Labor Law 1 A2010 - 1 - DisiniPEARANDA V BAGANGA PLYWOOD CORP.

PANGANIBAN; May 3, 2006

NATUREPetition for review assailing the resolutions of the Court of

Appeals (CA) FACTS- Petitioners Claims> Petitioner Charlito Pearanda alleges that he was employed by respondent [Baganga] with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer > His services were terminated without the benefit of due process and valid grounds. > He was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and attorneys fees having been forced to litigate the present complaint.- Respondents Claims> Respondent [BPC] represented by its General Manager HUDSON CHUA, allege that complainants separation from service was done pursuant to Art. 283 of the Labor Code. > BPC was on temporary closure due to repair and general maintenance and it applied for clearance with the DOLE, Regional Office No. XI to shut down and to dismiss employees. > Pearanda was not terminated from employment much less illegally. He opted to severe employment when he insisted payment of his separation benefits. > Furthermore, being a managerial employee he is not entitled to overtime pay and if ever he rendered services beyond the normal hours of work, there was no office order/or authorization for him to do so. - The labor arbiter ruled that there was no illegal dismissal and that petitioners complaint was premature because he was still employed by BPC. The temporary closure of BPCs plant did not terminate his employment.- Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest days, and attorneys fees in the total amount of P21,257.98.- NLRC deleted the award of overtime pay and premium pay for working on rest days for the petitioner was not entitled to these awards because he was a managerial employee.- CA dismissed Pearandas Petition for Certiorari and held that he failed to: 1) attach copies of the pleadings submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of the Petition was not done by personal service.- In its later Resolution, CA denied reconsideration on the ground that petitioner still failed to submit the pleadings filed before the NLRC. ISSUEWON petitioner is entitled to overtime pay and premium pay for working on rest days

HELDNO- Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for working on rest days. - Under this provision, managerial employees are those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision.- The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof;(2) They customarily and regularly direct the work of two or more employees therein;(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and

recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.

- The Court disagreed with the NLRCs finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities:

(1) The primary duty consists of the performance of work directly related to management policies of the employer;(2) Customarily and regularly exercise discretion and independent judgment;(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.

- Petitioners duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules. Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.- Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. The term foreman implies that he was the representative of management over the workers and the operation of the department. Petitioners evidence also showed that he was the supervisor of the steam plant. His classification as supervisor is further evident from the manner his salary was paid. He belonged to the 10% of respondents 354 employees who were paid on a monthly basis; the others were paid only on a daily basis. Disposition Petition was DENIED

BATONG BUHAY GOLDMINES V DELA SERNA

PURISIMA, August 6, 1999

FACTS- Employees filed a complaint against Batong Buhay for: unpaid salaries from March 16, 1987 to present, unpaid and ECOLA differentials under Wage Order Nos. 2 and 5, unpaid 13th months pay for 1985 and 1986, and upaid vacation/sick/compensatory leave benefits.- Labor Standards and Welfare Officers & Regional Director: Batong Buhay must pay Ty et al. P4,818,746.40- Regional Director directed Batong Buhay to put up a cash or surety bond otherwise a writ of execution will be issued.- The Special Sheriff seized three units of Peterbuilt trucks and then sold the same by public auction. Various materials and motor vehicles were also seized on different dates and sold at public auction.- Batong Buhay finally posted a supersedeas bond and appealed the Order contending that the Regional Director had no jurisdiction over the case.- Undersec dela Serna upheld the jurisdiction of the Regional Director and annulled all the auction sales conducted by Special Sheriff. MR denied. - Motion for Intervention was filed by MFT Corporation and Salter Holdings Pty., Ltd. For exclusion from annulment of the properties sold at the auction sale. Granted. MR denied.

Labor Law 1 A2010 - 2 - DisiniISSUES1. WON the Regional Director has jurisdiction over the complaint filed by the employees of BBGMI2. WON the auction sales conducted by the said Special Sheriff are valid

HELD1. YES- The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of DOLE. - Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety and health standards. Labor standards cases are governed by Article 128(b) of the Labor Code.- Even in the absence of E.O. 111 , Regional Directors already had enforcement powers over money claims, effective under P.D. 850, issued on December 16, 1975, which transferred labor standards cases from the arbitration system to the enforcement system.- E.O. No. 111 was issued on December 24, 1986 or three(3) months after the promulgation of the Secretary of Labor's decision upholding private respondents' salary differentials and ECOLAs on September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director (Article 128(b)) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where an employer-employee relationship still exists. This intention must be given weight and entitled to great respect. - The Court would have ruled differently had the petitioner shown that subject labor standards case is within the purview of the exception clause in Article 128 (b) of the Labor Code. Said provision requires the concurrence of the following elements in order to divest the Regional Director or his representatives of jurisdiction, to wit: (a) that the petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.- Petitioner's refusal to allow the Labor Standards and Welfare Officers to conduct inspection in the premises of their head office and the failure to file their position paper is equivalent to a waiver of its right to contest the claims of the employees. - This involves a labor standards case and it is in keeping with the law that "the worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge.- The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director has jurisdiction over the present labor standards case.2. NO- As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed absent any showing of grave abuse of discretion tainting the same. - There was grave abuse of discretion when the Undersec, without any evidentiary support, adjudged such prices as "scandalously low". He merely relied on the self-serving assertion by the petitioner that the value of the auctioned properties was more than the price bid. - The sales are null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines

CMS ESTATE, INC. V SOCIAL SECURITY SYSTEMCUEVAS; September 28, 1984

NATUREAppeal by the CMS Estate, Inc.

FACTS- Petitioner is a domestic corporation organized primarily for the purpose of engaging in real estate business. On December 1, 1952, it started doing business with only six (6) employees.- January 28, 1957: petitioner entered into a contract of management with one Eufracio D. Rojas for the operation and exploitation of the forest concession. The logging operation actually started on April 1, 1957 with four monthly-salaried employees. As of September 1, 1957, petitioner had 89 employees and laborers in the logging operation.- December 26, 1957: petitioner revoked its contract of management with Mr. Rojas.- August 1, 1958: petitioner became a member of the Social Security System with respect to its real estate business. On September 6, 1958, petitioner remitted to the System the sum of P203.13 representing the initial premium on the monthly salaries of the employees in its logging business. - October 9, 1958: petitioner demanded the refund of the said amount.- On November 10, 1958, petitioner filed a petition with the Social Security Commission praying for the determination of the effectivity date of the compulsory coverage of petitioner's logging business.- January 14, 1960: the instant petition was denied and petitioner was adjudged to be subject to compulsory coverage as Sept. 1, 1957 and the Social Security System was directed to effect such coverage of petitioner's employees in its logging and real estate business conformably to the provisions of Rep. Act No. 1161, as amended.- Petitioners ClaimCMS Estate, Inc. is not yet subject to compulsory coverage with respect to its logging business because it does not have the minimum required number of employees (per company).- Respondents CommentsThe logging business was a mere expansion of petitioner's activities and for purposes of the Social Security Act, petitioner should be considered a member of the System since December 1, 1952 when it commenced its real estate business.

ISSUES1. WON the contributions required of employers and employees under our Social Security Act of 1954 are obligatory because the said Act was allegedly enacted by Congress in the exercise of the police power of the State, not of its taxing power2. WON a contractee-independent contractor relationship existed between petitioner and Eufracio Rojas. during the time that he was operating its forest concession at Baganga, Davao3. WON Section 9 of the Social Security Act on the question of compulsory membership and employers should be given a liberal interpretation

HELD1. Ratio The said enactment implements the general welfare mandate of the Constitution and constitutes a legitimate exercise of the police power of the State.Reasoning - The Social Security Law was enacted pursuant to the policy of the government "to develop, establish gradually and perfect a social security system which shall be suitable to the needs of the people throughout the Philippines, and shall provide protection against the hazards of disability, sickness, old age and death" (Sec. 2, RA 1161, as amended).- Membership in the SSS is not a result of bilateral, concensual agreement where the rights and obligations of the parties are defined by and subject to their will, RA 1161 requires compulsory coverage of employees and employers under the System. It is actually a legal imposition on said employers and employees, designed to provide social security to the workingmen. The principle of non-impairment of the obligation of contract as provided in the Bill of Rights is not a proper defense, the enactment being a lawful exercise of the police power of the State.

Labor Law 1 A2010 - 3 - Disini- The taxing power of the State is exercised for the purpose of raising revenues. However, under our Social Security Law, the emphasis is more on the promotion of the general welfare. The Act is not part of out Internal Revenue Code nor are the contributions and premiums therein dealt with and provided for, collectible by the Bureau of Internal Revenue. The funds contributed to the System belong to the members who will receive benefits, as a matter of right, whenever the hazards provided by the law occur.- Together with the contributions imposed upon employees and the Government, they are intended for the protection of said employees against the hazards of disability, sickness, old age and death in line with the constitutional mandate to promote social justice to insure the well-being and economic security of all the people.- It is the intention of the law to cover as many persons as possible so as to promote the constitutional objective of social justice. It is clear that a later law prevails over a prior statute and moreover the legislative intent must be given effect.2. Ratio Rojas was not an independent contractor but merely an employee of the petitioner.Reasoning - Rojas was appointed as operations manager of the logging concession; he has no power to appoint or hire employees; as the term implies, he only manages the employees and it is petitioner who furnishes him the necessary equipment for use in the logging business; and he is not free from the control and direction of his employer in matter connected with the performance of his work. Rojas should be entitled to the compulsory coverage of the Act.3. Ratio Because of the broad social purpose of the Social Security Act, all doubts in construing the Act should favor coverage rather than exemption.Reasoning - Prior to its amendment, Sec. 9 of the Act provides that before an employer could be compelled to become a member of the System, he must have been in operation for at least two years and has at the time of admission at least six employees. It should be pointed out that it is the employer, either natural, or judicial person, who is subject to compulsory coverage and not the business.- It is the intention of the law to cover as many persons as possible so as to promote the constitutional objective of social justice. It is axiomatic that a later law prevails over a prior statute and moreover the legislative in tent must be given effectDisposition The records show that petitioner started its real estate business on December 1, 1952 while its logging operation was actually commenced on April 1, 1957. Applying the provision of Sec. 10 (previously Sec. 9) of the Act, petitioner is subject to compulsory coverage as of December 1, 1952 with respect to the real estate business and as of April 1, 1957 with respect to its logging operation. The appeal is dismissed, with costs against the petitioner.

KASAPIAN NG MALAYANG MANGGAGAWA SA COCA-COLA (KASAMMA-CCO) V CACHICO-NAZARIO; April 19, 2006

NATUREPetition for Review on Certiorari assailing the Decision of the Court of Appeals which affirmed the Decision of public respondent National Labor Relations Commission (NLRC) dismissing petitioners complaint against private respondent

FACTS- On 30 June 1998, the CBA for the years 1995-1998 executed between petitioner union and private respondent company expired. Petitioner submitted its demands to the company for another round of collective bargaining negotiations. Said negotiations came to a gridlock as the parties failed to reach a mutually acceptable agreement with respect to certain economic and non-economic issues.

Thereafter, petitioner filed a notice of strike on 11 November 1998 with the National Conciliation and Mediation Board on the ground of CBA negotiation deadlock. Several conciliation conferences were conducted but the parties failed to reach a settlement. On 19 December 1998, petitioner held the strike in private respondents Manila and Antipolo plants.- Subsequently, both parties came to an agreement settling the labor dispute. Thus, on 26 December 1998, both parties executed and signed a MOA providing for salary increases and other economic and non-economic benefits. It likewise contained a provision for the regularization of contractual, casual and/or agency workers who have been working with private respondent for more than one year. Said MOA was later incorporated to form part of the 1998-2001 CBA and was thereafter ratified by the employees of the company.- Consequently, petitioner demanded the payment of salary and other benefits to the newly regularized employees retroactive to 1 December 1998, in accord with the MOA. However, the private respondent refused to yield to said demands contending that the date of effectivity of the regularization of said employees were 1 May 1999 and 1 October 1999. Meanwhile, a certification election was conducted on 17 August 1999 wherein the KASAMMA-CCO Independent surfaced as the winning union and was then certified by the DOLE as the sole and exclusive bargaining agent of the rank-and-file employees of private respondents Manila and Antipolo plants for a period of five years from 1 July 1999 to 30 June 2004. On 23 August 1999, the KASAMMA-CCO Independent demanded the renegotiation of the CBA which expired on 30 June 1998. Such request was denied by private respondent as there was already an existing CBA which was negotiated and concluded between petitioner and private respondent which was yet to expire on 30 June 2001.- On 9 December 1999, despite the pendency of petitioners complaint before the NLRC, private respondent closed its Manila and Antipolo plants resulting in the termination of employment of 646 employees. About 500 workers were given a notice of termination effective 1 March 2000 on the ground of redundancy. The affected employees were considered on paid leave from 9 December 1999 to 29 February 2000 and were paid their corresponding salaries. On 13 December 1999, four days after its closure of the Manila and Antipolo plants, private respondent served a notice of closure to the DOLE.- Petitioner contends that respondent violated the MOA by not recognizing the regularization of the 61 employees as of December 1, 1998 and giving them full benefits retroactive to that date. Petitioner likewise claims the closure of the plants was in bad faith, done in order to avoid renegotiations of the CBA, and therefore illegal.

ISSUES1. WON the regularization of the 61 employees was effective December 1, 19982. WON the closure of the plants was legal

HELD1. YESRatio It must be noted that both parties admit the existence of said MOA and that they have voluntarily entered into said agreement. Furthermore, neither of the parties deny that the 61 employees have indeed been regularized by private respondent. The MOA, being a contract freely entered into by the parties, now constitutes as the law between them, and the interpretation of its contents purely involves an evaluation of the law as applied to the facts herein. It is the contention of petitioner that the date 1 December 1998 refers to the effective date of regularization of said employees, while private respondent maintains that said date is merely the reckoning date from which the one year employment requirement shall be computed. We agree with petitioner. It is logically absurd that the company will only begin to extend priority to these employees on a date that has already passed, when in fact they have already extended priority to these employees by agreeing to the contents of the MOA and signing said agreement. It is erroneous for the NLRC to conclude that extending to them the benefits of the MOA would

Labor Law 1 A2010 - 4 - Disiniviolate the principle of "no-work-no-pay" as they are actually rendering service to the company even before 1 December 1998, and continued to do so thereafter. Moreover, under Article 280 of the Labor Code, any employee who has rendered at least one year of service, 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. Also, under the law, a casual employee is only casual for one year, and it is the passage of time that gives him a regular status. Even if we were to follow private respondents contention that the date 1 December 1998 provided in the MOA is merely a reckoning date to determine who among the non-regular employees have rendered one year of service as of said date, all those who have been with the company for one year by said date must automatically be considered regular employees by operation of law.2. YESRatio The characterization of the employees service as no longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterizing or decision is 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. The private respondents decision to close the plant was a result of a study conducted which established that the most prudent course of action for the private respondent was to stop operations in said plants and transfer production to other more modern and technologically advanced plants of private respondent. The subject closure and the resulting termination of the 639 employees was due to legitimate business considerations, as evidenced by the technical study conducted by private respondent.Disposition The assailed Decisions are hereby AFFIRMED with MODIFICATION. The 61 subject employees are hereby declared regular employees as of 1 December 1998 and are entitled to the benefits provided for in the Memorandum of Agreement.

DOLE PHILIPPINES INC V PAWIS NG MAKABAYNG OBRERO

CORONA; (date) 2003

NATUREPetition for review on certiorari of the decision of the Court of Appeals

FACTS- The petitioner and the respondent executed a CBA for the period starting February 1996 to February 2001. Under the bonuses and allowances section of the said CBA, a P10 meal allowance shall be given to employees who render at least 2 hrs of overtime work and free meals shall be given after 3 hours of actual overtime work.- Pursuant to this provision, some departments of granted free meals after exactly 3 ours of work. However, other departments granted free meals only after more than 3 hours of overtime work.- The respondent filed a complaint against Dole, saying that free meals should be granted after exactly 3 hrs of overtime work, not after more than 3 hrs. The parties agreed to settle the dispute to voluntary arbitration. It was decided in favor of the respondent, directing the petitioner to grant free meals after exactly 3 hrs of overtime work. CA affirmed.

ISSUES1. WON free meals should be granted after exactly 3 hrs of work2. WON the petitioner has the right to determine when to grant free meals and its conditions

HELD1. YES- The same meal allowance provision is found in their previous CBAs, the 1985-1988 CBA and the 1990-1995 CBA. However, it

was amended in the 1993-1995 CBA, by changing the phrase after 3 hrs of overtime work to after more than 3 hrs of overtime work. In the 1996-2001 CBA, the parties had to negotiate the deletion of the said phrase in order to revert to the old provision. Clearly, both parties had intended that free meals should be given after exactly 3 hrs of overtime work.- The disputed provision is clear and unambiguous, hence the literal meaning shall prevail. No amount of legal semantics can convince the Court that after more than means the same as after.2. NO- The exercise of management prerogative is not unlimited. It is subject to the limitations provided by law. In this case, there was a CBA, and compliance therewith is mandated by the express policy of the law.Disposition Petition denied

DAVAO FRUITS CORPORATION V ASSOCIATED LABOR UNIONS (ALU)

QUIASON; August 24, 1993

NATUREThis is a petition for certiorari to set aside the resolution of the National Labor Relations Commission (NLRC)

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 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.

ISSUES1. WON 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 2. WON the petitioner may invoke the principle of solution indebiti

HELD1. 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-

Labor Law 1 A2010 - 5 - Disiniquoted 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]).2. Petitioner cannot invoke the principle of solutio indebiti which as a civil law concept that is not applicable in Labor Law. Besides, in solutio indebiti, the obligee is required to return to the obligor whatever he received from the latter (Civil Code of the Philippines, Arts. 2154 and 2155). Petitioner in the instant case, does not demand the return of what it paid respondent ALU from 1975 until 1981; it merely wants to "rectify" the error it made over these years by excluding unilaterally from the thirteenth month pay in 1982 the items subject of litigation. Solutio indebiti, therefore, is not applicable to the instant case.Disposition 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

SAMAHANG MANGGAGAWA V NLRCROMERO; September 7, 1998

NATUREPetition for Certiorari

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 P12 daily 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 P17 increase 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 P14.30 and from P6.00 to P10.00, respectively.- SM filed a complaint with the NCR NLRC. - Petitioners 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."- Respondents 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 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.

ISSUES1. WON private respondent committed an unfair labor practice in its refusal to grant across-the-board wage increases in implementing Wage Orders Nos. 01 and 022. WON 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.

HELD1. NORatio 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 TFM 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. - SMs 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 ) 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. NORatio 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.

Labor Law 1 A2010 - 6 - DisiniThere was a meaningful implementation of WO#01 and #02. SMs 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.

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION V AMERICAN WIRE AND CABLE

CO., INC.CHICO-NAZARIO: April 29, 2005

FACTS- American Wire and Cable Co., is a corporation engaged in the manufacture of wires and cables. On Feb.16, 2001, an original action was filed before the NCMB of the DOLE by the two unions (American Wire and Cable Daily Rated Employees and American Wire and Cable Monthly Rated Employees) for voluntary arbitration. They alleged that respondent company, without valid cause, suddenly and unilaterally withdrew and denied certain benefits which they have long enjoyed. These are:a) Service Awardb) 35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29c) Christmas partyd) Promotional increase.- A promotional increase was sought by 15 of its members who were given new job classifications. These new hob classifications according to the union are in the form of a promotion. Increase was not given.Petitioners contention- withdrawal of the 35% premium pay for selected days during Holy Week and Christmas season, the holding of a Christmas party, and its incidental benefits, and the giving of service awards was a customary practice that can no longer be unilaterally withdrawn by respondent without consent of the petitioner. The benefits in question were given by respondent consistently, deliberately and unconditionally since time immemorial. The benefits given by the respondent cannot be considered as a bonus as they are not founded on profit. Even assuming that it can be treated as a bonus, the grant of the same, by reason of its ling and regular concession, may be regarded as part of regular compensation.Respondents contention-The grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them. The grant of these benefits was conditional based upon the financial conditions that existed before have indeed substantially changed thereby justifying the discontinuance of said grants.

ISSUEWON respondent is guilty of violating article 100 of the Labor Code, when the benefits/entitlements given to the members of petitioner union were withdrawn

HELD*preliminary issue raised by respondent was the error in the mode of appeal by the petitioners. Respondent contends that petitioner should have raised a petition for review on certiorari under Rule 45, and not through a special civil action for certiorari under Rule 65 of the Rules on Civil Procedure. Thus, case should be dismissed outright.NO- Court ruled that the SC may brush aside the procedural barrier and take cognizance of the petition as it raises an issue of paramount importance.- ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.-Nothing in this Book shall be construed to

eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.- a determination must first be made on whether the benefits are in the nature of a bonus or no, and assuming they are so, whether they are demandable and enforceable obligations.- Definition of bonus (Producers Bank of the Philippines v. NLRC)a bonus is an amount granted and paid to an employee for his industry and loyalty it is an act of generosity granted by an enlightened employer to spur the employee to greater efforts the granting of a bonus is a management prerogative 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.- Court ruled that the benefits /entitlements subjects of the instant case are all bonuses given by respondent out of its generosity and munificence. Benefits/entitlements are all in excess of what the law requires each employer to give its employees. Since they are above what is strictly due, the granting of the same was a management prerogative, which, whenever management sees necessary, may be withdrawn.- the consequential question therefore that needs to be settled is if the subject benefits, which are bonuses, are demandable or not.- the Court does not believe so. For a bonus to be enforceable, it has to be promised by the employer and expressly agreed upon by the parties or it must have a fixed amount and had been a long and regular practice on the part of the employer. To be considered regular practice the giving of the bonus should have been done over a long period of time and must be shown to have been consistent and deliberate.- the benefits in question were never part of any express agreement. They were never even incorporated in the Collective Bargaining Agreement. The Christmas party and its incidental benefits and the giving of cash incentive together with the service award cannot be said to have fixed amounts. There was a downtrend in the amount given for service awards. There was also a downtrend with respect to the holding of Christmas parties as the locations were changed from paid venues to free ones. -The additional 35% premium pay for work during Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioners have a right to demand. This practice was only granted for two years and with the express reservation from respondent corporations owner that it cannot continue the same in view of the companys current financial condition.

PAG-ASA STEEL WORKS, INC. V CACALLEJO, SR; March 31, 2006

NATUREPetition for review on certiorari of the decision of the Court of Appeals in CA-G.R. SP No. 65171 ordering Pag-Asa Steel Works, Inc. to pay the members of Pag-Asa Steel Workers Union the wage increase prescribed under Wage Order No. NCR-08.

FACTS - On September 23, 1999, petitioner and the Union entered into a Collective Bargaining Agreement (CBA), effective July 1, 1999 until July 1, 2004. Section 1, Article VI (Salaries and Wage) of said CBA provides:Section 1. WAGE ADJUSTMENT - The COMPANY agrees to grant all the workers, who are already regular and covered by this AGREEMENT at the effectivity of this AGREEMENT, a general wage increase as follows:July 1, 1999 . . . . . . . . . . . P15.00 per day per employeeJuly 1, 2000 . . . . . . . . . . . P25.00 per day per employeeJuly 1, 2001 . . . . . . . . . . . P30.00 per day per employee- The aforesaid wage increase shall be implemented across the board. Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted to above. However, if no wage increase is given by the Wage Board within six (6) months from the

Labor Law 1 A2010 - 7 - Disinisigning of this AGREEMENT, the Management is willing to give the following increases, to wit:July 1, 1999 . . . . . . . . . . . P20.00 per day per employeeJuly 1, 2000 . . . . . . . . . . . P25.00 per day per employeeJuly 1, 2001 . . . . . . . . . . . P30.00 per day per employee- The difference of the first year adjustment to retroact to July 1, 1999. - The across-the-board wage increase for the 4th and 5th year of this AGREEMENT shall be subject for a re-opening or renegotiation as provided for by Republic Act No. 6715.- On October 14, 1999, Wage Order No. NCR-07 was issued, and on October 26, 1999, its Implementing Rules and Regulations. It provided for a P25.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file employees.- On July 1, 2000, the rank-and-file employees were granted the second year increase provided in the CBA in the amount of P25.00 per day.- On November 1, 2000, Wage Order No. NCR-08 took effect. Section 1 thereof provides:Section 1. Upon the effectivity of this Wage Order, private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of TWENTY SIX PESOS and FIFTY CENTAVOS (P26.50) per day, thereby setting the new minimum wage rate in the National Capital Region at TWO HUNDRED FIFTY PESOS (P250.00) per day.- Then Union president Lucenio Brin requested petitioner to implement the increase under Wage Order No. NCR-08 in favor of the companys rank-and-file employees. Petitioner rejected the request, claiming that since none of the employees were receiving a daily salary rate lower than P250.00 and there was no wage distortion, it was not obliged to grant the wage increase.- The Union elevated the matter to the National Conciliation and Mediation Board. When the parties failed to settle, they agreed to refer the case to voluntary arbitration. - The Union alleged that it has been the companys practice to grant a wage increase under a government-issued wage order, aside from the yearly wage increases in the CBA. - Petitioner alleged that there is no such company practice and that it complied with the previous wage orders (Wage Order Nos. NCR-01-05) because some of its employees were receiving wages below the minimum prescribed under said orders. As for Wage Order No. NCR-07, petitioner alleged that its compliance was in accordance with its verbal commitment to the Union during the CBA negotiations that it would implement any wage order issued in 1999.- On June 6, 2001, the VA rendered judgment in favor of the company and ordered the case dismissed. - The Union filed a petition for review with the CA. On September 23, 2004, the CA rendered judgment in favor of the Union and reversed that of the VA. But the findings of the CA were grounded on the CBA and not on the issue of past practices.

ISSUEWON the petitioner is obliged to grant wage increase under Wage Order No. NCR-08 as a matter of practice

HELD Ratio To ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. Reasoning - The only instance when petitioner admittedly implemented a wage order despite the fact that the employees were not receiving salaries below the minimum wage was under Wage Order No. NCR-07. Petitioner, however, explains that it did so because it was agreed upon in the CBA that should a wage increase be ordered within six months from its signing, petitioner would give the increase to the employees in addition to the CBA-mandated increases. Respondents isolated act could hardly be

classified as a "company practice" or company usage that may be considered an enforceable obligation. Disposition petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 65171 and Resolution dated January 11, 2005 are REVERSED and SET ASIDE. The Decision of the Voluntary Arbitrator is REINSTATED.

CHINA BANKING CORPORATION V BORROMEOCALLEJO, SR.; October 19, 2004

NATURECertiorari

FACTS- Borromeo was a Manager of CB assigned at Regional Office in Cebu City. He then had the rank of Manager Level I. Subsequently, the respondent was laterally transferred to Cagayan de Oro City as Branch Manager of the petitioner Banks branch thereat.- He consistently received a "very good" performance rating and was promoted to the position of Assistant Vice-President, Branch Banking Group for the Mindanao area effective October 16, 1996. - Each promotion had the corresponding increase in the respondents salary as well as in the benefits he received from the petitioner Bank.- However, prior to his last promotion and then unknown to the China Bank, Borromeo, without authority from the Executive Committee or Board of Directors, approved several DAUD/BP accommodations amounting to P2,441,375 in favor of Joel Maniwan, with Edmundo Ramos as surety. DAUD/BP is the acronym for checks "Drawn Against Uncollected Deposits/Bills Purchased." Such checks, which are not sufficiently funded by cash, are generally not honored by banks. Further, a DAUD/BP accommodation is a credit accommodation granted to a few and select bank clients through the withdrawal of uncollected or uncleared check deposits from their current account. Under the petitioner Banks standard operating procedures, DAUD/BP accommodations may be granted only by a bank officer upon express authority from its Executive Committee or Board of Directors.- As a result of the DAUD/BP accommodations in favor of Maniwan, a total of ten out-of-town checks (7 PCIB checks and 3 UCPB checks) of various dates amounting to P2,441,375 were returned unpaid from September 20, 1996 to October 17, 1996. Each of the returned checks was stamped with the notation "Payment Stopped/Account Closed."- On October 8, 1996, the Borromeo wrote a Memorandum to the petitioner Banks senior management requesting for the grant of a P2.4 million loan to Maniwan. - The memorandum stated that the loan was "to regularize/liquidate subjects (referring to Maniwan) DAUD availments." - It was only then that the petitioner Bank came to know of the DAUD/BP accommodations in favor of Maniwan. The petitioner Bank further learned that these DAUD/BP accommodations exceeded the limit granted to clients, were granted without proper prior approval and already past due. - Acting on this information, Samuel L. Chiong, the petitioner Banks First Vice- President and Head-Visayas Mindanao Division, in his Memorandum dated November 19, 1996 for the respondent, sought clarification from the latter on the following matters:- May 23, 1997 - Nancy D. Yang, the CBanks Senior VP and Head-Branch Banking Group, informed the B (through a memorandum) that his approval of the DAUD/BP accommodations in favor of Maniwan w/o authority and/or approval of higher management violated the petitioner Banks Code of Ethics. As such, B was directed to restitute the amount

Labor Law 1 A2010 - 8 - Disiniof P1,507,736.79 representing 90% of the total loss of P1,675,263.10 incurred by the petitioner Bank. - However, in view of his resignation and considering the years of service in the petitioner Bank, the management earmarked only P836,637.08 from the respondents total separation benefits or pay. - In the Letter dated May 26, 1997 addressed to B, Remedios Cruz, CBanks VP of the HR Division, again informed him that the management would withhold the sum of P836,637.08 from his separation pay, mid-year bonus and profit sharing. - The said amount would be released upon recovery of the sums demanded from Maniwan in Civil Case No. 97174 filed against him by CBank with the RTC in Cagayan de Oro City.- Consequently, the B, through counsel, made a demand on the CBank for the payment of his separation pay and other benefits. - The CBank maintained its position to withhold the sum of P836,637.08. - B filed with the NLRC, the complaint for payment of separation pay, mid-year bonus, profit share and damages against the petitioner Bank.- The Labor Arbiter (LA)-dismissed the Bs complaint, for B had committed a serious infraction when, in blatant violation of the banks SOP and policies, he approved the DAUD/BP accommodations in favor of Maniwan without authorization by senior management. B even had admitted this breach in the letters that he wrote to the senior officers of CBank.- LA- made the finding that B offered to assign or convey a property that he owned to CBank, as well as proposed the withholding of the benefits due him to answer for the losses that the petitioner Bank incurred on account of unauthorized DAUD/BP accommodations. - LA also held that CBanks act of withholding the benefits due the respondent was justified under its Code of Ethics and that B as an officer of the CBank, was bound by the provisions of the said Code.- B appealed to the NLRC. - NLRC- affirmed in toto the findings and conclusions of the LA. And ruled that the LA committed no grave abuse of discretion when he decided the case on the basis of the position papers submitted by the parties. - B file a MR but the NLRC denied his motion. So he filed a petition for certiorari with the CA. - CA -set aside the decision of the NLRC and ordered that the records of the case be remanded to the Labor Arbiter for further hearings on the factual issues involved.- CBank filed a MR but the CA denied as it found no compelling ground to warrant reconsideration.

ISSUESProceduralWON the CA erred in remanding the case to the Labor Arbiter/WON Bs right to due process was violated by CBank since no administrative investigation was conducted prior to the withholding of his separation benefitsSubstantive WON B pledged his benefits as guarantee for the losses the bank incurred resulting from the unauthorized DAUD/BP accommodations in favor of Maniwan/WON CBank could impose the penalty of restitution against B

HELDProcedural YES, CA committed reversible error/NO, No formal administrative investigation was necessaryReasoning - It is settled that administrative bodies like the NLRC, including the Labor Arbiter, are not bound by the technical niceties of the law and procedure and the rules obtaining in courts of law.- Rules of evidence are not strictly observed in proceedings before administrative bodies like the NLRC, where decisions may be reached on the basis of position papers.- The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is something that the parties cannot demand as a matter of right.

- As a corollary, trial-type hearings are not even required as the cases may be decided based on verified position papers, with supporting documents and their affidavits.- The assailed CA decisions directive requiring him to conduct further hearings constitutes undue interference with the Labor Arbiters discretion. - To require the conduct of hearings would be to negate the rationale and purpose of the summary nature of the proceedings mandated by the Rules and to make mandatory the application of the technical rules of evidence.- As long as the decisions of the LA and the NLRC are devoid of any arbitrariness in the process of their deduction from the evidence proffered by the parties, all that is left is for the Court to stamp its affirmation. - In this case, the factual findings of the Labor Arbiter and those of the NLRC concur on various points. - Due process simply demands an opportunity to be heard and this opportunity was not denied Borromeo as he was, through the memoranda issued to him, given notice of the charge against him. He was given the opportunity to be heard and considering his admissions, it became unnecessary to hold any formal investigation.SubstantiveYES to both. LA and NLRC concurred in finding that B indeed pledged his benefits and CBanks Code of Ethics expressly sanctions the imposition of restitution/forfeiture of benefits apart from or independent of the other penalties. Reasoning- CBanks Code of Ethics-Restitution may be imposed independently or together with any other penalty in case of loss or damage to the property of the Bank, its employees, clients or other parties doing business with the Bank. The Bank may recover the amount involved by means of salary deduction or whatever legal means that will prompt offenders to pay the amount involved. But restitution shall in no way mitigate the penalties attached to the violation or infraction.- Supra-Forfeiture of benefits/privileges may also be effected in cases where infractions or violations were incurred in connection with or arising from the application/availment thereof.- It is well recognized that company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by competent authority.- Moreover, management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. With more reason should these truisms apply to the respondent, who, by reason of his position, was required to act judiciously and to exercise his authority in harmony with company policies.- Obviously, in view of his voluntary separation from the petitioner Bank, the imposition of the penalty of reprimand or suspension would be futile. The petitioner Bank was left with no other recourse but to impose the ancillary penalty of restitution. It was certainly within the petitioner Banks prerogative to impose on the respondent what it considered the appropriate penalty under the circumstances pursuant to its company rules and regulations.- Significantly, B is not wholly deprived of his separation benefits. The LA stressed in his decision, "the separation benefits due the complainant (Borromeo) were merely withheld." The NLRC made the same conclusion.- B was not just a rank and file employee. At the time of his resignation, he was the Asst. VP, Branch Banking Group for the Mindanao area of CBank. His position carried authority for the exercise of independent judgment and discretion, characteristic of sensitive posts in corporate hierarchy.41 As such, he was, as earlier intimated, required to act judiciously and to exercise his authority in harmony with company policies.Obiter

Labor Law 1 A2010 - 9 - Disini- CBanks business is essentially imbued with public interest and owes great fidelity to the public it deals with. - It is expected to exercise the highest degree of diligence in the selection and supervision of their employees.- As a corollary, and like all other business enterprises, its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected.- DAYAN v BPI ~ The law, in protecting the rights of labor, authorized neither oppression nor self-destruction of an employer company which itself is possessed of rights that must be entitled to recognition and respectDisposition Petition is GRANTED. CAS DECISION AND RESOLUTION REVERSED AND SET ASIDE. NLRCS DECISION, affirming that of the Labor Arbiter, is REINSTATED.

CEBU ROYAL PLANT V DEPUTY MINISTER OF LABOR CRUZ; August 12, 1987

NATURE Petitioner faults the Deputy Minister of Labor with grave abuse of discretion

FACTS - Pilones was dismissed by Cebu Royal Plant (CRP)- the alleged ground for his removal: pulmonary tuberculosis minimal- Pilones complained to the Ministry of Labor. The regional director dismissed this complaint, but the Deputy Minister reversed this and required CRP to reinstate Pilones and to pay him back wages.Public respondent maintains: - that Pilones, the private respondent, was already a permanent employee when he was dismissed, and thus entitled to security of tenure- that his pulmonary tuberculosis minimal (PTM) was not certified as incurable within six months so as to justify his separation- that the petitioner should have first obtained a clearance for the termination of Pilones employmentPetitioner maintains:- Pilones was still on probation at the time of dismissal, and thus had no security of tenure.- dismissal was necessary for the protection of the public health because he was handling ingredients in the processing of soft drinks which were being sold to the public- the findings of the regional director, who had direct access to the facts, should not have been disturbed on appeal. - that Pilones was employed on probation on Feb. 16, 1978; that the six-month probation period ended on Aug. 17, 1978; that he was dismissed on Aug. 21, 4 days after he ceased to be a probationer, only because the x-ray examination (which showed his PTM) was made only on Aug. 17, and the results were not immediately available.- There is, however, proof that PIlones may have been hired in 1977, as shown by a 1977 withholding tax statement issued for him by CRP.

ISSUEWON Pilones was still a probationary employee when he was dismissed on August 21, 1978

HELDNORatio When an employee is dismissed due to a disease, the applicable rule is:Sec. 8, Rule I, Book VI, of the Rules and Regulations implementing the Labor Code: Disease as a ground for dismissal . Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at

such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. Reasoning - The records do not show the certification by a competent public health authority that is required by the above rule, that the disease cannot be cured within a period of 6 months. It only contained a certificate offered by CRPs own physician, not a public health authority. The court surmised that if the required certification was not presented, it was because the disease was not of such a nature that it could not be cured within a period of 6 months. If so, dismissal was an unlawful sanction.- Also, the petitioners application for clearance to terminate Pilones was filed only on August 28, 1978, 7 days after his dismissal. This did not follow the prior clearance rule which was in force at the time.-- We agree that there was here an attempt to circumvent the law by separating the employee after five months' service to prevent him from becoming a regular employee, and then rehiring him on probation, again without security of tenure. We cannot permit this subterfuge if we are to be true to the spirit and mandate of social justice. On the other hand, we have also the health of the public and of the dismissed employee himself to consider. Hence, although we must rule in favor of his reinstatement, this must be conditioned on his fitness to resume his work, as certified by competent authority. Disposition petition is DISMISSED and the temporary restraining order of November 18, 1981, is LIFTED. The Order of the public respondent dated July 14, 1981, is AFFIRMED, but with the modification that the backwages shall be limited to three years only and the private respondent shall be reinstated only upon certification by a competent public health authority that he is fit to return to work. Costs against the petitioner.

LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION V CA (and COMMANDO SECURITY

SERVICE AGENCY, INC.)GONZAGA-REYES; January 31, 2000

NATUREPetition for Review on Certiorari of the decision of the CA which affirmed the decision of the RTC.

FACTS- In June 1986 private respondent and plaintiff entered into a Guard Service Contract. Respondent provided security guards in defendant's banana plantation. The contract called for the payment to a guard of P754.28 on a daily 8-hour basis and an additional P565.72 for a four hour overtime while the shift-in-charge was to be paid P811.40 on a daily 8-hour basis and P808.60 for the 4-hour overtime.- Wage Orders increasing the minimum wage in 1983 were complied with by the defendant. On June 16, 1984, Wage Order No. 5 was promulgated directing an increase of P3.00 per day on the minimum wage of workers in the private sector and a P5.00 increase on the ECOLA. This was followed on November 1, 1984 by Wage Order No. 6 which further increased said minimum wage by P3.00 on the ECOLA. Both Wage Orders contain the following provision:

"In the case of contract for construction projects and for security, janitorial and similar services, the increase in the minimum wage and allowances rates of the workers shall be borne by the principal or client of the construction/service contractor and the contracts shall be deemed amended accordingly, subject to the provisions of Sec. 3 (b) of this order" (Sec. 6 and Sec. 9, Wage Orders No. 5 and 6, respectively).

- Respondent demanded that its Guard Service Contract with defendant be upgraded in compliance with Wage Order Nos. 5 and 6. Plaintiff refused. Their Contract expired on June 6, 1986

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Labor Law 1 A2010 - 10 - Disiniwithout the rate adjustment called for Wage Order Nos. 5 and 6 being implemented. By the time of the filing of respondent's Complaint, the rate adjustment payable by defendant amounted to P462,346.25. Plaintiff opposed the Complaint.- The trial court decided in favor of the respondent. Plaintiffs MOR was denied, hence this petition.

ISSUES1. WON RTC has jurisdiction over the case2. WON petitioner is liable to the private respondent for the wage adjustments provided under Wage Order Nos. 5 and 6 and for attorney's fees

HELD1. YES- The enforcement of the written contract does not fall under the jurisdiction of the NLRC because the money claims involved therein did not arise from employer-employee relations between the parties and is intrinsically a civil dispute. Thus, jurisdiction lies with the regular courts. The RTC has jurisdiction over the subject matter of the present case. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over the following:

1. Unfair labor practices;2. Termination disputes; 3. If accompanied with a claim for reinstatement, those

cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral exemplary and other form of damages arising from employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

- In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite; and there is none in this case.2. Private respondent admits that there is no employer-employee relationship between it and the petitioner. The private respondent is an independent/job contractor1 who assigned security guards at the petitioner's premises for a stipulated amount per guard per month. The Contract of Security Services expressly stipulated that the security guards are employees of the Agency and not of the petitioner. Articles 106 and 107 of the Labor Code provides the rule governing the payment of wages of employees in the event that the contractor fails to pay such wages1.

1 Art. 106. Contractor or sub contractor. Whenever an employer enters into a

contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally

- It will be seen from the above provisions that the principal (petitioner) and the contractor (respondent) are jointly and severally liable to the employees for their wages. This Court held in Eagle Security, Inc. vs. NLRC and Spartan Security and Detective Agency, Inc. vs. NLRC that the joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance with the provisions therein including the minimum wage. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractor's employees to secure payment of their wages should the contractor be unable to pay them. Even in the absence of an employer-employee relationship, the law itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in order to ensure that the employees are paid the wages due them. In the above-mentioned cases, the solidary liability of the principal and contractor was held to apply to the aforementioned Wage Order Nos. 5 and 6. In ruling that under the Wage Orders, existing security guard services contracts are amended to allow adjustment of the consideration in order to cover payment of mandated increases, and that the principal is ultimately liable for the said increases.- It is clear that it is only when contractor pays the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor) arises only if he has paid the amounts for which both of them are jointly and severally liable is in line with Article 12172 of the Civil Code. - The right of reimbursement from a co-debtor is recognized in favor of the one who paid.The liability of the petitioner to reimburse the respondent only arises if and when respondent actually pays its employees the increases granted by Wage Order Nos. 5 and 6. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation,is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors.- It is not disputed that the private respondent has not actually paid the security guards the wage increases granted under the Wage Orders in question. Neither is it alleged that there is an extant claim for such wage adjustments from the security guards concerned, whose services have already been terminated by the contractor. Accordingly, private respondent has no cause of action against petitioner to recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the laborers and the contractor may not assert a claim against the principal for salary wage adjustments that it has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself by recovering wage increases, for its own benefit.- Finally, considering that the private respondent has no cause of action against the petitioner, private respondent is not entitled to attorney's fees.Disposition Petition GRANTED. The decision of the CA REVERSED and SET ASIDE. The complaint of private respondent COMMANDO SECURITY SERVICE AGENCY, INC. is hereby DISMISSED.

VILLAMARIA, JR. V CA

liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.Art. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.

2 Art. 1217. Payment made by one of the solidary debtors extinguishes the

obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.He who made payment may claim from his codebtors only the share which corresponds to each, with interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. . . .

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Labor Law 1 A2010 - 11 - DisiniCALLEJO, SR.; April 19, 2006

NATUREPetition for review on certiorari of the decision of the CA which set aside the Resolution of the NLRC which in turn affirmed the Decision of the Labor Arbiter dismissing the complaint filed by respondent Bustamante.

FACTS- Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in assembling passenger jeepneys with a public utility franchise to operate along the Baclaran-Sucat route. By 1995, Villamaria stopped assembling jeepneys and retained only nine, four of which he operated by employing drivers on a boundary basis. One of those drivers was respondent. Bustamante remitted P450 a day to Villamaria as boundary and kept the residue of his daily earnings as compensation for driving the vehicle. In August 1997, Villamaria verbally agreed to sell the jeepney to Bustamante under the boundary-hulog scheme, where Bustamante would remit to Villarama P550 a day for a period of 4 years; Bustamante would then become the owner of the vehicle and continue to drive the same under Villamarias franchise. It was also agreed that Bustamante would make a downpayment of P10,000.- On August 7, 1997, Villamaria executed a contract entitled Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog over the passenger jeepney. The parties agreed that if Bustamante failed to pay the boundary-hulog for 3 days, Villamaria Motors would hold on to the vehicle until Bustamante paid his arrears, including a penalty of P50 a day; in case Bustamante failed to remit the daily boundary-hulog for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to return the vehicle to Villamaria Motors.- Bustamante continued driving the jeepney under the supervision and control of Villamaria. As agreed upon, he made daily remittances of P550 in payment of the purchase price of the vehicle. Bustamante failed to pay for the annual registration fees of the vehicle, but Villamaria allowed him to continue driving the jeepney.- In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their respective boundary-hulog. This prompted Villamaria to serve a Paalala, reminding them that under the Kasunduan, failure to pay the daily boundary-hulog for one week, would mean their respective jeepneys would be returned to him without any complaints. He warned the drivers that the Kasunduan would henceforth be strictly enforced and urged them to comply with their obligation to avoid litigation. On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and barred the latter from driving the vehicle.- Bustamante filed a Complaint for Illegal Dismissal against Villamaria and his wife Teresita. He narrated that in July 2000, he informed the Villamaria spouses that the surplus engine of the jeepney needed to be replaced, and was assured that it would be done. However, he was later arrested and his drivers license was confiscated because apparently, the replacement engine that was installed was taken from a stolen vehicle. He was no longer allowed to drive the vehicle unless he paid them P70,000.

ISSUES1. WON the existence of a boundary-hulog agreement negates the employer-employee relationship between the vendor and vendee2. As a corollary, WON the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such a case

HELD1. NORatio Under the boundary-hulog scheme, a dual juridical relationship is created: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish the employer-

employee relationship of the parties extant before the execution of said deed.Reasoning - The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to primarily govern the compensation of the driver, that is, the latters daily earnings are remitted to the owner/operator less the excess of the boundary which represents the drivers compensation. Under this system, the owner/operator exercises control and supervision over the driver. It is unlike in lease of chattels where the lessor loses complete control over the chattel leased but the lessee is still ultimately responsible for the consequences of its use. The management of the business is still in the hands of the owner/operator, who, being the holder of the certificate of public convenience, must see to it that the driver follows the route prescribed by the franchising and regulatory authority, and the rules promulgated with regard to the business operations. The fact that the driver does not receive fixed wages but only the excess of the boundary given to the owner/operator is not sufficient to change the relationship between them. Indubitably, the driver performs activities which are usually necessary or desirable in the usual business or trade of the owner/operator.- Under the Kasunduan, respondent was required to remit P550 daily to petitioner, an amount which represented the boundary of petitioner as well as respondents partial payment (hulog) of the purchase price of the jeepney. Thus, the daily remittances also had a dual purpose: that of petitioners boundary and respondents partial payment (hulog) for the vehicle. This dual purpose was expressly stated in the Kasunduan. The well-settled rule is that an obligation is not novated by an instrument that expressly recognizes the old one, changes only the terms of payment, and adds other obligations not incompatible with the old provisions or where the new contract merely supplements the previous one. The two obligations of the respondent to remit to petitioner the boundary-hulog can stand together.- The existence of an employment relation is not dependent on how the worker is paid but on the presence or absence of control over the means and method of the work. The amount earned in excess of the boundary hulog is equivalent to wages and the fact that the power of dismissal was not mentioned in the Kasunduan did not mean that private respondent never exercised such power, or could not exercise such power.- Neither is such juridical relationship negated by petitioners claim that the terms and conditions in the Kasunduan relative to respondents behavior and deportment as driver was for his and respondents benefit: to insure that respondent would be able to pay the requisite daily installment of P550, and that the vehicle would still be in good condition despite the lapse of 4 years. What is primordial is that petitioner retained control over the conduct of the respondent as driver of the jeepney.- As respondents employer, it was the burden of petitioner to prove that respondents termination from employment was for a lawful or just cause, or, at the very least, that respondent failed to make his daily remittances of P550 as boundary. However, petitioner failed to do so. Well-settled is the rule that, the employer has the burden of proving that the dismissal of an employee is for a just cause. The failure of the employer to discharge this burden means that the dismissal is not justified and that the employee is entitled to reinstatement and back wages.2. YESReasoning - The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes or their collective bargaining agreement. Disposition Petition is DENIED. Decision of the CA is AFFIRMED.

ANINO V NLRCPANGANIBAN; May 21, 1998

Labor Law 1 A2010 - 12 - DisiniNATURESpecial Civil Action in the Supreme Court. Certiorari.

FACTS- Complainants are supervisors of Hinatuan Mining Corporation (HMC) who planned the formation of a supervisors union. The HINATUAN MINING SUPERVISORY UNION was formally organized and registered with the DOLE. Complainants Anino, Navarro, Daug-daug and Filoteo were elected officers, while complainants Baladja and Ceredon were active members of the union.- On 3 November 1993, HIMSU formally notified the company of its legal existence through a letter addressed to HMC President Zamora. It informed the company of its desire for a collective bargaining agreement and submitted its proposals under letter dated 16 November 1993, which again was addressed to Zamora, VP-Operation Ganigan and VP-Finance Nacorda. However, the company ignored these proposals.- Union filed an unfair labor practice case against HMC on 13 May 1994. - HMC dismissed the complainants under letter dated 16 June 1994. - Labor Arbiter Legaspi held that the services of petitioners were illegally terminated, ordered their reinstatement and the grant of back wages and attorneys fees equivalent to 10% of monetary award; that there was no positive showing that petitioners were retrenched purposely to weaken or destroy their union; hence, claim of unfair labor practice was dismissed. Likewise, claim for damages was denied since no fraud or bad faith was committed by private respondents in dismissing them.- NLRC reversed Legaspis ruling, rejected all petitioners claims and questioned complainants actuations considering that they only challenged 2 months after dismissal and after receiving separation pay. It also took judicial notice of the economic difficulties suffered by the mining industry. Petitioners Claim- Dismissal was done with malicious intent to cause them and the union damage for their exercise of the right to self-organization, in defiance of Labor Code Art. 248. Complainants pray that respondents be: (a) declared guilty of unfair labor practices; (b) ordered to reinstate complainants to their former positions with backwages and to pay complainants jointly and severally the amount of P150k, as moral damages and litigation and attorney's fees, respectively.Respondents Comments- Retrenchment was a management prerogative implemented in order to prevent further losses. It affected rank-and-file, supervisors and managerial staffs and was done with due notice to take effect 30 days from receipt thereof.- Complainants had accepted separation pay equivalent to 1 month pay for every year of service plus other monetary benefits, and complainants executed a waiver and quitclaim for value received.- Complaint was an afterthought in order to give semblance of credence to their position/opposition to conduct a certification election, as manifested by complainants counsel declaration in open court that they were still filing a new complaint for unfair labor practice (this case)

ISSUES1. WON the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it absolved respondents from their duty to prove losses as a just ground for retrenchment2. WON the NLRC exceeded its jurisdiction in recognizing the waivers/quitclaims executed by petitioners as an effective bar to this complaint3. WON the NLRC abused its discretion when it ordered the dismissal of the instant complaint and totally disregarded the labor arbiters findings of facts and petitioners motion for execution

HELD1. YES

Ratio To justify retrenchment, the following requisites must be complied with: (a) the losses expected should be substantial and not merely de minimis in extent; (b) the substantial losses apprehended must be reasonably imminent; (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (d) the alleged losses, if already incurred, and the expected imminent losses sought to be