PI Manufacturing

Facts:

Petitioner P.I.
Manufacturing,
Incorporated is
engaged in the manufacture and sale of household appliances.

On the other hand, respondent P.I. Manufacturing Supervisors and Foremen Association (PIMASUFA) is
an organization of petitioners supervisors and foremen

On December 10, 1987, the President signed into law Republic Act (R.A.) No. 6640[2] providing, among
others, an increase in the statutory minimum wage and salary rates of employees and workers in the private
sector.

Thereafter, on December 18, 1987, petitioner and respondent PIMASUFA entered into a new Collective
Bargaining Agreement (1987 CBA) whereby the supervisors were granted an increase of P625.00 per
month and the foremen, P475.00 per month.

Respondents charged petitioner with wage distortion

LA ruled in favor of respondents

NLRC and CA affirmed LA

domestic

corporation

Issue: whether the implementation of R.A. No. 6640 resulted in a wage distortion and whether such distortion was
cured or remedied by the 1987 CBA.
Held: YES. There was a wage distortion but it was cured

wage distortion means the disappearance or virtual disappearance of pay differentials between lower
and higher positions in an enterprise because of compliance with a wage order.

Notably, the implementation of R.A. No. 6640 resulted in the increase of P10.00 in the wage rates
of Alcantara, supervisor, and Morales and Salvo, both foremen. They are petitioners lowest paid
supervisor and foremen. As a consequence, the increased wage rates of foremen
Morales and Salvo exceeded that of supervisor Buencuchillo.

However, while we find the presence of wage distortions, we are convinced that the same were cured or
remedied when respondent PIMASUFA entered into the 1987 CBA withpetitioner after the effectivity of
R.A. No. 6640. The 1987 CBA increased the monthly salaries of the supervisors by P625.00 and
the foremen, by P475.00, effective May 12, 1987.

These increases re-established and broadened the gap, not

only between the supervisors and the foremen, but also between them and the rank-and-file employees.

Interestingly, such gap as re-established by virtue of the CBA is more than a substantial compliance with
R.A. No. 6640.

It has not escaped our attention that requiring petitioner to pay all the members of respondent PIMASUFA a
wage increase of 18.5%, over and above the negotiated wage increases provided under the 1987
CBA, is highly unfair and oppressive to the former. Obviously, it was not the intention of R.A. No. 6640 to
grant an across-the-board increase in pay to all the employees of petitioner.

At this juncture, it must be stressed that a CBA constitutes the law between the
parties when freely and voluntarily entered into.[13]
Here, it has not been shown that
respondentPIMASUFA was coerced or forced by petitioner to sign the 1987 CBA.

Respondents cannot invoke the beneficial provisions of the 1987 CBA but disregard the concessions it
voluntary extended to petitioner.

The goal of collective bargaining is the making of agreements that will stabilize business conditions and fix
fair standards of working conditions.

In fine, it must be emphasized that in the resolution of labor cases, this Court has always been guided by
the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare
shall be protected.

However, consistent with such policy, the Court cannot favor one party, be it labor or management, in
arriving at a just solution to a controversy if the party concerned has no valid support to its claim,
like respondents here.

Prubankers Assn vs Prudential Bank and Co

Facts:

On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued Wage
Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private
sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period
[t]hereafter, in the following categories (P17.50) in the cities of Naga and Legaspi; (P15.50) in the
municipalities of Tabaco, Daraga, Pili and the city of Iriga; and (P10.00) for all other areas in the Bicol
Region.

Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region VII
issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage
Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum
wage rates for all workers and employees in the private sector as follows: The petitioner then granted a
COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 503, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its
Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03.

On June 7, 1994, respondent Prubankers Association wrote the petitioner requesting that the Labor
Management Committee be immediately convened to discuss and resolve the alleged wage distortion
created in the salary structure upon the implementation of the said wage orders.

Respondent Association then demanded in the Labor Management Committee meetings that the petitioner
extend the application of the wage orders to its employees outside Regions V and VII, claiming that the
regional implementation of the said orders created a wage distortion in the wage rates of petitioners
employees nationwide.

As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to
voluntary arbitration

Issue: Whether or not there is wage distortion

Held: NO

In other words, the quantitative difference in compensation between different pay classes remained the
same in all branches in the affected region.

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

The wage distortion should be among the same employees in the same region

Put differently, a wage distortion arises when a wage order engenders wage parity between employees
in different rungs of the organizational ladder of the same establishment.

It bears emphasis that wage distortion involves a parity in the salary rates of differentpay classes which, as
a result, eliminates the distinction between the different ranks in the same region.

Petitioner also avers that the implementation of the Wage Order in only one region violates the equal-payfor-equal-work principle. This is not correct. At the risk of being repetitive, we stress that RA 6727
mandates that wages in every region must be set by the particular wage board of that region, based on the
prevailing situation therein. Necessarily, the wages in different regions will not be uniform. Thus, under RA
6727, the minimum wage in Region 1 may be different from that in Region 13, because the socioeconomic
conditions in the two regions are different.

Section 13 provides that the minimum wage rates of workers working in branches or agencies of
establishments in or outside the National Capital Region shall be those applicable in the place where they
are sanctioned. The last part of the sentence was omitted by petitioner in its argument. Given the entire
phrase, it is clear that the statutory provision does not support petitioners view that establishment includes
all branches and offices in different regions.

Arco Metal vs Samahan etc.

Facts:

Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor
union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13 th month
pay, bonus, and leave encashment of three union members in amounts proportional to the service they
actually rendered in a year, which is less than a full twelve (12) months.

Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the
payment of the same benefits to seven (7) employees who had not served for the full 12 months. The
payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. According to respondent, the
prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code.
Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties
submitted the case for voluntary arbitration.

Issue: Whether or not there is diminution of benefits

Held:

There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and
sick leave, one must have rendered at least one year of service. The clear wording of the provisions does
not allow any other interpretation.

Anent the 13th month pay and bonus, we agree with the findings of Mangabat that the CBA provisions did
not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total
compensation which an employee receives for the whole calendar year.

The bonus is also equivalent to the amount of the 13 th month pay given, or in proportion to the actual
service rendered by an employee within the year.

According to petitioner, it was only in 2003 that the accounting department discovered the error when
there were already three (3) employees involved with prolonged absences and the error was corrected by
implementing the pro-rata payment of benefits pursuant to law and their existing CBA. [12] It adds that the
seven earlier cases of full payment of benefits went unnoticed considering the proportion of one
employee

We disagree

Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer.[14] The principle of non-diminution of benefits is founded on the
Constitutional mandate to "protect the rights of workers and promote their welfare, [15] and to afford labor
full protection.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily
and consistently granting full benefits to its employees regardless of the length of service rendered.

True, there were only a total of seven employees who benefited from such a practice, but it was an
established practice nonetheless.

Jurisprudence has not laid down any rule specifying a minimum number of years within which a company
practice must be exercised in order to constitute voluntary company practice

In
cases
involving
money
claims
of
employees,
the
employer
has
the
burden of proving that the employees did receive the wages and benefits and that the same were
paid in accordance with law

Lopez Sugar Corp vs Franco

Facts:

Private respondents Leonito G. Franco, Rogelio R. Pabalan, Romeo T. Perrin and Eduardo T. Candelario
were supervisory employees of the Lopez Sugar Corporation

They supervised fuel tenders, delivery of sugar, convince planters

They were received a memorandum that they were included in the special retirement program for
supervisors and middle level managers; hence, their employment with the Corporation was to be terminated
effective September 29, 1995, and they would be paid their salaries until September 27, 1995.

They filed for illegal dismissal

The private respondents also alleged that their inclusion in the said program was resorted to in order to
intimidate the union and its members from pursuing their objective of institutionalizing a collective
bargaining mechanism for supervisory employees in the company, thus, aborting the birth of a labor
organization capable of bargaining with the management on the terms and conditions of employment.

LA ruled in favor of the company

NLRC and CA reversed LA

Issue: Whether or not they were illegally dismissed

Held: YES. They did not know the standard or criteria for which they were dismissed.

The downsizing of personnel was not among the foregoing recommendations, and yet this was what the
petitioner did, through its special retirement program, by including private respondents Franco and Pabalan,
thereby terminating their employment. It is too much of a coincidence that the two private respondents
were active members of the union

The Release Waiver and Quitclaim were not verified by the complainants.

Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt of his claims
does not necessarily result in the waiver thereof.

The law does not consider as valid any agreement whereby a worker agrees to receive less compensation
than what he is entitled to recover.

A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally
entitled.

We have herefore (sic) explained that the reason why quitclaims are commonly frowned upon as contrary to
public policy and why they are held to be ineffective to bar claims for the full measures of the workers legal
rights is the fact the employer and the employee obviously do not stand on the same footing.

The employer drove the employees to the wall.

The latter must have to get hold of the money.

Because out of job, they had to face the harsh necessities of life

G&M Phil vs Batomalaque

Facts:

Sometime in February 1992, Abdul Aziz Abdullah Al Muhaimid Najad Car Maintenance Association
(Abdul Aziz), a Saudi Arabian entity based in Riyadh, hired respondent, Willie Batomalaque, as a car
painter

In accordance with the employment contract, respondent started working for Abdul Aziz on March 10,
1992[3] at a monthly salary of US$370.00[4] which according to him was equivalent to 1,200 Saudi riyals.[5]

On June 7, 1994[6] respondent was repatriated and on January 3, 1995 he filed a complaint [7] against
petitioner, Abdul Aziz, and Country Empire Insurance Company with the Philippine Overseas Employment
Administration[8] for non-payment and underpayment of salaries and damages.

Respondent claimed he was underpaid his salaries

All lower courts ruled in favor of the respondent

Issue: Whether or not the petitioner is liable to pay the underpayment of wages
Held: YES

It is settled that as a general rule, a party who alleges payment as a defense has the burden of proving it.

Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the
employer,

Aside, however, from its bare allegation that its principal Abdul Aziz had fully paid respondents salaries,
petitioner did not present any evidence, e.g., payroll or payslips, to support its defense of payment.
Petitioner thus failed to discharge the onus probandi.

On repeated occasions, this Court ruled that the debtor has the burden of showing with legal certainty that
the obligation has been discharged by payment.

To discharge means to extinguish an obligation, and in contract law discharge occurs either when the
parties have performed their obligations in the contract, or when an event the conduct of the parties, or the
operation of law releases the parties from performing.

Thus, a party who alleges that an obligation has been extinguished must prove facts or acts giving rise to
the extinction.

The fact of underpayment does not shift the burden of evidence to the plaintiff-herein respondent because
partial payment does not extinguish the obligation.

Only when the debtor introduces evidence that the obligation has been extinguished does the burden of
evidence shift to the creditor who is then under a duty of producing evidence to show why payment does
not extinguish the obligation.

Phil Global Communications Inc vs De Vera

Facts:

Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of
communication services and allied activities, while respondent Ricardo De Vera is a physician by
profession whom petitioner enlisted to attend to the medical needs of its employees. At the crux of the
controversy is Dr. De Veras status vis a vis petitioner when the latter terminated his engagement.

It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981,[3] offered his services to the
petitioner, therein proposing his plan of works required of a practitioner in industrial medicine,

The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP
CONTRACT[4] which will be for a period of one year subject to renewal, it being made clear therein that
respondent will cover the retainership the Company previously had with Dr. K. Eulau and that respondents
retainer fee will be at P4,000.00 a month. Said contract was renewed yearly.[5] The retainership arrangement
went on from 1981 to 1994 with changes in the retainers fee. However, for the years 1995 and 1996,
renewal of the contract was only made verbally.

He was then terminated

He filed an illegal dismissal case

Issue: Whether or not there is an employer-employee relationship and when there is an illegal dismissal
Held: There is no relationship. He was not illegally terminated.

Applying the four-fold test to this case, we initially find that it was respondent himself who sets the
parameters of what his duties would be in offering his services to petitioner.

The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with
petitioner, he never was included in its payroll;
o

was never deducted any contribution for remittance to the Social Security System (SSS);

and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee, in accordance with the National Internal Revenue Code, matters which are
simply inconsistent with an employer-employee relationship

Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from
doubt. Where the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts
have no choice but to see to it that the mandate is obeyed.

As it is, Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous
establishments to engage on retained basis the service of a dentist or physician.

Nowhere does the law provide that the physician or dentist so engaged thereby becomes a regular
employee.

The very phrase that they may be engaged on retained basis, revolts against the idea that this engagement
gives rise to an employer-employee relationship.

With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer
basis, as shown by their various retainership contracts, so can petitioner put an end, with or without cause,
to their retainership agreement as therein provided.

Congson vs NLRC
Facts:

The case was originally filed by herein respondents Bargo et al against Congson, the former being hired as
piece-rate workers responsible for the loading/unloading of tuna catch for Southern Fishing Industry owned
by
the
latter.

In 1990, the piece-rate workers were replaced with a new set of workers because of their alleged
refusal/resistance to the proposed reduction of their piece-rate payment per tuna (the former rate was P1.00
per tuna movement.

The reduction was proposed because of the decrease in the volume of tuna catch).

They filed for underpayment of wages, contending that their average monthly rate did not exceed P1000,
plus non-payment of overtime pay, 13th month pay, service incentive leave pay, and separation pay.

The labor arbiter decided in favor of the workers and directed Congson to pay the monetary claims for
salary differentials, 13th month pay, service incentive leave pay, and separation pay.

On appeal, the NLRC affirmed the decision of the Labor Arbiter, in toto, thus the instant petition.

However, it is the contention of petitioner that notwithstanding the fact that private respondents' actual cash
wage fell below the minimum wage fixed by law, respondent NLRC should have considered as forming a
substantial part of private respondents' total wages the cash value of the tuna liver and intestines private
respondents were entitled to retrieve.

Petitioner therefore argues that the combined value of private respondents' cash wage and the monetary
value of the tuna liver and intestines clearly exceeded the minimum wage fixed by law.

Issue: Whether or not the tuna can be counted as wage

Held:

Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal
tender combined with tuna liver and intestines runs counter to the above cited provision of the Labor Code.

The fact that said method of paying the minimum wage was not only agreed upon by both parties in the
employment agreement but even expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear.

Wages shall be paid only by means of legal tender.

The only instance when an employer is permitted to pay wages informs other than legal tender, that is, by
checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are
present.

Kar Asia Inc vs Corono

Facts:

Respondents, regular employees of petitioner KAR ASIA, Inc., an automotive dealer in Davao City, filed
on September 24, 1997 a complaint for underpayment of wages and attorneys fees before Branch XI,
Regional Arbitration Branch of Davao City.

They claimed that they were not paid their cost of living allowance (COLA), as mandated by the Regional
Tripartite and Wages Productivity Board (RTWPB) XI Wage Order No. 3, for the months of December
1993 and December 1994, and prayed that petitioner be ordered to pay the same with 1% interest per
month, as well as attorneys fees equivalent to 10% of the total monetary award.

Petitioner company and its president Celestino Barretto countered that the complaint was false and
malicious; that respondents had already been paid their COLA for the said periods;
o

and that respondents scared off potential customers and caused a substantial reduction in the
income of the petitioner company estimated at, more or less, P1,000,000.00 when they picketed
and put up streamers with insulting and derogatory slogans.

Petitioners presented in evidence the payrolls for December 1993 and December 1994 showing that the
respondents acknowledged in writing the receipt of their COLA, and the affidavits of Ermina Daray and
Cristina Arana, cashiers of KAR ASIA, refuting respondents claim that they were made to sign blank pieces
of paper.

LA ruled in favor of petitioner and affirmed by NLRC

CA reversed

Issue: whether or not the petitioner company paid the respondents the COLA for December 1993 and December
1994 as mandated by RTWPB XI Wage Order No. 3.
Held: Yes

A close scrutiny of the payroll for the December 1993 COLA [8] readily disclose the signatures of the
respondents opposite their printed names and the numeric value of P654.00.

Respondents averment that the petitioner company harassed them into signing the said payroll without
giving them its cash equivalent cannot be given credence.

Their self-serving and unsubstantiated declarations cannot overturn the evidentiary weight of the
signatures.

More importantly, the unreasonable length of time in pursuing respondents claim for the December 1993
COLA militates against its grant. Article 291 of the Labor Code requires that all money claims arising from
employer-employee relations shall be filed within 3 years from the time that the cause of action accrued;
otherwise they shall be barred forever. In the present case, the respondents filed the complaint for
underpayment of wage on September 24, 1997. Thus, the action for the payment of the December 1993
COLA has already prescribed.

Whether designated merely as an allowance or COLA, it is unmistakable that they all represent the cost of
living allowance for the given periods under RTWPB XI Wage Order No. 3.

The December 1994 payrolls contain a computation of the amounts payable to the employees for the given
period, including a breakdown of the allowances and deductions on the amount due, but the signatures of
the respondents are conspicuously missing.

Ideally, the signatures of the respondents should appear in the payroll as evidence of actual payment.
However, the absence of such signatures does not necessarily lead to the conclusion that the December
1994 COLA was not received.

It appears that the payslips for the same period bear the signatures of the respondents plus a certification
that they received the full compensation for the services rendered.

While ordinarily a payslip is only a statement of the gross monthly income of the employee, his signature
therein coupled by an acknowledgement of full compensation alter the legal complexion of the document.
The payslip becomes a substantial proof of actual payment.

Radio Communications of the Philippines vs Secretary of Labor

Facts:

petitioner, a domestic corporation engaged in the telecommunications business, filed with the National
Wages Council an application for exemption from the coverage of Wage Order No. 1.

The application was opposed by respondent URCPICLA-FUR, a labor organization affiliated with the
Federation of Unions of Rizal (FUR).

On May 22, 1981, the National Wages Council, through its Chairman, rendered a letterdecision 3 disapproving said application and ordering the petitioner to pay its covered employees the
mandatory living allowance of P2.00 daily effective March 22, 1981.

Said letter-decision was affirmed by the Office of the President in O.P. Case No. 1882 and, subsequently,
this Court in its resolution of July 15, 1985 in G.R. No. 70148 dismissed RCPI's petition for certiorari for
lack of merit. Entry of final judgment was issued by the Court on July 15, 1985.

On September 24, 1985, petitioner filed its opposition to said motion, asserting, among others, that "there is
no legal basis for respondent Union to have the sum equivalent to 20% union service fee deducted from the
amount due to every recipient member"

Issue: whether the public respondents acted with grave abuse of discretion amounting to lack of jurisdiction in
holding the petitioner solely liable for "union service fee' to respondent URCPICLA-FUR.
Held: NO

While it is true that the original decision of said Council; did not expressly provide for payment of
attorney's fees, that particular aspect or deficiency is deemed to have been supplied, if not modified pro
tanto, by the compromise agreement subsequently executed between the parties

Finally, petitioner cannot invoke the lack of an individual written authorization from the employees as a
shield for its fraudulent refusal to pay the service fee of private respondent.

Prior to the payment made to its employees, petitioner was ordered by the Regional Director to deduct the
15% attorney's fee from the total amount due its employees and to deposit the same with the Regional
Labor Office.

Petitioner failed to do so allegedly because of the absence of individual written authorizations. Be that as it
may, the lack thereof was remedied and supplied by the execution of the compromise agreement whereby
the employees, expressly approved the 10% deduction and held petitioner RCPI free from any claim, suit or
complaint arising from the deduction thereof.

When petitioner was thereafter again ordered to pay the 10% fees to respondent union, it no longer had any
legal basis or subterfuge for refusing to pay the latter.

We agree that Article 222 of the Labor Code requiring an individual written authorization as a prerequisite
to wage deductions seeks to protect the employee against unwarranted practices that would diminish his
compensation without his knowledge and consent.

However, for all intents and purposes, the deductions required of the petitioner and the employees do not
run counter to the express mandate of the law since the same are not unwarranted or without their
knowledge and consent.

Also, the deductions for the union service fee in question are authorized by law and do not require
individual check-off authorizations

Apodaca vs NLRC
Facts:

Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M. Mirasol
persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00 per share or a total
of P150,000.00.

He made an initial payment of P37,500.00. On September 1, 1975, petitioner was appointed President and
General Manager of the respondent corporation.

However, on January 2, 1986, he resigned.

On December 19, 1986, petitioner instituted with the NLRC a complaint against private respondents for the
payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and representation
expenses and his bonus compensation for 1986.

Issue: can an obligation arising therefrom be offset against a money claim of an employee against the employer?
Held: NO

the unpaid subscriptions are not due and payable until a call is made by the corporation for payment.

Private respondents have not presented a resolution of the board of directors of respondent corporation
calling for the payment of the unpaid subscriptions.

It does not even appear that a notice of such call has been sent to petitioner by the respondent corporation.

What the records show is that the respondent corporation deducted the amount due to petitioner from the
amount receivable from him for the unpaid subscriptions.

No doubt such set-off was without lawful basis, if not premature.

As there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and payable.

Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot
validly set it off against the wages and other benefits due petitioner. Article 113 of the Labor Code allows
such a deduction from the wages of the employees by the employer, only in three instances
o

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to checkoff has been
recognized by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.

Manila Trading and Supply Corporation vs Manila Trading Labor Association

Facts:

On October 10, 1950, the Manila Trading Labor Association, composed of workers of Manila Trading and
Supply Co., made a demand upon said company for increase of personnel, Christmas bonus, and other
gratuities and privileges

The Court of Industrial Relations found merit in the claim, and at their instance, ordered the company to
pay them their wages corresponding to the days they were absent from work while in attendance at the
hearings.

Issue: Whether or not the Court of Industrial Relations may require an employer to pay the wages of officers of its
employees' labor union while attending the hearing of cases between the employer and the union.
Held: NO

The respondent association, however, claims that it was not the one that brought the cases to the Court of
Industrial Relations, and the point is made that " if the laborer who is dragged to court is deprived of his
wages while attending court hearings, he would in effect be denied the opportunity to defend himself and
protect his interests and those of his fellow workers."

But while it is true that it was the Secretary of Labor who certified the dispute involved in case No. 521-V
to the Court of Industrial Relations, the fact remains that the dispute was initiated by a demand from the
labor association.

The truth, therefore, is that while one of the cases was filed by the employer, the other was initiated by the
employees. It may be conceded that the employer is in most cases in a better position to bear the burdens of
litigation than the employees.

But as was said in the case of J. P. Heilbronn Co. vs. National Labor Union, supra, "It is hardly fair for an
employee or laborer to fight or litigate against his employer on the employer's time."

The most that can be conceded in favor of the claimants herein is to have the absences occasioned by their
attendance at the hearings charged against their vacation leave if they have any, or as suggested by three of
the Justices who signed the decision in the case just cited, to have the wages they failed to earn charged as

damages in the event the cases whose hearings they attended are decided in favor of the association. But the
majority of the Justices make no commitment on this latter point.

Five J Taxi vs NLRC

Facts:

Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi
drivers 2 and, as such, they worked for 4 days weekly on a 24-hour shifting schedule.

Aside from the daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned
taxi, they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer
for any deficiency in their "boundary," for every actual working day.

In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already failed to
report for work for unknown reasons. Later, petitioners learned that he was working for "Mine of Gold"
Taxi Company.

He was then terminated upon asking for a reimbursement of his daily cash deposits for 2 years.

Issue: Whether or not petitioner should pay the accumulated deposits and car wash payments
Held: He should only pay for the deposit plus legal interest but not the car wash payments

Also, when private respondents stopped working for petitioners, the alleged purpose for which petitioners
required such unauthorized deposits no longer existed. In other case, any balance due to private respondents
after proper accounting must be returned to them with legal interest.

On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent the issue of
illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it
is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it
out, and as claimed by the respondents (petitioners in the present case), complainant(s) (private respondents
herein) were made to shoulder the expenses for washing, the amount doled out was paid directly to the
person who washed the unit, thus we find nothing illegal in this practice, much more (sic) to consider the
amount paid by the driver as illegal deduction in the context of the law.

Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments they
made. It will be noted that there was nothing to prevent private respondents from cleaning the taxi units
themselves, if they wanted to save their P20.00.

Also, as the Solicitor General correctly noted, car washing after a tour of duty is a practice in the taxi
industry, and is, in fact, dictated by fair play.

Dentech Manufacturing Corp vs NLRC

Facts:

petitioner Dentech Manufacturing Corporation is a domestic corporation organized under Philippine laws.
Before the firm became a corporate entity, it was known as the J.L. Ledesma Enterprises, a sole
proprietorship owned by the herein petitioner Jacinto Ledesma.

At present, he is the president and general manager of the corporation as well as the owner of the
controlling interest thereof. The firm is engaged in the manufacture and sale of dental equipment and
supplies.

The herein private respondents Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno are
members of the Confederation of Citizens Labor Union, a labor organization registered with the
Department of Labor and Employment.

They used to be the employees of the petitioner firm, working therein as welders, upholsterers and painters.

They were already employed with the company when it was still a sole proprietorship. They were
dismissed from the firm beginning February 14, 1985.

At first, they only sought the payment of their 13th month pay under Presidential Decree No. 851 as well as
their separation pay, and the refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and
service incentive leave pay, and separation pay in the event that they are not reinstated.

Petitoner claims they are exempted from paying 13th month pay

Issue: whether or not the private respondents are entitled as a matter of right to a 13th month pay.
Held: YES

From the foregoing, it clearly appears that the petitioners have no basis to claim that the company is
exempted from complying with the pertinent provisions of the law relating to the payment of 13th month
compensation.

The refund of the cash bond filed by the private respondents is in order. Article 114 of the Labor Code
prohibits an employer from requiting his employees to file a cash bond or to make deposits, subject to
certain exceptions,

The petitioners have not satisfactorily disputed the applicability of this provision of the Labor Code to the
case at bar. Considering further that the petitioners failed to show that the company is authorized by law to
require the private respondents to file the cash bond in question, the refund thereof is in order.

The allegation of the petitioners to the effect that the proceeds of the cash bond had already been given to a
certain carinderia to pay for the accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no evidence or receipt has been shown to
prove such payment.

Special Steel Products vs Villareal

Facts:

Special Steel Products, Inc., petitioner, is a domestic corporation engaged in the principal business of
importation, sale, and marketing of BOHLER steel products. Lutgardo C. Villareal and Frederick G. So,
respondents, worked for petitioner as assistant sales manager and salesman, respectively.

Sometime in May 1993, respondent Villareal obtained a car loan from the Bank of Commerce, with
petitioner as surety, as shown by a "continuing suretyship agreement" and "promissory note" wherein they
jointly and severally agreed to pay the bank P786,611.60 in 72 monthly installments. On January 15, 1997,
respondent Villareal resigned and thereafter joined Hi-Grade Industrial and Technical Products, Inc. as
executive vice-president.

Sometime in August 1994, petitioner "sponsored" respondent Frederick So to attend a training course in
Kapfenberg, Austria conducted by BOHLER, petitioners principal company. This training was a reward
for respondent Sos outstanding sales performance.

When respondent returned nine months thereafter, petitioner directed him to sign a memorandum providing
that BOHLER requires trainees from Kapfenberg to continue working with petitioner for a period of three
(3) years after the training. Otherwise, each trainee shall refund to BOHLER $6,000.00 (US dollars) by
way of set-off or compensation. On January 16, 1997 or 2 years and 4 months after attending the training,
respondent resigned from petitioner.

Immediately, petitioner ordered respondents to render an accounting of its various Christmas

giveaways3 they received. These were intended for distribution to petitioners customers.

In protest, respondents demanded from petitioner payment of their separation benefits, commissions,
vacation and sick leave benefits, and proportionate 13 th month pay. But petitioner refused and instead,
withheld their 13thmonth pay and other benefits.

On April 16, 1997, respondents filed with the Labor Arbiter a complaint for payment of their monetary
benefits against petitioner

Petitioner contends that as a guarantor, it could legally withhold respondent Villareals monetary benefits as
a preliminary remedy pursuant to Article 2071 of the Civil Code, as amended. 4 As to respondent So,
petitioner, citing Article 113 of the Labor Code, as amended, 5 in relation to Article 1706 of the Civil Code,
as amended,6 maintains that it could withhold his monetary benefits being authorized by the memorandum
he signed.

Issue: May an employer withhold its employees wages and benefits as lien to protect its interest as a surety in the
latters car loan and for expenses incurred in a training abroad?

Held: No.
Article 116 of the Labor Code, as amended, provides:
"ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages (and benefits) of a worker or induce him to give up any part of
his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent."

The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal authority to
withhold respondents 13th month pay and other benefits. What an employee has worked for, his employer
must pay.

Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he has either
defaulted in paying a loan guaranteed by his employer; or violated their memorandum of agreement; or
failed to render an accounting of his employers property.8

Based on the above distinction, it appears that the contract executed by petitioner and respondent Villareal
(in favor of the Bank of Commerce) is a contract of surety. In fact, it is denominated as a "continuing
suretyship agreement."

Hence, petitioner could not just unilaterally withhold respondents wages or benefits as a preliminary
remedy under Article 2071.

It must file an action against respondent Villareal. Thus, the Appellate Court aptly ruled that petitioner
"may only protect its right as surety by instituting an action to demand a security."

In the present case, set-off or legal compensation cannot take place between petitioner and respondent So
because they are not mutually creditor and debtor of each other.

Petitioner has no legal right to withhold respondents 13 th month pay and other benefits to recompense for
whatever amount it paid as security for respondent Villareals car loan; and for the expenses incurred by
respondent So in his training abroad.

South Motorist Enterprises vs Tosoc

Facts:

Sometime in January of 1983, complaints for non-payment of emergency cost of living allowances were
filed by 46 workers, Tosoc, et als., against SOUTH MOTORISTS before the Naga City District Office of
Regional Office No. 5 of the then Ministry of Labor. On 10 January 1983 a Special Order was issued by the
District Labor Officer directing its Labor Regulation Officers to conduct an inspection and verification of
SOUTH MOTORISTS' employment records.

On the date of the inspection and verification, SOUTH MOTORISTS was unable to present its employment
records on the allegation that they had been sent to the main office in Manila. The case was then set for
conference on 25 January 1983 but had to be reset to 8 February 1983 upon the request of SOUTH
MOTORISTS to enable it to present all the employment records on such date.

On 7 March 1983, the assigned Labor Regulation Officers submitted an Inspection Report on the basis of
which an Order dated 14 April 1983 was issued by Labor Officer Domingo Reyes directing SOUTH
MOTORISTS to pay Tosoc, et als., the total amount of One Hundred Eighty Four Thousand Six Hundred

Eighty Nine and 12/100 Pesos (P184,689.12) representing the latter's corresponding emergency cost of
living allowances.
Issue: Whether or not the petitioner is liable to pay
Held: YES. They did not keep the records and failed to present them as evidence.

As to the matter that the respondent Secretary of Labor and Employment erred in affirming the award based
on a mere Inspection Report, we see no reason for SOUTH MOTORISTS to complain as it was afforded
ample opportunity to present its side.

It failed to present employment records giving as an excuse that they were sent to the main office in
Manila, in violation of Section 11 of Rule X, Book II of the Omnibus Rules Implementing the Labor Code
o

All employment records of the employees of the employer shall be kept and maintained in or
about the premises of the workplace. The premises of a workplace shall be understood to mean the
main or branch office or establishment, if any, depending., upon where the employees are
regularly assigned. The keeping of the employee's records in another place is prohibited.

Phil Export etc vs CA

Facts:

On 13 May 1988, private respondent Raimund Diehl, a resident alien, lodged a complaint for illegal
dismissal against the Philippine German Wire Mesh Reinforcing Corporation ("FILFORCE") with the
National Labor Relations Commission ("NLRC")

Parenthetically, five (5) years earlier, or on 28 July 1983, FILFORCE had mortgaged its plant and other
property located at EPZA, Mariveles, Bataan, in favor of herein petitioner Philippine Export and Foreign
Loan Guarantee Corporation a government owned and controlled corporation, to secure a guarantee which
the latter executed in favor of Kuwait Asia Bank, E.C., over fifty one percent (51%) of the
US$1,357,600.00 loan which had been extended to FILFORCE by the bank.

The mortgage in PHILGUARANTEE's favor was duly registered, on 29 July 1983, with the Register of
Deeds of Bataan.

Issue:
Held:

Labor Law; National Labor Relations Commission; Court has responded in the negative when queried on
whether or not a civil court may interfere by injunction with the execution of a final and executory
judgment of the National Labor Relations Commission.
o

Same; Same; Levy; Indemnity bond that must be posted up by the prevailing party should be in a sum not
less than the value of the property levied.
o

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

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

Same; Same; Same; In case of disagreement on the value of the property levied, the matter shall be
determined by the Labor Arbiter.
o

The Manual provides that in case of disagreement on the value of the property levied, the matter
shall be determined by the Labor Arbiter.

Not only did PHILGUARANTEE promptly challenge the integrity of the bond submitted by Diehl
but it also did question the amount of the bond.

Since the difference is substantial, it should have behooved the Labor Arbiter to take more than
just a passing glance on the claim of PHILGUARANTEE. Philippine Export and Foreign Loan
Guarantee Corporation vs. Court of Appeals, 251 SCRA 354, G.R. No. 118701 December 12,
1995

Barayoga vs Asset Privatization Trust

Facts:

Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development

Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur.

On December 8, 1986, [Respondent] Asset Privatization Trust (APT), a public trust was created under
Proclamation No. 50, as amended, mandated to take title to and possession of, conserve, provisionally
manage and dispose of non-performing assets of the Philippine government identified for privatization or
disposition.

Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino issued Administrative
Order No. 14 identifying certain assets of government institutions that were to be transferred to the
National Government. Among the assets transferred was the financial claim of the Philippine National
Bank against BISUDECO in the form of a secured loan.

Consequently, by virtue of a Trust Agreement executed between the National Government and APT on
February 27, 1987, APT was constituted as trustee over BISUDECOs account with the PNB.

Sometime later, on August 28, 1988, BISUDECO contracted the services of Philippine Sugar Corporation
(Philsucor) to take over the management of the sugar plantation and milling operations until August 31,
1992.

Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its
mortgaged properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder.
On April 2, 1991, APT was issued a Sheriffs Certificate of Sale.

On July 23, 1991, the union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction
and underpayment of wages and other labor standard benefits plus damages.

Issue: whether Respondent APT is liable for petitioners monetary claims

Held: The Petition has no merit.

It was only in April 1991 that APT foreclosed the assets and chattels of BISUDECO because of the latters
continued failure to pay outstanding loan obligations to PNB/APT.

The properties were sold at public auction to APT, the highest bidder,

In the present case, petitioner-unions members who were not recalled to work by Philsucor in May 1991
seek to hold APT liable for their monetary claims and allegedly illegal dismissal.

Significantly, prior to the actual sale of BISUDECO assets to BAPCI on October 30, 1992, the APT board
of trustees had approved a Resolution on September 23, 1992.

The Resolution authorized the payment of separation benefits to the employees of the corporation in the
event of its privatization. Not included in the Resolution, though, were petitioner-unions members who had
not been recalled to work in May 1991.

The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were not all
automatically assumed by APT as purchaser of the foreclosed properties at the auction sale.

Any assumption of liability must be specifically and categorically agreed upon.

No succession of employment rights and obligations can be said to have taken place between the two.
Between the employees of BISUDECO and APT, there is no privity of contract that would make the latter a
substitute employer that should be burdened with the obligations of the corporation.

To rule otherwise would result in unduly imposing upon APT an unwarranted assumption of accounts not
contemplated in Proclamation No. 50 or in the Deed of Transfer between the national government and
PNB.

Furthermore, under the principle of absorption, a bona fide buyer or transferee of all, or substantially all,
the properties of the seller or transferor is not obliged to absorb the latters employees.

The most that the purchasing company may do, for reasons of public policy and social justice, is to give
preference of reemployment to the selling companys qualified separated employees, who in its judgment
are necessary to the continued operation of the business establishment

In other words, the liabilities of the previous owner to its employees are not enforceable against the buyer
or transferee, unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made in bad
faith. Thus, APT cannot be held responsible for the monetary claims of petitioners who had been dismissed
even before it actually took over BISUDECOs assets.

This Court has ruled in a long line of cases that under Articles 2241 and 2242 of the Civil Code, a mortgage
credit is a special preferred credit that enjoys preference with respect to a specific/determinate property of
the debtor.

On the other hand, the workers preference under Article 110 of the Labor Code is an ordinary preferred
credit.

While this provision raises the workers money claim to first priority in the order of preference established
under Article 2244 of the Civil Code, the claim has no preference over special preferred credits.

Thus, the right of employees to be paid benefits due them from the properties of their employer cannot have
any preference over the latters mortgage credit.

In other words, being a mortgage credit, APTs lien on BISUDECOs mortgaged assets is a special preferred
lien that must be satisfied first before the claims of the workers.

Republic vs Peralta
Facts:

In the voluntary insolvency proceedings commenced in May 1977 by private respondent Quality Tobacco
Corporation (the "Insolvent"), the following claims of creditors were filed:
o

(i) P2,806,729.92, by the USTC Association of Employees and workers Union-PTGWO USTC as
separation pay for their members

(ii) P53,805.05 by the Federacion de la Industria Tabaquera y Otros Trabajadores de Filipinas

("FOITAF), as separation pay for their members, an amount similarly awarded by the NLRC in the
same NLRC Case.

(iii) P1,085,188.22 by the Bureau of Internal Revenue for tobacco inspection fees covering the
period 1 October 1967 to 28 February 1973;

(iv) P276,161.00 by the Bureau of Customs for customs duties and taxes payable on various
importations by the Insolvent. These obligations appear to be secured by surety bonds

In its questioned Order of 17 November 1980, the trial court held that the above-enumerated claims of
USTC and FOITAF for separation pay of their respective members embodied in final awards of the
National Labor Relations Commission were to be preferred over the claims of the Bureau of Customs
and the Bureau of Internal Revenue.

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

Issue: Whether or not the claims of USTC and FOITAF for separation pay were to be preferred over BIR and
Customs
Held: NO

The resolution of the issue of priority among the several claims filed in the insolvency proceedings
instituted by the Insolvent cannot, however, rest on a reading of Article 110 of the labor Code alone.

Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed in isolation. Rather,
Article 110 must be read in relation to the provisions of the Civil Code concerning the classification,
concurrence and preference of credits, which provisions find particular application in insolvency
proceedings where the claims of all creditors, preferred or non-preferred, may be adjudicated in a binding
manner. 7 It is thus important to begin by outlining the scheme constituted by the provisions of the Civil
Code on this subject.

Those provisions may be seen to classify credits against a particular insolvent into three general categories,
namely:
o

(a) special preferred credits listed in Articles 2241 and 2242,

constitute liens or encumbrances on the specific movable or immovable property to

which they relate. Article 2243 makes clear that these credits "shall be considered

as mortgages or pledges of real or personal property, or liens within the purview of legal
provisions governing insolvency."
o

(b) ordinary preferred credits listed in Article 2244; and

(c) common credits under Article 2245.

We come to the question of what impact Article 110 of the Labor Code has had upon the complete scheme
of classification, concurrence and preference of credits in insolvency set out in the Civil Code.

We believe and so hold that Article 110 of the Labor Code did not sweep away the overriding preference
accorded under the scheme of the Civil Code to tax claims of the government or any subdivision thereof
which constitute a lien upon properties of the Insolvent.

It is frequently said that taxes are the very lifeblood of government.

The effective collection of taxes is a task of highest importance for the sovereign.

It is critical indeed for its own survival. It follows that language of a much higher degree of specificity than
that exhibited in Article 110 of the Labor Code is necessary to set aside the intent and purpose of the
legislator that shines through the precisely crafted provisions of the Civil Code.

It cannot be assumed simpliciter that the legislative authority, by using in Article 110 the words "first
preference" and "any provision of law to the contrary notwithstanding" intended to disrupt the elaborate
and symmetrical structure set up in the Civil Code.

Neither can it be assumed casually that Article 110 intended to subsume the sovereign itself within the
term "other creditors" in stating that "unpaid wages shall be paid in full before other creditors may
establish any claim to a share in the assets of employer."

Insistent considerations of public policy prevent us from giving to "other creditors" a linguistically
unlimited scope that would embrace the universe of creditors save only unpaid employees.

the use of the phrase "first preference" in Article 110 indicates that what Article 110 intended to modify
is the order of preference found in Article 2244, which order relates, as we have seen, to property of the
Insolvent that is not burdened with the liens or encumbrances created or recognized by Articles 2241 and
2242.

Article 110 of the Labor Code establishes "first preference" for services rendered "during the period prior to
the bankruptcy or liquidation, " a period not limited to the year immediately prior to the bankruptcy or
liquidation.

Thus, very substantial effect may be given to the provisions of Article 110 without grievously distorting the
framework established in the Civil Code by holding, as we so hold, that Article 110 of the Labor Code has
modified Article 2244 of the Civil Code in two respects:
o

(a) firstly, by removing the one year limitation found in Article 2244, number 2; and

(b) secondly, by moving up claims for unpaid wages of laborers or workers of the Insolvent from
second priority to first priority in the order of preference established I by Article 2244.

In respect of (a), if the Insolvent has inventories of processed or manufactured tobacco products, such
inventories must be subjected firstly to the claim of the Bureau of Internal Revenue for unpaid tobacco
inspection fees.

The remaining value of such inventories after satisfaction of such fees (or should such inspection fees be
satisfied out of other properties of the Insolvent) will be subject to a lien in favor of the Unions by virtue of
Article 2241, number 6.

In case, upon the other hand, the Insolvent no longer has any inventory of processed or manufactured
product, then the claim of the Unions for separation pay would have to be satisfied out of the "free
property" of the Insolvent under Article 2244 of the Civil Code. as modified by Article 110 of the Labor
Code.

Turning to (b), should the Bureau of Customs no longer have any importations by the Insolvent still within
customs custody or control, or should the importations still held by the Bureau of Customs be or have
become insufficient in value for the purpose, customs duties and taxes remaining unpaid would have only
ninth priority by virtue of Article 2244, number 9.

In respect therefore of the Insolvent's "free property, " the claims of the Unions will enjoy first priority
under Article 2244 as modified and will be paid ahead of the claims of the Bureau of Customs for any
customs duties and taxes still remaining unsatisfied.

It is understood that the claims of the Unions referred to above do not include the 10% claim for attorney's
fees. Attorney's fees incurred by the Unions do not stand on the same footing as the Unions' claims for
separation pay of their members.

Rubberworld Inc vs NLRC

Facts:

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

Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia M. San Pedro, and Felomena
Tolin were employed as dispatcher, warehouseman, issue monitor, foreman, jacks cementer and outer sole
attacher, respectively.

On August 26, 1994, Rubberworld filed with the Department of Labor and Employment a notice of
temporary shutdown of operations to take effect on September 26, 1994. Before the effectivity date,
however, Rubberworld was forced to prematurely shutdown its operations.

On November 11, 1994, private respondents filed with the National Labor Relations Commission a
complaint[2] against petitioner for illegal dismissal and non-payment of separation pay.

On November 22, 1994, Rubberworld filed with the Securities and Exchange Commission (SEC) a petition
for declaration of suspension of payments with a proposed rehabilitation plan.

On January 24, 1995, petitioners submitted to the labor arbiter a motion to suspend the proceedings
invoking the SEC order dated December 28, 1994. The labor arbiter did not act on the motion and ordered
the parties to submit their respective position papers.

LA ruled an illegal shutdown hence pay separation pay

NLRC affirmed LA

Issue: The issue is whether or not the Department of Labor and Employment, the Labor Arbiter and the National
Labor Relations Commission may legally act on the claims of respondents despite the order of the Securities and
Exchange Commission suspending all actions against a company under rehabilitation by a management committee
created by the Securities and Exchange Commission.
Held:

Presidential Decree No. 902-A is clear that "all actions for claims against corporations, partnerships or
associations under management or receivership pending before any court, tribunal, board or body shall be
suspended accordingly." The law did not make any exception in favor of labor claims.

Thus, the labor case would defeat the purpose of an automatic stay. To rule otherwise would open the
floodgates to numerous claims and would defeat the rescue efforts of the management committee.

Besides, even if an award is given to private respondents, the ruling could not be enforced as long as
petitioner is under management committee

This finds ratiocination in that the power to hear and decide labor disputes is deemed suspended when the
Securities and Exchange Commission puts the corporation under rehabilitation.

Thus, when NLRC proceeded to decide the case despite the SEC suspension order, the NLRC acted
without or in excess of its jurisdiction to hear and decide cases. As a consequence, any resolution, decision
or order that it rendered or issued without jurisdiction is a nullity.

From earlier case 1999

It is plain from the foregoing provisions of law that "upon the appointment [by, the SEC] of a management
committee or a rehabilitation receiver," all actions for claims against the corporation pending before any
court, tribunal or board shall ipso jure be suspended.

The justification for the automatic stay of all pending actions for claims "is to enable the management
committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or
extra-judicial interference that might unduly hinder or prevent the 'rescue' of the debtor company.

To allow such other actions to continue would only add to the burden of the management committee or
rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the
corporation instead of being directed toward its restructuring and rehabilitation."

Parenthetically, the rehabilitation of a financially distressed corporation benefits its employees, creditors,
stockholders and, in a larger sense, the general public.

And in considering whether to rehabilitate or not, the SEC gives preference to the interest of creditors,
including employees.

The reason that shareholders can recover their investments only upon liquidation of' the corporation, and
only if there are assets remaining after all corporate creditors ire paid

Placewell International etc vs Camote

Facts:

petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B. Camote to
work as building carpenter for SAAD Trading and Contracting Co. (SAAD) at the Kingdom of Saudi
Arabia (KSA) for a contract duration of two years, with a corresponding salary of US$370.00 per month.

At the job site, respondent was allegedly found incompetent by his foreign employer; thus the latter decided
to terminate his services.

However, respondent pleaded for his retention and consented to accept a lower salary of SR 800.00 per
month. Thus, SAAD retained respondent until his return to the Philippines two years after.

On November 27, 2001, respondent filed a sworn Complaint for monetary claims against petitioner
alleging that when he arrived at the job site, he and his fellow Filipino workers were required to sign
another employment contract written in Arabic under the constraints of losing their jobs if they refused; that
for the entire duration of the new contract, he received only SR 590.00 per month; that he was not given his
overtime pay

Issue: Whether or not the carpenter can recover his money claims

Held: Yes.

R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of
employment contracts already approved and verified by the Department of Labor and Employment (DOLE)
from the time of actual signing thereof by the parties up to and including the period of the expiration of the
same without the approval of the DOLE.

Applying the same rule in the case at bar, the unauthorized alteration in the employment contract of
respondent, particularly the diminution in his salary from US$370.00 to SR 800.00 per month, is void for
violating the POEA-approved contract which set the minimum standards, terms, and conditions of his
employment.

Moreover, we find that there was no proper dismissal of respondent by SAAD; the termination of
respondent was clearly a ploy to pressure him to agree to a lower wage rate for continued employment.

Thus, the original POEA-approved employment contract of respondent subsists despite the so-called new
agreement with SAAD. Consequently, the solidary liability of petitioner with SAAD for respondents
money claims continues in accordance with Section 10 of R.A. 8042.

Universal Robina Sugar Milling Corporation vs Caballeda

Facts:

Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic corporation engaged in
the sugar milling business and petitioner Renato Cabati4 is URSUMCO's manager.

Respondent Agripino Caballeda (Agripino) worked as welder for URSUMCO from March 1989 until June
23, 1997 with a salary of P124.00 per day, while respondent Alejandro Cadalin (Alejandro) worked for
URSUMCO as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandum 5 establishing the
company policy on "Compulsory Retirement" (Memorandum) of its employees. The memorandum
provides:

All employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered
retired on May 31, 1991.

Henceforth, any employee shall be considered retired 30 days after he attains age 60.

Personnel department shall prepare the retirement notices to be co-signed and served by respective
Department managers to employees concerned. The notices must be served as least 30 days before the
designated retirement date.

Vacation and sick leave credits remaining unused by the employees designated retirement date shall be
converted into cash

Subsequently, on December 9, 1992, Republic Act (RA) No. 7641 6 was enacted into law, and it took effect
on January 7, 1993,7 amending Article 287 of the Labor Code,
o

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements:
Provided, however, That an employee's retirement benefits under any collective bargaining and
other agreements shall not be less than those provided herein.

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced to retire by
URSUMCO. Agripino averred that URSUMCO illegally dismissed him from employment on June 24,
1997 when he was forced to retire upon reaching the age of sixty (60) years old. Upon the termination of
his employment, he accepted his separation pay and applied for retirement benefits with the Social Security
System (SSS).

Thereafter, on August 6, 1997, Agripino filed a Complaint 10 for illegal dismissal, damages and attorneys
fees before the Labor Arbiter (LA) of Dumaguete City. He alleged that his compulsory retirement was in
violation of the provisions of Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.

LA ruled in favor of employees, NLRC reversed, saying the retirement was voluntary, CA reinstated LA

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy.
Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his application
for retirement, submitted all the documentary requirements, accepted the retirement benefits and executed a
quitclaim in favor of URSUMCO.

Respondents claim otherwise, contending that they were merely forced to comply as they were no longer
given any work assignment and considering that the severance of their employment with URSUMCO is a
condition precedent for them to receive their retirement benefits.

Issue: Whether or not there is illegal dismissal

Held:

Third. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment
with the former.

The age of retirement is primarily determined by the existing agreement between the employer and the
employees. However, in the absence of such agreement, the retirement age shall be fixed by law.

Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65
years, while the set minimum age for optional retirement is 60 years.

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory
retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement
benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the
Labor Code which provides for two types of retirement:
o

(a) compulsory and

(b) optional.

The first takes place at age 65, while

the second is primarily determined by the collective bargaining agreement or other

employment contract or employer's retirement plan

Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or
pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and
frustrate just claims of employees.

They are frowned upon as contrary to public policy.

A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of
benefits therefrom does not amount to estoppels

The reason is plain. Employer and employee, obviously, do not stand on the same footing.

The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of
the job, he had to face harsh necessities of life.

He thus found himself in no position to resist money proferred.

His, then, is a case of adherence, not of choice.

One thing sure, however, is that petitioners did not relent their claim. They pressed it.

They are deemed not to have waived any of their rights. Renuntiatio non praesumitur.

In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the
employer is able to prove the following requisites:
o

(1) the employee executes a deed of quitclaim voluntarily;

(2) there is no fraud or deceit on the part of any of the parties;

(3) the consideration of the quitclaim is credible and reasonable; and

(4) the contract is not contrary to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear
from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential
on his retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement
benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that the quitclaim was
voluntarily entered into

It is worth mentioning that the respondents are rank-and-file employees.

They are simple folks who rely on their work for the daily sustenance of their respective families.

Absent any convincing proof of voluntariness in the submission of the documentary requirements and in
the execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very
same pressure mentioned in Becton.

Furthermore, the fact that respondents filed a complaint for illegal dismissal against petitioners completely
negates their claim that respondents voluntarily retired.

To note, respondents vigorously pursued this case against petitioners, all the way up to this Court.

Without doubt, this is a manifestation that respondents had no intention of relinquishing their employment,
wholly incompatible to petitioners' assertion that respondents voluntarily retired

Flight attendants and stewards association of the Philippines vs PAL

Facts:

Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and
stewards, or collectively known as PAL cabin crew personnel. Respondent PAL is a domestic corporation
organized and existing under the laws of the Republic of the Philippines, operating as a common carrier
transporting passengers and cargo through aircraft.

On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew
personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme allegedly to cut costs and
mitigate huge financial losses as a result of a downturn in the airline industry brought about by the Asian
financial crisis.

During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85
billion

In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14" whereby PALs fleet of
aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel.

PAL admits that the retrenchment is wholly premised upon such reduction in fleet, 5 and to "the strike
staged by PAL pilots since this action also translated into a reduction of flights."

PAL claims that the scheme resulted in "savings x x x amounting to approximately P24 million per month
savings that would greatly alleviate PALs financial crisis.

PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin
crew members overall performance for the year 1997 alone.

While consultations between FASAP and PAL were ongoing, the latter began implementing its
retrenchment program by initially terminating the services of 140 probationary cabin attendants only to
rehire them in April 1998. Moreover, their employment was made permanent and regular

On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel.

On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees. Two
days later, PAL employees, through the Philippine Airlines Employees Association (PALEA) board, sought
the intervention of then President Joseph E. Estrada. PALEA offered a 10-year moratorium on strikes and
similar actions and a waiver of some of the economic benefits in the existing CBA. Lucio Tan, however,
rejected this counter-offer.

On June 22, 1998, FASAP filed a Complaint 24 against PAL and Patria T. Chiong 25 (Chiong) for unfair labor
practice, illegal retrenchment with claims for reinstatement and payment of salaries, allowances and
backwages of affected FASAP members, actual, moral and exemplary damages with a prayer to enjoin the
retrenchment program then being implemented

Issue: Whether or not the retrenchment is valid

Held: It is illegal

FIRST, the record shows that PAL failed or neglected to adopt less drastic cost-cutting measures before
resorting to retrenchment. No less than the Supreme Court held that resort to less drastic cost-cutting
measures is an indispensable requirement for a valid retrenchment

SECOND, PAL arbitrarily and capriciously singled out the year 1997 as a reference in its alleged
assessment of employee efficiency. With this, it totally disregarded the employees performance during the
years prior to 1997. This resulted in the unreasonable and unfair retrenchment or demotion of several flight
pursers and attendants who showed impeccable service records during the years prior to 1997.

THIRD, seniority was totally disregarded in the selection of employees to be retrenched, which is a clear
and willful violation of the CBA.

FOURTH, PAL maliciously represented in the proceedings below that it could only operate on a fleet of
fourteen (14) planes in order to justify the retrenchment scheme. Yet, the evidence on record revealed that
PAL operated a fleet of twenty two (22) planes. In fact, after having illegally retrenched the unfortunate
flight attendants and pursers, PAL rehired those who were capriciously dismissed and even hired from the
outside just to fulfill their manning requirements.

FIFTH, PAL did not use any fair and reasonable criteria in effecting retrenchment. If there really was any,
the same was applied arbitrarily, if not discriminatorily.

FINALLY, and perhaps the worst transgression of FASAPs rights, PAL used retrenchment to veil its unionbusting motives and struck at the heart of FASAP when it retrenched seven (7) of its twelve (12) officers
and demoted three (3) others.

Nevertheless, while it is true that the exercise of this right is a prerogative of management, there must be
faithful compliance with substantive and procedural requirements of the law and jurisprudence, for
retrenchment strikes at the very heart of the workers employment, the lifeblood upon which he and his
family owe their survival. Retrenchment is only a measure of last resort, when other less drastic means
have been tried and found to be inadequate

The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting
evidence. Its failure to prove these reverses or losses necessarily means that the employees dismissal was
not justified.43 Any claim of actual or potential business losses must satisfy certain established standards, all
of which must concur, before any reduction of personnel becomes legal.
o

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month
pay or at least one-half () month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure;

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.

The employer must also exhaust all other means to avoid further losses without retrenching its employees.

Retrenchment is a means of last resort; it is justified only when all other less drastic means have been tried
and found insufficient. Even assuming that the employer has actually incurred losses by reason of the Asian
economic crisis, the retrenchment is not completely justified if there is no showing that the retrenchment
was the last recourse resorted to

In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which
would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine
economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has
likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate
rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.

This only proves that PAL was not aware of the true state of its finances at the time it implemented the
assailed massive retrenchment scheme.

It embarked on the mass dismissal without first undertaking a well-considered study on the proposed
retrenchment scheme. This view is underscored by the fact that previously, PAL terminated the services of
140 probationary cabin attendants, but rehired them almost immediately and even converted their
employment into permanent and regular, even as a massive retrenchment was already looming in the
horizon.

Likewise, PAL has not shown to the Courts satisfaction that the pilots strike had gravely affected its
operations. It offered no proof to show the correlation between the pilots strike and its alleged financial
difficulties.

he only manifestation of PALs attempt at exhausting other possible measures besides retrenchment was
when it conducted negotiations and consultations with FASAP which, however, ended nowhere.

Also, the claim that PAL saved P24 million monthly due to the implementation of the retrenchment
program does not prove anything; it has not been shown to what extent or degree such savings benefited
PAL, vis--vis its total expenditures or its overall financial position.

Neither could PAL claim to suffer from imminent or resultant losses had it not implemented the
retrenchment scheme in 1998. It could not have proved that retrenchment was necessary to prevent further
losses, because immediately thereafter or in February 1999 PAL was on the road to recovery;

Respondents might have confused the right to retrench with its actual retrenchment program, treating them
as one and the same.

The first, no doubt, is a valid prerogative of management; it is a right that exists for all employers.

As to the second, it is always subject to scrutiny in regard to faithful compliance with substantive
and procedural requirements which the law and jurisprudence have laid down.

The right of an employer to dismiss an employee differs from and should not be confused with the
manner in which such right is exercised.

On the requirement that the prerogative to retrench must be exercised in good faith, we have ruled that the
hiring of new employees and subsequent rehiring of "retrenched" employees constitute bad faith; 87 that the
failure of the employer to resort to other less drastic measures than retrenchment seriously belies its claim
that retrenchment was done in good faith to avoid losses;

When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its
employees, it could not be said that it acted in a manner compatible with good faith.

It offered no satisfactory explanation why it abandoned Plan 14; instead, it justified its actions of
subsequently recalling to duty retrenched employees by making it appear that it was a show of good faith;
that it was due to its good corporate nature that the decision to consider recalling employees was made. The
truth, however, is that it was unfair for PAL to have made such a move; it was capricious and arbitrary,
considering that several thousand employees who had long been working for PAL had lost their jobs, only
to be recalled but assigned to lower positions

In sum, we find that PAL had implemented its retrenchment program in an arbitrary manner and with
evident bad faith, which prejudiced the tenurial rights of the cabin crew personnel.

Sarocam vs Interiorient Maritime Enterprises

Facts:

On June 27, 2000 petitioner Benjamin L. Sarocam was hired by Interorient Maritime Ent., Inc. and Demaco
United Ltd., for a twelve-month contract as bosun on board M/V Despina.

His basic monthly salary was US$450.00 on a 48-hour work week, with a fixed overtime pay of US$180.00
per month for 105 hours, supplementary wage of US$70.00, and vacation leave with pay of 2.5 days.4

While the vessel was navigating to China, petitioner suffered lumbar sprain when he accidentally fell from
a ladder.5 On November 15, 2000, he was examined and found to have neuromyositis with the waist and
diabetes. The examining physician prescribed medicine and recommended the signing off and
hospitalization of petitioner.

His employers agreed to repatriate him on November 30,2000.

On December 5, 2000, petitioner was referred to the company-designated physician, Dr. Teodoro F.
Pidlaoan, Medical Director of the Our Lady of Fatima Medical Clinic.

The x-ray of his lumbosacral spine revealed normal results and his Fasting Blood Sugar test revealed 9.1
(NV 4.1-6.1 umol/1).

Petitioner was given Alaxan tablet for his back pain and Euglocon for his elevated blood sugar. He was also
advised to return for follow-up evaluation.

On December 13, 2000, he returned to the clinic with no more complaints of back pains. His sugar
examination likewise revealed normal results.

Petitioner was then declared fit for duty effective on that day.

On March 20, 2001, or barely three months from being pronounced fit to work, petitioner executed a
release and quitclaim8 in favor of his employers where he acknowledged the receipt of US$405.00 as his
sickwages and freed his employers from further liability.

However, on November 27, 2001, petitioner filed a complaint with the labor arbitration branch of the
NLRC for disability benefit, illness allowance/reimbursement of medical expenses, damages and attorneys
fees.

Issue: Whether or not the petitioner is entitled to disability benefits

Held:

Petitioner avers that the quitclaim he executed is invalid, as the amount he received as consideration
therefor was much lower than what he should have received under the POEA Standard Employment
Contract.

He went on to argue that quitclaims are frowned upon by this Court as they are contrary to public policy.

In the instant case, the CA, the NLRC and the Labor Arbiter are one in their findings that based on the
evidence on record, petitioner is not entitled to disability benefits.

Prescinding from the foregoing, the Court finds and so rules that under the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessel or the POEA Standard
Employment Contract issued pursuant to DOLE Department Order No. 4, and POEA Memorandum
Circular No. 9, both Series of 2000, petitioner is not entitled to disability benefits.

In the instant case, Dr. Pidlaoan diagnosed petitioner as fit for duty as gleaned from his December 13,
2000 Medical Report, to wit:

Since he was declared fit for work, petitioned has no more right to claim disability benefits under the
contractual provisions of the POEA Standard Employment Contract

Petitioner did not question the findings of Dr. Pidlaoan and his recommendation. He questioned the
doctors competency and the correctness of his findings only when he filed the complaint against
respondents before the Labor Arbiter, roughly 11 months after petitioner was examined by the doctor.

Petitioner consulted his personal doctors only in July and August 2001, long after he had been examined by
the company-designated physician.

The only requirement stated in the POEA Standard Employment Contract, as explained in the German
Marine case, is that the doctor be company-designated, and no other.

Though it is prudent and advisable to have a doctor specialized in his field to examine the seafarers
condition or degree of illness, the contractual provisions of the parties only require that the doctor be
company-designated.

When the language of the contract is explicit, as in the case at bar, leaving no doubt as to the intention of
the drafters thereof, the courts may not read into it any other intention that would contradict its plain
import.

Additionally, petitioner, instead of questioning the assessment of the company-designated doctor, executed
a release and quitclaim in favor of respondents, around three months after the assessment.

In executing the said document, petitioner thus impliedly admitted the correctness of the assessment of the
company-designated physician, and acknowledged that he could no longer claim for disability benefits.

While petitioner may be correct in stating that quitclaims are frowned upon for being contrary to public
policy, the Court has, likewise, recognized legitimate waivers that represent a voluntary and reasonable
settlement of a workers claim which should be respected as the law between the parties.

Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a
valid and binding under-taking.

From the document itself, the element of voluntariness in its execution is evident. Petitioner also appears to
have fully understood the contents of the document he was signing, as the important provision thereof had
been relayed to him in Filipino

Likewise, the US$405.00 which he received in consideration of the quitclaim is a credible and reasonable
amount. He was truly entitled thereto, no more and no less, given that he was sick for only less than a
month or from November 15, 2000 to December 13, 2000. The same would not, therefore, invalidate the
said quitclaim.

As a final note, let it be emphasized that the constitutional policy to provide full protection to labor is not
meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not
prevent us from sustaining the employer when it is in the right