CALAMBA MEDICAL CENTER

VS

NATIONAL LABOR RELATIONS COMMISSION

571 SCRA 585 (2008)

An employment relationship exists between a physician and a hospital if the

hospital controls both the means and the details of the process by which the
physician is to accomplish his task.

Petitioner Calamba Medical Center (CMC), engaged the services of medical

doctors-spouses Ronaldo Lanzanas (Dr. Ronaldo) and Merceditha Lanzanas
(Dr. Merceditha) as part of its team of resident physicians. They were given,
among others, identification cards and work schedules; and were paid a
monthly retainer. They were likewise enrolled in the Social Security System
(SSS). Subsequently, CMC’s medical director issued a Memorandum to Dr.
Ronaldo after a resident physician overheard Dr. Ronaldo and a fellow
employee discussing the low admission in the hospital. After the incident
involving her husband, Dr. Merceditha was no longer given any
work assignments.

Afterwards, the rank and file employees union of Calamba Medical Center

went on a strike. Dr. Ronaldo and Dr. Merceditha meanwhile filed a complaint
for illegal suspension and illegal dismissal, respectively before the National
Labor Relations Commission Regional Arbitration Board (NLRC-RAB).
Consequently, the Department of Labor and Employment (DOLE) issued a
return to work order. Dr. Ronaldo, on the other hand, received a notice of
termination indicating his failure to return for work. Dr. Ronaldo
thus amended his complaint to illegal dismissal. The CMC contends that the
doctors-spouses are not employees of the same, so that they cannot be illegally
dismissed.

ISSUES:
Whether or not an employee-employer relationship does not exist between
Calamba Medical Center and the doctors-spouses Lanzanas

HELD:
Under the ―control test,‖ an employment relationship exists between a
physician and a hospital if the hospital controls both the means and the details
of the process by which the physician is to accomplish his task.

Where a person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work, and is
compensated according to the result of his efforts and not the amount thereof,
the element of control is absent.

As priorly stated, the spouses-doctors maintained specific work-schedules, as

determined by petitioner through its medical director, which consisted of 24-
hour shifts totaling forty-eight hours each week and which were strictly to be
observed under pain of administrative sanctions.

That CMC exercised control over spouses-doctors gains light from the
undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, spouses-doctors’ work is monitored
through its nursing supervisors, charge nurses and orderlies. Without
the approval or consent of CMC or its medical director, no operations can be
undertaken in those areas. For control test to apply, it is not essential for the
employer to actually supervise the performance of duties of the employee, it
being enough that it has the right to wield the power.

With respect to spouses-doctors sharing in some hospital fees, this scheme

does not sever the employment tie between them and CMC as this merely
mirrors additional form or another form of compensation or incentive similar
to what commission-based employees receive as contemplated in Article 97 (f)
of the Labor Code.
The spouses-doctors were in fact made subject to petitioner-hospital’s Code of
Ethics, the provisions of which cover administrative and disciplinary
measures on negligence of duties, personnel conduct and behavior, and
offenses against persons, property and the hospital’s interest.

More importantly, the CMC itself provided incontrovertible proof of the

employment status of respondents, namely, the identification cards it issued
them, the payslips and BIR W-2 (now 2316) Forms which reflect their
status as employees, and the classification as ―salary‖ of their
remuneration. Moreover, it enrolled respondents in the SSS and
Medicare (Philhealth) program. It bears noting at this juncture
that mandatory coverage under the SSS Law is premised on the
existence of an employer-employee relationship,[35] except in cases
of compulsory coverage of the self-employed. It would be preposterous for an
employer to report certain persons as employees and pay their SSS premiums
as well as their wages if they are not its employees.

And if the spouses-doctors were not CMC’s employees, how does it account for
its issuance of the earlier-quoted March 7, 1998 memorandum explicitly
stating that respondent is ―employed‖ in it and of the subsequent termination
letter indicating Dr. Ronaldo’s employment status.

Finally, under Section 15, Rule X of Book III of the Implementing Rules of the
Labor Code, an employer-employee relationship exists between the resident
physicians and the training hospitals, unless there is a training agreement
between them, and the training program is duly accredited or approved by the
appropriate government agency. In the spouses-doctors’ case, they were
not undergoing any specialization training. They were considered
non-training general practitioners, assigned at the emergency
rooms and ward sections.
Tan vs. Lagrama

387 SCRA 393

Facts: Lagrama works for Tan as painter of billboards and murals

for the motion pictures shown at the theaters managed by

Tan for more than 10years. Lagrama was dismissed for having
urinated in his working area. Lagrama filed a complaint for

illegal dismissal and non payment of benefits. Tan asserted that

Lagrama was an independent contractor as he was paid in

piece-work basis

Issue: W/N Lagrama is an independent contractor or an employee

of Tan.

Ruling: Lagrama is an employee, not an independent contractor.

Applying Four Fold Test

A. Power of Control - Evidence shows that the Lagrama performed

his work as painter and under the supervision and control of Tan.

1. Lagrama worked in a designated work area inside the theater of

Tan for the use of which petitioner prescribed rules, which rules
included the observance of cleanliness and hygeine and prohibition
against urinating in the work area and any other place other than
rest rooms and

2. Tan's control over Lagrama's work extended not only the use of
work area but also the result of Lagrama;s work and the manner
and means by which the work was to be accomplished

3. Lagrama is not an independent contractor because he did not

enjoy independence and freedom from the control and supervision
of Tan and he was subjected to Tan's control over the means and
methods by which his work is to be performed and accomplished

B. Payment of Wages

1. Lagrama worked for Tan on a fixed piece work basis is of no

moment. Payment by result is a method of compensation and does
not define the essence of the relation.

2. Tat Lagrama was not reported as an employee to the SSS is not

conclusive, on the question whether he was an employee,
otherwise Tan would be rewarded for his failure or even neglect to
perform his obligation.
C. Power of Dismissal – by Tan stating that he had the right to fire
Lagrama, Tan in effect acknowledged Lagrama to be his employee

D. Power of Selection and Engagement of Employees – Tan

engaged the services of Lagrama without the intervention of third
party

Compared to an employee, an independent contractor is one who

carries on a distinct and independent business and undertakes to
perform the job, work, or service on its own account and under its
own responsibility according to its own manner and method, free
from the control and direction of the principal in all matters
connected with the performance of the work except as to the
results thereof.

[8]

Hence, while an independent contractor enjoys independence and

freedom from the control and supervision of his principal, an
employee is subject to the employer’s power to control the means
and methods by which the employee’s work is to be performed and
accomplished.
Sonza vs. ABS-CBN

GR 138051

Facts:

In May 1994, respondent ABS-CBN Broadcasting Corporation (“ABS-CBN”)

signed an Agreement (“Agreement”) with the Mel and Jay Management and
Development Corporation (“MJMDC”).  ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA, as President and
General Manager, and Carmela Tiangco (“TIANGCO”), as EVP and Treasurer.
Referred to in the Agreement as “AGENT,” MJMDC agreed to provide
SONZA’s services exclusively to ABS-CBN as talent for radio and television.

On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio

Lopez III about the recent event concerning his program and career, and that
the said violation of the company has breached the agreement, thus, the notice
of rescission of the Agreement was sent.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the
Department of Labor and Employment, National Capital Region in Quezon
City.  SONZA complained that ABS-CBN did not pay his salaries, separation
pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan
(“ESOP”).

On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no
employer-employee relationship existed between the parties. SONZA filed an
Opposition to the motion on 19 July 1996.

Issue: Whether Sonza was an employee or independent contractor.

Held:

Applying the control test to the present case, we find that SONZA is not an
employee but an independent contractor.

First, SONZA contends that ABS-CBN exercised control over the means and
methods of his work.

SONZA’s argument is misplaced.  ABS-CBN engaged SONZA’s services

specifically to co-host the “Mel & Jay” programs. ABS-CBN did not assign any
other work to SONZA.  To perform his work, SONZA only needed his skills
and talent. How SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBN’s control.  SONZA did not have to
render eight hours of work per day.  The Agreement required SONZA to
attend only rehearsals and tapings of the shows, as well as pre- and post-
production staff meetings. ABS-CBN could not dictate the contents of
SONZA’s script.  However, the Agreement prohibited SONZA from criticizing
in his shows ABS-CBN or its interests. The clear implication is that SONZA
had a free hand on what to say or discuss in his shows provided he did not
attack ABS-CBN or its interests.

SONZA protests the Labor Arbiter’s finding that he is a talent of MJMDC,

which contracted out his services to ABS-CBN. The Labor Arbiter ruled that as
a talent of MJMDC, SONZA is not an employee of ABS-CBN.  SONZA insists
that MJMDC is a “labor-only” contractor and ABS-CBN is his employer.

In a labor-only contract, there are three parties involved:  (1) the “labor-only”

contractor; (2) the employee who is ostensibly under the employ of the “labor-
only” contractor; and (3) the principal who is deemed the real
employer.  Under this scheme, the “labor-only” contractor is the agent
of the principal.  The law makes the principal responsible to the employees
of the “labor-only contractor” as if the principal itself directly hired or
employed the employees. These circumstances are not present in this case.

There are essentially only two parties involved under the Agreement, namely,
SONZA and ABS-CBN. MJMDC merely acted as SONZA’s agent.  The
Agreement expressly states that MJMDC acted as the “AGENT” of SONZA.
The records do not show that MJMDC acted as ABS-CBN’s agent.  MJMDC,
which stands for Mel and Jay Management and Development Corporation, is
a corporation organized and owned by SONZA and TIANGCO.  The President
and General Manager of MJMDC is SONZA himself.  It is absurd to hold that
MJMDC, which is owned, controlled, headed and managed by SONZA, acted
as agent of ABS-CBN in entering into the Agreement with SONZA, who
himself is represented by MJMDC.  That would make MJMDC the agent of
both ABS-CBN and SONZA.

Petition denied.
G.R. No. 183810               January 21, 2010

FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY

LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS, JR.,
HARVEY PONCE and ALAN C. ALMENDRAS, Petitioners,
vs.
ABS-CBN BROADCASTING CORPORATION, Respondent.

The Regularization Case.

In June 2001, petitioners Farley Fulache, Manolo Jabonero, David Castillo,

Jeffrey Lagunzad, Magdalena Malig-on Bigno, Francisco Cabas, Jr., Harvey
Ponce and Alan C. Almendras (petitioners) and Cresente Atinen (Atinen) filed
two separate complaints for regularization, unfair labor practice and several
money claims (regularization case) against ABS-CBN Broadcasting
Corporation-Cebu (ABS-CBN). Fulache and Castillo were drivers/cameramen;
Atinen, Lagunzad and Jabonero were drivers; Ponce and Almendras were
cameramen/editors; Bigno was a PA/Teleprompter Operator-Editing, and
Cabas was a VTR man/editor. The complaints (RAB VII Case Nos. 06-1100-
01 and 06-1176-01) were consolidated and were assigned to Labor Arbiter
Julie C. Rendoque.

- executed a CBA where they learned that they had been excluded from
its coverage as ABS-CBN considered them temporary and not regular
employees, 
- rendered more than a year of service in the company and, therefore, should
have been recognized as regular employees entitled to security of tenure,
privileges and other benefits

ABS CBN/s contention:

The RNG (reg. Network group) exercises control and supervision over all the
ABS-CBN local stations to ensure that ABS-CBN programs are extended to
the provinces

ABS-CBN alleged that the petitioners’ are contracted persons caled “talents”.
they are paid a pre-arranged consideration called "talent fee" taken from the
budget of a particular progra. Talents do not undergo probation. Their
services are engaged for a specific program or production, or a segment
thereof. Their contracts are terminated once the program, production or
segment is completed.

On January 17, 2002, Labor Arbiter Rendoque rendered his decision5 holding

that the petitioners were regular employees of ABS-CBN, not independent
contractors, and are entitled to the benefits and privileges of regular
employees.

ABS CBN appealed, and while the appeal on the regularization case was
pending. The petitioners were dismissed from their work. Therefore an illegal
dismissal case was initiated against ABS CBN in which the labor arbiter
rendered a decision in favor of the petitioners.

However, the CA reversed said decisions. Hence this petition.

ISSUE:
The factual issue is whether the petitioners are regular rank-and-file
employees of ABS-CBN.

Yes. The Supreme Court upheld the decision of the Labor Abiter that
petitioners are regular employees of ABS-CBN. As regular employees, the
petitioners fall within the coverage of the bargaining unit and are therefore
entitled to CBA benefits as a matter of law and contract. The parties’ 1999-
2002 CBA provided in its Article I (Scope of the Agreement) that:

Section 1. APPROPRIATE BARGAINING UNIT. – The parties agree that the

appropriate bargaining unit shall be regular rank-and-file employees of ABS-
CBN BROADCASTING CORPORATION but shall not include:

a) Personnel classified as Supervisor and Confidential employees;

b) Personnel who are on "casual" or "probationary" status as defined in

Section 2 hereof;

c) Personnel who are on "contract" status or who are paid for specified units
of work such as writer-producers, talent-artists, and singers.

Under these terms, the petitioners are members of the appropriate bargaining
unit because they are regular rank-and-file employees and do not belong to
any of the excluded categories. Specifically, nothing in the records shows that
they are supervisory or confidential employees; neither are they casual nor
probationary employees. Most importantly, the labor arbiter’s decision –
affirmed all the way up to the CA level – ruled against ABS-CBN’s submission
that they are independent contractors. Thus, as regular rank-and-file
employees, they fall within CBA coverage under the CBA’s express terms and
are entitled to its benefits.
WILHELMINA S. OROZCO, Petitioner, v. THE FIFTH DIVISION OF THE
HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, and
LETICIA JIMENEZ MAGSANOC, Respondents.

whether a newspaper columnist is an employee of the newspaper which

publishes the column.

In march 1990, PDI engaged the services of petitioner. The latter would
submit articles published weekly on the newspaper receiving a P200-300
compensation.

Until such time in 1992, PDI editor in chief Magsanoc stopped publishing her
articles because they needed to cut down the number of columnist by keeping
only those whose columns were well-written, with regular feedback and
following. In their judgment, petitioner's column failed to improve, continued
to be superficially and poorly written, and failed to meet the high standards of
the newspaper. Hence, they decided to terminate petitioner's column.

Orozco filed an illegal dismissal case to which the Labor Arbiter rendered a
Decision in her favor.

However CA reversed the decision, the reason was Orozco was never
considered as an employee of PDI, they didn’t have an employment contract
but only a verbal agreement that she would submit articles, she was not
required to report in their office, and she even went to new york without filing
a leave.

Hence this petition

The main issue we must resolve is whether petitioner is an employee

of PDI, and if the answer be in the affirmative, whether she was
illegally dismissed.

It is true that petitioner herself admitted that she "was not, and [had] never
been considered respondent's employee because the terms of works were
arbitrarily decided upon by the respondent." 22 However, the employment
status of a person is defined and prescribed by law and not by what the
parties say it should be.23

This Court has constantly adhered to the "four-fold test" to determine

whether there exists an employer-employee relationship between
parties.24 The four elements of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer's power to control the
employee's conduct.25

FOUR FOLD TEST

Of these four elements, it is the power of control which is the most

crucial26 and most determinative factor,27 so important, in fact, that the other
elements may even be disregarded.28 As this Court has previously held:
 the significant factor in determining the relationship of the
parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service
being rendered, and the degree to which the principal may
intervene to exercise such control.29

In other words, the test is whether the employer controls or has reserved the
right to control the employee, not only as to the work done, but also as to the
means and methods by which the same is accomplished. 30

Petitioner argues that several factors exist to prove that respondents

exercised control over her and her work, namely:

A. As to the Contents of her Column

B. As to Time Control - submit deadlines

C. As to Control of Space - The PETITIONER was told to submit

only two or three pages of article for the column

D. As to Discipline - The PETITIONER was disciplined to submit

her articles on highly relevant and significant issues on time by
the PRIVATE RESPONDENTS

Given this discussion by petitioner, we then ask the question: Is this

the form of control that our labor laws contemplate such as to
establish an employer-employee relationship between petitioner and
respondent PDI? cra lawlibrary

It is not.

This is not the case for petitioner. Although petitioner had a weekly
deadline to meet, she was not precluded from submitting her column
ahead of time or from submitting columns to be published at a later
time. More importantly, respondents did not dictate upon petitioner
the subject matter of her columns, but only imposed the general
guideline that the article should conform to the standards of the
newspaper and the general tone of the particular section.

Where a person who works for another performs his job more or less
at his own pleasure, in the manner he sees fit, not subject to definite
hours or conditions of work, and is compensated according to the
result of his efforts and not the amount thereof, no employer-
employee relationship exists

ECONOMIC TEST that petitioner was dependent on respondent PDI for her
continued employment in respondent's line of business

Petitioner's main occupation is not as a columnist for respondent but as a

women's rights advocate working in various women's
organizations.39 Likewise, she herself admits that she also contributes articles
to other publications.40 Thus, it cannot be said that petitioner was dependent
on respondent PDI for her continued employment in respondent's line of
business

ANSWER: The inevitable conclusion is that petitioner was not respondent

PDI's employee but an independent contractor, engaged to do independent
work. Considering that respondent PDI was not petitioner's employer, it
cannot be held guilty of illegal dismissal.

ANGELINA FRANCISCO,  Petitioner, versus NATIONAL LABOR

RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO
TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA,
Respondents., G.R. No. 170087, 2006 Aug 31.

FACTS:

1995, Petitioner was hired by Kasei Corporation during its incorporation

stage.  She was designated as Accountant and Corporate Secretary and
was assigned to handle all the accounting needs of the company.  She was also
designated as Liaison Officer to the City of Makati to secure business
permits, construction permits and other licenses for the initial operation of
the company.

Although she was designated as Corporate Secretary, she was not entrusted
with the corporate documents; neither did she attend any board meeting nor
required to do so.  She never prepared any legal document and never
represented the company as its Corporate Secretary. 1996, petitioner was
designated Acting Manager. Petitioner was assigned to handle recruitment of
all employees and perform management administration functions; represent
the company in all dealings with government agencies, especially with the
BIR, SSS and in the city government of Makati; and to administer all other
matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation.

January 2001, petitioner was replaced by a certain Liza R. Fuentes as

Manager. Kasei Corporation reduced her salary, she was not paid her mid-
year bonus allegedly because the company was not earning well.  On October
2001, petitioner did not receive her salary from the company.  She made
repeated follow-ups with the company cashier but she was advised that the
company was not earning well. Eventually she was informed that she is
no longer connected with the company.

Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter. Private
respondents averred that petitioner is not an employee of Kasei Corporation.
They alleged that petitioner was hired in 1995 as one of its
technical consultants on accounting matters and act concurrently as
Corporate Secretary.  As technical consultant, petitioner performed her work
at her own discretion without control and supervision of Kasei Corporation.
Petitioner had no daily time record and she came to the office any time she
wanted and that her services were only temporary in nature and dependent on
the needs of the corporation.

The Labor Arbiter found that petitioner was illegally dismissed, NLRC
affirmed with modification the Decision of the Labor Arbiter. On appeal, CA
reversed the NLRC decision. CA  denied petitioner’s MR, hence, the present
recourse.

ISSUES:

1. WON there was an employer-employee relationship between petitioner

and private respondent; and if in the affirmative,
2. Whether petitioner was illegally dismissed.
RULING:

1. control test - where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end. .

By applying the control test, it can be said that petitioner is an employee of

Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporation’s Technical Consultant.  She reported for work
regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for
the proper operation of the corporation such as securing business permits and
other licenses over an indefinite period of engagement. Respondent
corporation had the power to control petitioner with the means and methods
by which the work is to be accomplished.

economic conditions - the inclusion of the employee in the payrolls, can help
in determining the existence of an employer-employee relationship

Under the economic reality test, the petitioner can also be said to be an

employee of respondent corporation because she had served the company for
6 yrs. before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as
deductions and Social Security contributions from. When petitioner was
designated General Manager, respondent corporation made a report to the
SSS.  Petitioner’s membership in the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent
corporation. The coverage of Social Security Law is predicated on the
existence of an employer-employee relationship.

The corporation constructively dismissed petitioner when it reduced her.

This amounts to an illegal termination of employment, where the petitioner is
entitled to full backwages

Constructive dismissal is an involuntary resignation resulting in cessation

of work resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution in
pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to an employee. Petition is GRANTED.  
RIGHT TO HIRE (article 136 stipulations against marriage)

 ZIALCITA V. PHILIPPINE AIRLINES, INC. (Case No. RO4-3-

3398-76; February 20, 1977)

FACTS: Zialcita is a stewardess of PAL. She was fired from work because

she had gotten married. PAL argued and cited its policy that stewardesses
must be single. The policy also states that subsequent marriage of a
stewardess shall automatically terminate employment.

Zialcita anchored on Article 136 of the Labor Code. PAL sought refuge from
Article 132.

Article 132 provides, "Article 132. Facilities for women. The Secretary of

Labor and Employment shall establish standards that will ensure the safety
and health of women employees. In appropriate cases, he shall, by
regulations, require any employer to: To determine appropriate minimum
age and other standards for retirement or termination in special
occupations such as those of flight attendants and the like."

Article 136 provides, "Article 136. Stipulation against marriage. It shall be

unlawful for an employer to require as a condition of employment or
continuation of employment that a woman employee shall not get married,
or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely
by reason of her marriage."

ISSUE: Was Zialcita's termination proper?

HELD: The termination was improper. First of all, during the time Zialcita
was terminated, no regulation had yet been issued by the Secretary of
Labor to implement Article 132. Second, even assuming that the Secretary
of Labor had already issued such a regulation and to the effect that
stewardesses should remain single, such would be in violation of Article
136 of the Labor Code.
Article 136's protection of women is broader and more powerful than the
regulation provided under Article 132.

Philippine Telegraph v. National Labor Relations Commission

FACTS:

De Guzman was asked to join PT&T as a probationary employee. She indicated in the
portion of the job application form under civil status that she was single although she had
contracted marriage a few months earlier.

When petitioner learned later about the marriage, its branch supervisor sent de Guzman
a memorandum requiring her to explain the discrepancy including a reminder about the
company’s policy of not accepting married women for employment. She was dismissed
from the company and Labor Arbiter handed down a decision declaring that petitioner
illegally dismissed de Guzman, who had already gained the status of a regular employee.
It was apparent that she had been discriminated on account of her having contracted
marriage in violation of company policies.

ISSUE:

Whether or not the alleged concealment of civil status can be grounds to terminate the
services of an employee.

RULING:

No. Private respondent’s act of concealing the true nature of her status from PT&T could
not be properly characterized as in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. Thus, could
not be a ground to terminate her services.

Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits
discrimination merely by reason of marriage of a female employee. It is recognized that
company is free to regulate manpower and employment from hiring to firing, according to
their discretion and best business judgment, except in those cases of unlawful
discrimination or those provided by law.

PT&T’s policy of not accepting or disqualifying from work any woman worker who
contracts marriage is afoul of the right against discrimination provided to all women
workers by our labor laws and by our Constitution. The record discloses clearly that de
Guzman’s ties with PT&T were dissolved principally because of the company’s policy that
married women are not qualified for employment in the company, and not merely
because of her supposed acts of dishonesty.
The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code
on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment and it likewise is contrary to good morals and public
policy, depriving a woman of her freedom to choose her status, a privilege that is inherent
in an individual as an intangible and inalienable right. The kind of policy followed by
PT&T strikes at the very essence, ideals and purpose of marriage as an inviolable social
institution and ultimately, family as the foundation of the nation. Such policy must be
prohibited in all its indirect, disguised or dissembled forms as discriminatory conduct
derogatory of the laws of the land not only for order but also imperatively required.
However, SC nevertheless ruled that Grace did commit an act of dishonesty, which
should be sanctioned and therefore agreed with the NLRC’s decision that the dishonesty
warranted temporary suspension of Grace from work.

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.

TECSON, petitioners, 
vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.

FACTS: Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo

Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24,
1995, after Tecson had undergone training and orientation.

Thereafter, Tecson signed a contract of employment which stipulates, among

others, that he agrees to study and abide by existing company rules; to
disclose to management any existing or future relationship by consanguinity
or affinity with co-employees or employees of competing drug companies and
should management find that such relationship poses a possible conflict of
interest, to resign from the company. Code of Conduct of Glaxo similarly
provides these conditions; that otherwise, the management and the employee
will explore the possibility of a “transfer to another department in a non-
counterchecking position” or preparation for employment outside the
company after six months.

Tecson was initially assigned to market Glaxo’s products in the Camarines

Sur-Camarines Norte sales area. Subsequently, Tecson entered into a
romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3(Astra), a competitor of Glaxo. Bettsy was Astra’s Branch
Coordinator in Albay. She supervised the district managers and medical
representatives of her company and prepared marketing strategies for Astra in
that area.

Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship with
Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in
September 1998.

Tecson’s superior reminded him that he and Bettsy should decide which one
of them would resign from their jobs. Tecson requested for time to comply
with the company policy against entering into a relationship with an employee
of a competitor company. He explained that Astra, Bettsy’s employer, was
planning to merge with Zeneca, another drug company; and Bettsy was
planning to avail of the redundancy package to be offered by Astra.

Tecson again requested for more time resolve the problem. Thereafter, Tecson
applied for a transfer in Glaxo’s milk division, thinking that since Astra did
not have a milk division, the potential conflict of interest would be eliminated.
His application was denied in view of Glaxo’s “least-movement-possible”
policy.

Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales
area. Tecson asked Glaxo to reconsider its decision, but his request was
denied. Tecson defied the transfer order and continued acting as medical
representative in the Camarines Sur-Camarines Norte sales area.

DEVELOPMENT OF THE CASE: Because the parties failed to resolve the

issue at the grievance machinery level, they submitted the matter for
voluntary arbitration, but Tecson declined the offer. On November 15, 2000,
the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and affirming
Glaxo’s right to transfer Tecson to another sales territory.

CA sustained; MR denied.

Petitioner’s Contention: that Glaxo’s policy against employees marrying

employees of competitor companies violates the equal protection clause of the
Constitution because it creates invalid distinctions among employees on
account only of marriage. They claim that the policy restricts the employees’
right to marry; that Tecson was constructively dismissed

GLAXO argues: that the company policy prohibiting its employees from
having a relationship with and/or marrying an employee of a competitor
company is a valid exercise of its management prerogatives and does not
violate the equal protection clause;

The policy is also aimed at preventing a competitor company from gaining

access to its secrets, procedures and policies; that Tecson can no longer
question the assailed company policy because when he signed his contract of
employment, he was aware that such policy was stipulated therein.

ISSUE: WON Glaxo’s policy against its employees marrying employees from

competitor companies is valid

HELD: The Court finds no merit in the petition.

Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of

competitor companies upon Glaxo’s employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo
only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth.

Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor
dispute will be decided in favor of the workers. The law also recognizes that
management has rights which are also entitled to respect and enforcement in
the interest of fair play.21

EQUAL-PROTECTION: Glaxo does not impose an absolute prohibition

against relationships between its employees and those of competitor
companies. Its employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely seeks to avoid is a
conflict of interest between the employee and the company that may arise out
of such relationships.

Moreover, records show that Glaxo gave Tecson several chances to eliminate

the conflict of interest brought about by his relationship with Bettsy.

PETITION DENIED.

______________

Other Issue on Constructive dismissal:

The Court finds no merit in petitioners’ contention that Tescon was

constructively dismissed when he was transferred from the Camarines Norte-
Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales
area, and when he was excluded from attending the company’s seminar on
new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or
diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee.30 None of these
conditions are present in the instant case.

WAGES
ROSARIO A. GAA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION,
and CESAR R. ROXAS, Deputy Sheriff of Manila, respondents.

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

Europhil Industries commenced an action for damages against petitioner "for having
perpetrated certain acts that Europhil Industries considered a trespass upon its rights,
namely, cutting of its electricity, and removing its name from the building directory and
gate passes of its officials and employees" (p. 87 Rollo). On June 28, 1974, said court
rendered judgment in favor of respondent Europhil Industries,

Therefore a Notice of Garnishment upon El Grande Hotel, where petitioner was then
employed, garnishing her "salary, commission and/or remuneration." Petitioner then filed
with the Court of First Instance of Manila a motion to lift said garnishment on the ground
that her "salaries, commission and, or remuneration are exempted from execution under
Article 1708 of the New Civil Code. 

“Article 1708. The laborer's wages shall not be subject to execution or attachment,

except for debts incurred for food, shelter, clothing and medical attendance.”

ISSUE: WON Gaa is a “laborer” therefore can invoke the exemption under 1708

HELD:

"laborer" includes everyone who performs any kind of mental or physical labor. BUT it
only applies to one engaged in some form of manual or physical labor. Since persons of
that class usually look to the reward of a day's labor for immediate or present support
and so are more in need of the exemption than are other.

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

Article 1708 "wages" and not "salary" in relation to "laborer" when it declared what are
to be exempted from attachment and execution.
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a
responsibly place employee," of El Grande Hotel, "responsible for planning, directing,
controlling, and coordinating the activities of all housekeeping personnel" (p. 95, Rollo)
so as to ensure the cleanliness, maintenance and orderliness of all guest rooms, function
rooms, public areas, and the surroundings of the hotel. Considering the importance of
petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a
position equivalent to that of a managerial or supervisory position.

ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, petitioner,

vs.
ATOK-BIG WEDGE MINING COMPANY, INCORPORATED, respondents.

FACTS:
On September 4, 1950, a demand was submitted to petitioner by respondent union through its
officers for various concessions, among which were:
(a) An increase of P0.50 in wages;
(b) Commutation of sick and vacation leave if not enjoyed during the year;
(c) Various privileges, such as free medical care, medicine, and hospitalization; 
(d) Right to a closed shop, check off etc.;
(e) No dismissal without prior just cause and with a prior investigation, etc.

Some of the demands were granted by petitioner and the others were rejected. Hearings were
held in the Court of Industrial Relations. After the hearing, the respondent court rendered a
decision fixing the minimum wage for the laborers at P3.20 without rice ration and 2.65 a day
with rice ration, declaring that additional compensation representing efficiency bonus should not
be included as part of the wage, and making the award effective from September 4, 1950 (the
date of the presentation of the original demand, instead of from April 5, 1951, the date of the
amended demand).

Atok Company asked the Court for authority to stop operations & lay off employees and laborers,
for the reason that due to the heavy losses, increased taxes, high cost of materials, negligible
quantity of ore deports, and the enforcement of the Minimum Wage Law, the continued operation
of the company and the consequent lay-off of hundreds of laborers and employees.

The parties reached an agreement on October 29, 1952 after the SC decision which states
agreement that the following facilities heretofore given or actually being given by petitioner to its
workers and laborers, and which constitute as part of their wages, be valued as follows:

Rice ration P.55 per day 

Housing facility 40 per day 
All other facilities at least 85 per day

It is understood that the said amount of facilities valued at the above mentioned prices, may be
charged in full or partially by the Company against laborer or employee, as they may see fit
pursuant to the exigencies of its operation.

This was approved by the Court on December 26, 1952.

Later, another case was decided involving the 2 parties giving the employees minimum cash
wage of 3.45 a day with rice ration or 4.00 without rice ration.

ISSUES:
(1)  Which of the two decisions would prevail? The agreement or the subsequent decision giving
the
employees minimum case wage?, and;
WON the Agreement of October 29, 1952 from the minimum daily wage of P4 would be a waiver
of the minimum wage fixed by the law and hence null and void, since RA 602 sec. 20 provides
that “no agreement or contract, oral or written, to accept a lower wage or less than any other
under this Act, shall be valid”. 

(2)  WON additional compensation should be paid by the Company to its workers for work
rendered on Sundays and holidays which should be based on the minimum wage of 4.00 and not
on the cash portion which is 2.20. [Currently the company pays additional compensation of 50%
based on the 2.20 wage] 

HELD:
(1)  The Agreement subsists.

An agreement to deduct certain facilities received by the laborers from their employer is not a
waiver of the minimum wage fixed by the law. Wage includes the fair and reasonable value as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished
by the employer to the employee (Sec 2 of RA 602).

Thus, the law permits the deduction of such facilities from the laborer’s minimum wage of P4, as
long as their value is “fair and reasonable” 

.
.

(2)  NO. The Company is correct.

Section 4 of the Commonwealth Act No. 444 (Eight Hour Labor Law) provides:
No person, firm, or corporations... shall compel an employee or laborer to work during Sundays
and holidays, unless he is paid an additional sum of at least 25% of his regular remuneration.
Thus, the Company even pays the laborers higher wage than the minimum. Thus, no law is
violated. 
OTHER NOTES:

DIFFERENCE BETWEEN A SUPPLEMENT and FACILITY

(1)  Supplements, defined – extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages [vacation and holidays
not worked; paid sick leave or maternity leave; overtime rate in excess of what is required by
law; sick, pension, retirement and death benefits; profit sharing; family allowances; Christmas,
war risk and cost of living bonuses or other bonuses other than those paid as a reward for extra
output or time spent on the job]. 

(2)  Facilities, defined – items of expense necessary for laborer’s and his family’s existence and
subsistence, so that by express provision of the law, they form part of the wage and when
furnished by the employer are deductible therefrom since if they are not so furnished, the laborer
would spend and pay for them just the same. 
WAGE DISTORTION

PRUBANKERS ASSOCIATION, petitioner,

vs.

PRUDENTIAL BANK & TRUST COMPANY, respondent.

Before us is a Petition for Review on Certiorari, challenging the decision of the Court

of Appeals.

The Facts

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: SEVENTEEN PESOS AND FIFTY
CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN PESOS AND
FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco, Daraga, Pili and
the city of Iriga; and TEN PESOS (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 and employees in the
private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue
and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan,
Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao,
Toledo, Dumaguete, Bais, Canlaon and Tagbilaran.

The petitioner then granted a COLA of P17.50 to its employees at its Naga
Branch, the only branch covered by Wage Order No. RB 5-03, and integrated
the P150.00 per month COLA into the basic pay of its rank-and-file employees
at its Cebu, Mabolo and P. del Rosario branches, the branches covered by
Wage Order No. RB VII-03.
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 petitioner’s employees nationwide. As
the grievance could not be settled in the said meetings, the parties agreed to
submit the matter to voluntary arbitration. The Arbitration Committee formed
for that purpose was composed of the following: public respondent Froilan M.
Bacungan as Chairman, with Attys. Domingo T. Anonuevo and Emerico O. de
Guzman as members. The issue presented before the Committee was
whether or not the bank’s separate and regional implementation of Wage
Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu,
Mabolo and P. del Rosario branches, created a wage distortion in the bank
nationwide.

The Arbitration Committee on June 18, 1996 rendered questioned

decision.

Ruling of the Court of Appeals

In ruling that there was no wage distortion, the Court of Appeals held that
the variance in the salary rates of employees in different regions of the country
was justified by RA 6727. It noted that “the underlying considerations in
issuing the wage orders are diverse, based on the distinctive situations and
needs existing in each region. Hence, there is no basis to apply the salary
increases imposed by Wage Order No. VII-03 to employees outside of Region
VII.” Furthermore, the Court of Appeals ruled that “the distinctions between
each employee group in the region are maintained, as all employees were
granted an increase in minimum wage rate.

The Issues

In its Memorandum, petitioner raises the following issues:

1. Whether the Court of Appeals departed from the usual course of

judicial procedure when it disregarded the factual findings of
the Voluntary Arbitration Committee as to the existence of wage
distortion.
2. Whether the Court of Appeals committed grave error in law when it
ruled that wage distortion exists only within a region and not nationwide.
3. Whether the Court of Appeals erred in implying that the term
“establishment” as used in Article 125 of the Labor Code refers to the
regional branches of the bank and not to the bank as a whole.
The main issue is whether or not a wage distortion resulted from
respondent’s implementation of the aforecited Wage Orders.
The Court’s Ruling

The petition is devoid of merit.

Wage Distortion

The statutory definition of wage distortion is found in Article 124 of the Labor
Code, as amended by Republic Act No. 6727, which reads:

Art. 124. Standards/Criteria for Minimum Wage Fixing — . . .

As used herein, a wage distortion shall mean a situation where an increase in

prescribed wage results in the elimination of severe contraction of intentional
quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service, or other
logical bases of differentiation.

Elaborating on this statutory definition, this Court ruled: “Wage distortion

presupposes a classification of positions and ranking of these positions at
various levels. One visualizes a hierarchy of positions with corresponding
ranks basically in terms of wages and other emoluments. Where a significant
change occurs at the lowest level of positions in terms of basic wage without a
corresponding change in the other level in the hierarchy of positions, negating
as a result thereof the distinction between one level of position from the next
higher level, and resulting in a parity between the lowest level and the next
higher level or rank, between new entrants and old hires, there exists a wage
distortion. . . . . The concept of a wage distortion assumes an existing grouping
or classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected
in a differing wage rate for each of the existing classes of employees” 11

Wage distortion involves four elements:

1. An existing hierarchy of positions with corresponding salary rates

2. A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country
In the present case, it is clear that no wage distortion resulted when
respondent implemented the subject Wage Orders in the covered branches. In
the said branches, there was an increase in the salary rates of all pay classes.
Furthermore, the hierarchy of positions based on skills, lengh of service and
other logical bases of differentiation was preserved. In other words, the
quantitative difference in compensation between different pay classes
remained the same in all branches in the affected region. Put differently, the
distinction between Pay Class 1 and Pay Class 2, for example, was not
eliminated as a result of the implementation of the two Wage Orders in the
said region. Hence, it cannot be said that there was a wage distortion.

Petitioner argues that a wage distortion exists, because the implementation of

the two Wage Orders has resulted in the discrepancy in the compensation of
employees of similar pay classification in different regions. Hence, petitioner
maintains that, as a result of the two Wage Orders, the employees in the
affected regions have higher compensation than their counterparts of the
same level in other regions. Several tables are presented by petitioner to
illustrate that the employees in the regions covered by the Wage Orders are
receiving more than their counterparts in the same pay scale in other regions.

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.

Contrary to petitioner’s postulation, a disparity in wages between employees

holding similar positions but in different regions does not constitute wage
distortion as contemplated by law. As previously enunciated, it is the
hierarchy of positions and the disparity of their corresponding wages and
other emoluments that are sought to be preserved by the concept of wage
distortion. 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 different pay classes which, as
a result, eliminates the distinction between the different ranks in the same
region.

Different Regional Wages

Mandated by RA 6727

Petitioner’s claim of wage distortion must also be denied for one other reason.
The difference in wages between employees in the same pay scale in different
regions is not the mischief sought to be banished by the law. In fact, Republic
Act No. 6727 (the Wage Rationalization Act), recognizes “existing regional
disparities in the cost of living.” Section 2 of said law provides:

Sec 2. It is hereby declared the policy of the State to rationalize the fixing of
minimum wages and to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through
industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth.
The State shall promote collective bargaining as the primary mode of settling
wages and other terms and conditions of employment; and whenever
necessary, the minimum wage rates shall be adjusted in a fair and equitable
manner, considering existing regional disparities in the cost of living and
other socio-economic factors and the national economic and social
development plans.

RA 6727 also amended Article 124 of the Labor Code, thus:

Art. 124. Standards/Criteria for Minimum Wage Fixing. — The regional

minimum wages to be established by the Regional Board shall be as nearly
adequate as is economically feasible to maintain the minimum standards of
living necessary for the health, efficiency and general well-being of the
employees within the frame work of the national economic and social
development program. In the determination of such regional minimum
wages, the Regional Board shall, among other relevant factors,
consider the following:

The demand for living wages;

Wage adjustment vis-a-vis the consumer price index;

The cost of living and changes or increases therein;

The needs of workers and their families;

The need to induce industries to invest in the countryside;

Improvements in standards of living;

The prevailing wage levels;

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

Effects on employment generation and family income; and

The equitable distribution of income and wealth along the imperatives of

social and economic development.

From the above-quoted rationale of the law, as well as the criteria

enumerated, a disparity in wages between employees with similar positions in
different regions is necessarily expected. In insisting that the employees of the
same pay class in different regions should receive the same compensation,
petitioner has apparently misunderstood both the meaning of wage distortion
and the intent of the law to regionalize wage rates.

It must be understood that varying in each region of the country are

controlling factors such as the cost of living; supply and demand of basic
goods, services and necessities; and the purchasing power of the peso. Other
considerations underscore the necessity of the law. Wages in some areas may
be increased in order to prevent migration to the National Capital Region and,
hence, to decongest the metropolis. Therefore, what the petitioner herein
bewails is precisely what the law provides in order to achieve its purpose.

Petitioner claims that it “does not insist that the Regional Wage Boards
created pursuant to RA 6727 do not have the authority to issue wage orders
based on the distinctive situations and needs existing in each region. So
also, . . . it does not insist that the [B]ank should not implement regional wage
orders. Neither does it seek to penalize the Bank for following Wage Order
VII-03. . . . What it simply argues is that it is wrong for the Bank to
peremptorily abandon a national wage structure and replace the same with a
regionalized structure in violation of the principle of equal pay for equal work.
And, it is wrong to say that its act of abandoning its national wage structure is
mandated by law.”

As already discussed above, we cannot sustain this argument. Petitioner

contradicts itself in not objecting, on the one hand, to the right of the regional
wage boards to impose a regionalized wage scheme; while insisting, on the
other hand, on a national wage structure for the whole Bank. To reiterate, a
uniform national wage structure is antithetical to the purpose of RA 6727.

The objective of the law also explains the wage disparity in the example cited
by petitioner: Armae Librero, though only in Pay Class 4 in Mabolo, was, as a
result of the Wage Order, receiving more than Bella Cristobal, who was
already in Pay Class 5 in Subic. 12 RA 6727 recognizes that there are different
needs for the different situations in different regions of the country. The fact
that a person is receiving more in one region does not necessarily mean that
he or she is better off than a person receiving less in another region. We must
consider, among others, such factors as cost of living, fulfillment of national
economic goals, and standard of living. In any event, this Court, in its
decisions, merely enforces the law. It has no power to pass upon its wisdom or
propriety.

Equal Pay for Equal Work

Petitioner also avers that the implementation of the Wage Order in only one
region violates the equal-pay-for-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.

Meaning of “Establishment”

Petitioner further contends that the Court of Appeals erred in interpreting the
meaning of “establishment” in relation to wage distortion. It quotes the RA
6727 Implementing Rules, specifically Section 13 thereof which speaks of
“workers working in branches or agencies of establishments in or outside the
National Capital Region.” Petitioner infers from this that the regional offices
of the Bank do not themselves constitute, but are simply branches of, the
establishment which is the whole bank. In effect, petitioner argues that wage
distortion covers the pay scales even of employees in different regions, and not
only those of employees in the same region or branch. We disagree.

Sec. 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
petitioner’s view that “establishment” includes all branches and offices in
different regions.

Further negating petitioner’s theory is NWPC Guideline No. 1 (S. 1992)

entitled “Revised Guidelines on Exemption From Compliance With the
Prescribed Wage/Cost of Living Allowance Increases Granted by the Regional
Tripartite Wages and Productivity Board,” which states that “establishment”
“refers to an economic unit which engages in one or predominantly one kind
of economic activity with a single fixed location.”

Management Practice

Petitioner also insists that the Bank has adopted a uniform wage policy, which
has attained the status of an established management practice; thus, it is
estopped from implementing a wage order for a specific region only. We are
not persuaded. Said nationwide uniform wage policy of the Bank had been
adopted prior to the enactment of RA 6727. After the passage of said law, the
Bank was mandated to regionalize its wage structure. Although the Bank
implemented Wage Order Nos. NCR-01 and NCR-02 nationwide instead of
regionally even after the effectivity of RA 6727, the Bank at the time was still
uncertain about how to follow the new law. In any event, that single instance
cannot be constitutive of “management practice.”

WHEREFORE, the petition is DENIED and the assailed Decision is

AFFIRMED. Costs against petitioner.
BANKARD, INC. vs. NLRC- FIRST DIVISION, 
PAULO BUENCONSEJO,BANKARD EMPLOYEES UNION-
AWATU G.R. No. 171664, 6 March 2013

FACTS:

The issue started when Bankard implemented Manpower Rationalization Prog
ram (MRP), to further enhance its efficiency and be more competitive in the cr
edit card industry, invitating to the employees to tender their voluntary resign
ation, with entitlement to separation pay. Thereafter, majority of one division 
availed of the MRP. Thus, Bankard contracted an independent agency to hand
le its call center needs.

The Union filed before the NCMB its first Notice of Strike (NOS) alleging com
mission of unfair labor practices by petitioner Bankard, Inc. . Labor Secretary 
of the DOLE issued the order certifying the labor dispute to the NLRC upon th
e Bankard’s request. The Union filed its second NOS the day after it declared d
eadlock, alleging bargaining in bad faith on the part of Bankard. Bankard then 
again asked the Office of the Secretary of Labor to assume jurisdiction, which 
was granted and certified the labor dispute to the NLRC.

 ISSUE:

Whether job contractualization or outsourcing or contracting-out is an unfair l
abor practice considering there was no bad faith.

 RULING: No. Aside from the bare allegations of the Union, nothing in the rec
ords strongly proves that Bankard intended its program, the MRP, as a tool to 
drastically and deliberately reduce union membership. Contrary to the finding
s and conclusions of both the NLRC and the CA, there was no proof that the pr
ogram was meant to encourage the employees to disassociate themselves from 
the Union or to restrain them from joining any union or organization. There w
as no showing that it was intentionally implemented to stunt the growth of the 
Union or that Bankard discriminated, or in any way singled out the union me
mbers who had availed of the retirement package under the MRP. True, the pr
ogram might have affected the number of union membership because of the e
mployees’ voluntary resignation and availment of the package, but it does not 
necessarily follow that Bankard indeed purposely sought such result. It must b
e recalled that the MRP was implemented as a valid cost-cutting measure, well 
within the ambit of the so-called management prerogatives. Bankard contract
ed an independent agency to meet business exigencies. In the absence of any s
howing that Bankard was motivated by ill will, bad faith or malice, or that it w
as aimed at interfering with its employees’ right to self-organize, it cannot be s
aid to have committed an act of unfair labor practice. The Court has ruled that 
the prohibited acts considered as ULP relate to the workers’ right to self-
organization and to the observance of a CBA. It refers to “acts that violate the 
workers’ right to organize.” Without that element, the acts, even if unfair, are 
not ULP. Thus, an employer may only be held liable for unfair labor practice if 
it can be shown that his acts affect in whatever manner the right of his employ
ees to self-organize.

Law on unfair labor practices is not intended to deprive employers of their fun
damental right to prescribe and enforce such rules as they honestly believe to 
be necessary to the proper, productive and profitable operation of their busine
ss. Contracting out of services is an exercise of business judgment or manage
ment prerogative. Absent any proof that management acted in a malicious or a
rbitrary manner, the Court will not interfere with the exercise of judgment by 
an employer.