwithstanding, STELLAR exerted efforts to maintain its janitorial contract with PAL which, in the meantime, allowed Manuel Parenas and others to work at the PAL’s premises.

Subsequently, in a letter dated 31 October 1990, PAL formally informed STELLAR that the service agreement between them would no longer be renewed effective 16 November 1991, since PAL’s janitorial requirements were bidded to three other job contractors.

Alleging that they were illegally dismissed, the aforenamed individual private respondents filed, five complaint against PAL and STELLAR for illegal dismissal and for payment of separation pay.

RULING OF RESPONDENT COMMISSION – held petitioner as an indirect employer, jointly and severally liable with STELLAR for separation pay.

NLRC – absolves STELLAR of liability, thereby making PAL soley responsible for the award decreed by the Labor Arbiter

ISSUE/S: 1. No employer-employee relation between complainant and petitioner

2. STELLAR is Liable for Separation Pay

HELD:

1. Prohibited labor-only contracting is defined in Article 106 of the Labor Code – there is ‘labor-only’ contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent if the latter were directly employed by him. It involves some factual considerations, the existence of an employer-employee relation is nonetheless a question of law.

11

Applying the foregoing provisions to the present case, the Court finds no basis for holding PAL engaged in labor-only contracting. The true nature of the individual private respondents employment is evident from the service agreement between petitioner and STELLAR. The foregoing agreement clearly indicates that an employer-employee relation existed between the individual private respondents and STELLAR, not PAL.

From the foregoing disquisition, it is evident that petitioner was engaged in permissible job contracting and that the individual private respondents, for the entire duration of their employ, were employees not of petitioner but of STELLAR. In legitimate job contracting, no employer-employee relation exists between the principal and the job contractor’s employees. The principal is responsible to the job contractor’s employees only for the proper payment of wages. But in labor-only contracting, an employer-employee relation is created by law between the principal and the labor-only contractor’s employees, such that the former is responsible to such employees, as if he or she had directly employed them.

2. We must emphasize that the main business of STELLAR is the supply of manpower to perform janitorial services for its clients, and the individual private respondents were janitors engaged to perform activities that were necessary and desirable to STELLAR’s enterprise. In this case, we hold that the individual private respondents were STELLAR’s regular employees, and there was no valid cause for their dismissal.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution are SET ASIDE insofar as they held PAL liable for separation pay.

PHIL. FRUITS AND VEGETABLES INDUSTRIES v. NLRC

FACTS: Petitioner Phil. Fruit (for brevity) is a government-owned and controlled corporation engaged in manufacture and processing of fruit and vegetable purees for export. Petitioner Pedro Castillo is the former President and General Manager of Petitioner PFVII.

On 5 Sept. 1988, private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, for in behalf of 127 of its members, filed a complaint for unfair labor practice and/or illegal dismissal with damages against petitioner corporation. Private respondent alleged that many of its complaining members started working for San Carlos Fruits Corporation which later incorporated into PFVII in January or February 1983 until their dismissal on different dates in 1985, 1986, 1987 and 1988.

12

They further alleged that the dismissals were due to complainant’s involvement in union activities and were without just cause.

LABOR ARBITER – holding petitioners to pay full back backwages and 13th month pay

NLRC – affirmed

ISSUE: Whether complaining members of respondent union are regular employees of PFVII or are seasonal workers whose employment ceased during the off-season due to the non-availability of work.

HELD: An employment shall be deemed regular where the employee: a) has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; or b) has rendered at least one year of service, whether such service is continuous or broken, with respect to the activity in which he is employed.

In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors, drivers, truck helpers, mechanics and office personnel is without doubt necessary in the usual business of a food processing company like petitioner PFVII.

It should be noted that the complainant’s employment has not been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of their appointment of hiring. Neither is their employment seasonal in nature. While it may be true that some phrases of petitioner company’s processing operations is dependent on the supply of fruits for a particular season, the other equally important aspects of its business, such as manufacturing and marketing are not seasonal. That facts is that large-scale food processing companies such as petitioner company continue to operate and do business throughout the year even if the availability of fruits and vegetables is seasonal.

ACCORDINGLY, the questioned decision of the NLRC is AFFRIMED insofar as the 80 union members who were able to prove their respective claims are concerned, but REVERSED with respect to the other 114 union members, who did not adduce evidence in support of their claims.

ABASOLO v. NLRC

FACTS: Private respondent La Union Tobacco Redrying Corporation (LUTORCO), which is owned by private respondent See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its by-products. Tobacco

13

season starts sometime in October of every year when tobacco farmes germinate their seeds in plots until they are ready for replanting in November. The harvest season starts in mid-February. Then, the farmers sell the harvested tobacco leaves to redrying plants or do the redrying themselves. The redrying plant of LUTORCO receives tobacco for redrying at the end of February and starts redrying in March until August or September.

Petitioners have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted sometime in March 1993 when Compania General de Tabaccos de Filipinas (TABACALERA) took over LUTORCO’s tobacco operations. New signboards were posted indicating change of ownership and petitioners were then asked by LUTORCO to file their respective applications for employment with TABACALERA. Petitioners were caught unaware of the sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners.

On 17 March 1993, the disgruntled employees instituted before the NLRC a complaint for separation pay against private respondent LUTORCO on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover of TABACALERA.

Private respondents raised as its defense that it is exempt from paying separation pay and denied that it terminated the services of the petitioners; and that it stopped its operations due to the absence of capital and operating funds. It alleged further that LUTORCO entered into an agreement with TABACALERA to take over LUTORCO’s tobacco operations for the year 1993 in the hope of recovering from its serious business losses in the succeeding tobacco seasons and to create a continuing source of income for the petitioners. LUTORCO also manifested that it acted in good faith and with sincerity, and is willing to grant reasonable and adjusted amounts to the petitioners, as financial assistance, if and when LUTORCO could recover from its financial crisis.

LABOR ARBITER – petitioners are not entitled to the benefits under Article 283 of the Labor Code since LUTORCO ceased to operate and TABACALERA, the new employers has assumed the seniority rights of the petitioners

NLRC – assigned to third division

- Affirmed the dismissal of the consolidated complaint for separation pay.

ISSUE/S: 1.Whether petitioners employment with LUTORCO was terminated

2.Whether petitioners are regular or seasonal workers14

HELD:

1. There is no law requiring that the purchaser of an entire company should absorb the employees of the selling company. In the instant case, the petitioner employees were clearly required to filed new applications for employment. In reality then, they were hired as new employees of TABACALERA.

2. In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company form any years, some over for 20 years, performing services necessary and indispensable to LUTORCO’s business, serve as badges of regular employment. Moreover, the fact that petitioners don not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time are temporarily laid off during off-season are not separated from service in said period, but are merely considered leave until re-employed.

WHEREFORE, the petition is GRANTED.

INTERNATIONAL PHARMACEUTICALS v. NLRC

FACTS: Petitioner International Pharmaceuticals, Inc. employed private respondent Virginia Camacho Quintia as Medical Director of its Research and Development department. The contract of employment provided for a term of one year from the date of its execution on March 19, 1983, subject to renewal by mutual consent of the parties at least thirty days before its expiration.

When Quintia’s contract was about to expire, she was invited by Xavier University in Cagayan de Oro City to be the chairperson of its pharmacology department. However, Pio Castillo, the president and general manager, prevailed upon her to stay, assuring her of security of tenure and because of this assurance, she declined the offer of Xavier University. Indeed, after her contract expired on March 19, 1984, she remained in the employ of petitioner.

On July 10, 1986, Paz Wong replaced Quintia as head of the Research and Development department and two days later, received an inter-office memorandum officially terminating her services because of the expiration of her contract of employment.

On January 21, 1987, private respondent filed a complaint, charging petitioner with illegal dismissal and praying that petitioner be ordered to reinstate private respondent and to pay her full back wages and moral damages. In a decision rendered on

15

December 18, 1990, the Labor Arbiter found private respondent to have been illegally dismissed. He held that private respondent was a regular employee and not a project employee as provided in the Labor Code.

Petitioner contends among others that the NLRC’s reliance on Art. 280 is “clearly contrary to this Court’s decisions;” that private respondent’s tasks are really not necessary and desirable to the usual business of petitioner and that that there is “clearly no legal or factual basis to support respondent NLRC’s reliance on the absence of a new written contract as indicating that respondent Quintia became a regular employee.” hence this petition.

Issue:

Whether private respondent become a regular employee after the expiration of the written contract? Whether or not the one-year service of respondent made her into a regular employee of the petitioner?

Held: Yes on both counts.

Art. 280. Regular and casual employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

In Brent School, Inc. v. Zamora, it was held that although work done under a contract is necessary and desirable in relation to the usual business of the employer, a contract for a fixed period may nonetheless be made so long as it is entered into freely, voluntarily and knowingly by the parties. Applying this ruling to the case at bar, the NLRC held that the written contract between petitioner and private respondent was valid, but, after its expiration on March 18, 1984, as the petitioner had decided to continue her services, it must respect the security of tenure of the employee in accordance with Art. 280.

16

Petitioner’s ground is that the ruling of the NLRC is contrary to the Brent School decision. He contends that Art. 280 should not be so interpreted as to render employment contracts with a fixed term invalid. But the NLRC precisely upheld the validity of the contract in accordance with the Brent School case. Indeed, the validity of the written contract is not in issue in this case. What is in issue is whether private respondent did not become a regular employee after the expiration of the written contract on March 18, 1984 on the basis of the facts pointed out by the NLRC, simply because there was in the beginning a contract of employment with a fixed term.

PHILIPPINE JAI-ALAI & AMUSEMENT CORP. VS. CLAVE

FACTS: On February 2, 1976, petitioner hired plumber Cadatal and mason Delgra together with 30 other workers for a period of one month to continue even after that period should their services be needed further in the renovation work. This renovation was completed by the end of October 1976 but their services were still need for further projects. On November 17, 1976, private respondents received notice of termination effective November 29, 1976, but since minor repairs were still needed, they worked up to December 11, 1976 and were fully paid for their labor up to that date.

On December 13, 1976, petitioner filed with the former Department of Labor a report of termination of the services of private respondents and 30 others, due to completion of the project. The report listed them as "casual emergency workers." A summary Order was issued on December 24, 1976for reinstatement with full back wages.

The Order of December 24, 1976 was affirmed in an Order dated July 13, 1977. This Order was in turn appealed to the Office of the President. The appeal was dismissed on January 25, 1979.Petitioner's Motion for Reconsideration was denied on March 19, 1979. On April 26, 1980, an Alias Writ of Execution was issued to collect from petitioner corporation the total amount of 26,260.00, representing private respondents' full back wages. And, on June 5, 1980, a second Motion for Reconsideration dated April 24, 1980, was denied by respondent Clave, since only one such Motion is allowed and the grounds invoked were substantially the same as those previously raised.

Respondents allege that they had been terminated without just cause.

ISSUE: Whether or not private respondents are regular employees?

HELD: NO. Art 281 of the Labor Code states that:

17

Art. 281. Regular and Casual Employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.

The casual or limited character of private respondents' employment, therefore, is evident. They were engaged for a specific project or undertaking and fall within the exception provided for in Article 281of the Labor Code, supra. Not being regular employees, it cannot be justifiably said that petitioner had dismissed them without just cause. They are not entitled to reinstatement with full back wages. Thus previous decision is reversed and set aside.

Private respondents were hired for a specific project – to renovate the main building, where major repairs such as painting the main building, repair of the roof, cleaning of clogged water pipes and drains, and other necessary repairs were required. It was made known, and so understood at the start of the hiring, that their services would last until the completion of the renovation.

TUCOR INDUSTRIES, INC. v. NLRC

FACTS: Petitioner is a corporation principally engaged in the moving and storage of various goods owned by military personnel residing within the United States military facilities in the Philippines. On various dates herein private respondents were hired as packers, drivers and utilitymen/carpenters. They signed uniform company-prepared master employment contracts.

In a memorandum-ltter dated 17 July 1989, the Chief of Traffic Management of Clark Air Base reminded all agents including petitioner of the base policy that “(E)mployees who already have passes in their possession and who fail the polygraph x x x” administered by an acknowledged security company will be required their passes. On the same day petitioner terminated the employment of private respondents by sending them separate identical notices of termination.

18

All of private respondents had continuously been employed by petitioner for more than a year before the services were terminated.

On 2 August 1989, private respondents, except Pacifico Dizon, filed a complaint for illegal dismissal.

LABOR ARBITER – rendered judgment in favor of the complainants ordering respondent Tucor to pay backwages and to reinstate them.

NLRC – was dismissed for lack of merit and affirmed in toto the decision of the Labor Arbiter.

ISSUE: Whether private respondents are regular or casual employees.

HELD: Yes. An examination of the contract of employment does not show that private respondents were hired for a “specific project or undertaking” nor was the completion or termination of the alleged project for which private respondents were hired determined at the start of the employment.

The term “specific project or undertaking” under Article 280 contemplates an activity which was commonly or habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until the completion of the project.

In case at bar, private respondents were assigned to do carpentry work, packing and driving, activities which are usually necessary and desirable in petitioners usual business and which thus had to be done on a regular basis.

The fact the private respondents had rendered more than one year of service at the time of their dismissal overturns the petitoner’s allegation that private respondents were hired for a specific or a fixed undertaking for a limited period of time.

Private respondents are therefore regular employees of the petitioner.

MAMANSAG v. NLRC

FACTS: Private respondent Consumer Pulse Inc. is engaged in the business of conducting market researches and public surveys on consumer products and services for its clients. Due to the very nature of its business, private respondent hired the services of petitioners as field interviewers whose job was to gather data on consumer products to be submitted to the office of private respondent for evaluation or analysis.

19

In the course of petitioners' employment with private respondent company, petitioners were required by the latter to sign contracts specifying the name of the project and the duration of their employment.

Sometime in February 1987, petitioners were called to a meeting by private respondent company's Human Resources Department Director, Thelma Baricawa, where they were told that they would be transferred to a sub-contractor who would be paying them directly. However, petitioners objected to this proposal as they are regular employees of private respondent. They likewise rejected the offer of Consumer Pulse, Inc. to become members of the Rosie Chew Foundation whose founder is private respondent Rosario Chew, a major stockholder of private respondent Consumer Pulse, Inc.

Private respondents, however, deny having dismissed petitioners. Since their contract with petitioners was on a per project basis, their completion of the project resulted in the completion of their contract and automatic cessation of their employment.

On the other hand, private respondent's Human Resources Department Director Thelma Baricawa denied having told petitioners that they would be transferred to a sub-contractor. What she told them was to upgrade the quality of their work and form themselves into a group of duly licensed job contractors or sub-contractors since private respondent company would henceforth engage only the services of duly licensed contractors or sub-contractors to handle its job projects.

ISSUE: Whether or not petitioners are project employees of private respondent.

HELD: Yes. An examination of the petitioners contract of employment showed that they were hired by private respondent company for a specific project and the completion or termination of said project was determined at the start of their employment. Petitioners cannot be hired for an indefinite period of time and carried on the company's payroll even without projects to work, with without respondent company incurring financial losses.

As field interviewers of private respondent company, the latter depends for its business on the contract itis able to obtain from its clients. Necessarily, the duration of the employment of its employees is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. The fact that petitioners worked for several projects of private respondent company is no basis to consider them as regular employees. By the very nature of their employer's business, they will always remain project employees regardless of the number of projects in which they have worked.

UY v. NLRC

20

FACTS: Private respondents alleged in common that during their employment with petitioner, they rendered services in petitioner's construction projects and in his other businesses such as gasoline station, lumber and equipment yards; that their working hours were from 7:00 A.M. to 5:00 P.M. with a one to two-hour noon break for six days a week, from Monday to Saturday; that they worked during holidays but were paid only their daily wages; and that after their dismissal, petitioner hired new workers at wages lower thatwhat they were receiving at the time they were dismissed.

In his answer, petitioner denied having businesses other than his construction company. He alleged that private respondents were project employees; that they were hired by his foremen who paid them on a "pakyaw" or daily wage basis in a construction project; that after completion of a project, private respondents were free to find other jobs and engage in other sources of livelihood; that in fact, Felipe Magbanua and Nicanor Labuen were farmers who worked for petitioner only after the harvest season, Carlos dela Cruz worked for another businessman and was hired by petitioner only once in 1985, Remy Arnaiz worked for the National Irrigation Administration, Billy and Rolly Arnaiz were fishermen and Rolly was sometimes employed by the Department of Public Works and Highways, Domingo Salarda was a tricycle driver who also worked in a farm, and Julio Cahilig was a carpenter who worked for petitioner whenever his services were not contracted by other persons.

LABOR ARBITER – dismissed the complaint for lack of merit declaring that private respondents were project employees of petitioner.

NLRC – regular, not project employees.

ISSUE: Whether private respondents are regular employees despite their admissions and corroborating evidence on record that they worked on projects.

HELD: Yes. Petitioner has not shown that private respondents were hired for a specific project the duration of which had been determined at the time of hiring. In fact, petitioner has not identified the specific project or undertaking or any phase thereof for which private respondents were hired. He failed to submit any document such as private respondents employment contracts and employment records that would show the dates of hiring and termination in relation to the particular construction project or the phases in which they were employed. More importantly, petitioner has not presented the termination reports required to be submitted to the Department of Labor and Employment Regional Office every time his employees' services were terminated upon completion of a project.

Even assuming that the contracts were admitted, they, at best, prove that petitioner was engaged in construction projects in the province of Antique and Region VI, and that his

21

firm is capable of undertaking several major construction projects simultaneously contrary to petitioner's claims of being a modest provincial contractor. In two of these contracts, petitioner is referred to as "Rizalino P. Uy General Merchant." This description ironically supports private respondents' allegation that aside from his construction firm, petitioner was also engaged as in other businesses to which he assigned private respondents in-between projects.

Clearly, private respondents were non-project employees. As mason, carpenter and laborer, they performed work necessary and desirable in the usual business of petitioner, and are thus deemed regular employees. They were, however, dismissed without just cause and without proper notice and hearing. Their dismissal was illegal for which reason the respondent Commission correctly awarded them back wages and separation pay.

PURE FOODS CORPORATION v. NLRC

FACTS: The petitioner Pure Foods Corporation hired the private respondents (numbering 906) to work for a fixed period of five (5) months at its tuna cannery plant in Tambler, General Santos City. The respondents’ services were terminated after the expiration of their respective contracts of employment in June and July 1991. Thereafter, they executed a “Release and Quitclaim” stating that they had no claim whatsoever against the petitioner.

On July 29, 1991, the private respondents filed a complaint for illegal dismissal before the NLRC Sub-Regional Arbitration Branch No. XI, General Santos City. Labor Arbiter Arturo Aponesto dismissed the complaint on the ground that the respondents were mere contractual employees. Thus, the termination of their services was justified. By way of appeal to NLRC Cagayan de Oro City dated October 28, 1994, the latter affirmed the Labor Arbiter’s decision. However, on private respondents’ motion for reconsideration, the NLRC set aside the decision and held that the private respondents were regular employees.

Therefore, petitioner contends that respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction in reversing the decision of the Labor Arbiter.

ISSUE: Whether private respondents are regular employees.

HELD: Yes. The private respondents are regular employees.

Art. 280 of the Labor Code provide the two kinds of regular employees. To wit, (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered

22

at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.

In the case at bar, the private respondents’ activities consisted in the receiving, skinning, loining, packing and casing-up of tuna fish which were necessary in petitioner’ business. Contrary to petitioner’s contention, the private respondents could not be regarded as having been hired for a specific project or undertaking. Under Article 280 of the Labor Code, the term “specific project or undertaking” contemplates a type of work which is not done on a daily basis but only for a specific duration of time or until completion. The fact that the petitioner repeatedly and continuously hired workers to do the same kind of work as that performed by those whose contracts had expired negates the petitioner’s claim that those workers were hired for a specific project or undertaking only. The five- month period stated in the private respondents’ employment contracts should be struck down as it is contrary to public policy or morals by reason of circumventing the employees’ right to security of tenure. The scheme of the petitioner was apparently designed to prevent the private respondents and other “casual” employees from attaining the status of a regular employee.

Since reinstatement is no longer possible due to the closure of the business, the proper remedy is the payment of separation pay and back wages.

Wherefore, the instant petition is DISMISSED and the challenged decision of NLRC is hereby AFFIRMED subject to the modification in the computation of separation pay and back wages.

IMBUIDO v. NLRC

FACTS: Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a domestic corporation engaged in the business of data encoding and keypunching, from August 26,1988 until October 18, 1991 when her services were terminated. From August 26, 1988 until October 18, 1991, petitioner entered into thirteen (13) separate employment contracts with private respondent, each contract lasting only for a period of three (3) months. Aside from the basic hourly rate, specific job contract number and period of employment, each contract contains the following terms and conditions:"

a. This Contract is for a specific project/job contract only and shall be effective for the period covered as above-mentioned unless sooner terminated when the job contract is completed earlier or withdrawn by client, or when employee is dismissed for just and lawful causes provided by law. The happening of any of these events will automatically terminate this contract of employment.

23

In her position paper dated August 3, 1992 and filed before labor arbiter Raul T. Aquino, petitioner alleged that her employment was terminated not due to the alleged low volume of work but because she "signed a petition for certification election among the rank and file employees of respondents," thus charging private respondent with committing unfair labor practices. Petitioner further complained of non-payment of service incentive leave benefits and underpayment of 13th month pay.

On the other hand, private respondent, in its position paper filed on July 16, 1992, maintained that it had valid reasons to terminate petitioner’s employment and disclaimed any knowledge of the existence or formation of a union among its rank-and-file employees at the time petitioner’s services were terminated. Private respondent stressed that its business "…relies heavily on companies availing of its services. Its retention by client companies with particular emphasis on data encoding is on a project to project basis, "usually lasting for a period of "two (2) to five (5) months." Private respondent further argued that petitioner’s employment was for a "specific project with a specified period of engagement." According to private respondent, "…the certainty of the expiration of complainant’s engagement has been determined at the time of their (sic) engagement (until 27 November 1991) or when the project is earlier completed or when the client withdraws," as provided in the contract. "The happening of the second event [completion of the project] has materialized, thus, her contract of employment is deemed terminated per the Brent School ruling." Finally, private respondent averred that petitioner’s "claims for non-payment of overtime (sic) and service incentive leave [pay] are without factual and legal basis."

ISSUE: Whether or not Petitioner was a "regular employee," NOT a "project employee" as found by public respondent NLRC.

HELD: Yes. In the instant case, petitioner was engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent, a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment.

However, even as we concur with the NLRC’s findings that petitioner is a project employee, we have reached a different conclusion. In the recent case of Maraguinot, Jr. vs. NLRC, we held that "[a] project employee or a member of a work pool may acquire the status of a regular employee when the following concur:

24

1) There is a continuous rehiring of project employees even after [the] cessation of a project; and

2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer."

The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, from August 26, 1988 to October 18,1991 and contracted for a total of thirteen (13) successive projects. We have previously ruled that"[h]owever, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment." Based on the foregoing, we conclude that petitioner has attained the status of a regular employee of private respondent.

MARAGUINOT v. NLRC

FACTS: Petitioners Maraguinot and Enero maintain that they were employed by VIVA Films as part of their filming crew. Their tasks consist of loading, unloading, and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to VIVA Films' warehouse, assisting in the fixing of the lighting system, and performing other tasks that the cameraman and or director may assign.

Sometime in May 1992, Maraguinot and Enero asked that their salary be adjusted to the minimum wage rate. Instead of getting a pay increase, they were asked to sign a blank employment contract, and when they refused, their services were terminated. Petitioners filed a suit for illegal dismissal.

On the other hand, private respondents claim that VIVA Films is the trade name of VIVA Productions Inc. which is primarily engaged in the distribution and exhibition, but not the making of movies. In the same vein, Private respondent Del Rosario asserts that he is merely an executive producer or the financier who invests money for the production of movies to be distributed and exhibited by VIVA.

The respondents further assert that they contract with persons called producers to produce or make movies. VIVA Films and Del Rosario contend that the petitioners are project the employees of associate producers who in turn, act as independent contractors. Hence they say, petitioners are not employees of VIVA Films or of the executive producers.

LABOR ARBITER – rendered judgment declaring that complainants were illegally dismissed.

25

NLRC – reversed the judgment of the labor arbiter and indicated that complainants (herein petitioners) were project employees.

ISSUE: Whether complainants are to be considered as employees of the respondents

HELD: Private respondents insist that petitioners are project employees of associate producers who, in turn, act as independent contractors. It is settled that the contracting out of labor is allowed only in case of job contracting.

Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents' evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA. These include generators, cables and wooden platforms, cameras and "shooting equipment;" in fact, VIVA likewise owns the trucks used to transport the equipment. It is thus clear that the associate producer merely leases the equipment from VIVA.

If private respondents insist that the associate producers are labor contractors, then these producers can only be "labor-only" contractors, defined by the Labor Code. As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an available group of free-lance workers which includes the complainants Maraguinot and Enero.

The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer.

The employer-employee relationship between petitioners and VIVA can further be established by the "control test." While four elements are usually considered in determining the existence of an employment relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control of the employee's conduct, themost important element is the employer's control of the employee's conduct, not only as to the result of

26

the work to be done but also as to the means and methods to accomplish the same. These four elements are present here.

VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film.

Notably, the appointment slip does not indicate that it was the producer or associate producer who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA.

VIOLETA v. NLRC

FACTS: Petitioners Isabelo Violeta and Jovito Baltazar were former employees of Dasmariñas Industrial and Steelworks Corporation (DISC). They were hired from one project to another from 1980 to 1992.Upon their separation, petitioners executed a quitclaim wherein they declared that they have no claim against DISC. Contending that they are already regular employees who cannot be dismissed on the ground of completion of the particular project where they are engaged, petitioners filed two separate complaints for illegal dismissal DISC.

ISSUE: Whether petitioners were regular employees

HELD: Yes. Although the appointment contracts of petitioners specified fixed terms or periods of employment, the fact that they were hired and transferred from one project to another made both petitioners non-project employees who cannot be terminated by reason alone of the completion of the project. The principal test for determining whether particular employees are properly characterized as ”project employees,” as distinguished from “regular employees,” is whether or not the “project employees” were assigned to carry out a “specific project or undertaking,” the duration (and scope) of which were specified at the time the employees were engaged for that project. Project employees are those workers hired (1)for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. Petitioners are then regular employees and not

27

project employees as said by NLRC. Petitioners’ dismissal could not be justified by the completion of their items of work.

Therefore, the petition is granted.

RADA v. NLRC

Respondent: Philnor Consultants and Planners, Inc.

FACTS: Petitioner’s initial employment with this Respondent was under a ‘Contract of Employment for a Definite Period’ dated 7 July 1977 whereby petitioner was hired as ‘Driver’ for the construction supervision phase of the Manila North Expressway Extension, Second Stage (hereinafter referred to as MNEE Stage 2) for a term of about 24 months effective 1 July 1977.

Highlighting the nature of petitioner’s employment, the contract specifically provides that the employer does not have a continuing need for the services of the Employee beyond the termination date of the contract and that the Employee’s services shall automatically, and without notice, terminate upon the completion of the above specific phase of the project.

Petitioner’s first contract of employment expired on 30 June 1979. Meanwhile, the main project, MNEE Stage 2, was not finished on account of various constraints, not the least of which was inadequate funding, and the same was extended and remained in progress beyond the original period of 2.3 years. Fortunately for the petitioner, at the time the first contract of employment expired, respondent was in need of driver for the extended project. Since petitioner had the necessary experience and his performance under the first contract of employment was found satisfactory, the position of Driver was offered to petitioner, which he accepted. Hence a second Contract of Employment for a Definite Period of 10 months, that is, from 1 July 1979 to 30 April 1980 was executed between petitioner and respondent on 7 July 1979.

Then, it follows a third contract which was extended for a number of times until the last extension which were the petitioner was dismissed for having no more work to do.

LABOR ARBITER – ordering the respondent company to reinstate the complainants

NLRC – set aside the labor arbiter’s aforequoted decision and dismissing petitioner’s complaint.

ISSUE: Whether petitioner is a project employee

HELD: Yes. It must be stressed herein that although petitioner worked with Philnor as a driver for eight years, the fact that his services were rendered only for a particular

28

project which took that same period of time to complete categorizes him as a project employee. Petitioner was employed for one specific project.

A non-project employee is different in that the employee is hired for more than one project. A non-project employee, vis-à-vis a project employee.

From the foregoing, it is clear that petitioner is a project employee considering that he does not belong to a “work pool” from which the company would draw workers for assignment to other projects at its discretion. It is likewise apparent from the facts obtaining herein that petitioner was utilized only for one particular project, the MNEE Stage 2 Project of respondent company. Hence, the termination of herein petitioner is valid by reason of the completion of the project and the expiration of his employment contract.

LAO CONSTRUCTION v. NLRC

FACTS: Private complainants were hired for various periods by petitioner as follows:

(a) Roberto Labendia, general construction foreman, from 1971 to 17 October 1990(b) Narciso Adan, tireman, from October 1981 to November 1990(c) Florencio Gomez, welder, from July 1983 to July 1990(d) Ernesto Bagatsolon leadman/checker, from June 1982 to October 1990(e) Salvador Babon, clerk/timekeeper/paymaster, from June 1982 to October 1990(f) Paterno Bisnar, road grader operator, from January 1979 to October 1990(g) Cipriano Bernales, instrument man, from February 1980 to November 1990(h) Angel Mabulay, Sr., dump truck driver, from August 1974 to October 1990(i) Leo Surigao, payloader operator, from March 1975 to January 1978(j) Mario Labendia, Sr. surveyor/foreman, from August 1971 to July 1990(k) Roque Morillo, company watchman, from August 1983 to October 1990

On 1989 Andres Lao, Managing Director of LVM and President issued a memorandum requiringall workers and company personnel to sign employment contract forms and clearances which were issued on 1 July 1989 but antedated 10 January 1989. To ensure compliance with the directive, the company ordered the withholding of the salary of any employee who refused to sign. The contracts expressly described the construction workers as project employees. They were also required to explain why their services should not be terminated for violating company rules and warned that failure to satisfactorily explain would be construed as disinterest in continued employment with the company.

29

NLRC RAB VIII dismissed the complaints lodged before but however granted each employee a separation pay of P6,435.00 computed at one-half (1/2) month salary for every year of service, uniformly rounded at five (5) years.

The decision of Labor Arbiter Gabino A. Velasquez, Jr., was reversed on appeal by the Fourth Division of the National Labor Relations Commission (NLRC) of Cebu City.

ISSUE: Whether or not respondents were only project employees thus not entitled to security of tenure?

HELD: NO. The principal test in determining whether particular employees are project employees distinguished from regular employees is whether the project employees are assigned to carry out specific project or undertaking, the duration and scope of which are specified at the time the employees are engaged for the project. Project in the realm of business and industry refers to a particular job or undertaking that is within the regular or usual business of employer, but which is distinct and separate and identifiable as such from the undertakings of the company. Such job or undertaking begins and end sat determined or determinable times.

In the case the workers were initially hired for specific projects or undertakings of the company and hence can be classified as project employees. But the repeated re-hiring and the continuing need for their services over a long span of time have undeniably made them regular employees. The court held that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. Thus petition was denied.

BRENT SCHOOL v. ZAMORA

FACTS: Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. The contract was fixed for five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy of the report filed by Brent School advising of the termination of his services effective on July16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." Alegre protested and argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could not be removed except for valid cause. The Regional Director considered Brent School's report

30

as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. Brent School filed a motion for reconsideration but was denied. The School is now before this Court in a last attempt at vindication. That it will get here.

ISSUE: WON the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or employment for a term.

HELD: On one hand, there is the gradual and progressive elimination of references to term or fixed-period employment in the Labor Code, and the specific statement of the rule that regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. On the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976

31

without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective.

WHEREFORE, the public respondent’s Decision complained is REVERSED and SET ASIDE. Respondent Alegre’s contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the other relief awarded and confirmed on appeal in the proceedings below.

CIELO v. NLRC

FACTS : The petitioner is a truck driver who claims he was illegally dismissed by the private respondent, the Henry Lei Trucking Company. The Labor Arbiter found for him and ordered his reinstatement with backwages. On appeal, the decision was reversed by the National Labor Relations Commission, which held hat the petitioner's employment had expired under a valid contract.

The private respondent rests its case on the agreement and maintains that the labor laws are not applicable because the relations of the parties are governed by their voluntary stipulations. The contract having expired, it was the prerogative of the trucking company to renew it or not as it saw fit.

The agreement was supposed to have commenced on June 30, 1984, and to end on December31, 1984. On December 22, 1984, however, the petitioner was formally notified by the private respondent of the termination of his services on the ground of expiration of their contract. Soon thereafter, on January22, 1985, the petitioner filed his complaint.

The petitioner claimed he started working for the private respondent on June 16, 1984, and having done so for more than six months had acquired the status of a regular employee. As such, he could no longer be dismissed except for lawful cause.

ISSUE: Whether the petitioner was a regular employee of the company.

HELD: Yes. The factual finding of the Labor Arbiter that the petitioner was a regular employee of the private respondent was correct. The private respondent is engaged in the trucking business as a hauler of cattle, crops and other cargo for the Philippine Packing Corporation. This business requires the services of drivers, and continuously because the work is not seasonal, nor is it limited to a single undertaking or operation. Even if ostensibly hired for a fixed period, the petitioner should be considered a regular

32

employee of the private respondent, conformably to Article 280 of the Labor Code. The agreement in question was null and void ab initio to prevent circumvention of the employee's right to be secure in his tenure.

It appears from the records that all the drivers of the private respondent have been hired on a fixed contract basis, as evidenced by the mimeographed form of the agreement and of the affidavit. The private respondent's intention is obvious. There is no question that the purpose behind these individual contracts was to evade the application of the labor laws by making it appear that the drivers of the trucking company were not its regular employees.

It is plain that the petitioner was hired at the outset as a regular employee. At any rate, even assuming that the original employment was probationary, the Labor Arbiter found that the petitioner had completed more than six month's service with the trucking company and so had acquired the status of a regular employee at the time of his dismissal.

SERVIDAD v. NLRC

FACTS: Petitioner Joaquin T. Servidad was employed as a “Data Control Clerk” by respondent INNODATA on May 9, 1994. Sec. 2 of the contract states that the employment shall be effective for a period of one(1) year commencing on May 10, 1994 until May 10, 1995 unless sooner terminated pursuant to the provisions thereof. He shall be contractual for a period of six (6) months covering the period of May 10, 1994 to November 10, 1994, during which the employer shall serve a written notice should the latter opted to terminate his services. However, should he continue his employment beyond November 10, 1994, he shall become a regular employee upon demonstration of sufficient skill depending on his ability to meet the standards by the employer. Should he fail to demonstrate the ability to master his task during the first six months, he can be placed on probation for another six months after which he will be evaluated for promotion as a regular employee.

On November 9, 1994, he was made to sign a 3-month probationary employment and an extended 3-month probationary employment effective until May 9, 1995. Then, he was dismissed from the service on May 9, 1995 on the ground of alleged termination of contract of employment. Hence, he filed an illegal dismissal complaint before the Labor Arbiter who rendered respondent INNODATA guilty of the charge and ordered to pay backwages and reinstatement of petitioner. On appeal thereto by INNODATA, the NLRC reversed the decision declaring that the contract between petitioner and private respondent was for a fixed term and the dismissal, at the end of his one year term agreed upon, was valid.

33

ISSUE: Whether the contract of employment entered into by the parties is valid and enforceable

HELD: No. The contract of employment entered into by the parties is NOT valid and enforceable.

The tenor of the contract jeopardizes the right of the worker to security of tenure guaranteed by the Constitution given the fact that the private respondent had two (2) options of termination, either by reason of contract expiration or failure to meet work standards.

It was also clear that the petitioner was hired as a regular employee at the outset. His job as a “Data Control Clerk” was directly related to the data processing and encoding business of INNODATA. Thus, his work was necessary to the business of the employer. Such scenario embeds the principle under Art. 280 of the Labor Code, which states that “xxx an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer xxx”. At any rate, even assuming that his employment was probationary, petitioner was anyway permitted to work beyond the first six-month period. Under Art. 281of the Labor Code, an employee allowed to work beyond the probationary period is deemed a regular employee.

Wherefore, the petition is GRANTED, the questioned decision of NLRC is SET ASIDE and the decision of the Labor Arbiter, dated August 20, 1996, is REINSTATED.

CAPAROSO v. CA

FACTS: Composite Enterprises Incorporated (Composite) is engaged in the distribution and supply of confectioneries to various retail establishments within the Philippines. Emilio M. Caparoso and Joeve P. Quindipan were Composite’s deliverymen. Caparoso alleged that he was hired on 8 November 1998 while Quindipan alleged that he was hired on intermittent basis since 1997. Quindipan further alleged that he had been working continuously with Composite since August 1998.

On 8 October 1999, Caparoso and Quindipan were dismissed from the service. They filed a consolidated position paper before the Labor Arbiter charging Composite and its Personnel Manager Edith Tan with illegial dismissal.

Composite and Tan alleged that petitioners were both hired on 11 May 1999 as deliverymen, initially for three months and then on a month-to-month basis. Respondents alleged that petitioners’ termination from employment resulted from the expiration of their contracts of employment on 8 October 1999.

34

LABOR ARBITER - ruled petitioners are regular employees of respondents.

NLRC – set aside the Labor Arbiter’s Decision and dismissed petitioners’ complaint for illegal dismissal.

CA – affirmed the NLRC’s decision.

ISSUE: Whether petitioners are regular employees of respondents

HELD: No. Under Article 280 of the Labor Code, a regular employee is (1) one who is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed.

However, even if an employee is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, it does not preclude the fixing of employment for a definite period.

We agree with the Court of Appeals that in this case, the fixed period of employment was knowingly and voluntarily agreed upon by the parties. The Court of Appeals noted that there was no indication of force, duress, or improper pressure exerted on petitioners when they signed the contracts. Further, there was no proof that respondents were regularly engaged in hiring workers for work for a minimum period of five months to prevent the regularization of their employees.

Also, petitioner’s terms of employment are governed by their fixed-term contracts. Petitioners’ fixed-term employment contracts had expired. They were not illegally dismissed from employment.

AMA COMPUTER COLLEGE v. AUSTRIA

FACTS: Petitioner AMA Computer College, Parañaque is an educational institution duly organized under the laws of the Philippines. The rest of the petitioners are principal officers of AMA. Respondent Rolando A. Austria was hired by AMA on probationary employment as a college dean on 24 April 2000. On 22 August 2000, respondent’s appointment as dean was confirmed by AMA’s Officer-in-Charge, Academic Affairs, in his Memorandum which states on of the following that in the event that Mr. Austria gives up the Dean position or fails to meet the standards of the (sic) based on the evaluation of his immediate superior, he shall be considered for a faculty position and the appointee agrees that he shall lose the transportation allowance he enjoys as Dean and be entitled to his faculty rate.

35

Sometime in August 2000, respondent was charged with violating AMA’s Employees’ Conduct and Discipline provided in its Orientation Handbook, as follows:

1.) Leaking of test questions;2.) Failure to monitor general requirements vital to the operations of the company;

and3.) Gross inefficiency

In a Memorandum dates 29 August 2000, respondent refuted the charges against him. Thereafter, respondent was placed on preventive suspension from 8 September 000 to 10 October 2000. Notices of Investigation were sent to respondent. Eventually, on 29 September 2000, respondent was informed of his dismissal.

On 27 October 2000, respondent filed a Complaint for Illegal Dismissal, Illegal Suspension, Non-Payment of Salary and 13th Month Pay with prayer for Damages.

LABOR ARBITER – held that petitioners accorder respondent due process. Ordering respondent AMA Computer College to pay complainant’s proportionate salary for the period beginning 8 September 2000 to 17 September 2000.

NLRC – found merit in respondent’s appeal. Declared that respondent was a regular employee and that he was illegally dismissed.

CA – upheld the Labor Arbiter’s and the NLRC’s similar findings that respondent sufficiently rebutted the charges against him and that petitioners failed to prove the grounds for respondent’s dismissal.

ISSUE: Whether respondent is a regular, probationary, or fixed term employee

HELD: The fact that respondent voluntarily accepted the employment, assumed the position, and performed the functions of dean is clear indication that he knowingly and voluntarily consented to the terms and conditions of the appointment, including the fixed period of his deanship. Other than the handwritten notes made in the letter of appointment, no evidence was ever presented to show that respondent’s consent was vitiated, or that respondent objected to the said appointment or to any of its condition.

We already had occasion to state that the position of dean is primarily academic, and as such, he is considered a managerial employee. Yet, a perusal of the Handbook yield the interpretation that the provision on the permanency of Faculty members applies to teachers only. But the Handbook or school manual must yield to the decree of the Manual, the latter having the character in law. The specified probationary periods in Section 92 of the Manual are the maximum periods; under certain conditions, regular status may be achieved by the employees in less time. However, under the given

36

circumstances and the fact that the position of dean in this case is for a fixed term, the issue whether the respondent attained a regular status is not in point. It can be well said that a tenured status of employment co-exists and is co-terminous only with the definite term fixed in the contract of employment.

INTERNATIONAL CATHOLIC MIGRATION COMMISSION v. NLRC

FACTS: On January 24, 1983, petitioner ICMC engaged the services of Bernadette Galang as a probationary cultural orientation teacher with a monthly salary of P2,000.00. Three months later, ICMC informed her, orally and in writing, that her services were being terminated for her failure to meet the prescribed standards as reflected in the performance evaluation conducted by her supervisors. As a result, she filed a complaint for illegal dismissal, unfair labor practice and unpaid wages against ICMC with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral damages.

Labor Arbiter Pelagio Carpio dismissed the complaint for illegal dismissal as well as the complaint for moral and exemplary damages, but ordered ICMC to pay Bernadette Galang the sum of P6,000.00 as payment for the last three (3) months of the agreed employment period pursuant to her verbal contract of employment. Both parties appealed. Galang contended that her dismissal was illegal considering that it was effected without valid cause. On the other hand, ICMC countered that private respondent who was employed for a period of three (3) months could not rightfully be awarded P 6,000.00 because herservices were terminated for failure to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer. On August 22, 1985, the NLRC, by a majority vote ofCommissioners Guillermo C. Medina and Gabriel M. Gatchalian, sustained the decision of the Labor Arbiter and dismissed both appeals for lack of merit. Dissatisfied, petitioner ICMC filed the instant petition.

ISSUE: Whether Bernadette Galang is entitled to her salary for the unexpired portion of her six-month probationary employment

HELD: No. Private respondent Bernadette Galang is not entitled to her salary for the unexpired portion of her six-month probationary employment.

There is a justifiable basis for the reversal of NLRC’s award of salary for the unexpired three-month portion of Galang’s six-month probationary employment in the light of its express finding that there was no illegal dismissal. Records show that Galang was found by ICMC to be deficient in classroom management, teacher-student relationship and teaching techniques. As provided for in Art. 281 of the Labor Code, “xxx The services of an employee who has been engaged in a probationary basis may be

37

terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. xxx ”

The dissatisfaction of petitioner ICMC over her performance is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. Thus, it was a grave abuse of discretion on the part of NLRC to order ICMC to pay Bernadette Galang her salary for the unexpired three-month portion of her six-month probationary employment when she was validly terminated. To sanction such action would not only be unjust, but oppressive on the part of the employer.

Wherefore, the petition is GRANTED and the resolution of the NLRC is hereby REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent her P6,000.00 salary for the unexpired portion of her six-month probationary employment.

ESCORPIZO v. UNIVERSITY OF BAGUIO

FACTS: On June 13, 1989, petitioner Escorpizo was hired by University of Baguio as a high schoolteacher. It was on March 18, 1991 when the university informed Escorpizo that her employment was being terminated at the end of the school semester for failure to pass the professional board examination for teachers (PBET). As her appeal to be given a second chance was considered, she was allowed to teach the next school year. Her continued employment was conditioned on her passing the PBET. Escorpizo failed again on the subsequent PBET and thus was not included in the list of those who will teach on the next school year.

On June 8, 1992, Escorpizo passed the PBET. But on June 15, 1992, the university no longer renewed her contract of employment on the ground that she failed to qualify as a regular teacher. She filed on July 16, 1992 a complaint for illegal dismissal, payment of back wages and reinstatement against the university. On June 22, 1993, the labor arbiter ruled that respondent university had a permissible reason in not renewing the employment contract but the labor official ordered the reinstatement of Escorpizo. An instant petition imputing grave abuse of discretion on the part of public respondent in affirming the decision of the labor arbiter is now done by the petitioner.

ISSUE: Whether or not Escorpizo is still entitled to security of tenure?

HELD: NO. Article 281 of the Labor Code expresses that the services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable

38

standards, made known by the employer to the employee at the time of his engagement. Escorpizo was entitled to security of tenure during the period of her probation but such protection ended the moment her employment contract expired at the close of school year 1991-1992 and she was not extended a new appointment. No vested right to a permanent appointment had as yet accrued in her favor since she had not yet complied, during her probation, with the prerequisites necessary for the acquisition of permanent status. There was only an expiration of contract. Petition was dismissed.

MARIWASA MANUFACTURING v. LEOGARDO

FACTS: Private respondent Joaquin A. Dequila was hired on probation by petitioner Mariwasa Manufacturing as a general utility worker on 10 January 1979. Upon the expiration of the probationary period of six months, Dequila was informed by his employer that his work had proved unsatisfactory and had failed to meet the required standards. To give him a chance to improve his performance and qualify for regular employment, instead of dispensing with his services then and there, with his written consent Mariwasa extended his probation period for another three months from 19 July to 9 October 1979. His performance, however, did not improve and on that account Mariwasa terminated his employment at the end of the extended period.

DIRECTOR OF THE MINISTRY’s NATIONAL CAPITAL REGION – the termination of Dequila’s employment was in the circumstances justified and rejected his money claims for insufficiency of evidence.

RESPONDENT DEPUTY MINISTER – Dequila was already a regular employee at the time of his dismissal, therefore, could not have been lawfully dismissed for failure to meet company standards as a probationary worker.

ISSUE: Whether Article 282 of the Labor Code notwithstanding, probationary employment may validly be extended beyond the prescribed six-month period by agreement of the employer and the employee

HELD: The Court agrees with the Solicitor General, who takes the same position as the petitioners, that such an extension may lawfully be covenanted, notwithstanding the seemingly restrictive language of Article 282. Buiser vs. Leogardo, Jr. recognized agreements stipulating longer probationary periods as constituting lawful exception to the statutory prescription limiting such periods to six months, when it upheld as valid an employment contract between an employer and two of its employees that provided for an eigthteen-month probation period.

39

For aught that appears of record, the extension of Dequila’s probation was ex gratia, an act of liberality on the part of his employer affording him a second chance to make good after having initially failed to prove his worth as an employee. Such an act cannot now unjustly be turned against said employer’s account to compel it to keep on its payroll one who could not perform according to its work standards. The law, surely, was never meant to produce such an inequitable result.

By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy protecting the employee and the security of his tenure is served by proscribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a probationary employee’s prospects of demonstrating his fitness for regular employment.

ORIENT EXPRESS PLACEMENT PHILIPPINES v. NLRC

FACTS: Antonio Flores was hired as crane operator with a monthly salary of US$500 for 1 year, subject to a 3-month probationary period, by Orient Express Placement Philippines in behalf of its foreign principal Nadrico Saudi Limited. However, after only (1) month and five (5) days in Saudi Arabia, Flores was repatriated to the Philippines. Consequently, he filed a complaint with the POEA for having been terminated from work for no valid reason. Orient Express and NADRICO countered that Flores was terminated for poor job performance as shown in his Performance Evaluation Sheet and for his uncooperative work attitude.

POEA – rendered a decision in favor of complainant holding that when the ground invoked for the dismissal of an employee was incompetency or poor job performance it must be shown that the reasonable standards of work prescribed by the employer were made known to the employee and that the latter failed to conform to such standards.

NLRC – affirmed the POEA decision on appeal

ISSUE: Whether respondent was validly dismissed for poor job performance and uncooperative work attitude.

HELD: No. Under Art. 281 of the Labor Code, the services of an employee hired on a probationary basis may be terminated when he failed to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. However, the Court cannot sustain his dismissal on this ground because petitioner failed to specify the reasonable standards by which private respondent’s alleged poor performance was evaluated, much less to prove that such

40

standards were made known to him at the time of his recruitment in Manila. Neither private respondent’s Agency-Worker Agreement with ORIENT EXPRESSS nor his Employment Contract with NADRICO ever mentioned that he must first take and pass a Crane Operators’ License Examination in Saudi Arabia before he would be allowed to even touch a crane. Neither did he know that he would be assigned as floorman pending release of the results of the examination or in the event he failed; more importantly, that he would be subjected to a performance evaluation by his superior for 1 month after his hiring to determine whether the company was amenable to continuing with his employment. Hence, respondent could not be faulted for precisely harboring the impression that he was hired as crane operator for a definite period of 1 year to commence upon his arrival at the work site and to terminate at the end of 1 year. No other condition was laid out except that he was to be on probation for 3 months.

WHEREFORE, the assailed Decision and Resolution of the NLRC declaring private respondent was illegally dismissed is AFFIRMED.

A’PRIME SECURITY SERVICES, INC. v. NLRC

FACTS: Private respondent Othello Moreno alleged that he worked as a security guard for a year with Sugarland Security Services, Inc., a sister company of petitioner A’ Prime. On January 30, 1988, he was rehired as a security guard by the petitioner. He was assigned to the same post at the U.S. Embassy Building. According to him, he was forced by petitioner to sign new probationary contracts of employment for six (6) months. On August 1, 1988, his employment was terminated. He also claimed that during his employment, the amount of P20.00 per month was deducted from his salary allegedly for withholding tax and the salary he was receiving was only P2,187.00 a month contrary to the P2,410.17 stipulated in the PADPAO memorandum of agreement.

On the other hand, A’ Prime countered that Othello Moreno was hired on January 30, 1988 on a probationary basis and he signed an authority to deduct from his salary any reimbursement for any loss or damage caused to properties of the client. Petitioner contended that he was given a copy of petitioner’s rules and regulations which provided that sleeping on post is punishable by warning, suspension and dismissal. He was caught sleeping on post on March 17, 1988, for which he was sent a memorandum giving him a last warning. On March 25, 1988, he figured in a quarrel with another security guard, which resulted in a near shootout. At the end of his probationary employment, he was given a psychological test and on the basis of the foregoing, petitioner told him that his probationary employment had come to an end as he did not pass the company’s standard. Thus, he could not be hired as a regular employee.

41

Thus, Othello Moreno filed a complaint for illegal dismissal, illegal deduction and underpayment of wages against petitioner A’ Prime. Labor Arbiter Valentin Guanio handed down a decision in favor of complainant. A’ Prime was ordered to reinstate the complainant to his former position and accord to him the status of a regular employee, and to refund to the complainant the deduction it had made from his salary in the amount of P20.00 per month. On appeal, the NLRC affirmed the decision of the labor arbiter with a slight modification of setting aside the refund of the deductions from complainant’s salaries in the amount of P20.00 per month. Likewise, the back wages should in no case exceed the period of three (3) years. Hence, this petition.

ISSUE/S:

1. Whether private respondent’s employment with A’ Prime Security Services, Inc. was just a continuation of his employment with Sugarland Security Services, Inc.;

2. Whether private respondent is a regular or probationary employee of petitioner; and

3. Whether private respondent’s dismissal is illegal.

HELD:

1. In the first issue, records show that the allegations of Moreno that Sugarland is a sister company of A’Prime and that the latter absorbed the security contracts and security guards of Sugarland with the U.S. Embassy were neither denied nor controverted by the petitioner before Labor Arbiter Guanio. Under Sec. 1, Rule 9 of the Rules of Court, in relation to Sec. 3, Rule I of the Rules of NLRC, material averments in the complaint are deemed admitted when not specifically denied.

2. The Court holds that Othello Moreno became a regular employee upon completion of his six-month period of probation. He started working on January 30, 1988 and completed the said period of probation on July 27, 1988. Thus, at the time he was dismissed on August 1, 1988, he was already a regular employee with a security of tenure. He could only be dismissed for a just and authorized cause.

Relative thereto, there is no basis for subjecting Moreno to a new probationary or temporary employment on January 30, 1988, considering that he was already a regular employee when he was absorbed by A’ Prime from Sugarland, its sister company.

3. Finally, on the issue of whether the dismissal of private respondent was unjust and illegal, the Court ruled in the affirmative. The dismissal of the private respondent was presumably based on the results of his behavioral and neuropsychological tests and on his violation of a company rule on sleeping on post. With respect to the behavioral and neuropsychological tests, a discrepancy was observed in the test results. In the first

42

page of the Evaluation Report, the complainant was ruled as “Steadiness and Endurance under pressure-Average”. However, in the Summary page thereof, it states, “Under pressure, he needs emotional support.” Evidently, the evaluator’s mind was already preconditioned towards enforcing A’ Prime’s intent of terminating Othello Moreno’s employment, considering that the same was issued on the very day of his dismissal. Hence, Moreno was not given a chance to contest his dismissal and therefore, deprived of an opportunity to be heard.

In relation to the private respondent’s violations of sleeping on post and quarrelling with a co-worker, the infractions were merely first offenses not punishable by outright dismissal. As such, these are not deemed to be valid grounds for terminating the employment of private respondent.

Wherefore, the petition is DISMISSED and NLRC’s decision and resolution AFFIRMED.

LA CONSOLACION COLLEGE v. NLRC

FACTS: LCC initially employed Jose de la Peña III as a CAT Commandant and YCAP Coordinator for school year 1975-76. His employment as YCAP coordinator lasted until 29 September 1979, after which he resigned. He severed all ties with LCC when he left in 1980. Prior to his resignation and despite demands by LCC for him to submit a syllabi in YDT, I, II, III, and CAT I containing course objectives, subject matter, content, concepts, skills, activities and evaluation not later than 12 November 1979, respondent de la Peña failed to comply.

After his employment with LCC, respondent de la Peña sought and found employment in other establishment.

However, on 2 December 1991, LCC received an application from respondent de la Peña. The applicant requested that he be considered for the positions of CAT Commander and YDT Instructor, positions he held for 11 years prior to his resignation from LCC.

In June 1992, LCC appointed respondent de la Peña as a classroom teacher in physical education and health, a position he never held during his previous employment with LCC.

The written contract of employment between LCC and respondent de la Peña expressly provided that the employment was for 1 academic year, that is, from June 1992 to March 1993. Respondent de la Peña accepted such condition.

On 14 July 1992, petitioner Jose Bayoguing, Jr., a member of the academic team asked to evaluate the performance of the school’s teachers, reminded respondent de la Peña

43

in writing to comply with the requirements and standard operating procedure of the school. Respondent de la Peña ignored the reminder without any valid reason, and continued to defy these requirements and procedures.

On 27 November 1992, respondent de la Peña called an emergency meeting of faculty members. In said meeting, respondent de la Peña berated petitioner Beyoguing, shouted invectives, ridiculed and threatened Bayoguing with bodily harm. No untoward incident ensured petitioner Bayoguing kept his composure. During the same faculty meeting, respondent de la Peña was physically restrained by his fellow teachers whenever he would charge the person of petitioner Bayoguing.

On February 1993, respondent de la Peña wrote the principal of HS, stating that he “would like to apply for reinstatement as a faculty member for 1993-94.

In a letter dated 11 March 1993, respondent was informed of his unsatisfactory performance and advised him that the school would no longer hire him for the incoming school year.

LABOR ARBITER – rendered a decision dismissing the complaint holding that at the time respondent de la Peña was dismissed, he had not attained regular status.

NLRC – held that respondent de la Peña attained regular status at the time he was dismissed and that LCC failed to prove the existence of just cause to warrant his dismissal

ISSUE: Whether respondent was a regular employee of LCC in a position in which he had not undergone the 3 year probationary period provided in manual of regulations for private schools.

HELD: No. In resolving the issue, it is the Manual of Regulations for Private Schools, not the Labor Code, which is applicable. This was settled in University of Sto. Tomas v. NLRC, where we rules that for a private school teacher to acquire permanent status in employment the following requisites must concur: (1) the teacher is a full-time teacher; (2) the teacher must have rendered 3 consecutive years of service; and (3) such service must have been satisfactory.

The written contract of respondent de la Peña stated that he shall be employed by the LCC for the school year June 1992, up to March 1993, a fixed term of ten months. It is also important to note that respondent de la Peña was a new hire having previously resigned from the school and was holding the position of classroom teacher for BED for the first time. Respondent never denied the fact that he failed to comply with the

44

requirements of the school, hence, his employment was not renewed. Neither did he attain permanent status Clearly, respondent was not illegally dismissed.

NATIONAL SUGAR REFINERIES CORP v. NLRC

FACTS: NASUREFCO is a GOCC which operated 3 refineries in Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on 11 April 1992 pursuant to Proc. 50. Private respondent, NBSR Supervisory Union, represents the former supervisors of Nasurefco Batangas. On 1 June 1998, petitioner implemented a Job Evaluation Program (JE) affecting employees, to rationalize the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Prior to the JE, the members of the Union were treated in the same manner as rank-and-file employees. As such, they used to be paid overtime, rest day, and holiday pay. With the implementation of the JE, they were reclassified as managerial staff for purposes of compensation and benefits. Two years thereafter, the members of the Union filed a complaint for non-payment of overtime, restday and holiday pay allegedly in violation of Article 100 of Labor Code.

EXECUTIVE LABOR ARBITER – rules in favor of the Union – the long practice of paying for overtime, restday and holiday pay has ripened into a contractual obligation, the special allowance of P100 in lieu thereof amounts to a diminution of benefits.

NLRC – affirmed – they are not managerial employees as defined under Article 212(m). Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management nor in the hiring or firing of employees; their main function is to carry out the ready policies and plans of the corporation.

In this petition for certiorari, the Petitioner contends that in terms of entitlement to the questioned benefits, although the private respondents, as supervisors, may not be occupying managerial positions, there are clearly members of the managerial staff because they meet all the conditions prescribed by law.

ISSUE: Whether the members of respondent union are entitled to overtime, rest day and holiday pay.

HELD: NO. From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or

45

members of the managerial staff, as defined in Sec. 2, Rule I, Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consists of the management of a department of the establishment in which they are employed; (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described.

Under the facts obtaining in this case, were are constrained to agree with petitioner that the union members should be considered as officers or members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Therefore, they are not entitled to overtime, rest day and holiday pay.

With the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their former positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer meet the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the saying goes, they cannot have their cake and eat it too or, as petitioner suggests they should not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO.

WHEREFORE, The decision of the NLRC are annulled and set aside.

SAN MIGUEL BREWERY v. DEMOCRATIC LABOR ORG.

FACTS: On 27 January 1955, the Democratic Labor Association filed complaint against the San Miguel Brewery embodying 12 demands for the betterment of the conditions of employment of its members. The company filed its answer to the complaint specifically denying its material averments and answering the demands point by point. The company asked for the dismissal of the complaint.

46

At the hearing held sometime in 1955, the union manifested its desire to confine its claim to its demands for overtime, night-shift differential pay, and attorney’s fees, although it was allowed to present evidence on service rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave compensation.

The demands for the application of the Minimum Wage law to workers paid on “pakiao” basis, payment of accumulated vacation and sick leave and attorney’s fees, as well as the award of additional separation pay, were either dismissed, denied or set aside.

Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that outside or field sales personnel are entitled to the benefits of the Eight Hour Labor Law.

ISSUE: Whether the employees are entitled to the Eight-Hour Labor Law

HELD: NO. We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily compensation, in which, if he is made to work beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no application when the employee or laborer is paid on a piece-work, pakiao, or commission basis, regardless of the time employed. The philosophy behind this exemption is that earnings in the form of commission based on the gross receipts of the day. His participation depends upon his industry so that the more hours he employs in the work the greater are his gross returns and the higher his commission.

True it is that the employees concerned are paid a fixed salary for their month of service, and were paid on their sales commission depending on the volume of their sales and their rate of commission per case. And insofar as the extra work they perform, they can be considered as employees paid on piece work, pakiao, or commission basis. The Department of Labor, called upon to implement the Eight-Hour Labor Law, is of this opinion:

“Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, it its also the established policy of the Office to consider his commission as payment for the extra time he renders in excess of eight hours, thereby classifying him as if he were on piece-work basis, and therefore, technically speaking, he is not subject to the Eight-Hour Labor Law.”

47

We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law applies to the employees composing outside service force and in ordering that they be paid the corresponding additional compensation.

MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION v. BACUNGAN

FACTS: Petitioner employees question the validity of the pertinent section of the Rules and Regulations Implementing the Labor Code as amended on which respondent arbitrator Froilan M. Bacungan based his decision ruling that Mantrade Devt Corp is not under legal obligation to pay holiday pay (as provided for in Article 94 of the Labor Codei) to its monthly paid employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage, and that this rule is applicable not only as of 2 March 1976 but as of 1 November 1974.

Respondent corporation contends, among others that petitioner is barred from pursiong the present action in view of (1) Article 263 of the Labor Code; (2) the pertinent provision of the CBA between petitioner and respondent corporation; and (3) Article 2044 of the Civil Code; that the special civil action of certiorari does not lie because respondent arbitrator is not an “officer exercising judicial functions” within the contemplation of Rule 65 Sec 1 of the Rules of Court; that the instant petition raises an error of judgment on the part of respondent arbitrator of certain rules and regulations issued by the DOE, not for the annulment of the voluntary arbitration proceedings; and that appeal by certiorari under Sec 29 of the Arbitration Law, R.A. No. 876, is not applicable to the case at bar because arbitration in labor disputes is expressly excluded by Sec. 3 of said law.

ISSUE: Whether Mantrade employees are entitled to holiday pay

HELD: YES. Under Art. 94 of the Labor Code, monthly salaried employees are not among those excluded from receiving holiday pay. But they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations implementing said provision. Respondent arbitrator further opined that respondent corporation does not have any legal obligation to grant its monthly salaried employees holiday pay, unless it its argued that the pertinent section of the Rules and Regulations implementing Sec 94 of the Labor Code is not in conformity with the law, and thus, without force and effect.

- Insular Bank of Asia and America Employees' Union (IBAAEU)vs. Inciong(October 24, 1984): Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.-

48

- Chartered Bank Employees Association vs. Ople(August 28,1985): An administrative interpretation which diminishes the benefits of labor more than what the statute delimits orwithholds is obviously ultra vires.

WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and respondent corporation is ordered to GRANT holiday pay to its monthly salaried employees.

APEX MINING COMPANY v. NLRC

FACTS: Private respondent Sinclitica Candido was employed by petitioner Apex Mining on 18 May 1973 to perform laundry services at its staff house located at Davao del Norte. In the beginning, she was paid on a piece rate basis. However, on 17 January 1982, she was paid on a monthly basis at P250 a month which was untimely increased to P575 a month.

On 18 December 1987, while she was attending to her assigned task and she was hanging her laundry, she accidentally slipped and hit her back on a stone. She reported the accident to her immediate supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit. As a result of the accident she was not able to continue her work. she was permited to go on leave for medication. De la Rosa offered her the amount of P2,000 which was eventually increased to P5,000 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 on 4 February 1988.

On 11 March 1988, private respondent filed a request for assistance with the DOLE. After the parties submitted their position papers as required by the labor arbiter assigned to the case, the latter rendered a decision in favor of the respondent.

NLRC –affirmed

ISSUE: Whether private respondent should be treated as a mere househelper or domestic servant and not as a regular employee of petitioner

HELD: NO. Under Rule XIII, Section 1(b), Book 3 of the Labor Code, 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

49

maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family”

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 or 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.

WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of public respondent NLRC are hereby AFFIRMED.

MERCIDAR FISHING CORP v. NLRC

FACTS : Private respondent Agao was employed as a bodegero or ship’s quartermaster. He had been sick and was allowed to go on leave without pay but was refused to be admitted back to work. Agao filed an action against Mercidar for illegal dismissal, violation of PD No. 851, and non-payment of five days service incentive leave. Labor Arbiter ordered reinstatement with backwages, payment of 13thmonth pay and incentive leave pay for 1990. Mercidar argues that since the work of Agao is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. It contends that Agao and other fishermen in its employ should be classified as field personnel who have no statutory right to service incentive leave pay.

LABOR ARBITER – ordered respondents to reinstate complainant with backwages, pay him his 13th month pay and incentive pay for 1990.

NLRC – petitioner appealed. The appeal was dismissed for lack of merit. The NLRC dismissed petitioner’s claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are “field personnel” and thus not entitled to such pay under the Labor Code.

ISSUE: Whether Agao is a field personnel and therefore not entitled to service incentive leave pay.

HELD: NO. Art. 82 of the Labor Code excludes field personnel from application of the Labor Standards. It defines “field personnel” as non-agricultural employees who

50

regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. The requirement that “actual hours of work in the field cannot be determined with reasonable certainty” must be read in conjunction with Rule IV, Book III of the Implementing Ruleswhich provides: Section 1. This rule shall apply to all employees except: xxx (e)Field personnel and other employees whose time and performance is unsupervised by the employer xxx. The clause “whose time and performance is unsupervised by the employer” did not amplify but merely interpreted and expounded the clause “whose actual hour of work in the field cannot be determined with reasonable certainty”. The former clause is still within the scope and purview of Art. 82 which defines field personnel. In the case at bar, during the entire course of their fishing voyage, fishermen employed by Mercidar have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner’s business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of Mercidar through the vessel’s patron or master as the NLRC correctly held.

LABOR CONGRESS OF THE PHILIPPINES v. NLRC

FACTS: The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of money claims and for violation of labor standards laws They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative. In an Order dated October 24, 1990, Mediator Arbiter approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment".

On November 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining. On January 1991, petitioners filed a complaint against private respondents for Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting thru Harassments [sic], threats, and interfering with the rights of employees to self-organization; Violation of the Memorandum of Agreement dated October 23, 1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board; Actual, Moral and Exemplary Damages."

After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of

51

agreement, underpayment of wages and denied petitioners' prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants

ISSUE: Whether or not the petitioners are entitled to labor standard benefits considering they are paid by piece rate worker. 

HELD:  The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th month pay and service incentive leave. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners' tasks were necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, and third, the length of time that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their employment was that of regular employees. 

The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, "field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof." 

Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. 

Further, in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay. 

SEC. 8. Holiday pay of certain employees. — 

(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. 

In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly

52

exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 

2. EXEMPTED EMPLOYERS 

The following employers are still not covered by P.D. No. 851: 

d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. 

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. 

As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay.

The Supreme Court in its decision held: DECLARING petitioners to have been illegally dismissed by private respondents, thus entitled to full back wages and other privileges, and separation pay in lieu of reinstatement at the rate of one month's salary for every year of service with a fraction of six months of service considered as one year.

RADA v. NLRC

Respondent: Philnor Consultants and Planners, Inc.

FACTS: Petitioner’s initial employment with this Respondent was under a ‘Contract of Employment for a Definite Period’ dated 7 July 1977 whereby petitioner was hired as ‘Driver’ for the construction supervision phase of the Manila North Expressway Extension, Second Stage (hereinafter referred to as MNEE Stage 2) for a term of about 24 months effective 1 July 1977.

53

Highlighting the nature of petitioner’s employment, the contract specifically provides that the employer does not have a continuing need for the services of the Employee beyond the termination date of the contract and that the Employee’s services shall automatically, and without notice, terminate upon the completion of the above specific phase of the project.

Petitioner’s first contract of employment expired on 30 June 1979. Meanwhile, the main project, MNEE Stage 2, was not finished on account of various constraints, not the least of which was inadequate funding, and the same was extended and remained in progress beyond the original period of 2.3 years. Fortunately for the petitioner, at the time the first contract of employment expired, respondent was in need of driver for the extended project. Since petitioner had the necessary experience and his performance under the first contract of employment was found satisfactory, the position of Driver was offered to petitioner, which he accepted. Hence a second Contract of Employment for a Definite Period of 10 months, that is, from 1 July 1979 to 30 April 1980 was executed between petitioner and respondent on 7 July 1979.

Then, it follows a third contract which was extended for a number of times until the last extension which were the petitioner was dismissed for having no more work to do.

LABOR ARBITER – ordering the respondent company to reinstate the complainants

NLRC – set aside the labor arbiter’s aforequoted decision and dismissing petitioner’s complaint.

ISSUE: Whether the petitioner is entitled for overtime compensation

HELD: YES. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same. The fact that he picks up employees of Philnor at certain specified points along EDSA in going to the project site and drops them off at the same points on his way back from the field office going home to Marikina, Metro Manila is not merely incidental to petitioner’s job as a driver. On the contrary, said transportation arrangement had been adopted, not so much for the convenience of the employees, but primarily for the benefit of the employer, herein private respondent. This fact is inevitably deducible from the Memorandum of respondent company: “There herein Respondent resorted to the above transport arrangement because from its previous project construction supervision experiences, Respondent found out that project delays and inefficiencies resulted from employees tardiness; and that the problem of tardiness, in turn, was aggravated by transportation problems, which varied in degrees in proportion to the distance between the project site and the employees residence. In view of this lesson from experience, and as a practical, if expensive, solution to employees’ tardiness and its concomitant problems, Respondent adopted the policy of

54

allowing certain employees – not necessarily project drivers – to bring home project vehicles, so that employees could be afforded fast, convenient and free transportation to and from the project field office.

NATIONAL SHIPYARDS AND STEEL CORP v. CIR

FACTS: Petitioner NASSCO, a GOCC, is the owner of several barges and tugboats used in the transportation of cargoes and personnel in connection with its business of shipbuilding and repair. In order that its bargeman could immediately be called to duty whenever their services are needed, they are required to stay in their respective barges, for which reason they are given living quarters therein as well as subsistence allowance of P1.50 per day during the time they are on board. However, upon prior authority of their superior officers, they may leave their barges when said barges are idle.

On 15 April 1957, 39 crew members of petitioner’s tugboat service, including therein respondent Dominador Malondras, filed with the Industrial Court a complaint for the payment of overtime compensation.

On 14 February 1958, the court examiner submitted his report covering the period from 1 January to 31 December 1957, wherein he found that the petitioners including respondent Malondras rendered an average overtime service of 5 hours each day for the period aforementioned, and upon arrival of the report by the Court, all the claimants, including Malondras, were paid their overtime compensation by the NASSCO.

Subsequently, on 30 April 1958, the court examiner submitted his second partial report covering the 1 January 1954 to 31 December 1956, again giving each crewman an average of 5 overtime hours each day. Respondent Malondras was not, however, included in this report. Again upon approval by the Court, the crewmen concerned were paid their overtime compensation.

Because of his exclusion from the second part, and his time sheets having been located in the meantime, Malondras, filed petitions in the same case asking for the compensation. Malondras petition was opposed by the NASSCO upon the argument, among others, that its records do not indicate the actual number of working hours rendered by Malondras during the periods in question.

ISSUE: Whether Malondras should be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work during those hours.

HELD: NO. Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board.

55

It could not have been the purpose of our law to required their employers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours.

While Malondras daily time sheets do not show his actual working hours, nevertheless, petitioner has already admitted in the Stipulation of Facts in this case that Malondras and his co-complainants did render service beyond 8 hours a day when so required by the exigencies of the service, and in fact, Malondras was credited and already paid for 5 hours daily overtime work during the period from 1 May to 31 December 1957 under the examiner’s first report. Since Malondras has been at the same job since 1954, it can be reasonably inferred that the overtime service he put in whenever he was required to be aboard his barge all day from 1954 to 1957 would me more or less consistent. In truth, the other claimants who served with Malondras under the same conditions and period have been finally paid for an overtime of 5 hours a day, and no substantial difference exists between their case and the present one, which was not covered by the same award only because Malondras time records were not found until later.

CALTEX REGULAR EMPLOYEES AT MANILA OFFICE v. CALTEX, INC.

FACTS:

ISSUE:

HELD:

UNIVERSITY OF PANGASINAN FACULTY UNION v. UNIVERSITY OF PANGASINAN

FACTS: The petitioner’s members are full-time professors, instructors, and teachers of respondent University. The teachers in college level teach for a normal duration of ten (10) months a school year, divided into 2 semesters of 5 months each, excluding the 2 months summer vacation. These teachers are paid their salaries son a regular monthly basis.

In November and December 1981, the petitioner’s members were fully paid their regular monthly salaries. However ,from November 7 to December 5, during the semestral break, they were not paid their ECOLA. The private respondent claims that the teachers are not entitled thereto because the semestral break is not an integral part of the

56

schoolyear and there being no actual services rendered by the teachers during the said period, the principle of “No work, no pay” applies.

ISSUE: Whether petitioner’s members are entitled to ECOLA during the semestral break.

Whether semestral breaks may be considered as “ hours worked” under the Rules implementing the Labor Code

HELD:

1. YES. It is evident that the intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of “No pay, no ECOLA” the converse of which finds application in the case at bar. Petitioners cannot be considered to be on leave without pay so as not to be entitled to ECOLA, for as earlier stated, the petitioners were paid their wages in full for the months of November and December of 1981, notwithstanding the intervening semestral break. This, in itself, is a tacit recognition of the rather unusual state of affairs in which teachers find themselves. Although said to be on forced leave, professors and teacher are, nevertheless, burdened with the task of working during a period of time supposedly available for rest and private matter. It would be most unfair for the private respondent to consider these teachers as employees on leave without pay to suit its purposes and, yet, in the meantime, continue availing their services as they prepare for the next semester or complete all of the last semester’s requirements.

2. YES. The semestral break scheduled is an interruption beyond petitioner’s control and it cannot be used “effectively nor gainfully in the employee’s interest”. Thus, the semestral break may also be considered as “hours worked”. For this, the teachers are paid regular salaries, and for this, they should be entitled to ECOLA. Not only do the teachers continue to work during this short recess but much less do they cease to live for which the cost of living allowance is intended. The legal principles of “No work, No pay; No pay, no ECOLA” must necessarily give way to the purpose of the law to augment the income of employees to enable them to cope with the harsh living conditions brought about by inflation; and to protect employees and their wages against the ravages brought by these conditions. Significantly, it is the commitment of the State to protect labor and to provide means by which the difficulties faced by the working force may best be alleviated. To submit to the respondent’s interpretation of the no work, no pay is to defeat this noble purpose. This constitution and the law mandate otherwise.

SIME DARBY PILIPINAS v. NLRC

57

FACTS: Petitioner is engaged in the manufacture of automotive tires, tubes and other rubber products. Private respondent is an association of monthly salaried employees of petitioner at its Marikina factory. Beforehand, all company factory workers in Marikina including members of private respondent union worked from 7:45am to 3:45pm with a 30-minute paid “on call” lunch break.

Petitioner issued a memorandum to all factory- based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts.

Private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid “on call” lunch break, hence the filling of complaint for unfair labor practice, discrimination and evasion of liability. The Labor Article dismissed the complainant on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of factory workers constituted a valid exercise of management prerogative and did not decrease the benefits granted to factory workers as the working time did not go beyond 8 hours. Hence, this petition.

ISSUE: Whether the change of work schedule, which management deems necessary to increase production, constitute unfair labor practice.

HELD: NO. The Court ruled that the revision of work schedule is a management prerogative and does not amount to unfair labor practice in discarding the paid lunch break. 

The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. 

It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were “on call.” Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. 

With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. 

58

Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. The Court agrees with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not.

NATIONAL SEMICONDUCTOR DISTRIBUTION v. NLRC

FACTS: Petitioner National Semiconductor (HK) Distribution (NSC for brevity), a foreign corporation licensed to do business in the Philippines, manufactures and assembles electronic parts for export. Private respondent Edgar Philip Santos was employed by NSC as a technician in its Special Products Group with a monthly salary of P 5,501 assigned to the graveyard shift starting at 10pm until 6am.

On 8 January 1993 Santos did not report for work on his shift. He resumed his duties as night shift Technician Support only on 9 January 1993. However, at the end of his shift the following morning, he made 2 entries of his daily time record (DTR) to make it appear that he worked on both the 8th and 9th of January 1993.

His immediate supervisor, Mr. Joel Limsiaco, unknown to private respondent Santos, received the report that there was no technician in the graveyard shift on 8 January. Thus, Limsiaco check the DTRs and found out that Santos indeed did not report for work on 8 January. But when he checked Santos DTR again in the morning of 9 January he found the entry made by Santos for the day before.

Informal investigations were conducted by management. Santos was required in a memorandum to explain in writing within 48 hours from notice why no disciplinary action should be taken against him for dishonesty, falsifying daily time record and violation of company rules and regulations. On 11 January 1993 Santos submitted his written explanation alleging that he was ill on the day he was absent. As regards the entry, he alleged that it was merely due to oversight or carelessness on his part.

Finding Santos explanation unsatisfactory, NSC dismissed him on the ground of falsification of his DTR, which act was inimical to the company and constituted dishonesty and serious misconduct.

LABOR ARBITER – found that Santos was dismissed on legal grounds although he was not afforded due process, NSC was ordered to indemnify him P1,000. The Labor Arbiter likewise ordered the payment of P19,801.47 representing Santos unpaid night shift differentials.

59

NLRC – affirmed the Labor Arbiter holding that his conclusions were sufficiently supported by the evidence and therefore must be respected by the appellate tribunal because the hearing officer was in a unique position to observe the demeanor of witnesses and to judge their credibility.

ISSUE: Is complainant Santos entitled to recover unpaid salary, holiday pay, night shift differential, allowances separation pay, retirement benefits and moral damages?

HELD: YES. The fact that Santos neglected to substantiate his claim for night shift differentials is not prejudicial to his cause.   After all, the  burden of proving payment rests on petitioner NSC.   Santos’ allegation of non-payment of this benefit, to which he is by law entitled, is a negative allegation which need not be supported by evidence unless it is an essential part of his cause of action.   It must be noted that his main cause of action is his illegal dismissal, and the claim for night shift differential is but an incident of the protest against such dismissal.   Thus, the burden of proving that payment of such benefit has been made rests upon the party who will suffer if no evidence at all is presented by either party.[8] Moreover, in Jimenez v. National Labor Relations Commission,[9]we declared -

As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.   The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment.

Private respondent has been in petitioner’s employ for five (5) years - starting 13 January 1988 when he  was  hired  to  14  January 1993 when his services were terminated - and petitioner never denied that private respondent rendered night shift work.   In fact, it even presented some documents purporting to prove that private respondent was assigned to work on the night shift.

By choosing not to fully and completely disclose information to prove that it had paid all the night shift differentials due to private respondent, petitioner failed to discharge the burden of proof.   Consequently, no grave abuse of discretion can be ascribed to the NLRC for sustaining the Labor Arbiter when it ruled thus -

It is not disputed that complainant was regularly assigned to a night shift (10:00 P.M. to 7:00 A.M.).   Under Section 2, Rule II, Book Three of the Implementing Rules of the Labor Code, complainant is entitled to an additional benefit of not less than ten percent (10%) of his regular wage for each hour of work performed.   The record is bereft of evidence that respondent has paid complainant this benefit.  The best evidence for respondent corporation would have been the payrolls, vouchers, daily time records and the like which under Sections 6, 7, 8, 11 and 12, Rule X, Book III of the Implementing Rules it is obliged to keep.   Its failure gives rise to the presumption that either it does not have them or if it does, their presentation is prejudicial to its cause.

60

We rule therefore that complainant should be awarded a night shift differential but limited to three (3) years considering the prescriptive period of money claims.

WHEREFORE, petition is DISMISSED. The NLRC Decision is AFFIRMED.

NATIONAL DEVELOPMENT CO. v. CIR

FACTS: At the National Devt Co, a GOCC, there were fours shifts of work. One shift was from 8am to 4pm, while the other shifts were from 6am to 2pm; 2pm to 10pm; and 10pm to 6am. In each shift, there was a 1 hr mealtime period, to wit: from (1) 11am to 12nn for those working between 6am and 2pm and from (2) 7pm to 8pm for those working between 2pm and 10pm.

The records disclose that although there was a 1 hour mealtime, petitioner nevertheless credited the workers with 8 hours of work for each shift and paid them for the same number of hours. However, since 1953, whenever workers in 1 shift were required to continue working until the next shift, petitioner, instead of crediting them with 8 hours of overtime work, has been paying them for 6 hours only, petitioner claiming that the 2 hours corresponding to the mealtime period should not be included in computing compensation

CIR – holding that mealtime should be counted in the determination of overtime 407.96 by way of overtime compensation.

ISSUE: Whether the mealtime breaks should be considered working time

HELD:

“the legal working day for any person employed by another shall be of not more than 8 hours daily. When the work is not continuous, the time during the laborer is not working and can leave his working place can rest completely shall not be counted.”

It will be noted that, under the law, the idle time that an employee may spend for resting and during which he may leave the sport or place of work though not the premises of his employer, is not counted as working time only where the work is broken or is not continuous.

The determination as to whether work is continuous or not is mainly one of fact which We shall not review as long as the same is supported by evidence.

In this case, the CIR's finding that work in the petitioner company was continuous and did not permit employees and laborers to rest completely is not without basis in evidence and following our earlier rulings, shall not disturb the same. Thus, the CIR found:

While it may be correct to say that it is well-high impossible for an employee to work while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can be segregated or deducted from his work, if the same is continuous and the employee can leave his working place rest completely. The time cards show that the work was continuous and without interruption. There is also the

61

evidence adduced by the petitioner that the pertinent employees can freely leave their working place nor rest completely. There is furthermore the aspect that during the period covered the computation the work was on a 24-hour basis and previously stated divided into shifts.

From these facts, the CIR correctly concluded that work in petitioner company was continuous and therefore the mealtime breaks should be counted as working time for purposes of overtime compensation.

Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?

WHEREFORE, the resolution are hereby affirmed and the appeal is dismissed.

PRANGAN v. NLRC

FACTS: Private respondent, a corporation engaged in providing security to is client, hired on 4 November 1980 as one of its security guards. Thereafter, he was assigned to the Cat House Bar and Restaurant with a monthly salary until its closure.

On 6 May 1994, petitioner filed a complaint against private respondent for underpayment of wages, non-payment of salary from August 16-31, 1993, overtime pay, premium pay for holiday, rest day, night shift differential, uniform allowance, service incentive leave pay and 13th month pay from the year 1990 to 1993.

Private respondent, in its position paper, rejected petitioner’s claim alleging it merely acted as an agent of the latter in securing his employment at the Cat House Bar and Restaurant. Thus, the liability for the claims of the petitioner should be charged to Cat House Bar and its owner, being his direct employer.

LABOR ARBITER - brushed aside the private respondent’s contention that it was merely an agent of the petitioner 

NLRC - dismissed his appeal for lack of merit and decision is affirmed in toto..

ISSUE: Whether the employee works less than the normal hours of employment

HELD: NO. Private respondent hardly bothered to controvert petitioner’s assertion, much less bolster its own contention.  As petitioner’s employer, private respondent has unlimited access to all relevant documents and records on the hours of work of the petitioner.  Yet, even as it insists that petitioner only worked for four hours and not twelve, no employment contract, payroll, notice of assignment or posting, cash voucher or any other convincing evidence which may attest to the actual hours of work of the petitioner were even presented.  Instead, what the private respondent offered as evidence were only petitioner’s daily time record, which the latter categorically denied ever accomplishing, much less signing.

62

In said alleged daily time record, it showed that petitioner started work at 10:00 p.m. and would invariably leave his post at exactly 2:00 a.m.  Obviously, such unvarying recording of a daily time record is improbable and contrary to human experience.  It is impossible for an employee to arrive at the workplace and leave at exactly the same time, day in day out.  The very uniformity and regularity of the entries are “badges of untruthfulness and as such indices of dubiety.

Another consideration which militates against private respondent’s claim is the fact that in the personnel data sheet of the petitioner,duly signed by the former’s operation manager, it shows on its face that the latter’s hours of work are from 7:00 p.m. to 7:00 a.m. or twelve hours a day.  Hence, private respondent is estopped from assailing the contents of its own documents.

Further, the attendance sheets of Cat House Bar and Restaurant] showed that petitioner worked from 7:00 p.m. to 7:00 a.m. daily, documents which were never repudiated by the private respondent.

All told, private respondent has not adequately proved that petitioner’s actual hours of work is only four hours.  Its unexplained silence contravening the personnel data sheet and the attendance sheets of Cat House Bar and Restaurant presented by the petitioner showing he worked for twelve hours, has assumed the character of an admission.  No reason was proffered for this silence despite private respondent, being the employer, could have easily done so.

As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee.  Since it is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the former’s favor.

WHEREFORE, the petitioner is GRANTED.

LAGATIC v. NLRC

FACTS: Petitioner Lagatic was employed by Cityland, first as a probationary sales agent, and later on as a marketing specialist. He was tasked with soliciting sales for the company, with the corresponding duties of accepting call-ins, referrals, and making client calls and cold calls. Cold calls refer to the practice of prospecting for clients through the telephone directory. Cityland, believing that the same is an effective and cost-efficient method of finding clients, requires all its marketing specialists to make cold calls. Likewise, in order to assess cold calls made by the sales staff, as well as to determine the results thereof, Cityland requires the submission of daily progress reports on the same. Cityland issued a written reprimand to petitioner for his failure to submit cold call reports for some time. This notwithstanding, petitioner again failed to submit cold call reports. Petitioner was required to explain his inaction, with a warning that further non-compliance would result in his termination from the company. In a reply, petitioner claimed that the same was an honest omission brought about by his concentration on other aspects of his job. Cityland found said excuse inadequate and

63

suspended him for three days, with a similar warning. Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call reports. He was verbally reminded to submit the same and was even given up a due date to do so. Instead of complying with said directive, petitioner wrote a note, "TO HELL WITH COLD CALLS!WHO CARES?" and exhibited the same to his co-employees. Petitioner received a memorandum requiring him to explain why Cityland should not make good its previous warning for his failure to submit cold call reports, as well as for issuing the written statement aforementioned. He sent a letter-reply alleging that his failure to submit cold call reports should trot be deemed as gross insubordination. He denied any knowledge of the damaging statement allegedly made by him. Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on February 26,1993. Aggrieved by such dismissal, petitioner filed a complaint against Cityland for illegal dismissal, illegal deduction, underpayment, overtime and rest day pay, damages and attorney's fees. The labor arbiter dismissed the petition for lack of merit. On appeal, the same was affirmed by the NLRC; hence the present recourse.

ISSUE: Whether petitioner is entitled to overtime pay

HELD: NO. With respect to petitioner’s claims for overtime pay, rest day pay and holiday premiums, Cityland maintains that Saturday and Sunday call-ins were voluntary activities on the part of sales personnel who wanted to realize more sales and thereby earn more commissions. It is their contention that sales personnel were clamoring for the “privilege” to attend Saturday and Sunday call-ins, as well as to entertain walk-in clients at project sites during weekends, that Cityland had to stagger the schedule of sales employees to give everyone a chance to do so.  But simultaneously, Cityland claims that the same were optional because call-ins and walk-ins were not scheduled every weekend.  If there really were a clamor on the part of sales staff to “voluntarily” work on weekends, so much so that Cityland needed to schedule them, how come no call-ins or walk-ins were scheduled on some weekends?

In addition to the above, the labor arbiter and the NLRC sanctioned respondent’s practice of offsetting rest day or holiday work with equivalent time on regular workdays on the ground that the same is authorized by Department Order 21, Series of 1990. As correctly pointed out by petitioner, said D. O. was misapplied in this case.  The D. O. involves the shortening of the workweek from six days to five days but with prolonged hours on those five days. Under this scheme, non-payment of overtime premiums was allowed in exchange for longer weekends for employees. In the instant case, petitioner’s workweek was never compressed. Instead, he claims payment for work over and above his normal 5½ days of work in a week. Applying by analogy the principle that overtime cannot be offset by undertime, to allow off-setting would prejudice the worker.  He would be deprived of the additional pay for the rest day work he has rendered and which is utilized to offset his equivalent time off on regular workdays. To allow Cityland to do so would be to circumvent the law on payment of premiums for rest day and holiday work.

Notwithstanding the foregoing discussion, petitioner failed to show his entitlement to overtime and rest day pay due, to the lack of sufficient evidence as to the number of

64

days and hours when he rendered overtime and rest day work. Entitlement to overtime pay must first be established by proof that said overtime work was actually performed, before an employee may avail of said benefit.] To support his allegations, petitioner submitted in evidence minutes of meetings wherein he was assigned to work on weekends and holidays at Cityland’s housing projects. Suffice it to say that said minutes do not prove that petitioner actually worked on said dates. It is a basic rule in evidence that each party must prove his affirmative allegations. This petitioner failed to do. He explains his failure to submit more concrete evidence as being due to the decision rendered by the labor arbiter without resolving his motion for the production and inspection of documents in the control of Cityland. Petitioner conveniently forgets that on January 27, 1994, he agreed to submit the case for decision based on the records available to the labor arbiter. This amounted to an abandonment of above-said motion, which was then pending resolution.

Lastly, with the finding that petitioner’s dismissal was for a just and valid cause, his claims for moral and exemplary damages, as well as attorney’s fees, must fail.

WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is hereby DISMISSED for lack of merit.

JOSE RIZAL COLLEGE v. NLRC

FACTS: Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual number of working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start of the semester they sign contracts with the college undertaking to meet their classes as per schedule.

Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977,private respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the college for said alleged non-payment of holiday pay.

After the parties had submitted their respective position papers, the Labor Arbiter rendered a decision on February 5, 1979:

1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the month uniformly in a school year, irrespective of the number of working days in a month, without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and are no longer entitled to separate payment for the said regular holidays;

2. The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled to be paid the 10 unworked regular holidays according to the pertinent provisions of the Rules and Regulations Implementing the Labor Code;3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation per

65

student contract hour are not entitled to unworked regular holiday pay considering that these regular holidays have been excluded in the programming of the student contact hours.

On appeal, respondent National Labor Relations Commission in a decision promulgated on June 2, 1982, modified the decision appealed from, in the sense that teaching personnel paid by the hour are declared to be entitled to holiday pay.

ISSUE: Whether the school faculty who according to their contracts are paid per lecture hour are entitled to unworked holiday pay.

HELD: Petitioner maintains the position among others, that it is not covered by Book V of the Labor Code on Labor Relations considering that it is a non- profit institution and that its hourly paid faculty members are paid on a "contract" basis because they are required to hold classes for a particular number of hours. if a regular week day is declared a holiday, the school calendar is extended to compensate for that day. Thus petitioner argues that the advent of any of the legal holidays within the semester will not affect the faculty's salary because this day is not included in their schedule while the calendar is extended to compensate for special holidays.

NO. Regular holidays specified as such by law are known to both school and faculty members as no class days;" certainly the latter do not expect payment for said unworked days, and this was clearly in their minds when they entered into the teaching contracts.

YES. On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to payment on Special Public Holidays. Declared purpose of the holiday pay which is the prevention of diminution of the monthly income of the employees on account of work interruptions is defeated when a regular class day is cancelled on account of a special public holiday and class hours are held on another working day to make up for time lost in the school calendar.

PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission is hereby set aside, and a new one is hereby RENDERED:(a)exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same be during the regular semesters of the school year or during semestral, Christmas, or Holy Week vacations;(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as special holidays or for some reason classes are called off or shortened for the hours they are supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty members shall likewise be paid their hourly rates should they teach during said extensions.

CHARTERED BANK EMPLOYEES ASSOCIATION v. OPLE

FACTS: On May 20, 1975, the Chartered Bank Employees Association, in representation of its monthly paid employees/members, instituted a complaint with the Regional Office No. IV, Department of Labor, now Ministry of Labor and Employment (MOLE) against Chartered Bank, for the payment of ten (10) unworked legal holidays,

66

as well as for premium and overtime differentials for worked legal holidays from November 1, 1974.

The Minister of Labor dismissed the Chartered Bank Employees Association’s claim for lack of merit basing its decision on Section 2,Rule IV, Book Ill of the Integrated Rules and Policy Instruction No. 9,which respectively provide:

Sec. 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not.

POLICY INSTRUCTION NO. 9

TO: All Regional Directors

SUBJECT: PAID LEGAL HOLIDAYS

The rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal holidays. Before PD 850, the number of working days a year in a firm was considered important in determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was considered definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid legal holidays were already paid to him or not. The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit. Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the entitlement of monthly paid employees. The new determining rule is this: 'If the monthly paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid legal holidays. These new interpretations must be uniformly and consistently upheld.

ISSUE: Whether the monthly salaries of the petitioner’s members already includes holiday pay?

HELD: Provisions of the Labor Code on entitlement to the benefits of holiday pay are clear and explicit and provides for both coverage of and exclusion from the benefit. - It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal the law must be taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit it provides for both the coverage of and exclusion from the benefit. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular holiday pay. This is flagrant violation of the mandatory directive of Article 4 of the Labor Code, which states that 'All doubts in the implementation and interpretation of the provisions of this Code, including

67

its implementing rules and regulations, shall be resolved in favor of labor.' Moreover, it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky v. Hasken, 155 A. 112) Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor Code authorizing him to promulgate the necessary implementing rules and regulations.

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely, "employees who are uniformly paid by the month." While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires.

Any remaining doubts which may arise from the conflicting or different divisors used in the computation of overtime pay and employees' absences are resolved by the manner in which work actually rendered on holidays is paid. Thus, whenever monthly paid employees work on a holiday, they are given an additional 100% base pay on top of a premium pay of 50%. If the employees' monthly pay already includes their salaries for holidays, they should be paid only premium pay but not both base pay and premium pay.

We have to resolve the labor dispute in the light of the parties' own collective bargaining agreement and the benefits given by law to all workers. When the law provides benefits for "employees in all establishments and undertakings, whether for profit or not" and lists specifically the employees not entitled to those benefits, the administrative agency implementing that law cannot exclude certain employees from its coverage simply because they are paid by the month or because they are already highly paid. The remedy lies in a clear redrafting of the collective bargaining agreement with a statement that monthly pay already includes holiday pay or an amendment of the law to that effect but not an administrative rule or a policy instruction.

WHEREFORE, the September 7, 1976 order of the public respondent is hereby REVERSED and SET ASIDE. The March 24, 1976 decision of the National Labor Relations Commission which affirmed the October 30, 1975 resolution of the Labor Arbiter but deleted interest payments is REINSTATED.

WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION v. TRAJANO

FACTS: The case arose from a routine inspection conducted by a Labor Enforcement Officer on August 6, 1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner Wellington Investment and Manufacturing Corporation (hereafter, simply Wellington). The officer thereafter drew up a report, a copy of which was

68

"explained to and received by" Wellington's personnel manager, in which he set forth his finding of "non-payment of regular holidays falling on a Sunday for monthly-paid employees."

Wellington sought reconsideration of the Labor Inspector's report, by letter dated August 10, 1991. It argued that "the monthly salary of the company's monthly-salaried employees already includes holiday pay for all regular holidays . . . (and hence) there is no legal basis for the finding of alleged non-payment of regular holidays falling on a Sunday."

It expounded on this thesis in a position paper subsequently submitted to the Regional Director, asserting that it pays its monthly-paid employees a fixed monthly compensation "using the 314 factor which undeniably covers and already includes payment for all the working days in a month as well as all the 10 unworked regular holidays within a year."

Wellington's arguments failed to persuade the Regional Director who, in an Order issued on July 28, 1992, ruled that "when a regular holiday falls on a Sunday, an extra or additional working day is created and the employer has the obligation to pay the employees for the extra day except the last Sunday of August since the payment for the said holiday is already included in the 314 factor," and accordingly directed Wellington to pay its employees compensation corresponding to four (4) extra working days.

ISSUE: Whether a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday.

HELD: Every worker should, according to the Labor Code, "be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers;" this, of course, even if the worker does no work on these holidays. The regular holidays include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of December, and the day designated by law for holding a general election (or national referendum or plebiscite). 

Particularly as regards employees "who are uniformly paid by the month, "the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve." This monthly salary shall serve as compensation "for all days in the month whether worked or not," and "irrespective of the number of working days therein." In other words, whether the month is of thirty (30) or thirty-one (31) days' duration, or twenty-eight (28) or twenty-nine (29) (as in February), the employee is entitled to receive the entire monthly salary. So, too, in the event of the declaration of any special holiday, or any fortuitous cause precluding work on any particular day or days (such as transportation strikes, riots, or typhoons or other natural calamities), the employee is entitled to the salary for the entire month and the employer has no right to

69

deduct the proportionate amount corresponding to the days when no work was done. The monthly compensation is evidently intended precisely to avoid computations and adjustments resulting from the contingencies just mentioned which are routinely made in the case of workers paid on daily basis.

The Labor Officer who conducted the routine inspection of Wellington discovered that in certain years, two or three regular holidays had fallen on Sundays. He reasoned that this had precluded the enjoyment by the employees of a non-working day, and the employees had consequently had to work an additional day for that month. This ratiocination received the approval of his Regional Director who opined that "when a regular holiday falls on a Sunday, an extra or additional working day is created and the employer has the obligation to pay its employees for the extra day except the last Sunday of August since the payment for the said holiday is already included in the 314 factor."

There is no provision of law requiring any employer to make such adjustments in the monthly salary rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to the legal provisions bearing on the point, otherwise to reckon a year at more than 365 days. As earlier mentioned, what the law requires of employers opting to pay by the month is to assure that "the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve,"  and to pay that salary "for all days in the month whether worked or not," and "irrespective of the number of working days therein." That salary is due and payable regardless of the declaration of any special holiday in the entire country or a particular place therein, or any fortuitous cause precluding work on any particular day or days (such as transportation strikes, riots, or typhoons or other natural calamities), or cause not imputable to the worker. And as also earlier pointed out, the legal provisions governing monthly compensation are evidently intended precisely to avoid re-computations and alterations in salary on account of the contingencies just mentioned, which, by the way, are routinely made between employer and employees when the wages are paid on daily basis.

WHEREFORE, the orders complained of, namely: that of the respondent Undersecretary dated September 22, 1993, and that of the Regional Director dated July 30, 1992, are NULLIFIED AND SET ASIDE, and the proceeding against petitioner DISMISSED.

TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION v. NLRC

FACTS:

ISSUE:

HELD:

70

BUILDING CARE CORPORATION v. NLRC

FACTS: Complainant (herein private respondent) alleged that his wages, 13th month pay and service incentive leave pay were unpaid; that he was not paid for work rendered during legal holidays; that on February 11, 1988, he was suspended for one week by his supervisor, H. Silvestre, for no apparent reason; that the suspension was illegal because of the absence of just cause and respondent's (herein petitioner) non-compliance with the requirements of due process; that thereafter, he was not given any assignment, despite repeated follow-ups.

Respondent contended that complainant was paid his wages and holiday pay in accordance with law; that it was unable to comply with R.A. 6640 immediately because of its client's delay in approving the adjusted contract rates; that it was ready to pay complainant P369.40 representing salary differentials from December 14, 1987 to February 11, 1988; that on February 9, 1988, FEBTC complained that complainant's area of responsibility was improperly cleaned; that complainant was twice instructed to report to respondent's night shift supervisor, but on both times, he failed to do so; that because of such defiance, he was verbally warned that drastic disciplinary action would be taken against him should he persist in failing to report as directed; that on February 11, 1988, the assistant supervisor erroneously noted on the logbook that complainant was being suspended; that the suspension was not carried out as complainant was allowed to work the following day, as shown by his daily time record; that he was advised to report to respondent's office the following day; that, instead, complainant took a long absence without leave starting on February 12, 1988; that he showed up at respondent's office only on March 28, 1988; that he was required to submit a written explanation of his long absence without leave, frequent absences in the post and deteriorating performance; that complainant wrote that he failed to report because his supervisor suspended him for no apparent reason; that he was told that an investigation of his alleged suspension would be conducted and, in view of the forthcoming non-working holidays, advised to report on April 4, 1988; that, in the meantime, respondent's supervisor reported that FEBTC had indicated that it would no longer accept complainant; that complainant was advised of FEBTC's decision on April 4, 1988; that  for humanitarian reasons, complainant was advised that he was going to be temporarily assigned as reliever at respondent's office while there was no available post in its other clients; that complainant requested for a week-long leave, allegedly because he had to bring his family to Quezon Province; that complainant again failed to report for work on April 18, 1988; that he was sent a letter advising him to report to respondent's office; that he never went back to respondent's office; but instead, filed the instant case.

Complainant maintained that he did his work properly; that he was absent from January 18-22 (1988) because he was sick, and he duly advised respondent of his sickness; that he was absent from February 1-8 (1988) because he had to take care of his wife who was sick, as shown by her medical certificate; that he was absent again for one week starting February 12, 1988 because he was illegally suspended; that thereafter, he was

71

never given another assignment, contrary to respondent's untruthful averments; that he was denied due process of law by respondent; that respondent may have sent him a letter after April 4, 1988, but it was too late because he had already instituted the instant case

LABOR ARBITER – issued a decision in favor of private respondents

ISSUE: Whether private respondent was really dismissed

HELD: The recitation of facts evidently shows that public respondents did not rely on the evidence presented by private respondents.  All the evidence presented for or against, the position of private respondents have been duly considered in arriving at its conclusion.

"Both the Labor Arbiter and the respondent NLRC gave credence to the evidence of the private respondents that he was illegally dismissed.  We are not free to tamper with their calibration of the weight of evidence in the absence of a clear showing that it is arbitrary and bereft of any rational basis.”

Indeed if petitioner wanted to prove its payment of holiday pays and salary differentials, it could have easily presented proofs of such monetary benefits.  But it did not.  It had failed to comply with the mandate of the law.  As public respondent ruled, the burden of proof in this regard belongs to the employer, nor to the employee.

We also sustain the award of the attorney's fees.  "It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his right and interest, he is entitled to an award of attorney's fee's.”

WHEREFORE, premises considered, the Petition is DISMISSED and the assailed Decision  is AFFIRMED.

FERNANDEZ v. NLRC

FACTS: Petitioner Fernandez, et al. were employed by Lhuiller. They alleged that they demanded from Lhuilier an increase in their salaries since her business was making good and that she was evading payment of taxes by making false entries in her records of account; that Lhuillier became angry and threatened them that something would happen to their employment if they would report her to the BIR; that shortly thereafter, Lhuillier suspected them of stealing jewelry from the pawnshop; that on 19 July 1990, Lhuillier verbally informed them not to report for work as their employment had been terminated; that from 20 July 1990 they did not report for work and on 23 July 1990, they filed the instant complaint.

NLRC – rendered decision in favor of petitioners

ISSUE: Whether petitioners were illegally dismissed and assuming they were illegally dismissed, were they should receive service incentive leave

72

HELD:

1. YES. In view of the conflicting claims of the parties, we examined the records of this case and found that private respondents did not abandon their employment; rather, they were illegally dismissed.

To succeed in pleading abandonment as a valid ground for dismissal, the employer must prove (1) the intention of an employee to abandon his or her employment and (2) an overt act from which such intention may be inferred; i.e., the employee showed no desire to resume his work. Mere absence is not sufficient.  The employer must prove a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning. Private respondents failed to discharge this burden.  The claim of abandonment was inconsistent with the immediate filing of petitioners’ complaint for illegal dismissal and prayer for reinstatement.  For how can an inference be made that an employee had no intention of returning to work, when he filed a complaint for illegal dismissal praying for reinstatement three days after the alleged abandonment? Moreover, considering that petitioners had been with Pawnshop Lhuillier for several years -- ranging from six (6) years to thirty three (33) years -- it is unlikely that they would simply leave their employment.  Clearly, there is no cogent basis for private respondents’ theory that said petitioners abandoned their work.  In this light, we sustain the finding of the labor arbiter that said petitioners were illegally dismissed, with neither just cause nor due process.

2. YES. The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions.  Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that “[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.”  Service incentive leave is a right which accrues to every employee who has served “within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year.” It is also “commutable to its money equivalent if not used or exhausted at the end of the year.” In other words, an employee who has served for one year is entitled to it.  He may use it as leave days or he may collect its monetary value.  To limit the award to three years, as the solicitor general recommends,  is to unduly restrict such right.  The law indeed does not prohibit its commutation.

Since a service incentive leave is clearly demandable after one year of service -- whether continuous or broken -- or its equivalent period, and it is one of the “benefits” which would have accrued if an employee was not otherwise illegally dismissed, it is fair and legal that its computation should be up to the date of reinstatement as provided under Section 279 of the Labor Code, as amended, which reads:

73

“ART. 279.  Security of Tenure.  --  An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation is withheld from him up to the time of his actual reinstatement.”  (underscoring supplied).

However, the Implementing Rules clearly state that entitlement to “benefit provided under this Rule shall start December 16, 1975, the date the amendatory provision of the [Labor] Code took effect.” Hence, petitioners, except Lim and Canonigo, should be entitled to service incentive leave pay from December 16, 1975 up to their actual reinstatement.

WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resolution are REVERSED and SET ASIDE.  The labor arbiter’s decision is REINSTATED with MODIFICATIONS, such that the award of separation pay is deleted and the service incentive leave pay is computed from December 16, 1975 up to petitioners’ actual reinstatement.  Full backwages, including the accrued thirteenth month pay, are also awarded to the nine petitioners -- Leiden Fernandez, Brenda Gadiano, Gloria Adriano, Emelia Negapatan, Jesus Tomongha, Eleonor Quiñanola, Asteria Campo, Florida Villaceran and Florida Talledo -- from the date of their illegal dismissal to the time of their actual reinstatement.  Petitioners Lim and Canonigo, whom we find to have voluntarily resigned, are not entitled to any benefit.

MAKATI HABERDASHERY v. NLRC

FACTS: Private complainants are working for Makati Haberdashery as tailors, seamstress, sewers, basters and plantsadoras and are paid on a piece-rate basis (except 2 petitioners who are paid on a monthly basis) and in addition, they are given a daily allowance of P3 provided they report before 9:30am

Work sked: 9:30-6 or 7pm. Mondays to Saturdays and even on Sundays and holidays during peak periods.

Union’s first case was on: underpayment of basic wag and living allowance, non-payment of holiday pay, service incentive pay, 13th month pay and benefits provided under Wage Orders 1-5.

While the first case was pending decision, Pelobello left an open package containing a juri barong tagalong with salesman Rivera. He was caught and confronted about this and he explained that this was ordered by Zapata, also a worker, for his personal customer. Zapata allegedly admitted that he copied the design of the company but later denied ownership of the same

They were made to explain why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business. However they did not submit and went on AWOL until the period given for them to explain expired hence the dismissal.

Illegal dismissal complaint on the second case filed before the LA Diosana.

74

LA declared petitioners guilty of illegal dismissal and ordered to reinsate Pelobello and Zapata and found petitioners violation decrees of COLA, service incentive and so on.

NLRC affirmed but limited backwages to 1 year.

ISSUE: Whether employees paid on piece-rate basis are entitled to service incentive pay

HELD: NO., fall under exceptions set forth in the implementing rules.

As to the service incentive leave pay: as piece rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under the exceptions stated in Sec 1(d), Rule V, Book III, Labor Code.

Service Incentive Leave

Sec. 1 Coverage – this rule shall apply to all employees except:

(d) field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

SENTINEL SECURITY AGENCY v. NLRC

FACTS: The complainants were employees of Sentinel [Security Agency, Inc. hereafter referred to as ‘the Agency’]. They were assigned to render guard duty at the premises of [Philippine American Life Insurance Company] at Jones Avenue, Cebu City.  On December 16, 1993 Philippine American Life Insurance Company [‘the Client,’ for brevity], through Carlos De Pano, Jr., sent notice to all concerned that the [Agency] was again awarded the contract of [s]ecurity [s]ervices together with a request to replace all the security guards in the company’s offices at the cities of Cebu, Bacolod, Cagayan de Oro, Dipolog and Ilagan.  In compliance therewith, [the Agency] issued on January 12, 1994, a Relief and Transfer Order replacing the complainants as guards [of the Client] and for then to be re-assigned [to] other clients effective January 16, 1994.  As ordered, the complainants reported but were never given new assignments but instead they were told in the vernacular, ‘gui-ilisa mo kay mga tigulang naman mo’ which when translated means, ‘you were replace[d] because you are already old.’  Precisely, the complainants lost no time but filed the subject illegal dismissal cases on January 18, January 26 and February 4, 1994 and prayed for payment of separation pay and other labor standard benefits.

“[The Client and the Agency] maintained there was no dismissal on the part of the complainants, constructive or otherwise, as they were protected by the contract of security services which allows the recall of security guards from their assigned posts at the will of either party.  It also advanced that the complainants prematurely filed the subject cases without giving the [Agency] a chance to give them some assignments.

75

“On the part of [the Client], it averred further that there [was] no employer-employee relationship between it and the complainants as the latter were merely assigned to its Cebu Branch under a job contract; that [the Agency] ha[d] its own separate corporate personality apart from that of [the Client].  Besides, it pointed out that the functions of the complainants in providing security services to [the Client’s] property [were] not necessary and desirable to the usual business or trade of [the Client], as it could still operate and engage in its life insurance business without the security guards.  In fine, [the Client] maintains that the complainants have no cause of action against it.”

LA – agency and client ordered to pay solidarily complainants 13th month pay and service incentive leave benefits amounting to a little more than P60k

NLRC – there was constructive dismissal. Modified awards deleted 13 month pay for previous years. Twin remedies ordered: (1) agency to give separation pay at the reate of ½ month pay for every year of service and; (2) agency and client to solidarily pay backwages and 13th month pay for 1 year.

ISSUE: Whether petitioner is jointly and severally liable with Sentinel Agency in the latter’s payment of backwages, 13th month pay and service incentive leave

HELD: YES as to service incentive leave. The Client did not, as it could not, illegally dismiss the complainants.  Thus, it should not be held liable for separation pay and back wages.  But even if the Client is not responsible for the illegal dismissal of the complainants, it is jointly and severally liable with the Agency for the complainants’ service incentive leave pay.  In Rosewood Processing, Inc. vs. National Labor Relations Commission,[27] the Court explained that, notwithstanding the service contract between the client and the security agency, the two are solidarily liable for the proper wages prescribed by the Labor Code, pursuant to Article 106, 107 and 109 thereof.

Under these provisions, the indirect employer, who is the Client in the case at bar, is jointly and severally liable with the contractor for the workers’ wages, in the same manner and extent that it is liable to its direct employees.  This liability of the Client covers the payment of the service incentive leave pay of the complainants during the time they were posted at the Cebu branch of the Client.  As service had been rendered, the liability accrued, even if the complainants were eventually transferred or reassigned.

The service incentive leave is expressly granted by these pertinent provisions of the Labor Code:

“ART.  95. Right to service incentive leave.—(a)    Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in

76

establishments exempted from granting this benefit by the Secretary of Labor after considering the viability or financial condition of such establishment.

(c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court [or] admnistrative action.”

Under the Implementing Rules and Regulations of the Labor Code, an unused service incentive leave is commutable to its money equivalent, viz.:

“Sec. 5.  Treatment of Banefit. - The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the end of the year.”

The award of the thirteenth-month pay is deleted in view of the evidence presented by the Agency that such claim has already been paid to the complainants.  Obviously then, the award  of such benefit in the dispositive portion of the assailed Decision is merely an oversight, considering that Respondent Commission itself deleted it from the main body of the said Decision.

WHEREFORE, the petition is DISMISSED and the assailed Decision and Resolution are hereby AFFIRMED, but the award of the thirteenth-month pay is DELETED. 

ATOK-BIG WEDGE MINING CO. v. ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION

FACTS: On September 4, 1950, a demand was submitted to petitioner by respondent union through its officers for various concessions, among which were (a) an increase of P0.50 in wages, (b) commutation of sick and vacation leave if not enjoyed during the year, (c) various privileges, such as free medical care, medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e) no dismissal without prior just cause and with a prior investigation, etc.- Some of the demands, were granted by the petitioner, and the others were rejected. Hearings were held in the respondent court (CIR)

After the hearings the respondent court rendered a decision fixing the minimum wage for the laborers at P3.20, declaring that additional compensation representing efficiency bonus should not be included as part of the wage, and making the award effective from September 4, 1950 (the date of the presentation of the original demand, instead of from April 5,1951, the date of the amended demand).

ISSUES:

1. Whether the Court of Industrial Relations erred in fixing the minimum wage at P3.20

2. Whether the Court of Industrial Relations erred in declaring that the additional compensation representing the efficiency bonus should not be included as part of the wage

77

3. Whether the Court of Industrial Relations erred in making the award effective from September 4, 1950

HELD:

1. NO. Petitioner contends that the laborer and his family need only the amount of P2.58 for food so this should be the basis for the determination of his wage, not what he actually spends. Furthermore, that it is not justifiable to fix a wage higher than that provided by Republic Act No. 602 and that respondent union made the demand in accordance with a pernicious practice of claiming more after an original demand is granted.

- The respondent court found that P2.58 is the minimum amount actually needed by the laborer and his family. But this does not mean that it is his actual expense. A person's needs increase as his means increase. This is true not only as to food but as to everything else-education, clothing, entertainment, etc. The law guarantees the laborer a fair and just wage. The minimum must be fair and just. The "minimum wage" can by no means imply only the actual minimum. Some margin or leeway must be provided, over and above the minimum, to take care of contingencies, such as increase of prices of commodities and increase in wants, and to provide means for a desirable improvement in his mode of living. That the P3 minimum wage fixed in the law is still far below what is considered a fair and just minimum is shown by the fact that this amount is only for the year after the law takes effect, as thereafter the law fixes it at P4. Neither may it be correctly contended that the demand for increase is due to an alleged pernicious practice. Frequent demands for increase are indicative of a healthy spirit of wakefulness to the demands of a progressing and an increasingly more expensive world.

2. NO. Petitioner contends that the efficiency bonus paid the laborers should have been included in his minimum wage, in the same manner as the value of living quarters. Whether or not bonus forms part of wages depends upon the circumstances or conditions for its payment. If it is an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or a certain amount of productivity achieved, it cannot be considered part of the wages.

In the case at bar, it is not payable to all but to laborers only. It is also paid on the basis of actual production or actual work accomplished. If the desired goal of production is not obtained, or the amount of actual work accomplished, the bonus does not accrue. It is evident that under the circumstances it is paid onlywhen the labor becomes more efficient or more productive. It is only an inducement for efficiency, a prize therefore, not a part of the wage.

78

3. NO. Both parties agreed that any award should be retroactive to the date of the presentation of the demands, which is September 4, 1950. The terms of the stipulation are clearly against petitioner's contention. There being no question as to its agreement, the same must be given force and effect.

Disposition Dismissed with costs

SONGCO v. NLRC

FACTS: Private respondent F.E. Zuellig (M), Inc., filed with the Department of Labor an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel allegedly on the ground of retrenchment due to financial losses.

This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They alleged further that they are being dismissed because of their membership in the union.

At the last hearing of the case, however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners.

Petitioners, who were in the sales force of Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made.

The CBA entered into between Zuellig and F.E. ZuelligEmployees Association, of which petitioners are members,contains the following provision:

ARTICLE XIV — Retirement Gratuity Section l(a) - Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total service credits, a fraction of at least six months being considered one year, including probationary employment.

On the other hand, Article 284 of the Labor Code then prevailing provides:

Art. 284. Reduction of personnel. — The termination of employment of any employee due to the installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar causes, shall entitle the employee affected thereby to separation pay. In case of termination due to the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one(1) month pay or to at least one (1) month pay for every year of

79

service, whichever is higher. In case of retrenchment to prevent losses and other similar causes,the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)months shall be considered one (1) whole year.

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:

Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to prevent losses or other similar causes, or where the employee suffers from a disease and his continued employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year.

Sec. 10. Basis of termination pay. — The computation of the termination pay of an employee as provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat the intention of the Code, in which case the basis of computation shall be the rate before its deduction. (Emphasis supplied)

The Labor Arbiter rendered a decision ordering the respondent to pay the complainants separation pay equivalent to their one-month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company.- The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit.

Petitioners' Arguments

> In arriving at the correct and legal amount of separation pay due them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's salary, to wit;(f) '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 reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. 'Fair reasonable value' shall not include any profit to the employer or to any person affiliated with the employer.

Respondents’ Comments

80

> If it were really the intention of the Labor Code as well as its implementing rules to include commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or designations attached to the word remuneration or earnings.

ISSUE: Whether earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay.

HELD: YES. Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application

The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real.

Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered.

-- Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous. "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a reward or recompense for services performed.

Likewise, "pay" is the synonym of "wages" and "salary". In as much as the words "wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions.

Granting, in gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remuneration services rendered which contributed to the increase of income of Zuellig.

Commission is the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature

81

of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage or salary.

The Court took judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone, are part of petitioners' wage or salary. Also, that some salesman do not received any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists.

Bearing in mind the preceding discussions, if the opposite view is adopted that commissions, do not form part of wage or salary, then, in effect, this kind of salesmen do not receive any salary and therefore, not entitled to separation pay in the event of discharge from employment. This narrow interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown the the streets to face the harsh necessities of life.

Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in computing the separation pay, the Court held that: The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner.

Applying this by analogy, since the commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment.- In carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor", and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

Disposition The petition was granted.

Mabeza vs. NLRC Case DigestNorma Mabeza vs. NLRC, Peter Ng/Hotel Supreme 271 SCRA 670 (FROM INTERNET)

Facts: Petitioner Norma Mabeza contends that on the first week of May 1991, she and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum

82

wage and other labor standard provisions of law. Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. 

The affidavit was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE apparently adverse to the private respondent. After she refused to proceed to the City Prosecutor's Office, petitioner states that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 1991, the hotel's cashier informed her that she should not report to work and, instead, continue with her unofficial leave of absence. 

Consequently, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission — CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. 

Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter that petitioner surreptitiously left her job without notice to the management and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees. 

Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its assailed Resolution affirming the Labor Arbiter's decision. 

Issue: Whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment constitutes unfair labor practice. 

Ruling: The Court ruled that there was unfair labor practice. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's

83

termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty. 

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 employee's wages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily 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. 

More significantly, the food and lodging, or the 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 (food, lodging) but the purpose. Considering that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel.

GAA v. CA

FACTS: Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator.

December 12, 1973, Europhil Industries commenced an action in CFI for damages against petitioner "for having perpetrated certain acts that Europhil Industries considered a trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees." Court ruled in favor of Europhil.

A writ of garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas served a Notice of Garnishment upon ElGrande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or remuneration." Gaa filed with the CFI a motion to lift said garnishment on the ground that her "salaries, commission and or remuneration" are exempted from execution under Article 1708 of the New Civil Code.

CA dismissed the petition, saying that Gaa is not a mere laborer as contemplated under Article 1708. The term laborer does not apply to one who holds a managerial or supervisory position like that of petitioner, but only to those "laborers occupying the lower strata."

84

ISSUE: Whether Gaa is a laborer falling under the exception of Art. 1708 of the Civil Code

HELD: NO. Gaa is not a laborer as contemplated by the Civil Code.

Ratio:

The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office.

Reasoning

- The legislature intended the exemption in Article 1708 of theNew Civil Code to operate in favor of laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others.

LABORER: everyone who performs any kind of mental or physical labor, but as commonly and customarily used and understood, it only applies to one engaged in some form of manual or physical labor.

WAGE: the pay given "as hire or reward to artisans, mechanics, domestics or menial servants, and laborers employed in manufactories, agriculture, mines, and other manual occupation and usually employed to distinguish the sums paid to persons hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season."

Petitioner is not an ordinary or rank and file laborer but "a responsibly-placed employee," of El Grande Hotel, "responsible for planning, directing, controlling, and coordinating the activities of all housekeeping personnel" to ensure the cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel. Petitioner is occupying a position equivalent to that of a managerial or supervisory position.

Disposition Decision of the CA affirmed, with costs against the petitioner.

IRAN v. NLRC

FACTS: Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof. He hired private respondents as drivers/salesmen and truck helpers. Drivers/salesmen drove petitioner’s delivery trucks and promoted, sold and delivered softdrinks to various outlets in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the different outlets covered by the driver/salesmen. As part of their compensation, the driver/salesmen and truckhelpers of petitioner received commissions per case of softdrinks sold. Sometime in June 1991, Iran discovered cash shortages and irregularities allegedly committed by private respondents. Pending the investigation of irregularities and settlement of the cash shortages, Iran required private respondents to report for work everyday. They were not

85

allowed, however, to go on their respective routes. A few days thereafter, despite aforesaid order, private respondents stopped reporting for work, prompting Iran to conclude that the former had abandoned their employment. Consequently, Iran terminated their services. He also filed a complaint for estafa against them. Private respondents filed complaints against Iran for illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages and attorney’s fees.

Said complaints were consolidated, and assigned to Labor Arbiter Ernesto F. Carreon. He found that Iran had validly terminated private respondents, there being just cause for the latter’s dismissal. Nevertheless, he also ruled that Iran had not complied with minimum wage requirements in compensating private respondents, and had failed to pay private respondents their 13thmonth pay.

On appeal, NLRC affirmed the validity of private respondent’s dismissal, but found that said dismissal did not comply with the procedural requirements for dismissing employees. MR denied.

ISSUES:

1. Whether commissions are included in determining compliance with the minimum wage requirement

2. Whether Iran is guilty of procedural lapses in terminating private respondents

If yes, Whether P1,000.00 indemnity fee to each of the private respondents is proper

3. Whether the advance amount received by private respondents should be credited as part of their 13thmonth pay

HELD

1. YES. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesman’s wage or salary.

-Article 97(f), LC explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered.

Commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal.

SC has taken judicial notice of the fact that some salesmen do not receive any basic salary but depend entirely on commissions and allowances or commissions alone, although an employer-employee relationship exists.

86

Undoubtedly, this salary structure is intended for the benefit of the corporation establishing such, on the apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales commissions. This, however, does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to the corporation.There is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employee’s remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law.-

Philippine Agricultural Commercial and Industrial Workers Union vs. NLRC:

drivers and conductors who are compensated purely on a commission basis are automatically entitled to the basic minimum pay mandated by law should said commissions be less than their basic minimum for eight hours work. Were said commissions equal to or even exceed the minimum wage, the employer need not pay, in addition, the basic minimum pay prescribed by law.

2. YES. In terminating employees, the employer must furnish the worker with two written notices before the latter can be legally terminated: (a) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought ,and (b) the subsequent notice which informs the employee of the employer’s decision to dismiss him.- First notice informing the employee that his dismissal is being sought is absent in the present case. This makes the termination of private respondents defective, for which Iran must be sanctioned for his non-compliance with the requirements of or for failure to observe due process. Section 2 of Book V, Rule XIV of the Omnibus Rules Implementing the Labor Code requires that in cases of abandonment of work, notice should be sent to the worker’s last known address. If indeed private respondents had abandoned their jobs, it was incumbent upon Iran to comply with this requirement. This, Iran failed to do, entitling respondents to nominal damages in the amount of P5,000.00each, in accord with recent jurisprudence, to vindicate or recognize their right to procedural due process which was violated by Iran.

3. YES. Iran is entitled to credit only the amounts paid for the particular year covered by said vouchers. While it is true that the vouchers evidencing payments of 13thmonth pay were submitted only on appeal, it would have been more in keeping with the directive of Article 221 of the Labor Code for the NLRC to have taken the same into account.- In labor cases, technical rules of evidence are not binding. Labor officials should use every and all reasonable means to ascertain the facts in each case speedily and objectively,without regard to technicalities of law or procedure. The intent of P.D. No. 851 is the granting of additional income in the form of 13thmonth pay to employees not as yet receiving the same and not that a double burden should be imposed on the employer who is already paying his employees a 13th month pay or its equivalent. An employer who pays less than 1/12th of the employees basic salary as their 13th month pay is only required to pay the difference.

87

Disposition NLRC decision modified. Case remanded to the Labor Arbiter for a recomputation of the alleged deficiencies. No costs.

INTERNATIONAL SCHOOL –O0O-

STATES MARINE CORPORATION v. CEBU SEAMEN’S ASSOCIATION INC.

FACTS: The petitioners were engaged in the business of marine coastwise transportation. They had a CBA with the Cebu Seamen’s Association. On September 12, 1952, the respondent union filed acomplaint against the petitioners alleging that the officers and men working on board the petitioners’ vessels have not been paid theirsick leave, vacation leave and overtime pay; that the petitioners’ threatened then to accept the reduction of salaries, observed by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their employees on board their vessels, to pay the sum of P0.40 for every meal, while the mastersand officers were required to pay their meals and that because the captain had refused to yield to the general reduction of salaries, the petitioners dismissed the captain. The petitioner, on their defense, stated that they have suffered a financial losses in the operation of their vessels and there is no law which provides for the payment ofsick leave or vacation leave to employees of private firms; that with regards to their overtime pay, they have always observed the Eight-hour labor Law and that overtime does not apply to those who provide means of transportation. The decision ruled in favor of the respondent union. Hence, this petition. 

ISSUE: Whether or not the required meals which the petitioner company deducted from the salary of the employees is considered as facilities, and not supplements. 

HELD: Supplements constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by express provisions of law, they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay them just the same. It is argued that the food or meal given to the deck officers, marine engineers and unlicensed crew members in question, were mere facilities which should be deducted from wages, and not supplements which, according to Section 19 of the Minimum Wage Law, should not be deducted from such wages. It was found out that the meals were freely given to crew members prior to the effectivity of the Minimum Wage Lawwhile they were on the high seas not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew members during the voyage. The deductions therein made for the meals given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels should continue giving the benefits. Wherefore, the petition is dismissed, finding out that the meals or food in question are not facilities but supplements.

MILLARES v. NLRC (305 scra 501)

FACTS: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and

88

Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. 

In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials. 

ISSUE: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence. 

HELD: The allowances are not part of the wages of the employees. Wage is defined in letter (f) as 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 reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. 

When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." Customary is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. 

In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue Audit Memo Order No. 1-87 pertinently provides —3.2… transportation, representation or entertainment expenses shall not constitute taxable

89

compensation if: (a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income. 

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

REPUBLIC v. PERALTA

FACTS: The Republic of the Philippines seeks the review on certiorari of the Order dated 17 November 1980 of the Court of First Instance entitled "In the Matter of Voluntary Insolvency of Quality Tobacco Corporation, Quality Tobacco Corporation”.

In its questioned Order, the trial court held that the above-enumerated claims of USTC and (Federacion de la Industria Tabaquera y Otros Trabajadores de Filipinas) FOITAF (hereafter collectively referred to as the "Unions") for separation pay of their respective members embodied in final awards of the National Labor Relations Commission were to be preferred over the claims of the Bureau of Customs and the Bureau of Internal Revenue. The trial court, in so ruling, relied primarily upon Article 110 of the Labor Code.

The Solicitor General, in seeking the reversal of the questioned Orders, argues that Article 110 of the Labor Code is not applicable as it speaks of "wages," a term which he asserts does not include the separation pay claimed by the Unions. "Separation pay," the Solicitor General contends,

is given to a laborer for a separation from employment computed on the basis of the number of years the laborer was employed by the employer; it is a form of penalty or

90

damage against the employer in favor of the employee for the latter's dismissal or separation from service.

ISSUE: Whether wages under Article 110 of the Labor Code may be regarded as embracing within its scope severance pay or termination or separation pay.

HELD: YES. Article 97 (f) of the Labor Code defines "wages" in the following terms:

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 reasonable value, 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.(emphasis supplied)

We are unable to subscribe to the view urged by the Solicitor General. We note, in this connection, that in Philippine Commercial and Industrial Bank (PCIB) us. National Mines and Allied Workers Union, the Solicitor General took a different view and there urged that the term "wages" under Article 110 of the Labor Code may be regarded as embracing within its scope severance pay or termination or separation pay. In PCIB, this Court agreed with the position advanced by the Solicitor General.   We see no reason for overturning this particular position. We continue to believe that, for the specific purposes of Article 110 and in the context of insolvency termination or separation pay is reasonably regarded as forming part of the remuneration or other money benefits accruing to employees or workers by reason of their having previously rendered services to their employer; as such, they fall within the scope of "remuneration or earnings — for services rendered or to be rendered — ." Liability for separation pay might indeed have the effect of a penalty, so far as the employer is concerned. So far as concerns the employees, however, separation pay is additional remuneration to which they become entitled because, having previously rendered services, they are separated from the employer's service. The relationship between separation pay and services rendered is underscored by the fact that separation pay is measured by the amount (i.e., length) of the services rendered. This construction is sustained both by the specific terms of Article 110 and by the major purposes and basic policy embodied in the Labor Code.  It is also the construction that is suggested by Article 4 of the Labor Code which directs that doubts — assuming that any substantial rather than merely frivolous doubts remain-in the interpretation of the provisions of the labor Code and its implementing rules and regulations shall be "resolved in favor of labor."

91

PHIL. EXPORT v. CA (hindi ko gets >.<)

FACTS: On 13 May 1988, private respondent Raimund Diehl, a resident alien, lodged a complaint for illegal dismissal against the Philippine German Wire Mesh Reinforcing Corporation ("FILFORCE") with the National Labor Relations Commission ("NLRC"). Parenthetically, five (5) years earlier, or on 28 July 1983, FILFORCE had mortgaged its plant and other property located at EPZA, Mariveles, Bataan, in favor of herein petitioner Philippine Export and Foreign Loan Guarantee Corporation ("PHILGUARANTEE"), a government owned and controlled corporation, to secure a guarantee which the latter executed in favor of Kuwait Asia Bank, E.C., over fifty one percent (51%) of the US$1,357,600.00 loan which had been extended to FILFORCE by the bank. The mortgage in PHILGUARANTEE's favor was duly registered, on 29 July 1983, with the Register of Deeds of Bataan.

On 21 December 1990, a judgment favorable to respondent Diehl was rendered by Labor Arbiter Edilberto J. Pangan.

The decision became final with respect to FILFORCE and Basilio Sison who both did not take an appeal. J. Roberto C. Delgado appealed but he did not interpose any objection on Diehl's Urgent Ex-Parte Motion for Execution.

On 04 April 1991, Labor Arbiter Pangan issued a writ of execution directing NLRC Sheriff Abe Estrada to execute the judgment against FILFORCE and Basilio Sison. Failing to collect the sum due, Sheriff Estrada was directed to cause the satisfaction of the award by levying on the property of FILFORCE. Deputy Sheriff Estrada effected the levy and scheduled a public auction sale. Since the assets had previously been mortgaged to it, PHILGUARANTEE filed, on 15 April 1991, a third-party claim which resulted in the suspension of the scheduled 16th April 1991 auction sale. Upon the submission, on 22 April 1991, by Diehl of an indemnity bond issued by Plaridel Surety and Insurance Company, with a face value of P1,320,772.11, the Deputy Sheriff issued a notice resetting the auction sale for 27 April 1991. PHILGUARANTEE promptly filed, on 26 April 1991, a petition/manifestation before the Labor Arbiter questioning, among other things, the integrity of the indemnity bond posted by Diehl and, at the same time, asserting its superior right and prior lien over the levied property. Deputy Sheriff Estrada proceeded, nonetheless, with the auction sale at which Diehl was declared the sole and winning bidder. Forthwith, a Certificate of Sale was issued by the Deputy Sheriff in favor of respondent Diehl.

On 03 May 1991, PHILGUARANTEE received a copy of an "Urgent Ex-Parte Motion for the Issuance of an AliasWrit of Execution" from Diehl where he alleged that of the then total monetary award of One Million Three Hundred Twenty Thousand Seven Hundred Seventy Two Pesos and 11/100 (P1,320,772.11), only Seven Hundred Seventy Six Thousand Pesos (P776,000.00) worth of property belonging to FILFORCE was levied and sold at public auction, thus leaving a deficiency of Five Hundred Forty Four Thousand Seven Hundred Seventy Two Pesos & 11/100 (P544,772.11). Labor Arbiter

92

Pangan again acted favorably on Diehl's ex-parte motion; on 06 May 1991, he issued an alias writ of execution directing the Deputy Sheriff to further collect the sum of P544,772.11.

On 15 May 1991, PHILGUARANTEE went to the Regional Trial Court of Makati and there filed a complaint for "Annulment of Sale, Recovery of Possession and Injunction with Urgent Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order and/or Status Quo Order" (docketed as Civil Case No. 91-1360). Two days later, or on 17 May 1991, a temporary restraining order was issued and a hearing for the reception of evidence in support of the prayer for the issuance of a writ of preliminary injunction was set by the trial court.

Separate motions to dismiss were soon filed by Diehl, the Labor Arbiter and the Deputy Sheriff, on the ground that the trial court had no jurisdiction over the case. The motions were denied by the trial court in its order of 27 June 1991; it then, instead, directed defendants to file their responsive pleadings.

Diehl assailed the above orders of the trial court in a petition for certiorari and prohibition, with prayer for the issuance of a writ of preliminary injunction.

SCRA

Labor Law; NLRC; Court has responded in the negative when queried on whether or not a civil court may interfere by injunction with the execution of a final and executor judgment of the NLRC. – In Pucan v. Bengzon and in Guimoc v. Rosales,  the Court has thus responded in the negative when queried on whether or not a civil court may interfere by injunction with the execution of a final and executory judgment of the NLRC.

Same; Same; Levy; Indemnity bond that must be posted up by the prevailing party should be in a sum not less than the value of the property levied. - The Manual (second paragraph of Section 1 of Rule VI) requires that the indemnity bond that must be posted up by the prevailing party should be in a sum not less than the value of the property levied. 

Same; Same; Same; In case of disagreement on the value of the property levied, the matter shall be determined by the Labor Arbiter. - The Manual provides that in case of disagreement on the value of the property levied, the matter shall be determined by the Labor Arbiter. Not only did PHILGUARANTEE promptly challenge the integrity of the bond submitted by Diehl but it also did question the amount of the bond. Since the difference is substantial, it should have behooved the Labor Arbiter to take more than just a passing glance on the claim of PHILGUARANTEE.

WHEREFORE, the petition is DENIED and the assailed 10 January 1995 decision of the Court of Appeals is AFFIRMED without prejudice, however, to an appropriate recourse by petitioner before the proper forum. No costs.

93

RUBBERWORLD INC. v. NLRC

FACTS: Petitioner Rubberworld (Phils.) Inc., a corporation established in 1965, was engaged in manufacturing footwear, bags and garments.

Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia M. San Pedro, and Felomena Tolin were employed as dispatcher, warehouseman, issue monitor, foreman, jacks cementer and outer sole attacher, respectively. On August 26, 1994, Rubberworld filed with the Department of Labor and Employment a notice of temporary shutdown of operations to take effect on September 26, 1994. Before the effectivity date, however, Rubberworld was forced to prematurely shutdown its operations. On November 11, 1994,private respondents filed with the National Labor Relations Commission a complaint against petitioner for illegal dismissal and non-payment of separation pay. On November 22, 1994,Rubberworld filed with the Securities and Exchange Commission(SEC) a petition for declaration of suspension of payments with a proposed rehabilitation plan.

On December 28, 1994, SEC issued the following order:"Accordingly, with the creation of the Management Committee, all actions for claims against Rubberworld Philippines, Inc. pending before any court, tribunal, office, board, body, Commission or sheriff are hereby deemed SUSPENDED." Consequently, all pending incidents for preliminary injunctions, writ or attachments, foreclosures and the like are hereby rendered moot and academic.

On January 24, 1995, petitioners submitted to the labor arbiter a motion to suspend the proceedings invoking the SEC order dated December 28, 1994. The labor arbiter did not act on the motion and ordered the parties to submit their respective position papers.- On December 10, 1995, the labor arbiter rendered a decision, which provides: "In the light of the foregoing, respondents are hereby declared guilty of Illegal Shurtdown. On February 5,1996, petitioners appealed to the National Labor Relations Commission (NLRC) alleging abuse of discretion and serious errors in the findings of facts of the labor arbiter. On August 30,1996, NLRC issued a resolution affirming the decision with modification in that the award of moral and exemplary damages were deleted.

WON the Department of Labor and Employment, the LaborArbiter and the National Labor Relations Commission maylegally act on the claims of respondents despite the order of theSecurities and Exchange Commission suspending all actionsagainst a company under rehabilitation by a managementcommittee created by the Securities and ExchangeCommission.

HELD: NO. The petition is hereby granted. The decision of the labor arbiter dated December 10, 1995 and the NLRC resolution dated August30, 1996, are SET ASIDE.

94

Ratio: partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly." The law did not make any exception in favor of labor claims. The justification for the automatic stay of all pending actions for claims is to enable the management committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra judicial interference that might unduly hinder or prevent the 'rescue' of the debtor company. To allow such other actions to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. Thus, the labor case would defeat thepurpose of an automatic stay. To rule otherwise would open the floodgates to numerous claims and would defeat the rescue efforts of the management committee.

This finds ratiocination in that the power to hear and decide labor disputes is deemed suspended when the Securities and Exchange Commission puts the corporation under rehabilitation. Thus, when NLRC proceeded to decide the case despite the SEC suspension order, the NLRC acted without or in excess of its jurisdiction to hear and decide cases. As a consequence, any resolution, decision or order that it rendered or issued without jurisdiction is a nullity.

ECOP v. NWPC – hula ung issue..

FACTS:  Petitioners ECOP questioned the validity of the wage order issued by the Regional Tripartite Wages and Productivity Board (RTWPB) dated October 23, 1990 pursuant to the authority granted by RA 6727. The wage order increased the minimum wage by P17.00 daily in the National Capital Region. 

The wage order is applied to all workers and employees in the private sector of an increase of P 17.00 including those who are paid above the statutory wage rate. ECOP appealed with the National Wages and Productivity Commission (NWPC) but dismissed the petition. 

The Solicitor General in its comment posits that the Board upon the issuance of the wage order fixed minimum wages according to the salary method. Petitioners insist that the power of RTWPB was delegated, through RA 6727, to grant minimum wage adjustments and in the absence of authority, it can only adjust floor wages. 

ISSUE: Whether or not the wage order issues by RTWPB dated October 23, 1990 is valid. 

HELD: The Court agrees with the Solicitor General. It noted that there are two ways in the determination of wage, these are floor wage method and salary ceiling method. The

95

floor wage method involves the fixing of determinate amount that would be added to the prevailing statutory minimum wage while the salary ceiling method involves where the wage adjustment is applied to employees receiving a certain denominated salary ceiling. 

RA 6727 gave statutory standards for fixing the minimum wage. 

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: 

(a) The demand for living wages; 

(b) Wage adjustment vis-a-vis the consumer price index; 

(c) The cost of living and changes or increases therein; 

(d) The needs of workers and their families; 

(e) The need to induce industries to invest in the countryside; 

(f) Improvements in standards of living; 

(g) The prevailing wage levels; 

(h) Fair return of the capital invested and capacity to pay of employers; 

(i) Effects of employment generation and family income; and 

(j) The equitable distribution of income and wealth along the imperatives of economic and social development." 

The wage order was not acted in excess of board’s authority. The law gave reasonable limitations to the delegated power of the board.

96

APEX MINING COMPANY v. NLRC – naguguluhan aq

FACTS: Respondent Sandigan ng Manggagawang Pilipino ("Sandigan") filed before the Labor Arbiter a claim for Emergency Cost of Living Allowance ("ECOLA") differential against petitioner Apex Mining Company, Inc. ("Apex") alleging that Apex had paid its employees in its Maco, Davao del Norte operations, between 1 November 1954 until 28 March 1985, an aggregate cumulative daily ECOLA of only P15.00 which was P2.00 below the cumulative minimum ECOLA of P17.00 (for non-agricultural workers) established under Wage Order No. 6; and that petitioner had belatedly granted the additional P2.00 starting on 29 March 1985 only.

Apex denied having failed to comply with Wage Order No. 6, contending that it had, by previous agreement, incorporated the alleged P2.00 deficiency into the basic salary of its employees. In turn, Sandigan denies that such an agreement had been made, but conceded that a P2.00 increase in basic salary had been made by Apex, in compliance with a provision of the Collective Bargaining Agreement ("CBA") then in force between Apex andSandigan, and not in fulfillment of Apex's obligation under Wage Order No. 6. Sandigan pointed out that Wage Order No. 6 had taken effect on 1 November 1984, several months after the P2.00 had been integrated by Apex into the basic salary of its employees.

In a supplemental memorandum, Apex reiterated that the daily salary increase of P2.00 provided for in the then current CBA, to take effect on 1 February 1984, had been subsequently credited as partial compliance with the P5.00 increment mandated by Wage Order No. 5 (which took effect on 16 June 1984). Thus, Apex, in compliance with Wage Order No. 5, accordingly increased the daily ECOLA of its workers by P3.00 only (from P9.00 to P12.00), or P2.00 less than the legislated ECOLA increase of P5.00 (which would have increased the total daily ECOLA from P9.00 to P14.00). Petitioner Apex added that the integration of P2.00 allowance into the basic salary provided for in the CBA had been conformed to by Vicente Arniego, National President of Sandigan, and that in any event, Wage Order No. 5 had itself authorized such integration. Since petitioner Apex had integrated P2.00 (out of the P5.00) 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 P15.00, until one took into account the P2.00 (out of the P5.00 ECOLA increase mandated by Wage Order No. 5) integrated into the employees' basic salary. Finally, petitioner Apex explained, it had granted members of Sandigan an additional P2.00 effective 29 March 1985 not as an admission that it had previously failed to pay something legally due, but only as a measure to diffuse the tense atmosphere between management and the union created by the misunderstanding over the ostensible (as distinguished from the real) total increase paid by petitioner Apex to its employees.

97

ISSUE: Whether the P2 per day increase in basic salary effective starting Feb 1984 granted by petitioner Apex pursuant to the CBA, was lawfully credited towards compliance with increases in ECOLA required under Wage Orders 5 and 6

Whether the P2 increase in basic salary effective February 1984 provided by the CBA as compliance with the requirements of Wage Orders Nos. 5 and 6 would violate Article 100 of the Labor Code as well as Sec 6 of the Rules Implementing Wage Order No. 6

HELD:

1. YES. The P2.00 increase integrated in the basic salary of Apex's, employees, effective on and after 1 February 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. Section 7 o f Wage Order No. 5

It is important to note that the creditability provisions in Wage Orders Nos. 5 and 6 (as well as the parallel provisions in Wage Orders Nos. 2, 3 and 4) are grounded in an important public policy. That public policy 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. Clearly, this would be counter-productive so far as securing the interests of labor is concerned. The creditability provisions in the Wage Orders prevent the penalizing of employers who are industry leaders and who do not wait for statutorily prescribed increases in salary or allowances and pay their workers more than what the law or regulations require.

2. NO. Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with benefits already enjoyed at the time of 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.

98

METROBANK EMPLOYEES UNION v. NLRC

FACTS: On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary employees in the list of employees who would benefit from the first P900 increase but the bank had adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were given the increase to the exclusion of probationary employees.

Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy determination be establishing the mechanism and proper standards thereof, . . . fixing new wage rates, providing wage incentives for industrial dispersal to the countryside, and for other purposes," took effect.

Pursuant to the provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose daily rate was P100 and below. The bank refused to give the same increase to its regular employees who were receiving more than P100 per day and recipients of the P900 CBA increase.

Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees into (a) the probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who had been promoted to permanent or regular status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose pay was over P100 a day, and that, between the two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the bank the correction of the alleged distortion in pay. In order to avert an impeding strike, the bank petitioned the Secretary of Labor to assume jurisdiction over the case or to certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g) of the Labor Code. The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC.

ISSUE: The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC.

HELD: Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor official's findings rest.   As such, factual findings of the NLRC are generally accorded not only respect but also finality provided that its decision are supported by substantial evidence and devoid of any taint of unfairness of arbitrariness.  When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom.

99

In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there is a wage distortion arising from the bank's implementation of the P25 wage increase; they do differ, however, on the extent of the distortion that can warrant the adoption of corrective measures required by law.

The definition of "wage distortion,"  aforequoted, shows that such distortion can so exist when, as a result of an increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative differences in wage or salary rates" would occur "between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of imagination, be considered less than severe.

The "intentional quantitative differences" in wage among employees of the bank has been set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through the collective bargaining process to which the parties are thereby concluded.  The Solicitor General, in recommending the grant of due course to the petition, has correctly emphasized that the intention of the parties, whether the benefits under a collective bargaining agreement should be equated with those granted by law or not, unless there are compelling reasons otherwise, must prevail and be given effect. 

WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE PROCESS, the questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED subject to the MODIFICATION that the wage distortion in question be corrected in accordance with the formula expressed in the dissenting opinion of Presiding Commissioner Edna Bonto-Perez. This decision is immediately executory.

PHILIPPINE TELEGRAPH AND TELEPHONE CORP v. NLRC

FACTS: Herein private respondent PT&T Union-ALU initiated this case via a complaint, filed on 25 November 1986, charging petitioner Philippine Telegraph and Telephone Corporation ("PT&T") with unfair labor practice acts and underpayment of statutory and contractual benefits claimed to be due pursuant to Wage Orders No. 3, 4, 5 and 6, and also under Sections 2 and 3, Article IX, of the 1984 Collective Bargaining Agreement ("CBA") and Section 2, Article XII, of the 1986 CBA. Petitioner denied the charges.

LA - premises considered, respondent Philippine Telegraph and Telephone Corporation (PT&T) with main office and postal address at SSC Bldg., 106 Alvarez St., Legaspi Village, Makati, Metro Manila, is hereby ORDERED, to pay the individual complainants-

100

members of PT&T Employees Union-ALU their corresponding salary differentials in accordance with Wage Order Nos. 3 to 6; and/or Sections 2 and 3, Article IX of the 1984 CBA and Section 2, of Article XII of the 1986 CBA.

NLRC -  the NLRC dismissed the appeal for lack of merit. Petitioner moved for reconsideration stressing that only the higher remuneration from either the statutorily mandated increase or the CBA should be given and paid to the employees. This motion, as well as the supplement thereto, was denied by public respondent.

ISSUE: Whether NLRC erred in finding petitioner to have failed in its compliance with the increase mandated by Wage Orders No. 3-6 as well as the 1984 and 1986 CBAs.

Whether petitioner be obligated to pay both the CBA and statutory wage increases

HELD:

NO. That this factual finding is not without basis should be fairly evident from the statement of the Labor Arbiter, adopted by the respondent Commission, thusly:

As regards the issue of underpayment, respondent PT&T miserably failed to substantiate their stand of compliance with Wage Order Nos. 3 to 6 and the provisions of the 1984 and 1986 CBAs. All that was submitted by the respondent PT&T were sample payrolls for the period January and February 1985, purportedly to show that complainants were allegedly paid in accordance with Wage Order No. 6, without presenting however, the payrolls for the period of at least two (2) months prior to and after November 1, 1983, when Wage Order No. 3, took effect, in order to determine whether there was compliance or not starting with WageNo. 3. 

NO. The foregoing CBA provisions reveal quite sufficiently the parties' intention to consider salary increases provided in the CBA to be creditable to wage increases that are or may be mandated within the applicable period by law. There is nothing sinister in this stipulation. In Filipinas Golf and Country Club, Inc., vs. National Labor Relations Commission, 176 SCRA 625, we have said that such agreements merely create an equivalence between legal and contractual imperatives, rendering both obligations susceptible performance by compliance with either, subject only to the condition that where the increases given under agreement fall short in amount of those fixed by law, the difference must be made up by the employer.

WHEREFORE, the decision of the National Labor Relations Commission under review is MODIFIED insofar as it affirmed in toto the Labor Arbiter's decision ordering the payment to private respondent union's members their corresponding salary differentials in accordance with Wage Orders No. 3 to 6; and Sections 2 and 3, Article IX of the 1984 CBA and Section 2, of Article XII of the 1986 CBA; instead, the case is REMANDED to the Commission for a computation of the salary differentials payable to the members of

101

respondent union conformably with, and in the manner expressed in, this opinion. No special pronouncement on costs.

METRO TRANSIT ORGANIZATION INC v. NLRC

FACTS: Petitioner Metro is the operator and manager of the Light Railway Transit System in Metro Manila. It employs close to 1,000 rank-and-file and over 200 supervisory employees. Private respondent SEAM is a union composed of supervisory employees of petitioner Metro. In May 1989, SEAM was certified as the sole bargaining unit for the supervisory employees of Metro.

On 1 December 1989, the first collective bargaining agreement between petitioner Metro and private respondent SEAM took effect. Prior to December 1989, Metro had a CBA only with its rank-and-file employees. During the period when no CBA governed the terms and conditions of employment between Metro and its supervisory employees, whenever rank-and-file employees were paid a statutorily mandated salary increase, supervisory employees were, as a matter of practice, also paid the same amount plus P50.00.

On 17 April 1989, Metro paid its rank-and-file employees a salary increase of P500.00 per month in accordance with the terms of their CBA. Metro, however, did not extend a corresponding salary increase to its supervisory employees.

On 1 December 1989, Metro, in compliance with its CBA with SEAM, paid its supervisory employees a salary increase of P800.00 per month.

On 17 April 1990, Metro paid its rank-and-file and supervisory employees a P600.00 monthly increase. The payment thus made to rank-and-file employees was in compliance with the second year salary increase provided in their CBA. On the other hand, the P600.00 per month paid to supervisory employees was advanced from their second year salary increase, provided in their CBA, of P1,000.00 per month effective 1 December 1990. On 1 December 1990, Metro paid its supervisory employees the remaining balance of P400.00 per month in addition to the P600.00 a month it had earlier started to pay.

The third year salary increases due rank-and-file and supervisory employees were paid on 17 April and 1 December 1991, respectively, as scheduled in their corresponding CBAs.

On 24 March 1992, private respondent SEAM filed a Notice of Strike before the National Conciliation and Mediation Board ("NCMB") charging petitioner Metro with (a) discrimination in terms of wages; (b) underpayment of salary increase per CBA for 1990 and/or adjustment of salaries for correction of disparity/inequity in pay with rank-and-file employees and (c) harassment and demotion of union officers. Conciliation and mediation efforts before the NCMB failed.

102

ISSUE: Whether a wage distortion existed in respect of the salaries of the rank-and-file and supervisory employees of petitioner

Whether it has been corrected by petitioner Metro in accordance with law

HELD:

YES. In respect of the issue of existence of a wage distortion, the Court finds and so holds that a wage distortion did occur when the salaries of rank-and-file employees were increased by P500.00 per month on 17 April 1989 as stipulated in their CBA and no corresponding increase was paid to the supervisory employees. This fact was admitted by Atty. Virgilio C. Abejo, counsel for petitioner Metro, during the oral hearing and Metro is bound by that admission. 

In addition, Atty. Abejo explained that his client, as a matter of practice, granted its supervisory employees a salary increase (and a premium) whenever it paid its rank-and-file employees a salary increase. 

The defense of management prerogative or discretion invoked by petitioner Metro in asserting that it is not obligated to grant supervisory employees a salary increase whenever rank-and-file employee are granted an increase is, in this case, unavailing.

Basically, Metro's argument is that such increase was merely a bonus given to supervisory employees. A "bonus" is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is something given in addition to what is ordinarily received by or strictly due to therecipient. 

The general rule is that a bonus is a gratuity or an act of liberality which the recipient has no right to demand as a matter of right. A bonus, however, is a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the employee. Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of  productivity is achieved, it can not be considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. 

In the case at bar, the increase of P550.00 sought by private respondent SEAM was neither an inducement nor was it contingent on (a) the success of the business of petitioner Metro; or (b) the increased production or work output of the company or (c)

103

the realization of profits. The demand for this increase was based on a company practice, admitted by Metro, of granting a salary increase (and a premium) to supervisory employees whenever rank-and-file employees were granted a salary increase. That those increases were precisely designed to correct or minimize the wage distortion effects of increases given to rank-and-file employees (under their CBA or under Wage Orders), highlights the fact that those increases were part of the wage structure of supervisory employees. The demanded increase therefore is not a bonus that is generally not demandable as a matter of right. The demanded increase, in this instance, is an enforceable obligation so far as the supervisory employees of Metro are concerned.

We conclude that the supervisory employees, who then (i.e., on 17 April 1989) had, unlike the rank-and-file employees, no CBA governing the terms and conditions of their employment, had the right to rely on the company practice of unilaterally correcting the wage distortion effects of a salary increase given to the rank-and-file employees, by giving the supervisory employees a corresponding salary increase plus a premium. For reasons, however, shortly to be stated in the disposition of the second issue, we hold that the P550.00 increase is demandable by SEAM only in respect of the period beginning 17 April 1989 and ending on 30 November 1989.

It is true enough that, in the present case, the wage distortion to be corrected by the award of P550.00 increase for supervisory employees beginning 17 April 1989, was due to the time gap between the effectivity date (17 April 1989) of the increase of P500.00 per month given to rank-and-file employees under their CBA and the effectivity date (1 December 1989) of the P800.00 increase given to supervisory employees under their own CBA. It is also true that had the P800.00 increase to supervisory employees been made retroactive to 17 April 1989 by an appropriate synchronizing provision in the Metro-SEAM CBA, no wage distortion would have arisen. The fact, however, remains that Metro and SEAM did not agree upon such remedy in their CBA and that the CBA increase given to rank-and-file employees did produce a distortion effect by obliterating or drastically reducing the previous gap between the salary rates of rank-and-file and supervisory employees. The point to be stressed is that considering the prior practice of petitioner Metro, its supervisory employees had the right to expect rectification of that distortion.

YES. After careful examination of the provisions of the CBA between Metro and SEAM, in particular the provisions relating to anniversary salary increases every 1 December beginning 1989 to 1991, we believe and so hold that together with the increase of P550.00 referred to in Part I above, those provisions will have adequately rectified the wage distortion which arose in respect of rank-and-file and supervisory employees.

We consider the difference of P1,500.00 per month a significant differential that clearly distinguishes, on the basis of pay scales, a rank-and-file employee from a supervisory employee.

104

Applying the above increases to the actual salaries being received by rank-and-file and supervisory employees of Metro, we find that indeed the distortion caused by the CBA-stipulated wage increase granted rank-and-file employees on 17 April 1989 was rectified by 1 December 1991.

The difference in monthly wage scales of P690.00 clearly and substantially distinguishes, on the basis of pay, a rank-and-file employee from a supervisory employee.  Since the above computation utilizes the salaries of highest paid rank-and-file employee and the lowest paid supervisory employee, figures supplied by SEAM, the differential of P690.00 represents merely the minimum difference or gap that was restored or established once implementation of the salary increases due to supervisory employees was completed on 1 December 1991. That differential would, of course, be significantly greater for average rank-and-file employees receiving a salary less than P4,790.00 and for average supervisory employees receiving a salary greater than P3,980.00.

In the instant case, the CBA-stipulated increase of P800.00 a month was intended as the countervailing increase for supervisory employees, the rank-and-file employees having already received their own increase approximately eight (8) months earlier. In other words, the wage distortion in the present case arose not because of a government-decreed increase in minimum wages or because Metro simply refused to treat its supervisory employees, differently from its rank-and-file workers, but rather because of a failure to synchronize the CBA-stipulated increases for rank-and-file and for supervisory employees. Moreover, as more than once pointed out above, the P800.00 monthly increase given to supervisory employees should be taken in conjunction with the P550.00 month increase already awarded to supervisory employees under Part I above. When these are taken together, the wage distortion which occurred on 17 April 1989 was completely and permanently corrected. There is no legal basis for requiring Metro to pay not only the P800.00 month increase, but also, on top thereof, the P550.00 monthly increase to supervisory employees, after 1 December 1989 and forever after.

ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby GRANTED DUE COURSE.

GLOBE MACKAY v. NLRC

FACTS: Wage Order No. 6 increased the cost-of-living allowance (COLA) of non-agricultural workers in the private sector.

Petitioner Corporation complied with said Order by paying its monthly-paid employees the mandated P3.00 per day COLA. In its computation, Petitioner Corporation multiplied the P3.00 daily COLA by 22 days, which is the number of working days in the company.

105

Respondent Union disagreed with the computation alleging that prior to the effectivity of the Wage Order, Petitioner Corporation had been computing and paying the COLA on the basis of 30 days per month and that this constituted an employer practice, which should not be unilaterally withdrawn.

The Labor Arbiter sustained the position of Petitioner Corporation by holding that the monthly COLA should be computed on the basis of 22 days, since the evidence showed that there are only 22 days in a month for monthly-paid employees in the company.

The NLRC reversed the Labor Arbiter on appeal, holding that Petitioner Corporation was guilty of illegal deductions considering that COLA should be paid and computed on the basis of 30 days since workers paid on a monthly basis are entitled to COLA on days “unworked”; and the full allowance enjoyed by Petitioner Corporation’s monthly-paid employees before the CBA executed between the parties constituted voluntary employer practice, which cannot be unilaterally withdrawn.

ISSUE: Whether the entitlement to COLA is that basic wage being paid.

HELD: YES. The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is mandated only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees are not paid their basic wage, the payment of COLA is not mandated.

Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are deemed paid their basic wages for all those days and they should be entitled to their COLA on those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5) days a week, or twenty two (22) days a month.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law. Payment may be said to have been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law." (Article 2155, in relation to Article 2154  of the Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the correction.

With the conclusions thus reached, there is no further need to discuss the liability of the officers of Petitioner Corporation.

WHEREFORE, certiorari is granted,

106

SAMAHANG MANGGAGAWA SA TOP FORM v. NLRC

FACTS: Petitioner Samahang Manggagawa sa Top Form Manufacturing— United Workers of the Philippines (SM) was the certified collective bargaining representative of all regular rank and file employees of private respondent Top Form Manufacturing Philippines, Inc.

Employer Top Form Manufacturing (TFM) refused to grant across-the-board increases to its employees in implementing Wage Order No. 01 (granting an increase of P17 per day in the salary of workers) and Wage Order No. 02 (providing for a P12daily increase in salary) of the Regional Tripartite Wages and Productivity Board of the National Capital Region (RTWPB-NCR).Such refusal was aggravated by the fact that prior to the issuance of said wage orders, the employer allegedly promised at the collective bargaining conferences to implement any government-mandated wage increases on an across-the-board basis.

The union (SM) requested the implementation of said wage orders. But they demanded that the increase be on an across-the-board basis. Respondent TFM refused to accede to that demand. Instead, it implemented a scheme of increases purportedly to avoid wage distortion. TFM granted the P17increase under WO#01 to workers/employees receiving salary of P125/day and below. The P12 increase under by WO#02 was granted to those receiving the salary of P140/day and below. For employees receiving salary higher than P125 or P140.00/day, TFM granted an escalated increase ranging from P6.99 to P14.30and from P6.00 to P10.00, respectively.

SM filed a complaint with the NCR NLRC.

Petitioner’s contention:

TFM's act of "reneging on its undertaking/promise clearly constitutes act of unfair labor practice through bargaining in bad faith." It charged TFM with acts of unfair labor practices or violation of A247 of the Labor Code, as amended, specifically "bargaining in bad faith," and prayed that it be awarded actual, moral and exemplary damages. In its position paper, the union added that it was charging private respondent with "violation of A100 of the Labor Code."

Respondent’s contention:

In implementing Wage Orders Nos.01 and 02, it had avoided "the existence of a wage distortion" that would arise from such implementation.- There was no agreement to the effect that future wage increases mandated by the government should be implemented on an across-the-board basis. Otherwise, that agreement would have been incorporated and expressly stipulated in the CBA. It quoted the provision of the CBA that reflects the parties' intention to "fully set forth" therein all their agreements that had been arrived at after negotiations that gave the parties" unlimited right and opportunity to make

107

demands and proposals with respect to any subject or matter not removed by law from the area of collective bargaining."

Labor Arbiter dismissed the complaint for lack of merit. On appeal at the NLRC, same was dismissed for lack of merit. MFR denied. Hence, this petition.

ISSUES:

Whether private respondent committed an unfair labor practice in its refusal to grant across-the-board wage increases in implementing Wage Orders Nos. 01 and 02

Whether there was a significant wage distortion of the wage structure in private respondent as a result of the manner by which said wage orders were implemented.

HELD

1. NO

The CBA is the law between the contracting parties. Thus, only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal or a promise raised by a contracting party does not find print in the CBA it is not a part thereof and the proponent has no claim whatsoever to its implementation.

Reasoning

If there was indeed a promise or undertaking on the part of private respondent to obligate itself to grant an automatic across-the-board wage increase, union SM should have requested or demanded that such "promise or undertaking" be incorporated in the CBA. After all, petitioner has the means under the law to compel private respondent to incorporate this specific economic proposal in the CBA. It could have invoked A252 of the Labor Code defining "duty to bargain," thus, the duty includes "executing a contract incorporating such agreements if requested by either party."

A252 also states that the duty to bargain "does not compel any party to agree to a proposal or make any concession." Thus, petitioner may not validly claim that the proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered into with private respondent.

SM’s contention that the Minutes of the collective bargaining negotiation meeting forms part of the entire agreement is pointless. If indeed private respondent promised to continue with the practice of granting across-the-board salary increases ordered by the government, such promise could only be demandable in law if incorporated in the CBA.

(Obiter for our purposes Re: Past Practices)

108

Granted that private respondent TFM had granted an across-the-board increase pursuant to Republic Act No. 6727,that single instance may not be considered an established company practice.

2. NO. The issue of whether or not a wage distortion exists is a question of fact that is within the jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative agencies are accorded respect and even finality in this Court if they are supported by substantial evidence.

Reasoning

In this case, NLRC unanimously ruled that no wage distortions marred private respondent's implementation of the wage orders. There was a meaningful implementation of WO#01 and #02.SM’s contention on the issue of wage distortion and the resulting allegation of discrimination against the TFM's employees are anchored on its dubious position that TFM's promise to grant an across-the-board increase in government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable part of the CBA.

Disposition NLRC resolutions affirmed. Petition dismissed.

NASIPIT LUMBER COMPANY v. NWPC

FACTS: On 20 October 1990, the RTWPB issued Wage Order which provides an increase in minimum wage rates applicable to workers and employees in the private sector in Northern Mindanao. Subsequently, a supplementary wage order was issued by the Board.

Applicants/appellees Nasipit Lumber Company (NALCC), Philippine Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO), claiming to be separate and distinct from each other but for expediency and practical purposes, jointly filed application for exemption.

Applicants/Appellees aver that they are engaged in logging and integrated wood processing industry but are distressed due to conditions beyond their control, to wit: 1) Depressed economic conditions due to worldwide recession; 2) Peace and order and other emergency-related problems causing disruption and suspension of normal logging operations; 3) Imposition of environmental fee for timber production in addition to regular forest charges; 4) Logging moratorium in Bukidnon; 5) A reduction in the annual allowable volume of cut logs of NALCO & ALCO by 59%; 6) Highly insufficient raw material supply; 7) Extraordinary increases in the cost of fuel, oil, spare parts, and maintenance; 8) Excessive labor cost/production ratio that is more or less 47%; and 9) Lumber export ban.

109

On the other hand, oppositor/appellant Unions jointly opposed the application for exemption on the ground that said companies are not distressed establishments since their capitalization has not been impaired by 25%.

Citing liquidity problems and business decline in the wood-processing industry, the RTWPB approved the applicants joint application for exemption.

Dissatisfied with the RTWPB’s decision, the private respondents lodged an appeal with the NWPC, which affirmed ALCO’s application but reversed the applications of petitioners NALCO and PWC since it did not pass the approval of the Commission.

ISSUE: Whether the guideline issued by an RTWPB without the approval of or worse, contrary to the guidelines promulgated by the NWPC valid?

Petitioner’s contention: Petitioners contend that the NWPC gravely abused its discretion in overturning the RTWPB's approval of their application for exemption from Wages Orders RX-01 and RX-01-A. They argue that under Art. 122 (e) of the Labor Code, the RTWPB has the power "[t]o receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any wage order." They also maintain that no law expressly requires the approval of the NWPC for the effectivity of the RTWPB's Guideline No. 3. Assuming arguendo that the approval of the NWPC was legally necessary, petitioners should not be prejudiced by their observance of the guideline, pointing out that the NWCP's own guidelines  took effect "only on March 18, 1991 long after Guideline No. 3 was issued on November 26, 1990." Lastly, they posit that the NWPC guidelines "cannot be given retroactive effect as [they] will effect or change the petitioners' vested rights."

HELD: YES. Power to Prescribe Guidelines

Lodged in the NWPC, Not in the RTWPB

The three great branches and the various administrative agencies of the government can exercise only those powers conferred upon them by the Constitution and the law. It is through the application of this basic constitutional principle that the Court resolves the instant case.

RA 6727 (the Wage Rationalization Act), amending the Labor Code, created both the NWPC and the RTWPB and defined their respective powers. Article 121 of the Labor Code lists the powers and functions of the NWPC.

Article 122 of the Labor Code, on the other hand, prescribes the powers of the RTWPB.

The foregoing clearly grants the NWPC, not the RTWPB, the power to "prescribe the rules and guidelines" for the determination of minimum wage and productivity measures. While the RTWPB has the power to issue wage orders under Article 122 (b)

110

of the Labor Code, such orders are subject to the guidelines prescribed by the NWPC. One of these guidelines is the "Rules on Minimum Wage Fixing," which was issued on June 4, 1990. Rule IV, Section 2 thereof, allows the RTWPB to issue wage orders exempting enterprises from the coverage of the prescribed minimum wages. However, the NWPC has the power not only to prescribe guidelines to govern wage orders, but also to issue exemptions therefrom, as the said rule provides that "[w]henever a wage order provides for exemption, applications thereto shall be filed with the appropriate Board which shall process the same, subject to guidelines issued by the Commission." In short, the NWPC lays down the guidelines which the RTWPB implements.

Significantly, 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 of the RTWPB, the said guideline is inoperative and cannot be used by the latter in deciding or acting on petitioners' application for exemption. Moreover, Rule VIII, Section 1 of the NWPC's Rules of Procedure on Minimum Wage Fixing issued on June 4, 1990 — which was prior to the effectivity of RTWPB Guideline No. 3 — requires that an application for exemption from wage orders should be processed by the RTWPB, subject specifically to the guidelines issued by the NWPC.

To allow RTWPB Guideline No. 3 to take effect without the approval of the NWPC is to arrogate unto RTWPB a power vested in the NWPC by Article 121 of the Labor Code, as amended by RA 6727. The Court will not countenance this naked usurpation of authority. It is a hornbook doctrine that the issuance of an administrative rule or regulation must be in harmony with the enabling law. If a discrepancy occurs "between the basic law and an implementing rule or regulation, it is the former that prevails."  This is so because the law cannot be broadened by a mere administrative issuance. It is axiomatic that "[a]n administrative agency cannot amend an act of Congress."

CAGAYAN SUGAR MILLING COMPANY v. SEC. OF LABOR AND EMPLOYMENT

FACTS: Regional Wage Order No. RO2-02 was issued by the Regional Tripartite Wage and Productivity Board of the DOLE. It provided that the statutory minimum wage rates applicable to worker sand employees in the private sector in Region II shall be increased by P14.00 per day in Cagayan. Labor inspectors from DOLE found that petitioner violated the wage order as it did not implement an across the board increase in the salary of its employees. At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that it complied with the wage order as it paid the mandated increase in the minimum wage. Regional Director Martinez ruled that petitioner violatedRO2-02. He ordered petitioner to pay the deficiency in the salary of its employees in the total amount of P555,133.41

Petitioner appealed to public respondent Labor Secretary Quisumbing. On the same date, the Regional Wage Board issued Wage Order No. RO2-02-A amending the earlier wage order in providing that the workers and employees in the private sector shall

111

receive an across the board wage increase of P14.00 in Cagayan, retroacting to the date of effectivity of RO2-02. Private respondent CARSUMCO EMPLOYEES UNION moved for execution of the order. Regional Director Martinez granted the motion and issued the writ of execution. Petitioner moved for reconsideration. The DOLE regional sheriff served on petitioner a notice of garnishment of its account with the Far East Bank and Trust Company. The sheriff also seized petitioner’s dump truck and scheduled its public sale. Hence, this petition, with a prayer for the issuance of a TRO.

ISSUE: Whether RO2-02-A violates petitioner’s right to due process

HELD: YES. RO2-02-A is invalid for lack of public consultations and hearings and non-publication in a newspaper of general circulation, in violation of the Labor Code.

Reasoning

- Article 123 of the Labor Code 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 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. The contention that, despite the wording of RO2-02 providing for a statutory increase in minimum wage, the real intention of the Regional Board was to provide for an across the board increase is absurd. There was no ambiguity in the provision of RO2-02 as it provided in clear and categorical terms for an increase in statutory minimum wage of workers in the region. The subsequent passage of RO2-02-A changed the essence of the original Order.

Disposition petition is GRANTED.

NATIONAL FEDERATION OF LABOR v. NLRC

FACTS: Wage Orders Nos. 3, 4, 5 and 6 were promulgated by the then Pres. Marcos. Before the effectivity of Wage Order No. 3, the wage rates of regular employees and of casual (or non-regular employees of private respondent Franklin Baker Company of the Philippines (Davao Plant) ("Company") were such that there was a positive differential of P4.56 between the 2. The effect of the implementation of the successive Wage Orders upon the daily wage rates of these two (2) groups of employees was summarized by petitioner in the following table:

Upon the effectivity of Wage Order No. 5, grievance meetings were held by petitioner National Federation of Labor ("NFL") and private respondent Company sometime in June 1984, addressing the impact which implementation of the various Wage Orders had on the wage structure of the Company. The wage rates of bith casual and regular

112

employees were the same at P34. Then all the casual or non-regular employees of private respondent Company (at least in its Davao Plant) were "regularized," or converted into regular employees, pursuant tothe request of petitioner NFL.

On 1 July 1984, the effectivity date of the 1984 CBA between NFL and the Company, all regular employees of the Company received an increase of P1.84 in their daily wage; the regular aily wage of the regular employees thus became P35.84 as against P34.00 per day for non-regular employees.

Through Wage Order No. 6, casual employees received an increase of their daily wage from P34 to 36. At the same time, Company unilaterally granted an across-the-board increase of P2 in the daily rate of all regular employees, increasing their daily wage from P35.84 to P37.84. Further, on 1 July 1985, all regular employees who were members of the collective bargaining unit got a raise of P1.76 in their basic daily wage, which pushed that daily wage from P37.84 to P39.60, as against the non-regular's basic wage of P36/day. And, by Nov ‘87, the lowest paid regular employee had a basic daily rate of P64.64,P10.64 more than the statutory minimum wage paid to a non-regular employee.

Petitioner’s principal contention:

A wage distortion in the wage structure of private respondent Company continued to exist although a gap of P1.84 between the daily wage rate of regular employees and that of casual employees had been re-established upon the effectivity of the CBA increase on 1 July1984.

ISSUE: Whether the NLRC committed grave abuse of discretion when it concluded that the wage distortion had ceased to exist after 1 July 1084.

HELD: NO. The re-establishment of a significant gap or differential between regular employees and casual employees by operation of the CBA was more than substantial compliance with the requirements of the several Wage Orders (and of Article 124 of the Labor Code)

In this case the Court summarized the principles regarding wage distortion:

[a] The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees.

[b] Wage distortions have often been the result of government-decreed increases in minimum wages. There are however, other causes of wage distortions, like merger of 2 companies (with differing classifications of employees and different wage rates)where the surviving company absorbs all the employees of the dissolved corporation.

113

[c] Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion by readjustment of the age rates of the differing classes of employees, the gap which had previously or historically existed or restored in precisely the same amount. In other words correction of a wage distortion may be done by reestablishing a substantial or significant gap(as distinguished from the historical gap) between the wage rates of the differing classes of employees.

[d] The reestablishment of a significant difference in wage rates may be the result of resort to grievance procedures or collecting bargaining negotiations.

We consider, still further, that the "regularization" of the casual or non-regular employees on 21 June 1984 which was unilaterally effected by the Company (albeit upon the request of petitioner NFL), in conjunction with the coming into effect of the increases in daily wage stipulated in the CBA, had the effect of rendering the whole problem of wage distortion academic. The act of "regularization" eliminated the classification scheme in respect of which the wage distortion had existed.

The Court also emphasized that: Whether or not a new additional scheme of classification of employees for compensation purposes should be established by the Company(and the legitimacy or viability of the bases of distinction there embodied) is properly a matter for management judgment and discretion, and ultimately, perhaps, a subject matter for bargaining negotiations between employer and employees.  It is assuredly something that falls outside the concept of "wage distortion." The Wage Orders and Article 124 as amended do not require the establishment of new classifications or sub-classifications by the employer. The NLRC is not authorized unilaterally to impose, directly or indirectly, under the guise of rectifying a "wage distortion," upon an employer a new scheme of classification of employees where none has been established either by management decision or by collective bargaining.

We conclude that petitioner NFL has not shown any grave abuse of discretion amounting to lack of excess of jurisdiction on the part of the NLRC in rendering its decision (through its Fifth Division) dated 16 December 1991.

WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of merit. No pronouncement as to costs.

PRUBANKERS ASSOCIATION v. PRUDENTIAL BANK & TRUST COMPANY

FACTS: On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued Wage Order No. RB 05-03which provided for a Cost of Living Allowance (COLA) to workers in the private sector who had rendered service for at least three months before its effectivity, and for the same period thereafter. The amount of COLA depended on the region where it was implemented.

114

On November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region, VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and employees in the private sector. Again amount differed depending on the region.

The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03- Prubankers association told Prudential Bank to extend the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates of the bank’s employees nationwide.

they decided to submit the dispute for voluntary arbitration. Issue being won the enforcement of the wage orders created a wage distortion. (there was no mention of the decision so I think the ruled that it created a wage distortion)

CA ruled that there was no distortion saying that the RA justified it. It noted, I that the underlying considerations in issuing the wage orders are diverse, based on the distinctive situations and needs existing in each region.

ISSUE: Whether a wage distortion resulted from respondent's implementation of the aforecited Wage Orders

HELD: NO. The statutory definition of' wage distortion is found in Article124 of the Labor Code, as amended by Republic Act No. 6727: “As used herein, a wage distortion shall mean a situation where an increase in prescribed wage 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”.

Wage distortion involves four elements:

1. An existing hierarchy of positions with corresponding salary rates

2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one

3. The elimination of the distinction between the two levels

4. The existence of the distortion in the same region of the country.

115

No wage distortion resulted when respondent implemented the subject Wage Orders ill the covered branches.

In the said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved.

Petitioner maintains that, as a result of the two Wage Orders, the employees in the affected regions have higher compensation than their counterparts of the same level in other regions.

The Court is not persuaded. A wage parity between employees in different rungs is not at issue here, but a zeage disparity between employees in the same rung but located in different regions of the country.

A wage distortion arises when a wage order engenders wage parity, between employees in different rungs of the organizational ladder of the same establishment. It bears emphasis that wage distortion involves a parity in the salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in the same region- Petitioner's claim of wage distortion must also be denied for one other reason. The difference in wages between employees in the same pay scale in different regions is not the mischief sought to be banished by the law. In fact it recognizes the disparity.

It must be understood that varying in each region of the country are controlling factors such as the cost of living; supply and demand of basic goods, services and necessities; and the purchasing power of the peso.

INTERNATIONAL SCHOOL –O0O-

PULP and PAPER, INC. v. NLRC

FACTS: A case of illegal dismissal and underpayment of wages was filed by MS. EPIFANIA ANTONIO [private respondent herein]against PULP AND PAPER DISTRIBUTORS INC., [petitioner herein] She alleges that she was a regular employee of the corporation having served thereat as Wrapper sometime in September 1975. On November 29, 1991, for unknown reasons, she was advised verbally of her termination and was given a prepared form of Quitclaim and Release which she refused to sign. Instead she brought the present complaint for illegal dismissal. In charging the company of underpayment of wages, complainant in the same position paper alleges that, rarely during her employment with the respondent she received her salary, a salary which was in accordance with the minimum wage law. She was not paid overtime pay, holiday pay and five-day service incentive leave pay, hence she is claiming for payments thereof by instituting the present case.

116

Company denied having terminated the services of the complainant and alleges inter alia that starting 1989 the orders from customers became fewer and dwindled to the point that it is no longer practical to maintain the present number of packer/wrappers. Maintaining the same number of packers/wrappers would mean less pay because the work allocation is no longer the same as it was. Such being the case, the respondent has to reduce temporarily the number of packers/wrappers. Complainant was among those who were temporarily laid-off from work. Complainant last worked with the company on June 29, 1991.

As regards complainant's allegation that on November 29,1991, she was forced to sign a quitclaim and release by the respondent, the latter clarified that considering that five months from the time the complainant last worked with the company, the management decided to release the complainant and give her a chance to look for another job in the meantime that no job is available for her with the company. In other words, complainant was given the option and considering that she did not sign the documents referred to as the Quitclaim and Release, the respondent did not insist, and did not terminate the services of the complainant. It was just surprise [sic] to receive the present complaint. In fact, respondent added that the reason why the complainant was called on November 29,1991 was not to work but to receive her 13th month pay of P636.70 as shown by the voucher she signed.

As regards the claim of the complainant for underpayment, respondent did not actually denied the same but give the reservation that should the same be determined by this Office it is willing to settle the same considering the fact that complainant herein being paid by results, it is not in a proper position to determine whether the complainant was underpaid or not.

ISSUES:

1. WON the computation should apply the minimum wage and not the wage rate of workers

2. WON the private respondent's separation pay should not have been computed at one month's pay for every year of service because private respondent should be considered retrenched, the separation pay should be "one month's pay or at least one/half (1/2) month pay for every year of service, whichever is higher, and not one (1) month's pay for every year of service as public respondent had ruled."

3. WON petitioner's challenge to the computation of salary differential must be dismissed as "the work of the private respondent is seasonal, being dependent upon the availability of job-orders" and not "twenty-six (26) days a month because as a piece worker whose work was seasonal."

117

HELD:

1. Minimum wage is applicable.- In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission. To ensure the payment of fair and reasonable wage rates, Article 101 of the Labor Code provides that "the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other non time work." The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers' and employers' organizations. In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply. This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A the prevailing wage order at the time of dismissal of private respondent, viz:

Sec. 8. Workers Paid by Results. a) All workers paid by results including those who are paid on piece work, takay ,pakyaw, or task basis, shall receive not less than the applicable minimum wage rates prescribed under the Order for the normal working hours which shall not exceed eight (8)hours work a day, or a proportion thereof for work of less than the normal working hours.- The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps:1) Amount of increase in AMW x 100 = % increase PreviousAMW2) Existing rate/piece x % increase = increase in rate/piece;3) Existing rate/piece + increase in rate/piece = adjusted rate/piece. b) The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the Labor Code, as amended and its implementing regulations.

On November 29, 1991, private respondent was orally informed of the termination of her employment. Wage Order No. NCR-02, in effect at the time, set the minimum daily wage for non-agricultural workers like private respondent at P118.00. This was the rate used by the labor arbiter in computing the separation pay of private respondent. We cannot find any abuse of discretion, let alone grave abuse, in the order of the labor arbiter which was later affirmed by the NLRC.

Moreover, since petitioner employed piece-rate workers, it should have inquired from the secretary of labor about their prescribed specific wage rates. In any event, there being no such prescribed rates, petitioner, after consultation with its workers, should have submitted for the labor secretary's approval time and motion studies as basis for the wage rates of its employees. This responsibility of

118

the employer is clear under Section 8, Rule VII, Book III of the Omnibus Rules Implementing the Labor Code:

Sec. 8. Payment by result.(a) On petition of any interested party, or upon its initiative, the Department of Labor shall use all available devices, including the use of time and motion studies and consultations with representatives of employers' and workers' organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule.(b) The basis for the establishment of rates for piece, output or contract work shall be the performance of an ordinary worker of minimum skill or ability.(c) An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped workers employed therein.(d) Where the output rates established by the employer do not conform with the standards prescribed herein, or with the rates prescribed by the Department of Labor in an appropriate order, the employees shall be entitled to the difference between the amount to which they are entitled to receive under such prescribed standards or rates and that actually paid them by employer.

In the present case, petitioner as the employer unquestionably failed to discharge the foregoing responsibility. Petitioner did not submit to the secretary of labor a proposed wage rate based on time and motion studies and reached after consultation with the representatives from both workers' and employers' organization which would have applied to its piece-rate workers. Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural workers prevailing at the time of private respondent's dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards. Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers. In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondent's separation pay. In fact, it acted and ruled correctly and legally in the premises.

It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent. The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight. Aside from its bare assertion, petitioner presented no clear proof that private respondent's regular working day was less than eight hours. Thus, the labor arbiter correctly used the full amount of P118.00 per day in computing private respondent's separation pay. We agree with the following computation:

119

Considering therefore that complainant had been laid-off for more than six (6) months now, we strongly feel that it is already reasonable for the respondent to pay the complainant her separation pay of one month for every year of service, a fraction of six (6) months to be considered as one whole year. Separation pay should be computed based on her minimum salary as will be determined hereunder. Separation pay 1 month = 16 yearsP118.00 x 26 x 16 years =P49,088.00 The amount "P118.00" represents the applicable daily minimum wage per Wage Order Nos. NCR-02 and NCR-02-A; "26", the number of working days in a month after excluding the four Sundays which are deemed rest days; "16", the total number of years spent by private respondent in the employ of petitioner.

2. NO. Petitioner misapprehended the ground relied upon by public respondent for awarding separation pay. In this case, public respondent held that private respondent was constructively dismissed, pursuant to Article 286 of the Labor Code which reads:

Art. 286. When employment not deemed terminated. The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later that one (1) month from his resumption of operations of his employer or from his relief from the military or civic duty.- Petitioner failed to discern that public respondent, in finding that the services of private respondent were terminated, merely adopted by analogy the rule on constructive dismissal. Since private respondent was not reemployed within six (6) months from the "suspension" of her employment, she is deemed to have been constructively dismissed. Otherwise, private respondent will remain in a perpetual "floating status." Because petitioner had not shown by competent evidence any just cause for the dismissal of private respondent, she is entitled to reinstatement or, if this is not feasible, to separation pay equivalent to one (1) month salary for every year of service. Private respondent, however, neither asked for reinstatement or appealed from the labor arbiter's finding that she was not illegally dismissed; she merely prayed for the grant of her monetary claims. Thus, it is sustained that the award of separation pay made by public respondent, for employees constructively dismissed are entitled to separation pay. Because she did not ask for more, we cannot give her more. We repeat: she appealed neither the decision of the labor arbiter nor that of the NLRC. Hence, she is not entitled to any affirmative relief.

Furthermore, we cannot sustain petitioner's claim that private respondent was retrenched. For retrenchment to be considered a ground for termination, the employer must serve a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof. Petitioner did not comply with this requirement.

120

3. YES. it should be dismissed. As earlier observed, private respondent is entitled to the minimum wage prevailing at the time of the termination of her employment. The same rate of minimum wage, P118.00, should be used in computing her salary differential resulting from petitioner's underpayment of her wages. Thus, the labor arbiter correctly deducted private respondent's actually received wage of P60 a day from the prescribed daily minimum wage of P118.00, and multiplied the difference by 26 working days, and subsequently by 16 years, equivalent to her length of service with petitioner. Thus, the amount of P31,149.56 as salary differential.

Contrary to the assertion of petitioner, neither the assailed Decision nor the pleadings of private respondent show that private respondent's work was seasonal. More important, petitioner utterly failed to substantiate its allegation that private respondent's work was seasonal. We observe that the labor arbiter based the computation of the salary differential on a 26-day month on the presumption that private respondent's work was continuous. In view of the failure of petitioner to support its claim, we must sustain the correctness of this computation.

Disposition petition is DISMISSED and the assailed Decision is AFFIRMED.

ASSOCIATED LABOR UNIONS-TUCP v. NLRC

FACTS: On July 1, 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, subject to certain conditions.

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.

On February 14, 1990, the parties executed a Memorandum Agreement wherein private respondent, "in positive response to the union's representations and notwithstanding that it has no legal or contractual obligation," granted the members of petitioner union a P10.00/day wage increase effective January1, 1990, subject to the latter's right to claim P15.00/day as balance, through compulsory arbitration.

On June 5, 1990, petitioners filed a complaint against private respondent in the National Labor Relations Commission (NLRC). They alleged that a wage distortion had been created. On appeal the NLRC affirmed the Labor Arbiter's findings and denied petitioner's motion for reconsideration.

121

ISSUE: Whether the wage increases mandated by the parties’ Collective Bargaining Agreement should be considered (should take effect)

HELD: YES. 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. Recognition and validation of wage increases given by employers either unilaterally or as a result of collective bargaining negotiations for the purpose of correcting wage distortions are in keeping with the public policy of encouraging employers to grant wage and allowance increases to their employees which are higher than the minimum rates of increases prescribed by statute or administrative regulation.

Apex Mining, Inc. v. NLRC

To compel employers simply to add on legislated increases in salary or allowances without regard to what is already paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counterproductive so far as securing the interest of labor is concerned.

Cardona v. NLRC

There was no wage distortion where the employer made salary adjustments in terms of restructuring of benefits and allowances and re was an increase pursuant to the CBA.-

Finally, 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.

Disposition Petition dismissed

DAVAO FRUITS CORPORATION v. ASSOCIATED LABOR UNIONS

FACTS: On December 28, 1982 respondent Associated Labor Unions(ALU), for and in behalf of all the rank-and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82) before the Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for "Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation and maternity leaves, premium for work done on rest days and

122

special holidays, and pay for regular holidays which petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the thirteenth month pay for 1982.

In its answer, petitioner claimed that it erroneously included items subject of the complaint in the computation of the thirteenth month pay for the years prior to 1982, upon a doubtful and difficult question of law. According to petitioner, this mistake was discovered only in 1981 after the promulgation of the Supreme Court decision in the case of San Miguel Corporation v. Inciong (103 SCRA 139).

A decision was rendered on March 7, 1984 favoring ALU. That ordered Davao Fruits Corporation to pay the 1982 — 13th month pay differential to all its rank-and-file workers/employees herein represented by complainant Union. Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed the said decision accordingly dismissed the appeal for lack of merit. Petitioner elevated the matter to the Supreme Court.

ISSUE: Whether in the computation of the thirteenth month pay given by employers to their employees under P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays may be excluded in the computation and payment thereof, regardless of long-standing company practice.

HELD: Clearly, the term "basic salary" includes renumerations or earnings paid by the employer to employee, but excludes cost-of-living allowances, profit-sharing payments, and all allowances and monetary benefits which have not been considered as part of the basic salary of the employee as of December 16, 1975. The exclusion of cost-of-living allowances and profit sharing payments shows the intention to strip "basic salary" of payments which are otherwise considered as "fringe" benefits. This intention is emphasized in the catch all phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary." Basic salary, therefore does not merely exclude the benefits expressly mentioned but all payments which may be in the form of "fringe" benefits or allowances (San Miguel Corporation v. Inciong, supra, at 143-144). In fact, the Supplementary Rules and Regulations Implementing P.D. No. 851 are very emphatic in declaring that overtime pay, earnings and other renumerations shall be excluded in computing the thirteenth month pay.

In other words, whatever compensation an employee receives for an eight-hour work daily or the daily wage rate in the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of determining the thirteen month pay.

123

Petitioner claims that the mistake in the interpretation of "basic salary" was caused by the opinions, orders and rulings rendered by then Acting Labor Secretary Amado C. Inciong, expressly including the subject items in computing the thirteenth month pay. The inclusion of these items is clearly not sanctioned under P.D. No. 851, the governing law and its implementing rules, which speak only of "basis salary" as the basis for determining the thirteenth month pay.

The "Supplementary Rules and Regulations Implementing P.D. No. 851," which put to rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until 1981. Petitioner continued its practice in December 1981, after promulgation of the afore-quoted San Miguel decision on February 24, 1981, when petitioner purportedly "discovered" its mistake.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees' thirteenth month pay, the payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake.

A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Section 10 of the Rules and Regulations Implementing P.D. No. 851, and Article 100 of the labor of the Philippines, which prohibit the diminution or elimination by the employer of the employees' existing benefits (Tiangco v. Leogardo, Jr., 122 SCRA 267, [1983]).

WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the petition is hereby DISMISSED, and the questioned decision of respondent NLRC is AFFIRMED accordingly.

124

PHILIPPINE AGRICULTURAL COMMERCIAL AND INDUSTRIAL WORKERS UNION (PACIWU-TUCP) v. NLRC

FACTS: Petitioner Philippine Agricultural Commercial and Agricultural Workers Union — TUCP is the exclusive bargaining agent of the rank and file employees of respondent Vallacar Transit, Inc. Petitioner union instituted a complaint with NLRC Regional Arbitration Branch No. VI, Bacolod City, for payment of 13th month pay in behalf of the drivers and conductors of respondent company's Visayan operation on the ground that although said drivers and conductors are compensated on a "purely commission" basis as described in their Collective Bargaining Agreement (CBA), they are automatically entitled to the basic minimum pay mandated by law should said commission be less than their basic minimum for eight (8) hours work.

In its position paper, respondent Vallacar Transit, Inc. contended that since said drivers and conductors are compensated on a purely commission basis, they are not entitled to 13th month pay pursuant to the exempting provisions enumerated in paragraph 2 of the Revised Guidelines on the Implementation of the Thirteenth Month Pay Law. It further contended that Section 2 of Article XIV of the Collective Bargaining Agreement (CBA) concluded on October 17, 1988 expressly provided that "drivers and conductors paid on a purely commission are not legally entitled to 13th month pay." Said CBA, being the law between the parties, must be respected, respondent opined.

LA – complaint dismissed

NLRC – dismissed

ISSUE: Whether the bus drivers and conductors of respondent Vallacar Transit are entitled to 13th month pay.

HELD: YES. From the foregoing legal milieu (13TH Month Pay Law; P.D. NO. 851 and Memorandum Order No. 28 (issued by Pres. Corazon Aquino), it is clear that every employee receiving a commission in addition to a fixed or guaranteed wage or salary, is entitled to a 13th month pay. For purposes of entitling rank and file employees a 13th month pay, it is immaterial whether the employees concerned are paid a guaranteed wage plus commission or a commission with guaranteed wage inasmuch as the bottom line is that they receive a guaranteed wage. This is correctly construed in the MOLE Explanatory Bulletin No. 86-12.

In the case at bench, while the bus drivers and conductors of respondent company are considered by the latter as being compensated on a commission basis, they are not paid purely by what they receive as commission. As admitted by respondent company, the said bus drivers and conductors are automatically entitled to the basic minimum pay mandated by law in case the commissions they earned be less than their basic minimum for eight (8) hours work. Evidently therefore, the commissions form part of the wage or salary of the bus drivers and conductors. A contrary interpretation would allow an employer to skirt the law and would result in an absurd situation where an employee who receives a guaranteed minimum basic pay cannot be entitled to a 13th month pay simply because he is technically referred to by his employer per the CBA as an

125

employee compensated on a purely commission basis. Such would be a narrow interpretation of the law, certainly not in accord with the liberal spirit of our labor laws. Moreover, what is controlling is not the label attached to the remuneration that the employee receives but the nature of the remuneration 7 and the purpose for which the 13th month pay was given to alleviate the plight of the working masses who are receiving low wages. 

Commission is the recompense, compensation, reward of an employee, agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit of the principal.  While said commissions may be in the form of incentives or encouragement to inspire said bus drivers and conductors to put a little more zeal and industry on their jobs, still, it is safe to say that the same are direct remunerations for services rendered, given the small remuneration they receive for the services they render,  which is precisely the reason why private respondent allowed the drivers and conductors a guaranteed minimum wage. The conclusion is ineluctable that said commissions are part of their salary. In Philippine Duplicators, Inc. v. National Labor Relations Commission, we had the occasion to estate that:

. . . Article 97 (f) of the Labor Code defines the term "wage" (which is equivalent to "salary," as used in P.D. No. 851 and Memorandum Order No. 28) 

In sum, the 13th month pay of the bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commissions be less than the statutory minimum, and commissions only in case where the same is over and above the statutory minimum, must be equivalent to one-twelfth (1/12) of their total earnings during the calendar year.

WHEREFORE, the petition is hereby GRANTED.

PHILIPPINE DUPLICATORS v. NLRC

FACTS: Petitioner Corporation pays its salesmen a small fixed or guaranteed wage; the greater part of the latter’s wages or salaries being composed of the sales or incentive commissions earned on actual sales of duplicating machines closed by them. Thus the sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of the Philippine Duplicators for doing their job.

The Labor Arbiter directed Petitioner Duplicators to pay 13th month pay to private respondent employees computed on the basis of their fixed wages plus sales commission.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 (Revised Guidelines Implementing 13th Month Pay) provides that overtime pay, earning and

126

other remuneration which are not part of the basic salary shall not be included in the computation of the 13th month pay.

Petitioner Corporation contends that their sales commission should not be included in the computation of the 13th month pay invoking the consolidated cases of Boie-Takeda Chemicals, Inc. vs Hon. Dionisio dela Serna and Philippine Fuji Xerox Corp. vs Hon. Crecencio Trajano, were the so-called commissions of medical representatives of Boie-Takeda Chemicals and rank-and-file employees of Fuji Xerox Co. were not included in the term “basic salary” in computing the 13th month pay.

ISSUE: Whether sales commissions comprising a pre-determined percent of the selling price of the goods are included in the computation of the 13th month pay.

Whether Productivity bonus shall be considered as part of wages in 13th month pay

HELD: YES. The sales commissions were an integral part of the basic salary structure of Philippine Duplicators' employees salesmen. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term "basic salary" for purposes of computing their 13th month pay.

The commissions were an integral part of the pay of the workers, considering that the fixed wage was only 30% of what they were normally receiving.

NO. Productivity bonuses are generally tied to the productivity, or capacity for revenue production, of a corporation; such bonuses closely resemble profit-sharing payments and have no clear director necessary relation to the amount of work actually done by each individual employee. More generally, a bonus is an amount granted and paid ex gratia to the employee; its payment constitutes an act of enlightened generosity and self-interest on the part of the employer, rather than as a demandable or enforceable obligation. Since productivity bonus is not demandable, then it cannot be considered part of basic salary when time comes to compute 13th month pay.

Additional payments made to employees, to the extent they partake of the nature of profit-sharing payments, are properly excluded from the ambit of the term "basic salary" for purposes of computing the 13th month pay due to employees. Such additional payments are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised Guidelines Implementing13th Month Pay.

The Supplementary Rules and Regulations Implementing P.D. No.851 subsequently issued by former Labor Minister Ople sought to clarify the scope of items excluded in the computation of the 13thmonth pay; viz.:

127

Sec. 4. Overtime pay, earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th month pay.

PHILIPPINE AIRLINES, INC. v. NLRC

FACTS: ALPAP filed its complaint 2 on September, 1991, charging PAL of violating Presidential Decree No. 851, its Implementing Rules and Regulations and Memorandum Order No. 28 issued by then President Corazon C. Aquino, for unlawfully refusing and failing to pay the pilots their thirteenth month pay from 1988 to 1990. Aside from their accumulated thirteenth month pay, ALPAP prayed for an award of P500,000.00 as moral damages and P100,000.00 as exemplary damages to each of their pilots, plus attorney's fees equivalent to ten percent (10%) of the total awards adjudged. Subsequently, however, ALPAP expanded the coverage of its claim from1986 to 1990 upon filing its position paper.

In answer to the complaint, PAL denied any liability to ALPAP and maintained that it was not obliged to give its pilots a thirteenth month pay under P.D. 851 as it was already paying said employees the equivalent of a thirteenth month pay in the form of a year-end bonus. PAL invokes that under Section 2 of PD 851 and its Implementing Rules and Regulations, "employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance," are not covered by PD 851. Additionally, PAL contends that there is no demandable obligation in the absence of any contractual stipulation or a legal provision requiring it to give its pilots a thirteenth month pay as aside from a year-end bonus that the latter are already receiving.

FACTS (NET) : Refusing to pay its pilots their thirteenth month pay for unfair labor practice was filed against Philippine Airlines by the Airline Pilots Association of the Philippines. The Labor Arbiter ruled in favor of ALPAP and ordered PAL to pay its pilots belonging to ALPAP their thirteenth month pay from 1988 to1990. Disputing PAL's contention, ALPAP argued that the payment of the year-end bonus cannot be equated within the thirteenth month pay since the payment of the former is conditional in character and not fixed in its amount, while that of the thirteenth month pay is mandatory in character and definite in its. Both parties appealed to the National Labor Relations Commission which in turn affirmed with modifications the decision of the Labor Arbiter.

ISSUE: Whether PAL is obligated to pay the 13th month pay of the pilots having no provision in the CBA of ALPAP.

HELD: YES. The absence of an express provision in the CBA between PAL and ALPAP obligating the former to pay the members of the latter a thirteenth month pay is immaterial. It cannot be disputed that the tenor of P.D. 851 as amended by Memorandum Order No. 28 is mandatory in so providing that "all employers are hereby required to pay all their rank and file employees a thirteenth month pay not later than

128

December 24 of every year." Non-compliance with this mandate cannot be excused by the simple expedient of pointing to the absence of a similar provision in the CBA for this would contravene the basic rule that an existing law enters into and forms part of a valid contract without the need for the parties to expressly make reference to it. Not withstanding therefore the absence of any contractual agreement, the payment of a thirteenth month pay being a statutory grant, compliance with the same is mandatory and is deemed incorporate in the CBA.

FRAMANLIS FARMS, INC. v. MINISTER OF LABOR

FACTS: 18 Employees of the petitioners filed against their employer and the other petitioners 2 labor standard cases in the RTC alleging that they were not paid emergency cost of living allowance(ECOLA), minimum wage 13 th month pay, holiday pay, and service incentive leave pay.

Petitioners, in an answer to the amended complaint, alleged that (1) the private respondents were not regular workers, but were migratory (sacadas) or pakyaw workers who were hired seasonally, or only during the milling season, to so piece-of work on the farms, hence they were not entitled to benefits being claimed, (2) they applied for an exception to pay for the living allowance although the MOLE has no ruling yet.

The claims for holiday pay, service incentive pay, social amelioration bonus and underpayment of minimum wage were not controverted. On the other claims, the petitioners submitted only random payrolls which showed that the women workers were, although the male workers received P10 more or less, per day.

In an Order, the Minister of Labor (MOLE), through Assistant Regional Director Dante Ardivilla, adopting there commendations of the Chief of the Labor Regulation Section,Bacolod District Office, directed the respondents (now petitioners) to pay: (1) deficiency payments under PD 925,PD1614 , under Ministry Order No. 5, under PD 1678, service incentive leave pay, holiday pay and social amelioration bonus and 13 th

month pay and emergency living allowance under PD1123.

Upon the petitioners' appeal of that Order, the Deputy MOLE modified it ordering the employer to all non-pakyaw workers their claim for holiday and incentive leave pay, their 13thmonth pay, pay differentials and ECOLA excluding the pakyaw workers from holiday and service incentive leave pay.

Framanlis filed for MFR, which was denied hence, this petition for certiorari.

ISSUE: Whether benefits in form of food and electricity are equivalent to the 13 th month pay

HELD: NO. In 1976, PD No. 928 fixed a minimum wage of P7.00 for agricultural workers in any plantation or agricultural enterprise irrespective of whether or not the

129

worker was paid on a piece-rate basis. However, effective July 1, 1978, the minimum wage was increased to P8.00 (Sec. 1, PD 1389). Subsequently, PD 1614 provided for a P2.00 increase in the daily wage of all workers effective April 1, 1979. The petitioners admit that those were the minimum rates prevailing then. Therefore, the respondent Minister did not err in requiring the petitioners to pay wage differentials to their pakyaw workers who worked for at least eight hours daily and earned less than P8.00 per day in 1978 to 1979.

With regard to the 13th month pay, petitioners admitted that they failed to pay their workers 13th month pay in 1978 and 1979. However, they argued that they substantially complied with the law by giving their workers a yearly bonus and other non-monetary benefits amounting to not less than 1/12th of their basic salary, in the form of:

1. a weekly subsidy of choice pork meat for only P9.00 per kilo and later increased to P11 per kilo in March 1980, instead of the market price of P10 to P15 per kilo;

2. free choice pork meat in May and December of every year; and

3. free light or electricity.

4. all of which were allegedly "the equivalent" of the 13th month pay.

Unfortunately, under Section 3 of PD No. 851, such benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the 13th month pay required by law. PD 851 provides:

Section 3. Employees covered — The Decree shall apply to all employees except to:

x x x. x x x x x x

The term 'its equivalent' as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits.

Where an employer pays less than 1/12 of the employee's basic salary, the employer shall pay the difference."

Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay. Section 10 of the Rules and Regulations Implementing Presidential Decree No. 851 provides:

130

Section 10. Prohibition against reduction or elimination of benefits-Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way, supplements, or other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this issuance."

The failure of the Minister's decision to identify the pakyaw and non-pakyaw workers does not render said decision invalid. The workers may be identified or determined in the proceedings for execution of the judgment.

WHEREFORE, the petition for certiorari is dismissed with costs against the petitioners.

SAN MIGUEL CORP. v. INCIONG

FACTS: Cagayan Coca-Cola Free Workers Union, private respondent herein, filed a complaint against San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein, alleging failure or refusal of the latter to include in the computation of 13th- month pay such items as sick, vacation or maternity leaves, premium for work done on rest days and special holidays, including pay for regular holidays and night differentials.

ISSUE: Whether the computation of the 13th month pay under PD 851,payments for sick, etc. should be considered.

PETITIONER’S CONTENTION: assails as erroneous the aforesaid order, ruling and opinions, vigorously contends that Presidential Decree 851 speaks only of basic salary as basis for the determination of the 13th-month pay; submits that payments for sick, vacation, or maternity leaves, night differential pay, as well as premium paid for work performed on rest days, special and regular holidays do not form part of the basic salary; and concludes that the inclusion of those payments in the computation of the 13th-month pay is clearly not sanctioned by Presidential Decree 851.

HELD: NO. Computations of the 13th month pay under PD 851 excludes from the basic salary all earnings and other remunerations paid by an employer to an employee.

Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay.

While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto

131

been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary.

The all-embracing phrase "earnings and other renumeration" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves. Maternity premium for works performed on rest days and special holidays pays for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month they, were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be Idle and with no purpose.

ULTRA VILLA FOOD HAUS v. GENISTON

FACTS: Private respondent Renato Geniston was employed by petitioner Ultra Villa Food House and/or its alleged owner Rosie Tio. Private respondent alleged that he was employed as a "do it all guy" acting as waiter, driver and maintenance man, in said restaurant. During the elections of May 11, 1992, private respondent acted as Poll Watcher. The counting of votes lasted until 3:00 p.m. the next day, May 12. Private respondent did not report for work on both days on account of his poll watching. As a result, his employment was terminated by petitioner Tio on the ground of abandonment. Private respondent filed a case of illegal dismissal against petitioners. Petitioner Tio maintained that private respondent was her personal driver, not an employee of Ultra Villa Food Haus and denied dismissing private respondent whom she claimed abandoned his job. The Labor Arbiter found that private respondent was indeed petitioner's personal driver. The Labor Arbiter concluded that private respondent, being a personal driver, was not entitled to overtime pay, premium pay, service incentive leave and 13th month pay. On appeal, the NLRC reversed the decision of the labor arbiter and ordered therein statement of private respondent and payment of backwages, overtime pay, premium pay for holiday and rest days, etc. The NLRC also granted private respondent separation pay in lieu of reinstatement on account of the establishment's closure but denied his prayer for moral, actual and exemplary damages, and attorney's fees. Petitioner moved for reconsideration but was denied.

ISSUE: Whether private respondent was an employee of the Ultra Villa Food Haus or the personal driver of petitioner.

HELD: PERSONAL DRIVER. We find that private respondent was indeed the personal driver of petitioner, and not an employee of the Ultra Villa Food Haus. There is substantial evidence to support such conclusion, namely:

(1) Private respondent's admission during the mandatory conference that he was petitioner's personal driver. 7

132

(2) Copies of the Ultra Villa Food Haus payroll which do not contain private respondent's name. 

(3) Affidavits of Ultra Villa Food Haus employees attesting that private respondent was never an employee of said establishment. 

(4) Petitioner Tio's undisputed allegation that she works as the branch manager of the CFC Corporation whose office is located in Mandaue City. This would support the Labor Arbiter's observation that private respondent' position as driver would be "incongruous" with his function as a waiter of Ultra Villa Food Haus. 

(5) The Joint Affidavit of the warehouseman and warehouse checker of the CFC Corporation stating that:

Renato Geniston usually drive[s] Mrs. Tio from her residence to the office. Thereafter, Mr. Geniston will wait for Mrs. Tio in her car. Most of the time, Renato Geniston slept in the car of Mrs. Tio and will be awakened only when the latter will leave the office for lunch.

Mr. Geniston will again drive Mrs. Tio to the office at around 2:00 o'clock in the afternoon and thereafter the former will again wait for Mrs. Tio at the latter's car until Mrs. Tio will again leave the office to make her rounds at our branch office at the downtown area. 

Accordingly, the terms and conditions of private respondent's employment are governed by Chapter III, Title III, Book III of the Labor Code as well as by the pertinent provisions of the Civil Code.  Thus, Article 141 of the Labor Code provides:

Art. 141. Coverage. — This Chapter shall apply to all persons rendering services in households for compensation.

Domestic or household service" shall mean services in the employers home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employers household, including services of family drivers. (Emphasis supplied.)

Chapter III, Title III, Book III, however, is silent on the grant of overtime pay, holiday pay, premium pay and service incentive leave to those engaged in the domestic or household service.

Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the Labor Code,  and Article 82, which defines the scope of the application of these provisions, expressly excludes domestic helpers from its coverage:

133

Art. 82. Coverage. — The provision of this title shall apply to employees in all establishments and undertakings whether for profit or not; but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. (Emphasis supplied.)

The limitations set out in the above article are echoed in Book III of the Omnibus Rules Implementing the Labor Code. 

Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits.

Employing the same line of analysis, it would seem that private respondent is not entitled to 13th month pay. The Revised Guidelines on the Implementation of the 13th Month Pay Law also excludes employers of household helpers from the coverage of Presidential Decree No. 851.

ALLIANCE OF GOVERNMENT WORKERS v. NLRC – mahaba, basahin n lng.. kakatamad

ARCHILLES MANUFACTURING CORPORATION v. NLRC

FACTS: Archilles Manufacturing Corporation (ARCHILLES for brevity), Alberto Yu and Adrian Yu are the petitioners, the latter two (2) being the Chairman and the Vice-President of ARCHILLES, respectively. Private respondents Geronimo Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin Rindon were employed by ARCHILLES as laborers in its steel factory located in Barangay Pandayan, Meycauayan, Bulacan, each receiving a daily wage of P96.00. 1

ARCHILLES was maintaining a bunkhouse in the work area which served as resting place for its workers including private respondents. In 1988 a mauling incident nearly took place involving a relative of an employee. As a result ARCHILLES prohibited its workers from bringing any member of their family to the bunkhouse. But despite this prohibition, private respondents continued to bring their respective families to the bunkhouse, causing annoyance and discomfort to the other workers. This was brought to the attention of ARCHILLES.

On 11 May 1990 the management ordered private respondent to remove their families from the bunkhouse and to explain their violation of the company rule. Private respondents remove their families from the premises but failed to report to the management as required; instead, they absented themselves from 14 to 18 May 1990. Consequently, on 18 May 1990, ARCHILLES terminated their employment for

134

abandonment and for violation of the company rule regarding the use of the bunkhouse. 

Private respondents filed a complaint for illegal dismissal. On 10 July 1991 the Labor Arbiter found the dismissal of private respondents illegal and ordered their reinstatement as well as the payment to them the backwages, proportionate 13th month pay for the year 1990 and attorney'sfees.

ISSUE: Whether dismissal for cause results in the forfeiture of the employee's right to a 13th month pay

HELD: YES. On the second issue, which refers to the propriety of the award of a 13th month pay, paragraph 6 of the Revised Guidelines on the Implementation of the 13th Month Pay Law (P. D. 851) provides that "(a)n employee who has resigned or whose services were terminated at any time before the payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year up to the time of his resignation or termination from theservice . . . The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee relationship. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship."

Furthermore, Sec. 4 of the original Implementing Rules of P.D. 851 mandates employers to pay their employees a 13th month pay not later than the 24th of December every year provided that they have worked for at least one (1) month during a calendar year. In effect, this statutory benefit is automatically vested in the employee who has at least worked for one month during the calendar year. As correctly stated by the Solicitor General, such benefit may not be lost or forfeited even in the event of the employee's subsequent dismissal for cause without violating his property rights.

LUZON STEVEDORING CORP. v. CIR – sobrang haba ng facts!!!!!!

BUSINESS INFORMATION SYSTEMS AND SERVICES, INC. v. NLRC

FACTS: BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its creditors, the Development Bank of the Philippines (DBP) and the Asset Privatization Trust (APT), took possession of its assets, including a manufacturing plant in Marilao, Bulacan.

135

As a retrenchment measure, some plant employees, including the private respondents, were laid off on May 16, 1988, after prior notice, and were paid separation pay equivalent to one-half (1/2) month pay for every year of service. Upon receipt of their separation pay, the private respondents signed individual releases and quitclaims in favor of BSSI.

BSSI retained some employees in an attempt to rehabilitate its business as a trading company.

However, barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether. Unlike the private respondents, that batch of employees received separation pay equivalent to a full month's salary for every year of service plus mid-year bonus.

Protesting against the discrimination in the payment of their separation benefits, the twenty-seven (27) private respondents filed three (3) separate complaints against the BSSI and Raul Locsin. These cases were later consolidated.

ISSUE: Whether respondents can claim mid-year bonus

HELD: NO. With regard to the private respondents' claim for the mid-year bonus, it is settled doctrine that the grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC, 189 SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. The fact that the company's business was no longer profitable (it was in fact moribund) plus the fact that the private respondents did not work up to the middle of the year (they were discharged in May 1988) were valid reasons for not granting them a mid-year bonus. Requiring the company to pay a mid-year bonus to them also would in effect penalize the company for its generosity to those workers who remained with the company till the end" of its days. (Traders Royal Bank vs. NLRC, supra.) The award must therefore be deleted.

MARCOS v. NLRC

FACTS: Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but they were dismissed on November 1, 1990 when their positions were declared redundant. A special redundancy benefit was paid to them, which included payment of accrued vacation leave and fifty percent (50%) of unused current sick leave, special redundancy benefit, equivalent to three (3) months salary for every year of service; and additional cash benefits, in lieu of other benefits provided by the company or required by law. 

Before the termination of their services, petitioner Marcos had been in the employ of private respondent for more than twenty (20) years, from August 26, ]970; petitioner Andrada, more than twenty-five (25) years, from July 26, 1965; petitioner Lopez, exactly

136

thirty (30) years, from October 31, 1960; and petitioner Cruz, more than twenty (20) years, from March 1, 1970. 

Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to respondent company questioning the redundancy package, She claimed that they should receive their respective service awards and other prorated bonuses which they had earned at the time they were dismissed. In addition, Lopez argued that "the cash service awards have already been budgeted in a fund distinct and apart from redundancy fund. 

Thereafter, private respondent required petitioners to execute a "Release and Quitclaim,"  and petitioners complied but with a written protest reiterating their previous demand that they were nonetheless entitled to receive their service awards.

approved the grant of an anniversary bonus equivalent to one (1) month salary only to permanent and probationary employees as of November 15, 1990. 

On March 26, 1991, respondent company announced the grant of performance bonus to both rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2) months salary and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus, however, would be given only to permanent employees as of March 30, 1991. 

Despite the aforequoted opinion of the Department of Labor and Employment, private respondent refused to pay petitioners service awards. This prompted the latter to file a consolidated complaint, which was assigned to NLRC Labor Arbiter Lopez, for payment of their service awards, including performance and anniversary bonuses.

ISSUE: Whether petitioners are not entitled to payment of service awards and other bonuses

HELD: NO. The grant of service awards in favor of petitioners is more importantly underscored in the precedent case of Insular Life Assurance Co., Ltd., et al. vs. NLRC, et al.,  where this Court ruled that "as to the service award differentials claimed by some respondent union members, the company policy shall likewise prevail, the same being based on the employment contracts or collective bargaining agreements between the parties. As the petitioners had explained, pursuant to their policies on the matter, the service award differential is given at the end of the year to an employee who has completed years of service divisible by 5.

A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what would ordinarily be given.  The term "bonus" as used in employment contracts, also conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage which the employer agrees to pay.

137

While there is a conflict of opinion as to the validity of an agreement to pay additional sums for the performance of that which the promisee is already under obligation to perform, so as to give the latter the right to enforce such promise after performance, the authorities hold that if one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity.

This is true if the contract contemplates a continuance of the employment for a definite term, and the promise of the bonus is made at the time the contract is entered into. If no time is fixed for the duration of the contract of employment, but the employee enters upon or continues in service under an offer of a bonus if he remains therein for a certain time, his service, in case he remains for the required time, constitutes an acceptance of the offer of the employer to pay the bonus and, after that acceptance, the offer cannot be withdrawn, but can be enforced by the employee. 

The weight of authority in American jurisprudence, with which we are persuaded to agree, is that after the acceptance of a promise by an employer to pay the bonus, the same cannot be withdrawn, but may be enforced by the employee. However, in the case at bar, equity demands that the performance and anniversary bonuses should be prorated to the number of months that petitioners actually served respondent company in the year 1990. This observation should be taken into account in the computation of the amounts to be awarded to petitioners.

PHILIPPINE DUPLICATORS, INC. v. NLRC –o0o-

PRODUCERS BANK OF THE PHILIPPINES v. NLRC

FACTS: The present petition originated from a complaint filed by private respondent charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages.

On 31 March 1989, Labor Arbiter Nieves V. de Castro found private respondent's claims to be unmeritorious and dismissed its complaint. In a complete reversal, however, the NLRC4 granted all of private respondent's claims, except for damages.

Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC in a Resolution issued on 18 June 1991. Hence, recourse to this Court.

ISSUE: Whether petitioner can be compelled to pay the alleged bonus differentials regardless to its depressed financial condition as evidenced by the facts that it was placed under conservatorship by the Monetary Board.

138

HELD: NO. A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee.

However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for his past generosity.

It was established by the labor arbiter and the NLRC and admitted by both parties that petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section 28-A of Republic Act No. 265, as amended by Presidential Decree No. 72.

Under Section 28-A, the Monetary Board may place a bank under the control of a conservator when it finds that the bank is continuously unable or unwilling to maintain a condition of solvency or liquidity.

Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of petitioner's employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and restore the viability of the financially precarious bank. Ultimately, it is to the employees' advantage that the conservatorship achieve its purposes for the alternative would be petitioner's closure whereby employees would lose not only their benefits, but their jobs as well.

PHILIPPINE TELEGRAPH & TELEPHONE CO. v. NLRC

FACTS: PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman specifically as “Supernumerary Project Worker”, for a fixed period from November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on maternity leave. She was again invited for employment as replacement of Erlina F. Dizon who went on leave on 2 periods, from June 10, 1991 to July 1, 1991 and July 19, 1991 to August 8, 1991.

139

On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employee where probationary period will cover 150 days. She indicated in the portion of the job application form under civil status that she was single although she had contracted marriage a few months earlier. When petitioner learned later about the marriage, its branch supervisor, Delia M. Oficial, sent de Guzman a memorandum requiring her to explain the discrepancy. Included in the memorandum, was a reminder about the company’s policy of not accepting married women for employment. She was dismissed from the company effective January 29, 1992. Labor Arbiter handed down decision on November 23, 1993 declaring that petitioner illegally dismissed De Guzman, who had already gained the status of a regular employee. Furthermore, it was apparent that she had been discriminated on account of her having contracted marriage in violation of company policies.

ISSUE: Whether the alleged concealment of civil status can be grounds to terminate the services of an employee.

HELD: NO. Article 136 of the Labor Code, one of the protective laws for women,

explicitly prohibits discrimination merely by reason of marriage of a female employee.  It

is recognized that company is free to regulate manpower and employment from hiring to

firing, according to their discretion and best business judgment, except in those cases of

unlawful discrimination or those provided by law.

PT&T’s policy of not accepting or disqualifying from work any woman worker who

contracts marriage is afoul of the right against discrimination provided to all women

workers by our labor laws and by our Constitution.  The record discloses clearly that de

Guzman’s ties with PT&T were dissolved principally because of the company’s policy

that married women are not qualified for employment in the company, and not merely

because of her supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature adopted by PT&T.  As

stated in the labor code: 

“ART. 136. Stipulation against marriage. — It shall be unlawful for an employer to

require as a condition of employment or continuation of employment that a woman shall

not get married, or to stipulate expressly or tacitly that upon getting married, a woman

employee shall be deemed resigned or separated, or to actually dismiss, discharge,

discriminate or otherwise prejudice a woman employee merely by reason of marriage.”

140

The policy of PT&T is in derogation of the provisions stated in Art.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 and it likewise is contrary to good morals and public

policy, depriving a woman of her freedom to choose her status, a privilege that is

inherent in an individual as an intangible and inalienable right.  The kind of policy

followed by PT&T strikes at the very essence, ideals and purpose of marriage as an

inviolable social institution and ultimately, family as the foundation of the nation.  Such

policy must be prohibited in all its indirect, disguised or dissembled forms as

discriminatory conduct derogatory of the laws of the land not only for order but also

imperatively required.

LIBRES v. NLRC

FACTS: Petitioner Libres was an Assistant Manager at National Steel Corp.

In August, 1993, he received a Notice of investigation requesting him to submit a written explanation regarding the charge of sexual harassment made by Capiral, Hynson’s (his boss) secretary, and warned him that failure to file this would be construed as a waiver of his right to be heard.

He submitted his explanation, denying the accusation, offering to submit himself for clarificatory interrogation.

Hynson conducted an internal investigation, letting Libres and Capiral provide their sides of the issue.

Hynson Jr. submitted his report to the Management Evaluation Committee (MEC). The MEC concluded that the charges against petitioner constituted a violation of the Plant's Rules and Regulations. It opined that "touching a female subordinate's 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 petitioner's acts clearly constituted sexual harassment as charged and recommended petitioner's suspension for thirty (30) days without pay.

Libres filed a complaint for illegal suspension and unjust discrimination against respondent NSC and its officers, private respondents herein, before the Labor Arbiter. The Labor Arbiter found that aside from a few facts which were controverted by Capiral in her complaint-affidavit, petitioner’s admissions approximated the truth; consequently, he ruled that the MEC was correct in including that sexual harassment had indeed

141

transpired.  The Labor Arbiter observed that petitioner should welcome that his penalty was only for suspension of thirty (30) days as opposed to termination imposed in Villarama v. NLRC and Golden Donuts.[ Citing the failure of the MEC to grant him audience despite his offer to answer clarificatory questions, petitioner claimed denial of due process.

Petitioner primarily disputes the failure of the NLRC to apply RA No. 7877, "An Act Declaring Sexual Harassment Unlawful inthe 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 respondent's 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."

Petitioner questioned the set off since there was no call or notice for the payment of the unpaid subscription, and that the alleged obligation is not enforceable.

The 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 other due to petitioner is not contrary to law, morals, public policy

ISSUE:

1. Whether RA 7877 is applicable in this case (to determine whether he actually committed sexual harassment.)

2. Whether the delay in instituting the complaint shows that it was only an afterthought

3. Whether the requirements of due process were sufficiently complied with

HELD

1. NO

Reasoning

- 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 petitioner's case was decided by the Labor Arbiter. As a rule, laws shall have no retroactive effect unless otherwise provided, or except in a criminal case when their application will favor the accused. Hence, the Labor Arbiter have to rely on the MEC report and the common connotation of sexual harassment as it is generally as understood by the public. Faced

142

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.

2. NO

Reasoning-

it could be expected since Libres was Capiral's immediate superior. Fear of retaliation and backlash, not to forget the social humiliation and embarrassment that victims of this human frailty usually suffer, are all realities that Capiral had to contend with. Moreover, the delay did not detract from the truth derived from the facts. Petitioner Libres never questioned the veracity of Capiral's allegations. In fact his narration even corroborated the latter's assertion in several material points. He only raised issue on the complaint's protracted filing.

3. YES

Reasoning

- Due process as a constitutional precept does not always require a trial type proceeding. It is satisfied when a person is notified of the charge against him and given an opportunity to explain or defend himself. The essence is simply to be heard, an opportunity to seek a reconsideration of the action complained of. Petitioner was given a Notice of Investigation, he was asked to submit a a written explanation to his superior, he was allowed to air his grievance in a private session, and upon the release of the suspension order made by the MEC he was requested its reconsideration (but he was denied)- The personal confrontation with the MEC officers, which he requested, was not necessary, for they had already exhaustively presented their claims and defenses in differentfora. Litigants may be heard through pleadings, written explanations, position papers, memoranda or oral arguments(Howevers Savings and Loan Association v NLRC).

Disposition

petition is DISMISSED, no grave abuse of discretion having been committed by public respondent National Labor Relations Commission in upholding the suspension of petitioner Carlos G. Libres as justified and in accordance with due process. Consequently, its decision of 28August 1995 as well as its resolution of 31 October 1995 is AFFIRMED.

143

PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION v. NLRC

FACTS: Petitioner Philippine Aeolus Automotive United Corporation(PAAUC) is a corporation duly organized and existing under Philippine laws, petitioner Francis Chua is its President while private respondent Rosalinda C. Cortez was a company nurse of petitioner corporation until her termination on 7 November1994.

On 5 October 1994 a memorandum was issued by Ms. Myrna Palomares, Personnel Manager of petitioner corporation, addressed to private respondent Rosalinda C. Cortez requiring her to explain within forty-eight (48) hours why no disciplinary action should be taken against her (a) for throwing a stapler at Plant Manager William Chua, her superior, and uttering invectives against him on 2 August 1994; (b) for losing the amount of P1,488.00 entrusted to her by Plant Manager Chua to be given to Mr. Fang of the CLMC Department on 23 August1994; and, (c) for asking a co-employee to punch-in her timecard thus making it appear that she was in the office in the morning of 6 September 1994 when in fact she was not. The memorandum however was refused by private respondent although it was read to her and discussed with her by a co-employee. She did not also submit the required explanation, so that while her case was pending investigation the company placed her under preventive suspension for thirty (30) days effective 9 October 1994 to 7 November 1994.

On 20 October 1994, while Cortez was still under preventive suspension, another memorandum was issued by petitioner corporation giving her seventy-two (72) hours to explain why no disciplinary action should be taken against her for allegedly failing to process the ATM applications of her nine (9) co-employees with the Allied Banking Corporation. On 21 October1994 private respondent also refused to receive the second memorandum although it was read to her by a co-employee. A copy of the memorandum was also sent by the Personnel Manager to private respondent at her last known address by registered mail.

Meanwhile, private respondent submitted a written explanation with respect to the loss of the P1,488.00 and the punching-in of her time card by a co-employee.

On 3 November 1994 a third memorandum was issued to private respondent, this time informing her of her termination from the service effective 7 November 1994 on grounds of gross and habitual neglect of duties, serious misconduct and fraud or willful breach of trust.

On 6 December 1994 private respondent filed with the Labor Arbiter a complaint for illegal dismissal, non-payment of annual service incentive leave pay, 13th month pay and damages against PAAUC and its president Francis Chua.

144

LA rendered a decision holding the termination of Cortez as valid and legal, at the same time dismissing her claim for damages for lack of merit.

NLRC reversed the decision of the LA and found petitioner corporation guilty of illegal dismissal of private respondent Cortez.

ISSUES

1. Whether the NLRC gravely abused its discretion in holding as illegal the dismissal of private respondent

2. Whether she is entitled to damages in the event that the illegality of her dismissal is sustained

HELD

1. NO- Cortez claims that as early as her first year of employment her Plant Manager, William Chua, already manifested a special liking for her, so much so that she was receiving special treatment from him who would oftentimes invite her "for a date," which she would as often refuse. On many occasions, he would make sexual advances - touching her hands, putting his arms around her shoulders, running his fingers on her arms and telling her she looked beautiful. The special treatment and sexual advances continued during her employment for four (4) years but she never reciprocated his flirtations, until finally, she noticed that his attitude towards her changed. He made her understand that if she would not give in to his sexual advance she would cause her termination from the service; and he made good his threat when he started harassing her. She just found out one day that her table which was equipped with telephone and intercom units and containing her personal belongings was transferred without her knowledge to a place with neither telephone nor intercom, for which reason, an argument ensued when she confronted William Chua resulting in her being charged with gross disrespect.

The Supreme Court, in a litany of decisions on serious misconduct warranting dismissal of an employee, has ruled that for misconduct or improper behavior to be a just cause for dismissal (a) it must be serious; (b) must relate to the performance of the employee’s duties; and, (c) must show that the employee has become unfit to continue working for the employer. The act of private respondent in throwing a stapler and uttering abusive language upon the person of the plant manager may be considered, from a lay man's perspective, as a serious misconduct. However, in order to consider it a serious misconduct that would justify dismissal under the law, it must have been done in relation to the

145

performance of her duties as would show her to be unfit to continue working for her employer. The acts complained of, under the circumstances they were done, did not in any way pertain to her duties as a nurse. Her employment identification card discloses the nature of her employment as a nurse and no other. Also, the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her as a nurse.

2. YES- The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of power by the employer.

Any employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee.

Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer's sexual impositions. Not many women, especially in this country, are made of the stuff that can endure the agony and trauma of a public, even corporate, scandal. If petitioner corporation had not issued the third memorandum that terminated the services of private respondent, we could only speculate how much longer she would keep her silence. Moreover, few persons are privileged indeed to transfer from one employer to another. The dearth of quality employment has become a daily "monster" roaming the streets that one may not be expected to give up one's employment easily but to hang on to it, so to speak, by all tolerable means. Perhaps, to private respondent's mind, for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere occupational hazards. This uneasiness in her place of work thrived in an atmosphere of tolerance for four (4) years, and one could only imagine the prevailing anxiety and resentment, if not bitterness, that beset her all that time. But William Chua faced reality soon enough. Since he had no place in private respondent's heart, so must she have no place in his office. So,he provoked her, harassed her, and finally dislodged her; and for finally venting her pent-up anger for years, he "found" the perfect reason to terminate her.

In determining entitlement to moral and exemplary damages, we restate the bases therefor. In moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, be smirched reputation and social humiliation by reason of the act complained of.22 [Art. 2217, New Civil Code of the Philippines.] Exemplary damages, on the other hand, are granted in addition to, inter alia, moral damages "by way of example or correction for the public good"23 [Art. 2229, id.] if the employer "acted in a wanton, fraudulent, reckless, oppressive or malevolent manner."24 [Art. 2232, id.]-

146

Anxiety was gradual in private respondent's five (5)-year employment. It began when her plant manager showed an obvious partiality for her which went out of hand when he started to make it clear that he would terminate her services if she would not give in to his sexual advances. Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an employee's spirit in her capacity for advancement. It affects her sense of judgment; it changes her life. If for this alone private respondent should be adequately compensated. Thus, for the anxiety, the seen and unseen hurt that she suffered, petitioners should also be made to pay her moral damages, plus exemplary damages, for the oppressive manner with which petitioners effected her dismissal from the service, and to serve as a forewarning to lecherous officers and employers who take undue advantage of their ascendancy over their employees.

Disposition

Decision of NLRC finding the dismissal of private respondent without just cause and ordering petitioners to pay her back wages computed from the time of her dismissal, which should be full back wages, is AFFIRMED. However, in view of the strained relations between the adverse parties, instead of reinstatement ordered by public respondent, petitioners should pay private respondent separation pay equivalent to one (1)month salary for every year of service until finality of this judgment. In addition, petitioners are ordered to pay private respondent P25,000.00 for moral damages and P10,000.00 for exemplary damages.

APEX MINING –o0o-

BARCENAS v. NLRC

FACTS: In 1978, Chua Se Su (Su for short) in his capacity as the Head Monk of the Buddhist Temple of Manila and Baguio City and as President and Chairman of the Board of Directors of the Poh Toh Buddhist Association of the Phils. Inc. hired the petitioner who speaks the Chinese language as secretary and interpreter. Petitioner's position required her to receive and assist Chinese visitors to the temple, act as tourist guide for foreign Chinese visitors, attend to the callers of the Head Monk as well as to the food for the temple visitors, run errands for the Head Monk such as paying the Meralco, PLDT, MWSS bills and act as liaison in some government offices. Aside from her pay and allowances under the law, she received an amount of P500.00 per month plus free board and lodging in the temple. In December, 1979, Su assumed the responsibility of paying for the education of petitioner's nephew. In 1981, Su and petitioner had amorous relations. In May, 1982, of five months before giving birth to the alleged son of Su on October 12, 1982, petitioner was sent home to Bicol. Upon the death of Su in July, 1983, complainant remained and continued in her job. In 1985,

147

respondent Manuel Chua (Chua, for short) was elected President and Chairman of the Board of the Poh Toh Buddhist Association of the Philippines, Inc. and Rev. Sim Dee for short) was elected Head Buddhist Priest. Thereafter, Chua and Dee discontinued payment of her monthly allowance and the additional P500.00 effective 1983. In addition, petitioner and her son were evicted forcibly from their quarters in the temple by six police officers. She was brought first to the Police precinct in Tondo and then brought to Aloha Hotel where she was compelled to sign a written undertaking not to return to the Buddhist temple in consideration of the sum of P10,000.00. Petitioner refused and Chua shouted threats against her and her son. Her personal belongings including assorted jewelries were never returned by respondent Chua.

Chua and DEE on the other hand, claimed that petitioner was never an employee of the Poh Toh Temple but a servant who confined herself to the temple and to the personal needs of the late Chua Se Su and thus, her position is coterminous with that of her master.

ISSUE: Whether petitioner was a regular employee of the Manila Buddhist Temple or a servant

HELD: REGULAR EMPLOYEE. At the outset, however, We agree with the petitioner's claim that she was a regular employee of the Manila Buddhist Temple as secretary and interpreter of its Head Monk, Su As Head Monk, President and Chairman of the Board of Directors of the Poh Toh Buddhist Association of the Philippines, Su was empowered to hire the petitioner under Article V of the By-laws of the Association.

Moreover, the work that petitioner performed in the temple could not be categorized as mere domestic work. Thus, We find that petitioner, being proficient in the Chinese language, attended to the visitors, mostly Chinese, who came to pray or seek advice before Buddha for personal or business problems; arranged meetings between these visitors and Su and supervised the preparation of the food for the temple visitors; acted as tourist guide of foreign visitors; acted as liaison with some government offices; and made the payment for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks may not be deemed activities of a household helper. They were essential and important to the operation and religious functions of the temple.

BERNARDO v. NLRC - walang kopya ng case

FACTS:

COCOFED v. TRAJANO – read the case again to full understand

148

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 was issued: requiring petitioner to effect restitution or correction within five (5) days from notice.

Summary Petitioner submitted its position paper claiming that it should be classified as an establishment with less than 30 employees and with a paid-up capital of P500,000.00 or less a evidenced by the assessment of the municipal treasurer. Moreover, complainants worked for less than eight hours, a minimum of four and maximum of six. A three (3) year actual payrolls from March 1985 to February 1989 showing the daily actual payment made by the respondent to involved workers are substantial evidence against the mere memorandum issued by the respondents on the matter. Further, such payrolls submitted by respondents are not mere summaries of daily efforts of workers but these are daily records showing workers actual daily rate.

ISSUE: Whether public respondents committed grave abuse of discretion in not categorizing it as an establishment with less than 30 employees and not finding that complainants are piece rate workers or paid by results.

HELD: NO. The SC find no grave abuse of discretion on the part of public respondents.

Petitioner would have us overturn the factual finding of public respondents that its employees aredaily paid workers. This we are unable to do for the payrolls submitted by it support the latters' position. Findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but finality. Moreover, there is absolutely nothing in the records which show that petitioner's employees worked for less than eight hours. Finally, there would have been no need for petitioner to make an offer increasing the wage to P45.00 per day if complainants were indeed piece rate workers, as it claimed and if their wages were not underpaid, as found by public respondents. The petition is DISMISSED.

149

ASSIGNED CASES

GUICO, JR. v. QUISUMBING

FACTS: The case started when the Office of the Regional Director, Department of Labor and Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized representative under Article 128 of the Labor Code, as amended, inspections were conducted at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following violations involving twenty-one (21) employees who are copier operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no service incentive leave with pay. 

The first hearing of the case was held on June 14, 1995, where petitioner was represented by Joseph Botea, Officer-in-Charge of the Dagupan City outlets, while the 21 employees were represented by Leilani Barrozo, Gemma Gales, Majestina Raymundo and Laureta Clauna. It was established that a copier operator was receiving a daily salary ranging from P35.00 to P60.00 plus commission of P20.00 per P500.00 worth of photocopying. There was also incentive pay of P20.00 per P250.00 worth of photocopying in excess of the first P500.00. 

On July 13, 1995, petitioner's representative submitted a Joint Affidavit signed and executed by the 21 employees expressing their disinterest in prosecuting the case and their waiver and release of petitioner from his liabilities arising from non-payment and underpayment of their salaries and other benefits. Individually signed documents dated December 21, 1994, purporting to be the employees' Receipt, Waiver and Quitclaim were also submitted. 

In the investigation conducted by Hearing Officer Adonis Peralta on July 21, 1995, the 21 employees claimed that they signed the Joint Affidavit for fear of losing their jobs. They added that their daily salary was increased to P92.00 effective July 1, 1995, but the incentive and commission schemes were discontinued. They alleged that they did not waive the unpaid benefits due to them. 

On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Order   favorable to the 21 employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated December 21 and 22, 1994, could not cause the dismissal of the labor standards case against the petitioner since the same were executed before the filing of the said case. Moreover, the employees repudiated said waiver and quitclaim. Second, he held that despite the salary increase granted by the petitioner, the daily salary of the employees was still below the minimum daily wage rate of P119.00 under Wage Order

150

No. RB-I-03. Thirdly, he held that the removal of the commission and incentive schemes during the pendency of the case violated the prohibition against elimination or diminution of benefits under Article 100 of the Labor Code, as amended.

ISSUE: Whether or not the Regional Director has jurisdiction over the instant labor standards case

HELD: YES. We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed out, this Court's ruling in Servando — that the visitorial power of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code, viz:

Art. 128 (b) — Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of the Code and other labor legislation based on the findings of the labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (Emphasis supplied.)

The records of the House of Representatives  show that Congressmen Alberto S. Veloso and Eriberto V. Loreto sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared that "this bill seeks to do away with the jurisdictional limitations imposed through said ruling (referring to Servando) and to finally settle any lingering doubts on the visitorial and enforcement powers of the Secretary of Labor and Employment."  Petitioner's reliance on Servando is thus untenable.

PETITIONER’s claim: petitioner alleged that the Regional Director has no jurisdiction over the instant case since the individual monetary claims of the 21 employees exceed

151

P5,000.00. He further argued that following Article 129 of the Labor Code, as amended, and Section 1, Rule IX of the Implementing Rules of Republic Act No. 6715, the jurisdiction over this case belongs to the Labor Arbiter, and the Regional Director should have indorsed it to the appropriate regional branch of the National Labor Relations Commission (NLRC). On the other hand, the respondent Secretary held that the jurisdictional limitation imposed by Article 129 on his visitorial and enforcement power under Article 128 (b) of the Labor Code, as amended, has been repealed by Republic Act No. 7730. He pointed out that the amendment "[n]otwithstanding the provisions of Article 129 and 217 of the Labor Code to the contrary" erased all doubts as to the amendatory nature of the new law, and in effect, overturned this Court's ruling in the case of Servando's Inc. v. Secretary of Labor and Employment.

PEOPLE v. SEŇORON

FACTS: At the consolidated hearing of the cases filed against appellant, complainants Cesar Virtucio, Ronilo Bueno and Greg Corsega testified for the prosecution. Bueno, Virtucio and Corcega uniformly testified that before the filing of Illegal Recruitment and Estafa cases against Aquilino Ilano, John Doe and appellant before the National Bureau of Investigation, they (Bueno, Virtucio and Corcega) asked for the return of their money. Consequently, appellant issued Interbank Check No. 05263108 in the amount of P135,000.00 in words but P130,000.00 in figures. They also testified that the amount covers the payment given by nine (9) applicants including complainants (tsn, May 27, 1993, p. 16 and tsn, June 30, 1993, pp. 33 to 34). However, Interbank Check No. 05263108 was never encashed as an inquiry from the bank revealed that the check was not sufficiently funded (ibid., p. 38).

The prosecution presented as its last witness Socorro Landas, an employee of the Philippine Overseas Employment Administration (POEA), who testified that appellant is not licensed by the Philippine Overseas Employment Administration to be a recruiter (tsn, February 11, 1993, pp. 2 to 5). 

On the other hand, as lone witness for her defense, accused EDITHA SEÑORON, testified that she only met the private complainants at the National Bureau of Investigation on September 1993, that she has nothing to do with the receipts of payment to Greg Corsega; and Cesar Virtucio which receipts were signed by Aquilino Ilano. She admitted having issued check No. 05263108 (Exh. C) just to accommodate co-accused Aquilino Ilano who promised that he will be the one to put funds on said check.

At the outset, the Court observes that appellant confines her appeal to her conviction for illegal recruitment as she neither questioned nor assailed her convictions for the three (3) counts of estafa. The failure to appeal therefrom rendered the estafa convictions final and executory; hence, this review shall be limited to the illegal recruitment case.

152

In essence, the centerpiece of appellant's defense dwells on the alleged insufficiency of the prosecution's evidence to prove her guilt as "[t]here is nothing on record . . . which says that placement fees received by Aquilino Ilano from the three (3) private complainants was turned over to [her]".  Appellant asserts that she never issued or signed any receipts and that as a matter of fact "[t]he receipts of payment of alleged placement fees were received and receipted by accused Aquilino Ilano."   Appellant also harps on her being a mere accommodation party in the issuance of the Interbank Check in the amount of P135,000.00 and "that after the check bounced", she contends that "no notice whatsoever was given to [her]". Thus, appellant concludes that the prosecution failed to discharge its burden of proof thereby necessitating her acquittal.

HELD: We are not persuaded.

Illegal recruitment is defined under Article 38 (a) of the Labor Code, as amended, as "(a)ny recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority." Article 13 (b) of the Code defines "recruitment and placement" as

[A]ny 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.

To prove illegal recruitment, two elements must be shown namely: (1) the person charged with the crime must have undertaken recruitment activities, or any of the activities enumerated in Article 34 of the Labor Code, as amended; and (2) said person does not have a license or authority  to do so. Contrary to appellant's mistaken notion, therefore, it is not the issuance or signing of receipts for the placement fees that makes a case for illegal recruitment, but rather the undertaking of recruitment activities without the necessary license or authority. And in this case, evidence on record belie appellant's assertion that she did not engage in any recruitment activity and that the fees paid by the applicants were not turned over to her possession as shown by the following testimony of private complainant Virtucio.

Appellant made a distinct impression that she had the ability to send applicants for work abroad. She, however, does not possess any license or authority to recruit which fact was confirmed by the duly authenticated certification issued by the Manager of the Licensing Branch of the POEA, and by the testimony of Ms. Socorro Landas representing the Licensing Division of the Philippine Overseas Employment Administration (POEA). It is the lack of necessary license or authority that renders the recruitment activity, as in this case, unlawful or criminal.

153

PEOPLE v. SAULO

FACTS: Romulo Saulo, together with Amelia and Clodualo de la Cruz, were charged with violation of A38 of the Labor Code for illegal recruitment in large scale.

From April to May 1990, the three accused falsely represented themselves to have the capacity to contract, enlist and recruit workers for employment abroad. They promised job placements to Maullon, Maligaya and Javier without first securing the required license or authority from DOLE. In addition, the three were also charged with three counts of estafa.

Maligaya had learned from a relative of Saulo that the latter was recruiting workers for Taiwan. He, along with Maullon and Javier, went to visit Saulo in Saulo’s San Francisco del Monte home. Saulo told Maligaya that she could leave for Taiwan as soon as she paid the fees for the processing of documents.

Saulo pleaded not guilty to the charges against him. Amelia and Clodualdo still remain at large. Saulo was eventually found guilty of three counts of estafa and illegal recruitment.

- Petitioners’ Claim:

> Maligaya paid P35,000 evidenced by a receipt dated May 21,1990. Javier was also told to pay the same amount but she gave an initial amount of P20,000. She did not ask for a receiptsince she trusted Saulo. Maullo was told to pay P30,000 as processing fee for work in Taiwan. Maullon made an initial payment of P7,900 to Saulo’s wife who issued him a receipt in turn. Maullon then made an additional payment of P6,800 in the presence of Amelia de la Cruz and another payment of P15,700 to Tumalig, a friend of Saulo, who also issued him another receipt. In all three instances, Saulo failed to deliver what he promised. The prosecution also presented a certification dated July 26, 1994 which stated that Saulo was not authorized by the POEA to recruit workers for overseas employment.

- Respondents’ Comments:

> Saulo interposes for his defense a claim that he was also applying for work abroad through Amelia de la Cruz which led him to meet the three complainants. They were all there to follow-up their applications and that he was also deceived by Amelia. He denied being an overseas recruiter nor an agent for one. He also denies receiving the abovementioned amounts from complainants. He could not have committed the crime because testimony from a POEA employee showed that licenses for recruitment are issued only to corporations and not to natural persons.

ISSUE: Whether the appeal of accused should be given merit

154

HELD: NO

Ratio

Recruitment under the Labor Code refers to “any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers and includes referrals, contract services, promising or advertising for employment locally or abroad, whether for profit or not; Provided, that any person or entity in which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement.”

Reasoning

- The essential elements of illegal recruitment in large scale areas follows:(a) the accused engages in the recruitment and placement of workers as defined under Art. 13(b) or in any of the enumerated prohibitions in Art. 31 of the Labor Code(b) the accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the securing of a license or an authority to recruit and deploy workers whether locally or overseas(c) accused commits the same against three more persons individually or as a group.

Saulo proferred inadequate evidence to prove his innocence. Even if Saulo did not sign all the receipts presented by the complainants, it does not weaken the case in any way. A person charged with illegal recruitment may be convicted on the strength of the testimonies of the complainants, if found to be credible and convincing.

On the argument that licenses for recruitment are issued only to corporations, the Labor Code states 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.” A non licensee or non holder of authority is a person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor or whose license or recovery has been suspended, revoked or cancelled by the POEA. Agents or representatives appointed by a licensee or a holder of authority but whose appointments were not previously recognized by the POEA fall within the definition stated above.

Disposition

Judgment affirmed.

ROYAL CROWN INTERNATIONALE v. NLRC

FACTS: In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private respondent for employment with ZAMEL as an architectural draftsman in Saudi Arabia. On February 13, 1984, ZAMEL terminated the employment of private

155

respondent on the ground that his performance was below par. For three (3) successive days thereafter, he was detained at his quarters and was not allowed to report to work until his exit papers were ready. On February 16, 1984, he was made to board a plane bound for the Philippines. Private respondent then filed on April 23, 1984 a complaint for illegal termination against petitioner and ZAMEL. Based on a finding that petitioner and ZAMEL failed to establish that private respondent was terminated for just and valid cause, the Workers' Assistance and Adjudication Office of the POEA issued a decision ordering the former to pay, jointly and severally, the complainant. Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor Relations Commission (NLRC) which affirmed a decision of the Philippine Overseas Employment Administration (POEA) holding it liable to pay, jointly and severally with Zamel-Turbag Engineering and Architectural Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary and vacation pay corresponding to the unexpired portion of his employment contract with ZAMEL.

ISSUE:

I. Whether or not petitioner as a private employment agency may be held jointly and severally liable with the foreign-based employer for any claim which may arise in connection with the implementation of the employment contracts of the employees recruited and deployed abroad;

II. Whether sufficient evidence was presented by petitioner to establish the termination of private respondent's employment for just and valid cause.

HELD:

1. YES. In applying for its license to operate a private employment agency for overseas recruitment and placement, petitioner was required to submit, among others, a document or verified undertaking whereby it assumed all responsibilities for the proper use of its license and the implementation of the contracts of employment with the workers it recruited and deployed for overseas employment [Section 2(e), Rule V, Book1, Rules to Implement the Labor Code (1976)]. It was also required to file with the Bureau a formal appointment or agency contract executed by the foreign-based employer in its favor to recruit and hire personnel for the former, which contained a provision empowering it to sue and be sued jointly and solidarily with the foreign principal for any of the violations of the recruitment agreement and the contracts of employment [Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code (1976)].

2. NO. The NLRC upheld the POEA finding that petitioner's evidence was insufficient to prove termination from employment for just and valid cause. And a careful study of the evidence thus far presented by petitioner reveals to this Court that there is legal basis for public respondent's conclusion.

156

The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction in upholding the POEA's finding of insufficiency of evidence to prove termination for just and valid cause.

WHEREFORE, the Court Resolved to DISMISS the instant petition.

SEAGULL MARITIME CORP v. BALATONGAN

FACTS: On November 2, 1982, a "crew Agreement" was entered into by private respondent Nerry D. Balatongan and Philimare Shipping and Equipment Supply (hereinafter called Philimare) whereby the latter employed the former as able seaman on board its vessel "Santa Cruz"(renamed "Turtle Bay") with a monthly salary of US $ 300.00. Said agreement was processed and approved by the National Seaman's Board (NSB) on November 3, 1982. While on board said vessel the said parties entered into a supplementary contract of employment on December 6, 1982 which provides that the employer shall be obliged to insure the employee during his engagement against death or permanent invalidity caused by accident on board up to: US $40,000 - for death caused by accident and US $ 50,000 - for permanent total disability caused by accident.

On October 6, 1983 Balatongan met an accident in the Suez Canal, Egypt as a result of which he was hospitalized at the Suez Canal Authority Hospital. Later, he was repatriated to the Philippines and was hospitalized at the Makati Medical Center from October 23, 1983 to March 27, 1984. On August 19,1985 the medical certificate was issued describing his disability as "permanent in nature."Balatongan demanded payment for his claim for total disability insurance in the amount of US $ 50,000.00 as provided for in the contract of employment but his claim was denied for having been submitted to the insurers beyond the designated period for doing so.

Thus, Balatongan filed on June 21, 1985 a complaint against Philimare and Seagull Maritime Corporation (hereinafter called Seagull) in the Philippine Overseas Employment Administration(POEA) for non-payment of his claim for permanent total disability with damages and attorney's fees.

After the parties submitted their respective position papers with the corresponding documentary evidence, the officer-in-charge of the Workers Assistance and Adjudication Office of the POEA rendered a decision on May 2, 1986, the dispositive part of which reads as follows: respondents are hereby ordered to pay complainant representing permanent total disability insurance..

Seagull and Philimare appealed said decision to the National Labor Relations Commission(NLRC) on June 4, 1986. Pending resolution of their appeal because of the alleged transfer of the agency of Seagull to Southeast Asia Shipping Corporation, Seagull filed on April 28, 1987 a Motion For Substitution/Inclusion of

157

Party Respondent which was opposed by Balatongan. This was followed by an ex-parte motion for leave to file third party complaint on June 4, 1987 by Seagull.

ISSUE: Whether the respondent committed prohibited acts by altering or substituting employment contracts approved and verified by the Department of Labor.

HELD: Yes, it shall be unlawful for any individual, entity, licensee, or holder of authority to substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the period of expiration of the same without the approval of the Department of Labor. The supplementary contract of employment was entered into between petitioner and private respondent to modify the original contract of employment The reason why the law requires that the POEA should approve and verify a contract under Article 34 of the Labor Code is to insure that the employee shall not thereby be placed in a disadvantageous position and that the same are within the minimum standards of the terms and conditions of such employment contract set by the POEA.

GENERAL MILLING CORPORATION v. TORRES

FACTS: DOLE NCR issued Alien Employment Permit in favor of petitioner Earl Timothy Cone, a United States citizen, as sports consultant and assistant coach for GMC. GMC and Cone entered into a contract of employment whereby the latter undertook to coach GMC's basketball team. Board of Special Inquiry of the Commission on Immigration and Deportation approved petitioner Cone's application for a change of admission status from temporary visitor to prearranged employee.

On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment permit. GMC also requested that it be allowed to employ Cone as full-fledged coach. The DOLE Regional Director, Luna Piezas, granted the request. Alien Employment Permit was issued.

Private respondent Basketball Coaches Association of the Philippines ("BCAP") appealed the issuance of said alien employment permit to the respondent Secretary of Labor who issued a decision ordering cancellation of petitioner Cone's employment permit on the ground that there was no showing that there is no person in the Philippines who is competent, able and willing to perform the services required nor that the hiring of petitioner Cone would redound to the national interest.

ISSUE:

1. Whether Secretary of Labor gravely abused his discretion when he revoked petitioner Cone's alien employment permit.

158

2. Whether Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null and void as it is in violation of the enabling law as the Labor Code does not empower respondent Secretary to determine if the employment of an alien would redound to national interest.

HELD:

1. NO. Petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of respondent Secretary of Labor in rendering his decision, revoking petitioner Cone's Alien Employment Permit.

The alleged failure to notify petitioners of the appeal filed by private respondent BCAP was cured when petitioners were allowed to file their Motion for Reconsideration before respondent Secretary of Labor.

2. NO. The Labor Code itself specifically empowers respondent Secretary to make a determination as to the availability of the services of a "person in the Philippines who is competent, able and willing at the time of application to perform the services for which an alien is desired." In short, the Department of Labor is the agency vested with jurisdiction to determine the question of availability of local workers.

Under Article 40 of the Labor Code, an employer seeking employment of an alien must first obtain an employment permit from the Department of Labor. Petitioner GMC's right to choose whom to employ is, of course, limited by the statutory requirement of an alien employment permit.

Petitioners will not find solace in the equal protection clause of the Constitution. As pointed out by the Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman Black as the latter is "a long time resident of the country," and thus, not subject to the provisions of Article 40 of the Labor Code which apply only to "non-resident aliens." In any case, the term "non-resident alien" and its obverse "resident alien," here must be given their technical connotation under our law on immigration.

Neither can petitioners validly claim that implementation of respondent Secretary's decision would amount to an impairment of the obligations of contracts. The provisions of the Labor Code and its Implementing Rules and Regulations requiring alien employment permits were in existence long before petitioners entered into their contract of employment. It is firmly settled that provisions of applicable laws, especially provisions relating to matters affected with public policy, are deemed written into contracts. Private parties cannot constitutionally contract away the otherwise applicable provisions of law.

159

In short, the Department of Labor is the agency vested with jurisdiction to determine the question of availability of local workers. The constitutional validity of legal provisions granting such jurisdiction and authority and requiring proof of non-availability of local nationals able to carry out the duties of the position involved, cannot be seriously questioned.

Petitioners apparently suggest that the Secretary of Labor is not authorized to take into account the question of whether or not employment of an alien applicant would "redound to the national interest" because Article 40 does not explicitly refer to such assessment. This argument (which seems impliedly to concede that the relationship of basketball coaching and the national interest is tenuous and unreal) is not persuasive. In the first place, the second paragraph of Article 40 says: "[t]he employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired."

ALMODIEL v. NRLC

FACTS: Petitioner Farle P. Almodiel is a certified public accountant who was hired in October,1987 as Cost Accounting Manager of respondent Raytheon Philippines, Inc. through a reputable placement firm, John Clements Consultants, Inc. with a starting monthly salary of P18,000.00.Before said employment, he was the accounts executive of Integrated Microelectronics, Inc. for several years. He left his lucrative job therein in view of the promising career offered by Raytheon. He started as a probationary or temporary employee. As Cost Accounting Manager, his major duties were: (1) plan, coordinate and carry out year and physical inventory; (2) formulate and issue out hard copies of Standard Product costing and other cost/pricing analysis if needed and required and (3) set up the written Cost Accounting System for the whole company. After a few months, he was given a regularization increase of P1,600.00 a month. Not long thereafter, his salary was increased to P21,600.00 a month.

On August 17, 1988, he recommended and submitted a Cost Accounting/Finance Reorganization, affecting the whole finance group but the same was disapproved by the Controller. However, he was assured by the Controller that should his position or department which was apparently a one-man department with no staff becomes untenable or unable to deliver the needed service due to manpower constraint, he would be given a three (3) year advance notice.

In the meantime, the standard cost accounting system was installed and used at the Raytheon plants and subsidiaries worldwide. It was likewise adopted and installed in the Philippine operations. As a consequence, the services of a Cost Accounting Manager allegedly entailed only the submission of periodic reports that would use computerized forms prescribed and designed by the international head office of the Raytheon Company in California, USA.

160

On January 27, 1989, petitioner was summoned by his immediate boss and in the presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition of his position on the ground of redundancy. He pleaded with management to defer its action or transfer him to another department, but he was told that the decision of management was final and that the same has been conveyed to the Department of Labor and Employment. Thus, he was constrained to file the complaint for illegal dismissal before the Arbitration Branch of the National Capital Region, NLRC, Department of Labor and Employment.

ISSUE: Whether bad faith, malice and irregularity crept in the abolition of petitioner’s position of Cost Accounting Manager on the ground of redundancy.

HELD: NO. Whether petitioner's functions as Cost Accounting Manager have been dispensed with or merely absorbed by another is however immaterial. Thus, notwithstanding the dearth of evidence on the said question, a resolution of this case can be arrived at without delving into this matter. For even conceding that the functions of petitioner's position were merely transferred, no malice or bad faith can be imputed from said act. A survey of existing case law will disclose that in Wiltshire File Co., Inc. v. NLRC, the position of Sales Manager was abolished on the ground of redundancy as the duties previously discharged by the Sales Manager simply added to the duties of the General Manager to whom the Sales Manager used to report. In adjudging said termination as legal, this Court said that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. The characterization of an employee's services as no longer necessary or sustainable, and therefore, properly terminable, was an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown.

an employer has no legal obligation to keep more employees than are necessary for the operation of its business. Petitioner does not dispute the fact that a cost accounting system was installed and used at Raytheon subsidiaries and plants worldwide; and that the functions of his position involve the submission of periodic reports utilizing computerized forms designed and prescribed by the head office with the installation of said accounting system. Petitioner attempts to controvert these realities by alleging that some of the functions of his position were still indispensable and were actually dispersed to another department. What these indispensable functions that were dispersed, he failed however, to specify and point out. Besides, the fact that the functions of a position were simply added to the duties of another does not affect the legitimacy of the employer's right to abolish a position when done in the normal exercise of its prerogative to adopt sound business practices in the management of its affairs.

Considering further that petitioner herein held a position which was definitely managerial in character, Raytheon had a broad latitude of discretion in abolishing his position. An

161

employer has a much wider discretion in terminating employment relationship of managerial personnel compared to rank and file employees. The reason obviously is that officers in such key positions perform not only functions which by nature require the employer's full trust and confidence but also functions that spell the success or failure of an enterprise.

Likewise destitute of merit is petitioner's imputation of unlawful discrimination when Raytheon caused corollary functions appertaining to cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien without a working permit. Article 40 of the Labor Code which requires employment permit refers to non-resident aliens. The employment permit is required for entry into the country for employment purposes and is issued after determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. Since Ang Tan Chai is a resident alien, he does not fall within the ambit of the provision.

Petitioner also assails Raytheon's choice of Ang Tan Chai to head the Payroll/Mis/Finance Department, claiming that he is better qualified for the position. It should be noted, however, that Ang Tan Chai was promoted to the position during the middle part of 1988 or before the abolition of petitioner's position in early 1989. Besides the fact that Ang Tan Chai's promotion thereto is a settled matter, it has been consistently held that an objection founded on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the position. In the case at bar, since petitioner does not allege that Ang Tan Chai does not qualify for the position, the Court cannot substitute its discretion and judgment for that which is clearly and exclusively management prerogative. To do so would take away from the employer what rightly belongs to him as aptly explained in National Federation of Labor Unions v. NLRC: 

It is a well-settled rule that labor laws do not authorize interference with the employer's judgment in the conduct of his business. The determination of the qualification and fitness of workers for hiring and firing, promotion or reassignment are exclusive prerogatives of management. The Labor Code and its implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial authority. The employer is free to determine, using his own discretion and business judgment, all elements of employment, "from hiring to firing" except in cases of unlawful discrimination or those which may be provided by law. There is none in the instant case.

Finding no grave abuse of discretion on the part of the National Labor Relations Commission in reversing and annulling the decision of the Labor Arbiter and that on the contrary, the termination of petitioner's employment was anchored on a valid and authorized cause under Article 283 of the Labor Code, the instant petition for certiorari must fail.

162

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS v. QUISIMBING –o0o-

NITTO ENTERPRISES v. NLRC

FACTS: Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship agreement  for a period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable minimum wage.

At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital.

Later that same day, after office hours, private respondent entered a workshop within the office premises which was not his work station. There, he operated one of the power press machines without authority and in the process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of private respondent.

The following day, Roberto Capili was asked to resign in a letter.

On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in consideration of the sum of P1,912.79. 4

Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary benefits.

LA – rendered decision finding the termination of private respondent as valid and dismissing the money claim for lack of merit. He gave two reasons for ruling that the dismissal of Roberto Capilian was valid. First, private respondent who was hired as an apprentice violated the terms of their agreement when he acted with gross negligence resulting in the injury not only to himself but also to his fellow worker. Second, private respondent had shown that "he does not have the proper attitude in employment particularly the handling of machines without authority and proper training.

NLRC – reversed the decision of the LA. Declared that private respondent was a regular employee of petitioner.

ISSUE: Whether signing of the apprenticeship agreement already established an employer-employee relationship.

Petitioner’s contention: petitioner assails the NLRC’s finding that private respondent Capili cannot plainly be considered an apprentice since no apprenticeship program had yet been filed and approved at the time the agreement was executed.

163

And that the mere signing of the apprenticeship agreement already established an employer-employee relationship.

HELD: NO. Article 61 of the Labor Code provides:

Contents of apprenticeship agreement. — Apprenticeship agreements, including the main rates of apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship. (emphasis supplied)

In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and Employment. However, the apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment.

Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship.

Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program through the participation of employers, workers and government and non-government agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and agreements cannot be debased.

164

Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code.

ILOILO DOCK AND ENGINEERING CO. v. WCC

FACTS: At about 5:02 o'clock in the afternoon of January 29, 1960, Pablo, who was employed as a mechanic of the IDECO, while walking on his way home, was shot to death in front of, and about 20 meters away from, the main IDECO gate, on a private road commonly called the IDECO road. The slayer, Martin Cordero, was not heard to say anything before or after the killing. The motive for the crime was and still is unknown as Cordero was himself killed before he could be tried for Pablo's death. At the time of the killing, Pablo's companion was Rodolfo Galopez, another employee, who, like Pablo, had finished overtime work at 5:00 p.m. and was going home. From the main IDECO gate to the spot where Pablo was killed, there were four "carinderias" on the left side of the road and two "carinderias" and a residential house on the right side. The entire length of the road is nowhere stated in the record.

ISSUE:

1.Whether Pablo’s death occurred in the course of employment and arising out of the employment.

2.Whether the PROXIMITY RULE should apply in this case.

3.Whether the death of Pablo was an accident within the purview of the Workmen’s Compensation Act

HELD:

The two components of the coverage formula — "arising out of" and "in the course of employment" — are said to be separate tests which must be independently satisfied;however, it should not be forgotten that the basic concept of compensation coverage is unitary, not dual, and is best expressed in the word, "work-connection," because an uncompromising insistence on an independent application of each of the two portions of the test can, in certain cases, exclude clearly work-connected injuries. The words "arising out of" refer to the origin or cause of the accident, and are descriptive of its character, while the words "in the course of" refer to the time, place and circumstances under which the accident takes place.

As a matter of general proposition, an injury or accident is said to arise "in the course of employment" when it takes place within the period of the employment, at a place where

165

the employee reasonably may be, and while he is fulfilling his duties or is engaged in doing something incidental thereto.

1. YES. Workmen’s compensation is granted if the injuries result from an accident which arise our of and in the course of employment. Both the “arising” factor and the “course” factor must be present. If one factor is weak and the other is strong, the injury is compensable but not where both factors are weak. Ultimately, the question is whether the accident is work connected. The words “arising out of” refer to the origin or cause of the accident and are descriptive of its character, while the words “in the course” refer to the time, place and circumstances under which the accident takes place. The presumption that the injury arises out of and in the course of employment prevails where the injury occurs on the employer’s premises. While the IDECO does not own the private road, it cannot be denied that it was using the same as the principal means of ingress and egress. The private road leads directly to its main gate. Its right to use the road must then perforce proceed from either an easement of right of way or a lease. Its right therefore is either a legal one or a contractual one. In wither case the IDECO should logically and properly be charged with security control of the road.

2. YES. The general rule in workmen’s compensation law known as going and coming rule provides that in the absence of special circumstances, an employee injured in, going to, or coming from his place of work is excluded from the benefits of workmen’s compensation acts.

The following are the exceptions:

a. Where the employee is proceeding to or from his work on the premises of his employer

b. Where the employee is about to enter or about to leave the premises of his employer by way of exclusive or customary means of ingress and egress

c. Where the employee is charged while on his way to or from his place of employment or at his home or during his employment, with some duty or special errand connected with his employment

d. Where the employer, as an incident of the employment provides the means of transportation to and from the place of employment.

The second exception is known as the “proximity rule.” The place where the employee was injured being immediately proximate to his place of work, the accident in question must be deemed to have occurred within the zone of his employment and therefore arose out of or in the course thereof.

166

3. YES. An “assault” although resulting from a deliberate act of the slayer, is considered an “accident” within the meaning of the Workmen’s Compensation Act since the word accident is intended to indicate that the act causing the injury shall be casual or unforeseen, an act for which the injured party is not legally responsible.

HINOGUIN v. EMPLOYEE’S COMPENSATION COMMISSION

FACTS: Sgt. Lemick Hinoguin was a sergeant in “A” company, 14th Infantry Battalion, 5th

Infantry Division. The headquarters of the 14th Infantry Battalion was located at Bical, Muñoz, Nueva Ecija. On August 1, 1985, Sgt. Hinoguin, Cpl. Rogelio Clavo and Dft. Nicomedes Alibuyog sought permission from Capt. Frankie Besas, to go on overnight pass to Aritao, Nueva Viscaya. Capt. Besas orally granted them permission to go to Aritao and to take their issued firearms with them considering that Aritao was regarded as “a critical place.” The three soldiers went to Dft. Alibuyog’s home for a meal and some drinks. At around 7:00 PM, the soldiers headed back to the headquarters. They boarded a tricycle, Hinoguin and Clavo seating themselves in the tricycle cab while Alibuyog occupied the seat behind the tricycle driver. When they reached the poblacion, Alibuyog dismounted from the tricycle. Not noticing that his rifle’s safety lever was on “semi-automatic,” he accidentally touched the trigger, firing a single shot in the process and hitting Sgt. Hinoguin in the left lower abdomen. Sgt. Hinoguin died a few days after the incident. In the investigation conducted by the 14th Infantry Battalion, it was found that the shooting of Sgt. Hinoguin was purely accidental in nature and that he died in the line of duty. The Life of Duty Board of Officers recommended that all benefits due the legal dependents of the late Sgt. Hinoguin be given. However, when the father of the deceased made a claim from GSIS, the same was denied on the ground that the deceased was not at his work place nor performing his duty as a soldier of the Philippine Army at the time of his death. This denial was confirmed by the ECC.

ISSUE: Whether the death of Sgt. Hinoguin is compensable under the applicable statute and regulations.

HELD: YES. The amended Implementing Rules provides in part as follows:

SECTION 1. Conditions to Entitlement. — (a) The beneficiaries of a deceased employee shall be entitled to an income benefit if all of the following conditions are satisfied:

(1) The employee had been duly reported to the System;

(2) He died as a result of injury or sickness; and

167

(3) The System has been duly notified of his death, as well as the injury or sickness which caused his death. His employer shall be liable for the benefit if such death occurred before the employee is duly reported for coverage of the System.

Article 167 (k) of the Labor Code as amended defines a compensable "injury" quite simply as "any harmful change in the human organism from any accident arising out of and in the course of the employment." The Amended (Implementing) Rules have, however, elaborated considerably on the simple and succinct statutory provision. Rule III, Section 1 (a) reads:

SECTION 1. Grounds. (a) For the injury and the resulting disability or death to be compensable, the injury must be the result of an employment accident satisfying all of the following grounds:

(1) The employee must have been injured at the place work requires him to be;

(2) The employee must have been performing his official functions; and

(3) If the injury is sustained elsewhere, the employee must have been executing an order for the employer.

The concept of work place referred in Ground 1, for instance, cannot always be literally applied to a soldier on active duty status, as if he were a machine operator or a worker in an assembly line in a factory or a clerk in a particular fixed office. A soldier must go wherehis comp any is stationed. Aritao, Nueva Viscaya was not of course, Carranglan, NuevaEcija. Aritao being approximately 1 – ½ hours from the later by public transportation. But Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog had permission from their Commanding Officer to proceed to Aritao and the place which soldiers have secured lawful permission to be at cannot be very different, legally speaking, from a place where they are required to go by their commanding officer. The soldiers were on an overnight pass. They were not on vacation leave.

In this connection, a soldier on active duty status is really on 24 hours a day official duty status and is subject to military discipline and military law 24 hours a day. He is subject to call and to the orders of his superior officers at all times, 7 days a week, except, of course, when he is on vacation leave status. A soldier should be presumed to be on official duty unless he is shown to have clearly and unequivocally put aside that status or condition temporarily by, e.g. going on an approved vacation leave.

We hold, therefore, that the death of Sgt. Hinoguin that resulted from his being hit by an accidental discharge of the M-16 of Dft. Alibuyog, in the circumstances of this case, arose out of and in the course of his employment as a soldier on active duty status in the Armed Forces of the Philippines and hence compensable.

168

It may be well to add that what we have written above in respect of performance of official functions of members of the Armed Forces must be understood in the context of the specific purpose at hand, that is, the interpretation and application of the compensation provisions of the Labor Code and applicable related regulations. It is commonplace that those provisions should, to the extent possible, be given the interpretation most likely to effectuate the beneficient and humanitarian purposes infusing the Labor Code.

BELARMINO v. EMPLOYEES’ COMPENSATION COMMISSION

FACTS: Before her death on February 19, 1982, petitioner's wife, Oania Belarmino, was a classroom teacher of the Department of Education, Culture and Sports assigned at the Buracan Elementary School in Dimasalang, Masbate (p. 13, Rollo). She had been a classroom teacher since October 18, 1971, or for eleven (11) years. Her husband, the petitioner, is also a public school teacher.

On January 14, 1982, at nine o'clock in the morning, while performing her duties as a classroom teacher, Mrs. Belarmino who was in her 8th month of pregnancy, accidentally slipped and fell on the classroom floor. Moments later, she complained of abdominal pain and stomach cramps. For several days, she continued to suffer from recurrent abdominal pain and a feeling of heaviness in her stomach, but, heedless of the advice of her female co-teachers to take a leave of absence, she continued to report to the school because there was much work to do. On January 25, 1982, eleven (11) days after her accident, she went into labor and prematurely delivered a baby girl at home (p. 8, Rollo).

Her abdominal pains persisted even after the delivery, accompanied by high fever and headache. She was brought to the Alino Hospital in Dimasalang, Masbate on February 11, 1982. Dr. Alfonso Alino found that she was suffering from septicemia post partum due to infected lacerations of the vagina. She was discharged from the hospital after five (5) days on February 16, 1982, apparently recovered but she died three (3) days later. The cause of death was septicemia post partum. She was 33 years old, survived by her husband and four (4) children, the oldest of whom was 11 years old and the youngest, her newborn infant (p. 9, Rollo).

On April 21, 1983, a claim for death benefits was filed by her husband. On February 14, 1984, it was denied by the Government Service Insurance System (GSIS) which held that 'septicemia post partum the cause of death, is not an occupational disease, and neither was there any showing that aforesaid ailment was contracted by reason of her employment. . . . The alleged accident mentioned could not have precipitated the death of the wife but rather the result of the infection of her lacerated wounds as a result of her delivery at home".

ECC – denied the appeal. Postpartum septicemia is an acute infectious disease of the puerperium resulting from the entrance into the blood of bacteria usually streptococci

169

and their toxins which cause dissolution of the blood, degenerative changes in the organs and the symptoms of intoxication. The cause of this condition in the instant case was the infected vaginal lacerations resulting from the decedent's delivery of her child which took place at home. The alleged accident in school could not have been the cause of septicemia, which in this case is clearly caused by factors not inherent in employment or in the working conditions of the deceased. 

ISSUE: Whether public respondent’s peremptory denial of the petitioner’s claim constitutes a grave abuse of discretion.

HELD: YES. Rule III, Section 1 of the Amended Rules on Employees' Compensation enumerates the grounds for compensability of injury resulting in disability or death of an employee, as follows:

Sec. 1. Grounds — (a) For the injury and the resulting disability or death to be compensable, the injury must be the result of an employment accident satisfying all of the following conditions:

(1) The employee must have been injured at the place where his work requires him to be;

(2) The employee must have been performing his official functions; and

(3) If the injury is sustained elsewhere, the employee must have been executing an order for the employer.

(b) For the sickness and the resulting disability or death to be compensable, the sickness must be the result of an occupational disease listed under Annex "A" of these Rules with the conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is increased by the working conditions.

(c) Only injury or sickness that occurred on or after January 1, 1975 and the resulting disability or death shall be compensable under these Rules.

The illness, septicemia post partum which resulted in the death of Oania Belarmino, is admittedly not listed as an occupational disease in her particular line of work as a classroom teacher. However, as pointed out in the petition, her death from that ailment is compensable because an employment accident and the conditions of her employment contributed to its development. The condition of the classroom floor caused Mrs. Belarmino to slip and fall and suffer injury as a result. The fall precipitated the onset of recurrent abdominal pains which culminated in the premature termination of her pregnancy with tragic consequences to her. Her fall on the classroom floor brought about her premature delivery which caused the development of post partum septicemia

170

which resulted in death. Her fall therefore was the proximate or responsible cause that set in motion an unbroken chain of events, leading to her demise.

Mrs. Belarmino's fall was the primary injury that arose in the course of her employment as a classroom teacher, hence, all the medical consequences flowing from it: her recurrent abdominal pains, the premature delivery of her baby, her septicemia post partum and death, are compensable.

There is no merit in the public respondents' argument that the cause of the decedent's post partum septicemia "was the infected vaginal lacerations resulting from the decedent's delivery of her child at home" for the incident in school could not have caused septicemia post partum, . . . the necessary precautions to avoid infection during or after labor were (not) taken" (p. 29, Rollo).

The argument is unconvincing. It overlooks the fact that septicemia post partum is a disease of childbirth, and premature childbirth would not have occurred if she did not accidentally fall in the classroom.

It is true that if she had delivered her baby under sterile conditions in a hospital operating room instead of in the unsterile environment of her humble home, and if she had been attended by specially trained doctors and nurses, she probably would not have suffered lacerations of the vagina and she probably would not have contracted the fatal infection. Furthermore, if she had remained longer than five (5) days in the hospital to complete the treatment of the infection, she probably would not have died. But who is to blame for her inability to afford a hospital delivery and the services of trained doctors and nurses? The court may take judicial notice of the meager salaries that the Government pays its public school teachers. Forced to live on the margin of poverty, they are unable to afford expensive hospital care, nor the services of trained doctors and nurses when they or members of their families are in. Penury compelled the deceased to scrimp by delivering her baby at home instead of in a hospital.

The Government is not entirely blameless for her death for it is not entirely blameless for her poverty. Government has yet to perform its declared policy "to free the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all (Sec. 7, Art. II, 1973 Constitution and Sec. 9, Art. II, 1987 Constitution). Social justice for the lowly and underpaid public school teachers will only be an empty shibboleth until Government adopts measures to ameliorate their economic condition and provides them with adequate medical care or the means to afford it. "Compassion for the poor is an imperative of every humane society" (PLDT v. Bucay and NLRC, 164 SCRA 671, 673). By their denial of the petitioner's claim for benefits arising from the death of his wife, the public respondents ignored this imperative of Government, and thereby committed a grave abuse of discretion.

171

LAZO V. ECC

FATS: The petitioner, Salvador Lazo, is a security guard of the Central Bank of the Philippines assigned to its main office in Malate, Manila. His regular tour of duty is from 2:00 o'clock in the afternoon to 10:00 o'clock in the evening. On 18 June 1986, the petitioner rendered duty from 2:00 o'clock in the afternoon to 10:00 o'clock in the evening. But, as the security guard who was to relieve him failed to arrive, the petitioner rendered overtime duty up to 5:00 o'clock in the morning of 19 June 1986, when he asked permission from his superior to leave early in order to take home to Binangonan, Rizal, his sack of rice.

On his way home, at about 6:00 o'clock in the morning of 19 June 1986, the passenger jeepney the petitioner was riding on turned turtle due to slippery road. As a result, he sustained injuries and was taken to the Angono Emergency Hospital for treatment. He was later transferred to the National Orthopedic Hospital where he was confined until 25 July 1986.

For the injuries he sustained, petitioner filed a claim for disability benefits under PD 626, as amended. His claim, however, was denied by the GSIS.

It was held that the condition for compensability had not been satisfied.

Upon review of the case, the respondent Employees Compensation Commission affirmed the decision since the accident which involved the petitioner occurred far from his work place and while he was attending to a personal matter.

ISSUE: Whether the injuries sustained by the petitioner is compensable.

PETITIONER’S CONTENTION: The petitioner contends that the injuries he sustained due to the vehicular accident on his way home from work should be construed as "arising out of or in the course of employment" and thus, compensable. In support of his prayer for the reversal of the decision, the petitioner cites the case of Pedro Baldebrin vs. Workmen's Compensation Commission,  where the Court awarded compensation to the petitioner therein who figured in an accident on his way home from his official station at Pagadian City to his place of residence at Aurora, Zamboanga del Sur. In the accident, petitioner's left eye was hit by a pebble while he was riding on a bus.

HELD: YES. Petitioner’s submission is meritorious. In the case at bar, petitioner had come from work and was on his way home, just like in the Baldebrin case, where the employee "... figured in an accident when he was ping home from his official station at Pagadian City to his place of residence at Aurora, Zamboanga del Sur ...."  Baldebrin, the Court said:

172

The principal issue is whether petitioner's injury comes within the meaning of and intendment of the phrase 'arising out of and in the course of employment.'(Section 2, Workmen's Compensation Act). InPhilippine Engineer's Syndicate, Inc. vs. Flora S. Martin and Workmen's Compensation Commission,4 SCRA 356, We held that 'where an employee, after working hours, attempted to ride on the platform of a service truck of the company near his place of work, and, while thus attempting, slipped and fell to the ground and was run over by the truck, resulting in his death, the accident may be said to have arisen out of or in the course of employment, for which reason his death is compensable. The fact standing alone, that the truck was in motion when the employee boarded, is insufficient to justify the conclusion that he had been notoriously negligent, where it does not appear that the truck was running at a great speed.'And, in a later case, Iloilo Dock & Engineering Co. vs. Workmen's Compensation Commission, 26 SCRA 102, 103, We ruled that '(e)mployment includes not only the actual doing of the work, but a reasonable margin of time and space necessary to be used in passing to and from the place where the work is to be done. If the employee be injured while passing, with the express or implied consent of the employer, to or from his work by a way over the employer's premises, or over those of another in such proximity and relation as to be in practical effect a part of the employer's premises, the injury is one arising out of and in the course of the employment as much as though it had happened while the employee was engaged in his work at the place of its performance. (Emphasis supplied)

In the case at bar, it can be seen that petitioner left his station at the Central Bank several hours after his regular time off, because the reliever did not arrive, and so petitioner was asked to go on overtime. After permission to leave was given, he went home. There is no evidence on record that petitioner deviated from his usual, regular homeward route or that interruptions occurred in the journey.

While the presumption of compensability and theory of aggravation under the Workmen's Compensation Act (under which the Baldebrin case was decided) may have been abandoned under the New Labor Code, it is significant that the liberality of the law in general in favor of the workingman still subsists. As agent charged by the law to implement social justice guaranteed and secured by the Constitution, the Employees Compensation Commission should adopt a liberal attitude in favor of the employee in deciding claims for compensability, especially where there is some basis in the facts for inferring a work connection to the accident.

This kind of interpretation gives meaning and substance to the compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states that 'all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor.'

173

The policy then is to extend the applicability of the decree (PD 626) to as many employees who can avail of the benefits thereunder. This is in consonance with the avowed policy of the State to give maximum aid and protection to labor. 

There is no reason, in principle, why employees should not be protected for a reasonable period of time prior to or after working hours and for a reasonable distance before reaching or after leaving the employer's premises. 

If the Vano ruling awarded compensation to an employee who was on his way from home to his work station one day before an official working day, there is no reason to deny compensation for accidental injury occurring while he is on his way home one hour after he had left his work station.

We are constrained not to consider the defense of the street peril doctrine and instead interpret the law liberally in favor of the employee because the Employees Compensation Act, like the Workmen's Compensation Act, is basically a social legislation designed to afford relief to the working men and women in our society.

WHEREFORE, the decision appealed from is REVERSED and SET ASIDE. Let the case be remanded to the ECC and the GSIS for disposition in accordance with this decision.

PAXENXA, MAHABA ANG PAGKAKADIGEST.. IKLIAN NYO NA LANG

RARO v. ECC

FACTS: The petitioner states that she was in perfect health when employed as a clerk by the Bureau of Mines and Geo-Sciences at its Daet, Camarines Norte regional office on March 17, 1975. About four years later, she began suffering from severe and recurrent headaches coupled with blurring of vision. Forced to take sick leaves every now and then, she sought medical treatment in Manila. She was then a Mining Recorder in the Bureau.

The petitioner was diagnosed at the Makati Medical Center to be suffering from brain tumor. By that time, her memory, sense of time, vision, and reasoning power had been lost.

A claim for disability benefits filed by her husband with the Government Service Insurance System (GSIS) was denied. A motion for reconsideration was similarly denied. An appeal to the Employees' Compensation Commission resulted in the Commission's affirming the GSIS decision.

ISSUE: Whether brain tumor which causes are unknown but contracted during employment is compensable under the present compensation laws.

174

HELD: The law, as it now stands requires the claimant to prove a positive thing – the illness was caused by employment and the risk of contracting the disease is increased by the working conditions. To say that since the proof is not available, therefore, the trust fund has the obligation to pay is contrary to the legal requirement that proof must be adduced. The existence of otherwise non-existent proof cannot be presumed .

In Navalta v. Government Service Insurance System (G.R. No. 46684, April 27, 1988) this Court recognized the fact that cancer is a disease of still unknown origin which strikes; people in all walks of life, employed or unemployed. Unless it be shown that a particular form of cancer is caused by specific working conditions (e. g. chemical fumes, nuclear radiation, asbestos dust, etc.) we cannot conclude that it was the employment which increased the risk of contracting the disease .

To understand why the "Presumption of compensability" together with the host of decisions interpreting the "arising out of and in the course of employment" provision of the defunct law has been stricken from the present law, one has to go into the distinctions between the old workmen's compensation law and the present scheme.

the Workmen's Compensation Act was replaced by a novel scheme under the new Labor Code. The new law discarded, among others, the concepts of "presumption of compensability" and "aggravation" and substituted a system based on social security principles. The present system is also administered by social insurance agencies — the Government Service Insurance System and Social Security System — under the Employees' Compensation Commission. The intent was to restore a sensible equilibrium between the employer's obligation to pay workmen's compensation and the employee's right to receive reparation for work- connected death or disability.

The non-adversarial nature of employees' compensation proceedings is crucial to an understanding of the present scheme. There is a widespread misconception that the poor employee is still arrayed against the might and power of his rich corporate employer. Hence, he must be given all kinds of favorable presumptions. This is fallacious. It is now the trust fund and not the employer which suffers if benefits are paid to claimants who are not entitled under the law. The employer joins its employees in trying to have their claims approved. The employer is spared the problem of proving a negative proposition that the disease was not caused by employment. It is a government institution which protects the stability and integrity of the State Insurance Fund against the payment of non-compensable claims. The employee, this time assisted by his employer, is required to prove a positive proposition, that the risk of contracting the is increased by working conditions.

We have no actuarial expertise in this Court. If diseases not intended by the law to be compensated are inadvertently or recklessly included, the integrity of the State Insurance Fund is endangered. Compassion for the victims of diseases not covered by the law ignores the need to show a greater concern for the trust fund to winch the tens of millions of workers and their families look for

175

compensation whenever covered accidents, salary and deaths occur. As earlier stated, if increased contributions or premiums must be paid in order to give benefits to those who are now excluded, it is Congress which should amend the law after proper actuarial studies. This Court cannot engage in judicial legislation on such a complex subject with such far reaching implications.

WHEREFORE, the petition is hereby DISMISSED The questioned decision of the public respondents is AFFIRMED.

SANTOS v. ECC

FACTS: Francisco Santos was employed as welder at the Philippine Navy and its Naval Shipyard as early as March 22, 1955. He spent the last 32 years of his life in the government service, the first year as a welder helper and the last two years as shipyard assistant.

On December 29, 1986, Francisco was admitted at the Naval Station Hospital in Cavite City, on complaint that he was having epigastric pain and been vomiting blood 2 days prior to his hospitalization. His case was diagnosed as bleeding Peptic Ulcer disease (PUD), cholelithiasis and diabetes mellitus. On January 11, 1987, he died, the cause of which as indicated in the Death Certificate was liver cirrhosis.

Mrs. Carmen A. Santos filed a claim for the death benefit of her husband, Francisco, on January 28, 1987, pursuant to Presidential Decree No. 626, as amended. However, on a letter dated April 30, 1987, the Government Service Insurance System (GSIS), denied the claim on the ground that upon proofs and evidence submitted, Francisco's ailment cannot be considered an occupational disease as contemplated under P.D. 626, as amended.

Mrs. Santos then sought the assistance of the Commander of NASCOM, PN, who in turn wrote the GSIS requesting for a favorable action on her claim. Despite such endorsement, petitioner's motion for reconsideration was likewise denied, upon claim of the GSIS that Francisco's job as a welder would instead cause lung disease rather than liver cirrhosis.

On appeal to the Employees' Compensation Commission (ECC), the Commission affirmed the denial of the GSIS on petitioner's claim relying on the fact that the diagnosis on Francisco's illness did not specify the type of cirrhosis which caused his death. Nevertheless, the Commission took cognizant of the fact that the deceased employee did not have a previous history of alcoholism, hepatitis or a previous history of biliary condition which could give a clue to the nature of cirrhosis he had.

ISSUE: Whether the cause of death of petitioner’s husband is related to his work, thus, entitled to be compensated.

176

HELD: YES. The law defines compensable sickness as any illness definitely accepted as occupational disease listed by the Commission, or any illness caused by employment subject to proof that the risk of contracting the same is increased by the working conditions. For sickness and the resulting death of an employee to be compensable, the claimant must show either: (1) that it is a result of an occupational disease listed under Annex A of the Amended Rules on Employees' Compensation with the conditions set therein satisfied; or (2) if not so listed, that the risk of contracting the disease is increased by the working conditions.

Where the claimant's illness is not listed in the Table of Occupational Diseases embodied in Annex A of the Rules of Employees' Compensation, said claimant must positively prove that the risk of contracting the disease is increased by the working conditions.

In granting the petition, the Court correlated the fact that the deceased experienced untold sufferings in the course of his inspection of barrio schools and that he became malnourished because of the scarcity of food in the places he travelled to. All these factors were found to have contributed to the weakening of his health rendering him susceptible to malnutrition and eventually to contracting liver cirrhosis.

We do not pretend to be an expert in the realm of medical discipline. However, We cannot discount the fact that the cause of death of petitioner's husband could very well be related to his previous working conditions. Even the Commission volunteered the theory that post necrotic cirrhosis show that of the many types of advanced liver injury, one cause may be due to toxins.

 The presumption of compensability and theory of aggravation under the Workmen's Compensation Act may have been abandoned under the new Labor Code, the liberality of the law in general in favor of the working man still prevails. 8 The Employees' Compensation Act is basically a social legislation designed to afford relief to the working man and woman in our society. The Employees' Compensation Commission, as the agency tasked with implementing the social justice mandate guaranteed by the Constitution, should be more liberal in resolving compensation claims of employees especially where there is some basis in the facts for inferring a work connection to the cause of death.

This interpretation gives meaning and substance to the liberal and compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor." 

Premises considered, We find the petition meritorious. Liver cirrhosis, although not one among those listed as compensable ailment, as considered in the case at bar as

177

covered under the Act, on the ground that the nature of the work of petitioner's husband, exposed him to the risk of contracting the same.

NARAZO v. ECC

FACTS: Geronimo Narazo was employed for 38 years as Budget Examiner in the Office of the Governor, Province of Negros Occidental. That on 14 May 1984, Narazo died at the age of 57. His medical records show that he was confined 3 times for urinary retention, abdominal pain and anemia. He was thereafter diagnosed to be suffering from UREMIA.

Petitioner, as the widow of the deceased filed a claim with the GSIS for death benefits of her husband. However, said claim was denied on the ground that the cause of death of Narazo is not listed as an occupational disease and that there is not showing that the position and duties of the deceased as Budget Examiner had increased the risk of contracting UREMIA. On appeal, the ECC affirmed the decision of the GSIS.

ISSUE: Whether the cause of death of petitioner is work-related.

HELD: YES . Burden of proof was upon the petitioner to show that the conditions which her deceased husband was then working had increased the risk of contracting the illness which cause his death.

The nature of the work of the deceased as Budget Examiner dealt with the detailed preparation of the budget, financial reports and review and/or examination of the budget of other provincial and municipal offices. Full concentration and thorough study of the entries of accounts in the budget and/or financial reports were necessary, such that the deceased had to sit for hours, and more often than not, delay and even forego urination in order not to interrupt the flow of concentration.

Under the foregoing circumstances, we are persuaded to hold that the cause of death of petitioner’s husband is work-connected, i.e. the risk of contracting the illness was aggravated by the nature of the work, so much so that petitioner is entitled to receive compensation benefits for the death of her husband.

PANO v. ECC – NO COPY OF THE CASE

BEJERANO v. ECC

FACTS: Petitioner Jose Bejerano was a cash supervisor of the Development Bank of the Philippines, Zamboanga City Branch Office. He retired at the age of sixty-two (62), after having served the bank for almost twenty-nine (29) years.  Medical records disclose that sometime in 1985, petitioner complained of dyspnea or shortness of breath accompanied by productive cough. He was admitted to the Brent Hospital, where he was attended to by Dr. Arcadio Salazar, who medically diagnosed his illness as Chronic

178

Obstructive Lung Disease Emphysema with severe asthmatic component. The medical certificate issued by Dr. Salazar states that petitioner was admitted three (3) times to Brent Hospital in the year 1985, not including the petitioner's confinement at Brent Hospital on 6-9 December 1985, for treatment of chronic obstructive lung disease. Dr. Salazar, in the same medical certificate, classified petitioner's disability as permanent total. 

Due to his disability, petitioner was forced to retire at the age of sixty-two (62) on 31 December 1985 and received the sum of P60,890.57 corresponding to five (5) years lump sum of his annuity. 

In the year 1987, petitioner was again confined at the Zamboanga Regional Hospital.

Subsequently, petitioner filed a claim for compensation benefits with the Government Service Insurance System (GSIS), which was favorably acted upon. The GSIS awarded petitioner Bejerano benefits for temporary total disability for the period of 6-9 December 1985 and permanent partial disability from January 1986 to July 1987. 

Not satisfied with the award, petitioner in a letter dated 17 March 1987 requested the GSIS for a change of the classification of his disability benefits from permanent partial to permanent total. Such request was denied by the GSIS, which prompted petitioner to file, on 13 July 1987, a request for reconsideration of the earlier denial of his request for the conversion of his disability benefits from permanent partial to permanent total. 

On 29 September 1987, the GSIS again denied petitioner's request. This denial was appealed by the petitioner to the Employees' Compensation Commission (ECC) in a letter dated 8 October 1987. On 5 July 1988, the ECC ruled that the disability benefits previously awarded to the petitioner were already commensurate to the degree of the petitioner's disability.

ISSUE: whether petitioner's disability would entitle him to compensation benefits corresponding to permanent total disability.

HELD: YES. It has been repeatedly held by this Court that "permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of a similar nature that she was trained for or accustomed to perform, or any kind of work which a person of her mentality and attainment could do." 

It does not mean state of absolute helplessness, but inability to do substantially all material acts necessary to prosecution of an occupation for remuneration or profit in substantially customary and usual manner. 

Permanent total disability is the lack of ability to follow continuously some substantially gainful occupation without serious discomfort or pain and without material injury or danger to life.

179

A thorough examination of the records convinces us that petitioner's claim is substantiated with enough evidence to show that his disability is permanent and total.

PHYSICIAN’S FINDINGS: Shortness of breath, difficulty of walking distances longer than ten (10) meters without having respiratory problems; inability to walk a flight of stairs without intervals of rest. 

1. The patient has a tendency to develop acute exacerbation of his ailment resulting in frequent hospitalizations (1985 to 1987);

2. The patient's condition stabilizes only on strict confinement at home;

3. The physical capacity of the patient has deteriorated markedly. He could walk a distance of only 10 meters before dyspnea develops;

4. The patient is confined at home and under continuous medication. 

It is evident from the foregoing that, as per his physician's opinion, petitioner is totally incapacitated from engaging in any gainful occupation, and that therefore his disability is permanent and total.

It is also of importance to note that petitioner was forced to retire at the age of 62 because of his physical condition. This, again, is another indication that petitioner's disability is permanent and total. As held by this Court, "the fact of an employee's disability is placed beyond question with the approval of the employee's optional retirement, for such is authorized only when the employee is "physically incapable to render sound and efficient service" . . ." 

"Finally, denying petitioner's permanent total disability benefit, who for more than twenty (20) years had rendered his best service unblemished and only because his ailments forced him to retire, would subvert the very essence of the Workmen's Compensation Act to implement the social justice provision of the Constitution."

MABUHAY SHIPPING SERVICES v. NLRC

FACTS: Romulo Sentina was hired as a 4th Engineer by petitioner Mabuhay Shipping Services, Inc. (MSSI) for and in behalf of co-petitioner, Skippers Maritime Co., Ltd. to work aboard the M/V Harmony I for a period of one year. He reported for duty aboard said vessel on July 13, 1987.

On January 16, 1988 at about 3 p.m., while the vessel was docked alongside Drapetona Pier, Piraeus, Greece, Sentina arrived aboard the ship from shore leave visibly drunk. He went to the messhall and took a fire axe and challenged those eating therein. He was pacified by his shipmates who led him to his cabin. However, later he went out of his cabin and proceeded to the messhall. He became violent. He smashed and threw a

180

cup towards the head of an oiler Emmanuel Ero, who was then eating. Ero touched his head and noticed blood. This infuriated Ero which led to a fight between the two. After the shipmates broke the fight, Sentina was taken to the hospital where he passed away on January 17, 1988.  Ero was arrested by the Greek authorities and was jailed in Piraeus.

On October 26, 1988, private respondents filed a complaint against petitioners with the Philippine Overseas Employment Administration (POEA) for payment of death benefits, burial expenses, unpaid salaries on board and overtime pay with damages docketed as POEA Case No. (M) 88-10-896. After submission of the answer and position papers of the parties a decision was rendered by the POEA on July 11, 1989, the dispositive part of which reads as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered ordering Mabuhay Shipping Services, Inc. and Skippers Maritime Co., Ltd. to pay complainant Cecilia S. Sentina.

A motion for reconsideration and/or appeal was filed by petitioners which the respondent First Division of the National Labor Relations Commission (NLRC) disposed of in a resolution dated March 31, 1990 dismissing the appeal and affirming the appealed decision.

ISSUE: Whether the death of seaman during the term of his employment automatically give rise to compensation.

POEA’S INTERPRETATION OF THE PROVISION: In interpreting the aforequoted provision in its decision, the POEA held that payment of death compensation benefits only requires that the seaman should die during the term of the contract and no other. It further held that the saving provision relied upon by petitioners refers only to suicide where the seaman deliberately and intentionally took his own life. 

Public respondent in affirming the said POEA decision made the following disquisition

It is not difficult for us to understand the intent of the aforequoted "Part II, Section C, No. 6 of the POEA Standard Format" that to avoid death compensation, two conditions must be met:

a) the subject death much have resulted "from a deliberate or willful act on his own life by the seaman;" and

b) such death "directly attributable to the seaman" must have been proven by the "employer."

Thus, even if arguendo, the appellants may successfully prove that the subject seaman's death resulted from the fight he himself created, such, nonetheless does not

181

constitute a "deliberate or willful act on his own life." On this ground alone, the instant appeal would already fail. 

HELD: NO. Part II, Section C, No. 6 of the POEA Standard Format for Filipino seamen employed in ocean going vessels states that —

No compensation shall be payable in respect of any injury, incapacity, disability or death resulting from a deliberate or willful act on his own life by the seaman, provided however that the employer can prove that such injury, incapacity, disability or death is directly attributable to the seamen.

The mere death of the seaman during the term of his employment does not automatically give rise to compensation. The circumstances which led to the death as well as the provisions of the contract, and the right and obligation of the employer and seaman must be taken into consideration, in consonance with the due process and equal protection clauses of the Constitution. There are limitations to the liability to pay death benefits.

When the death of the seaman resulted from a deliberate or willful act on his own life, and it is directly attributable to the seaman, such death is not compensable. No doubt a case of suicide is covered by this provision.

By the same token, when as in this case the seaman, in a state of intoxication, ran amuck, or committed an unlawful aggression against another, inflicting injury on the latter, so that in his own defense the latter fought back and in the process killed the seaman, the circumstances of the death of the seaman could be categorized as a deliberate and willful act on his own life directly attributable to him. First he challenged everyone to a fight with an axe. Thereafter, he returned to the messhall picked up and broke a cup and hurled it at an oiler Ero who suffered injury. Thus provoked, the oiler fought back The death of seaman Sentina is attributable to his unlawful aggression and thus is not compensable.

Even under Article 172 of the Labor Code, the compensation for workers covered by the Employees Compensation and State Insurance Fund are subject to the limitations on liability.

Art. 172. Limitations of liability. — The State Insurance Fund shall be liable for the compensation to the employee or his dependents except when the disability or death was occasioned by the employee's intoxication, willful intent to injure or kill himself or another, notorious negligence, or otherwise provided under this Title.

Private respondent pointed out that petitioner MSSI endorsed the claim for compensation of private respondents. Said petitioner admits this fact but asserts that it

182

was not favorably acted upon by its principal, petitioner Skippers Maritime Co., Inc. because of the circumstances that led to the death of Sentina.

WHEREFORE, the petition is GRANTED. The questioned decision of the POEA dated July 11, 1989 and the resolutions of public respondent dated May 31, 1990 and June 29, 1990 affirming the same are hereby set aside and another judgment is hereby rendered dismissing the complaint.

YSMAEL MARITIME CORPORATION v. AVELINO

FACTS: It appears that on December 22, 1971. Rolando G. Lim, single, a licensed second mate, was on board the vessel M/S Rajah, owned by petitioner Ysmael Maritime Corporation, when the same ran ground and sank near Sabtan Island, Batanes. Rolando perished as a result of that incident.

Claiming that Rolando's untimely death at the age of twenty- five was due to the negligence of petitioner, his parents, respondents Felix Lim and Consorcia Geveia, sued petitioner in the Court of First Instance on January 28, 1972 for damages [Civil Case No. R-12861].

In its answer, petitioner-defendant alleged by way of affirmative defenses [1] that the complaint stated no cause of action; [2] that respondent-plaintiffs had received P4,160 from petitioner and had signed release papers discharging petitioner from any liability arising from the death of their son, and [3] that most significantly, the respondents had already been compensated by the Workmen's Compensation Commission [NCC] for the same incident, for which reason they are now precluded from seeking other remedies against the same employer under the Civil Code.

A protracted legal battle over procedural points ensued. Finally, on July 30, 1975, the case was set for pre-trial. Petitioner sought the dismissal of the complaint on the ground that the trial court had no jurisdiction over the subject matter of the action.

In his order of December 29, 1975, respondent Judge Avelino upheld respondents' vigorous opposition and denied petitioner's motion to dismiss for being unmeritorious. Its motion for reconsideration having met the same fate on February 3, 1976, petitioner filed the instant special civil action for certiorari, prohibition and mandamus with preliminary injunction, contending that respondent judge acted with grave abuse of discretion when he refused to dismiss the complaint for damages on the ground of lack of jurisdiction. This Court subsequently granted a temporary restraining order prohibiting the trial court from proceeding with the hearing of the case.

ISSUE: Whether the denial of Judge Avelino of petitioner’s motion to dismiss is adjudged to be improper.

183

HELD: YES. In the recent case of Floresca vs. Philex Mining Company, L-30642, April 30, 1985, 136 SCRA 141, involving a complaint for damages for the death of five miners in a cave in on June 28, 1967, this Court was confronted with three divergent opinions on the exclusivity rule as presented by several amici curiae One view is that the injured employee or his heirs, in case of death, may initiate an action to recover damages [not compensation under the Workmen's Compensation Act) with the regular courts on the basis of negligence of the employer pursuant to the Civil Code. Another view, as enunciated in the Robles case, is that the remedy of an employee for work connected injury or accident is exclusive in accordance with Section 5 of the WCA. A third view is that the action is selective and the employee or his heirs have a choice of availing themselves of the benefits under the WCA or of suing in the regular courts under the Civil Code for higher damages from the employer by reason of his negligence. But once the election has been exercised, the employee or his heirs are no longer free to opt for the other remedy. In other words, the employee cannot pursue both actions simultaneously. This latter view was adopted by the majority, in the Floresca case, reiterating as main authority its earlier decision in Pacaña vs. Cebu Autobus Company, L-25382, April 30, 1982, 32 SCRA 442. In so doing, the Court rejected the doctrine of exclusivity of the rights and remedies granted by the WCA as laid down in the Robles case. 'Three justices dissented.

It is readily apparent from the succession of cases dealing with the matter at issue * that this Court has vacillated from one school of thought to the other. Even now, the concepts pertaining thereto have remained fluid. But unless and until the Floresca ruling is modified or superseded, and We are not so inclined, it is deemed to be the controlling jurisprudence vice the Robles case.

As thus applied to the case at bar, respondent Lim spouses cannot be allowed to maintain their present action to recover additional damages against petitioner under the Civil Code. In open court, respondent Consorcia Geveia admitted that they had previously filed a claim for death benefits with the WCC and had received the compensation payable to them under the WCA [Rollo, pp. 22-23, 29-30]. It is therefore clear that respondents had not only opted to recover under the Act but they had also been duly paid. At the very least, a sense of fair play would demand that if a person entitled to a choice of remedies made a first election and accepted the benefits thereof, he should no longer be allowed to exercise the second option. "Having staked his fortunes on a particular remedy, [he] is precluded from pursuing the alternate course, at least until the prior claim is rejected by the Compensation Commission."

In the light of this Court's recent pronouncement in the Floresca case, respondent Judge Avelino's denial order of petitioner's motion to dismiss is adjudged to be improper.

LENTEJAS v. ECC

184

FACTS: Victorio Lentejas, the husband of petitioner Rosa Lentejas, entered the government service on 13 January 1968 as Maintenance "Capataz" at the Bureau of Public Highways in Calbayog City, Western Samar. He rose from the ranks until he became a maintenance foreman in 1978, a construction foreman in 1979, and eventually general foreman at the City Engineer's Office of Calbayog City. His official working hours were from 8:00 A.M. to 5:00 P.M.

On 25 July 1984, Victorio as general foreman of the City Engineer's Office, went to Barangay Banti, Tinambacan District, Calbayog City, there to inspect work being done on a damaged seawall protecting the shoreline against encroachment by the sea. At around 4:30 P.M., being then (according to the police report) on his way home from that place, Victorio was suddenly attacked and stabbed with a knife by Arnulfo Luaton who inflicted upon him multiple stab wounds on different parts of the body causing his instantaneous death.

Police investigation showed that the killing was brought about by a personal grudge. The deceased Victorio and the killer Arnulfo were owners of adjoining lots situated in San Vicente St., Tinambacan District, Calbayog City and they were in disagreement as to the correct boundary between their respective lots. About six (6) months earlier, petitioner and Arnulfo's father had a heated argument regarding this boundary dispute.

Because of Victorio's death, petitioner as the surviving spouse filed with the Government Service Insurance System (GSIS) a claim for compensation benefits under the provisions of Presidential Decree No. 626, as amended. The GSIS denied her claim upon the ground that the killing was not work-connected since the motive of the assailant in slaying her husband was a personal grudge. Petitioner filed a motion for reconsideration, which motion was denied by the GSIS. This denial was elevated by the petitioner to public respondent Employees' Compensation Commission (ECC). The ECC, however, in its decision dated 24 May 1989, affirmed the decision of the GSIS denying petitioner's claim for compensation benefits on the same basis that the cause of Victorio's death was not work-connected.

ISSUE: Whether Victorio’s death was not work-connected

HELD: NO. Under, the Amended Rules on Employees' Compensation promulgated by the ECC and relating to both government and private sector employees, more particularly Section 1 of Rule III, the requirements for compensability of an injury and the resulting death are as follows:

a) For the injury and the resulting death to be compensable, the injury must be the result of an employment accident satisfying all of the following conditions:

1. the employee must have been injured at the place where his work requires him to be;

185

2. the employee must have been performing his official function petitions:

3. if the injury is sustained elsewhere, the employee must have been executing an order for the employer.

xxx xxx xxx

It is not disputed that on 24 July 1984, Victorio Lentejas, a general foreman at the City Engineer's Office, Calbayog City, was assigned the task of inspecting the construction or rehabilitation work then in process on the damaged seawall along the shoreline of Barangay Banti. While he was on his way from Barangay Banti, Arnulfo Luaton attacked and stabbed him with deadly effect. He was dead when the police reached the scene of the crime; the circumstances of Victorio's death were related by an eyewitness to the police officers. Thus, there was no definite evidence to show that the deceased was actually on his way home at the time of the attack upon him. The killing took place at 4:30 P.M., that is, during the deceased's official hours of work and hence, Victorio might well have been on his way back to the City Engineer's Office when he was set upon and killed. He was, in other words, on official time and in the course of performing his official functions when he was attacked. The deceased was at a place where his work required him to be, that is, at Barangay Banti and there is no evidence to show that the route he took leaving the situs of the damaged seawall was not a usual or convenient route from that place. He was not, to borrow a phrase from the common law of torts, on "a frolic of his own." 

In a line of cases, this Court has held that an injury sustained by the employee while on his way to or from his place of work, and which is otherwise compensable, is deemed to have arisen out of and in the course of his employment. 

We note that under the foregoing cases, it is quite clear that although Victorio might have been on his way home from Barangay Banti at the time he was attacked and killed by Arnulfo Luaton, that circumstance did not by itself operate to render his death non- compensable. We note, at the same time, that in all the cases noted above fromVda. de Torbela to Lazo, the events which caused or precipitated injury or death did not involve the intentional inflicting of harm or injury or death upon the employee concerned. In the instant case, however, as noted earlier, Victorio's death was the result of a murderous assault upon him. Thus, the precise technical issue here is whether or not the circumstance that Victorio's death was the result of a criminal attack by another person, not a member of the staff of the Calbayog City Engineer's Office, had the effect of rendering his death non-compensable although such death had occurred in the course of performance of official functions.

VICENTE v. ECC

FACTS: The petitioner, Domingo Vicente, was formerly employed as a nursing attendant at the Veterans Memorial Medical Center in Quezon City. On August 5, 1981,

186

at the age of forty-five, and after having rendered more than twenty-five years of government service, he applied for optional retirement (effective August 16, 1981) under the provisions of Section 12(c) of Republic Act No. 1616, giving as reason therefor his inability to continue working as a result of his physical disability. The petitioner likewise filed with the Government Service Insurance System (GSIS) an application for "income benefits claim for payment" under Presidential Decree (PD) No. 626, as amended. Both applications were accompanied by the necessary supporting papers, among them being a "Physician's Certification" issued by the petitioner's attending doctor at the Veterans Memorial Medical Center, Dr. Avelino A. Lopez, M.D., F.P.C.S., ** F.I.C.S. *** (Section Chief, General, Thoracic & Peripheral Surgery, Surgical Department, Veterans Medical Center, Hilaga Avenue, Quezon City), who had diagnosed the petitioner as suffering from:

Osteoarthritis, multiple;Hypertensive Cardiovascular Disease;Cardiomegaly; andLeft Ventricular Hypertrophy;

and classified him as being under "permanent total disability." 

The petitioner's application for income benefits claim payment was granted but only for permanent partial disability (PPD) compensation or for a period of nineteen months starting from August 16, 1981 up to March 1983. 

On March 14, 1983, the petitioner requested the General Manager of the GSIS to reconsider the award given him and prayed that the same be extended beyond nineteen months invoking the findings of his attending physician, as indicated in the latter's Certification.  As a consequence of his motion for reconsideration, and on the basis of the "Summary of Findings and Recommendation"  of the Medical Services Center of the GSIS, the petitioner was granted the equivalent of an additional four (4) months benefits.  Still unsatisfied, the petitioner again sent a letter to the GSIS Disability Compensation Department Manager on November 6, 1986, insisting that he (petitioner) should be compensated no less than for "permanent total disability." On June 30, 1987, the said manager informed the petitioner that his request had been denied. Undaunted, the petitioner sought reconsideration and as a result of which, on September 10, 1987, his case was elevated to the respondent Employees Compensation Commission (ECC). Later, or on October 1, 1987, the petitioner notified the respondent Commission that he was confined at the Veterans Memorial Medical Center for "CVA probably thrombosis of the left middle cerebral artery."

There was nothing he could do but wait and hope.

Finally, on August 24, 1988, the respondent rendered a decision affirming the ruling of the GSIS Employees' Disability Compensation and dismissed the petitioner's appeal.

187

ISSUE: Whether the disability of petitioner is permanent total or permanent partial

Employee's disability under the Labor Code is classified into three distinct categories: (a) temporary total disability; (b) permanent total disability;  and (c) permanent partial disability.  Likewise, in Section 2, Rule VII of the Amended Rules on Employees Compensation, it is provided that:

Sec. 2. Disability—(a) A total disability is temporary if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period not exceeding 120 days, except as otherwise provided in Rule X of these Rules.

(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of these Rules.

(c) A disability is partial permanent if as a result of the injury or sickness the employee suffers a permanent partial loss of the use of any part of his body.

Here, there is no question that the petitioner is not under "temporary total disability" as defined by law. The respondent Commission's decision classifying the petitioner's disability as "permanent partial" attests, albeit indirectly, to this fact. Our focus therefore, as stated earlier, is only in resolving out whether the petitioner suffers from "permanent total disability" as he claims, or from "permanent partial disability" as the respondent Commission would have us believe.

HELD: PERMANENT TOTAL DISABILITY. It may therefore be inferred from the Court's pronouncements that while "permanent total disability" invariably results in an employee's loss of work or inability to perform his usual work, "permanent partial disability," on the other hand, occurs when an employee loses the use of any particular anatomical part of his body which disables him to continue with his former work. Stated otherwise, the test of whether or not an employee suffers from "permanent total disability" is a showing of the capacity of the employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in a more detailed manner, describes what constitutes temporary total disability), then the said employee undoubtedly suffers from "permanent total disability" regardless of whether or not he loses the use of any part of his body.

In the case at bar, the petitioner's permanent total disability is established beyond doubt by several factors and circumstances. Noteworthy is the fact that from all available

188

indications, it appears that the petitioner's application for optional retirement on the basis of his ailments had been approved. The decision of the respondent Commission even admits that the petitioner "retired from government service at the age of 45." Considering that the petitioner was only 45 years old when he retired and still entitled, under good behavior, to 20 more years in service, the approval of his optional retirement application proves that he was no longer fit to continue in his employment.  For optional retirement is allowed only upon proof that the employee-applicant is already physically incapacitated to render sound and efficient service. 

The fact that the petitioner was granted benefits amounting to the equivalent of twenty-three months shows that the petitioner was unable to perform any gainful occupation for a continuous period exceeding 120 days. This kind of disability is precisely covered by Section 2(b), Rule VII of the Amended Rules on Employees' Compensability which we again quote, to wit:

Sec. 2. Disability—(a) . . .

(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of those Rules.

xxx xxx xxx

There being no showing, as we mentioned earlier, that the petitioner's disability is "temporary total" as defined by the law, the inescapable conclusion is that he suffers from permanent total disability.

LOOT v. GSIS

FACTS : Petitioner, a lawyer, retired at age sixty-five (65) as Special Assistant in the Development Bank of the Philippines (DBP) on September 27, 1980. He started serving the government in 1939 as a clerk in the Bureau of Health and had a short stint as a military officer from 1941 to 1947, after which, he started working as a stenographer at the DBP.

Sometime in 1969, when he was branch manager of the DBP in Puerto Princesa, he began complaining of headache and chest pain. He consulted physicians at the DBP but he was referred to the St. Luke's Hospital where he was disposed as suffering from hypertensive cardiovascular disease.

One year after his retirement in 1980, petitioner filed with the Government Service Insurance System (GSIS) a claim for compensation benefits under Presidential Decree No. 626, 1 as amended. Attached to his claim was a certification from his attending physician at the United Doctors Medical Center, Dr. Antonio F. Guytingco, stating that

189

petitioner was suffering from "arteriosclerotic hypertensive cardiovascular disease" and "left ventricular hypertrophy by voltage criteria" and that his degree of disability was "permanent total." 2

Evaluating petitioner's medical records, the GSIS considered him to have only partial permanent disability (PPD), and awarded him medical benefits from September 1980 to March 1982 or for nineteen (19) months. Petitioner requested a reconsideration of the GSIS' evaluation which was, however, denied on the ground that, based on the Implementing Rules of Employees Compensation Program, the degree of his disability at the time of his separation from government service fell under the category of PPD only, and that any sickness, injury or death which might arise after retirement could not be considered work-related within the contemplation of law.

Still dissatisfied with the GSIS' explanation, petitioner persistently wrote letters claiming additional benefits, attaching thereto medical certificates issued by his attending physician. The GSIS re-evaluated his case but found no reason to alter or even amend its denial of petitioner's claims. 

In a decision which was unanimously approved by the ECC on September 21, 1988 under Resolution No. 3986, the denial of petitioner's claims was affirmed.

ISSUE: Whether the law applicable in petitioner’s case is WCL and not PD 626

HELD:

WCL. Art. 206 of the said Presidential Decree specifically provides that it shall apply "only to injury, sickness, disability or death occurring on or after January 1, 1975."  The records indisputably show that petitioner became ill as early as 1969. Workmen's Compensation cases are governed by the law in force at the time the claimant contracted his illness.  Therefore, petitioner's case is clearly excluded from the application of P.D. No. 626 and he can invoke the doctrine of compensability under the Workmen's Compensation Act. 

Although it appears that the GSIS granted the petitioner's claim under P.D. No. 626 as shown by the fact that its counsel contends herein that the GSIS should be refunded by the DBP with whatever amount of the claim it had paid to petitioner because liability under the Workmen's Compensation Law is chargeable to the employer, it is not too late in the day to correct such erroneous application of the law.

Permanent total disability or "total and permanent disability" under Sec. 15 of the Workmen's Compensation Law means "disablement of an employee to earn wages in the same kind of work, or work of a similar nature that (s)he was trained for, or accustomed to perform, or any kind of work which a person of her (his) mentality and attainment could do."

190

Petitioner asserts that his ailment has prevented him from seeking employment, practicing his profession, or engaging in a gainful occupation or even pursuing a self-help project since his retirement without risking a sudden stroke and eventual death as he has been under his doctors' ministrations. He cites Dr. Guytingco's report to buttress his assertion.

While we do not question the competence of GSIS physicians in determining the extent of an employee's disability, yet we cannot close our eyes to the fact that these physicians place more reliance on reports rather that on personal examination of an employee, which is what happened in the instant case. It must be conceded that the findings of the medical staff of the GSIS should be given due weight. However, a claimant may not just cite the findings of a physician in support of his claim in order to be entitled to a monetary benefit. As this Court said inMarte v. Employees' Compensation Commission, "no physician in his right mind and who is aware of the far-reaching and serious effect that his statements would cause on a money claim filed with a government agency, would issue certifications indiscriminately, without even minding his own interests and protection." In signing a medical report, a physician, especially a specialist, stakes his reputation. We, thus, accord greater weight to Dr. Guytingco's findings.

In the same manner, the strain and tension caused by managing a branch of a bank may have aggravated petitioner's ailment, such that aggravation persisted even after he had retired from the service. His longevity inspite of a debilitating ailment should not stand in the way of his availment of the benefits provided for by the Workmen's Compensation Act.

As to who shall be liable for the payment of the petitioner's medical benefits, Sec. 2 of the Workmen's Compensation Act explicitly provides that the employer shall be liable to pay compensation. Thus, we agree with respondent GSIS that DBP should reimburse it whatever amount it had paid petitioner.

WHEREFORE, the decision of the Employees' Compensation Commission is hereby REVERSED and SET ASIDE. The Development Bank of the Philippines shall PAY petitioner medical benefits as a permanently and totally disabled person under the Workmen's Compensation Act and the same bank shall reimburse the GSIS whatever amount the latter had paid petitioner in terms of medical benefits. No costs.

PHILIPPINE BLOOMING MILLS EMPLOYEES ASS. v. SSS

FACTS: The Philippine Blooming Mills Co., Inc., a domestic corporation since the start of its operations in 1957, has been employing Japanese technicians under a pre-arranged contract of employment, the minimum period of which employment is 6 months and the maximum is 24 months.

191

From April 28, 1957, to October 26, 1958, the corporation had in its employ 6 Japanese technicians. In connection with the employment of these aliens, it sent an inquiry to the Social Security System (SSS) whether these employees are subject to compulsory coverage under the System

Starting September, 1957, and until the aforementioned Japanese employees left the Philippines on October 26, 1958,

On October 7, 1958, the Assistant General Manager of the corporation, on its behalf and as attorney-in-fact of the Japanese technicians, filed a claim with the SSS for the refund of the premiums paid to the System, on the ground of termination of the members' employment. As this claim was denied, they filed a petition with the Social Security Commission for the return or refund of the premiums, in the total sum of P2,520.00, paid by the employer corporation and the 6 Japanese employees, plus attorneys' fees. This claim was controverted by the SSS, alleging that Rule IX of the Rules and Regulations of the System, as amended, requires membership in the System for at least 2 years before a separated or resigned employee may be allowed a return of his personal contributions. Under the same rule, the employer is not also entitled to a refund of the premium contributions it had paid.

After hearing, the Commission denied the petition for the reason that, although under the original provisions of Section 3 (d) of Rule I of the Rules and Regulations of the SSS, alien-employees (who are employed temporarily) and their employers are entitled to a rebate of a proportionate amount of their respective contributions upon the employees' departure from the Philippines, said rule was amended by eliminating that portion granting a return of the premium contributions. This amendment became effective on January 14, 1958, or before the employment of the subject aliens terminated. The rights of covered employees who are separated from employment, under the present Rules, are covered by Rule IX which allows a return of the premiums only if they have been members for at least 2 years.

ISSUE: Whether appellants are bound by the amended Rules requiring membership for 2 years before refund of the premium-contributions may be allowed..

HELD: YES. These rules and regulations were promulgated to provide guidelines to be observed in the enforcement of the law. As a matter of fact, Section 3 of Rule I is merely an enumeration of the "general principles to (shall) guide the Commission" in the determination of the extent or scope of the compulsory coverage of the law. One of these guiding principles is paragraph (d) relied upon by appellants, on the coverage of temporarily-employed aliens. It is not here pretended, that the amendment of this Section 3(d) of Rule I, as to eliminate the provision granting to these aliens the right to a refund of part of their premium contributions upon their departure from the Philippines, is not in implementation of the law or beyond the authority of the Commission to do.

192

It may be argued, however, that while the amendment to the Rules may have been lawfully made by the Commission and duly approved by the President on January 14, 1958, such amendment was only published in the November 1958 issue of the Official Gazette, and after appellants' employment had already ceased. Suffice it to say, in this regard, that under Article 2 of the Civil Code,5 the date of publication of laws in the Official Gazette is material for the purpose of determining their effectivity, only if the statutes themselves do not so provide.

In the present case, the original Rules and Regulations of the SSS specifically provide that any amendment thereto subsequently adopted by the Commission, shall take effect on the date of its approval by the President. Consequently, the delayed publication of the amended rules in the Official Gazette did not affect the date of their effectivity, which is January 14, 1958, when they were approved by the President. It follows that when the Japanese technicians were separated from employment in October, 1958, the rule governing refund of premiums is Rule IX of the amended Rules and Regulations, which requires membership for 2 years before such refund of premiums may be allowed.

Wherefore, finding no error in the resolution of the Commission appealed from, the same is hereby affirmed, with costs against the appellants. So ordered.

STA. RITA v. CA – hay naku, basahin n lng ung case.. parang nahahabaan aq.. bka makopya ko lahat. Hahaha

CORPORAL v. NLRC

FACTS:  two female petitioners, Teresita Flores and Patricia Nas worked as manicurists in New Look Barber Shop located at 651 P. Paterno Street, Quiapo, Manila owned by private respondent Lao Enteng Co. Inc.. Petitioner Nas alleged that she also worked as watcher and marketer of private respondent.

Petitioners claim that at the start of their employment with the New Look Barber Shop, it was a single proprietorship owned and managed by Mr. Vicente Lao. In or about January 1982, the children of Vicente Lao organized a corporation which was registered with the Securities and Exchange Commission as Lao Enteng Co. Inc. with Trinidad Ong as President of the said corporation. Upon its incorporation, the respondent company took over the assets, equipment, and properties of the New Look Barber Shop and continued the business. All the petitioners were allowed to continue working with the new company until April 15, 1995 when respondent Trinidad Ong informed them that the building wherein the New Look Barber Shop was located had been sold and that their services were no longer needed.[2]

On April 28, 1995, petitioners filed with the Arbitration Branch of the NLRC, a complaint for illegal dismissal, illegal deduction, separation pay, non-payment of 13th month pay, and salary differentials. Only petitioner Nas asked for payment of salary differentials as she alleged that she was paid a daily wage of P25.00 throughout her period of employment. The petitioners also sought the refund of the P1.00 that the

193

respondent company collected from each of them daily as salary of the sweeper of the barber shop.

Private respondent in its position paper averred that the petitioners were joint venture partners and were receiving fifty percent commission of the amount charged to customers. Thus, there was no employer-employee relationship between them and petitioners. And assuming arguendo, that there was an employer-employee relationship, still petitioners are not entitled to separation pay because the cessation of operations of the barber shop was due to serious business losses.

Respondent Trinidad Lao Ong, President of respondent Lao Enteng Co. Inc. specifically stated that private respondents had no control over petitioners who were free to come and go as they wished. Admittedly too by petitioners they received fifty percent to sixty percent of the gross paid by customers. Trinidad explained that some of the petitioners were allowed to register with the Social Security System as employees of Lao Enteng Company, Inc. only as an act of accommodation. All the SSS contributions were made by petitioners. Moreover, Osias Corporal, Elpidio Lacap and Teresita Flores were not among those registered with the Social Security System. Lastly, Trinidad avers that without any employee-employer relationship petitioners claim for 13th month pay and separation pay have no basis in fact and in law.

Labor Arbiter Potenciano S. Cañizares, Jr. ordered the dismissal of the complaint on the basis of his findings that the complainants and the respondents were engaged in a joint venture and that there existed no employer-employee relation between them. The Labor Arbiter also found that the barber shop was closed due to serious business losses or financial reverses and consequently declared that the law does not compel the establishment to pay separation pay to whoever were its employees.[4]

On appeal, NLRC affirmed the said findings of the Labor Arbiter and dismissed the complaint for want of merit

ISSUE: Whether an employer-employee relationship exist between petitioners and private respondent

Whether the membership in SSS is predicated on the existence of an employer-employee relationship

HELD:

1. YES. The following elements must be present for an employer-employee relationship to exist: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. Records of the case show that the late Vicente Lao engaged the services of the petitioners to work as barbers and manicurists in the New Look Barber Shop, then a single proprietorship owned by him; that in January 1982,

194

his children organized a corporation which they registered with the Securities and Exchange Commission as Lao Enteng Company, Inc.; that upon its incorporation, it took over the assets, equipment, and properties of the New Look Barber Shop and continued the business; that the respondent company retained the services of all the petitioners and continuously paid their wages. Clearly, all three elements exist in petitioners' and private respondent's working arrangements.

Private respondent claims it had no control over petitioners. The power to control refers to the existence of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee. It is enough that the employer has the right to wield that power.As to the "control test", the following facts indubitably reveal that respondent company wielded control over the work performance of petitioners, in that: (1) they worked in the barber shop owned and operated by the respondents; (2) they were required to report daily and observe definite hours of work; (3) they were not free to accept other employment elsewhere but devoted their full time working in the New Look Barber Shop for all the fifteen (15) years they have worked until April 15, 1995; (4) that some have worked with respondents as early as in the 1960's; (5) that petitioner Patricia Nas was instructed by the respondents to watch the other six (6) petitioners in their daily task. Certainly, respondent company was clothed with the power to dismiss any or all of them for just and valid cause. Petitioners were unarguably performing work necessary and desirable in the business of the respondent company.

2. NO. While it is no longer true that membership to SSS is predicated on the existence of an employee-employer relationship since the policy is now to encourage even the self-employed dressmakers, manicurists and jeepney drivers to become SSS members, we could not agree with private respondents that petitioners were registered with the Social Security System as their employees only as an accommodation. As we have earlier mentioned private respondent showed no proof to their claim that petitioners were the ones who solely paid all SSS contributions. It is unlikely that respondents would report certain persons as their workers, pay their SSS premium as well as their wages if it were not true that they were indeed their employees.

SANTIAGO v. CA

FACTS: There is no dispute that petitioners were employees of I-Feng Enamelling Company (Phil.) Inc. for several years, some from 1950 up to the time the company closed its business on May 1, 1965, and that since the enactment of the Social Security Act, Republic Act No. 1161, as amended, said employees have been paying, through salary deductions, their personal contributions to the System There is likewise no dispute that appellants, during their employment, also enjoyed salary loan benefits, their installment payments thereto were likewise deducted and collected by their employer, and that said employer failed to remit to the System not only the installment payments to their salary loans in the amount of P7,940.13 but also the back premiums in the

195

amount of P137,787.90 as of July 1966, excluding of course the penalties therefor in the amount of P63,734.97 as of August 9,1966.

Petitioners sought to have the amounts credited in their favor but the Commission denied their petition. Petitioners appealed to the then Court of Appeals, which, in its Decision promulgated on December 23, 1974, upheld the findings of the Commission and affirmed the challenged Resolution. 

ISSUE: whether or not the premium contributions and payments of salary loans by petitioners, which were deducted and collected from their salaries by their Employer, but hot remitted to the System, should be credited in their favor by the System.

HELD: ONLY THE PREMIUMS. On the matter of payments of salary loans, SSS Circular No. 52 provides: têñ.£îhqwâ£

(2) in case the borrower is in active employment, payment shall be made thru this employer by means of salary deductions. For this purpose, he shall expressly authorize in the application form his employer and the subsequent employers to whom he may later on transfer to deduct from his salaries the installments due. The employer, in turn shall remit to the System these installments in accordance with the procedure laid down in heading VII hereof.

lt should be noted from the abovequoted rule that it is the borrower who expressly authorizes his employer and subsequent employers to deduct from his salary the installments due on his salary loan. The employer then remits the installments due to the System in accordance with rules that the System has laid down. The employer, in so deducting the installment payments from the borrower, does so upon the latter's authorization. The employer is merely the conduit for remitting the premiums for reasons of administrative convenience and expediency iii order that SSS members may be served efficiently and expeditiously. No contract of agency, in the legal sense, therefore may be said to exist between the employer and the System. But petitioners also rely on the "Current Employer's Certification/Agreement" (Exhibits "N-1 ", "U-1 ", "V1" and "WI ") providing that the employer is empowered: têñ.£îhqwâ£

1. To deduct monthly from the salaries of said employee the installments due on the loan that may be granted by virtue of this application and to remit the same to the System not later than the 20th day of the month following the end of each calendar quarter, the employer being entitled to deduct from the total quarterly collections P.07 for every P10.00 thereof as his collection fee.

The foregoing reiterates the proviso in SSS Circular No. 52, reading: têñ.£îhqwâ£

196

V. Service and Collection Fee. -The System shall charge a service fee of P3.50 for every approved application deductible in advance from the proceeds of the loan.

However, the employer shall be entitled to deduct from the total quarterly collections that he remits to the System a collection fee of seven centavos (P.07) for every ten pesos (P10.00) or fraction thereof.

The entitlement to the collection fee by the employer neither makes the latter the agent of the System. The fee was devised to encourage employers to be prompt in the remittance of their collections to the System. As held by respondent Appellate Court:

To us, this negligible collection fee is only an incentive granted to all employers throughout the country covered by the Social Security Act for their efforts in helping the System collect the necessary contributions and payments made to the latter by the innumerable individual members. This incentive is for administrative policy, efficiency and expediency with the end in view that the purposes for which the System has been created by law shall be effectively carried out. ... .

To rule otherwise would be to open the door for unscrupulous employers to circumvent the law by not remitting their collections of salary loans installment payments from employees since, anyway, the System would credit them with what they had paid to the Employer even though the latter fails to remit them to the System.

There is a difference, however, in respect of premium contributions, by reason of the explicit provision of Section 22(b) of the Social Security Act, reading: têñ.£îhqwâ£

(b) The contributions payable under this Act in cases where an employer refuses or neglects to pay the same shall be collected by the System in the same manner as taxes are made collectible under the National Internal Revenue Code, as amended, Failure or refusal of the employer to pay or remit the contributions herein prescribed shall not prejudice the right of the covered employee to the benefits of the coverage.

Clearly, if the employer neglects to pay the premium contributions, the System may proceed with the collection in the same manner as the Bureau of Internal Revenue in case of unpaid taxes. Plainly, too, notwithstanding non-remittance by employers of the premium contributions, covered employees are entitled to the benefits of the coverage, such as death sickness, retirement, and permanent disability benefits. 2 These benefits continue to be enjoyed by the employees by operation of law and not, as petitioners allege, because the premium contributions and salary loan installment payments have already became the money of the System upon payment by the employees to the employer. It should be remembered that funds contributed to the System by compulsion of law are funds belonging to the members, which are merely held in trust by the government.3 The mentioned benefits, however, do not include the salary loan

197

privileges that member-employees apply for. The System may or may not grant those loans pursuant to its rules and regulations. The salary loans are not covered by law but by contract between the System as lender, and the private employee, as borrower.

Contrary to petitioners' contention, the penalty of 3% per month imposed on the employer, if any premium contribution is not paid to the System, prescribed by Section 22 of the Act from the date the contribution falls due until paid, does not necessarily make the employer the agent of the System. The prescribed penalty is intended to exact compliance by the employer. It is evidently of a punitive character to assure that employers do not take lightly the State's exercise of the police power in the implementation of the Republic's declared policy to develop, establish gradually, and perfect a Social Security System which shag be suitable to the needs of the people throughout the Philippines and to provide protection to employees against the hazards of disability, sickness, old age, and death.'

WHEREFORE, the judgment under review is hereby modified in that only the premium contributions paid by petitioners to its employer, the I-Feng Enamelling Company (Phil.) Inc., shall be credited in petitioners' favor so that they may continue to enjoy the benefits of the coverage as provided by law. 

BENEDICTO v. ABAD SANTOS JR. - mahaba

FACTS: Petitioner Benedicto started a trucking business sometime in March 1971 in which business he employed the late Salvador Pillon as truck driver. Petitioner, however, did not report Pillon's employment to the Social Security System ("SSS") for compulsory coverage and did not pay the corresponding SSS contributions.

The above facts came to the knowledge of the SSS sometime in 1975. On 19 October 1975, after Pillon's death, Mr. Antonio Obillos, Jr., an investigator of the SSS Regional Office in Bacolod City, was deputized to conduct an enquiry in respect of Benedicto's alleged violations of the Social Security Act (Republic Act No. 1161, as amended). In his Field Investigation Report, dated 29 October 1975, 1 Obillos stated that Benedicto had admitted having failed to report and to register with the SSS Pillon's employment for the period from March 1971 up to the time of Pillon's death in 1974, and to pay the corresponding SSS contributions; that upon Obillos' suggestion, petitioner Benedicto had accomplished and submitted SSS Forms E-1 and R-1A reporting himself and Pillon for SSS compulsory coverage; that Benedicto and Pillon were assigned SSS Identification Nos. 07-17376-00 and 07-0687-312 effective 1 March 1971; that Benedicto was assessed SSS premiums in the total amount of P491.70 excluding penalties. Obillos recommended that his report be transmitted to the Legal Department of the SSS in Quezon City for appropriate action.

Approximately ten (10) years later, on 18 July 1985, upon complaint of the Legal Department of the SSS, the Assistant City Fiscal of Bacolod City filed an information charging petitioner Benedicto with violations of Section 24 (a) in relation to Section 28 (e) of the Social Security Act, as amended.

ISSUE: Whether the offense with which petitioner Benedicto is charged has prescribed.

PETITIONER’S CONTENTION: argues that since the Social Security Act itself had not established a prescriptive period in respect of criminal liability for violations of the Social Security Act

198

or the Rules and Regulations promulgated by the Social Security Commission concerning registration of employees and remittance of contributions to the SSS, the applicable statute of limitations was four (4) years under Act No. 3326, as amended, quoted above.

SSS CONTENTION: argued by the SSS as complainant before the trial court, as it is argued by the Solicitor General in the Petition at bar, that Act No. 3326, as amended, was not applicable to the instant case for the reason that the Social Security Act itself had established a statute of limitations in Section 22 (b) of the Social Security Act as amended by P.D. No. 1636, quoted earlier. It appears to be the position of the SSS that the 20-year statute of limitations embodied in Section 22 (b) is applicable in respect of all kinds of actions against a delinquent employer,whether criminal or civil. We find it difficult to accept this view as correct.

HELD:

199

200

201