11.

MARK ROCHE V NLRC,313 SCRA 356, August 31, 1999

FACTS:

On different dates, private respondents filed separate complaints for underpayment of wages and non-payment of
overtime pay against petitioners Mark Roche International (MRI), Eduardo Dayot and Susan Dayot. Private respondents
sought the assistance of a labor organization which helped them organize the Mark Roche Workers Union (MRWU).
Apparently irked by the idea of a union within the company, petitioners ordered private respondents to withdraw the
petition and further threatened them that should they insist in the organization of a union they would be dismissed.
Unfazed, private respondents refused.

As expected, private respondents were discharged from work. Petitioners disclaimed knowledge of any deficiency owing
to private respondents since all the benefits due them as required by law were fully paid, except overtime pay which they
were not entitled to on account of their being piece-rate workers.

The Labor Arbiter rendered his decision declaring as illegal the constructive dismissal of private respondents and ordered
their reinstatement, payment of backwages, salary differentials and proportionate 13th month pay and service incentive
leave pay. On appeal, the National Labor Relations Commission (NLRC) affirmed the decision of the Labor Arbiter, but set
aside the award of service incentive leave on the ground that private respondents were not entitled thereto as they were
piece-rate workers. Petitioners moved for reconsideration, but it was denied. Hence, the present petition

ISSUE:

WON the dismissal of private respondents was a constructive dismissal or an illegal dismissal

HELD:

- Constructive dismissal or a constructive discharge has been defined as a quitting because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. In the
instant case, private respondents were not demoted in rank nor their pay diminished considerably. They were simply told
without prior warning or notice that there was no more work for them.

After receiving the notice of hearing of the petition for certification election on 27 October 1992, petitioners immediately
told private respondents that they were no longer employed.

Evidently it was the filing of the petition for certification election and organization of a union within the company which
led petitioners to dismiss private respondents and not petitioners' allegations of absence or abandonment by private
respondents.

The formation of a labor union has never been a ground for valid termination, and where there is an absence of clear,
valid and legal cause, the law considers the termination illegal.

12. LAMBO vs. NATIONAL LABOR RELATIONS COMMISSION

Facts:

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or
Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays.

As in the case of the other 100 employees of private respondents, petitioners were paid on a piecework basis, according
to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery
of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th
month pay, and attorney’s fees. After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners’ claims. On appeal, the NLRC reversed the decision of the Labor Arbiter.

The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th
month pay. Petitioners allege that they were dismissed by private respondents as they were about to file a petition with
the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS)
coverage, sick leave and vacation leave. They deny that they abandoned their work.

Issue:

Whether or not the petitioners are entitled to the minimum benefits provided by law.

Ruling:

The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners were
employees of private respondents although they were paid not on the basis of time spent on the job but according to
the quantity and the quality of work produced by them.

There are two categories of employees paid by results:

(1) those whose time and performance are supervised by the employer. (Here, there is an element of control and
supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category
especially if he performs his work in the company premises.); and

(2) those whose time and performance are unsupervised. (Here, the employer’s control is over the result of the work.
Workers on pakyao and takay basis belong to this group.)

Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories
where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the
agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify.

Petitioners belong to the first category, i.e., supervised employees. In this case, private respondents exercised control
over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays.

The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private
respondents. The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of
being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis.

Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the
fact that petitioners are not covered by the SSS affect the employer-employee relationship.

As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter applied the rule
in the Mercury Drug case, according to which the recovery of back wages should be limited to three years without
qualifications or deductions. Any award in excess of three years is null and void as to the excess.

The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since
petitioners’ dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties.

In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year
of service, with a fraction of at least six (6) months of service being considered as one (1) year. The awards for overtime
pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees,
although paid on a piece-rate basis.
 13. LABOR CONGRESS OF THE PHILIPPINES vs. NATIONAL LABOR RELATIONS COMMISSION

Facts:

The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food
Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of
money claims and for violation of labor standards laws They also filed a petition for direct certification of petitioner
Labor Congress of the Philippines as their bargaining representative.

In an Order dated October 24, 1990, Mediator Arbiter approved the memorandum of agreement and certified LCP "as
the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of
collective bargaining with respect to wages, hours of work and other terms and conditions of employment".

On November 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for
collective bargaining.

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

Issue:

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

Ruling:

The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th month pay and service
incentive leave. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular
employees of private respondents.

First, as to the nature of petitioners' tasks were necessary or desirable in the usual business of private respondents, who
were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents
throughout the year, and third, the length of time that petitioners worked for private respondents.

Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their employment
was that of regular employees.

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

Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners
labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with
the fulfillment of their quota as supposed basis for compensation. Further, in Section 8(b), Rule IV, Book III which we
quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay.

SEC. 8. Holiday pay of certain employees.

— (b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not
be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided,
however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to
P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those
exempted from paying 13th month pay, to wit:

The following employers are still not covered by P.D. No. 851: (d) Employers of those who are paid on purely
commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of
the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such workers.

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

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

As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay.

14. SAN JUAN DE DIOS HOSPITAL vs. NATIONAL LABOR RELATIONS COMMISSION

Facts:

Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees
Association, sent a letter requesting for the expeditious implementation and payment by respondent, San Juan De Dios
Hospital, of the ‘40-hours/5-day workweek’ with compensable weekly two (2) days off provided for by Policy Instruction
No. 54 issued by the Secretary of Labor.

Said policy instruction purports to implement R.A. No. 5901, otherwise known as “An Act Prescribing Forty Hours A
Week of Labor For Government and Private Hospitals Or Clinic Personnel.”

Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their claims for
statutory benefits under the above-cited law and policy issuance. However, the Labor Arbiter and, subsequently, NLRC
dismissed the complaint. Hence, this petition ascribing grave abuse of discretion on the part of NLRC in concluding that
Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901 and Article 83 of the Labor Code.

Issue:

Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon completion of 40-hour/5-day
workweek, is valid based on existing labor laws.

Ruling:

Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the provision of Article 83 of the Labor
Code, as well as to R.A. No. 5901. A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for
health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No.
16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill’s sole purpose is to shorten the
working hours of health personnel and not to dole out a two days off with pay.

Petitioners’ position is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards
which implement Republic Act No. 5901. Section 15 of aforementioned implementing rules grants specific rate of
additional compensation for work performed on Sunday or for work performed in excess of forty hours a week.
Policy Instruction No. 54 unduly extended the statute. Article 83 merely provides: (1) the regular office hour of eight
hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage for work on the sixth day.

There is nothing in the law that supports then Secretary of Labor and petitioner’s assertion. The Secretary of Labor
exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute.
Administrative interpretation of the law is at best merely advisory, and the Court will not hesitate to strike down an
administrative interpretation that deviates from the provision of the statute.