labor law case.doc

8/11/2019 labor law case.doc

1/127

Basic Principles

G.R. No. 167622 June 29, 2010

GREGORIO V. TONGO,Petitioner,vs.

T!E "#N$%#&T$RER' (I%E IN'$R#N&E &O. )P!I('.*, IN&. an+ REN#TO #. VERGE(E IO',Respondents.

Topic: Basic Principles

Facts:

The contractual relationship between Tongko and The Manufacturers Life nsurance !o."Phils.#, nc. "Manulife#had two basic phases. The $rst or initial phase began on %ul& ', '()),under a !areer *gent+s *greeent "*greeent# that provided:

t is understood and agreed that the *gent is an independent contractor and nothing

contained herein shall be construed or interpreted as creating an eplo&er-eplo&eerelationship between the !opan& and the *gent.

The second phase started in '(/ when Tongko was naed 0nit Manager in Manulife+s 1ales

*genc& 2rgani3ation. n '((4, he becae a Branch Manager. 1i5 &ears later "or in '((6#,

Tongko becae a Regional 1ales Manager.

Tongko+s gross earnings consisted of coissions, persistenc& incoe, and anageent

overrides. 1ince the beginning, Tongko consistentl& declared hiself self-eplo&ed in his

incoe ta5 returns.

Manulife eventuall& terinated the *genc& *greeent with Tongko for his failure to align his

directions with the avowed copan& policies.

ssue: e5istence of an eplo&ent relationship

Ruling:

*t the ver& least, three sets of laws 7 nael&, the nsurance !ode, the Labor !ode and the

!ivil !ode 7 have to be considered in looking at the present case. 8ot to be forgotten, too, is

the *greeent that the parties adopted to govern their relationship for purposes of selling

the insurance the copan& o9ers.

0nder the nsurance !ode, the agent ust, as a atter of uali$cation, be licensed and

ust also act within the paraeters of the authorit& granted under the license and under

the contract with the principal.

2n the other hand, the !ivil !ode de$nes an agent as a ;person


2/127

Aenerall&, the deterinative eleent is the control e5ercised over the one renderingservice. The eplo&er controls the eplo&ee both in the results and in the eans andanner of achieving this result. The principal in an agenc& relationship, on the other hand,also has the prerogative to e5ercise control over the agent in undertaking the assigned taskbased on the paraeters outlined in the pertinent laws.

The *greeent, b& its e5press ters, is in accordance with the nsurance !ode odel whenit provided for a principal-agent relationship, and thus cannot lightl& be set aside nor sipl&be considered as an agreeent that does not reect the parties+ true intent. This intent,incidentall&, is reinforced b& the s&ste of copensation the *greeent provides, whichlikewise is in accordance with the production-based sales coissions the nsurance !odeprovides.

That Tongko assued a leadership role but nevertheless wholl& reained an agent is the

inevitable conclusion that results fro the reading of the *greeent "the onl& agreeent on

record in this case# and his continuing role thereunder as sales agent, fro the perspective

of the nsurance and the !ivil !odes and in light of what Tongko hiself attested to as his

role as Regional 1ales Manager.

Cvidence indicates that Tongko consistentl& clung to the view that he was an independent

agent selling Manulife insurance products since he invariabl& declared hiself a business or

self-eplo&ed person in his incoe ta5 returns. T-is consisenc/ i-, an+ acion a+e

pursuan o -e #reeen ere pieces o3 e4i+ence -a ere ne4er enione+

nor consi+ere+ in our ecision o3 No4e5er 7, 200.Dad the& been considered, the&

could, at the ver& least, serve as Tongko+s adissions against his interest. 1trictl& speaking,

Tongko+s ta5 returns cannot but be legall& signi$cant because he certi$ed under oath the

aount he earned as gross business incoe, claied business deductions, leading to his net

ta5able incoe.

>hat, to Tongko, serve as evidence of labor law control are the codes of conduct that

Manulife iposes on its agents in the sale of insurance. The ere presentation of codes or ofrules and regulations, however, is not per se indicative of labor law control as the law and

@urisprudence teach us.

The general law on agenc& e5pressl& allows the principal an eleent of control over theagent in a anner consistent with an agenc& relationship. n this sense, these controleasures cannot be read as indicative of labor law control. Foreost aong these are thedirectives that the principal a& ipose on the agent to achieve the assigned tasks, to thee5tent that the& do not involve the eans and anner of undertaking these tasks. The lawlikewise obligates the agent to render an accountE in this sense, the principal a& ipose onthe agent speci$c instructions on how an account shall be ade, particularl& on the atterof e5penses and reiburseents. To these e5tents, control can be iposed through rulesand regulations without intruding into the labor law concept of control for purposes of

eplo&ent.

Fro @urisprudence, an iportant lesson that the $rst nsular Life case teaches us is that acoitent to abide b& the rules and regulations of an insurance copan& does not ipsofacto ake the insurance agent an eplo&ee. 8either do guidelines soehow restrictive ofthe insurance agent+s conduct necessaril& indicate ;control; as this ter is de$ned in

@urisprudence. Gui+elines in+icai4e o3 la5or la conrol, as -e 8rs Insular (i3ecase ells us, s-oul+ no erel/ relae o -e uuall/ +esira5le resul inen+e+5/ -e conracual relaions-ip -e/ us -a4e -e naure o3 +icain the eans


3/127

or ethods to be eplo&ed in attaining the result, or of $5ing the ethodolog& and ofbinding or restricting the part& hired to the use of these eans. n fact, results-wise, theprincipal can ipose production uotas and can deterine how an& agents, with speci$cterritories, ought to be eplo&ed to achieve the copan&+s ob@ectives. These areanageent polic& decisions that the labor law eleent of control cannot reach. 2ur rulingin these respects in the $rst nsular Life case was practicall& reiterated in !arungcong. Thus,

as will be shown ore full& below, Manulife+s codes of conduct,

/4

all of which do not intrudeinto the insurance agents+ eans and anner of conducting their sales and onl& controlthe as to the desired results and nsurance !ode nors, cannot be used as basis for a$nding that the labor law concept of control e5isted between Manulife and Tongko.

n light of these conclusions, the su?cienc& of Tongko+s failure to copl& with the copan&guidelines, as a ground for terination of Tongko+s agenc&, is a atter that the labortribunals cannot rule upon in the absence of an eplo&er-eplo&ee relationship. %urisdictionover the atter belongs to the courts appl&ing the laws of insurance, agenc& and contracts.

:G.R. No. 169;10, #uus 0, 2011e have repeatedl& entioned in countless

decisions: "'# the selection and engageent of the eplo&eeE "H# the pa&ent of

wagesE "/# the power of disissalE and "G# the power to control the eplo&ee+s

conduct, which is the ost iportant eleent.


7/127

*s found b& both the 8LR! and the !*, respondents had no part in petitioners+

selection and anageentE


8/127

Respondents, not being petitioners+ eplo&ers, could never have disissed, legall&

or illegall&, petitioners, since respondents were without power or prerogative to do

so in the $rst place.

TOPIC 1: BASIC PRINCIPLES

JOSE MEL BERNARTE vs. PHILIPPINE BASKETBALL ASSOC, ET. AL, G.R. No.192084, September 14, 2011

FACTS:Complainants (Jose Mel Bernarte and Renato Guevarra) aver that the !ere invitedto "oin the #B$ as re%erees& 'urin the leadership o% Commissioner milio Bernardino, the!ere made to sin *ontra*ts on a ear+to+ear basis& 'urin the term o% Commissioner ala,ho!ever, *hanes !ere made on the terms o% their emploment&Complainant Bernarte, %or instan*e, !as not made to sin a *ontra*t durin the %irst

*on%eren*e o% the $ll+ilipino Cup !hi*h !as %rom ebruar 2-, 200- to June 200-& .t !asonl durin the se*ond *on%eren*e !hen he !as made to sin a one and a hal% month*ontra*t %or the period Jul 1 to $uust /, 200-&n Januar 1/, 2004, Bernarte re*eived a letter %rom the %%i*e o% the Commissioneradvisin him that his *ontra*t !ould not be rene!ed *itin his unsatis%a*tor per%orman*eon and o%% the *ourt& .t !as a total sho* %or Bernarte !ho !as a!arded Re%eree o% the earin 200-& e %elt that the dismissal !as *aused b his re%usal to %i3 a ame upon order o%rnie 'e eon&n the other hand, *omplainant Guevarra allees that he !as invited to "oin the #B$ pool o%re%erees in ebruar 2001& n Mar*h 1, 2001, he sined a *ontra*t as trainee& Beinnin2002, he sined a earl *ontra*t as Reular Class C re%eree& n Ma 5, 200-, respondent

Martine6 issued a memorandum to Guevarra e3pressin dissatis%a*tion over his 7uestioninon the assinment o% re%erees o%%i*iatin out+o%+to!n ames& Beinnin ebruar 2004, he!as no loner made to sin a *ontra*t&Respondents aver, on the other hand, that Complainants !ere not illeall dismissedbe*ause the !ere not emploees o% the #B$& 8heir respe*tive *ontra*ts o% retainer !eresimpl not rene!ed& #B$ had the preroative o% !hether or not to rene! their *ontra*ts,!hi*h the ne! !ere %i3ed&4

ISSE:!hether petitioner is an emploee o% respondents, !hi*h in turn determines!hether petitioner !as illeall dismissed&

RLING: 8he e3isten*e o% an emploer+emploee relationship is ultimatel a 7uestion o%%a*t& $s a eneral rule, %a*tual issues are beond the provin*e o% this Court& o!ever, thisrule admits o% e3*eptions, one o% !hi*h is !here there are *on%li*tin %indins o% %a*tbet!een the Court o% $ppeals, on one hand, and the 9RC and abor $rbiter, on the other,su*h as in the present *ase&1:

8o determine the e3isten*e o% an emploer+emploee relationship, *ase la! has *onsistentlapplied the %our+%old test, to !it; (a) the sele*tion and enaement o% the emploee< (b) the
http://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote5symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote19symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote5symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote19sym


9/127

pament o% !aes< (*) the po!er o% dismissal< and (d) the emploer=s po!er to *ontrol theemploee on the means and methods b !hi*h the !or is a**omplished& 8he so+*alled

>!o"#$o% #&s#? is the most important indi*ator o% the presen*e or absen*e o% an emploer+emploee relationship&1@

.n this *ase, #B$ admits repeatedl enain petitioner=s servi*es, as sho!n in the retainer

*ontra*ts& #B$ pas petitioner a retainer %ee, e3*lusive o% per diem or allo!an*es, asstipulated in the retainer *ontra*t& #B$ *an terminate the retainer *ontra*t %or petitioner=sviolation o% its terms and *onditions&o!ever, respondents (#B$) arue that the all+important element o% *ontrol is la*in inthis *ase, main petitioner an independent *ontra*tor and not an emploee o% respondentsetitioner *ontends other!ise& #etitioner asserts that he is an emploee o% respondentssin*e the latter e3er*ise *ontrol over the per%orman*e o% his !or& #etitioner *ites the%ollo!in stipulations in the retainer *ontra*t !hi*h eviden*e *ontrol; (1) respondents*lassi% or rate a re%eree< (2) respondents re7uire re%erees to attend all basetball amesorani6ed or authori6ed b the #B$, at least one hour be%ore the start o% the %irst ame o%ea*h da< (-) respondents assin petitioner to o%%i*iate ballames, or to a*t as alternatere%eree or substitute< (4) re%eree arees to observe and *ompl !ith all the re7uirements o%the #B$ overnin the *ondu*t o% the re%erees !hether on or o%% the *ourt< (/) re%ereearees (a) to eep himsel% in ood phsi*al, mental, and emotional *ondition durin the li%eo% the *ontra*t< (b) to ive al!as his best e%%ort and servi*e, and loalt to the #B$, andnot to o%%i*iate as re%eree in an basetball ame outside o% the #B$, !ithout !ritten prior*onsent o% the Commissioner< (*) al!as to *ondu*t himsel% on and o%% the *ourt a**ordinto the hihest standards o% honest or moralit< and (5) imposition o% various san*tions %orviolation o% the terms and *onditions o% the *ontra*t&

8he %oreoin stipulations hardl demonstrate *ontrol over the means and methods b!hi*h petitioner per%orms his !or as a re%eree o%%i*iatin a #B$ basetball ame& 8he*ontra*tual stipulations do not pertain to, mu*h less di*tate, ho! and !hen petitioner !illblo! the !histle and mae *alls& n the *ontrar, the merel serve as rules o% *ondu*t or

uidelines in order to maintain the interit o% the pro%essional basetball leaue& $s*orre*tl observed b the Court o% $ppeals, >ho! *ould a silled re%eree per%orm his "ob!ithout blo!in a !histle and main *allsA 3 3 3 o! *an the #B$ *ontrol theper%orman*e o% !or o% a re%eree !ithout *ontrollin his a*ts o% blo!in the !histle andmain *allsA?20

.n Sonza v. ABS-CBN Broadcasting Corporation,21!hi*h determined the relationshipbet!een a television and radio station and one o% its talents, the Court held that not all rulesimposed b the hirin part on the hired part indi*ate that the latter is an emploee o% the%ormer& 8he Court held;

De %ind that these eneral rules are merel uidelines to!ards the a*hievement o%the mutuall desired result, !hi*h are top+ratin television and radio prorams that*ompl !ith standards o% the industr& De have ruled that;

urther, not ever %orm o% *ontrol that a part reserves to himsel% over the *ondu*to% the other part in relation to the servi*es bein rendered ma be a**orded thee%%e*t o% establishin an emploer+emploee relationship& 8he %a*ts o% this *ase %alls7uarel !ith the *ase o% Insular Life Assurance Co., Ltd. v. NLRC& .n said *ase, !eheld that;oi*all, the line should be dra!n bet!een rules that merel serve as uidelinesto!ards the a*hievement o% the mutuall desired result !ithout di*tatin the meansor methods to be emploed in attainin it, and those that *ontrol or %i3 the
http://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote20symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote21symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote22symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote20symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote21symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote22sym


10/127

methodolo and bind or restri*t the part hired to the use o% su*h means& 8he %irst,!hi*h aim onl to promote the result, *reate no emploer+emploee relationshipunlie the se*ond, !hi*h address both the result and the means used to a*hieve it& 22

De aree !ith respondents that on*e in the plain *ourt, the re%erees e3er*ise their o!nindependent "udment, based on the rules o% the ame, as to !hen and ho! a *all or

de*ision is to be made& 8he re%erees de*ide !hether an in%ra*tion !as *ommitted, and the#B$ *annot overrule them on*e the de*ision is made on the plain *ourt&

8he re%erees are the onl, absolute, and %inal authorit on the plain *ourt& Respondents oran o% the #B$ o%%i*ers *annot and do not determine !hi*h *alls to mae or not to mae and*annot *ontrol the re%eree !hen he blo!s the !histle be*ause su*h authorit e3*lusivelbelons to the re%erees& 8he ver nature o% petitioner=s "ob o% o%%i*iatin a pro%essionalbasetball ame undoubtedl *alls %or %reedom o% *ontrol b respondents&

Moreover, the %ollo!in *ir*umstan*es indi*ate that petitioner is an independent *ontra*tor;(1) the re%erees are re7uired to report %or !or onl !hen #B$ ames are s*heduled, !hi*his three times a !ee spread over an averae o% onl 10/ plain das a ear, and theo%%i*iate ames at an averae o% t!o hours per ame< and (2) the onl dedu*tions %rom the%ees re*eived b the re%erees are !ithholdin ta3es&

.n other !ords, unlie reular emploees !ho ordinaril report %or !or eiht hours per da%or %ive das a !ee, petitioner is re7uired to report %or !or onl !hen #B$ ames ares*heduled or three times a !ee at t!o hours per ame& .n addition, there are nodedu*tions %or *ontributions to the So*ial Se*urit Sstem, #hilhealth or #a+.bi, !hi*h arethe usual dedu*tions %rom emploees= salaries& 8hese undisputed *ir*umstan*es buttress the%a*t that petitioner is an independent *ontra*tor, and not an emploee o% respondents&

urthermore, the appli*able %orein *ase la! de*lares that a re%eree is an independent*ontra*tor, !hose spe*ial sills and independent "udment are re7uired spe*i%i*all %or su*hposition and *annot possibl be *ontrolled b the hirin part&

.n Yonan v. United States Soccer ederation, Inc.,2-the Enited States 'istri*t Court o%.llinois held that plainti%%, a so**er re%eree, is an independent *ontra*tor, and not anemploee o% de%endant !hi*h is the statutor bod that overns so**er in the Enited States&$s su*h, plainti%% !as not entitled to prote*tion b the $e 'is*rimination in mploment$*t& 8he E&S& 'istri*t Court ruled;

Generall, >i% an emploer has the riht to *ontrol and dire*t the !or o% anindividual, not onl as to the result to be a*hieved, but also as to details b !hi*hthe result is a*hieved, an emploerFemploee relationship is liel to e3ist&? 8heCourt must be *are%ul to distinuish bet!een >*ontrollin the *ondu*t o% anotherpart *ontra*tin part b settin out in detail his obliations? *onsistent !ith the%reedom o% *ontra*t, on the one hand, and >the dis*retionar *ontrol an emploer

dail e3er*ises over its emploee=s *ondu*t? on the other&onan asserts that the ederation >*losel supervised? his per%orman*e at ea*hso**er ame he o%%i*iated b ivin him an assessor, dis*ussin his per%orman*e, and*ontrollin !hat *lothes he !ore !hile on the %ield and travelin& #uttin aside thatthe ederation did not, %or the most part, *ontrol !hat *lothes he !ore, theederation did not supervise onan, but rather evaluated his per%orman*e a%termat*hes& 8hat the ederation evaluated onan as a re%eree does not mean that he!as an emploee& 8here is no 7uestion that parties retainin independent *ontra*tors
http://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote23symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote24symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote23symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote24sym


11/127

ma "ude the per%orman*e o% those *ontra*tors to determine i% the *ontra*tualrelationship should *ontinue& 3 3 3.t is undisputed that the ederation did not *ontrol the !a onan re%ereed hisames& e had %ull dis*retion and authorit, under the a!s o% the Game, to *all theame as he sa! %it& 3 3 3 .n a similar vein, sub"e*tin onan to 7uali%i*ation

standards and pro*edures lie the ederation=s reistration and trainin re7uirementsdoes not *reate an emploerFemploee relationship& 3 3 3$ position that re7uires spe*ial sills and independent "udment !eihts in %avor o%independent *ontra*tor status& 3 3 3 Ensilled !or, on the other hand, suests anemploment relationship& 3 3 3ere, it is undisputed that so**er re%ereein,espe*iall at the pro%essional and international level, re7uires >a reat deal o% silland natural abilit&? onan asserts that it !as the ederation=s trainin that made hima top re%eree, and that suests he !as an emploee& 8houh substantial traininsupports an emploment in%eren*e, that in%eren*e is dulled sini%i*antl or neated!hen the putative emploer=s a*tivit is the result o% a statutor re7uirement, not theemploer=s *hoi*e& 3 3 3

I"McInturff v. Battle Ground Academy of Franklin,24'# ()s *&%+ #*)# #*& -'$&()s "o# )" )/&"# o #*& T&""&ss&& S&!o"+)$ S!*oo% A#*%'! Asso!')#'o"TSSAA3, so #*& %)&$s v'!)$'os %')5'%'# !%)'- )/)'"s# #*& )sso!')#'o" s*o%+ 5&+'s-'ss&+. I" '"+'"/ #*)# #*& -'$& 's )" '"+&&"+&"# !o"#$)!#o$, #*& Co$# oA&)%s o T&""&ss& $%&+:

8he 8SS$$ deals !ith umpires to a*hieve a result+uni%orm rules %or all baseballames plaed bet!een 8SS$$ member s*hools& 8he 8SS$$ does not supervisereular season ames& .t does not tell an o%%i*ial ho! to *ondu*t the ame beondthe %rame!or established b the rules& 8he 8SS$$ does not, in the verna*ular o% the*ase la!, *ontrol the means and method b !hi*h the umpires !or&

.n addition, the %a*t that #B$ repeatedl hired petitioner does not b itsel% prove thatpetitioner is an emploee o% the %ormer& or a hired part to be *onsidered an emploee, thehirin part must have *ontrol over the means and methods b !hi*h the hired part is toper%orm his !or, !hi*h is absent in this *ase& 8he *ontinuous rehirin b #B$ o% petitionersimpl sini%ies the rene!al o% the *ontra*t bet!een #B$ and petitioner, and hihlihts thesatis%a*tor servi*es rendered b petitioner !arrantin su*h *ontra*t rene!al& Conversel, i%#B$ de*ides to dis*ontinue petitioner=s servi*es at the end o% the term %i3ed in the *ontra*t,!hether %or unsatis%a*tor servi*es, or violation o% the terms and *onditions o% the *ontra*t,or %or !hatever other reason, the same merel results in the non+rene!al o% the *ontra*t,as in the present *ase& 8he non+rene!al o% the *ontra*t bet!een the parties does not*onstitute illeal dismissal o% petitioner b respondents&6HEREFORE, !e 7EN the petition and AFFIRMthe assailed de*ision o% the Court o%

$ppeals&

=ae En3orceen an+ Reco4er/

8#.C 5; D$G 9RCM98 $9' RCHR

PEOPLEs BROA7CASTING vs. SEC OF 7OLE, GR 19;2, M) 8, 2009
http://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote25symhttp://sc.judiciary.gov.ph/jurisprudence/2011/september2011/192084.html#sdfootnote25sym


12/127

FACTS; $ *omplaint !as %iled b Jandeleon Jue6an (respondent) aainst #eople=sBroad*astin Servi*e, .n*& (Bombo Rado #hils&, .n*) (petitioner) %or illeal dedu*tion, non+pament o% servi*e in*entive leave, 1-thmonth pa, premium pa %or holida and rest daand illeal diminution o% bene%its, delaed pament o% !aes and non+*overae o% SSS,#$G+.B.G and #hilhealth be%ore '& n the basis o% the *omplaint, the ' *ondu*ted aplant level inspe*tion on 2- September 200-& .n the Inspection Report or!,-the abor

.nspe*tor !rote under the headin >indinsFRe*ommendations? >non+diminution o%bene%its? and >9ote; Respondent den emploer+emploee relationship !ith the*omplainant+ see 9oti*e o% .nspe*tion results&? .n the Notice of Inspection Results4alsobearin the date 2- September 200-, the abor .nspe*tor made the %ollo!in notations;

Manaement representative in%ormed that *omplainant is a dramatalent hired on a per drama > parti*ipation basis? hen*e no emploer+emploeeship si* e3isted bet!een them& $s proo% o% this, manaementpresented photo*opies o% *ash vou*hers, billin statement, emploments o%spe*i%i* undertain (a *ontra*t bet!een the talent dire*tor I the*omplainant), summar o% billin o% drama produ*tion et*& 8he (mt&) hassi* not *ontrol o% the talent i% he ventures into another *ontra*t !Fother broad*astin industries&

n the other hand, *omplainant Jue6an=s alleed violation o% non+

diminution o% bene%its is *omputed as %ollo!s; # 2,000F1/ das K 1&/ mos L # 5,000($uust 1F0- to Sept 1/F0-)

9ote; Re*ommend %or summar investiation or !hatever a*tion deemproper&/

#etitioner !as re7uired to re*ti%Frestitute the violations !ithin %ive (/) das %rom

re*eipt& 9o re*ti%i*ation !as e%%e*ted b petitioner< thus, summar investiations !ere*ondu*ted, !ith the parties eventuall ordered to submit their respe*tive position papers&5

ISSES:!as there mploer+emploee relationshipA does the Se*retar o% abor have thepo!er to determine the e3isten*e o% an emploer+emploee relationshipA Dhat is the

"urisdi*tion o% 'A

RLING: 8o resolve this pivotal issue, one must loo into the e3tent o% the visitorialand en%or*ement po!er o% the ' %ound in $rti*le 12: (b) o% the abor Code, asamended b Republi* $*t -0& .t reads;

$rti*le 12: (b) 9ot!ithstandin the provisions o% $rti*les 12@ and 21

o% this Code to the *ontrar, and '" !)s&s (*&$& #*& $&%)#'o"s*' o

&-%o&$


13/127

do*umentar proo%s !hi*h !ere not *onsidered in the *ourse o% inspe*tion&(emphasis supplied)

3 3 3

8he provision is 7uite e3pli*it that the visitorial and en%or*ement po!er o% the '

*omes into pla onl >in *ases !hen the relationship o% emploer+emploee still e3ists&? .talso unders*ores the avo!ed ob"e*tive underlin the rant o% po!er to the ' !hi*h is>to ive e%%e*t to the labor standard provision o% this Code and other labor leislation&? %*ourse, a person=s entitlement to labor standard bene%its under the labor la!s presupposesthe e3isten*e o% emploer+emploee relationship in the %irst pla*e&

8he *lause >in *ases !here the relationship o% emploer+emploee still e3ists?

sini%ies that the emploer+emploee relationship must have e3isted even be%ore theemeren*e o% the *ontrovers& N&!&ss)$'%, #*& 7OLEs o(&$ +o&s "o# )% '" #(o'"s#)"!&s, ")-&%: )3 (*&$& #*& &-%o&$)"+ 53 (*&$& "o s!* $&%)#'o"s*' *)s &v&$ &='s#&+.

8he %irst situation is *ateori*all *overed b Se*& -, Rule 11 o% the Rules on t"e

#isposition of La$or Standards Cases1/issued b the ' Se*retar& .t reads;

Rule .. M9 C$.MS $R.S.9G RM CM#$.98FRE8.9.9S#C8.9

Se*& -& Co!plaints %"ere no e!plo&er-e!plo&ee relations"ip actuall&

e'ists. Dhere emploer+emploee relationship no loner e3ists b reason o%the %a*t that it has alread been severed, *laims %or pament o% monetarbene%its %all !ithin the e3*lusive and oriinal "urisdi*tion o% the laborarbiters& $**ordinl, i% on the %a*e o% the *omplaint, it *an be as*ertainedthat emploer+emploee relationship no loner e3ists, the *ase, !hethera**ompanied b an alleation o% illeal dismissal, shall immediatel be

endorsed b the Reional 'ire*tor to the appropriate bran*h o% the 9ationalabor Relations Commission (9RC)&

.n the re*ent *ase o% Ba& (aven, Inc. v. A$uan,15this Court re*oni6ed the %irstsituation and a**ordinl ruled that a *omplainant=s alleation o% his illeal dismissal haddeprived the ' o% "urisdi*tion as per $rti*le 21 o% the abor Code&1

.n the %irst situation, the *laim has to be re%erred to the 9RC be*ause it is the 9RC

!hi*h has "urisdi*tion in vie! o% the termination o% the emploer+emploeerelationship& 8he same pro*edure has to be %ollo!ed in the se*ond situation sin*e it is the9RC that has "urisdi*tion in vie! o% the absen*e o% emploer+emploee relationshipbet!een the evidentiar parties %rom the start&

Clearl the la! a**ords a preroative to the 9RC over the *laim !hen the emploer+

emploee relationship has terminated or su*h relationship has not arisen at all& 8he reasonis obvious& .n the se*ond situation espe*iall, the e3isten*e o% an emploer+emploeerelationship is a matter !hi*h is not easil determinable %rom an ordinar inspe*tion,ne*essaril so, be*ause the elements o% su*h a relationship are not veri%iable %rom a mereo*ular e3amination& 8he intri*a*ies and impli*ations o% an emploer+emploeerelationship demand that the level o% s*rutin should be %ar above the *ursor and theme*hani*al& Dhile do*uments, parti*ularl do*uments %ound in the emploer=s o%%i*e
http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn19http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn19


14/127

are the primar sour*e materials, !hat ma prove de*isive are %a*tors related to thehistor o% the emploer=s business operations, its *urrent state as !ell as a**epted*ontemporar pra*ti*es in the industr& More o%ten than not, the 7uestion o% emploer+emploee relationship be*omes a battle o% eviden*e, the determination o% !hi*h shouldbe *omprehensive and intensive and there%ore best le%t to the spe*iali6ed 7uasi+"udi*ialbod that is the 9RC&

I# !)" 5& )ss-&+ #*)# #*& 7OLE '" #*& &=&$!'s& o '#s v's'#o$')% )"+&"o$!&-&"# o(&$ so-&*o( *)s #o -)?& ) +&$-'")#'o" o #*& &='s#&"!& o )"&-%o&$


15/127

*omplain !ith the ', and, at the same time, petitioner *ould ill+a%%ord to dis*laim anemploment relationship !ith all o% the people under its aeis&

Dithout a doubt, petitioner, sin*e the in*eption o% this *ase had been *onsistent inmaintainin that respondent is not its emploee& Certainl, a preliminar determination,based on the eviden*e o%%ered, and noted b the abor .nspe*tor durin the inspe*tion as

!ell as submitted durin the pro*eedins be%ore the Reional 'ire*tor puts in enuine doubtthe e3isten*e o% emploer+emploee relationship& rom that point on, the prudent re*ourseon the part o% the ' should have been to re%er respondent to the 9RC %or the properdispensation o% his *laims& urthermore, as dis*ussed earlier, even the eviden*e relied onb the Reional 'ire*tor in his order are mere sel%+servin de*larations o% respondent(Jue6an), and hen*e *annot be relied upon as proo% o% emploer+emploee relationship&

333.n the instant *ase, save %or respondent=s sel%+servin alleations and sel%+de%eatin

eviden*e, there is no substantial basis to !arrant the Reional 'ire*tor=s %indin thatrespondent is an emploee o% petitioner& 3333

$lthouh substantial eviden*e is not a %un*tion o% 7uantit but rather o% 7ualit, thepe*uliar environmental *ir*umstan*es o% the instant *ase demand that somethin moreshould have been pro%%ered&--ad there been other proo%s o% emploment, su*h asrespondent=s in*lusion in petitioner=s paroll, or a *lear e3er*ise o% *ontrol, the Court !ouldhave a%%irmed the %indin o% emploer+emploee relationship& 8he Reional 'ire*tor,there%ore, *ommitted rievous error in orderin petitioner to ans!er %or respondent=s*laims& Moreover, !ith the *on*lusion that no emploer+emploee relationship has evere3isted bet!een petitioner and respondent, it is *rstal+*lear that the ' Reional'ire*tor had no "urisdi*tion over respondent=s *omplaint& 8hus, the improvident e3er*ise o%po!er b the Se*retar o% abor and the Reional 'ire*tor behooves the *ourt to sub"e*ttheir a*tions %or revie! and to invalidate all the subse7uent orders the issued&

333 8he *omplaint aainst petitioner is 7ISMISSE7&

'E TIT(EF%ethro ntelligence O 1ecurit& !orp. vs 1ec. of 2LC

%#&T'FPetitioner %ethro ntelligence and 1ecurit& !orporation "%ethro# is a securit& service contractor

with a securit& service contract agreeent with co-petitioner akult Phils., nc. "akult#. 2n the basis of

a coplaint $led b& respondent Frederick Aarcia "Aarcia#, one of the securit& guards deplo&ed b&

%ethro, for underpa&ent of wages, legalQspecial holida& pa&, preiu pa& for rest da&, '/th onth

pa&, and night shift di9erential, the 2LC Regional o?ce conducted an inspection at akult+s preises

in the course of which several labor standards violations were noted, including keeping of pa&rolls and

dail& tie records in the ain o?ce, underpa&ent of wages, overtie pa& and other bene$ts, and

non-registration with the 2LC.

Dearings on Aarcia+s coplaint and on the subseuent coplaints of his co-respondents Ail !ordero et

al. were conducted during which %ethro subitted copies of pa&rolls covering %une '6 to /4, H44/,

Februar& to Ma& '6-/', H44G, %une '6-/4, H44/, and Februar& '-'K, H44G. %ethro failed to subit dail&tie records of the claiants fro H44H to %une H44G, however, despite the order for it to do so.

B& 2rder, 2LC Regional irector, noting petitioners+ failure to rectif& the violations noted during the

above-stated inspection within the period given for the purpose, found the @ointl& and severall& liable

to herein respondents for an aount representing their wage di9erentials, regular holida& pa&, special

da& preiu pa&, '/th onth pa&, overtie pa&, service incentive leave pa&, night shift di9erential

preiu and rest da& preiu. Petitioners were also ordered to subit proof of pa&ent to the

claiants within ten calendar da&s, failing which the entire award would be doubled, pursuant to

Republic *ct 8o. ', and the corresponding writs of e5ecution and garnishent would be issued.
http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn35http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/179652.htm#_ftn35


16/127

%ethro appealed to the 12LC. 12LC partiall& granted petitioner %ethro+s appeal b& a?ring with

odi$cation the Regional irector+s 2rder b& deleting the penalt& of double indenit& and setting

aside the writs of e5ecution and garnishent, without pre@udice to the subseuent issuance b& the

Regional irector of the writs necessar& to ipleent the said ecision.

Petitioners attribute grave abuse of discretion on the part of the 2LC Regional irector and the 12LC

in this wise:

"'# the 12LC has no @urisdiction over the case because, following *rticle 'H( of the Labor !ode,

the aggregate one& clai of each eplo&ee e5ceeded PK,444.44E

"H# petitioner %ethro, as the aditted eplo&er of respondents, could not be e5pected to keep

pa&rolls and dail& tie records in akult+s preises as its o?ce is in ue3on !it&, hence, the

inspection conducted in akult+s plant had no basisE and

"/# having $led the reuired bond euivalent to the @udgent award, and as the Regional

irector+s 2rder was not served on their counsel of record, the writs of e5ecution and

garnishent subseuentl& issued were not in order.

I''$EF>28 the 2LC R and the 12LC coitted grave abuse of discretion.

!E(F82, the& did not coit grave abuse of discretion.

The scope of the visitorial powers of the 12LC and hisQher dul& authori3ed representatives was clari$ed

in *llied nvestigation Bureau, nc. v. 1ecretar& of Labor and Cplo&ent, vi3:

>hile it is true that under *rticles 'H( and H') of the Labor !ode, the Labor *rbiter has @urisdiction to

hear and decide cases where the aggregate one& clais of each eplo&ee e5ceeds PK,444.44, said

provisions do not conteplate nor cover the visitorial and enforceent powers of the 1ecretar& of

Labor or his dul& authori3ed representatives.

Rather, said powers are de$ned and set forth in *rticle 'H of the Labor !ode "as aended b& R.*. 8o.

))/4# thus:

*rt. 'H. Iisitorial and enforceent power.S 5 5 5 5

"b# 8otwithstanding the provisions of *rticles 'H( and H') of this !ode to the contrar&, and in

cases where the relationship of eplo&er-eplo&ee e5ists, the 1ecretar& of Labor and

Cplo&ent or his dul& authori3ed representatives shall have the power to issue copliance

orders to give e9ect to the labor standards provisions of this !ode and other labor legislation

based on the $ndings of labor eplo&ent and enforceent o?cers or industrial safet&

engineers ade in the course of inspection. The 1ecretar& or his dul& authori3ed

representatives shall issue writs of e5ecution to the appropriate authorit& for the enforceent

of their orders, e5cept in cases where the eplo&er contests the $nding of the labor

eplo&ent and enforceent o?cer and raises issues supported b& docuentar& proofs

which were not considered in the course of inspection.


17/127

e9ect to the labor standards provisions of said !ode and other labor legislation based on the

$ndings of labor eplo&ent and enforceent o?cers or industrial safet& engineers ade in

the course of inspection.'/"Cphasis and underscoring supplied.#

n C5-Bataan Ieterans 1ecurit& *genc&, nc. v. Laguesa case, the !ourt went on to hold that:

5 5 5 if the labor standards case is covered b& the e5ception clause in *rticle 'H"b# of theLabor !ode, then the Regional irector will have to endorse the case to the appropriate

*rbitration Branch of the 8LR!. n order to divest the Regional irector or his representatives

of @urisdiction, the following eleents ust be present: "a# that the eplo&er contests the

$ndings of the labor regulations o?cer and raises issues thereinE "b# that in order to resolve

such issues, there is a need to e5aine evidentiar& attersE and "c# that such atters are not

veri$able in the noral course of inspection. The rules also provide that the eplo&er shall

raise such ob@ections during the hearing of the case or at an& tie after receipt of the notice of

inspection results.

n the case at bar, the 1ecretar& of Labor correctl& assued @urisdiction over the case as it does not

coe under the e5ception clause in *rt. 'H"b# of the Labor !ode. >hile petitioner %ethro appealed the

inspection results and there is a need to e5aine evidentiar& atters to resolve the issues raised, the

pa&rolls presented b& it were considered in the ordinar& course of inspection. >hile the eplo&ent

records of the eplo&ees could not be e5pected to be found in akult+s preises in !alaba, as

%ethro+s o?ces are in ue3on !it&, the records show that %ethro was given aple opportunit& to

present its pa&rolls and other pertinent docuents during the hearings and to rectif& the violations

noted during the ocular inspection. t, however, failed to do so, ore particularl& to subit copetent

proof that it was giving its securit& guards the wages and bene$ts andated b& law.

Moreover, respecting the fact that %ethro+s $rst counsel of record, *tt&. Ben@ain Rabuco , was not

furnished a cop& of the 2rder of the irector, the 12LC noted in her assailed ecision that since *tt&.

Thaddeus Ienturan3a forall& entered his appearance as %ethro+s new counsel on appeal 7 and an

appeal was indeed $led and dul& veri$ed b& %ethro+s ownerQanager, for all practical purposes, the

failure to furnish *tt&. Rabuco a cop& of the said 2rder had been rendered oot. For, on account of

such lapse, the 12LC deleted the double indenit& award and held that the writs issued inipleentation of the 2rder were null and void, ;without pre@udice to the subseuent issuance b& the

Regional irector of the writs necessar& to ipleent; the 12LC ecision.

Thus, the 2LC-Regional 2?ce subseuentl& issued the following 2rders: 2rder holding in abe&ance

the release of the aount euivalent to the @udgent award out of akult accounts pending the receipt

of the supersedeas bondE and 2rder ordering the iediate release of the garnished aount.

t bears ephasis that the 12LC, under *rticle '46 of the Labor !ode, as aended, e5ercises uasi-

@udicial power, at least to the e5tent necessar& to deterine violations of labor standards provisions of

the !ode and other labor legislation. DeQshe or the Regional irectors can issue copliance orders and

writs of e5ecution for the enforceent thereof. The signi$cance of and binding e9ect of the copliance

orders of the 2LC 1ecretar& is enunciated in *rticle 'H of the Labor !ode, as aended, vi3:

*RT. 'H. Iisitorial and enforceent power. 7

5 5 5 5

"d# t shall be unlawful for an& person or entit& to obstruct, ipede, dela& or otherwise render

ine9ective the orders of the 1ecretar& of Labor or his dul& authori3ed representatives issued

pursuant to the authorit& granted under this article, and no inferior court or entit& shall issue
http://www.lawphil.net/judjuris/juri2009/aug2009/gr_172537_2009.html#fnt13http://www.lawphil.net/judjuris/juri2009/aug2009/gr_172537_2009.html#fnt13


18/127

teporar& or peranent in@unction or restraining order or otherwise assue @urisdiction over

an& case involving the enforceent orders issued in accordance with this article.

*nd 1ec. K, Rule I "C5ecution# of the Rules on isposition of Labor 1tandards !ases in Regional 2?ces

provides that the $ling of a petition for certiorari shall not sta& the e5ecution of the appealed order or

decision, unless the aggrieved part& secures a teporar& restraining order "TR2# fro the !ourt. n the

case at bar, no TR2 or in@unction was issued, hence, the issuance of the uestioned writs of e5ecutionand garnishent b& the 2LC-Regional irector was in order.

'E TIT(EF PDLPP8C D2TCLCR1, 8!., 01T D2TCL 82-M*8L* vs.8*T28*L 0828 2F

>2RCR1 8 D2TCL, RC1T*0R*8T, *8 *LLC 801TRC1 "80>DR*8-*PL-0F#- 01T D2TCL 82

!D*PTCR

%#&T'F>2 8o. (, approved b& the Regional Tripartite >ages and Productivit& Board "RT>PB# of the

8ational !apital Region "8!R#, took e9ect on K 8oveber H44'. t grants P/4.44 C!2L* to particular

eplo&ees and workers of all private sectors:

*ount of C!2L* C9ectivit&

P'K.44 K 8oveber H44'

P'K.44 ' Februar& H44H

Respondent 8ational 0nion of >orkers in Dotel, Restaurant and *llied ndustries-usit Dotel 8ikko

!hapter "0nion#, through its President, Re&naldo !. Rasing "Rasing#, sent a letter to irector *le5

Maraan "ir. Maraan# of the epartent of Labor and Cplo&ent-8ational !apital Region "2LC-

8!R#, reporting the non-copliance of usit Dotel with >2 8o. (, while there was an on-goingcopulsor& arbitration before the 8ational Labor Relations !oission "8LR!# due to a bargaining

deadlock between the 0nion and usit Dotel.

*cting on Rasing+s letters, the 2LC-8!R sent Labor 1tandards 2?cer Cstrellita 8atividad "L12

8atividad# to conduct an inspection of usit Dotel preises.

*ccordingl&, the 2LC-8!R issued a 8otice of nspection Result directing usit Dotel to e9ect

restitution andQor correction of the noted violations within $ve da&s fro receipt of the 8otice, and to

subit an& uestion on the $ndings of the labor inspector within the sae period, otherwise, an order

of copliance would be issued.

n the eantie, the 8LR! rendered a ecision 7 the copulsor& arbitration involving the !ollective

Bargaining *greeent "!B*# deadlock between usit Dotel and the 0nion 7 granting the hotel

eplo&ees the following wage increases, in accord with the !B*:

C9ective %anuar& ', H44'- PK44.44Qonth

C9ective %anuar& ', H44H- PKK4.44Qonth

C9ective %anuar& ', H44/- P644.44Qonth


19/127

Thereafter, 2LC-8!R, through ir. Maraan, issued the 2rder directing usit Dotel to pa& 'GG of its

eplo&ees the total aount corresponding to their unpaid C!2L* under >2 8o. (E plus, the penalt& of

double indenit&, pursuant to 1ection 'H of Republic *ct 8o. 6)H), as aended b& Republic *ct 8o.

'.

usit Dotel $led a Motion for Reconsideration of the 2LC-8!R 2rder arguing that the 8LR! ecision

resolving the bargaining deadlock between usit Dotel and the 0nion, and awarding salar& increases

under the !B* to hotel eplo&ees retroactive to ' %anuar& H44', alread& rendered the 2LC-8!R

2rder oot and acadeic. >ith the increase in the salaries of the hotel eplo&ees ordered b& the

8LR! ecision of ( 2ctober H44H, along with the hotel eplo&ees+ share in the service charges, the

'GG hotel eplo&ees, covered b& the 2LC-8!R 2rder of HH 2ctober H44H, would alread& be receiving

salaries be&ond the coverage of >2 8o. (. The wage increase granted b& the 8LR! in the latter+s

ecision dated ( 2ctober H44H retroacted to ' %anuar& H44'. The said wage increase, taken together

with the hotel eplo&ees+ share in the service charges of usit Dotel, alread& constituted copliance

with the >2 8o. (.

I''$EF>hether the 'GG hotel eplo&ees were still entitled to C!2L* granted b& >2 8o. ( despite the

increases in their salaries, retroactive to ' %anuar& H44', ordered b& 8LR! in the latter+s ecision dated

( 2ctober H44H.

!E(F >2 8o. ( ver& plainl& stated that onl& private sector workers and eplo&ees in the 8!R

receiving dail& wage rates of PHK4.44 to PH(4.44 shall be entitled to C!2L*. 8ecessaril&, private sector

workers and eplo&ees receiving dail& wages of ore than PH(4.44 were no longer entitled to C!2L*.

The C!2L* was to be ipleented in two tranches: P'K.44Qda& beginning K 8oveber H44'E and the

full aount of P/4.44Qda& beginning ' Februar& H44H.

>2 8o. ( took e9ect on K 8oveber H44'. The ecision rendered b& the 8LR! on ( 2ctober H44H

ordered usit Dotel to grant its eplo&ees salar& increases retroactive to ' %anuar& H44' and '

%anuar& H44H. n deterining which of its eplo&ees were entitled to C!2L*, usit Dotel used as bases

the dail& salaries of its eplo&ees, inclusive of the retroactive salar& increases. The 0nion protested

and insisted that the bases for the deterination of entitleent to C!2L* should be the hotel

eplo&ees+ dail& salaries, e5clusive of the retroactive salar& increases. *ccording to the 0nion, usit

Dotel cannot credit the salar& increases as copliance with >2 8o. (.

Much of the confusion in this case arises fro the insistence of the 0nion to appl& 1ection '/ of >2

8o. (, which states:

1ection '/. >age increasesQallowances granted b& an eplo&er in an organi3ed establishent

with three "/# onths prior to the e9ectivit& of this 2rder shall be credited as copliance with

the prescribed increase set forth herein, provided the corresponding bargaining agreeent

provision allowing creditabilit& e5ists. n the absence of such an agreeent or provision in the

!B*, an& increase granted b& the eplo&er shall not be credited as copliance with the

increase prescribed in this 2rder.

n unorgani3ed establishents, wage increasesQallowances granted b& the eplo&er withinthree "/# onths prior to the e9ectivit& of this 2rder shall be credited as copliance therewith.

n case the increases given are less than the prescribed ad@ustent, the eplo&er shall pa&

the di9erence. 1uch increases shall not include anniversar& increases, erit wage increases

and those resulting fro the regulari3ation or prootion of eplo&ees.

The 0nion harps on the fact that its !B* with usit Dotel does not contain an& provision on

creditabilit&, thus, usit Dotel cannot credit the salar& increases as copliance with the C!2L*


20/127

reuired to be paid under >2 8o. (.1avvphi1

The reliance of the 0nion on 1ection '/ of >2 8o. ( in this case is isplaced. usit Dotel is not

contending creditabilit& of the hotel eplo&ees+ salar& increases as copliance with the C!2L*

andated b& >2 8o. (. !reditabilit& eans that usit Dotel would have been allowed to pa& its

eplo&ees the salar& increases in place of the C!2L* reuired b& >2 8o. (. This, however, is not what

usit Dotel is after. The position of usit Dotel is erel& that the salar& increases should be taken intoaccount in deterining the eplo&ees+ entitleent to C!2L*. The retroactive increases could raise the

hotel eplo&ees+ dail& salar& rates above PH(4.44, conseuentl&, placing said eplo&ees be&ond the

coverage of >2 8o. (. Cvidentl&, 1ection '/ of >2 8o. ( on creditabilit& is irrelevant and inapplicable

herein.

The !ourt agrees with usit Dotel that the increased salaries of the eplo&ees should be used as

bases for deterining whether the& were entitled to C!2L* under >2 8o. (. The ver& fact that the

8LR! decreed that the salar& increases of the usit Dotel eplo&ees shall be retroactive to ' %anuar&

H44' and ' %anuar& H44H, eans that said eplo&ees were alread& supposed to receive the said

salar& increases beginning on these dates. The increased salaries were the rightful salaries of the hotel

eplo&ees b& ' %anuar& H44', then again b& ' %anuar& H44H. *lthough belatedl& paid, the hotel

eplo&ees still received their salar& increases.

t is onl& fair and @ust, therefore, that in deterining entitleent of the hotel eplo&ees to C!2L*,

their increased salaries b& ' %anuar& H44' and ' %anuar& H44H shall be ade the bases. There is no

logic in recogni3ing the salar& increases for one purpose "i.e., to recover the unpaid aounts thereof#

but not for the other "i.e., to deterine entitleent to C!2L*#. For the !ourt to rule otherwise would

be to sanction un@ust enrichent on the part of the hotel eplo&ees, who would be receiving increases

in their salaries, which would place the be&ond the coverage of 1ection ' of >2 8o. (, &et still be

paid C!2L* under the ver& sae provision.

The 8LR!, in its ecision dated ( 2ctober H44H, directed usit Dotel to increase the salaries of its

eplo&ees b& PK44.44 per onth, retroactive to ' %anuar& H44'. *fter appl&ing the said salar&

increase, onl& H hotel eplo&eesH(would have had dail& salar& rates falling within the range of

PHK4.44 to PH(4.44. Thus, upon the e9ectivit& of >2 8o. ( on K 8oveber H44', onl& the said Heplo&ees were entitled to receive the $rst tranch of C!2L*, euivalent to P'K.44 per da&.

The 8LR! ecision dated ( 2ctober H44H also ordered usit Dotel to e9ect a second round of increase

in its eplo&ees+ salaries, euivalent to PKK4.44 per onth, retroactive to ' %anuar& H44H. *s a result

of this increase, the dail& salar& rates of all hotel eplo&ees were alread& above PH(4.44.

!onseuentl&, b& ' %anuar& H44H, no ore hotel eplo&ee was uali$ed to receive C!2L*.

Aiven that H hotel eplo&ees were entitled to receive the $rst tranch of C!2L* fro K 8oveber

H44' to /' eceber H44', the !ourt ust address the assertion of usit Dotel that the receipt b&

said hotel eplo&ees of their shares in the service charges alread& constituted substantial copliance

with the prescribed pa&ent of C!2L* under >2 8o. (.

The !ourt rules in the negative.

t ust be noted that the hotel eplo&ees have a right to their share in the service charges collected

b& usit Dotel, pursuant to *rticle (6 of the Labor !ode of '((', to wit:

*rticle (6. 1ervice charges. 7 *ll service charges collected b& hotels, restaurants and siilar

establishents shall be distributed at the rate of eight&-$ve percent "KU# for all covered

eplo&ees and $fteen percent "'KU# for anageent. The share of eplo&ees shall be
http://www.lawphil.net/judjuris/juri2009/aug2009/gr_181972_2009.html#fnt29http://www.lawphil.net/judjuris/juri2009/aug2009/gr_181972_2009.html#fnt29


21/127

euall& distributed aong the. n case the service charge is abolished, the share of the

covered eplo&ees shall be considered integrated in their wages.

1ince usit Dotel is e5plicitl& andated b& the afore-uoted statutor& provision to pa& its eplo&ees

and anageent their respective shares in the service charges collected, the hotel cannot clai that

pa&ent thereof to its H eplo&ees constitute substantial copliance with the pa&ent of C!2L*

under >2 8o. (. 0ndoubtedl&, the hotel eplo&ees+ right to their shares in the service chargescollected b& usit Dotel is distinct and separate fro their right to C!2L*E grati$cation b& the hotel of

one does not result in the satisfaction of the other.

The !ourt, however, $nds no basis to hold usit Dotel liable for double indenit&. 0nder 1ection H"#

of 2LC epartent 2rder 8o. '4, 1eries of '((, the 8otice of nspection Result ;shall specif& the

violations discovered, if an&, together with the o?cer+s recoendation and coputation of the

unpaid bene$ts due each worker with an advice that the eplo&er shall be liable for double indenit&

in case of refusal or failure to correct the violation within $ve calendar da&s fro receipt of notice.; *

careful review of the 8otice of nspection Result issued herein b& the 2LC-8!R to usit Dotel, reveals

that the said 8otice did not contain such an advice. *lthough the 8otice directed usit Dotel to correct

its noted violations within $ve da&s fro receipt thereof, it was not su?cientl& apprised that failure to

do so within the given period would alread& result in its liabilit& for double indenit&. The lack of

advice deprived usit Dotel of the opportunit& to decide and act accordingl& within the $ve-da& period,

as to avoid the penalt& of double indenit&. B& HH 2ctober H44H, the 2LC-8!R, through ir. Maraan,

alread& issued its 2rder directing usit Dotel to pa& 'GG of its eplo&ees the total aount

corresponding to their unpaid C!2L* under >2 8o. (E plus the penalt& of double indenit&, pursuant

to 1ection 'H of Republic *ct 8o. 6)H), as aended b& Republic *ct 8o. '.

*lthough the !ourt is indful of the fact that labor ebraces individuals with a weaker and unlettered

position as against capital, it is euall& indful of the protection that the law accords to capital. >hile

the !onstitution is coitted to the polic& of social @ustice and the protection of the working class, it

should not be supposed that ever& labor dispute will be autoaticall& decided in favor of labor.

Manageent also has its own rights which, as such, are entitled to respect and enforceent in the

interest of siple fair pla&.

n su, the !ourt holds that the retroactive salar& increases should be taken into account in the

deterination of which hotel eplo&ees were entitled to C!2L* under >2 8o. (. *fter appl&ing the

salar& increases retroactive to ' %anuar& H44', H hotel eplo&ees still had dail& salar& rates between

PHK4.44 and PH(4.44, thus, entitling the to receive the $rst tranch of C!2L*, euivalent to P'K.44

per da&, beginning K 8oveber H44', the date of e9ectivit& of >2 8o. (, until /' eceber H44'.

Following the second round of salar& increases retroactive to ' %anuar& H44H, all the hotel eplo&ees

were alread& receiving dail& salar& rates above PH(4.44, hence, leaving no one uali$ed to receive

C!2L*. Receipt b& the H hotel eplo&ees of their shares fro the service charges collected b& usit

Dotel shall not be deeed pa&ent of their C!2L* fro K 8oveber H44' to /' eceber H44'.

Tiger Construction and Development Corp. (TCDC) vs Abay, et. al (GR No. 1!1!1, "eb.

#,#$1$)

"acts%

Reynaldo Abay and ot&er '1 employees iled a complaint to t&e Regional ice o t&e

Department o *abor and +mployment (D*+).D*+ oicials conducted an inspection at t&e

premises o petitioner TCDC. everal labor standard violations -ere noted, suc& as

deiciencies in record eeping, non/compliance -it& various -age orders, non/payment o

&oliday pay, and underpayment o 10t&mont& pay. T&e case -as t&en set or summary &earing.


22/127

eore t&e &earing could tae place, t&e Director o Regional ice No. 2, 3a. Glenda A.

3analo (Director 3analo), issued an rder on 4uly #', #$$#, reerring t&e case to N*RC on the

ground that the aggregate money claim of each worker exceeds the jurisdictional amount which

is P5,000.00.

eore t&e N*RC could tae any action, D*+ ecretary to. Tomas, in an apparent

reversal o Director 3analo5s endorsement, issued anot&er inspection aut&ority on August #,

#$$# in t&e same case. 6ursuant to suc& aut&ority, D*+ oicials conducted anot&er

investigation o petitioner5s premises and t&e same violations -ere discovered. T&en D*+

oicials issued a Notice o 7nspection Results to petitioner directing it to rectiy t&e violations

-it&in ive days rom notice. "or ailure to comply -it& t&e directive, t&e case -as set or

summary &earing on August 18, #$$#. n even date, petitioner allegedly 9uestioned t&e

inspector5s indings and argued t&at t&e proceedings beore t&e regional oice &ad been

rendered moot by t&e issuance o t&e 4uly #', #$$# rder endorsing t&e case to t&e

N*RC. According to petitioner, t&is 4uly #', #$$# rder -as tantamount to a dismissal on t&e

ground o lac o :urisdiction, -&ic& dismissal &ad attained inality; &ence, all proceedings beore

t&e D*+ regional oice ater 4uly #', #$$# -ere null and void or -ant o :urisdiction.

n eptember 0$, #$$#, Director 3analo issued an rder directing TCDC to

pay 6#,1#0,#0'.8$ to its employees representing underpayment o salaries, 10t&mont& pay, and

underpayment o service incentive leave pay and regular &oliday pay. TCDC iled a 3otion or

Reconsideration reiterating t&e argument t&at Director 3analo &ad lost :urisdiction over t&e

matter.

ecution, and more t&an

t&ree mont&s ater t&e denial o its motion or reconsideration, TCDC iled an admittedly belated

appeal -it& t&e D*+ ecretary. T&ere it reiterated its argument t&at, subse9uent to t&e 4uly

#', #$$# rder, all o Director 3analo5s actions concerning t&e case are null and void or &aving

been issued -it&out :urisdiction.


23/127

ec. to Tomas acted on t&e appeal but dismissed it or lac o merit. TCDC appealed to

t&e CA but CA dismissed t&e case or ailure to properly sign t&e Certiication o non/orum

s&opping, t&e person -&o signed does not &ave aut&ority to sign in be&al o t&e company.

7ssue%

T&e issue in t&e case is -&et&er petitioner can still assail t&e 4anuary #8, #$$0 rder o

Director 3analo allegedly on t&e ground o lac o :urisdiction, ater said rder &as attained

inality and is already in t&e e>ecution stage.

Ruling%

T&e petition lacs merit.

6etitioner admits t&at it ailed to appeal t&e 4anuary #8, #$$0 rder -it&in t&e period

prescribed by la-. 7t lie-ise admits t&at t&e case -as already in t&e e>ecution process -&en it

resorted to a belated appeal to t&e D*+ ecretary. 6etitioner, &o-ever, e>cuses itsel rom t&e

eects o t&e inality o t&e rder by arguing t&at it -as allegedly issued -it&out :urisdiction and

may be assailed at any time.

=&ile it is true t&at orders issued -it&out :urisdiction are considered null and void and,

as a general rule, may be assailed at any time, t&e act o t&e matter is t&at in t&is

case, Director 3analo acted within her jurisdiction. ?nder Article 1#@ (b) o t&e *abor

Code, as amended by Republic Act (RA) No. 0$, t&e D*+ ecretary and &er

representatives, t&e regional directors, &ave :urisdiction over labor standards violations based

on indings made in t&e course o inspection o an employer5s premises. T&e said :urisdiction

is notaected by t&e amount o claim involved, as RA 0$ &ad eectively removed t&e

:urisdictional limitations ound in Articles 1#8 and #1 o t&e *abor Code insoar as inspection

cases, pursuant to t&e visitorial and enorcement po-ers o t&e D*+ ecretary, are

concerned. T&e last sentence o Article 1#@(b) o t&e *abor Code recogniBes an exceptionto

t&e :urisdiction o t&e D*+ ecretary and &er representatives, but suc& e>ception is neit&er an

issue nor applicable &ere.

Director 3analo5s initial endorsement o t&e case to t&e N*RC, on t&e mistaen opinion

t&at t&e claim -as -it&in t&e latter5s :urisdiction, did not oust or deprive &er o :urisdiction over

t&e case. &e t&ereore retained t&e :urisdiction to decide t&e case -&en it -as eventually

returned to &er oice by t&e D*+ ecretary. 4urisdiction or aut&ority to try a certain case is

conerred by la- and not by t&e interested parties, muc& less by one o t&em, and s&ould be


24/127

e>ercised precisely by t&e person in aut&ority or body in -&ose &ands it &as been placed by t&e

la-.

=e also cannot accept petitioner5s t&eory t&at Director 3analo5s initial endorsement o

t&e case to t&e N*RC served as a dismissal o t&e case, -&ic& prevented &er romsubse9uently assuming :urisdiction over t&e same. T&e said endorsement -as evidently not

meant as a inal disposition o t&e case; it -as a mere reerral to anot&er agency, t&e N*RC, on

t&e mistaen belie t&at :urisdiction -as lodged -it& t&e latter. 7t cannot preclude t&e regional

director rom subse9uently deciding t&e case ater t&e mistae -as rectiied and t&e case -as

returned to &er by t&e D*+ ecretary, particularly since it -as a labor case -&ere procedural

lapses may be disregarded in t&e interest o substantial :ustice.

6rocedural due process as understood in administrative proceedings ollo-s a more

le>ible standard as long as t&e proceedings -ere undertaen in an atmosp&ere o airness and:ustice. Alt&oug& Director 3analo5s endorsement o t&e complaint to t&e N*RC turned out to be

ill/advised (because t&e regional director actually &ad :urisdiction), -e note t&at no rig&t o t&e

parties -as pre:udiced by suc& action. 6etitioner -as properly investigated, received a Notice

o 7nspection Results, participated ully in t&e summary &earings, iled a 3otion or

Reconsideration, and even a upplemental 6leading to t&e 3otion or Reconsideration.

T&ere is also reason to doubt t&e good ait& o petitioner in raising t&e alleged lac o

:urisdiction. 7, in all &onesty and earnestness, petitioner believed t&at Director 3analo -as

acting -it&out :urisdiction, it could &ave iled a petition or certiorariunder Rule ' withint&e

proper period prescribed, -&ic& is $ days rom notice o t&e order. 7ts ailure to do so, -it&out

any e>planation or suc& ailure, belies its good ait&. 7n suc& circumstances, it becomes

apparent t&at petitioner is merely using t&e alleged lac o :urisdiction in a belated attempt to

reverse or modiy an order or :udgment t&at &ad already become inal and e>ecutory. T&is

cannot be done.

'. A9uinas c&ool vs. ps. 7nton, et.al (GR No. 1@!#$#, 4an. #, #$11)

"acts%

4ose *uis, a grade 0 student o A9uinas sc&ool and son o ps. 7nton misbe&aved during

a religion class taug&t by ister Eamyamin. 4ose *uis let &is assigned seat and -ent over to aclassmate to play a :oe o surprising &im. Eamyamin noticed t&is and sent 4ose *uis bac to

&is seat. Ater a -&ile, 4ose *uis got up again and -ent over to t&e same classmate. T&is time,

unable to tolerate t&e c&ild5s be&avior, Eamyamin approac&ed 4ose *uis and iced &im on t&e

legs several times. &e also pulled and s&oved &is &ead on t&e classmate5s seat. "inally, s&e

told t&e c&ild to stay -&ere &e -as on t&at spot o t&e room and inis& copying t&e notes on t&e

blacboard -&ile seated on t&e loor.


25/127

ps. 7nton iled a case or damages against t&e sc&ool and t&e nun and a criminal case

against t&e nun. 2ictoria, t&e mot&er, also soug&t or personal damagesF &er o-n moral

damages. RTC &eld Eamyamin liable or t&e damages prayed e>cept 2ictoria5s claim or moral

damages.

Not satisied, t&e 7ntons elevated t&e case to t&e Court o Appeals (CA).#H

T&ey asedt&e CA to increase t&e a-ard o damages and &old A9uinas solidarily liable -it&

Eamyamin. "inding t&at an employer/employee relation e>isted bet-een A9uinas and

Eamyamin, t&e CA ound t&em solidarily liable to 4ose *uis. T&e CA, &o-ever, declined to

increase t&e a-ard o damages.0H 4ose *uis moved or partial reconsideration but t&is -as

denied. A9uinas, or its part, appealed directly to t&is Court rom t&e CA decision t&roug& a

petition or revie- on certiorari.

7ssue%

=&et&er or not t&e CA -as correct in &olding A9uinas solidarily liable -it& Eamyamin or

t&e damages a-arded to 4ose *uis.

Ruling%

T&e CA ound A9uinas liable to 4ose *uis based on Article #1@$ o t&e Civil Code upon

t&e CA5s belie t&at t&e sc&ool -as Eamyamin5s employer. A9uinas contests t&is.

T&e Court &as consistently applied t&e our/old test to determine t&e e>istence o anemployer/employee relations&ip% t&e employer (a) selects and engages t&e employee; (b) pays

&is -ages; (c) &as po-er to dismiss &im; and (d) &as control over &is -or. t&ese, t&e most

crucial is t&e element o control. Control reers to t&e rig&t o t&e employer, -&et&er actually

e>ercised or reserved, to control t&e -or o t&e employee as -ell as t&e means and met&ods

by -&ic& &e accomplis&es t&e same.!H

7n t&is case, t&e sc&ool directress testiied t&at A9uinas &ad an agreement -it& a

congregation o sisters under -&ic&, in order to ulill its ministry, t&e congregation -ould send

religion teac&ers to A9uinas to provide catec&esis to its students. A9uinas insists t&at it -as not

t&e sc&ool but Eamyamin5s religious congregation t&at c&ose &er or t&e tas o catec&iBing t&e

sc&ool5s grade t&ree students, muc& lie t&e -ay bis&ops designate t&e catec&ists -&o -ould

teac& religion in public sc&ools. ?nder t&e circumstances, it -as 9uite evident t&at A9uinas did

not &ave control over Eamyamin5s teac&ing met&ods. T&e 7ntons &ad not reuted t&e sc&ool
http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn4


26/127

directress5 testimony in t&is regard. Conse9uently, it -as error or t&e CA to &old A9uinas

solidarily liable -it& Eamyamin.

course, A9uinas still &ad t&e responsibility o taing steps to ensure t&at only

9ualiied outside catec&ists are allo-ed to teac& its young students. 7n t&is regard, it cannot besaid t&at A9uinas too no steps to avoid t&e occurrence o improper conduct to-ards t&e

students by t&eir religion teac&er.

"irst, Eamyamin5s transcript o records, certiicates, and diplomas s&o-ed t&at s&e -as

9ualiied to teac& religion.

econd, t&ere is no 9uestion t&at A9uinas ascertained t&at Eamyamin came rom a

legitimate religious congregation o sisters and t&at, given &er C&ristian training, t&e sc&ool &ad

reason to assume t&at s&e -ould be&ave properly to-ards t&e students.

T&ird, t&e sc&ool gave Eamyamin a copy o t&e sc&ool5s Administrative "aculty ta

3anual t&at set t&e standards or &andling students. 7t also re9uired &er to attend a teac&ing

orientation beore s&e -as allo-ed to teac& beginning t&at 4une o 188@.'H

"ourt&, t&e sc&ool pre/approved t&e content o t&e course s&e -as to teac&Hto ensure

t&at s&e -as really catec&iBing t&e students.

And it&, t&e sc&ool &ad a program or sub:ecting Eamyamin to classroom evaluation.H ?nortunately, since s&e -as ne- and it -as :ust t&e start o t&e sc&ool year, A9uinas did not

&ave suicient opportunity to observe &er met&ods. At any rate, it acted promptly to relieve &ero &er assignment as soon as t&e sc&ool learned o t&e incident.@H 7t cannot be said t&at

A9uinas -as guilty o outrig&t neglect.

RIMO E. CAONG, JR., ALEAN7ER J.TRESDIO, )"+ LORIANO 7. 7ALON,P'#'o"&$s+ versus +

AELINO REGALOS,Respondent&

'iested b; Geore

G.R. No. 19428

Januar 25, 2011

To'!: 6)/& E"o$!&-&"# )"+ R&!ov&$

NNN'espite m best e%%orts, . *ould not %ind an issue s7uarel on !ae en%or*ement and

re*overNNN

N'!?")-&: S) %oo5 "/ J&&"&
http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn8http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn6http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn7http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/184202.htm#_ftn8


27/127

.s the poli* o% suspendin drivers pendin pament o% arrears in their boundar

obliations reasonableA

F)!#s: #etitioners #rimo & Caon, Jr& (Caon), $le3ander J& 8res7uio (8res7uio), and

oriano '& 'aluon ('aluon) !ere emploed b respondent $velino Reualos under a

boundar areement, as drivers o% his )eepne&s& .n 9ovember 2001, the %iled separate

*omplaints12 %or illeal dismissal aainst respondent !ho barred them %rom drivin the

vehi*les due to de%i*ien*ies in their boundar paments&

Caon !as hired b respondent in September 1@@: and be*ame a permanent driver

sometime in 2000& 8res7uio !as emploed b respondent as driver in $uust 1@@5& e

be*ame a permanent driver in 1@@& n the other hand, 'aluon started !orin %or

respondent in Mar*h 1@@:& e be*ame a permanent driver in Jul 1@@:&

'urin the mandator *on%eren*e, respondent mani%ested that petitioners !ere not

dismissed and that the *ould drive his)eepne&son*e the paid their arrears& #etitioners,

ho!ever, re%used to do so&

P'#'o"&$s A$/-&"#: #etitioners averred that the !ere illeall dismissed b

respondent !ithout "ust *ause& 8he maintained that respondent did not *ompl !ith due

pro*ess re7uirements be%ore terminatin their emploment, as the !ere not %urnished

noti*e apprisin them o% their in%ra*tions and another in%ormin them o% their dismissal&

#etitioners 7uestioned respondent=s poli* o% automati*all dismissin the drivers !ho %ail to

remit the %ull amount o% the boundar as it alleedl (a) violates their riht to due pro*esse, thus, agree with the 8LR! and the appellate court when the& stated that the $5ed overtie of'6 hours, out-of-port allowance and eal allowance previousl& granted to *guan3a were erel&

suppleents or eplo&ent bene$ts given on condition that *guan3a+s assignent was out-of-

port. The $5ed overtie and allowances were not part of *guan3a+s basic salar&. *guan3a+s basic

salar& was not reducedE hence, there was no violation of the rule against diinution of pa&.

I"BER(>A&(#R P!I(' 4s I"#>$G#

GR No. 17770; 'epe5er 1, 2009

%#&T'F

ia&uga was !ost *ccounting 1upervisor, Aloria was Business *nal&st and de Auia was

*ccounting Managerof iberl&-!lark. ia&uga and Aloria resigned prior to iberl&-!lark+s

o9ering of earl& retireent package.Both pleaded that its bene$ts be retroactivel& e5tended to

the. e Auia also resigned. *ll were able tobene$t fro the earl& retireent package.

iberl&-!lark then announced a lup su retireent pa& subseuentl&. ia&uga, Aloria and de

Auia $led a clai for this additional bene$t with the 8LR!. * decisionwas ade den&ing ia&uga

and Aloria of this additional bene$t because the& ceased to be eplo&ees when the lup suretireent pa& was o9ered b& iberl&-!lark. e Auia+s lup su retireent pa& was granted,

however, being an eplo&ee of iberl&-!lark when this bene$t was o9ered.

*ppeals were $led in 8LR!,which a?red ia&uga, Aloria and de Auia+s clai to the lups su

retireent pa&, ruling that iberl&-!lark+s denial to grant ia&uga and Aloria+s lup su

retireent pa& was an act of discriination. iberl&-!lark appealed to the !* which a?red


35/127

8LR!+s decision. iberl&-!lark appealed to the 1! contending that ia&uga and Aloria signed

uitclais that no longer entitles the to the additional bene$ts.

I''$EF>28 ia&uga and Aloria are entitled to the lup su retireent pa&.

R$(INGF

1! decided in favor of iberl&-!lark on the basis of the absence of a !B* or contract entitling

ia&uga and Aloria to thelup su retireent pa&. ia&uga and Aloria resigned prior to the

o9ering of iberl&-!lark. TheBusiness da& doctrine of eual treatent of all eplo&ees is

isplaced because it involved retrenchent and separation pa&, while the case at bar involved

resignation and a lup su retireent pa&. iberl&-!lark was not even obliged to appl& its earl&

retireent package retroactivel& to ia&uga and Aloria. The uitclais signed b& ia&uga and

Aloria were honored. *s for de Auia+s lup su retireent pa& clai, it was denied because this

clai was for eplo&ees resigning due to iberl&-!lark+s downsi3ing and not due to career

advanceent.

(EP#NTO &ER#"I&' 4s (EP#NTO &ER#"I&' E"P(O>EE' #''O&I#TION

GR No. 1066 "arc- 2, 2010

%#&T'F

Petitioner Lepanto !eraics, nc., a corporation priaril& in the business of anufacture, akes,bu& and sell, on whole sale basis, tiles, arbles, osaics and other siilar products. Respondent

Lepanto !eraics Cplo&ees *ssociation is the sole and e5clusive bargaining agent in the

establishent of petitioner.

n '((, petitioner gave P/, 444.44 as bonus to its eplo&ees, ebers of the respondent

*ssociation. 1ubseuentl&, in 1epteber '(((, petitioner and respondent *ssociation entered into

a !ollective Bargaining *greeent "!B*# which provides for, aong others, the grant of a

!hristas gift packageQbonus to the ebers of the respondent *ssociation.

n the succeeding &ears, '(((, H444, H44', petitioner gave bonuses in a for of a certi$catewhich is euivalent to P/, 444.44. Dowever, in H44H, petitioner gave onl& P644.44 as cash bene$t.

Respondent *ssociation ob@ected to the P644.44 cash bene$t and argued that it was in violation of

the !B*. Petitioner averred that the giving of e5tra copensation was based on the copan&+s

available resources for a given &ear and the workers are not entitled to a bonus if the copan&

does not ake pro$ts. 0nable to aicabl& settle the dispute, the case was referred to the

Ioluntar& *rbitrator. The Ioluntar& *rbitrator rendered a decision, declaring that petitioner is

bound to grant each of its workers a !hristas bonus of P/,444.44 for the reason that the bonus

was given prior to the e9ectivit& of the !B* between the parties and that the $nancial losses of the


36/127

copan& is not a su?cient reason to e5ept it fro granting the sae. 2n appeal, the !ourt of

*ppeals a?red the ruling of the Ioluntar& *rbitrator.

I''$EFs petitioner obliged to give a !hristas bonus to respondent *ssociationW

R$(INGF

es. Aenerall&, a bonus is not a deandable and enforceable obligation. For a bonus to be

enforceable, it ust have been proised b& the eplo&er and e5pressl& agreed upon b& the

parties. Aiven that the bonus in this case is integrated in the !B*, the sae partakes the nature of

a deandable obligation. Ieril&, b& virtue of its incorporation in the !B*, the !hristas bonus due

to respondent *ssociation has becoe ore than @ust an act of generosit& on the part of the

petitioner but a contractual obligation it has undertaken.

* reading of the provision of the !B* reveals that the sae provides for the giving of a;!hristas gift packageQbonus; without uali$cation. The said provision did not state that the

!hristas package shall be ade to depend on the petitioner+s $nancial standing. The records are

also bereft of an& showing that the petitioner ade it clear during !B* negotiations that the bonus

was dependent on an& condition. ndeed, if the petitioner and respondent *ssociation intended

that the P/,444.44 bonus would be dependent on the copan& earnings, such intention should

have been e5pressed in the !B*.

*ll given, business losses are a feeble ground for petitioner to repudiate its obligation under the

!B*. The rule is settled that an& bene$t and suppleent being en@o&ed b& the eplo&ees cannot

be reduced, diinished, discontinued or eliinated b& the eplo&er. The principle of non-

diinution of bene$ts is founded on the constitutional andate to protect the rights of workersand to proote their welfare and to a9ord labor full protection.

GENE'I' TR#N'PORT 'ERVI&E IN& 4s $N>ON NG "#(#>#NG

"#NGG#G#=# NG GENE'I' TR#N'PORT

GR No. 1211@ #pril ;, 2010

%#&T'F

Taro& worked as a driver for Aenesis on coission basis at (U of the gross revenue per trip.

Taro& was, after due notice and hearing, terinated fro eplo&ent after an accident where he

was deeed to have been driving recklessl&.


37/127

Taro& $led a coplaint for illegal disissal and pa&ent of service incentive leave pa&,

claiing that he was singled out for terination because of his union activities, other drivers who

had et accidents not having been disissed fro eplo&ent.

Taro& later aended his coplaint to iplead 0n&on ng Mala&ang Manggagawa ng Aenesis

Transport "the union# as coplainant and add as grounds of his cause of action unfair labor

practice, reiburseent of illegal deductions on tollgate fees, and pa&ent of service incentive

leave pa&.

Taro& alleged that in '((), petitioner started deducting fro his weekl& earnings an aount

ranging fro P'64 to P(44 representing toll fees, without his consent and written authori3ation as

reuired under *rticle ''/ of the Labor !ode and contrar& to copan& practiceE and that

deductions were also taken fro the bus conductor+s earnings to thus result to double deduction.

I''$EF>28 the toll fee deductions fro the gross revenue aounted to wage deduction in

violation of *rticle ''/ of the Labor !ode.

R$(INGF

C1.

*lbeit the aounts representing tollgate fees were deducted fro gross revenues and not directl&

fro Taro&+s coissions, the labor tribunal and the appellate court correctl& held that the

withholding of those aounts reduced the aount fro which Taro&+s (U coission would be

coputed. 1uch a coputation not onl& arks a change in the ethod of pa&ent of wages,

resulting in a diinution of Taro&+s wages in violation of *rticle ''/ vis-X-vis *rticle '44 of theLabor !ode, as aended. t need not be underlined that without Taro&+s written consent or

authori3ation, the deduction is considered illegal.

Besides, the invocation of the rule on ;copan& practice; is generall& used with respect to the

grant of additional bene$ts to eplo&ees, not on issues involving diinution of bene$ts.

&ENTR#( #H$RER# E T#R(#& 4s &ENTR#( #H$RER# E T#R(#&

(#BOR $NIONAN($

GR No. 19@9 Jul/ 26, 2010

%#&T'F


38/127

Respondent is a legitiate labor organi3ation which serves as the e5clusive bargaining

representative of petitioner+s rank-and-$le eplo&ees.

n copliance with P.. 8o. K', petitioner granted its eplo&ees the andator& thirteenth

"'/th# - onth pa& since '()K.

The forula used b& petitioner in coputing the '/th-onth pa& was: Total Basic *nnual

1alar& divided b& 'H. ncluded in petitioner+s coputation of the Total Basic *nnual 1alar& were

the following: basic onthl& salar&E $rst eight "# hours overtie pa& on 1unda& and legalQspecial

holida&E night preiu pa&E and vacation and sick leaves for each &ear. Throughout the &ears,

petitioner used this coputation until H446.

8oveber 6, H44G, respondent staged a strike. uring the pendenc& of the strike, petitioner

declared a teporar& cessation of operations.

eceber H44K, all the striking union ebers were allowed to return to work. 1ubseuentl&,

petitioner declared another teporar& cessation of operations for the onths of *pril and Ma&

H446. The suspension of operation was lifted on %une H446, but the rank-and-$le eplo&ees were

allowed to report for work on a $fteen "'K# da&-per-onth rotation basis that lasted until

1epteber H446.

n eceber H446, petitioner gave the eplo&ees their '/th-onth pa& based on the

eplo&ee+s total earnings during the &ear divided b& 'H.

Respondent ob@ected to this coputation. t averred that petitioner did not adhere to the usual

coputation of the '/th-onth pa&. t claied that the divisor should have been eight "# instead

of 'H, because the eplo&ees worked for onl& onths in H446. t likewise asserted that

petitioner did not observe the copan& practice of giving its eplo&ees the guaranteed aount

euivalent to their one onth pa&, in instances where the coputed '/th-onth pa& was less than

their basic onthl& pa&.

Petitioner argues that there was an error in the coputation of the '/th-onth pa& of its

eplo&ees, an error that was discovered b& the anageent when respondent raised a uestion

concerning the coputation of the eplo&ees+'/th-onth pa& for H446. Petitioner insists that thelength of tie "alost /4 &ears# during which an eplo&er has perfored a certain act bene$cial

to the eplo&ees, does not prove that such an act was not done in error. t aintains that for the

clai of istake to be negated, there ust be a clear showing that the eplo&er had freel&,

voluntaril&, and continuousl& perfored the act, knowing that he is under no obligation to do so.

Petitioner asserts that such voluntariness was absent in this case.

I''$EF>28 petitioner should adhere to its established practice of granting '/th onth pa& on

the basis of gross annual basic which includes basic pa&, preiu pa& for work in rest da&s and

special holida&s, night shift di9erential and paid vacation and sick leaves for each &ear.

R$(INGF

C1.

The '/th-onth pa& andated b& "P..# K' represents an additional incoe based on wage

but not part of the wage. t is euivalent to one-twelfth "'Q'H# of the total basic salar& earned b&


39/127

an eplo&ee within a calendar &ear. *ll rank-and-$le eplo&ees, regardless of their designation or

eplo&ent status and irrespective of the ethod b& which their wages are paid, are entitled to

this bene$t, provided that the& have worked for at least one onth during the calendar &ear. f the

eplo&ee worked for onl& a portion of the &ear, the '/th-onth pa& is coputed pro rata.

The RR of P.. 8o. K', proulgated on eceber HH, '()K, de$nes '/th-onth pa& and

basic salar& as follows:

1ec. H. e$nition of certain ters. - *s used in this issuance:

"a# ;Thirteenth-onth pa&; shall ean one twelfth "'Q'H# of the basic salar& of an

eplo&ee within a calendar &earE

"b# ;Basic salar&; shall include all reunerations or earnings paid b& an eplo&er to an

eplo&ee for services rendered but a& not include cost-of-living allowances granted pursuant to

Presidential ecree 8o. KHK or Letter of nstructions 8o. ')G, pro$t-sharing pa&ents, and all

allowances and onetar& bene$ts which are not considered or integrated as part of the regular or

basic salar& of the eplo&ee at the tie of the proulgation of the

labor law case.doc

Documents

Transcript of labor law case.doc