Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
This is the Labor Code, taken from various laws but
the ultimate origin is the American law. Labor
Standards part is taken from the Labor Standard
Act. Labor Relations part is taken from the labor
relations law in the US.
Declaration of Policy: Art. 3 says "The State shall
afford protection to labor, promote full
employment, ensure equal opportunities
regardless of sex, race and creed, and regulate the
relations between workers and employers; The
State shall assure the rights of workers to self
organization, collective bargaining, security of
tenure and just and humane conditions at work."
The first sentence is composed of policies. The 2nd
sentence is composed of laws. But actually the
whole of that is policy. Why? Because the
enumeration in the second sentence, although law,
is rights enumeration. This enumeration is NOT
found in the bill of rights, this is found in Art. 13,
Sec. 3 of your constitution. So, it has to be
implemented. They, therefore fall in the same level
as the enumeration in the first sentence: the
principle of protection of labor, principle of full
employment; the principle of equal work
opportunities regardless of sex (of course we do not
mean sex as the action word), gender, race or creed
and regulate the relations between workers and
employees.
So I brought up to you the issue why does labor
have to have protection when Sec. 1, Art. 3 already
provides equal protection? Does labor then enjoy a
double protection? The notion of equal protection
is equal protection before the law. We discussed
this ages ago, why law and justice is symbolized by a
woman (the goddess of justice) who is blindfolded
The protection is against the ordinary biases of
society. The ordinary biases that comes with
considering factors that come with other than the
merits of the case which should not be included in
the deliberation.
So gender, race or creed, if they are not included in
the merits of the case should not be part of the
consideration. "..ensure equal work opportunities"
you will later on find out the laws in the US, as they
are concentrating now in discrimination, they are
now away from labor standards since the same has
been already achieved. The emphasis is now on
discrimination, for instance equal rights
amendment in all the 51 states decree that if you
have a work place, the same must mirror the racial
composition of your labor market. So in MI,
especially in Detroit, the black population is higher
than the national population. So it must be
mirrored in the shock floor of lets say, GM. There is
a debate on what is the rule of the racial
composition of the market. And there is this rule in
economics that your labor market becomes more
and more local if your labor is less and less skilled.
But if your labor is skilled then it becomes not just
local, but regional and even national. So if the shock
floor has less blacks than the racial population in
the neighborhood, then the company will be
penalized, and they will be given time to bring it up
to the same composition in Detroit. Assuming that
the company will not be able to bring it up, it will be
severely fined and if assuming it cannot still comply
with the requirement, it will be closed.
But here, that is not the case yet. But we do have a
rule with respect to gender, race or creed. We are
still catching up on the gender side, not to
discriminate on women. We have now laws on
women's rights. But there is this emerging gender:
the so-called emphasis on gay rights. Because the
law merely rules on the general insight of human
acumen; on the universal understanding of what is
human. Before, to be gay was abnormal then in the
60's, to be gay was not normal or abnormal. To be
gay was like catching cold, it was a disease over
which the subject has no control. Then in the 80's
they realized that being gay is just another way of
being human. So, if you are gay, it should not be
taken against you. But what happens if official
policies is still against being gay? In the US Armed
Forces, for as long as you do not speak out, its all
right. But once you say you are gay, then you are
out of the service.
Unless gender is the very determinative factor of a
job, then you cannot use gender as the
consideration for hiring, promoting, advancing,
firing. But suppose gender is the determinative
factor of a job, then you cannot insist that your
application as a lingerie model must be accepted if
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
you are male. Because it is supposed to be female,
it is the female anatomy that brings out the
qualities this product. So if you file an application
and it goes straight to the waste basket, that is not
discrimination. Unless gender is part and parcel of
the issue of the particular position, it does not enter
into the consideration. And if you make that part of
the decision, it means discrimination.
Lets talk about the problem of full employment
policy. There is now works and researches saying
that unemployment cannot be brought lower to
zero. Why? Because in a modern economy,
unemployment is structural in nature, because
economy will not progress unless there is
unemployment. It does not mean that
unemployment contributes in the progress, rather it
is an index that an economy is improving because
there is unemployment. For example, before to
cook rice, people use colon to cook rice. After
awhile, somebody invented the calderos. So what
happens to the workers who are still making
colons? They run out of jobs, but there is progress,
because instead of colons, there is cauldron. Then
after cauldrons, there was the aluminum kettle, so
the makers of cauldron are out of jobs since
everybody switches to this aluminum kettle. Then
there is this wonder of wonders, pyrex! So its
always like that. Unemployment is built into the
economy, because without it, it means that the
economy does not progress. So if you have full
employment, it means that there is nothing new in
that economy. So, the policy should not promote
full employment, rather it should have a statement
of safety nets, to catch those who will be
unemployed because unemployment is a
permanent ingredient of a progressive economy.
Now, lets go to the rights. There are more rights
mentioned in Art. 13, Sec. 3 than what is mentioned
here. Right to self organization, collective
bargaining. In Sec. 3, it says right of collective
bargaining and negotiating. Right of security of
tenure, just and humane condition of work. Many
of the rights mentioned there (Art. 13, Sec. 3). Now
and again you will read from the decisions of the SC
when the SC almost calls these rights as
constitutional rights of workers. Now, I will say that
the best way to understand the SC decisions calling
these rights constitutional rights is that yes, they
are constitutional rights in the broad sense, and not
in the sense that you study them in political law
because the only constitutional rights that you
study are the Bill of Rights. The Bill of Rights are the
true constitutional rights because they do not need
implementing legislation. They are constitutional
because not even Congress has the power to
abolish such rights. These rights (rights mentioned
in Art. 13, Sec. 3) are statutory. They need
implementing legislation. The enumeration in Art.
13, Sec. 3 is not a source of right. So you cannot say
that the right to self organization was suddenly
abolished by Congress, that that is unconstitutional.
The remedy, if the law is done, is not to go to court
and say that such was unconstitutional. Your
remedy is political. It is to elect people who will
enact laws to enact these rights. Because they are
not constitutional rights in the sense of the Bill of
Rghts. (NB: Bill of Rights is rights against the State)
Sec. 8, Art. 3 says that the right of the people,
including those employed in the public and private
sectors, to form unions, associations, or societies,
for purposes not contrary to law shall not be
abridged. "..including those in the public sectors.."
when they say that, does that mean that the right
to form a union is now a constitutional right? No,
because you have to interpret this particular
provision with other provisions in the Constitution.
Other provisions says that government office is a
public trust. In other words, the basis of your work
in the government is not a contract between you
and the government, as your employer. No. The
basis is that you have been entrusted with a duty of
which you are answerable to the people. So, the
basis of your engagement in government is law, not
a contract. Even if you are appointed or elected
(NB: these are the only two ways you can be in
government service). So if you have been stirring
coffee for the office of Mayor Duterte since his first
office term. Contractual employee ka for 30 years
but you have not been given regular employment,
you cannot say that this office is yours by
prescription.
Because if you have been with somebody, you are
tolerated, in the words of the Labor
Code..."suffered or permitted to work", which
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
brings out the idea that there is no explicit
agreement on the part of the employer to engage
you for some job. You are just tolerated, your work
is just accepted. Are you entitled to pay, yes. Are
you considered a regular? Yes. Under the law,
engagements where there are no terms issued is a
regular employee. But that is not so in the case of
the goverment, no matter how long you have been
in the Mayor's Office, you cannot claim regularity of
employment.
So, government may form unions, but can they
negotiate their wage? No, because the basis of
wage is not contract. It is law. That is why in Art. 13,
Sec. 3 it says collective bargaining and negotiations.
The second term (negotiations) is for government
employees, not collective bargaining.
Article 4: CONSTRUCTION IN FAVOR OF LABOR: All
doubts in the implementation and interpretation
of the provisions of this Code including its
implementing rules and regulations, shall be
resolved in favor of labor.
Its not only contracts and labor laws that are
interpreted in favor of labor in case of doubt, it is
also labor standards. As I've told you before, this
does not abrogate the rules of statutory
construction. This is just an additional rule in
construction and applies only in labor standards.
This does not apply to non-labor provisions. So, if
you have to rip up into elements Art. 4, the first
element is labor legislation; second there is a doubt
in that labor legislation or its implementation.
The doubt may be textual doubt or factual doubt
(doubts on the facts upon which the law is to be
applied.) An example of textual doubt: Appeals shall
be within 10 days from the decision of the Labor
arbiter. Are those days calendar days or working
days? There is a doubt because the terminology is
vague. How do you resolve the doubt? First, you ask
how many interpretations. If there is an
interpretation in favor of labor, then the trier of
facts will have to accept that interpretation because
of this provision. Factual doubt: Suppose an
employee files a claim for overtime and yet he
cannot produce an authorization to do an overtime.
And there is this company regulation that states
that all OTs must be approved before the work is
rendered. Then he says that I did the work but it
was not approved because the tractor broke down
and it was raining and we had to repair it even if it
was way passed the regular hours of working. Even
if there is no approval of the previous work you
have, they have to pay for the overtime because it
has to be assumed that it (the OT work) redounded
to the benefit of the employer. If the OT is not paid,
the employer is unjustly enriching himself.
You know this provision is a narrowing of the
discretion to judge a case by the SC because once
you can create a doubt, the doubt has to be
resolved in favor of labor. But a word of caution, if
in the exam every number you answer that "in case
of doubt, doubt is resolved in favor of labor..", then
you invite the examiners to a primordial doubt. This
is not a catch all phrase, for short.
ART. 5: THE DEPARTMENT OF LABOR AND
EMPLOYMENT AND OTHER GOVERNMENT
AGENCIES CHARGED WITH THE ADMINISTRATION
AND ENFORCEMET OF THIS CODE OR ANY OF ITS
PARTS SHALL PROMULGATE THE NECESSARY
IMPLEMENTING RULES AND REGULATIONS. SUCH
RULES AND REGULATIONS SHALL BECOME
EFFECTIVE 15 DAYS ATER ANNOUNCEMET OF
THEIR ADOMPTION IN NEWSPAPERS OF GENERAL
CIRCULATION.
This is an example of crash and equestrian
legislation (?!). Because when we say the
"department of labor and employment.. shall
promulgate the necessary implementing rules and
regulations.." who will sign these rules? Can the
janitor of the DOLE promulgate such rules and
regulations? Who? The President through his/her
alter ego, which is the Secretary of DOLE. By saying
the department, it means all has the power to
promulgate rules.
ART. 6: ALL RIGHTS AND BENEFITS GRANTED TO
WORKERS UNDER THIS CODE SHALL, EXCEPT AS
MAY OTHERWISE BE PROVIDED HEREIN, APPLY
ALIKE TO ALL WORKERS, WHETHER AGRICULTURAL
OR NON-AGRICULTURAL
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
Applicability: The issue is does this labor code apply
to both workers and non-workers? Or do you have
to be a worker? And for that matter, must there
exist an employer-employee relationship? NO.
case: Perez vs. Pomar: As you can see from the
date of the case, it was before the 1935
Constitution. The 1935 Consti is the first time that
the protection of labor clause appears and the
social justice thrust becomes prominent in our
jurisdiction. Before that, we were governed by the
Civil Code. In other words, under the CC, there is no
assumption that there are underprivileged sector in
the society. Under the CC, each one is free to enter
into contract. And if you enter into a contract it is
assumed that you are in equal footing with the
party which you are contracting. Now, this is not so
under the 1935 Constit, that is no longer the
premise. Under this Consti, there are these people
who have no choice but to rent out their labor
because they do not have the mental capability and
no property. Precisely because they have less in life,
they must be given more in law. But that is not the
premise under the CC. This is the background with
which you should read this case.
Perez vs Pomar
1. CONTRACTS; CONSENT.-Contracts resulting from
an implied consent of the parties are valid and
enforceable.
2. ID.; ID.; HIRING.-Where one has rendered
services to another, and these services are accepted
by the latter, in the absence of proof that the
service was rendered gratuitously, an obligation
results to pay the reasonable worth of the services
rendered upon the implied contract of hiring.
3. ID.; ID.; ID.-Although no fixed amount may have
been determined as the consideration for the
contract of hiring, the contract is nevertheless valid
if the amount of the implied compensation can be
determined by custom or frequent use in the place
where the services were rendered.
Facts:
Perez, on various occasions render Don Eugenio
Pomar services as interpreter of English and that he
obtained passes and accompanied the defendant
upon his journeys to some of the towns in the
Province of Laguna. It does not appear from the
evidence, however, that the plaintiff was constantly
at the disposal of the defendant during the period
of six months, or that he rendered services as such
interpreter continuously and daily during that
period of time.
Don Eugenio Pomar, as general agent of the
Compañia General de Tabacos in the said province,
verbally requested the plaintiff on the 8th of
December, 1901, to act as interpreter between
himself and the military authorities; that after the
date mentioned the plaintiff continued to render
such services up to and including May 31, 1902;
that he had accompanied the defendant, Pomar,
during that time at conferences between the latter
and the colonel commanding the local garrison, and
with various officers and doctors residing in the
capital, and at conferences with Captain Lemen in
the town of Pilar, and with the major in command
at the town of Pagsanjan, concerning the shipment
of goods from Manila, and with respect to goods
shipped from the towns of Santa Cruz, Pilar, and
Pagsanjan to this city; that the plaintiff during this
period of time was at the disposal of the defendant,
Pomar, and held himself in readiness to render
services whenever required; that on this account his
private business, and especially a soap factory
established in the capital, was entirely abandoned;
that to the end that such services might be
punctually rendered.
Issue: Is compensation owing to the one who
rendered service absent any written or verbal
agreement as to compensation.
Held: Yes.
Although it does not appear that any written
contract was entered into between the parties for
the employment of the plaintiff as interpreter, or
that any other innominate contract was entered
into; but whether the plaintiff's services were
solicited or whether they were offered to the
defendant for his assistance, inasmuch as these
services were accepted and made use of by the
latter, we must consider that there was a tacit and
mutual consent as to the rendition of the services.
This gives rise to the obligation upon the person
benefited by the services to make compensation
therefore, since the bilateral obligation to render
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
service as interpreter, on the one hand, and on the
other to pay for the services rendered, is thereby
incurred. Notwithstanding the denial of the
defendant, it is unquestionable that it was with his
consent that the plaintiff rendered him services as
interpreter, thus aiding him at a time when, owing
to the existence of an insurrection in the province,
the most disturbed conditions prevailed. It follows,
hence, that there was consent on the part of both in
the rendition of such services as interpreter. Such
service not being contrary to law or to good
custom, it was a perfectly licit object of contract,
and such a contract must necessarily have existed
between the parties. The consideration for the
contract is also evident, it being clear that a mutual
benefit was derived in consequence of the service
rendered. It is to be supposed that the defendant
accepted these services and that the plaintiff in turn
rendered them with the expectation that the
benefit would be reciprocal. The compensation
owing must be based on the customs of the place
absent any clear stipulation.
This is the same principle as quasi-contracts which
is based on the principle that one cannot unjustly
enrich himself even though unrequested for as long
as it redounds to one's benefit. For example you
have a heart attack and a doctor who was present
at that time timely gave you a shot and you live to
see another day, di na madala ug "salamat doc".
You have to pay because the service is normally
compensated. Suppose you come to class and you
pass by the store of Lucci and you light your
cigarette in her store without paying. You do that
everyday, then one day she decides to charge you
for the frequent lighting of your cigarette, can she
do that? No, because the service is not normally
compensated.
This doctrine applies in this case. If the service is not
normally compensated, then Perez vs. Pomar
doctrine does not apply. In labor, you will come
across the phrase "suffered or permitted to work.."
(Art. 84). If for instance you are building a house,
and you have a neighbor who is a carpenter. He
then gets his tools and works for the foreman. And
you were happy kay matinabangun ang imong
silingan, so you suffer and permit him to work. But
on the 15th he lines up and asks for his salary, you
cannot say "Pasaylua ko kay wa man ta nagsabot
nga bayran ka, abi nako sinilingan ning imong
pagtabang.." Does this change the equation just
because you are neighbors? Do you have a right to
suppose that this was neighborly charity? No,
applying the Perez vs. Pomar doctrine. Perez and
Pomar were friends! But the court has ruled that it
was not neighborly kindness that he invited Pomar
to interpret. That is not what the law intends. For as
long as the service is compensable naturally, then
this service of interpreting must be compensated.
How much will the service be compensated when
there is no agreement? As much as the reasonable
value of his service merits. So, the measure of
reasonable value (quantum meruit). He cannot
charge the rate of an expert translator, he cannot
also be paid the rate of a house helper. His rate is
somewhat the regular rate, in between the two.
This is without ER-EE relationship ha! Because in the
CC there are provisions for lease of services without
employer and employment relationship. (Basta
remember, under CC to kasi before the 1935
Constitution pa)
LVN vs. Film Musicians
Facts: PMG (Phil. Musicians Guild) applied for
certification as teh sole and exclusive bargainng
agency for all musicians working in LVN and
Sampaguita Pictures. LVN et al, are engaged in the
making of motion pictures and in the processing
and distribution thereof.
LVN opposed the application stating that PMG are
not their employees, they are merely (under the CC)
lessors of services. Why? Because of the four
requisites of ER-EE relationship. (MEMORIZE)
1. selection and hiring: Who selects and hires
is the employer
2. payment of wages: who pays the wages is
the employer
3. power to dismiss: who has the power to
dismiss is the employer
4. power to control: The one who controls
not only the ends to be achieved but also the
means to be used employed is the employer.
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
These are the four elements. LVN is not a landmark
case because it enunciates the four elements in an
er-ee relationship. It is a landmark case because the
SC says even if the majority of these four requisites
are not complied with, for as long as the power of
control test is met, there is an er-ee relationship. As
in this case:
1. selection and hiring: Who selects and hires? It is
the musical director.. is he an employee of LVN? No,
he is contracted by LVN. The producer who is
employee of LVN, looks for a musical director (MD)
who is paid for a lump sum price. And then MD
starts looking for his musicians
2. payment of wages: MD pays the musicians
depending on his or her expertise. If you are the
expert violinist, you will be paid higher of course.
3. power to dismiss: If you do not show up or go to
practices, it is the MD who will dismiss you.
So why does the SC say that the MD is NOT the
employer? This is because, the power of control is
shown by the ff. instances:
In the final pick of the music that will go in the film,
the musicians will be called by call slips, and the call
slips have the name of the movie company. The call
slip assigns them to a place where they will be
picked up by the bus of the movie company. This is
an index of control ha.
Where they practice is an index of control. They
practice within the premises of the movie company.
Who feeds them when it comes to meal times? It is
the movie company, not the MD.
When the final take of the music is to be done, the
MD disappears and the movie director takes over
and directs the very playing itself of the music. The
movie director is already an employee of the movie
company. And that is very telling that it is the movie
company who dictates the very means and methods
and not just the ends the movie.
This is contrasted with Vda. de Cruz vs. Manila Hotel
SC held that Vda de Cruz is wrong since Manila
Hotel is an employer since it merely directed the
ends to be achieved, which is to please the clients.
How you (the musicians) do it is up to you, Manila
Hotel doesn't care about the means and the
method. So that is the difference with LVN. Because
in LVN during the final take, it is the movie director
who directs the musicians HOW TO PLAY, i.e. play
the drums louder, or violin softer, etc.
Take note that is one of the main doctrines of LVN.
There are other doctrines that will come out of this
case in labor relations. Read this case inside out.
Because on one hand the SC says, ESSENTIAL
REQUISITES.. but then it says, if you fulfill the power
of control test, there is er-ee relationship. Also, in
the four requisites, how come the rendition of
service is not mentioned?
In Dy Keh Beng vs. ILMUP case, the SC says that in
the power of control test, it is not necessary to
prove that there was actual exercise of power of
control. It is not necessary to prove that the
putative employer exercises control. What is
essential is the reservation of the power. All you
have to prove that is that he has the power of
control, that he reserves that right, not necessarily
that he exercise that right.
Dy Keh Beng also argues that the fact that they are
paid on a piece rate basis shows that there was no
er-ee relationship. When you hire on a pakyaw
(piece rate) basis, all you have to do is to finish the
work. You are free to determine the ways and
means for as long as you finish the work. How do
you know that you've finished the work? The fact
that you are paid, in fact you are paid on the basis
of the work that you finish. But in this case, the SC
said that they have a right to be represented by
International Labor because they are employees of
Dy Keh Beng. The argument that they are paid on a
piece rate basis proves that there is no er-ee
relationship is incorrect. Because piece rate
payment neither affirms, nor denies er-ee
relationship. It is neutral. What does it prove? It
proves only payment. It does not prove the legal
characterization of the relationship.
The fact that they did not show proof that they
were actually supervised is not what is essential.
What is essential is the proof given that DK Beng
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 Labor Standards and Cases
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Property of: Hanniyah P. Sevilla
had the right to control; reserved the right to
control. How is this proven? This is proven by the
fact that there are specified dimensions they have
to achieve. They could not just bring any size
basket. No proof need be given for the exercise the
right to control because there was no need to
exercise it in view of the specifications given. So
actual exercise of control is not as important as
reservation of the right to control.
Dy Keh Beng vs. ILMUP
Fx: Beng, proprietor of a basket factor, dismissed
Carlos Solano and Recardo Tudla because of their
union activities.
A case was filed in the Court of Industrial Relations
for in behalf of the International Labor and Marine
Union of the Philippines and two of its members,
Solano and Tudla.
Dy Keh Beng contended that he did not know Tudla
and that Solano was not his employee because the
latter came to the establishment only when there
was work which he did on pakiaw basis, each piece
of work being done under a separate contract.
The CIR held that an employee-employer
relationship was found to have existed between Dy
Keh Beng and complainants Tudla and Solano,
although Solano was admitted to have worked on
piece basis.
According to the Hearing Examiner, the evidence for
the complainant Union tended to show that Solano
and Tudla became employees of Dy Keh Beng from
May 2, 1953 and July 16, 1955, respectively, and
that except in the event of illness, their work with
the establishment was continuous although their
services were compensated on piece basis.
Evidence likewise showed that at times the
establishment had eight (8) workers and never less
than five (5); including the complainants, and that
complainants used to receive P5.00 a day
sometimes less.
According to Dy Keh Beng, however, Solano was not
his employee for the following reasons:
"(1) Solano never stayed long enought at Dy's
establishment;
(2) Solano had to leave as soon as he was through
with the order given him by Dy;
(3) When there were no orders needing his services
there was nothing for him to do;
(4) When orders came to the shop that his regular
workers could not fill, it was then that Dy went to
his address in Caloocan and fetched him for these
orders; and
(5) Solaro's work with Dy's establishment was not
continuous."
Petitioner really anchors his contention of the non-
existence of employee-employer relationship on the
control test that the private respondents "did not
meet the control test in the light of the ... definition
of the terms employer and employee, because
there was no evidence to show that petitioner had
the right to direct the manner and method of
respondent's work." Moreover, it is argued that
petitioner's evidence showed that "Solano worked
on a pakiaw basis" and that he stayed in the
establishment only when there was work.
Issue: W/N there existed E-E relationship between
beng and the two respondents. Is Beng in "control"?
Held: Yes yes yo!!
While this Court upholds the control test under
which an employer-employee relationship exists
"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," it finds no merit with
petitioner's arguments as stated above. It should be
borne in mind that the control test calls merely for
the existence of the right to control the manner of
doing the work, not the actual exercise of the right.
The establishment of Dy Keh Beng is "engaged in
the manufacture of baskets known as kaing, "it is
natural to expect that those working under Dy
would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some
control would necessarily be exercised by Dy as the
making of the kaing would be subject to Dy's
specifications. Parenthetically, since the work on
the baskets is done at Dy's establishments, it can be
inferred that the proprietor Dy could easily exercise
control on the men he employed.
It is worthy to note that Justice Perfecto, concurring
with Chief Justice Ricardo Pares who penned the
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
decision in "Sunripe Coconut Products Co. v. Court
of Industrial Relations" opined that:
"judicial notice of the fact that the so-called
'pakyaw' system mentioned in this case as generally
practiced in our country, is, in fact, a labor contract
between employers and employees, between
capitalists and laborers."
Sterling vs. Sol
Facts: Loreta C. Sol charged the herein petitioners
Sterling Products International and its Radio
Director V. San Pedro with having committed an
unfair labor practice act. In her complaint she
alleged among others that she has been a regular
Radio Monitor of respondents-petitioners; that on
January 8, 1960, she filed a complaint against the
said firm for underpayment, money equivalent of
her vacation leave from 1952 to 1959, and
Christmas bonus for 1959, equivalent to one month
salary. The complaint resulted in her dismissal,
without just cause, on December 16, 1960.
Petitioners alleged that Sol is an independent
contractor whose services were restrained by
petitioners to submit reports of radio monitoring
work performed outside of their office. Because the
petitioners no longer need such services, they gave
Sol notice of termination and executed the same.
The Court of Industrial Relations in a decision dated
October 8, 1960 held that the complainant is not an
employee of the respondent firm but only an
independent contractor and that respondent firm
was justified in dismissing the complainant due to
economic reasons.
The lower court reversed the ruling that
complainant was an employee and not an
independent contractor, and ordered her
reinstatement with back wages. The lower Court
further ruled that respondent firm was guilty of
unfair labor practice. In arriving at this ruling it
considered the following circumstances: (1)
Complainant was given an identification card stating
that "Bearer Loreta C. Sol is a bonafide employee of
this Company;" (2) when she applied for purchase
of a lot from the PHHC, she was given a certificate
to show that she was indeed an employee of the
respondent company for the last five years or six
years; and (3) as such employee, she enjoyed the
privilege of borrowing money from the Employees
Loan Association of the firm. The court further
found that the company's control over respondent's
work is shown by the fact that she can not listen to
broadcasts other than those that were contained in
the schedule given to her by the company.
Supervision and control of her work could be done
by checking or verifying the contents of her reports
on said broadcasts. The company not only hired and
fired Mrs. Sol, without third party intervention, but
also reserved to itself, possessed and exercised its
right to control 'the end to be achieved and the
means' to be used in reaching such end, namely,
the schedule and other instructions by which the
monitor shall be guided, and the reports with
specifications by which the company observes and
verifies the performance of her work."
Held: In Ruling that Sol was not an independent
contractor, the SC ruled that respondent Sol was
directed to listen to certain broadcasts, directing
her, in the instructions given her, when to listen and
what to listen, petitioners herein
naming the stations to be listened to, the hours of
broadcasts, and the days when listening was to be
done. Respondent Sol had to follow these
directions. The mere fact that while performing the
duties assigned to her she was not under the
supervision of the petitioners does not render her a
contractor, because what she has to do, the hours
that she has to work and the report that she has to
submit-all these are according to instructions given
by the employer. It is not correct to say, therefore,
that she was an independent contractor, for an
independent contractor is one who does not
receive instructions as to what to do, how to do,
without specific instructions. The very act of
respondent Sol in demanding vacation leave,
Christmas bonus and additional wages Shows that
she considered herself an employee. A contractor is
neither entitled to a vacation leave or to a bonus
nor to a minimum wage. This act of hers in
demanding these privileges are inconsistent with
the claim that she was an independent contractor.
The control test is met even if you are physically
separated from the employer. There are three
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Property of: Hanniyah P. Sevilla
corroborating evidences that led the SC to say that
there was power of control, i.e. Sol was given an ID
that says she was an employee; he was given a
certification that she was an employee when she
applied to buy a lot; she was allowed to apply for a
loan. So these evidences strengthened the SC's
ruling based on the control test. Because she was
handed a schedule determining the times she has to
listen; because she was not free to listen to any
other broadcast except those specifically given her;
because she has to make reports; these are indices
of control.
Doctrine: So, physical proximity to the employer is
not essential for control because that can be
surmounted by pre-determined instructions.
Issue: W/N control necessitates continuity
Doctrine: No (RJL case). The SC gave weight to the
argument of the stevedores because of the nature
of their work was such that they could finish early,
you cannot blame them for looking for extra work,
but they were actually workers of RJL. And this is by
way of exception that they go to other boats to
unload other boats.
RJL MARTINEZ FISHING CORPORATION and/or
PENINSULA FISHING CORPORATION vs NLRC and
Boticario et. al.
Facts:
Petitioners are principally engaged in deep-sea
fishing business since 1978, private respondents
were employed by them as stevedores at the
Navotas Fish Port for the unloading of tuna fish
catch from petitioners' vessels and then loading
them on refrigerated vans for shipment abroad.
On March 27, 1981, private respondents Antonio
Boticario, and thirty (30) others, upon the premise
that they are petitioners' regular employees, filed a
complaint against petitioners for non-payment of
overtime pay, premium pay, legal holiday pay,
emergency, 13th month pay, service incentive leave
pay and night shift differential.
They were dismissed afterwards by the Petitioners.
Claiming that they were dismissed from
employment on March 29, 1981 as a retaliatory
measure for their having filed the said complaint,
private respondents filed on April 21, 1981 another
complaint against petitioners for Illegal Dismissal
and for Violation of Article 118 of the Labor Code,
as amended. The two cases were consolidated.
Petitioners contend that private respondents are
contract laborers whose work terminated upon
completion of each unloading, and that in the
absence of any boat arrivals, private respondents
did not work for petitioners but were free to work
or seek employment with other fishing boat
operators.
the Labor Arbiter upheld petitioners' position ruling
that the latter are extra workers, who were hired to
perform specific tasks on contractual basis; that
their work is intermittent depending on the arrival
of fishing vessels; that if there are no fish to unload
and load, they work for some other fishing boat
operators; that private respondent Antonio
Boticario had executed an employment contract
under which he agreed to act as a labor contractor
and that the other private respondents are his men;
that even assuming that private respondents are
employees of petitioners, their employer-employee
relation is co-terminous with each unloading and
loading job; that in the same manner, petitioners
are not under any obligation to hire petitioners
exclusively, hence, when they were not given any
job on March 29, 1981, no dismissal was effected
but that they were merely not rehired.
NLRC reversed the decision of the Labor Arbiter and
held that there existed an E-E relationship.
Issue: W/N there is in fact.
Held: Yesir. There exists E-E relationship...
As respondent NLRC had found:
We further find that the employer-employee
relationship between the parties herein is not co-
terminus with each loading and unloading job. As
earlier shown, respondents are engaged in the
business of fishing. For this purpose, they have a
fleet of fishing vessels. Under this situation,
respondents' activity of catching fish is a continuous
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Property of: Hanniyah P. Sevilla
process and could hardly be considered as seasonal
in nature. So that the activities performed by herein
complainants, i.e. unloading the catch of tuna fish
from respondents' vessels and then loading the
same to refrigerated vans, are necessary or
desirable in the business of respondents. This
circumstance makes the employment of
complainants a regular one, in the sense that it
does not depend on any specific project or seasonal
activity.
Indeed 'that during the temporary layoff the
laborers are considered free to seek other
employment is natural, since the laborers are not
being paid, yet must find means of support' and
such temporary cessation of operations 'should not
mean starvation for employees and their families'."
Suffer and Permitted to work - Indeed, considering
the length of time that private respondents have
worked for petitioner - since 1978 - there is
justification to conclude that they were engaged to
perform activities usually necessary or desirable in
the usual business or trade of petitioners and are,
therefore, regular employees. As such, they are
entitled to the benefits awarded them by
respondent NLRC.
Summary:
Locational separation does not prove the non
existence of control (Sterling vs. Sol); Actual
exercise of control is not necessary to prove that
there is control (Dy Keh Beng); There is no need to
establish the continuity of control for the control
test to be met (RJL).
However, it is not also correct to say that the
control test is the only test you have to meet. For
example, you are here, and I (as a professor)
exercise the power of control over you, but does
that mean that I am your employer? No. So it is the
ultimate test, the test par excellence, but it is not
the only/exclusive test. (VIP!)
DISTINCTIONS BETWEEN ER-EE RELATIONSHIPS
AND OTHER CONTRACTS
I. Er-Ee vs INDEPENDENT CONSTRUCTION
CONSTRUCTOR
Note: An independent construction contractor must
have:
1. An office or business establishment or a
license to engage in business as building
constructor;
2. capital to pay his laborers or to comply with
his obligations to them;
3. ability to file bond to answer either for the
fulfillment of his contract or for the satisfaction of
such liability as may arise by reason of injury out of
and in the ordinary course of the employment his
laborers are engaged.
The problem for instance is you want to make an
extension to your house. You do not hire an
architect or engineer; instead you look for an
experienced foreman. What is your relationship
with the foreman? Is he your employee? If he brings
along other carpenters, what is your relationship to
the people that he hires?
Carro vs. Rillaroza (VIP case)
Fx: Caro was sentenced to pay one Rilloraza for the
injuries he suffered while constructing the window
of the building managed by the former (as the
building belonged to Caro's wife, Ramon Caro being
only the administrator) Caro maintains that
Rilloraza was not his employee within the purview
of the Workmen's Compensation Act as the latter
was hired by one Daniel de la Cruz
who allegedly, is an independent contractor. Caro
insists that relationship between him and Rillaroza
was casual. Caro maintains that there was a
contract
entered into between him and dela Cruiz wherein
the latter assumed all responsibility for whatever
accident that may happen to his laborers engaged
in the jobs.
Issue: W/N there exists er-ee relationship as to
render Caro liable under WCA
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Property of: Hanniyah P. Sevilla
Held: Yes. There exists an er-ee relationship
because Caro's business was to rent out the
building and he necessarily has to maintain the
same into habitable conditions.
The contracts entered into by dela Cruiz and Caro
pertain only to Dela Cruz as the window railing
constructed by Rillaroza was not covered by said
contract.
Furthermore, the evidence indicates that dela Cruz
was not an independent contractor. The general
nature of the work to be undertaken indicates that
the floor joists mentioned in the contract were to
be changed under the direction and control of Mr.
Caro. Dela Cruiz does not appear to have any office
or business establishment, or even a license to
engage in business as a building contractor. He
would seem to be merely a free lancing carpenter
with some experience in carpentry work, who goes
around looking for minor repair construction jobs
for he has no capital or money to pay his laborers or
to comply with his obligations to them.
Anent the issue of contractual relationship between
Caro and Rillaroza, it has been held that
employment is causal when it is irregular,
unpredictable, sporadic and brief in nature. Under
this test, most maintenance and repair activities, as
well as even remodelling and incidental
construction, have been held to be within the usual
course of a business.
In the instant case, the building in which Rilloraza
worked was found to be intended or used for rental
purposes. Caro had control of such building as
manager and administrator. Obviously, the repair of
said building his part of the usual business of the
administration of the aforesaid properties so that
the same may be suitable for the gainful purpose
above referred to. Consequently, even if Rilloraza,
who did the repair work, were a casual laborer,
engaged directly by De la Cruiz, acting as an
independent contractor, which he is not, the former
would still be an employee of petitioner herein,
within the purview of the Workmen's
Compensation Act, and, hence, would be entitled to
demand compensation from him.
Uy Chao Vs Aguilar and Ramos
Facts: In trying to maintain the beauty of his store,
Petitioner hired Ramos as independent contractor
to fix the eaves of the store of the former who in
turn sent Aguilar to do the job.
It appears that at about 10:00 o'clock in the evening
of 24 November 1953, respondent Aguilar suffered
physical injury as a result of the sudden fall of the
whole eave of a glassware store known as La Boda
de Plata and owned by the petitioner Uy Chao,
while Aguilar together with two other laborers was
on top of said eave removing the galvanized iron
sheets covering the frame of the eave.
Aguilar asked for Workman’s Compensation and the
Commission granted the same.
Issue: W/N E-E existed.
Held: Nope..
The employment of respondent Aguilar to help in
the repair or replacement of the eave of a
commercial store owned by petitioner Uy Chao was
purely casual, because such work would occur only
when the said structure should be damaged or
broken. When it would be broken and repaired,
nobody could foresee. It may safely be stated that
the work on the eave would not be made at fixed
intervals. The employment of a carpenter and a
tinsmith for its repair or replacement was therefore
only occasional, sporadic and for a short time.
It is clear that the repair or dismantlement of the
eave was not for the purpose of the petitioner's
occupation or business. The petitioner was a
glassware dealer. He bought and sold glassware. It
is difficult, to see the connection of the repair or
dismantlement with the buying and selling of
glassware.
Even if the services of respondent Aguilar were
engaged by petitioner Uy Chao directly or through
an agent or contractor, still respondent Aguilar, the
injured laborer, is not entitled to compensation for
the simple reason that his employment was purely
casual and was not for the purposes of the
petitioner's business or occupation.
Aguilar is not covered by the Workman's
Compensation act with respect to Uy. Because:
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 Labor Standards and Cases
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Property of: Hanniyah P. Sevilla
Section 39 (b) of Act No. 342S as amended, known
otherwise as the workmen's Compensation Act,
provides that (b) 'Laborer' is used as a synonym of
'Employee' and means every person who has
entered the employment of, or works under a
service or apprenticeship contract for an employer.
It does not include a person whose employment is
purely casual and is 'not for the, purposes of
occupation or business of the employer.
Decision of the Workmen’s Compensation
Commission is reversed.
There is no er-ee relationship because of the nature
of the business of Uy Chao. Uy Chao was not
engaged in real property business, he was engaged
in selling glass. His need for a carpenter is on a
casual basis. Ramos and Aguilar are independent
contractors. So that's the difference between Caro
case and Uy Chao.
Cabe vs Tamayo
Facts: Samuel Tamayo agreed in March, 1979 to
construct for the spouses Ronald Cabe and Purita
Cabe their residential house for P106,000 in
accordance with the plans and specifications
prepared by an architect.
Tamayo started the work. The Cabes dispensed with
his services when he allegedly made certain
deviations from the plans. The house was finished
by other persons.
Tamayo on June 28, 1979 sued the Cabes in the
Regional Office of the Department of Labor in Laoag
City for the recovery of P7,000 as payment of labor
and materials. He filed the case as head carpenter
of his 18 co-workers, whose wages he had advanced
and for reimbursement of materials which he had
purchased.
The Assistant Regional Director for Arbitration
ordered the Cabes to pay Tamayo P6,400 as
contractual wages and P600 as reimbursement of
materials.
Issue: W/N Cabe is liable.
Held: No…
We hold that Tamayo was an independent
contractor and not an employee of the Cabes. The
Labor Regional Office and the National Labor
Relations Commission had no jurisdiction over his
claim. Their Jurisdiction is confined to claims arising
from employer-employee relationship Tamayo's
claim is cognizable by the municipal trial court.
WHEREFORE, the decision of respondent Assistant
Regional Director Tumang is reversed and set aside.
The construction contractor asked for
reimbursement of materials, therefore there is no
er-ee relationship. That is not within the jurisdiction
of labor courts. That's why the SC said it should
have never been entertained by the DOLE. That
shows that he was an independent contractor
because he assumed some of the materials.
If dili gani trabaho, pure and simple nga trabaho
lang, but apil ang materyales, the materials take you
out of the er-ee relationship. Because if it were not
so, you would be giving the labor courts jurisdiction
to decide on property issues which is beyond their
jurisdiction. Remember that labor courts are
tribunal with limited jurisdiction.
ROVING INDEPENDENT PEDDLERS
1. Works for another at his own pleasure;
2. Not subject to definite hours or conditions
of work
3. Compensated according to results of his
efforts and not as to amount of effort
4. Does not sell only the employer’s products
5. Doest not post bond as a surety
Snow White case- At issue here is payment under
the Workmen’s Compensation. Remember the old
law, workmen’s compensation was the
responsibility of the employer just like in New York,
we followed NY until the Labor code was amended
effective Nov.1, 1974. Now it is the Employee’s
Compensation, the State Insurance Fund that
answers for contingencies such as work-related
injuries , sickness or death. Here what happened
was death which began with work-related injury.
Snow White Ice Cream and Ice Drop Factory vs
Garcia
Facts:
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Property of: Hanniyah P. Sevilla
Emilio Garcia began working with the respondent as
an ice drop vendor in 1953. He was paid on
commission basis of P0.02 per ice drop that he sold,
thereby earning approximately P7.00 a day, seven
days a week. As such vendor, his duties consisted
mainly of breaking into small pieces the block of ice
given to him, and placing them in the ice drop
pushcart to prevent the ice drops from melting.
Claimant, when not selling ice drops, repaired
broken down pushcarts belonging to the
respondents, being also a carpenter by occupation.
It appears that on July 27, 1960, while preparing the
pushcart assigned to him for peddling, a block of
the ice he was carrying fell on his right foot,
smashing three of his [toes]. After a week of
medication, he resumed his work despite the fact
that he was still limping; that while pushing the ice
drop pushcart along Solis Street, Tondo, Manila, his
swollen right foot was hit by a barbed wire.
Claimant, however, continued working until August
27, 1960 when he stopped as he could no longer
withstand the pain and chilling sensation that he
suffered. He was brought to the North General
Hospital where his right foot was amputated below
the knee, the abscess having already become
gangrenous. He remained in said hospital until
September 16, 1960. Dr. V. Roldan, a private
physician, continued treatment on the claimant
while at home until the amputation wound was
completely healed nine months thereafter.
Claimant alleged that he spent the total amount of
P700.00 for said treatment.
Issue:
W/N E-E relationship existed between Garcia and
Snow White Ice cream Factory.
Held: YES.
The criterion is whether the person or firm alleged
to be the employer can direct or require the party
assertedly enjoying the employee status to do a
certain kind of work and to specify the means and
methods by which the same is to be
accomplished.The logic of the situation indeed
dictates that where the element of control is
absent; 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
in turn is compensated according to the result of his
efforts and not the amount thereof, we should not
find that the relationship of employer and
employee exists.
Just as the employer may buy his raw materials
outright from an independent businessman, so he
can distribute his product by turning it over
completely to a jobber who is an independent
businessman. But, since disposition of the product
is normally an inherent part of any business, there is
an increasing tendency to indulge a presumption
that salesman, distributors, and deliverymen who
fall short of the status of businessmen holding
themselves out to the public as such are employees.
The circumstance that the salesman is devoting his
entire time to the distribution of the one
employer's product is, in most lines, an indication
that he is an employee.
It is a stronger case for employment, in that the
iceman did not own the ice wagon he used. The
privilege of returning unsold ice for credit tends to
discredit the validity of the 'sale.' However, the
driver's business consisted not only of orders
received by the company but also of whatever
orders he himself could get. There was some
control, in that the driver had to begin work at 7
A.M. and quit before dark. He was held to be an
employee.
There is ER-EE relationship because 1. who owns
the cart? SW, the ice? SW, who provided the ice
pick? SW. Finally up to issue WoN the ice drop that
has been sold, was it Garcia’s or SW? SW. Because
he could still return it if it were unsold. If it were
really his and there were still ice drops at the end of
the day, he could no longer return it. The fact that
he can return it means that the title does not pass
to him, it remains with SW. now, corroborating
evidence, when Garcia could no longer push the
cart anymore because his foot is injured, he was
repairing the push carts, it means that he is an
employee of SW. This is the corroborating evidence
which convinced the court that he was an employee
of SW.
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Property of: Hanniyah P. Sevilla
So we go to Mafinco Trading, if we parallel this case
with SW, instead of an ice cream cart, what do we
have? A softdrinks truck. Instead of ice drop, what
do we have? Softdrink. At what price did he sell the
softdrink? He sold it at the recommended price of
the trading company, Mafinco, the exclusive
distributors of Cosmos, the original name of Pop
Cola. If he could not sell the softdrink could they
return it? Yes. There is almost a very faithful
parallelism with SW, the only difference is there is a
written contract. The peddler’s contract which
provides among other things that: 1. that the
peddler shall secure the peddling license, 2. that the
peddler puts up a bond for the payment to his
helpers or driver, because it is suggested that he
hire a helper or a driver, but he could drive it
himself. Aside from the 1st bond, there was a 2nd
bond that he had to put up. To answer for the
proceeds if he does not remit the proceeds of the
softdrinks that he sold. So 2 kinds of bonds. The SC
says that this is not a question of ER-EE relationship.
The characterization of the relationship should be
determined by the four corners of that contract.
Why? Because the SC says that ER-EE relationship
now is a question of what is written down
regardless of the facts. Why all of a sudden you
disregard the 4 requisites for the establishment of
ER-EE relationship? The SC says because to rule
otherwise would in effect give the labor tribunal
jurisdiction over other contracts provided for in that
written peddler’s contract. If it is governed by the
relationship, then that means the labor arbiter will
have jurisdiction over a nominate contract which is
provided for in the peddler’s contract, what is that
contract, the nominate contract of surety which is
under the jurisdiction of the regular court. That is
why the court has no choice but to rule that it is not
an ER-EE relationship. Question of jurisdiction.
Labor tribunals are tribunals of limited jurisdiction -
ER-EE relationship – that is its jurisdiction. The
regular courts are courts of general jurisdiction – it
is just a question of amount that differentiate the
jurisdiction of specific courts from that of the RTCs
because the jurisdiction is supposed to be general in
nature.
Mafinco vs Ople
Facts: Rodrigo Repomanta and Rey Moralde
entered into peddling contracts with MAFINCO, the
sole distributor of Cosmos soft drinks.
One of the stipulations of the contracts was that
either party may terminate the same upon five days
prior notice to the other. In accordance with this
stipulation, MAFINCO terminated the aforesaid
contracts, in view of which, Moralde and
Repomanta, thru their union, filed a complaint with
the NLRC.
MAFINCO filed a motion to dismiss on the ground
that the NLRC had no jurisdiction because
complainants were not its employees but were
independent contractors. NLRC referred it to a fact
finder, the latter recommended dismissal of the
complaint on the ground that complainants were
indeed not employees. By reason thereof, the NLRC
dismissed the complaint. The Secretary of Labor
reversed the order of NLRC, holding that
complainants were employees of MAFINCO and
therefore NLRC had jurisdiction.
Issue: W/N there is E-E relationship.
Held: No!!! An independent contractor is one who
exercises independent employment and contracts
to do a piece of work according to his own methods
and without being subject to control of his
employer except as to the result of the work. A
person who has no capital or money of his own to
pay his laborers or to comply with his obligations to
them, who files no bond to answer for the
fulfillment of his contract with his employer, falls
short of the requisites or conditions necessary to
classify him an independent contractor.
Those tests to determine the existence of an
employer-employee relationship or whether the
person doing a particular work for another is an
independent contractor cannot be satisfactorily
applied in the instant case. It should be obvious by
now that the instant case is a penumbral, sui
generis case lying on the shadowy borderline that
separates an employee from an independent
contractor.
In determining whether the relationship is that of
employer and employee or whether one is an
independent contractor, "each case must be
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Property of: Hanniyah P. Sevilla
determined on its own facts and all the features of
the relationship are to be considered". We are
convinced that on the basis of the peddling
contract, no employer-employee relationship was
created. Hence, the old NLRC had no jurisdiction
over the termination of the peddling contract.The
Supreme Court held that the complainants were
independent businessmen. The SC set aside the
order and resolution of the Secretary of Labor and
affirmed the order of the NLRC dismissing the case
for lack of jurisdiction.
SSS case, again this is peddlers. In la swerte, you
have to pick up the goods that are to be sold by the
peddler, the brands of cigarettes that are the
products of la swerte cigar. Once again, the court
said there is a contract. The peddler here is not at
liberty to determine the price at which he would
sell the cigarette. He is not at liberty to choose the
brands to sell. He is not at liberty to depart from his
area, he is given an area, you can only sell here. All
these things are indexes of control but there is no
surety, there is no bond. That is why the court is
very brave in saying that there is no ER-EE
relationship. That is why you can see all the more
that that made the difference is Mafinco is the
bond, the 2 kinds of bonds.
SSS vs CA and quality Tobacco Corp.
Facts: QTC, formerly U.S. Tobacco Corporation, is a
firm engaged in the manufacture and sale of
cigarettes. On August 12, 1972, QTC, as VENDOR,
entered into an agreement with CARREON, as
VENDEE.
The contract with CARREON was terminated by QTC
on December 18, 1972.
On April 29, 1974, CARREON filed a petition with
the Social Security Commission alleging that he was
an employee of QTC, and asking that QTC be
ordered to report him for coverage under the Social
Security Law. QTC answered claiming that CARREON
has not been an employee but was an 'Independent
businessman.' The Social Security System
intervened and, taking the side of CARREON, also
asked that QTC be ordered to pay Social Security
contributions in respect of CARREON. On January
21, 1976, the Social Security Commission resolved
CARREON's petition, finding him to be an employee
of QTC.
The CA reversed the decision of SS Commission.
Issue: W/N Romeo Carreon is an employee or an
independent contractor
Held: Employee Po!!!
The last which is the so-called "control test" is the
most important element. Where the element of
control is absent; 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 in turn is compensated according to the
result of his effort, the relationship of employer-
employee does not exist.
Thus, after a study of the records and applying the
"control tests," there appears to be no question
that the existence of an employer-employee
relationship between Romeo Carreon and QTC has
been established, based on the following
"undisputed" facts as pointed out by the Solicitor
General, to wit: (a) QTC assigned a definite sales
territory; (b) QTC provided a delivery truck for the
exclusive use of the latter in his sales activities; (c)
QTC dictated the price of the cigarettes sold; (d)
QTC prescribed what brand of cigarettes to sell; (e)
QTC determined the persons to whom Carreon
could sell, (f) QTC issued circulars and memoranda
relative to Carreon's sales activities; (g) QTC
required Carreon to submit to it daily, weekly and
monthly reports; (h) QTC grounded Carreon for six
months in 1966; (i) Carreon was supervised by sales
coordinators of QTC; (j) Carreon was subject to
payment of damages and loss even of accrued
rights for any violation of instructions made by QTC
in relation to his sales activities; and (k) Carreon was
paid an allowance by QTC. All these indicate control
and supervision over Carreon's work.
II. Er-Ee vs INDEPENDENT SALESMAN
Independent salesman, remember that he does not
carry with him what he sells, that is what the
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peddler does. The peddler carries with him what he
sells and he brings with him that which he sells.
They are selling what they are carrying.
Ysmael case – the salesmen wants to form a union,
Ysmael says they are not our employees. 1. they do
not follow the same procedure of hiring as our
regular employees, they do not submit themselves
to a regular medical check up. 2. they do not have a
regular salary, they may be given transportation
allowance but they do not have regular salary. 3.
they have no regular office hours, they report at 8
but after that they punch in and are given their
general instructions, they disappear and after that
they don’t have to come back. Accdg, to Ysmael
how can they be our employees? No definite hours
of work, no definite salary, when they were hired
they were not even given a medical checkup just
like all our regular employees.
JUAN YSMAEL & COMPANY, INC. vs. CIR, YC
Salesmen's Union
Facts: On November 27, 1957, the petitioning
Union, a legitimate labor organization duly
registered with the Department of Labor, filed a
petition praying for the aforesaid certification, upon
the ground that it is a labor organization composed
of all the salesmen working for the Ysmael Steel
Manufacturing Co., which is operated by the
Company, as a subsidiary thereof, both of which are
employers of the aforementioned salesmen; that
there are in the Company two (2) other labor
unions, namely, the Ysmael Steel Labor
Organization (PAFLU), the membership of which is
composed mainly of manual factory workers (non-
supervisors), and the Ysmael Steel Employees
Union, the membership of which is composed of
supervisors, non-supervisors who are technical
employees, office non-technical employees and
clerical factory workers, and that the members of
petitioning Union are not included in or
represented by any of said two (2) unions in their
collective bargaining agreement with the Company,
for the economic factors affecting the members of
petitioning Union are different and they constitute
a separate and distinct union for an appropriate
bargaining unit.
At the hearing of this case on February 11,
March 12, 26 and May 5, 1958, the following facts
appear to have been established in evidence: That
the petitioning Union is duly registered by the
Department of Labor and is, therefore, a legitimate
labor organization within the meaning of Section
2(f) of the Act; that the Company is a corporation
engaged in the manufacture of steel equipment,
machines, etc., owned and operated by the Juan
Ysmael & Company, Inc.; that at the time of the
instant petition for certification was filed, there
were twenty (20) salesmen or commission agents
working for the Company, but that as of March 26,
1958, only fourteen (14) of them were left; and that
neither of the two unions existing in the Company,
namely the Ysmael Steel Labor Organization
(PAFLU) and the Ysmael Steel Employees' Union,
represents the members of the petitioning Union in
any of their respective collective bargaining
agreement with the Company.
The Company maintains the negative upon
the ground that the members of petitioning Union
are mere commission agents or sales
representatives, whose form of selection and
engagement is different from that of the employees
of the Company, for unlike such employees,
commission agents are not required to undergo
physical examination, to submit a police clearance,
and to punch the Bundy clock, and are not provided
with identification cards. It is further urged that
commission agents are paid neither wages nor
salaries, but are granted commissions, the amount
of which depends on their sales, and that their
conduct as agents is not subject to the control or
supervision of the Company, which, moreover, has
no power of dismissal over them.
Issue: W/N the members of petitioning Union are
employees of the Company, for purposes of
certification of the former as the sole and exclusive
bargaining representative of all the salesmen of the
latter.
Held: Yesir.
The aforementioned difference in the manner of
"selection and engagement" does not prove,
however, the alleged absence of employer-
employee relationship. Most business enterprises
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Property of: Hanniyah P. Sevilla
have employees of different classes, necessarily
requiring different methods of selection and
contracts of services of various types, without
detracting from the existence of said relationship.
There is an ER-EE relationship. Why? It is because
the distinction that they were not given medical
check up may be otherwise explained by the fact
that they do not expose themselves with the factory
conditions that may be the cause of contagious
disease or aggravation of an existing disease. There
is no need for them to undergo regular check up
before they are regularized. The fact that there is
no basic wage does not mean that there is no ER-EE
relationship, because they are paid on a
commission basis. And in fact, they are controlled as
to the particular means by the withdrawal of their
transportation allowance. That is how that
employer controls the behavior of the salesmen
under it. And finally, the fact that they have to make
a report is an index of control. Who did you visit?
How many times? Initial pleading, follow up
pleading, concluding pleading. What is the product
that is introduced to the particular potential
customer? They are already written down and that
is how Ysmael controls its salesmen.
Investment Planning: They want them to be
enrolled in the SSS but the employer investment
planning refused on the grounds that there is no ER-
EE relationship. Of course the SSS, the said that
there must be ER-EE relationship. So the SSS
answered that there is ER-EE relationship. What is
the explanation why the courts say that there is
none? 1st, no regular hours. 2nd, there is no
exclusivity agreement. Nowhere does it state that
investment planning require its salesperson to sell
its plan and nothing else. So the salesmen could sell
other plan, other securities belonging to other
entity not investment planning. That would show
that they are independent. They are paid on
commission, there is no basic. What is more is that
they can already deduct their commission from the
proceeds that they collect. So what they would
have to remit to investment planning is already the
net of their commission. It shows that they are
independent. 3rd, they have no quotas. They have
no quotas to make. How many customers have you
visited today? There is no quota. It’s up to you.
Actually you are rewarded by the commensurate
energy that you put in your performance. Bisitahon
nimo ang daghang customer, mahalinan jud ka.
That is a kind of independent salesmen, rather than
an employee salesmen.
Investment Planning Corp of the Phil. vs SSS
Facts: These representatives are in reality
commission agents, The uncontradicted testimony
of petitioner's lone witness, who was its assistant
sales director, is that these agents are recruited and
trained by him particularly for the job of selling
"Filipinas Mutual Fund" shares, made to undergo a
test after such training and, if successful, are given
license to practice by the Securities and Exchange
Commission. They then execute an agreement with
petitioner with respect to the sale of FMF shares to
the general public. Among the features of said
agreement which respondent Commission
considered pertinent to the issue are:
(a) an agent is paid compensation for services in the
form of commission;
(b) in the event of death or resignation lie or his
legal representative shall be paid the balance of the
commission corresponding to him;
(c) he is subject to a set of rules and regulations
governing the performance of his duties under the
agreement;
(d) he is required to put up a performance bond:
and
(e) his services may be terminated for certain
causes.
That the agents "are not required to report for work
at any time; they do not have to devote their time
exclusively to or work solely for petitioner; the time
and the effort they spend in their work depend
entirely upon their own will and initiative; they are
not required to account for their time nor submit a
record of their activities; they shoulder their own
selling expenses as well as transportation; and they
are paid their commission based on a certain
percentage of their sales." The record also reveals
that the commission earned by an agent on his sales
is
directly deducted by him from the amount he
receives from the investor and turns over to the
company the amount invested after such deduction
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is made. The majority of the agents are regularly
employed elsewhere - either in the government or
in private enterprises.
On August 27, 1960 petitioner, through counsel,
applied to respondent Social Security Commission
for exemption of its so-called registered
representatives from the compulsory coverage of
the Social Security Act. The application was denied
in a letter signed by the Secretary to the
Commission on January 16, 1961.
Petitioner submits that its commission agents,
engaged under the terms and conditions already
enumerated, are not employees but independent
contractors
Issue: W/N petitioner's registered representatives
are employees within the meaning of the Social
Security Act defining the term "employee" - "any
person who performs services for an 'employer' in
which either or both mental and physical efforts are
used and who receives compensation for such
services, where there is an employer-employee
relationship."
Held: Nopers.
It must be noted that even if an agent of petitioner
should devote all of his time and effort trying to sell
its investment plans he would not necessarily be
entitled to compensation therefor. His right to
compensation depends upon and is measured by
the tangible results he produces.
The significant factor in determining the
relationship of the parties is the presence or
absence of a supervisory power to control the
method and detail of performance of the service,
and the degree to which the principal may
intervene to exercise such control, the presence of
such power of control being indicative of an
employment relationship and the absence of such
power being indicative of the relationship of
independent contractor.
The logic of the situation indeed dictates that where
the element of control is absent; 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 in turn is compensated
according to the result of his efforts and not the
amount thereof, we should not find that the
relationship of employer and employee exists.
Sara case – the situation of a nurse employed by Dr.
Sara, he is so successful in his doctoring he put up a
rice mill. He convinced her to quit nursing, don’t go
the US, buy palay for me and sell rice for me at
commission. Wala kay pang-capital, panghulam, I
will guarantee the capital. There is
misunderstanding born out of labor, Agarrado sues
the former boss, the doctor couple for unpaid
commission. Does the labor arbiter have
jurisdiction? Of course the labor arbiter said yes.
And the NLRC also affirmed. When it reached the
SC, the SC said that it should have never have
reached the court because this is not ER-EE
relationship. Agarrado, the moment that she
resigned from nursing, became an independent
salesperson. Why is she independent? The fact that
the doctor has guaranteed her loan, shows you that
they are not one and the same enterprise. That is
why you need to guarantee because your standing
is not enough. That is what the court ruled in Sara
vs. Agarrado. Remember that the SC did not
consider that Agarrado was formerly employed. The
court perceived that there was a complete break,
why? It is not included in the nature of work that
she assumed, it is now buying and selling palay and
milled rice. It is different from nursing.
Sara vs Agarrado
Facts: Private respondent Cerila Agarrado was an
attendant in the clinic of petitioner Dr. Renato Sara.
She quit her job in 1973.
Four years later, petitioners Dr. Sara and Romeo
Araña, being owners of a rice mill and having begun
to engage in the buy and sell of palsy and nee,
entered into a verbal agreement with private
respondent Agarrado whereby it was agreed that
the latter would be paid P2.00 commission per sack
of milled rice sold as well as a commission of 10%
per kilo of palsy purchased. It was further agreed
that private respondent would spend her own
money for the undertaking, but to enable her to
carry out the agreement more effectively, she was
authorized to borrow money from other persons, as
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in fact she did, subject to reimbursement by
petitioners.
In 1982, private respondent filed with the National
Labor Relations Commission (NLRC) Regional
Arbitration Branch No. XI, Cotabato City, a
complaint against petitioners for unpaid
commission of P4,598.00 on milled rice sold,
P2,982.80 on palsy sold, reimbursement of
P17,500.00 which she had borrowed from various
persons and P1,749.00 of her own money which
petitioners allegedly had not reimbursed
On January 17, 1973, Labor Arbiter Magna C. Cruz
rendered a decision in favor of private respondent
ordering petitioners to pay all the claims amounting
to P26,397.80. which was affirmed by nlRC.
Issue: W/N an employer-employee relationship
exists between petitioners and private respondent
as to warrant cognizance by the Labor Arbiter
Held: NO. Private respondent was an independent
contractor, who exercising independent
employment, contracted to do a piece of work
according to her own method and without being
subjected to the control of her employer except as
to the result of her work. She was paid for the result
of her labor, unlike an employee who is paid for the
labor he performs.
To determine the existence of an employer-
employee relationship, this Court in a long line of
decisions has invariably applied the four-fold test.
-The arrangement thus was explicitly on a
commission basis dependent on the volume of sale
or purchase. Private respondent was not
guaranteed any minimum compensation nor was
she allowed any drawing account or advance of any
kind against unearned commissions.
-The power to terminate the relationship was
mutually vested upon the parties. Either may
terminate the business arrangement at will, with or
without cause.
-We observe that the means and methods of
purchasing and selling rice or Parley by private
respondent were totally independent of petitioners'
control.
The absence of control is made more evident by the
fact that private respondent was not even obliged
to sell the palay she purchased to petitioners. She
was at liberty to sell the palay to any trader offering
higher buying rates. She was thus free to sell it to
anybody whom she pleased.
Moreover, private respondent worked for
petitioners at her own pleasure and was not subject
to definite hours or conditions of work. She could
even delegate the task of buying and selling to
others, if she so desired, or simultaneously engaged
in other means of livelihood while selling and
purchasing rice or palay.
III. Er-Ee vs AGENCY
Guardex case – Guardex sells firefighting
equipment. Tries to get somebody who will
represent with rubberworld their number 1 product
which is the fire truck. They wanted to sell the fire
truck to rubberworld. One person responds to their
advertisement is immediately hired. Go to
rubberworld, convince them that they need to get
the fire truck. You will be given a commission, pila
may commission. Not stated. Not considerable
because a fire truck is quite a sum.
This particular person commissioned to sell the fire
truck disappeared. So then it is the manager who
now follows up with rubberworld the sale of the fire
truck. Rubberworld is finally convinced to buy the
fire truck, and just as they were about to sign the
contract of sale, the particular worker who has
disappeared suddenly appeared. And now claims
his unpaid commission. Guardex said that the
commission is conditioned upon your closing the
deal. You did not close it, we had to close the deal.
That is why he claimed that he need not close it
because he is an employee. Every effort that I put in
whether they accept it or not should be rewarded
and paid because he is an employee. Is that
correct? That is why the SC said that this case
should have never been entertained by NLRC
because this is not a case of ER-EE relationship but
agency. What is the difference?
Guardex Enterprises vs. NLRC
FACTS: Marcelina A. Escandor was engaged, under
the name of Guardex Enterprises, in the
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Property of: Hanniyah P. Sevilla
manufacture and sale of fire-fighting equipment
and the building or fabrication of fire trucks; while
Jumbee Orbeta was a "freelance" salesman. Orbeta
learned that Escandor had offered to fabricate a fire
truck for Rubberworld (Phil.) Inc. He wrote to
Escandor inquiring about the amount of
commission for the sale of a fire truck. Escandor
wrote back on the same day to advice that it was
P15,000.00 per unit. Four days later, Orbeta offered
to follow-up Escandor's pending proposal to sell a
fire truck to Rubberworld, and asked for P250.00 as
representation expenses. Escandor agreed and gave
him the money.
When no word was received from Orbeta after 3
days, she herself inquired in writing from
Rubberworld about her offer of sale of a fire truck.
In the meantime, Orbeta sold to other individuals
some of Escandor's fire extinguishers, receiving
traveling expenses as well as the corresponding
commissions. He then dropped out of sight.
About 7 months afterwards, Escandor herself finally
concluded a contract with Rubberworld for the
purchase of a fire truck. The transaction was
consummated with the delivery of the truck and full
payment by Rubberworld. Orbeta suddenly
reappeared and asked for his commission for the
sale of the fire truck to Rubberworld. Escandor
refused, saying that he had nothing to do with the
offer, negotiation and consummation of the sale.
Insisting that he was entitled to the commission,
Orbeta filed a complaint against Escandor with the
Ministry of Labor. The Labor Arbiter rendered
judgment in his favor. That judgment was affirmed
by the National Labor Relations Commission. It is
claimed that an implied agency had been created
between Escandor and Orbeta on the basis of the
following circumstances:
1) the alleged verbal authority given to him to
offer a fire truck to Rubberworld;
2) the alleged written authority to sell the truck
contained in a letter of Escandor
3) Escandor's having given Orbeta P250.00 as
representation expenses; and
4) Orbeta's submission of a price quotation to
Rubberworld and his having arranged a meeting
between Escandor and Rubberworld's Purchasing
Manager.
ISSUE: W/N an er-ee relationship exists?
NO
W/N Orbeta is Escandor's agent as
regards the sale of a fire truck to Rubberworld? NO
RULING: Months prior to Orbeta's
approaching Escandor, the latter had already made
a written offer of a fire truck to Rubberworld. All
that she consented to was for Orbeta to "follow up"
that pending offer. It does not even appear that it
was Orbeta who undertook the promised follow-up.
He reported nothing of his efforts or their fruits to
Escandor. It was Escandor who determinedly
pushed the Rubberworld deal. Orbeta was simply
nowhere to be found. Furthermore, the
"representation allowance" of P250 was meant to
cover the expenses for the "follow-up" offered by
Orbeta - an ambiguous fact which does not of itself
suggest the creation of an agency and is not at all
inconsistent with the theory of its absence in this
case.
Granting that a contract of agency had
indeed been constituted, nothing in the record
tends to prove that he succeeded in carrying out its
terms or even as much as attempted to do so. The
terms of Escandor's letter, assuming that it was
indeed an "authority to sell," as Orbeta insists are to
the effect that entitlement to the P15,000
commission is contingent on the purchase by a
customer of a fire truck, the implicit condition being
that the agent would earn the commission if he was
instrumental in bringing the sale about. Orbeta
certainly had nothing to do with the sale of the fire
truck, and is not therefore entitled to any
commission at all.
Even if Orbeta is considered to have been
Escandor's agent for the time he was supposed to
"follow up" the offer to sell, such agency would
have been deemed revoked upon the resumption of
direct negotiations between Escandor and
Rubberworld, Orbeta having in the meantime
abandoned all efforts to secure the deal in
Escandor's behalf.
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Property of: Hanniyah P. Sevilla
Given the sole issue raised by the parties
concededly from the case's inception, the
competence to resolve the controversy did not
pertain to either the Labor Arbiter or the NLRC. The
jurisdiction vested in them by the Labor Code
extends only to cases arising from employer-
employee relationships. What has all along been at
issue here is the existence of a contract of agency
not employment or lease of services.
How can you distinguish it from ER-EE relationship?
The common denominator is services, in agency
services are rendered for purposes of
representation. In ER-EE relationship, services are
rendered for the enterprise of the employer. In the
first case, the rendition of services in agency is
reparatory to further contracts because you do
really represent your employer. But the services
rendered in ER-EE relationship are an end in
themselves. You render the service to the
enterprise to the owner who is your employer.
Services in agency is rendered in representation,
services in ER-EE relationship is rendered accdg. to
the purpose of the enterprise of the employer. That
is the main difference between agency and ER-EE
relationship.
Carungcong case – remember carungcong, he filed
an agreement with sun life. You are in charge of a
particular territory, you will be given a lump sum,
you hire, you train people to sell insurance. And
then you have overriding commission. The
insurance salesperson is the person to have a first
commission, the supervisor has an overriding
commission of the commission. Here it is the agent.
He spends for the training; he spends for his
expenses that have been paid. The insurance most
of those agents are not insurance -- because you
must still pass an exam.
In Carungcong, the SC says this is an agent. There is
no ER-EE relationship so NLRC is mistaken in
assuming jurisdiction of the case because what
happened to Carungcong? The salesmen operating
under her, complained to the office in manila
because they are supposed to be given a Christmas
party and they are asking for a lechon, e wala sila
gihatagan ug lechon nasuko sila. The agent’s
contract was cancelled that is why he sued sun life
for millions for unpaid insurance, unpaid
commission. That is why the SC said there is no ER-
EE relationship, if he were an employee he would
not make millions. This is an agency.
Carungcong vs. NLRC
FACTS: Susan Carungcong began her career in the
insurance industry as an agent of Sun Life Assurance
Company of Canada. She signed an "Agent's
Agreement" with Sun Life in virtue of which she was
designated the latter's "agent to solicit applications
for its insurance and annuity policies." The contract
set out in detail the terms and conditions
particularly those concerning the commissions
payable to her under which her relationship with
the company would be governed.
This contract was superseded some five years later
when she signed 2 new agreements. The first,
denominated "Career Agent's (or Unit Manager's)
Agreement," dealt with agent's commissions,
obligations, limitations on authority, and
termination of the agreement by death, or by
written notice "with or without cause." It declared
that the "Agent shall be an independent contractor
and none of the terms of the Agreement shall be
construed as creating an employer-employee
relationship."
The second was titled, "MANAGER'S Supplementary
Agreement." Said second contract explicitly
described as a "further agreement”, contained
provisions regarding remuneration, limitation of
authority, and termination of the agreement by
written notice "without cause."
Subsequently, Carungcong and Sun Life executed
another Agreement by which the former was
named New Business Manager. Like the "Career
Agent's (or Unit Manager's) Agreement" first signed
by Carungcong, this latest Agreement stressed that
the "New Business Manager shall be considered an
independent contractor and not an employee of
Sun Life," and that "under no circumstance shall the
New Business Manager and/or his employees be
considered employees of Sun Life."
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 Labor Standards and Cases
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Property of: Hanniyah P. Sevilla
Ms. Eleizer Sibayan, Manager of Sun Life's Internal
Audit Department, commenced an inquiry into the
special fund availments of Carungcong and other
New Business Managers. Ms. Sibayan drew up a
report after having examined and analyzed the
pertinent records, and interviewed the unit
managers and agents mentioned in the receipts
presented by Carungcong to support her claims for
reimbursement of expenses for 1987, 1988 and
1989. Carungcong was confronted with and asked
to explain the discrepancies set out in Sibayan's
report. On January 11, 1990, she was given a letter
which advised of the termination of her relationship
with Sun Life.
NLRC reversed the Arbiter's judgment. It affirmed
that no employment relationship existed between
Carungcong and Sun Life.
ISSUE: W/N complainant Carungcong is a regular
employee of Sun Life? NO
RULING: The contracts she had willingly and
knowingly signed with Sun Life repeatedly and
clearly provided that said agreements were
terminable by either party by written notice with or
without cause. A subsequent agreement by which
she was named New Business Manager similarly
provided for termination of relation by notice in
writing with or without cause. This last agreement
emphasized, like the "Career
Agent's (or Unit Manager's) Agreement" first
signed by her, that in the performance of her duties
defined herein, Carungcong would be considered an
independent contractor and not an employee of
Sun Life," and that “under no circumstance shall the
New Business Manager and/or his employees be
considered employees of Sun Life."
It is true that Carungcong's duties and functions
derived from existing agreements/contracts were
made subject to rules and regulations issued by
respondent company, and for that matter, have
likewise been made subject of certain limitations
imposed by said respondent company. Nonetheless,
these are not sufficient to accord the effect of
establishing employer-employee relationship in this
case. This is so because the insurance business is
not just any other ordinary business. It is one that is
imbued with public interest hence, it must be
governed by the rules and regulations of the state.
The SC in the case of Insular Life Assurance
Co. Ltd. v. NLRC and Basiao held that:
Logically, the line should be drawn between
rules that merely serve as guidelines towards the
achievement of the mutually desired result without
dictating the means or methods to be employed in
attaining it, and those that control to fix the
methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to
promote the result, create no employer-employee
relationship unlike the second, which address both
the result and the means used to achieve it. The
distinction acquires particular relevance in the case
of an enterprise affected with public interest and is
on that account subject to regulation by the State
with respect, not only to the relations between
insurer and insured but also to the internal affairs of
the Insurance company. Rules and regulations
governing the conduct of the business are provided
for in the Insurance Code and enforced by the
Insurance Commissioner. It is therefore usual and
expected for an insurance company to promulgate a
set of rules to guide its commission agents in selling
its policies that they may not run afoul of the law
and what it requires or prohibits.
Complainant having admitted that she was
free to work as she pleases, at the place and time
she felt convenient for her to do so where in spite
of the controls imposed by respondents, she
suffered no interference whatsoever in relation to
the manner and methodology she used for her to
achieve her desired results. Complainant admitted
that her remunerations were based on her levels of
production. She admitted she could solicit insurance
anywhere or at any time she deemed convenient.
She never accounted for her working time or that
daily working hours were never applicable to her
situation. She gave unequivocal testimony that she
performed her duties as a New Business Manager at
her own time and convenience.
Complainant alleged that respondent
company issued rules and regulations to which she
should conform. However, no showing has been
made that such rules and regulations effectively and
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Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
actually controlled or restricted her choice of
methods in performing her duties as New Business
Manager.
Insular life case – when you arrive at insular life, it’s
almost the same case. It’s just that when he is
terminated he sues for unpaid wage and
commission. SC says that you are paid because you
are not an agent, you are an employee. The only
difference in these to cases is that the SC
admittedly has introduced a variable and that is the
amount of the claim somehow is an index of ER-EE
relationship. If the amount is stupendous, it cannot
be ER-EE relationship. The SC has introduced a
variable here, that when it comes to a certain
amount, it is no longer ER-EE relationship.
Insular life vs. NLRC
FACTS: Petitioner entered into an agency contract
with respondent Pantaleon de los Reyes authorizing
the latter to solicit within the Philippines
applications for life insurance and annuities for
which he would be paid compensation in the form
of commissions. The contract contained the
stipulation that no employer-employee relationship
shall be created between the parties and that the
agent shall be free to exercise his own judgment as
to time, place and means of soliciting insurance. De
los Reyes however was prohibited by petitioner
from working for any other life insurance company,
and violation of this stipulation was sufficient
ground for termination of the contract.
Petitioner and private respondent entered into
another contract where the latter was appointed as
Acting Unit Manager under its office - the Cebu DSO
V (157). It was similarly provided in the
management contract that the relation of the acting
unit manager and/or the agents of his unit to the
company shall be that of independent contractor. If
the appointment was terminated for any reason
other
than for cause, the acting unit manager would be
reverted to agent status and assigned to any unit.
Private respondent worked concurrently as agent
and Acting Unit Manager until he was notified by
petitioner on 18 November 1993 that his services
were terminated effective 18 December 1993. On 7
March 1994 he filed a complaint before the Labor
Arbiter on the ground that he was illegally
dismissed and that he was not paid his salaries and
separation pay.
Petitioner filed a motion to dismiss the complaint of
De los Reyes for lack of jurisdiction, citing the
absence of employer-employee relationship. It
reasoned out that based on the criteria for
determining the existence of such relationship or
the so-called "four-fold test," i.e., (a) selection and
engagement of employee, (b) payment of wages, (c)
power of dismissal, and, (d) power of control, De los
Reyes was not an employee but an independent
contractor.
The motion of petitioner was granted by the Labor
Arbiter and the case was dismissed on the ground
that the element of control was not sufficiently
established since the rules and guidelines set by
petitioner in its agency agreement with respondent
De los Reyes were formulated only to achieve the
desired result without dictating the means or
methods of attaining it.
Respondent NLRC determined that respondent De
los Reyes was under the effective control of
petitioner in the critical and most important aspects
of his work as Unit Manager. This conclusion was
derived from the provisions in the contract which
appointed private respondent as Acting Unit
Manager, to wit: (a) De los Reyes was to serve
exclusively the company, therefore, he was not an
independent contractor; (b) he was required to
meet certain manpower and production quota; and,
(c) petitioner controlled the assignment to and
removal of soliciting agents from his unit.
ISSUE: W/N an er-ee relationship exists
between Insular Life and de los Reyes? YES
RULING: It is axiomatic that the existence of an
employer-employee relationship cannot be negated
by expressly repudiating it in the management
contract and providing therein that the "employee"
is an independent contractor when the terms of the
agreement clearly show otherwise. For, the
employment status of a person is defined and
prescribed by law and not by what the parties say it
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should be. In determining the status of the
management contract, the "four-fold test" on
employment earlier mentioned has to be applied.
Petitioner contends that De los Reyes was never
required to go through the pre-employment
procedures and that the probationary employment
status was reserved only to employees of
petitioner. It insists that the first requirement of
selection and engagement of the employee was not
met.
The provisions of the contract show that private
respondent was appointed as Acting Unit Manager
only upon recommendation of the District Manager.
This indicates that private respondent was hired by
petitioner because of the favorable endorsement of
its duly authorized officer. The very designation of
the appointment of private respondent as "acting"
unit manager obviously implies a temporary
employment status which may be made permanent
only upon compliance with company standards such
as those enumerated in the management contract.
On the matter of payment of wages, petitioner
points out that respondent was compensated
strictly on commission basis, the amount of which
was totally dependent on his total output.
The payment of compensation by way of
commission does not militate against the conclusion
that private respondent was an employee of
petitioner. Under Art. 97 of the Labor Code, "wage"
shall mean "however designated, capable of being
expressed in terms of money, whether fixed or
ascertained on a time, task, price or commission
basis .”
As to the matter involving the power of dismissal
and control by the employer, the latter of which is
the most important of the test, petitioner asserts
that its termination of De los Reyes was but an
exercise of its inherent right as principal under the
contracts and that the rules and guidelines it set
forth in the contract cannot be deemed as an
exercise of control over the private respondent as
these were merely directives that fixed the desired
result without dictating the means or method to be
employed in attaining it.
The following factual findings of the NLRC however
contradict such claims. A perusal of the
appointment of complainant as Acting Unit
Manager reveals that:
1. Complainant was to "exclusively" serve
respondent company.
2. Complainant was required to meet certain
manpower and production quotas.
3. Respondent (herein petitioner) controlled the
assignment and removal of soliciting agents to and
from complainant's unit
The ruling in Insular Life Assurance Co., Ltd. v. NLRC
and Basiao is not applicable in the present case.
Unlike Basiao, herein respondent De los Reyes was
appointed Acting Unit Manager, not agency
manager. There is no evidence that to implement
his obligations under the management contract, De
los Reyes had organized an office. Petitioner in fact
has admitted that it provided De los
Reyes a place and a table at its office where he
reported for and worked whenever he was not out
in the field. Under the managership contract, De los
Reyes was obliged to work exclusively for petitioner
in life insurance solicitation and was imposed
premium production quotas. De los Reyes could
only be promoted to permanent unit manager if he
met certain requirements and his promotion was
recommended by the petitioner's District Manager
and Regional Manager and approved by its Division
Manager. As Acting Unit Manager, De los Reyes
performed functions beyond mere solicitation of
insurance business for petitioner. As found by the
NLRC, he exercised administrative functions which
were necessary and beneficial to the business of
INSULAR LIFE.
In Great Pacific Life Insurance Company v. NLRC
which is closer in application than Basiao to this
present controversy, we found that "the
relationships of the Ruiz brothers and Grepalife
were those of employer-employee. First, their work
at the time of their dismissal as zone supervisor and
district manager was necessary and desirable to the
usual business of the insurance company. They
were entrusted with supervisory, sales and other
functions to guard Grepalife's business interests and
to bring in more clients to the company, and even
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with administrative functions to ensure that all
collections, reports and data are faithfully brought
to the company. A cursory reading of their
respective functions as enumerated in their
contracts reveals that the company practically
dictates the manner by which their jobs are to be
carried out.”
IV. ER-EE VS AGRICULTURAL TENANCY
Kanang imong sakop ug kanang imong empleyado
sa farm, unsa man ang kalain nila?remember 5727,
tenancy is supposed to be abolished. There’s no
more tenancy. Shared tenancy has been abolished.
In the tenancy, you have to be full tenant, di kanang
share tenancy, magbahin mo sa tahop. That’s
supposed to be gone under the comprehensive
agrarian reform law. Wala na unta but you and I
know that hantod karon naa gihapon tenancy. The
law may say that it may no longer be in existence
but the reality is it still is.
Landmark case of De los Reyes—
Here is coconut land, the owner hires an encargado,
go there, take care of my land, just give me what
rightfully belongs to me after deducting all of the
expenses. Now the caretaker goes there and he too,
likes to be the landlord, he also asks people na
kamo sa puyo diha, bantayi ninyo na walay lain
magpuyo dinha, kamoy harvest, bahin ta. One of
the most lazy kind of job, maghulat ka lang ug 3 ka
bulan na mahulog ang lubi. Pagsayo mahulog, la ka
nay paaboton.
So when the landlord goes there and discovers that
the foreman is not there, who are these people
living here? He fires the encargado and now he has
to settle the occupancy. And that is the policy, the
occupant run for protection to the DAR and claims
unpaid shares. So what is the claim now of the
landlord, he claims ER-EE relationship. He is the one
claiming that there is ER-EE relationship so he does
not have to pay his shares. Nabali ni. He is now
claiming that they are not my tenants, they are
employees. Why are they your employees? Because
I asked them to be my watchers. That is the task
accdg to the landlord. Did the SC buy that? If you
are an employee, and you are tasked to watch you
are given a period, unsa man ka 7-3, 3-11, 11-7?
Kana imong watch wala may kinutuban.
Delos Reyes vs. Espineli
FACTS: Petitioner Geronimo de los Reyes is the
owner of a 200-hectare coconut plantation located
in Calauan, Laguna. In 1958 his overseer
("katiwala") therein was Gonzalo Belarmino, who
took into the land the 17 respondents under an
agreement that the latter were to receive 1/7
portion of every coconut harvest. Sometime in
October, 1962, the petitioner dismissed Belarmino,
upon the suspicion that the latter had been
deceiving him, in connivance with respondents.
Ruperto Alcantara, et al., and Gregorio Espineli
(respondents here) filed separate petitions
(subsequently amended) against De los Reyes in the
Court of Agrarian Relations, seeking the delivery to
them of the difference between the 1/7 share
which the petitioner had been giving them and the
30% share to which they, as share tenants, were
allegedly entitled. Upon the finding that the
respondents were mere agricultural workers of the
petitioner, the CAR ordered the latter to retain
them as such and to pay them the sum of P4,
559.07. Upon respondents' appeal, the Court of
Appeals modified the decision of the CAR, by
declaring the respondents tenants of the petitioner
and ordering the latter to pay
them "the difference between the one-seventh
(1/7) share of the crops and the thirty (30%) per
cent provided for in the Tenancy Law.
ISSUE: Whether the relationship is that of
agricultural share tenancy or that of farm employer
and agricultural laborer?
RULING: "Agricultural tenancy" is the
physical possession by a person of land devoted to
agriculture belonging to, or legally possessed by,
another for the purpose of production through the
labor of the former and of the members of his
immediate farm household, in consideration of
which the former agrees to share the harvest with
the latter, or to pay a price certain or ascertainable,
either in produce or in money, or in both. "Share
tenancy" exists whenever two persons agree on a
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joint undertaking for agricultural production
wherein one party furnishes the land and
the other his labor, with either or both contributing
any one or several of the items of production, the
tenant cultivating the land personally with the aid
of labor available from members of his immediate
farm household, and the produce thereof to be
divided between the landholder and the tenant in
proportion to their respective contributions. And a
"share tenant" is a person who, himself and with
the aid available from within his immediate farm
household, cultivates the land belonging to or
possessed by another, with the latter's consent, for
purposes of production, sharing the produce with
the landholder.
The characteristics of a share tenancy contract are:
(1) the parties are a landholder, who is a natural or
juridical person and is the owner, lessee,
usufructuary or legal possessor of agricultural land,
and a tenant who, himself and with the aid available
from within his immediate farm household,
cultivates the land which is the subject-matter of
the tenancy; (2) the subject-matter is agricultural
land; (3) the purpose of the contract is agricultural
production; and (4) the cause or consideration is
that the landholder and the share tenant would
divide the agricultural produce between themselves
in proportion to their respective contributions.
A "farm worker" is "any agricultural wage, salary or
piece worker but is not limited to a farm worker of a
particular farm employer unless the Agricultural
Land Reform Code explicitly states otherwise, and
any individual whose work has ceased as a
consequence of, or in connection with, a current
agrarian dispute or an unfair labor practice and who
has not obtained a substantially equivalent and
regular employment." The term includes "farm
laborer and/or farm employees." An "agricultural
worker" is not a whit different from a "farm
worker."
In determining the existence of an employer-
employee relationship, the elements that are
generally considered are the following: (1) the
selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and
(4) the employer's power to control the employee's
conduct. It is this last element that constitutes the
most important index of the existence of
relationship.
We are here primarily interested in the basic
differences between a farm employer-farm worker
relationship and an agricultural sharehold tenancy
relationship. Both are leases, but there the
similarity ends. In the former, the lease is one of
labor, with the agricultural laborer as the lessor of
his services, and the farm employer as the lessee
thereof. In the latter, it is the landowner who is the
lessor, and the sharehold tenant is the lessee of
agricultural land. As lessee he has possession of the
leased premises. But the relationship is more than a
mere lease. It is a special kind of lease, the law
referring to it as a "joint undertaking." For this
reason, not only the tenancy laws are applicable,
but also, in a suppletory way, the law on leases, the
customs of the place and the civil code provisions
on partnership. The share tenant works for that
joint venture. The agricultural laborer works for the
farm employer, and for his labor he receives a
salary or wage, regardless of whether the employer
makes a profit. On the other hand, the share tenant
participates in the agricultural produce. His share is
necessarily dependent on the amount of the
harvest.
The record is devoid of evidentiary support for the
notion that the respondents are farm laborers. They
do not observe set hours of work. The petitioner
has not laid down regulations under which they are
supposed to do their work. The argument tendered
is that they are guards. However, it does not appear
that they are under obligation to report for duty to
the petitioner or his agent. They do not work in
shifts. Nor has the petitioner prescribed the manner
by which the respondents were and are to perform
their duties as guards. We do not find here that
degree of control and supervision evincive of an
employer-employee relationship
ISSUE: W/N there was an agricultural share
tenancy contract? YES
The crucial factors are that the tenant must have
physical possession of the land for the purpose of
production and he must personally cultivate the
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land. If the tenant does not cultivate the land
personally he cannot be considered a tenant even if
he is so designated in the written agreement of the
parties. "Cultivation" is not limited to the plowing
and harrowing of the land. It includes the various
phases of farm labor described and provided by law,
the maintenance, and repair and weeding of dikes,
paddies and irrigation canals in the holding.
Moreover, it covers attending to the care of the
growing plants.
The Court of Appeals made some essential findings
of fact. The respondents were called "kasama."
They have plowing implements. Almost all of the
respondents have banana plantations on the land.
They live in the landholding.
They are charge with the obligation to clean their
respective landholdings. The appellate court was
correct in concluding that "kasama" means
"tenant," not worker or laborer, which is translated
into our national language as "manggagawa."
The petitioner clearly expected the respondents to
perform the duties of a tenant, especially, to
maintain the land clean and clear "at all times,"
which not only would facilitate harvesting but, more
importantly, would necessarily result in greater
production.
In this case, the SC goes into the long distinction of
tenancy vis-à-vis an ER-EE relationship1.
1.Tenancy is the joint production agreement. The
subject matter is agricultural land. Landlord and
tenants are partners upon the subject matter of
agricultural land for production purposes. ER-EE
relationship, there is no joint production. There is
only one producer and that is the employer. The
others are workers. That is the difference. Tenancy
is joint, ER-EE relationship it is not joint.
2. Second, as to the possession of land, it is said that
the relationship of tenancy with the landlord is
tenurial, it is tied to the land. Once you become a
tenant, you have a right to the land. Dili na imuha,
you have a right to possess the land. You have a
right to put up a small hut, and around that small
lot is your own lot and whatever you grow in that
small lot you do not have to share with your
landlord. You possess the land, you cannot be
driven out.
You have taken up eminent domain, suppose the
land is taken over by the gov’t for public use. You
know that the landlord is paid for the land. How
about the tenant? The tenant is also paid. He is paid
for disturbance fee part of his compensation,
because he has a real right. That means right tied to
real property. So he has a right to be in possession,
he cannot be driven. How about the employee in
the farm, the farm worker, he has no right to stay in
the farm. So as to possession, the farm worker has
no right, the tenant has a right to possession.

3. As to the labor, in tenancy, it is not just the

1
Agricultural Tenancy (agricultural
tenant)
1. Joint production agreement
2. Tenant has the right to possess
land (tenurial)
3. Entire family of tenant works
(no pay)
4. As to salary – in the form of
share of the harvest;
Contingent as to the size and
existence of harvest (conditional
compensation)
5. Power of control is by way of
exception – vetoing what the
tenant does
Employer-employee relationship
(farm worker)
1. No joint production. Only one
producer – the er.
2. Employee has no right to
possess land
3. entire household of ee not
required to work; if they work,
they are paid.
4. Not conditional compensation
– employee is paid whether or
not there is harvest;
5. Employer exercises the power
of control – what to plant, how to
plant, when to sow, etc.
tenant that renders labor, it is his entire family. So
the entire family helps. When you are a farm
worker in ER-EE relationship, you are not obligated
to bring your wife and your children to your work. It
is only you. That is the difference. Is the landlord
obligated to pay the wife and the children? No. that
is part of the set up, part of the arrangement.
4. As to the compensation, what is the
compensation of the tenant? It is the share of the
harvest. It is contingent in the existence of the
harvest. How big should the share be? The share of
the tenant is contingent on the size of the harvest.
The tenant has a big share. How about the farm
worker in the ER-EE relationship, he is paid every
15th and 30th of the month, regardless of whether

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they have a harvest or not. It is not a conditional
compensation, unlike that of the tenant wherein
the tenant’s compensation is unconditional.
5. As to power of control, as farm worker, the farm
owner has absolute control. He decides what to
plant, when to plant, how much to plant. How
about in tenancy? Who decides when to plant? It is
the tenant? How much to plant? It is the tenant.
What is the control of the landowner? The control
of the landowner is by way of inspection (or
exception?). He can veto something that the tenant
does which is clearly in contravention with the
accepted farm practices of that locality. He controls
it by way of exception, when he intervenes when
the tenant embarks on a practice that is not
accepted in the locality.
Can an encargado fine the landlord by bringing in
tenants? SC says yes.
V. ER-EE VS LEASE CONTRACTS
Citizen’s League case – Davao case in 1969. This
involves the auto-calesa. Now the drivers here
decide to form a union and inform the citizen’s
league, that is their union. If a pedestrian
understanding the relationship between them and
the operator, it is Abas. Later on he develops his
own boundary, everyday you will pay the operator
not less than this amount. The operator calls --
because he does not want to know what he ---.
Bahala ka kung matulog ka ba o magminatay kag
drive basta ka tapusan sa adlaw ihatag nimo ang
boundary. Is that rental, is the relationship a lessor
and lessee? Is the operator the lessor and the
drivers the lessee? The SC says that it is not lease. It
is in part ER-EE relationship. And if you read the
case the SC does not even bother to explain
because it is obvious. That is to say that if you go to
a company that is a rent a car company. You take
the daily rate plus the mileage. Per kilometer plus
the additional rate. And then you return it to the
rent a car company full tank because you got it full
tank. Bahala ka how much gas you consume. That is
the condition of the rent a car. The daily rate plus
the mileage. Now what is the theorem? The
difference is you can go anywhere. But the driver of
the operator is not free to go out of the franchise
route. He has to go back and forth that route. So
therefore he is operating on the franchise of the
operator. He is an employee of the operator. And
his boundary is just a sure way of calculating that
the gross proceeds and the expenses of fuel and
other items will lead him is equivalent to the
minimum wage of his hours of work. That is why it
is obvious. This is reiterated in the case of Jardin.
LEASE CONTRACTS
In the boundary system, there is er-ee relationship.
The wage is in the form of total amount of fares
earned or collected by them over and above the
boundary amount.
In lease of chattels, the lessor loses complete
control over the chattel leased, although lessee
cannot be reckless otherwise he would be liable for
damages. In the boundary system, owner controls
the route prescribed.
CITIZENS LEAGUE v ABBAS
FACTS:It appears that on March 11, 1963,
respondents-spouses (Teofilo Geronimo and
Emerita Mendez), owners and operators of auto-
calesas in Davao City, filed a complaint with the CFI
of Davao to restrain the Union (Citizens' League of
Freeworkers) and its members, who were drivers of
the spouses in said business, from interfering with
its operation, from committing certain acts
complained of in connection therewith, and to
recover damages.
The complaint alleged that the defendants named
therein used to lease the auto calesas of the
spouses on a daily rental basis; that, unable to get
the spouses to
recognize said defendants as employees instead of
lessees and to bargain with it on that basis, the
Union declared a strike and since then had
paralyzed plaintiffs' business operations through
threats, intimidation and violence. The complaint
also prayed for the issuance of a writ of preliminary
injunction ex-parte restraining defendants therein
from committing said acts of violence and
intimidation during the pendency of the case. The
respondent judge granted the writ prayed for.
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Meanwhile, on March 12, 1963, petitioners filed a
complaint for unfair labor practice against the
respondents-spouses with the Court of Industrial
Relations on the ground, among others, of the
latter's refusal to bargain with them.
On March 18, 1963, petitioners filed a motion to
declare the writ of preliminary injunction void on
the ground that the same had expired by virtue of
Section 9 (d) of Republic Act 875. In his order of
March 21, 1963, however, the respondent judge
denied said motion on the ground that there was no
employer-employee relationship between
respondents-spouses and the individual petitioners
herein and that, consequently, the Rules of Court
and not Republic Act No. 875 applied to the matter
of injunction.
ISSUE: W/N an er-ee relationship exists? YES
RULING: In the case of Isabelo Doce vs.
Workmen's Compensation Commission et al., upon
a similar if not an altogether identical set of facts,
SC held:
"This case falls squarely within our ruling in National
Labor Union vs. Dinglasan, wherein this Court held
that a driver of a jeep who operates the same under
the boundary system is considered an employee
within the meaning of the law and as such the case
comes under the jurisdiction of the Court of
Industrial Relations. In that case, Benedicto
Dinglasan was the owner and operator of TPU
jeepneys which were driven by petitioner under
verbal contracts that they will pay P7.50 for 10
hours use under the so-called 'boundary system.'
The drivers did not
receive salaries or wages from the owner. Their
day's earnings were the excess over the P7.50 they
paid for the use of the jeepneys. In the event that
they did not earn more, the owner did not have to
pay them anything.
In holding that the er-ee relationship existed
between the owner of the jeepneys and the drivers
even if the latter worked under the boundary
system, this Court said:
'The only features that would make the relationship
of lessor and lessee between the respondents
owner of the jeeps, and the drivers, members of the
petitioner union, are the fact that he does not pay
them any fixed wage but their compensation is the
excess of the total amount of fares earned or
collected by them over and above the amount of
P7.50 which they agreed to pay to the respondent,
and the fact that the gasoline burned by the jeeps is
for the account of the drivers. These two features
are not, however, sufficient to withdraw the
relationship, between them from that of employer-
employee, because the estimated earnings for fares
must be over and above the amount they agreed to
pay to the respondent for a ten-hour shift or ten-
hour a day operation of the jeeps. Not having any
interest in the business because they did not invest
anything in the acquisition of the jeeps and did not
participate in the management thereof, their
service as drivers of the jeeps being their only
contribution to the business, the relationship of
lessor and lessee cannot be sustained.'"
JARDIN vs. NLRC
FACTS:Petitioners were drivers of private
respondent, Philjama International Inc., a domestic
corporation engaged in the operation of "Goodman
Taxi." Petitioners used to drive private respondent's
taxicabs every other day on a 24-hour work
schedule under the boundary system. Under this
arrangement, the petitioners earned an average of
P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners' daily
earnings the amount of P30.00 supposedly for the
washing of the taxi units. Believing that the
deduction is illegal, petitioners decided to form a
labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private
respondent refused to let petitioners drive their
taxicabs when they reported for work on August 6,
1991, and on succeeding days. Petitioners
suspected that they were singled out because they
were the leaders and active members of the
proposed union. Aggrieved, petitioners filed with
the labor arbiter a complaint against private
respondent for unfair labor practice, illegal
dismissal and illegal deduction of washing fees.
The labor arbiter dismissed said complaint for lack
of merit. On appeal, the NLRC reversed and set
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aside the judgment of the labor arbiter. The labor
tribunal declared that petitioners are employees of
private respondent, and, as such, their dismissal
must be for just cause and after due process.
Private respondent's first motion for
reconsideration was denied. Private respondents
filed another motion for reconsideration. This time,
public respondent granted aforesaid second motion
for reconsideration. It ruled that it lacks jurisdiction
over the case as petitioners and private respondent
have no
employer-employee relationship. It held that the
relationship of the parties is leasehold which is
covered by the Civil Code rather than the Labor
Code.
ISSUE: W/N an er-ee relationship exists? YES
RULING: In a number of cases decided by the Court,
it was ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers
on the other under the boundary system is that of
employer-employee and not of lessor-lessee.
As explained in the lease of chattels, the lessor loses
complete control over the chattel leased although
the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages
to the lessor.
In the case of jeepney owners/operators and
jeepney drivers, the former exercise supervision
and control over the latter. The management of the
business is in the owner's hands. The owner as
holder of the certificate of public convenience must
see to it that the driver follows the route prescribed
by the franchising authority and the rules
promulgated as regards its operation. Now, the fact
that the drivers do not receive fixed wages but get
only that in excess of the so-called "boundary" they
pay to the owner/operator is not sufficient to
withdraw the relationship between them from that
of employer and employee. We have applied by
analogy the above stated doctrine to the
relationships between bus owner/operator and bus
conductor, auto-calesa owner/operator and driver,
and recently between taxi owners/operators and
taxi drivers. Hence, petitioners are undoubtedly
employees of private respondent because as taxi
drivers they perform activities which are usually
necessary or desirable in the usual business or trade
of their employer.
As consistently held by this Court, termination of
employment must be effected in accordance with
law. Hence, petitioners, being employees of private
respondent, can be dismissed only for just and
authorized cause, and after affording them notice
and hearing prior to termination. In the instant
case, private respondent had no valid cause to
terminate the employment of petitioners. Neither
was there two (2) written notices sent by private
respondent informing each of the petitioners that
they had been dismissed from work. This lack of
valid cause and failure on the part of private
respondent to comply with the twin-notice
requirement underscored the illegality surrounding
petitioners' dismissal.
VI. ER-EE VS INDUSTRIAL PARTNERSHIP
Industrial partnership can be found in the civil code
art. 1769, par.4, subsub paragraph B.
Ruga case – the SC summarizes the status of two
lines of cases. These are fishermen cases. Mostly
here the employers are involved in deep sea fishing.
They have a deep sea fishing boat and sail. He
chooses his route. They are given ice, given fish
nets, and sail out at sea and when they come back
the catch of fish or tuna is sold. The gross proceeds
from where is is deducted the 10%, so you have the
net proceeds, the net proceeds is right away divided
into two. ½ goes to the owner of the vessels, the
other half is divided among the crew and the share
of the patron is double. If you are 6 all in all, the half
of the crew is divided into 7 because the patron has
double share.
Are those crew men industrial partners of the deep
fishing operator or are they employees? The SC in
Ruga says that they are two lines of cases. One line
says that they are employees, the other line says
that they are not employees, they are partners. The
question is how do you know that this kind of crew
are partners and this kind of crew are employers?
The SC says power of control test. If the operator
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decides when he goes. If the operator maintains
contact with the boat, radio or satellite, if the
operator feeds the boat with satellite data, then
there is ER-EE relationship. But if there is no control,
as when it is the patron where, how far will it go,
that is industrial partnership. That is not ER-EE
relationship. Remember that this is not just crew for
purposes of fishing.
Ruga vs. NLRC
FACTS: Petitioners were the fishermen-crew
members of 7/B Sandyman II, one of several fishing
vessels owned and operated by private respondent
De Guzman Fishing Enterprises which is primarily
engaged in the fishing business.
Upon arrival at the fishing port, petitioners were
told by president of private respondent, to proceed
to the police station for investigation on the report
that
they sold some of their fish-catch at midsea to the
prejudice of private respondent. During the
investigation, no witnesses were presented to
prove the charge against petitioners, and no
criminal charges were formally filed against
them. Notwithstanding, private respondent refused
to allow petitioners to return to the fishing vessel to
resume their work on the same day.
Petitioners individually filed their complaints for
illegal dismissal and non-payment of 13th month
pay, emergency cost of living allowance and service
incentive pay, with the Ministry of Labor and
Employment. They uniformly contended that they
were arbitrarily dismissed without being given
ample time to look for a new job.
Private respondent submitted its position paper
denying the employer-employee relationship
between private respondent and petitioners on the
theory that private respondent and petitioners
were engaged in a joint venture.
NLRC promulgated its resolution affirming the
decision of the labor arbiter that a "joint fishing
venture" relationship existed between private
respondent and petitioners.
Petitioners stress that there is an employer-
employee relationship between them and private
respondent: that they were directly hired by private
respondent through its general manager, Arsenio
de Guzman, and its operations manager, Conrado
de Guzman; that they had been employed by
private respondent from 8 to 15 years in various
capacities; that private respondent, through its
operations manager, supervised and controlled the
conduct of their fishing operations as to the fixing of
the schedule of the fishing trips, the direction of the
fishing vessel, the volume or number of tubes of the
fish-catch, the time to return to the fishing port,
which were communicated to the patron/pilot by
radio that they were not allowed to join other
outfits even the other vessels owned by private
respondent without the permission of the
operations manager; that they were compensated
on percentage commission basis of the gross sales
of the fish-catch which were delivered to them in
cash by private respondent's cashier, Mrs. Pilar de
Guzman; and that they have to follow company
policies, rules and regulations imposed on them by
private respondent.
ISSUE: W/N the fishermen-crew members of the
trawl fishing vessel 7/B Sandyman II are employees
of its owner-operator, De Guzman Fishing
Enterprises? YES
RULING: We have consistently ruled that in
determining the existence of an employer-
employee relationship, the elements that are
generally considered are the following (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
with respect to the means and methods by which
the work is to be accomplished. The employment
relation arises from contract of hire, express or
implied. In the absence of hiring, no actual
employer-employee relation could exist.
From the four (4) elements mentioned, We have
generally relied on the so-called right-of-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. The test calls merely for the
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existence of the right to control the manner of
doing the work, not the actual exercise of the right.
The conduct of the fishing operations was
undisputedly shown by the testimony of Alipio
Ruga, the patron/pilot of 7/B Sandyman II, to be
under the control and supervision of private
respondent's operations manager. Matters dealing
on the fixing of the schedule of the fishing trip and
the time to return to the fishing port were shown to
be the prerogative of private respondent. While
performing the fishing operations, petitioners
received instructions via a single-side band radio
from private respondent's operations manager who
called the patron/pilot in the morning. They are told
to report their activities, their position, and the
number of tubes of fish-catch in one day. Clearly
thus, the conduct of the fishing operations was
monitored by private respondent thru the
patron/pilot of 7/B Sandyman II who is responsible
for disseminating the instructions to the crew
members.
Records show that herein petitioners were directly
hired by private respondent, through its general
manager, Arsenio de Guzman, and its operations
manager, Conrado de Guzman and have been under
the employ of private respondent for a period of 8-
15 years in various capacities. While tenure or
length of employment is not considered as the test
of employment, nevertheless the hiring of
petitioners to perform work which is necessary or
desirable in the usual business or trade of private
respondent for a period of 8-15 years since 1968
qualify them as regular employees within the
meaning of Article 281 of the Labor Code as they
were indeed engaged to perform activities usually
necessary or desirable in the usual fishing business
or occupation of private respondent.
Aside from performing activities usually necessary
and desirable in the business of private respondent,
it must be noted that petitioners received
compensation on a percentage commission based
on the gross sale of the fish-catch, i.e. 13% of the
proceeds of the sale if the total
proceeds exceeded the cost of the crude oil
consumed during the fishing trip, otherwise only
10% of the proceeds of the sale. Such compensation
falls within the scope and meaning of the term
"wage" as defined under Article 97(f) of the Labor
Code.
Furthermore, the fact that on mere suspicion based
on the reports that petitioners allegedly sold their
fish-catch at midsea without the knowledge and
consent of private respondent, petitioners were
unjustifiably not allowed to board the fishing vessel
on September 11, 1983 to resume their activities
without giving them the opportunity to air their side
on the accusation against them unmistakably
reveals the disciplinary
power exercised by private respondent over them
and the corresponding sanction imposed in case of
violation of any of its rules and regulations.
Even on the assumption that petitioners indeed
sold the fish-catch at mid-sea, the act of private
respondent virtually resulting in their dismissal
evidently contradicts private respondent's theory of
"joint fishing venture" between the parties herein.
A joint venture, including partnership, presupposes
generally a parity of standing between the joint co-
venturers or partners, in which each party has an
equal proprietary interest in the capital or property
contributed and where each party exercises equal
rights in the conduct of the business It would be
inconsistent with the principle of parity of standing
between the joint co-venturers as regards the
conduct of business, if private respondent would
outrightly exclude petitioners from the conduct of
the business without first resorting to other
measures consistent with the nature of a joint
venture undertaking. Instead of arbitrary unilateral
action, private respondent should have discussed
with an open mind the advantages and
disadvantages of petitioners' action with its joint co-
venturers if indeed there is a "joint fishing venture"
between the parties. But this was not done in the
instant case. Petitioners were arbitrarily dismissed
notwithstanding that no criminal complaints were
filed against them.
Besa case – Aside from selling shoes, they have
shoeshine boys. Some people go there just to have
their shoes shined. These boys are approved by
management. Because sometimes they could not
pay to the cashier, and sometimes the cashier just
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Property of: Hanniyah P. Sevilla
calls the boys and gives them their share, they say
that they are employees. Is that correct? Are they
employees or are they partners? The index that
they used to prove that there is ER-EE relationship
is the selection and hiring. We were selected, we
were hired. There is power of control. Not anybody
can shined it because we are already pre-directed
as to how we should shine. Power of dismissal,
muhawa gani ka dinha then you are no longer
admitted. Then there is payment of wage only it is
specific.
Now question, is there ER-EE relationship? The SC
says there is none. The testing for standard cannot
be confused with selection and hiring. Precisely
because it is a partnership, you would like to know
if your partner is worthy to be trusted. Second,
there is no specific rule that you are paid in wage,
the client has the option whether to pay the cashier
and the cashier will give to the shoeshine boy his
share or the client will pay the shoeshine boy and
the shoeshine boy will give the management its
share. In the first, normally the client pays the
standard payment and cashier gives the share and
normally the client gives the shoeshine boy a tip. In
the other way of payment, when you give to the
shoeshine boy, you normally give more than the
standard amount and the shoeshine boy gives his
partner his share. So there is no payment of wages.
And finally the question of dismissal is not power to
dismiss but the maintenance of standard.
VILLAVILLA v CA
FACTS:Arturo Villavilla, son of petitioners, was
employed as "tripulante" (crew member) of the
fishing boat "F/B Saint Theresa" when the boat sank
off Isla Binatikan, Taytay, Palawan. Arturo was not
among the known survivors of that sinking and had
been missing since then.
Petitioners Andres Villavilla and Ester Gadiente
Villavilla, parents of Arturo, filed a petition with the
Social Security Commission against Reynaldo
Mercado and Marcelino Cosuco, owners of the ill-
fated fishing boat, for death compensation benefits
of Arturo whom respondents failed to register as
their employee.
Respondent Cosuco filed his answer denying all
allegations in the petition and claiming that he
already sold the fishing boat to respondent
Mercado on December 10, 1975, and from then on
he did not participate anymore in the operation and
management of the boat or in the hiring of its
crewmembers.
Respondent Social Security Commission issued an
Order dismissing the petition for lack of cause of
action. On appeal, respondent Court of Appeals
affirmed the questioned Order of respondent
Commission there being no reversible error.
ISSUE: W/N there was an er-ee
relationship between petitioners' deceased son,
Arturo Villavilla, and herein private respondents?
NO
Petitioners argue that it was private respondent
Reynaldo Mercado who recruited Arturo Villavilla
sometime in 1974 to be a crew member of the
fishing boat "F/B Saint Theresa" with a daily wage of
P20.00. The boat was then owned by private
respondent Marcelino Cosuco and operated by
Reynaldo Mercado. On December 10, 1975, Cosuco
sold the fishing boat to Mercado.
Invoking Negre vs. Workmen's Compensation
Commision, petitioners assert that "fishermen-crew
members are individual employees and not
industrial partners as in the case at bar" so that the
"mere presence of Arturo Villavilla in the fishing
boat of Mercado makes him an employee of the
employer, Mercado." Further citing RJL Martinez
Fishing Corporation vs. NLRC, petitioners posit that
"the main factor that determines whether a person
is an employee of the employer is the kind of work
being performed by that person. If the work of the
laborer is part of the regular business or occupation
of the employer, the said laborer is a regular
employee of the employer." Petitioners thus
contend that since Arturo was recruited by
Mercado himself sometime in 1974 as one of his
fishermen-crew members and that the crew
members were uniformly paid by Mercado, there
can be no other conclusion but that Arturo was an
employee of Mercado at the time his fishing boat
sank.
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RULING:It is clear that the arrangement between
the boat owner and the crew members partook of
the nature of a joint venture: the crew members did
not receive fixed compensation as they only shared
in their catch; they ventured to the sea irrespective
of the instructions of the boat owners, i.e., upon
their own best judgment as to when, how long, and
where to go fishing; the boat owners did not hire
them but simply joined the fishing expedition upon
invitation of the ship master, even without the
knowledge of the boat owner. In short, there was
neither right of control nor actual exercise of such
right on the part of the boat owner over his crew
members.
Respondent Court of Appeals is correct in upholding
the application by respondent Social Security
Commission of the ruling in Pajarillo v. Social
Security System where We held:
" an employee is defined as a 'person who performs
services for an employer in which either or both
mental and physical efforts are used and who
receives compensation for such services, where
there is an employer-employee relationship'.
In the present case, neither the pilots nor the crew-
members receive compensation from boat-owners.
They only share in their own catch produced by
their own efforts. There is no showing that outside
of their one third share, the boat-owners have
anything to do with the distribution of the rest of
the catch among the pilots and the crew-members.
The latter perform no service for the boat-owners,
but mainly for their own benefit.
The boat-owners are not responsible for the wage,
salary, or fee of the pilot and crew-members. Their
sole participation in the venture is the furnishing or
delivery of the equipment used for fishing, after
which, they merely wait for the boat's return and
receive their share in the catch,
if there is any. The undertaking is in the nature of a
joint venture, with the boat-owner supplying the
boat and its equipments, and the pilot and crew-
members contributing the necessary labor, and the
parties getting specific shares for their respective
contributions.
Certainly, petitioners' reliance on Negre v.
Workmen's Compensation Commission and RJL
Fishing Corp v. NLRC is misplaced. The case of Jose
Negre vs. Workmen's Compensation will show that
it made referral to the case of Abong vs. Workmen's
Compensation Commission, wherein this Court
stated:
'As pointed by the Commission's finding, the
fundamental bases showing that petitioner Dr.
Agustino R. Abong is the employer, are present,
namely, the selection and engagement of the
employee; the payment of wages; the power of
dismissal and the employer's power to control the
employees conduct. These powers were lodged in
petitioner Abong, thru his agent, Simplicio
Panganiban, whom he alleges to be his partner.
The aforementioned fundamental bases for the
existence of employer-employee relationship are
not present in the case at bar. As mentioned earlier,
private respondent Reynaldo Mercado had no
connection with the selection and engagement of
Arturo Villavilla; exercised no power of dismissal
over Arturo Villavilla; neither had he any power of
control or had reserved the right to control Arturo
Villavilla as to the result of the work to be done as
well as the means and methods by which the same
is to be accomplished, and there was no such
uniform salary involved
It is clear that there was no employer-employee
relationship between petitioner's son Arturo and
private respondent Mercado, much less private
respondent Cosuco. As such, Arturo could not be
made subject of compulsory coverage under the
Social Security Act; hence, private respondents
cannot be said to have violated said law which they
did not register him with the Social Security System.
Respondents as well as intervenor are not
answerable to petitioners for any death benefits
under the law.
BESA v TRAJANO
FACTS: Private respondent Kaisahan ng
Manggagawang Pilipino (KAMPIL) a legitimate labor
union duly registered with the Ministry of Labor and
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Property of: Hanniyah P. Sevilla
Employment (MOLE), filed a Petition for
Certification Election, in the National
Labor Relations Division of the National Capital
Region. Petitioner opposed it alleging that there is
no employer-employee relationship between Besa's
and the petitioners-signatories to the petition.
The Med-Arbiter issued an order declaring that
there was an employer-employee relationship
between the parties and directed that an election
be conducted. Petitioner appealed the order to the
Director of BLR. Appeal was dismissed by the
Director of BLR, upholding the finding of the Med-
Arbiter that supervisors were appointed to oversee
the bootblacks' performance.
ISSUE: W/N an er-ee relationship exists between
petitioner and the 17 shoeshiners-members of the
respondent union? NO
RULING: The records of the case reveal that an
employer-employee relationship does not exist
between the 17 shoeshiners and petitioner.
The shoe shiner is distinct from a piece worker
because while the latter is paid for work
accomplished, he does not, however, contribute
anything to the capital of the employer other than
his service. It is the employer of the piece worker
who pays his wages, while the shoe shiner in this
instance is paid directly by his customer. The piece
worker is paid for work accomplished without
regard or concern to the profit as
derived by his employer, but in the case of the shoe
shiners, the proceeds derived from the trade are
always divided share and share alike with
respondent Besa. The shoe shiner can take his share
of the proceeds everyday if he wanted to or weekly
as is the practice of Besa's. The employer of the
piece worker supervises and controls his work, but
in the case of the shoe shiner, respondent Besa
does not exercise any degree of control or
supervision over their person and their work. All
these are not obtaining in the case of a piece
worker as he is in fact an employee in
contemplation of law, distinct from the shoe shiner
in this instance who, in relation to respondent
Mamerto B. Besa is a partner in the trade.
Entitlement of the minimum requirements of the
law particularly on wages and allowances
presupposes the existence of employer-employee
relationship which is determined by the
concurrence of the following conditions:
1. right to hire2. payment of wages 3. right to
fire; and 4. control and supervision
The most important condition to be considered is
the exercise of control and supervision over the
employees. These shoe shiners are not employees
of the company, but are partners instead. This is
due to the fact that the owner/manager does not
exercise control and supervision over the shoe
shiners. That the shiners have their own customers
from whom they charge the fee and divide the
proceeds equally with the owner, which make the
owner categorized them as on purely commission
basis.
Case of Manila Golf – the caddy of manila golf also
thought that they were employees. But the SC said
that you are not employees. You are partners.
These caddies say that manila golf exercises control
over them. They are tested whether they know how
to caddy. And then accdg to the caddy, we are
regulated as to the attire. We have to come in
collared shirt. We come in shoes and we cannot
come in shoes without socks. And our behavior is
controlled. So accdg to the caddies that is evidence
that we controlled not only to the goal that we have
to achieve but also as to the means. Is that correct?
The SC says that these are not indexes of control.
Why? Because if it were indexes of control then the
members of the manila golf are also employees of
the manila golf because they are also subject to the
same regulations. They also cannot come in
collarless shirts.
So accdg to the SC, if all these rules indicate ER-EE
relationship then the members are also employees
because they are subject to the same rules. But the
truth of the matter is you even though you are
assigned that day to be present in order that you be
ready to caddy, if somebody comes around who is
your favorite customer and asks you to come with
him in another golf course and you accompany him,
the management cannot do anything, they will have
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to pick another caddies who are on standby to pick
up your place. Because in golf you have a favorite
caddy.
Those are the cases with respect to industrial
partnership.
There is this question, is ER-EE relationship a
question of fact or is it a question of law? Why is
that a question? Because the SC in SSS vs. CA, says
that ER-EE relationship is a question of fact. But
then in 1989, in ---, SC says that ER-EE relationship is
a question of law. So what is it? Is it a question of
fact or question of law?
ER-EE Relationship imposed by law
Indirect Employer (Read with Dept. Order 18-02)
There used to be three ee-er relationship imposed
by law: First, Art.106 is contracting and
subcontracting. There are 2 sub kinds there namely:
those contracted bona fide, in which case the
contractor has (1) sufficient capital for investment
by way of machinery, equipment and the (2)
control for activities which are not directly related
to the business of the indirect employer. Should
the contractor fail to pay the wages and benefits
then the indirect employer becomes liable for the
extent of nonpayment or underpayment of the
employees. That is the extent of liability. That is
limited ee-er relationship. 2
2 LIMITED OR INDIRECT EMPLOYER (valid job contracting) – refers
to an arrangement whereby a principal aggress to put out or farm out
with a contractor or subcontractor the performance or completion of a
specific job, work or service to be performed or completed within or
outside the premises of the principal.
ELEMENTS:
1. The contractor or subcontractor 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 and
FREE FROM CONTROL AND DIRECTION of the principal
in all matters connected with the performance of the work,
except as to the results thereof.
2. The sub/contractor has substantial capital or investment;
3. the agreement between the principal and contractor assures
the contractual employees entitlement to all labor and
occupational safety and health standards, free exercise of
the right to self-organization, security of tenure and social
and welfare benefits.
CONSEQUENCES:
However, if the contractor does not have sufficient
capital and or investment by way of equipment,
office, machinery and he is made to perform
activities which are directly related to the principal
business of the indirect employer then the law
dictates that the contractor is disregarded and
there is only one employer viz the indirect employer
and he is the employer not only to the extent of the
underpayment but for all labor and social legislation
purposes.3 So even for SSS and Pag-ibig, the indirect
employer becomes liable.
Now the landmark case of course is Philippine Bank
of Communications v NLRC. That messenger is not
a messenger! He is working with the premises of
the bank where no outsider can go in. what was in
the mind to think that he is not an employee when
he is under the direction of the officers of the bank.
Naa ba gud tugotan mag laroy2x diha sa sulod sa
bank., privy to confidential papers, even to the vault
of the bank. So he is engaged to perform activities
1. The sub/contractor shall be considered the employer;
2. The principal is solidarily liable for unpaid wages and any
violations of the Labor Code.
3In this case, there is labor only contracting, a prohibited act defined as
an arrangement where the contractor or subcontractor merely recruits,
supplies, or places workers to perform a job, work or service for a
principal.
 Elements:
1. The contractor or subcontractor DOES NOT HAVE
substantial capital or investment to actually perform the job,
work or service under its own account and responsibility and
The employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which
are DIRECTLY RELATED to the main business of the
principal; OR
2. The contractor DOES NOT EXERCISE CONTROL over the
performance of the employees.
According to Azucena: The essential element of labor-only
contracting is: arrangement is merely to recruit, supply or place workers
to perform a job or service for a principal. The confirming elements are
(1) element number 1, or (2) element number 3. For labor-only
contracting to exist, the formula must be: ESSENTIAL ELEMENT
plus CONFIRMING ELEMENT (1) or ESSENTIAL ELEMENT plus
CONFIRMING ELEMENT 2.
CONSEQUENCE OF LABOR ONLY CONTRACTING:
1. Workers supplied by the agency become employees of the
principal;
2. Agency-hired employees become entitled to benefits under
the CBA of principal company;
3. The principal company is directly and immediately liable.
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in the bank which are usual and necessary to the
business of the bank. He is not made to do
contractual work which has nothing to do with the
business of the bank so therefore he is controlled of
the bank thus he is an employee of the bank not of
the agency. That is the doctrine in Phil bank of
communications v NLRC.
However, in Kimberly Clark (independent labor
union v Drilon), the SC said that the court takes
judicial notice that there is common mark list in the
private and public sector of sub contracting
1. Security services
2. Maintenance
3. Janitorial
(NB: Judicial notice means that you do not have to
present proof, the court accepts it as it is as a fact.
Example: There are 24 hours in a day)
SC said this practice of contracting of security,
maintenance, and janitorial services are taken
judicial notice of by the SC. why does the SC say
that? Because if you go to the website of the SC,
one of the pages there has subcontracting. The SC
asks for bid to hire contractors to do the janitorial
and security services of the different court s all over
the country so even the SC is engaged in sub
contracting. That’s why the SC says this court takes
judicial notice.
So there is limited ee-er rel in case of failure, non-
payment of the contractor and wages of the
employee and there is unlimited ee-er relationship
between the indirect employer and the contractor if
the contractor does not have sufficient capital etc
and is engaged to perform activities which are
directly related to the business of the employer.
Now, subsequently in 1993 Neri V NLRC. The SC
reinstated the ruling in Kimberly Clark but there are
other categories. This court takes judicial notice a
widespread practice in both private and public
sector in subcontracting and not only janitorial,
security, maintenance but also technical service.
What is the service in Neri that was an issue? There
was a telephone operator which the SC held may be
contracted out by the banana operation farm in
Panabo. The case of Neri v NLRC.
KIMBERLY CLARK v DRILON
FACTS: Kimberly-Clark Philippines, Inc. (KIMBERLY)
executed a three-year collective bargaining
agreement (CBA) with United Kimberly-Clark
Employees Union-Philippine Transport and General
Workers' Organization (UKCEUPTGWO) which
expired on June 30, 1986.
Some members of the bargaining unit formed
another union called "Kimberly Independent Labor
Union for Solidarity, Activism and Nationalism-
Organized Labor Association in Line Industries and
Agriculture (KILUSAN-OLALIA)."
On April 21, 1986, KILUSAN-OLALIA filed a petition
for certification election w/ the Ministry of Labor
and Employment (MOLE). KIMBERLY and UKCEU-
PTGWO did not object to the holding of a
certification election but objected to the inclusion
of the so-called contractual workers whose
employment with KIMBERLY was coursed through
an independent contractor, Rank Manpower
Company (RANK), as among the qualified voters.
Med-Arbiter Bonifacio I. Marasigan issued an order
declaring the regular rank-and-file
laborers/employees, casuals who have worked at
least six (6) months and Contractual employees who
are allegedly in the employ of an independent
contractor as eligible to vote in the certification
election.
During the pre-election conference, 64 casual
workers were challenged by KIMBERLY and UKCEU-
PTGWO on the ground that they are not employees
of KIMBERLY but of RANK. It was agreed by all the
parties that the 64 voters shall be allowed to cast
their votes but that their ballots shall be segregated
and subject to challenge proceedings.
KILUSAN-OLALIA filed with the med-arbiter a
"Protest and Motion to Open and Count Challenged
Votes" on the ground that the 64 workers are
employees of KIMBERLY within the meaning of
Article 212(e) of the Labor Code. KIMBERLY filed an
opposition to the protest and motion, asserting that
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
there is no employer-employee relationship
between the casual workers and the company.
Then Minister Sanchez rendered a decision:
1. The service contract for janitorial and yard
maintenance services between KIMBERLY and RANK
was declared legal;
2. The other casual employees not performing
janitorial and yard maintenance services were
deemed labor-only contractual and since labor-only
contracting is prohibited, such employees were held
to have attained the status of regular employees,
the regularization being effective as of the date of
the decision (November 13, 1986, and, therefore,
they were not entitled to vote in the certification
election);
3. UKCEU-PTGWO, having garnered more votes
than KILUSAN-OLALIA, was certified as the exclusive
bargaining representative of KlMBERLY's
employees;
Former Labor Minister Franklin Drilon denied both
motions for reconsideration filed by KIMBERLY and
KILUSAN-OLALIA. The new CBA executed between
KIMBERLY and UKCEU-PTGWO was signed.
ISSUE: W/N said workers, not performing janitorial
or yard maintenance service, became regular
employees of KIMBERLY? YES
RULING:The Labor Code defines who are regular
employees, as follows:
"ART. 280. Regular and Casual Employment. The
provisions of written agreements to the contrary
notwithstanding and regardless of the oral
agreements of the parties, an employment shall be
deemed to be regular where the employee has
been engaged to perform activities which are
usually necessary or desirable in the usual business
or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which
has been determined at the time of the
engagement of the employee or where the work or
services to be performed is seasonal in nature and
the employment is for the duration of the season.
"An employment shall be deemed to be casual if it
is not covered by the preceding paragraph:
Provided, That any employee who has rendered at
least one year of service, whether such service is
continuous or broken, shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while
such activity exists."
The law thus provides for two kinds of regular
employees, namely: (1) those who are engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer; and (2) those who have rendered at least
one year of service, whether continuous or broken,
with respect to the activity in which they are
employed. The individual petitioners herein who
have been adjudged to be regular employees fall
under the second category. These are the
mechanics, electricians, machinists, machine shop
helpers, warehouse helpers, painters, carpenters,
pipe fitters and masons.
It is not disputed that these workers have been in
the employ of KIMBERLY for more than one year at
the time of the filing of the petition for certification
election by KILUSAN-OLALIA. Owing to their length
of service with the company, these workers became
regular employees, by operation of law, one year
after they were employed by KIMBERLY through
RANK.
As a consequence of their status as regular
employees, those workers not perforce janitorial
and yard maintenance service were performance
entitled to the payment of salary differential, cost
of living allowance, 13th month pay, and such other
benefits extended to regular employees under the
CBA, from the day immediately following their first
year of service in the company. These regular
employees are likewise entitled to vote in the
certification election held in July 1, 1986.
Neri vs NLRC
Facts:Petitioners Virginia G. Neri and Jose Cabelin
applied for positions with, and were hired by,
respondent BCC, a corporation engaged in providing
technical maintenance, engineering, housekeeping,
security and other specific services to its clientele.
They were assigned to work in the Cagayan De Oro
HPSEVILLA© 38
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
City Branch of respondent FEBTC on 1 May 1979
and 1 August 1980, respectively, Neri as radio/telex
operator and Cabelin as janitor, before being
promoted to messenger on 1 April 1989.
On 28 June 1989, petitioners instituted complaints
against FEBTC and BCC before Regional Arbitration
Branch No. 10 of the Department of Labor and
Employment to compel the bank to accept them as
regular employees and for it to pay the differential
between the wages being paid them by BCC and
those received by FEBTC employees with similar
length of service.
Respondent BCC was considered by the LA as an
independent contractor because it proved it had
substantial capital. Thus, petitioners were held to
be regular employees of BCC, not FEBTC.
Issue: W/N the petitioners are employees of FEBTC.
Held: It is well-settled that there is "labor-only"
contracting where: (a) the person supplying workers
to an employer does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others; and, (b)
the workers recruited and placed by such person
are performing activities which are directly related
to the principal business of the employer.
BCC cannot be considered a "labor-only" contractor
because it has substantial capital. While there may
be no evidence that it has investment in the form of
tools, equipment, machineries, work premises,
among others, it is enough that it has substantial
capital, as was established before the Labor Arbiter
as well as the NLRC.
The Court has already taken judicial notice of the
general practice adopted in several government and
private institutions and industries of hiring
independent contractors to perform special
services. These services range from janitorial,
security and even technical or other specific
services such as those performed by petitioners
Neri and Cabelin. While these services may be
considered directly related to the principal business
of the employer, nevertheless, they are not
necessary in the conduct of the principal business of
the employer.
Besides, petitioners do not deny that they were
selected and hired by BCC before being assigned to
work in the Cagayan de Oro Branch of FEBTC. BCC
likewise acknowledges that petitioners are its
employees. The record is replete with evidence
disclosing that BCC maintained supervision and
control over petitioners through its Housekeeping
and Special Services Division: petitioners reported
for work wearing the prescribed uniform of BCC;
leaves of absence were filed directly with BCC; and,
salaries were drawn only from BCC.
The determination of employer-employee
relationship involves factual findings.
VINOYA vs. NLRC
FACTS: Petitioner Alexander Vinoya claims that he
applied and was accepted by RFC as sales
representative and on the same date, a company
identification card was issued to him by RFC.
Petitioner alleges that he reported daily to the
office of RFC in Pasig City. During his employ, he
was assigned to various supermarkets and grocery
stores where he booked sales orders and collected
payments for RFC. For this task, he was required by
RFC to put up a monthly bond of P200.00 as
security deposit to guarantee the performance of
his obligation as sales representative. Petitioner
contends that he was under the direct control and
supervision of Mr. Dante So and Mr. Sadi Lim, plant
manager and senior salesman of RFC, respectively.
He was transferred by RFC to Peninsula Manpower
Company, Inc. ("PMCI"), an agency which provides
RFC with additional contractual workers pursuant to
the Contract of Service for the supply of manpower
services. After his transfer to PMCI, petitioner was
allegedly reassigned to RFC as sales representative.
Subsequently, he was informed by Ms. Susan Chua,
personnel manager of RFC that his services were
terminated and he was asked to surrender his ID
card. Petitioner was told that his dismissal was due
to the expiration of the Contract of Service between
RFC and PMCI.
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
Consequently, petitioner filed a case against RFC
before the Labor Arbiter for illegal dismissal and
non-payment of 13th month pay.
Private respondent Regent Food Corporation, on
the other hand, maintains that no er-ee relationship
existed between petitioner and itself. It insists that
petitioner is actually an employee of PMCI,
allegedly an independent contractor, which had a
Contract of Service with RFC.
The Labor Arbiter rendered a decision in favor of
petitioner. The Labor Arbiter concluded that RFC
was the true employer of petitioner for the
following reasons: (1) Petitioner was originally with
RFC and was merely transferred to PMCI to be
deployed as an agency worker and then
subsequently reassigned to RFC as sales
representative; (2) RFC had direct control and
supervision over petitioner; (3) RFC actually paid for
the wages of petitioner although coursed through
PMCI; and, (4) Petitioner was terminated per
instruction of RFC.
RFC appealed the adverse decision of the Labor
Arbiter to the NLRC. The NLRC reversed the findings
of the Labor Arbiter. The NLRC opined that PMCI is
an independent contractor because it has
substantial capital and, as such, is the true
employer of petitioner. The NLRC, thus, held PMCI
liable for the dismissal of petitioner.
RFC alleges that PMCI is an independent contractor
on the sole ground that the latter is a highly
capitalized venture. RFC presents a copy of the
Articles of Incorporation and the Treasurer's
Affidavit submitted by PMCI to the SEC showing
that it has an authorized capital stock of P1,
000,000.00, of which P300, 000.00 is subscribed and
P75, 000.00 is paid-in. According to RFC, PMCI is a
duly organized corporation engaged in the business
of creating and hiring a pool of temporary
personnel and assigning them to its clients for such
duration
as said clients may require. RFC further contends
that PMCI has a separate office, permit and license
and its own organization.
ISSUE: W/N an er-ee relationship exists between
Vinoya and RFC? YES
RULING: Labor-only contracting, a prohibited
act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a
principal. In labor-only contracting, the following
elements are present:
(a) The contractor or subcontractor does not have
substantial capital or investment to actually
perform the job, work or service under its own
account and responsibility;
(b) The employees recruited, supplied or placed by
such contractor or subcontractors are performing
activities which are directly related to the main
business of the principal.
On the other hand, permissible job contracting or
subcontracting refers to an arrangement whereby a
principal agrees to put out or farm out with a
contractor or subcontractor the performance or
completion of a specific job, work or service within
a definite or predetermined period, regardless of
whether such job, work or service is to be
performed or completed within or outside the
premises of the principal. A person is considered
engaged in legitimate job contracting or
subcontracting if the following conditions concur:
(a) The contractor or subcontractor 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, and 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;
(b) The contractor or subcontractor has substantial
capital or investment; and
(c) The agreement between the principal and
contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational
safety and health standards, free exercise of the
right to self-organization, security of tenure, and
social and welfare benefits.
The Court agreed with the conclusion of the Labor
Arbiter that PMCI is engaged in labor-only
contracting.
HPSEVILLA© 40
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
First, PMCI does not have substantial capitalization
or investment in the form of tools, equipment,
machineries, and work premises, among others, to
qualify as an independent contractor. While it has
an authorized capital stock of P1, 000,000.00, only
P75, 000.00 is actually paid-in, which cannot be
considered as substantial capitalization with the
current economic atmosphere in the country.
Second, PMCI did not carry on an independent
business nor did it undertake the performance of its
contract according to its own manner and method,
free from the control and supervision of its
principal, RFC. The evidence shows that the workers
assigned by PMCI to RFC were under the control
and supervision of the latter. The Contract of
Service itself provides that RFC can require the
workers assigned by PMCI to render services even
beyond the regular eight hour working day when
deemed necessary.
Third, PMCI was not engaged to perform a specific
and special job or service, which is one of the strong
indicators that an entity is an independent
contractor. As stated in the Contract of Service, the
sole undertaking of PMCI was to provide RFC with a
temporary workforce able to carry out whatever
service may be required by it. Apart from that, no
other particular job, work or service was required
from PMCI.
Lastly, in labor-only contracting, the employees
recruited, supplied or placed by the contractor
perform activities which are directly related to the
main business of its principal. In this case, the work
of petitioner as sales representative is directly
related to the business of RFC.
Even granting that PMCI is an independent
contractor, a perusal of the Contract of Service
entered into between RFC and PMCI reveals that
petitioner is actually not included in the
enumeration of the workers to be assigned to RFC.
The following are the workers enumerated in the
contract:
1. Merchandiser 2. Promo Girl 3. Factory Worker 4.
Driver
The above enumeration does not include the
position of petitioner as sales representative. This
only shows that petitioner was never intended to be
a part of those to be contracted out.
In determining the existence of employer-employee
relationship the following elements of the "four-
fold test" are generally considered, namely: (1) the
selection and engagement of the employee or the
power to hire; (2) the payment of wages; (3) the
power to dismiss; and (4) the power to control the
employee. Of these four, the "control test" is the
most important.
The ID card is enough proof that petitioner was
previously hired by RFC prior to his transfer as
agency worker to PMCI. With respect to the
payment of wages, even though the wages were
coursed through PMCI, the funds actually came
from the pockets of RFC. Thus, RFC is still the one
who paid the wages of petitioner albeit indirectly.
As to the third element, the Contract of Service
gave RFC the right to terminate the workers
assigned to it by PMCI without the latter's approval.
RFC requested PMCI to terminate petitioner from
his employment with the company. In response to
the request of RFC, PMCI terminated petitioner
from service. As to the fourth element, RFC already
admitted that it exercised control and supervision
over petitioner.
Now, I would like to bring out to you a 2005 case of
indirect employer. That is National Food Authority
v Magpala Security (March 8, 2005) 453 SCRA 70.
This is a bona fide contracting out of security
services. There’s a wage order which specifically
says that any increase is born out by the order
account by the direct employer and not the agency.
So the agency asks for reimbursement from the
indirect employer in line with what the wage order
says. As to the increases of the minimum wage to
give the security guards. No questions about that?
The security agency is further asking for the
differential in terms of overtime. Because if your
rate goes up, your overtime also goes up! 13th
month pay also goes up if the wage goes up and
the premium pay for work done on days which work
should not be done! What is the ruling of the SC?
HPSEVILLA© 41
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
The SC says the indirect employer is only liable for
the increase not for the roll up costs! (the
consequent increase in overtime) now take note
that the indirect employer here is the NFA and NFA
is government owned and controlled corporation
with orig charter. So this is the only instance where
a government entity acting an employer subject to
the labor code, if it becomes an employer by the
force of law. What is that law? 107 of the labor
code. You are an indirect employer. The direct
employer is the agency and if the contractor fails to
pay wages you are to pay the wages! It is the law
itself that makes you an employer that is why it is
called ee-er relationship imposed by law! So please
read this case because this case makes a
government entity become a private employer
liable under the LC and secondly it limits the liability
and it has the passion as to defy common sense.
And the SC says if you don’t agree with the
judgment your remedy is to elect people who will
change the law because the SC merely interprets
the law strictly, liberally! Ok we will take that up
further when we go to ee-er from 105 to 107.
NFA v MASADA SECURITY AGENCY
FACTS: Respondent MASADA Security Agency,
Inc., entered into a one year contract to provide
security services to the various offices, warehouses
and installations of NFA within the scope of the NFA
Region I. Upon the expiration of said contract, the
parties extended the effectivity on a monthly basis
under same terms and condition.
Meanwhile, the Regional Tripartite Wages and
Productivity Board issued several wage orders
mandating increases in the daily wage rate.
Respondent
requested NFA for a corresponding upward
adjustment in the monthly contract rate consisting
of the increases in the daily minimum wage of the
security guards as well as the corresponding raise in
their overtime pay, holiday pay, 13th month pay,
holiday, rest day pay, Social Security System (SSS)
and Pag-ibig premiums. NFA, however, granted the
request only with respect to the increase in the
daily wage and denied the same with respect to the
other benefits and remunerations.
Respondent filed with the RTC of Quezon City, a
case for recovery of sum of money against NFA.
The complaint sought reimbursement of the
amounts allegedly paid by respondent to the
security guards.
The trial court rendered a decision in favor of
respondent holding that NFA is liable to pay the
security guards’ wage related benefits pursuant to
RA 6727, because the basis of the computation of
said benefits, like overtime pay, holiday pay, SSS
and Pag-ibig premium, is the increased minimum
wage.
NFA appealed to the Court of Appeals but the same
was dismissed. The appellate court sustained the
ruling of the trial court that NFA is under obligation
to pay the administrative costs and margin and the
wage related benefits of the respondent’s security
guards. The Court of Appeals likewise denied NFA’s
motion for reconsideration.
ISSUE: W/N the liability of principals in service
contracts under Section 6 of RA 6727 (Wage
Rationalization Act) and the wage orders issued by
the Regional Tripartite Wages and Productivity
Board is limited only to the increment in the
minimum wage? YES
RULING: Payment of the increases in the wage rate
of workers is ordinarily shouldered by the
employer. Sec. 6 of RA 6727, however, expressly
lodged said obligation to the principals or indirect
employers in construction projects and
establishments providing security, janitorial and
similar services. Section 6 of RA 6727, provides:
SEC. 6. In the case of contracts for construction
projects and for security, janitorial and similar
services, the prescribed increases in the wage rates
of the workers shall be borne by the principals or
clients of the construction/service contractors and
the contract shall be deemed amended accordingly.
In the event, however, that the principal or client
fails to pay the prescribed wage rates, the
construction/service contractor shall be jointly and
severally liable with his principal or client.
HPSEVILLA© 42
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
NFA claims that its additional liability under the
aforecited provision is limited only to the payment
of the increment in the statutory minimum wage
rate, i.e., the rate for a regular eight (8) hour work
day.
The term “wage” as used in Sec. 6 of RA 6727
pertains to no other than the “statutory minimum
wage” which is defined under the Rules
Implementing RA 6727 as the lowest wage rate
fixed by law that an employer can pay his worker.
The basis thereof under Section 7 of the same Rules
is the normal working hours, which shall not exceed
eight hours a day. Hence, the prescribed increases
or the additional liability
to be borne by the principal under Sec. 6 of RA 6727
is the increment or amount added to the
remuneration of an employee for an 8-hour work.
Since the increase in wage referred to in Sec. 6
pertains to the “statutory minimum wage” as
defined herein, principals in service contracts
cannot be made to pay the corresponding wage
increase in the overtime pay, night shift differential,
holiday and rest day pay, premium pay and other
benefits granted to workers.
Moreover, the law secures the welfare of the
workers by imposing a solidary liability on principals
and the service contractors. Under the second
sentence of Sec. 6 of RA 6727, in the event that the
principal or client fails to pay the prescribed wage
rates, the service contractor shall be held solidarily
liable with the former. Articles 106, 107 and 109 of
the Labor Code likewise provide the same rule.
Based on the foregoing interpretation of Sec. 6 of
RA 6727, the parties may enter into stipulations
increasing the liability of the principal. So long as
the
minimum obligation of the principal, i.e., payment
of the increased statutory minimum wage is
complied with, the Wage Rationalization Act is not
violated.
The parties acknowledged the application to their
contract of the wage orders issued by the RTWPB
pursuant to RA 6727. There being no assumption
by NFA of a greater liability than that mandated by
Sec. 6 of the Act, its obligation is limited to the
payment of the increased statutory minimum wage
rates which had already been satisfied by NFA.
*Other cases:
RABAGO v NLRC
FACTS: In 1981, Ace Building Care and the Philippine
Tuberculosis Society entered into a contract under
which the former would provide the latter with
janitorial and allied services. The contract was
renewed yearly until 1985, when the services were
placed under public bidding and a new contract was
awarded to another company, which then took over
from ABC.
The 41 janitors ABC had earlier detailed to PTS filed
a complaint with the NLRC against both ABC and
PTS for unpaid wage differentials under Wage Order
Nos. 5 and 6, holiday premium pay, damages and
attorney's fees, reimbursement of cash bond,
incentive leave pay and bonus and separation pay.
ABC filed a cross-claim against PTS, contending that
the latter was liable for the statutory increases,
while PTS moved to dismiss on the ground that it
belonged to the public sector and was not covered
by the Labor Code.
The Labor Arbiter held that the complainants were
not entitled to legal holiday pay and to
reimbursement of cash bond or separation pay
except for five of them who were allowed
separation pay. The Labor Arbiter also held ABC and
PTSI jointly and severally liable for payment of the
wage differentials under Wage Orders Nos. 5 and 6.
Both ABC and PTSI appealed to the NLRC, which
affirmed the decision with respect to the award of
separation pay and service incentive leave with pay
but held that it was ABC alone that should pay the
wage differentials under Wage Orders Nos. 5 and 6.
ISSUE: W/N both ABC and PTS are solidarily liable
for the payment of wage differentials? YES
RULING:The Court held in Eagle Security Agency,
Inc. vs. NLRC:
HPSEVILLA© 43
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
Petitioners' solidary liability for the amounts due
the security guards finds support in Articles 106,
107 and 109 of the Labor Code which state that:
Art. 106. Contractor or subcontractor. Whenever an
employer enters into a contract with another
person for the performance of the former's work,
the employees of the contractor and of the latters'
subcontractor, if any, shall be paid in accordance
with the provisions of this Code.
In the event that the contractor or subcontractor
fails to pay the wages of his employees in
accordance with this Code, the employer shall be
jointly and severally liable with his contractor or
subcontractor to such employees to the extent that
he is liable to employees directly employed by him.
Art. 107. Indirect employer. The provisions of the
immediately preceding Article shall likewise apply
to any person, partnership, association or
corporation which, not being an employer,
contracts with an independent contractor for the
performance of any work, task, job or project.
Art. 109. Solidary liability. The provisions of existing
laws to the contrary notwithstanding, every
employer or indirect employer shall be held
responsible with his contractor or subcontractor for
any violation of this Code. For purposes of
determining the extent of the civil liability under
this Chapter, they shall be considered as direct
employers.
The contractor is made liable by virtue of his status
as direct employer. The principal, on the other
hand, is made the indirect employer of the
contractor's employees for purposes of paying the
employees their wages should the contractor be
unable to pay them. This joint and several liability
facilitates, if not
guarantees, payment of the workers' performance
of any work, task, job or project, thus giving the
workers ample protection as mandated by the 1987
Constitution.
The conclusion is that Ace Building Care and the
Philippine Tuberculosis Society are solidarily liable
to the complainants for their differential pay under
Wage Orders Nos. 5 and 6, PTS being considered in
the circumstances of this case to be the indirect
employer of workers in the private sector. ABC is
liable for the payment of the separation pay and
incentive leave pay of the complainants mentioned
in the challenged decisions.
Filipinas vs NLRC
Facts: On 4 April 1991 FILSYN, a domestic
corporation engaged in the manufacture of
polyester fiber, contracted with DE LIMA for the
performance of specific janitorial services at the
former's plant. Pursuant to the agreement Felipe
Loterte, among others, was deployed at FILSYN to
take care of the plants and maintain general
cleanliness around the premises.
On 24 February 1992 Loterte sued FILSYN and DE
LIMA as alternative defendants for illegal dismissal,
underpayment of wages, non-payment of legal
holiday pay, service incentive leave pay and 13th
month pay alleging that he was first assigned to
perform janitorial work at FILSYN in 1981; that
when a movement to demand increased wages and
13th month pay arose among the workers on
December 1991 he was accused by a certain Dodie
La Flores of having posted in the bulletin board at
FILSYN an article attributing to management a
secret understanding to block the demand; and, for
denying responsibility, his gate pass was
unceremoniously cancelled on 6 February 1992 and
he was subsequently dismissed.
The NLRC debunked the claim of FILSYN and
affirmed the Labor Arbiter in finding DE LIMA as a
labor-only contractor.
Issue: W/N DE LIMA is a labor-only contractor thus
creating a E-E relationship betwen FILSYN and
LOTERO.
Held: NO!.
We agree that there is sufficient evidence to show
that private respondent DE LIMA is an independent
job contractor, not a mere labor-only contractor.
Under the Labor Code, two (2) elements must exist
for a finding of labor-only contracting: (a) the
person supplying workers to an employer does not
have
HPSEVILLA© 44
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
substantial capital or investment in the form of
tools, equipment, machineries, work premises,
among others, and (b) the workers recruited and
placed by such persons are performing activities
directly related to the principal business of such
employer.
These two (2) elements do not exist in the instant
case. As pointed out by petitioner, private
respondent DE LIMA is a going concern duly
registered with the Securities and Exchange
Commission with substantial capitalization of
P1,600,000.00, P400,000.00 of which is actually
subscribed. Hence, it cannot be considered as
engaged in labor-only contracting being a highly
capitalized venture. Moreover, while the janitorial
services performed by Felipe Loterte pursuant to
the agreement between FILSYN and DE LIMA may
be considered directly related to the principal
business of FILSYN which is the manufacture of
polyester fiber, nevertheless, they are not
necessary in its operation.
Consequently, DE LIMA being an independent job
contractor, no direct employer-employee
relationship exists between petitioner FILSYN and
private respondent Felipe Loterte.
With respect to its liability, however, petitioner
cannot totally exculpate itself from the fact that
respondent DE LIMA is an independent job
contractor. We agree with the Solicitor General that
notwithstanding the lack of a direct employer-
employee relationship between FILSYN and Felipe
Loterte, the former is still jointly and severally liable
with respondent DE LIMA for Loterte's monetary
claims under Art. 109 of the Labor Code 19 which
explicitly provides --
The provisions of existing laws to the contrary
notwithstanding, every employer or indirect
employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter,
they shall be considered as direct employers.
COCA COLA BOTTLERS VS. NLRC
Fx: COCA COLA entered into a contract of janitorial
services with Bacolod Janitorial Services (BJS). Every
year thereafter a service contract was entered into
between the parties under similar terms and
conditions until about May 1994.
On 26 October 1989 COCA COLA hired
private respondent Ramon Canonicato as a casual
employee and assigned him to the bottling crew as
a substitute for absent employees. In April 1990
COCA COLA terminated Canonicato's casual
employment. Later that year COCA COLA availed of
Canonicato's services, this time as a painter in
contractual projects which lasted from fifteen (15)
to thirty (30) days. On 1 April 1991 Canonicato was
hired as a janitor by BJS which assigned him to
COCA COLA considering his familiarity with its
premises. On 5 and 7 March 1992 Canonicato
started painting the facilities of COCA COLA and
continued doing so several months thereafter or so
for a few days every time until 6 to 25 June 1993.
Goaded by information that COCA COLA
employed previous BJS employees who filed a
complaint against the company for regularization
pursuant to a compromise agreement, Canonicato
submitted a similar complaint against COCA COLA
to the Labor Arbiter on 8 June 1993.
Labor Arbiter ruled that there were no er-
ee relationship between Coca Cola and Canonicato
as BJS was the latter's real employer. NLRC reversed
LA's ruling and held that the janitorial services of
Canonicato were found to be necessary or desirable
in the usual business or trade of COCA COLA. The
NLRC accepted Canonicato's proposition that his
work with the BJS was the same as what he did
while still a casual employee of COCA COLA. In so
holding the NLRC applied Art. 280 of the Labor Code
and declared that Canonicato was a regular
employee of COCA COLA and entitled to
reinstatement and payment of P18,105.10 in back
wages.
Issue: W/N there was er-ee relationship
Held: No. The NLRC was wrong to apply Art. 280 in
this case.
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
We perceive at the outset the disposition of the
NLRC that janitorial services are necessary and
desirable to the trade or business of petitioner
COCA COLA. But this is inconsistent with our
pronouncement in Kimberly Independent Labor
Union v. Drilon where the Court took judicial notice
of the practice adopted in several government and
private institutions and industries of hiring janitorial
services on an "independent contractor basis." In
this respect, although janitorial services may be
considered directly related to the principal business
of an employer, we deemed them unnecessary in
the conduct of the employer's principal business.
This judicial notice, of course, rests on the
assumption that the independent contractor is a
legitimate job contractor so that there can be no
doubt as to the existence of an employer-employee
relationship between contractor and the worker. In
this situation, the only pertinent question that may
arise will no longer deal with whether there exists
an employment bond but whether the employee
may be considered regular or casual as to deserve
the application of Art. 280 of the Labor Code.
It is an altogether different matter when the very
existence of an employment relationship is in
question. This was the issue generated by
Canonicato's
application for regularization of his employment
with COCA COLA and the subsequent denial by the
latter of an employer-employee relationship with
the applicant. It was error therefore for the NLRC
to apply Art. 280 of the Labor Code in determining
the existence of an employment relationship of the
parties herein. Article 280 is not the yardstick for
determining the existence of an employment
relationship because it merely distinguishes
between two kinds of employees, i.e., regular
employees and casual employees, for purposes of
determining the right of an employee to certain
benefits, to join or form a union, or to security of
tenure. Article 280 does not apply where the
existence of an employment relationship is in
dispute.
In determining the existence of an employer-
employee relationship it is necessary to determine
whether the following factors are present: (a) the
selection and engagement of the employee; (b) the
payment of wages; (c) the
power to dismiss; and, (d) the power to control the
employee's conduct. Notably, these are all found in
the relationship between BJS and Canonicato and
not between Canonicato and petitioner COCA COLA.
BJS has the power to control the conduct of the
janitors. The supervisors of petitioner, being
interested in the result of the work of the janitors,
also gives suggestions as to the performance of the
janitors, but this does not mean that BJS has no
control over them. The interest of petitioner is only
with respect to the result of their work. On the
other hand, BJS oversees the totality of their
performance.
BJS has the power to control the conduct of the
janitors. The supervisors of petitioner, being
interested in the result of the work of the janitors,
also gives suggestions as to the performance of the
janitors, but this does not mean that BJS has no
control over them. The interest of petitioner is only
with respect to the result of their work. On the
other hand, BJS oversees the totality of their
performance.
Vallum Security vs. NLRC (compare with Coca Cola
case)
Fx: On 1 September 1986, petitioner Baguio Leisure
Corporation (Hyatt Terraces Baguio) ("Hyatt
Baguio") and petitioner Valium Security Services
(Vallum") entered into a contract for security
services under the terms of which Vallum a greed to
protect the properties and premises of Hyatt Baguio
by providing fifty (50) security guards, on a 24-hour
basis, a day.
On I June 988, Heinrich L. Maulbecker, Hyatt
Baguio's General Manager, wrote to Domingo A.
Inocentes, President of Valium advising that
effective 1 July 1988, the contract of security
services would be terminated. Vallum informed Mr.
Maulbecker, on 22 June 1988, that it was agreeable
to the termination or the contract.
On 30 June 1988, private respondents, who were
security guards provided by Valium to Hyatt Bag 'o,
were informed by Vallum's Personnel Officer that
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
the contract between the two (2) bad already
expired. Private respondents were directed to
report to Vallum's head office at Sucat Road, in
Muntinlupa, Metropolitan Manila, not later than 15
July 1988 for re-assignment. They were also told
that failure to report at Sucat would be taken to
mean that they were no longer interested in being
re-assigned to some other client of Vallum.
None of the private respondents reported at Sucat
for reassignment, Instead, between July and
September, 1988, private respondents filed several
complaints against petitioners in the NLRC's Office
in Baguio City for illegal dismissal and unfair labor
practices; for violation of labor
standards relating to underpayment of wagers
premium holiday and rest day pay, uniform
allowances and meal allowances. They prayed for
reinstatement with full backwages.
Labor Arbiter dismissed the petition ruling
that Vallum was an independent contractor. NLRC
reversed the LA's decision.
Issue: W/N the security guards are employees of
Hyatt Baguio.
Held: Yes. Remember four elements:
With respect of the selection and engagement of
the employees, the records here show that private
respondents filled up Hyatt employment application
forms and submitted the executed forms directly to
the Security Department of Hyatt Baguio.
Petitionerrs argument that it would have been an
inconvenience to let the applicants submit their
forms to Sucat, Makati is untenable due to the fact
that the process of selection and engagement of
private respondents had been carried out in Hyatt
Baguio and subject to the scrutiny of officers and
employees of Hyatt Baguio
With respect to the mode or manner of payment of
wages, the pay slips bore the Hyatt Baguio's logo.
These payslips show that it was Hyatt Baguio which
paid their wages directly and that Hyatt Baguio
deducted therefrom the necessary amounts for SSS
premiums, internal revenue withholding taxes, and
medicare contributions.
Anent the power of dismissal: note that the
contract provided that upon loss of confidence on
the part of Hyatt Baguio vis-a-vis any security guard
furnished by Vallum, such security guard "may be
changed immediately upon the request to [Vellum]
by [Hyatt Baguio]." Notwithstanding the terms of
the formal contract between petitioners, the NLRC
found that, in operative fact, it was Hyatt Baguio's
Chief Security Officer who exercised the power of
enforcing disciplinary
measures over the security guards. In the matter of
termination of services of particular security guards,
Hyatt Baguio had merely used Vallum as a channel
to
implement its decisions, much as it had done in the
process of selection and recruitment of the guards.
Test of control is satisfied by the ff:
a) the assignments of particular security guards was
subject to the approval of Hyatt Baguio's Chief
Security Officer;"
(b) promotions of the security guards from casual
regular employees were approved or ratified by the
Chief Security Officer of Hyatt Baguio;
(c) Hyatt Baguio's Chief Security Officer decides
who among the various security guards should be
on duty or on call, as well as who, in cases of
disciplinary matters, should be suspended or
dismissed.
(d) the petitioners themselves admitted that Hyatt
Baguio, through its Chief Security Officer, awarded
citations to individual security guards for
meritorious services.
Most importantly, orders received by private
respondent security guards were set forth on paper
bearing the letterheads of both Hyatt Baguio and
Vallum. Negating petitioners contention that what
existed between Vallum and Hyatt' Baguio was
simply close coordination and dove-tailing of
operations, rather than control and supervision by
one over the operations of the other, and that Hyatt
Baguio's Chief Security Officer had acted as the
conduit between Hyatt Baguio and Vallum in
respect of the implementation of the contract of
security services.
Hence, there was labor only contracting.
HPSEVILLA© 47
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
Labor-only contracting.-(a) Any person who
undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting
where such person:
(1) Does not have substantial capital or investment
in the form of tools, equipment, machineries, work
premises and other materials; and
(2) The workers recruited and placed by such
person are performing activities which are directly
related to the principal business or operations of
the employer in which workers are habitually
employed.
(b) Labor-only contracting as defined herein is
hereby prohibited and the person acting "
contractor shall be considered merely as an agent
or intermediary of the employer who shall be
responsible to the workers in the same manner and
extent as if the latter were directly employed by
him.
There is job contracting permissible under the Code
if the following conditions are met:
(1) The contractor carries on an independent
business and undertakes the contract work on his
own account under his own responsibility according
to his own manner and method, free from the
control and direction of his employer or principal in
all matters connected with the performnance of the
work except as to the results thereof; and (2) The
contractor has substantial capital or investment in
the form of tools, equipment, machineries, work
premises, and other materials which am necessary
in the conduct of his business."
In the case at bar, we noted that Vellum did not
have a branch office in Baguio City and that Hyatt
Baguio provided Vallum with offices at Hyatt's own
premises and allowed Vallum to use its Security
Department in the processing of applications. That
was the reason too why Vallum had stipulated that
Hyatt Baguio was to distribute the salaries of the
security guards directly to them and that Hyatt had
used its own corporate forms and pay in the hereby
guards were clearly performing activities directly
related to the business operations of Hyatt Baguio,
the undertaking to safeguard the person and
belongings of hotel guest is one of the obligations of
a hotel vis-a-vis guests and the general public.
Where labor-only contracting exists in a given case,
the law itself impose or established an employer-
employee relationship between the employer (the
owner of the projector establishment) (here, Hyatt
Baguio) and the employees of the labor-only
contractor (here, Vallum) to prevent any violation
or circumvention of provisions of the Labor Code.
RELIGIOUS OF THE VIRGIN MARY, petitioner vs.
NLRC, Colegio de San Pascual Baylon
Facts:On July 18, 1983, CDSPB, represented by the
Bishop of Malolos, entered into an Agreement with
petitioner Religious of the Virgin Mary, a religious
congregation, whereby the latter was designated to
"run, administer and operate the [CDSPB] Girls'
Department." The Agreement was for a term of 10
years, commencing in the school year 1983-1984.
Pursuant to the terms of the agreement, petitioner
hired teachers and administrative personnel for the
Girls' Department under pro forma appointment
papers.
This appointment shall be deemed in full force and
subsisting unless expressly terminated by either
party for a valid cause or causes and after due
process, and approved by the Regional Director.
On April 10, 1987, the Bishop of Malolos pre-
terminated the Agreement. As a result, petitioner
moved out of the school premises, and CDSPB,
through the Bishop of Malolos and his
representatives, took over the administration of the
Girls' Department.
Apparently, the teaching and non-teaching
personnel hired by petitioner for school year 1986-
1987 continued to render services even after the
Agreement was terminated, but they were not paid
their salaries for the month of May 1987. Hence,
they filed a complaint for unpaid salaries with the
NLRC-Regional Arbitration Branch III, naming CDSPB
and petitioner as respondents.
NLRC adopted the findings of the labor arbiter and
affirmed his decision holding CDSPB and petitioner
jointly and severally liable to complainants for the
payment of their salaries for May 1987. LA held that
HPSEVILLA© 48
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
respondent RVM, may, in the wider spectrum of
labor relations, be considered an independent
contractor. It exercised greater degree of autonomy
and independence in running the affairs of
respondent CDSPB, with whose real
owner/operator it had an Agreement. The hiring
and paying of salaries of the complainants primarily
rest on it and eventually, the substantial attributes
of a direct employer were exercised by it.
Issue:W/N RVM is the employer of the teachers.
Held: No... it is he CDSBP as represented by its
director.
The Agreement shows that petitioner entered into
the same not as an independent contractor but, as
it claims, a manager or administrator of the school.
It is true that under the Agreement, petitioner had
the "sole responsibility and expense over the
administration, management and operation of the
Girls' Department," as well as the authority to
employ teachers needed by the school, impose and
collect tuition fees, and pay the expenses of
operations. However, control and supervision over
the school's operations remained in the hands of
the Diocese of Malolos, owner of CDSPB,
represented by the Parish Priest of Obando,
Bulacan, who acted as school director.
CDSPB, as represented by the director, exercised
absolute control and supervision over the school's
administration. Under it, the authority to hire,
discipline and terminate the employment of
personnel is vested in the director, as academic and
administrative head of the school.
In this case, CDSPB reserved the right to control and
supervise the operations of the Girls' Department.
As noted by the labor arbiter himself and affirmed
by the NLRC, although CDSPB "actually exercised
minimal supervision over petitioner, [it] could
exercise substantial supervision and control as it did
when [it] preterminated the Agreement." There
was, therefore, no basis in finding that petitioner
had a "greater degree of autonomy and
independence in running the affairs" of the school.
The presence of the school director, whose vast
powers have already been noted, negates any
suggestion or semblance of autonomy.
Time and again we have held that "the 'control test'
only requires the existence of the right to control
the manner of doing the work not necessarily the
actual exercise of the power by him, which he can
delegate."
Lapanday vs CA
Commando Security Service Agency, Inc., and
defendant Lapanday Agricultural Development
Corporation entered into a Guard Service Contract.
Plaintiff provided security guards in defendant’s
banana plantation. The contract called for the
payment to a guard of P754.28 on a daily 8-hour
basis and an additional P565.72 for a four hour
overtime while the shift-in-charge was to be paid
P811.40 on a daily 8-hour basis and P808.60 for the
4-hour overtime.
Wage Orders increasing the minimum wage in 1983
were complied with by the defendant. On June 16,
1984, Wage Order No. 5 was promulgated directing
an increase of P3.00 per day on the minimum wage
of workers in the private sector and a P5.00
increase on the ECOLA. This was followed on
November 1, 1984 by Wage Order No. 6 which
further increased said minimum wage by P3.00 on
the ECOLA.
Both Wage Orders contain the following provision:
"In the case of contract for construction projects
and for security, janitorial and similar services, the
increase in the minimum wage and allowances rates
of the workers shall be borne by the principal or
client of the construction/service contractor and
the contracts shall be deemed amended
accordingly, subject to the provisions of Sec. 3 (b) of
this order
Plaintiff demanded that its Guard Service Contract
with defendant be upgraded in compliance with
Wage Order Nos. 5 and 6. Defendant refused. Their
Contract expired on June 6, 1986 without the rate
adjustment called for Wage Order Nos. 5 and 6
being implemented.
Issue: W/N petitioner is liable to the private
respondent for the wage adjustments provided
HPSEVILLA© 49
 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
under Wage Order Nos. 5 and 6 and for attorney’s
fees.
Held: Yesir...but
Private respondent admits that there is no
employer-employee relationship between it and the
petitioner. The private respondent is an
independent/job contractor.
The contractor is made liable by virtue of his status
as direct employer. The principal, on the other
hand, is made the indirect employer of the
contractor’s employees to secure payment of their
wages should the contractor be unable to pay them.
Even in the absence of an employer-employee
relationship, the law itself establishes one between
the principal and the employees of the agency for a
limited purpose i.e. in order to ensure that the
employees are paid the wages due them.
....the liability of the petitioner to reimburse the
respondent only arises if and when respondent
actually pays its employees the increases granted by
Wage Order Nos. 5 and 6. Payment, which means
not only the delivery of money but also the
performance, in any other manner, of the
obligation, is the operative fact which will entitle
either of the solidary debtors to seek
reimbursement for the share which corresponds to
each of the debtors.
Now the 2nd kind of ee-er relationship imposed by
law is what is provided in Art 138 of the Labor
Code. It is the first time that you will find out that
these kinds of women are close to the hearts of the
law. They are protected by the law. 138.
Classification of certain women workers. Who are
these certain women workers? If you work in a
night club, cocktail lounge, massage clinic, bar or
similar establishments under the effective control
or supervision of the employer for a substantial
period of time as determined by the Secretary of
labor, shall be considered as an employee of such
establishment for purposes of labor and social
legislation. It is a comprehensive ee-er relationship.
Take note: the provision does not require the
payment of salary by the owner for these women.
Now if you are working as an entertainer in a night
club, because this is what these women are,
suffered to work with or without compensation.
Normally they are paid on a commission basis.
Commission for what? Commission for the drinks
that they convince their client. Now sometimes the
client can invite them to go some where else not jut
in the night club. So when that happens they are
released from the night clubs if the client pays what
is called the bar fine. In other words the share of
the night club as to the earnings of that woman if
she lasted the whole time the bar opens. In other
words there is an average earning of each of these
workers. Then if the owner will accept that so the
client brings her out. That is not really an employee
if the client can just leave. That is a mark that you
are not an employee. Following the Manila Polo
Club case v NLRC. Manila golf club with these
caddies they are asked by the favorite member to
caddy for them to other golf course, so they can go.
Sot he SC said that that is a mark that they are not
employees. Here even if that happens, because the
law itself creates ee-er relationship, then
notwithstanding that, they can leave the client to go
somewhere else does that not in any way diminish
their status as employees because it is already the
law 138 that creates ee-er relationship. Now take
note it says for purposes of labor and social
legislation so the night club owner is the employer
for the purposes of wages, holiday pay, etc. and
also pag-ibig employees compensation and others.
This is a comprehensive ee-er relationship. Now,
that is the 2nd.
There used to be a 3rd. Ramos v CA about nurses in
the operating room. But it has been overturned so
there is no longer an automatic ee-er relationship
between nurses and surgeon in the operating room
so that is no longer operative.
Alright, may a labor union be an employer? In the
case of Bautista v Inciong 1988 the SC said that the
union here is an employer because the employee is
one who is engaged to perform activities which are
usual to the trade or worker in the union namely
organizing. So this is one of the instances where a
union becomes an employer and the union here is
convicted of illegal dismissal.
Bautista vs. Inciong
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
Fx: Bautista was employed by Associated Labor
Unions (ALU) as Organizer in 1972 with a starting
salary of P250/mo. As such he paid his monthly SSS
contributions, with the respondent as his employer.
On March 15, 1979, He was left in the office of ALU
while his other coorganizers were in Cainta, Rizal
attending a certification election at Chrysler
Philippines, as he was not the organizer assigned in
said company. On March 16, 1979, he went on sick
leave for ten (10) days. His SSS sickness benefit
application form signed by ALU's
physician was given to ALU for submission to the
SSS. On March 16, 1979, complainant reported back
for work upon expiration of his leave but was
informed by ALU's Area Vice-President for Luzon of
his termination effective March 15, 1979. Hence,
this complaint filed on March 28, 1979. On April 18,
1979, however, ALU filed a clearance application to
terminate complainant's services effective March
16, 1979 on the ground of abandonment of work.
The National Capital Region Director ordered the
reinstatement of Baustista with full backwages and
to pay him emergency allowance, 13th month pay
and to refund his mutual aid fund deposit. The
Ministry of labor reversed the order and ruled that
Bautista was merely accommodated by ALU after he
was dismissed by his former employer sometime in
1972 and that his membership coverage with the
SSS which shows that respondent ALU is the one
paying the employer's share in the premiums is not
conclusive proof that respondent is the petitioner's
employer because such payments were performed
by the respondent as a favor for all those who were
performing full time union activities with it to
entitle them to SSS benefits. The Deputy Minister
further ruled that the non-existence of an
employer-employee relationship between the
parties is bolstered by the fact that respondent ALU
is not an entity for profit but a duly registered labor
union whose sole purpose is the representation of
its bona fide organization units where it is certified
as such. The issue of whether or not a Union may be
an employer was answered in the affirmative by the
SC when it, in favor of Bautista
Held: That htere is nothing in the records which
support the Minister's conclusion that Bautista is
not an employee of ALU. The mere fact that he
respondent is a labor union does not mean that it
cannot be considered an employer of the persons
who work for it. Much less should it be exempted
from the very labor laws which it espouses as a
labor organization.
(Remember the four tests) In the case at bar, the
Regional Director correctly found that the petitioner
was an employee of the respondent union as
reflected in the latter's individual payroll sheets and
shown by the petitioner's membership with the
Social Security System (SSS) and the respondent
union's share of remittances in the petitioner's
favor. Even more significant, is the respondent
union's act of filing a clearance application with the
MOL to terminate the petitioner's services. Bautista
was selected and hired by the Union. He was paid
wages by the Union. ALU had the power to dismiss
him as indeed it dismissed him. And definitely, the
Union tightly controlled the work of Bautista as one
of its organizers. There is absolutely no factual or
legal basis for Deputy Minister Inciong's decision.
Now there is ee-er relationship which is beyond
the jurisdiction of the court by virtue of the int’l
law. When does that happen? That happens when
the employer is imbued with international
personality by treaties or by international law. So
the cases in question are: USA v Rodrigo as the
same was decided by the SC jointly with USA v
Guinto (1990), JUSMAG v NLRC , international
catholic migration, seaedec v nlrc). So let me again
recall the principle in the constitutional law that you
learned last year. An embassy which is a
representative of a foreign sovereign in our land
enjoys the same immunity from suit as the
sovereign itself. Now when does the sovereign
becomes liable for that suit? If he impliedly or
expressly or impliedly allows himself to be sued.
Expressly is by legislation, there is a tolerance for it
and that is explicit. Impliedly as when he enters
into a contract so he puts himself in the same level
as an ordinary citizen and therefore he is now open
to suit. However, exception to that exception is
suppose the contract is entered into in pursuit of
the sovereign function then that is still not
shedding of immunity.
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
So that is the issue here in USA v Rodrigo. Rodrigo
here is a cook in camp john hay. He sued the base
commander for illegal dismissal and for damages.
Now, the defense is immune from suit? Why is it
immune from suit? Did you not shed immunity by
entering into a contract by hiring this person!? They
said no because we are hiring him in pursuit of our
sovereign function. What is the sovereign function
here? That is maintaining the morale of the morale
of the Armed Forces of the United States because
camp john hay is golf course one house is for
military personnel coming from subic and clark. So
we did not shed our immunity according to the
commander. Then the SC said the court takes
judicial notice and that camp john hay is not
sovereign because it allows civilians not just military
personnel to make use of the facilities. Or can go
there play golf or go to the club house order steak
pay in dollar or in peso in its equivalence and you
will be served. So the SC said you have shed off
your immunity because you are engaged not just on
a strict sovereign activities with regard to the armed
forces but you engaged in a proprietary activity. So
the SC said now we have jurisdiction of his case but
then later the supreme court decided against
Rodrigo because this is the instant where he puts
urine in to the soup served to the armies. So the SC
says that is a grave misconduct which merits
dismissal after due process.
US vs. Rodrigo
Fx: Genove filed a complaint for damages againts
petitioners Lamachia, Belsa, Cartalla and Orascion
for his dismissal as cook in the U.S. Air Force
Recreation Center at the John Hay Air Station in
Baguio City. It had been ascertained after
investigation, from the testimony of Belsa, Cartalla
and Orascion, that Genove had poured urine into
the soup stock used in cooking the vegetables
served to the club customers.
Lamachia, as club manager, suspended him, and
thereafter referred the case to a board of
arbitrators conformably to the collective bargaining
agreement between the Center and its employees.
The board unanimously found him guilty and
recommended his dismissal. This was effected on
March 5, 1986, by Col. David C. Kimball,
Commander of the 3rd Combat Support Group,
PACAF Clark Air Force Base. Genove's reaction was
to file his complaint in the Regional Trial Court of
Baguio City against the individual petitioners.
Issue: W/N immunity from suit can be invoked by
the US?
Held: While the doctrine appears to prohibit only
suits against the state without its consent, it is also
applicable to complaints filed against officials of the
state for acts allegedly performed by them in the
discharge of their duties. The rule is that if the
judgment against such officials will require the state
itself to perform an affirmative act to satisfy the
same, such as the appropriation of the amount
needed to pay the damages awarded against them,
the suit must be regarded as against the state itself
although it has not been formally impleaded.In such
a situation, the state may move to dismiss the
complaint on the ground that it has been filed
without its consent.
There is no question that the United States of
America, like any other state, will be deemed to
have impliedly waived its non-suability if it has
entered into a contract in its proprietary or private
capacity. It is only when the contract involves its
sovereign or governmental capacity that no such
waiver may be implied
As manager of this complex, petitioner Lamachia is
responsible for eleven diversified activities
generating an annual income of $2 million. Under
his executive management are three service
restaurants, a cafeteria, a bakery, a Clear, VI store, a
coffee and pantry shop, a main cashier cage, an
administrative office, and a decentralized
warehouse which maintains a stock level of
$200,000.00 per month in resale items. He
supervises 167 employees, one of whom was
Genove, with whom the United States government
has concluded a collective bargaining agreement.
The restaurant services offered at the John Hay Air
Station partake of the nature of a business
enterprise undertaken by the United States
government in its proprietary capacity. Such
services are not extended to the American
servicemen for free as a perquisite of membership
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in the Armed Forces of the United States. Neither
does it appear that they are exclusively offered to
these servicemen; on the contrary, it is well known
that they are available to the general public as well,
including the tourists in Baguio City, many of whom
make it a point to visit John Hay for this reason. All
persons availing themselves of this facility pay for
the privilege like all other customers as in ordinary
restaurants. Although the prices are concededly
reasonable and relatively low, such services are
undoubtedly operated for profit, as a commercial
and not a governmental activity.
The consequence of this finding is that the
petitioners cannot invoke the doctrine of state
immunity to justify the dismissal of the damage suit
against them by Genove. Such defense will not
prosper even if it be established that they were
acting as agents of the United States when they
investigated and later dismissed Genove. For that
matter, not even the United States government
itself can claim such immunity. The reason is that by
entering into the employment contract with
Genove in the discharge of its proprietary functions,
it impliedly divested itself of its sovereign immunity
from suit.
US vs. Guinto
Fx: Roberto Valencia, Emerenciana Tanglao and
Pablo del Pilar sued several officers of the US Air
Force stationed in Clark Air-Base in connection with
the bidding conducted by them for barbering
services in the said base. On Feb. 24, 86, the
Western Pacific Contracting Office solicited bids for
such contracts through its contracting officer, James
Shaw. The private respondents were one
of those who had submitted theri bids. (Valencia
had been a concessionare inside Clark for 34 yrs, del
Pilar for 12 and Tanglao for 50)
The bidding was won by Ramon Dizon over the
objection of the private respondents, who claimed
that he had made a bid for four facilities, including
the Civil Engineering Area, which was not included
in the invitation to bid.
The private respondents complained to the
Philippine Area Exchange (PHAX). The latter,
through its representatives, petitioners Yvonne
Reeves and Frederic M. Smouse, explained that the
Civil Engineering concession had not been awarded
to Dizon as a result of the February 24, 1986
solicitation. Dizon was already operating this
concession, then known as the NCO club
concession, and the expiration of the contract had
been extended from June 30,1986 to August 31,
1986. They further explained that the solicitation of
the CE barbershop would be available only by the
end of June and the private respondents would be
notified.
On June 30,1986, the private respondents filed a
complaint in the court below to compel PHAX and
the individual petitioners to cancel the award to
defendant Dizon, to conduct a rebidding for the
barbershop concessions and to allow the private
respondents by a writ of preliminary injunction to
continue operating the concessions pending
litigation.
US filed a motion to dismiss which was denied by J.
Guinto ruling that by virtue of the contract of
concession already existing between the petitioner
and the private respondent, there exists a
commercial transaction. Furthermore, the RP-US
Bases Agreement does not cover such kind of
services falling under concessionareship, such as a
barber shop concession. The SC affirmed the ruling
of public respondent Judge Guinto when it
Held: that the barbershops subject of the
concessions granted by the United States
government are commercial enterprises operated
by private persons. They are not agencies of the
United States Armed Forces nor are their facilities
demandable as a matter of right by the American
servicemen. These establishments provide for the
grooming needs of their customers and offer not
only the basic haircut and shave (as required in
most military organizations) but such other
amenities as shampoo, massage, manicure and
other similar indulgences. And all for a fee.
Interestingly, one of the concessionaires, private
respondent Valencia, was even sent abroad to
improve his tonsorial business, presumably for the
benefit of his customers. No less significantly, if not
more so, all the barbershop concessionaires are,
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under the terms of their contracts, required to
remit to the United States government fixed
commissions in consideration of the exclusive
concessions granted to them in their respective
areas.
This being the case, the petitioners cannot plead
any immunity from the complaint filed by the
private respondents in the court below. The
contracts in question being decidedly commercial,
the conclusion reached in the United States of
America v. Ruiz case cannot be applied here
JUSMAG VS. NLRC
FX: JUSMAG was created pursuant to the Military
Assistance Agreement between the Phil and US. It
consists of Air, Naval and Army group whose
primary task is to advise and assist the Phil on air
force, army and naval matters. Originally, the Phil.
covered the expenses until 1991 when US
manifested its preparedness to provide funds to
cover the salaries of security assistance support
personnel and security guards, the rent of bldgs and
housing and the cost of utilities.
Florencio Sactramento was one of the seventy-four
(74) security assistance support personnel (SASP)
working at JUSMAG Philippines., He had been with
JUSMAG from December 18, 1969, until his
dismissal an April 27, 1992. He held the position of
Illustrator 2 and was the incumbent President of
JUSMAG
PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES
ASSOCIATION (JPFCFA), a labor organization duly
registered with the Department C Labor and
Employment. His services were terminated
allegedly due to the abolition of his position. He was
also advised that he was under administrative leave
until April 27, 1992, although the same was not
charged against his leave.
He filed a complaint for illegal dismissal with DOLE
and asked for reinstatement. USMAG then filed a
Motion to Dismiss invoking its immunity from suit
as an agency of the United States. It further alleged
lack of employer-employee relationship and that it
has no juridical personality to sue and be sued.
Labor Arbiter dismissed the petition for want of
jurisdiction. NLRC reversed the LA's decision on the
grounds: 1) the principle of estoppel-that JUSMAG
failed to refute the existence of employer-employee
relationship under the "control test"; and (2)
JUSMAG has waived its right to immunity from suit
when it hired the services of private respondent on
December 18, 1969.
Issue: W/N Jusmag enjoys immunity from suit
Held: Yes. From the foregoing, it is apparent that
when JUSMAG took the services of private
respondent, it was performing a governmental
function on behalf of the United States pursuant to
the Military Assistance Agreement dated March 21,
1947. Hence, we agree with petitioner that the suit
is, in effect, one against the United States
Government, albeit it was not impleaded in the
complaint. Considering that the United States has
not waived or consented to the suit, the complaint
against JUSMAG cannot prosper.
Anent the issue of absence of employer-employee
relationship, Jusmag is not estopped form denying
the existence of such as it consistently contended
that the respondent was an employee of the AFP
pursuant to the contract between the Phil and the
US.
NB: Remember general rule that a State cannot be
suit in the courts of another state without its
consent or waiver (express). However, exception to
the rule is implied consent as when the state or any
of its government enteres into a contract, through
its officers or agents, in furtherance of a legitimate
aima dn purpose and pursuant to constitutuional
legislative authority, whereby mutual or reciprocal
benefits accrue and rights and obligations arise
therefrom, and if the law granting the authority to
enter into such contract does not provide for or
name the officer against whom action may be
brought in the event of a breach thereof, the state
itself may be sued, even without its consent,
because by entering into a contract, the sovereign
state has descended to the level of the citizen and
its consent to be sued is implied from the very act
of entering into such contract.
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The application of the doctrine has been restricted
to sovereign or governmental activities. It cannot be
made to extend to commercial, private and
proprietary acts. Also, the application of the
doctrine depends on the legal nature of the act. If a
contract was entered into in the discharge of its
governmental fxns, the sovereign state cannot be
deemed to have waived its immunity from suit.
Alright, suppose an employer that is imbued with
personality under the international law allows to be
sued in one case, does he shed immunity for the rest
of the cases coming? You allow yourself to be sued
and then later on you say the guarantee which
invokes immunity. That is the case of international
catholic migration v pura ferrer calleja (1990).
SC says no. what is the reason? In international
catholic migration v NLRC , we are talking here of a
probationary teacher who used to teach English.
That was when the time when Vietnamese tries to
escape from Vietnam so they landed in Palawan, in
Zambales. The UN bodies comes and brings them
to their host countries like Germany, US, Canada,
Australia so they hire teachers to teach them
English for the cultural adjustments that they have
to make in their host country. That particular
teacher was not given the whole 6 months
probation. After 3 months she was asked to leave
and so she said that is unjust. I should have given 6
months as a right of a probationary employee. Does
she have the right? That was decided in
international catholic migration v NLRC. In
that case the catholic did not raise its personality
under the international law and its immunity from
suit. So here comes another case! International
catholic migration v calleja . Now the lawyer of
international catholic migration raises its immunity
and the answer of the complaint to the complainant
is that “ you shed it off in the last case! Too late
now to invoke immunity. ” is that correct? A
sovereign is never bound by the mistakes of its
officers. Unsay kabuoang sa mga opisyal dha sa
gobyerno it does not bind the government . Mao
nay dakong dimalas. Mahapay ang gobyerno ana.
So if the particular official forgot to invoke
immunity, that does not bind the int’l organization.
INTERNATIONAL CATHOLIC MIGRATION
COMMISSION VS. CALLEJA
FX: This is a consolidated case as it involves the
same issues re: the validity of the claim of immunity
by the Int'l Catholic Migration Commission and the
Int'l Rice Research Institute, Inc from the application
of Phil. Labor Laws.
Pursuant to the agreement between the Phil. and
the UN, ICMC was established for the processing of
Indo-Chinese refugees from the Vietnam war. On
July 14, 1986, Trade Unions of the Phil and Allied
services (TUPAS) filed with the Ministry of Labore
and Employment for certification election among
the rank and file members of ICMC. ICMC opposed
the petition on the ground that it enjoys diplomatic
immunity. During the pendency of the case, the
Phil. Gov't granted ICMC the status of a specialized
agency with corresponding diplomatic privileges
and immunities.
In a similar case, the IRRI invokes its immunity from
suit. he Philippine Government and the Ford and
Rockefeller Foundations signed a Memorandum of
Understanding establishing the International Rice
Research Institute (IRRI) at Los Baños, Laguna. It
was intended to be an autonomous, philanthropic,
tax-f
ree, non-profit, non-stock organization designed to
carry out the principal objective of conducting
"basic research on the rice plant, on all phases of
rice production, management, distribution and
utilization with a view to attaining nutritive and
economic advantage or benefit for the people of
Asia and other major rice-growing areas through
improvement in quality and quantity of rice."
Initially, IRRI was organized and registered with the
Securities and Exchange Commission as a private
corporation subject to all laws and regulations.
However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the
status, prerogatives, privileges and immunities of an
international organization.
Kapisanan filed a petition for direct certification of
election. IRRI invoked PD 1620.
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Issue: W/N the grant of immunity from suit includes
exemption form the coverage of our Labor laws.
Held: Yes.
The grant of immunity from local jurisdiction to
ICMC and IRRI is clearly necessitated by their
international character and respective purposes.
The objective is to avoid the danger of partiality and
interference by the host country in their internal
workings. The exercise of jurisdiction by the
Department of Labor in these instances would
defeat the very purpose of immunity, which is to
shield the affairs of international organizations, in
accordance with international practice, from
political pressure or control by the host country to
the prejudice of member States of the organization,
and to ensure the unhampered performance of
their functions.
The existence of this Union factually and tellingly
belies the argument that Pres. Decree No. 1620,
which grants to IRRI the status, privileges and
immunities of
an international organization, deprives its
employees of the right to self- organization.
The immunity granted being "from every form of
legal process except in so far as in any particular
case they have expressly waived their immunity," it
is inaccurate to state that a certification election is
beyond the scope of that immunity for the reason
that it is not a suit against ICMC. A certification
election cannot be viewed as an independent or
isolated process. It could trigger off a series of
events in the collective bargaining process together
with related incidents and/or concerted activities,
which could inevitably involve ICMC in the "legal
process,"
which includes "any penal, civil and administrative
proceedings." The eventuality of Court litigation is
neither remote and from which international
organizations are precisely shielded to safeguard
them from the disruption of their functions. Clauses
on jurisdictional immunity are said to be standard
provisions in the constitutions of international
organizations. ''The immunity covers the
organization concerned, its property and its assets.
It is equally applicable to proceedings in personam
and proceedings in rem.''
*Anent the issue of whether a state who did not
invoke its immunity before be deemed to have
waived its immunity to future suits: TUPAS calls
attention to the case entitled "International
Catholic Migration Commission v. NLRC, et als., and
claims that, having taken cognizance of that dispute
(on the issue of payment of salary for the unexpired
portion of a six-month probationary employment),
the Court is now estopped from passing upon the
question of DOLE jurisdiction over ICMC. The SC
held that such contention is wrong. Not only did the
facts of said controversy occur between 1983-1985,
or before the grant to ICMC on 15 July 1988 of the
status of a specialized agency with corresponding
immunities, but also because ICMC in that case did
not invoke its immunity and, therefore, may be
deemed to have waived it, assuming that during
that period (1983-1985) it was tacitly recognized as
enjoying such immunity.
Alright! So remember ha, here there is ee-el
relationship but if immunity can be invoked, there is
no legal remedy. Once I was approached by the
employee of the Indonesian consulate here that
their pay was reduced so they were forced to go to
the labor arbiter. And they were mentioning 2 or 3
lawyers. Lawyer ray nadato ana cge mog session wa
jud moy maabtan ana. That wil come to naught!
Because your employer enjoys immunity from suit!
So what is now the remedy!? Your remedy is
diplomatic! You go to the dept of foreign affairs.
You convince the DFA secretary so that he will
communicate diplomatically with the consul. There
are several kinds of letter depending on the urgency
of the letter. And he should bring out the case in
the diplomatic remedy. So that is the solution. No
judicial remedy only diplomatic.
That is true with SEAFDEC Ilo-Ilo. That is a UN body.
That is true with IRRI (international Rice Research
Institute) in Los Baños Laguna. That is true with
UNESCO, etc. all those bodies that are considered
persons in international law and they are protected
with immunity from suit.
SEAFDEC-AQD vs. NLRC
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FX: SEAFDEC-AQD is a department of an
international organization, the Southeast Asian
Fisheries Development Center, organized through
an agreement entered into in Bangkok, Thailand on
December 28, 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam,, Indonesia
and the Philippines with Japan as the sponsoring
country.
On April 20, 1975, private respondent Juvenal
Lazaga was employed as a Research Associate on a
probationary basis by the SEAFDEC-AQD and was
appointed Senior External Affairs Officer on January
5, 1983 with a monthly basic salary of P8,000.00
and a monthly allowance of P4,000.00. Thereafter,
he
was appointed to the position of Professional III and
designated as Head of External Affairs Office with
the same pay and benefits.
On May 8,1986, petitioner Lacanilao in his capacity
as Chief of SEAFDEC-AQD sent a notice of
termination to private respondent informing him
that due to the financial constraints being
experienced by the department, his services shall
be terminated at the close of office hours on May
15,1986 arid that he is entitled to separation
benefits equivalent to one (1) month of his basic
salary for every year of service plus other benefits.
Upon nonpayment of his separation pay, Lazaga
filed a complaint for nonpayment of separation
benefits plus moral damages and atty's fees.
Petitioners aver that NLRC has no jurisdiction as
SEAFDEC is an international organization nd that
private respondent must first secure clearances
from the proper departments for property or
money accountability before any claim for
separation pay will be paid, and which clearances
had not yet been obtained by the private
respondent.
NLRC assumed jurisdiction and asked petitioner to
pay private respondent. However, upon petition for
certiorari with the SC, the SC in reversing the NLRC
decision
Held: that SEAFDEC-AQD is immune from suit as it is
an international agency. Being an international
organization, SEAFDEC including its Departments
(AQD) enjoys functional independence from control
of the state in whose territory its office is located.
Respondent Lazaga's invocation of estoppel with
respect to the issue of jurisdiction is unavailing
because estoppel does not apply to confer
jurisdiction to a tribunal that has none over a cause
of action. Jurisdiction is conferred by law. Where
there is none, no agreement of the parties can
provide one. Settled is the rule that the decision of
a tribunal not vested with appropriate jurisdiction is
null and void.
Then COOPERATIVES in the landmark case of
Cooperative Rural Bank of Davao City v NLRC the
SC says that if you are a member the cooperatives
and at the same time you are an employee in the
coop you are not a true employee. You are serving
the coop because the coop is a special agency that
enjoys exemption from taxes and even from
minimum wage. So if you are a member of the coop
and at the same time an employee of the coop, can
you form a union? The answer is no. why? Because
the assembly of members is the highest body of the
coop. so it will put you in a conflict of interest so
you will demand an increase in salary but then on
the other hand who will be sitting their in
judgment? It is you also! So ikaw pa mangayo ikaw
pa mu hatag. That is conflict of interest. That is the
ruling in
Batangas-1 electric coop Labor Union vs Young
Facts:On June 1, 1981, the Batangas-I Electric
Cooperative Union filed with the Regional Office
No. IV-A, Ministry of Labor and Employment a
petition for certification election. The UNION
alleged, inter alia, that it is a legitimate labor
organization; that the Batangas-I Electric
Cooperative Inc. (BATELEC) has 150 employees,
more or less; that the UNION desires to represent
the regular rank and file employees of BATELEC for
purposes of collective bargaining; that there is no
other union existing in BATELEC except the UNION;
that there is no certified collective bargaining
agreement in the said cooperative; and that there
has been no certification election conducted in
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BATELEC during the last twelve (12) months
preceding the filing of the petition.
BATELEC filed a MFR of the Med-Arbitter's decision
giving due course to the petition for certification
election contending that, there was a legal
impediment to the holding of a certification election
considering that the formation of a union in a
cooperative is illegal and invalid, the officers and
members of the union being the owners thereof.
Young, Officer in Charge, Bureau of Labor Relations,
granting the appeal and revoking the Med-Arbiter's
order mandating the holding of a certification
election.
Issue: W/N employees of an electric cooperative
who are at the same time members of the
cooperative, may be allowed to form or join a labor
union in the electric cooperative for purposes of
collective bargaining.
Held: No.
There is no E-E relationship to begin with. The
applicants being co-owners are barred from forming
a union for purposes of collective bargaining. (ingon
pa si sir, ikaw na mo reklamo- ikaw pa gyud mo
tyubag sa reklamo ug mangitag pama-agi. ehehehe
buot buot ko.)
However, in 1991 case of Central Negros Electric
Coop. v Secretary the coop members in question
resigned the coop. After they resigned they joined
the union. Can they now join the union? The SC says
yes because the impediment has been removed.
Alright, so we are now through with ee-er
relationship. Please read those cases because they
will be asked in the exam. Because the exam will be
such a kind to determine if you really have read the
case. These are landmark cases.
CENECO vs sec of DoLE, CURE
On August 15, 1987, CENECO entered into a
collective bargaining agreement with CURE, a labor
union representing its rank-and-file employees,
providing for a term of three years retroactive to
April 1, 1987 and extending up to March 31, 1990.
On December 28, 1989, CURE wrote CENECO
proposing that negotiations be conducted for a new
collective bargaining agreement.
On January 18, 1990, CENECO denied CURE's
request on the ground that, under applicable
decisions of the Supreme Court, employees who at
the same time are members of an electric
cooperative are not entitled to form or join a union.
CURE members, in a general assembly held on
December 9, 1989, approved Resolution No. 35
whereby it was agreed that "all union members
shall withdraw, retract, or recall the union
members' membership from Central Negros Electric
Cooperative, Inc. in order to avail of the full benefits
under the existing Collective Bargaining Agreement
entered into by and between CENECO and CURE,
and the supposed benefits that our union may avail
of under the renewed CBA.
However, the withdrawal from membership was
denied by CENECO on February 27, 1990.
Med-Arbiter Felizardo T. Serapio issued an order,
granting the petition for certification election filed
by CURE.
CENECO appealed to the Department of Labor and
Employment which issued the questioned order
modifying the aforestated order of the med-arbiter
by directly certifying CURE as the exclusive
bargaining representative of the rank-and-file
employees of CURE.
Issue:
W/N the employees of CENECO who withdrew their
membership from the cooperative are entitled to
form or join CURE for purposes of the negotiations
for a collective bargaining agreement proposed by
the latter.
Held: Yesir!!
Membership in the cooperative is on a voluntary
basis. Hence, withdrawal therefrom cannot be
restricted unnecessarily. The right to join an
organization necessarily includes the equivalent
right not to join the same.
The right of the employees to self-organization is a
compelling reason why their withdrawal from the
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cooperative must be allowed. As pointed out by
CURE, the resignation of the member-employees is
an expression of their preference for union
membership over that of membership in the
cooperative.
The avowed policy of the State to afford full
protection to labor and to promote the primacy of
free collective bargaining mandates that the
employees' right to form and join unions for
purposes of collective bargaining be accorded the
highest consideration.
We rule, however, that the direct certification
ordered by respondent Secretary is not proper. By
virtue of Executive Order No. 111, which became
effective on March 4, 1987, the direct certification
originally allowed under Article 257 of the Labor
Code has apparently been discontinued as a
method of selecting the exclusive bargaining agent
of the workers. This amendment affirms the
superiority of the certification election over the
direct certification which is no longer available now
under the change in said provision.
Air Services COOP vs CA, Batican
Facts:
it appears that respondent was allegedly reported
to have been illegally draining aviation fuel from the
aircraft assigned to him by the cooperative's client
Stanfilco (Dole Philippines, Inc.) for which reason
Capt. Sarael issued a memorandum dated January
20, 1993 calling his attention and directing him to
cease and desist from said practice. Apparently, the
warning fell on deaf ears, thus, prompting the
cooperative's Board of Directors itself to issue a
memorandum on February 22, 1993 this time giving
a final warning that respondent's services would be
terminated should he be found guilty of illegally
draining aviation fuel again. Shortly thereafter,
Capt. Sarael required respondent in a memorandum
dated March 1, 1993 to explain within forty-eight
hours why no disciplinary action should be taken
against him on account of the reported acts of
repeated pilferage despite prior warning. On March
8, 1993, after considering respondent's explanation
and conducting a thorough investigation on the
matter, the cooperative's Board of Directors
resolved to cancel and revoke respondent's
membership in the cooperative. After respondent's
expulsion, the cooperative's client Stanfilco likewise
filed a formal criminal complaint for qualified theft
against him on March 26, 1993 for which a warrant
of arrest had been subsequently issued.
Aggrieved by his expulsion, respondent filed before
the National Labor Relations Commission (NLRC) a
complaint on May 18, 1993, both against the
cooperative and Capt. Sarael for illegal dismissal,
reimbursement of the value of six (6) shares of
stock, vacation/sick leave conversion, unpaid
commission for the month of February and non-
payment of the 13th month pay.
The Labor Arbiter ruled in favor of respondent
thereby awarding the monetary claims.
Petitioners filed a Petition for Certiorari, Prohibition
and Annulment of Judgment before the Regional
Trial Court and later to the CA wherein both
dismissed the petitions for lack of jurisdiction
stating that the former should have appealed to the
NLRC first.
Issue: W/N it is procedurally sound to impugn and
seek the annulment of the Labor Arbiter's decision
over the dispute herein mentioned before the
Regional Trial Court.
Held: Indeed, we find it odd that petitioners should
entertain the notion that the Labor Arbiter's
decision may be assailed in the trial court when the
law clearly provides for the proper manner by which
a party may have such decision reviewed. Hence, in
Article 223 of Presidential Decree No. 442, as
amended, otherwise known as "The Labor Code of
the Philippines," we find that:
"ART. 223. Appeal. Decisions, awards, or orders of
the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such
decisions, awards, or orders. . ."
Also, in Article 217 (b), the same Code states:
(b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor
Arbiters."
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"ART. 223. Appeal. . . . Such appeal may be
entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of
discretion on the part of the Labor Arbiter;"
Abuse of discretion is admittedly within the ambit
of certiorari and its grant of review thereof to the
NLRC indicates the lawmakers' intention to broaden
the meaning of appeal as that term is used in the
Code. For this reason, petitioners cannot argue now
that the NLRC is devoid of any corrective power to
rectify a supposed erroneous assumption of
jurisdiction by the Labor Arbiter and justify recourse
to the trial courts.
Alright, after saying that ee-er relationship is very
important, I have a question to ask: must there be
ee-er relationship in order to be covered by the
labor code? Must there be ee-er relationship? As a
general rule, yes but there are exceptions.
Why do I say that there are exceptions? Take a look
at Art. 6, applicability : all rights and benefits
granted to workers under this code shall, except as
otherwise may be provided herein, apply alike to
all workers, whether agricultural or non-
agricultural. So workers, there must be ee-er
relationship for you to be covered and for the labor
code to be applicable to you. However, you take a
look at book 1 replacement and recruitment of
workers. Art 13 definitions: 1. Worker for this
book alone, book 1, worker means any member of
the labor force, whether employed or
unemployed. Apil d ay ang walay ee-el relationship
in this book one. And then we go to book II. Human
resources development . Art. 44 man power shall
mean that portion of the nations population which
had actual or potential capability to contribute
directly to the production of goods and services. So
is ee-er required in order to be covered with the
Labor CODE book 2? Again no! If you just have the
potential to contribute directly to the production of
goods and services then you are already covered by
book two. If you are a fetus inside the womb of the
mother you have potential to contribute to the
production of services. You are incapable of
rendering ee-er relationship yet but you are already
covered by this book. So, there are at least 2 big
sections in the labor code that does not require ee-
er relationship to be covered by the labor code.
Now, lets go to book 1. Recruitment and placement
of workers. Art. 12 up to Art 24 and up to Art 39
that has now been superseded by RA 8042 .
Now, central to this particular law is section 29. why
is sec 29 central? Take a look at sec 29.
Comprehensive deregulation plan on the
recruitment activities. It says, pursuant to a
progressive policy of deregulation whereby the
migration of workers becomes strictly amended
between the workers and his foreign employer, the
DOLE within one year from the affectivity of this act
is hereby mandated to postulate a five-year
deregulation plan on recruitment activities taking
into account the labor market trends, economic
condition of the country and the emerging
circumstance which may affect the welfare of the
migrant workers . sec 30 (please see the law.).
Technically speaking, the law mandated that there
should no longer deregulation with respect to
placement or recruitment of workers oversees.
Why is that? Because of the WTO (World Trade
Organization) if goods are supposed to be traded so
also with the services and so also with respect to
capital. That is why any form of limited conversion
of currencies like conversion the currency of China.
Again, WTO. That is why they are pressuring China
to make their currency fully convertible and yet
China would not do that. So in the 1997 financial
crisis in Asia China was never referred because its
currency is isolated. The capital is supposed to flow
freely then labor is also supposed to flow freely. It
should go well if it wants to seek better
remuneration. Because the system of licensing is
deterrent to free labor. That is why magkatawa ka
aning balaora. Tan awa ra gud ni nia and title taas
kaau. Pag abot d ay diri tang tangon d ay ni pag
abot ug 5 years. Wla na d ay protection. And yet the
law says higher standards.. nag buwa lang ning
baba ani wa d ay, tang tanong d ay after 5 years!
The question is why wala pa mantangtanga? There
are many reasons Political, economic. That is why,
for example, anti money laundering law took a long
time to take effect. They pass a law but it was not
approved by the council of money laundering
authorities in the world. Because we believe that
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we can protect workers by licensing which is crazy!
You do not! You are just making workers
irresponsible! They should take their own
responsibility. Kung gusto ka mulangyaw kay taas
ug sweldo sa gawas ikaw maoy mu lantaw sa imong
kaugalingon! Ikaw mangita dilikay cge ta ug blame
sa gobyerno!
So you will read here in 8042, automatic
repatriation in times of war in the workplace. The
government guarantees your repatriation. If you are
under age and you are found there undocumented,
automatic repatriation ang gov’t maoy mu gasto for
you. That is provided by 8042. it is no longer
debatable if the whether the gov’t will spend for
you because it is provided in 8042. it is only a
question of means. Whether you can charter the
boat. So, you have to read this law on your own.
In the labor code, illegal recruitment is committed
only by unlicensed recruitment agency. If you are
take charging recruitment agency, you are required
to have a license. If you are not take charging, you
have to get a permit. If you do not have a license,
you are committing illegal recruitment. Illegal
recruitment is of two kinds. One that constitutes
economic sabotage when it is large scale. When is it
large scale? If you recruit more than three. Or you
recruit in conspiracy of three or more. So what is
the difference? If you are large scale, life
imprisonment. If you are not large scale, the penalty
is 6 years, 1 day to 12 years. Or 200,000 fine to 500,
000. That is the penalty sec. 7 of 8042. Sec 6 is
illegal recruitment. Now if you have a license you
can take charge an illegal recruitment . we have a
very long list here of illegal recruitment. What
constitutes illegal recruitment? Driver ka lang sa
mga gi illegal recruit, illegal recruitment ka na! Your
acts can fall in any of those enumerated in Sec 6 of
8042. Failure to reimburse, to withhold documents,
failure to deploy without valid reason. So you have
agencies that will recruit. As a GR direct hiring is
prohibited. Foreign principals will direct contact
you, that is illegal. You have to go through an
agency, why? So that they agency will be held
responsible. It is the bridge of the law here because
our labor laws are municipal law valid within the
territorial jurisdiction of the Philippines, it cannot
be enforced outside. Now, if you are a land based
worker, you have a recruitment agency. If you are
sea based, then you have a manning agency. All
your contract must be registered with the POEA. No
contract can be given effect unless it is registered
with the POEA. Advertisements that you read in the
newspaper with respect to foreign deployment they
have to be registered with the POEA. That is to
protect you from being defrauded. Now, there is a
list of fees that is to be approved. If the manning
agency or the recruitment agency collects higher
than the approves fees , that is also a violation and
that is a form of illegal recruitment. Tan aw ra ninyo
sa sec 6 .
Now, before an OFW leaves, he must open a local
account through which he pays his remittance. You
can..’t leave without opening an account and it
must go through the official remittance channel of
the Philippines. Dili mahimo nga padala padala
lang. kanand padala padala pwede na in excess of
what you get. You have to remit and there are
different percentages. For example the highest is
50%. If you are a seaman, your employer commits
to remit to the agency at least 50% of your
earnings. You can remit higher but the minimum is
50% and that is done through deduction. Two
contracts, both registered with the POEA, what
contract then is correct? You as a seaman will
receive 500 dollars a month. But then right before
you leave, you are made to sign another contract:
oral or written agreement prior to this agreement
notwithstanding, I am going to take home the pay
of 300 dollars. Two contacts because there are
certain ports that are controlled by International
Union of Sea Farers. They will check the contracts
and if it is lower than the ITF rates, they can boycott
the ship. Odessa, Amsterdam, Huston Texas, those
are ITF ports. And it is where they catch people.
They will even make the ship line pay. They will not
load or unload. So two kinds of contract, which is
valid? That is the trilogy of cases in Virjen Shipping.
In Virjen shipping the first division of the SC says
that what is valid is the 2nd contract. 3rd division of
the Sc still Virjen Shipping says the 1st contract is
what is valid. So the 3rd case they have to raise it to
the SC en banc. There is this argument on the ruling
that will uphold the first contract to the negation of
the 2nd contract is the type of ruling that kills the
goose that lays the golden egg. So they uphold the
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first contract. Is that followed? No that is not
followed.
Now again there is a trilogy of cases I want you to
read. Rabago v Eastern Marine Ltd March 14,
2005/ 453 s 361. before that is Millares and Lagda v
NLRC/2002, Petroleum Shipping Ltd v NLRC/ June
16, 2006. 20 anyos na, I year contract, 1 year, one
year, naa nay sakit taas cholesterol, so din a
pasakyon. babay na. walay benefits. So original is,
the SC says no! Art 13, section 3 of the Consti says
the state shall uphold protection to labor local and
overseas so therefore we have to enforce our
security and tenure laws. these people are regular
employees and they are entitled to ( dili na dayon
masabtan) So this is what the decision says,
subsequently, the Filipino Association of Mariners
Employment files a motion for reconsideration and
filed for the second motion. And the office of the
Sol Gen has now taken the opposite view in the
application in sustaining the decision and calls for
the examination. What is the ruling now? The latest
ruling says they are not regular but contract
employees. Their ee-el relationship lasts for the
duration of the contract because it is the contract
that determines and not the law. So tun-ina kay
mao na ang suginlanon sa tong kinabuhi… specially,
you are to read penalties for illegal recruitment,
mandatory periods, prescriptive period. Ordinary
Illegal recruitment prescribes in 5 years, illegal
recruitment that are concerning economic sabotage
when 3 or more illegal recruiters or 3 or more in
conspiracy and collaborating with one another to
recruit.
Ravago vs ESSO Eastern Marine, ltd., Trans-Global
Maritime Agency, Inc.
Facts:
The Esso Eastern Marine Ltd. (EEM), now the
Petroleum Shipping Ltd., is a foreign company
based in Singapore and engaged in maritime
commerce. It is represented in the Philippines by its
manning agent and co-respondent Trans-Global
Maritime Agency, Inc. (Trans-Global), a corporation
organized under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work
as a seaman on board various Esso vessels. On
February 13, 1970, Ravago commenced his duty as
S/N wiper on board the Esso Bataan under a
contract that lasted until February 10, 1971.
Thereafter, he was assigned to work in different
Esso vessels where he was designated diverse tasks,
such as oiler, then assistant engineer. He was
employed under a total of 34 separate and
unconnected contracts, each for a fixed period, by
three different companies, namely, Esso Tankers,
Inc. (ETI), EEM and Esso International Shipping
(Bahamas) Co., Ltd. (EIS), Singapore Branch. Ravago
worked with Esso vessels until August 22, 1992, a
period spanning more than 22 years.
On the night of October 12, 1992, a stray bullet hit
Ravago on the left leg while he was waiting for a
bus ride in Cubao, Quezon City. He fractured his left
proximal tibia and was hospitalized at the Philippine
Orthopedic Hospital. Ravago’s wife, Lolita,
informed Trans-Global and EIS of the incident on
October 13, 1992 for purposes of availing medical
benefits.
Ravago’s left leg had become apparently shorter,
making him walk with a limp. For this reason, the
company physician, Dr. Virginia G. Manzo, found
him to have lost his dexterity, making him unfit to
work once again as a seaman.
Consequently, instead of rehiring Ravago, EIS paid
him his Career Employment Incentive Plan as of
March 1, 1993 and his final tax refund for 1992.
After deducting his Social Security System and
medical contributions from November 1992 to
February 1993, EIS remitted the net amount of
P162,232.65, following Ravago’s execution of a
Deed of Quitclaim and/or Release.
Ravago filed a complaint for illegal dismissal with
prayer for reinstatement, backwages, damages and
attorney’s fees against Trans-Global and EIS with
the Philippine Overseas Employment Administration
Adjudication Office.
Respondents denied that Ravago was dismissed
without notice and just cause. Rather, his services
were no longer engaged in view of the disability he
suffered which rendered him unfit to work as a
seafarer. This fact was further validated by the
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company doctor and Ravago’s attending physician.
They averred that Ravago was a contractual
employee and was hired under 34 separate
contracts by different companies.
Ravago, likewise, asserted that he was not a mere
contractual employee because the respondents
regularly and continuously rehired him for 23 years
and, for his continuous service, was awarded a CEIP
payment upon his termination from employment.
Labor Arbiter Ramon Valentin C. Reyes rendered a
decision in favor of Ravago, the complainant. He
ruled that Ravago was a regular employee because
he was engaged to perform activities which were
usually necessary or desirable in the usual trade or
business of the employer. The Labor Arbiter noted
that Ravago’s services were repeatedly contracted;
he was even given several promotions and was paid
a monthly service experience bonus. This was in
keeping with the increasing number of long term
careers established with the respondents. Finally,
the Labor Arbiter resolved that an employer cannot
terminate a worker’s employment on the ground of
disease unless there is a certification by a
competent public health authority that the said
disease is of
such nature or at such a stage that it cannot be
cured within a period of six months even with
proper medical treatment.
NLRC affirmed the decission of Labor arbiter.
CA reversed the NLRC decision. According to the CA,
the fact that Ravago was not rehired upon the
completion of his contract did not result in his
illegal dismissal; hence, he was not entitled to
reinstatement or payment of separation pay.
Issue:
W/N a seafarer is a regular employee.
Held:
The SC declared that a seafarer, not being a regular
employee, is not entitled to separation or
termination pay.
Furthermore, petitioner’s contract did not provide
for separation benefits. In this connection, it is
important to note that neither does the POEA
standard employment contract for Filipino seamen
provide for such benefits.
As a Filipino seaman, petitioner is governed by the
Rules and Regulations Governing Overseas
Employment and the said Rules do not provide for
separation or termination pay. ...
From the foregoing cases, it is clear that seafarers
are considered contractual employees. They cannot
be considered as regular employees under Article
280 of the Labor Code. Their employment is
governed by the contracts they sign every time they
are rehired and their employment is terminated
when the contract expires. Their employment is
contractually fixed for a certain period of time. They
fall under the exception of Article 280 whose
employment has been fixed for a specific project or
undertaking the completion or termination of which
has
been determined at the time of engagement of the
employee or where the work or services to be
performed is seasonal in nature and the
employment is for the duration of the season.
The Standard Employment Contract governing the
Employment of All Filipino Seamen on Board Ocean-
Going Vessels of the POEA, particularly in Part I, Sec.
C, specifically provides that the contract of seamen
shall be for a fixed period. And in no case should the
contract of seamen be longer than 12 months. It
reads:
Section C. Duration of Contract
The period of employment shall be for a fixed
period but in no case to exceed 12 months and shall
be stated in the Crew Contract. Any extension of
the Contract period shall be subject to the mutual
consent of the parties.
The continuous re-hiring was dictated by practical
considerations that experienced crew members are
more preferred. Petitioners were only given priority
or preference because of their experience and
qualifications but this does not detract the fact that
herein petitioners are contractual employees. They
can not be considered regular employees.
Millares vs ESSO
Facts: Petitioner Douglas Millares was employed by
private respondent ESSO International Shipping
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Company LTD. (Esso International, for brevity)
through its local manning agency, private
respondent Trans-Global Maritime Agency, Inc.
(Trans-Global, for brevity) on November 16, 1968 as
a machinist. In 1975, he was promoted as Chief
Engineer which position he occupied until he opted
to retire in 1989. He was then receiving a monthly
salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a
leave of absence for the period July 9 to August 7,
1989. Michael J. Estaniel, President of private
respondent Trans-Global, approved the request for
leave of absence. On June 21, 1989, petitioner
Millares wrote G.S. Hanly, Operations Manager of
Exxon International Co., (now Esso International)
through Michael J. Estaniel, informing him of his
intention to avail of the optional retirement plan
under the Consecutive Enlistment Incentive Plan
(CEIP) considering that he had already rendered
more than twenty (20) years of continuous service.
On July 13, 1989 respondent Esso International,
through W.J. Vrints, Employee Relations Manager,
denied Millares’ request for optional retirement on
the following grounds, to wit: (1) he was employed
on a contractual basis; (2) his contract of enlistment
(COE) did not provide for retirement before the age
of
sixty (60) years; and (3) he did not comply with the
requirement for claiming benefits under the CEIP,
i.e., to submit a written advice to the company of
his intention to terminate his employment within
thirty (30) days from his last disembarkation date.
Regenboog, Personnel Administrator, advised
petitioner Millares that in view of his absence
without leave, which is equivalent to abandonment
of his position, he had been dropped from the
roster of crew members effective September 1,
1989.
The same circumstances also happened to Lagda.
On October 5, 1989, petitioners Millares and Lagda
filed a complaint-affidavit, docketed as POEA (M)
89-10-9671, for illegal dismissal and non-payment
of employee benefits against private respondents
Esso International and Trans-Global, before the
POEA.
POEA dismissed the complaint which was affirmed
by the NLRC for lack of merit.
They aver that Complainants-appellants, as seamen
and overseas contract workers are not covered by
the term “regular employment” as defined under
Article 280 of the Labor Code. The POEA, which is
tasked with protecting the rights of the Filipino
workers for overseas employment to fair and
equitable recruitment and employment practices
and to ensure their welfare, prescribes a standard
employment contract for seamen on board ocean-
going vessels for a fixed period but in no case to
exceed twelve (12) months.
The SC held in favor of petitioners.
Subsequently, the Filipino Association for Mariners
Employment, Inc. (FAME) filed a Motion for Leave
to Intervene and to Admit a Motion for
Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion
for Leave to File a Second Motion for
Reconsideration of our decision.
In both motions, the private respondents and FAME
respectively pray in the main that the Court
reconsider its ruling that “Filipino seafarers are
considered regular employees within the context of
Article 280 of the Labor Code.” They claim that the
decision may establish a precedent that will
adversely affect the maritime industry.
Issue: W/N petitioners are regular employees
pursuant to art 280(1) of the LC.
Held: They can not be considered as regular
employees under Article 280 of the Labor Code.
Their employment is governed by the contracts they
sign everytime they are rehired and their
employment is terminated when the contract
expires. Their employment is contractually fixed for
a certain period of time. They fall under the
exception of Article 280 whose employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
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determined at the time of engagement of the
employee or where the work or services to be
performed is seasonal in nature and the
employment is for the duration of the season.
Undeniably, this circumstance of continuous re-
hiring was dictated by practical considerations that
experienced crew members are more preferred.
Petitioners were only given priority or preference
because of their experience and qualifications but
this does not detract the fact that herein petitioners
are contractual employees. They can not be
considered regular employees.
Petroleum Shipping vs NLRC
Facts:
On 6 March 1978, Esso International Shipping
(Bahamas) Co., Ltd., (“Esso”) through Trans-Global
Maritime Agency, Inc. (“Trans-Global”) hired
Florello W. Tanchico (“Tanchico”) as First Assistant
Engineer. In 1981, Tanchico became Chief
Engineer. On 13 October 1992, Tanchico returned
to the Philippines for a two-month vacation after
completing his eight-month deployment.
On 8 December 1992, Tanchico underwent the
required standard medical examination prior to
boarding the vessel. The medical examination
revealed
that Tanchico was suffering from “Ischemic Heart
Disease, Hypertensive Cardio-Muscular Disease and
Diabetes Mellitus.” Tanchico
took medications for two months and a subsequent
stress test showed a negative result. However, Esso
no longer deployed Tanchico. Instead, Esso offered
to pay him benefits under the Career Employment
Incentive Plan. Tanchico accepted the offer.
On 26 April 1993, Tanchico filed a complaint against
Esso, Trans-Global and Malayan Insurance Co., Inc.
efore the POEA for illegal dismissal with claims for
backwages, separation pay, disability and medical
benefits and 13th month pay. In view of the
enactment of RA 8042 transferring NLRC the
jurisdiction over money claims of overseas workers.
NLRC, on MFR, granted disability benefit of 18 days
for every year of credited service of fourteen (14)
years less the amount he already received under
the Company’s Disability Plan. To pay complainant
his monthly pay computed at [sic] the actual month
[sic] worked, which is 8 months as 13th month pay.
And the cost of suit.
CA:
The Court of Appeals Affirmrd and ruled that
Tanchico was a regular employee of Petroleum
Shipping. The Court of Appeals held that
petitioners are not exempt from the coverage of
Presidential Decree No. 851, as amended (“PD
th
851”) which mandates the payment of 13 month
pay to all employees. The Court of Appeals further
ruled that Tanchico is entitled to disability benefits
based on his 14 years of tenure with petitioners.
The Court of Appeals stated that the employer-
employee relationship subsisted even during the
period of Tanchico’s vacation. The Court of Appeals
noted that petitioners were aware of Tanchico’s
medical history yet they still deployed him for 14
years. Finally, the Court of Appeals sustained the
award of attorney’s fees.
Issue: 1. Whether Tanchico is a regular
employee of petitioners; and
2. Whether Tanchico is entitled to 13th month
pay
Held: As was held in the case of Millares, seafarers
are not regular employees. As they are only
considered as contractual employees whose
employment are terminated everytime their
contracts expire.
Their employment is contractually fixed for a
certain period of time. They fall under the
exception of Article 280 whose employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of engagement of the
employee or where the work or services to be
performed is seasonal in nature and the
employment is for the duration of the season.
The prescriptive periods is 20 years. What are
prohibited, who are prohibited in illegal
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recruitment? If you are a travel agency, you are
prohibited to engage in illegal recruitment. Only
Filipino citizens. Remember in the constitution 60%
owned by a Filipino citizen. The rule is different
here. It must be 70%. Then there is free legal
assistance for migrant workers , etc. you read 8042
as you have finished reading Art 13 up to Art 29 of
the labor code. What happens when the law will be
passed, who implement the regulation? Remember
there are now people who are now in jail and when
this law is passed what will happen? It will
decriminalize illegal recruitment which means that
the law repealing illegal recruitment will appreciate
in their favor. What is the case that you will file?
Habeas corpus using the law that repealed. 8042
and you will ask the court to produce the living
body of the client because what used to be criminal
in no linger criminal now. The only problem is if
together with illegal recruitment is estafa! Because
it is possible. you can be charged with estafa with
illegal recruitment. That is not double jeopardy and
that is allowed in court. You can get exonerated
with illegal recruitment but with estafa you will still
serve the penalty. That is criminal. There is this
case of illegal recruitment which has been asked in
the bar several times so I think you should read it.
That is the case of ppl v panis 1986.
People vs Judge Panis, Serapio Abug (recruitment)
Facts:
Four informations were filed on January 9, 1981, in
the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug "without
first securing a license from the Ministry of Labor as
a holder of authority to operate a fee-charging
employment agency, did then and there wilfully,
unlawfully and criminally operate a private fee-
charging employment agency by charging fees and
expenses and promising employment in Saudi
Arabia" to four separate individuals named therein,
in violation of Article 16 in relation to Article 39 of
the Labor Code.
Abug filed a motion to quash on the ground that the
informations did not charge an offense because he
was accused of illegally recruiting only one person
in each of the four informations. Under the proviso
in Article 13(b), he claimed, there would be illegal
recruitment only "whenever two or more persons
are in any manner promised or offered any
employment for a fee."
Denied at first, the motion was reconsidered and
finally granted in the Orders of the trial court dated
June 24 and September 17, 1981.
Issue:
The basic issue in this case is the correct
interpretation of Article 13(b) of P. D. 442,
otherwise known as the Labor Code, reading as
follows:
"(b) 'Recruitment and placement' refers to any act
of canvassing, 'enlisting, contracting, transporting,
hiring, or procuring workers, and includes referrals,
contract services, promising or advertising for
employment, locally or abroad, whether for profit
or not: Provided, That any person or entity which, in
any manner, offers or promises for a fee
employment to two or more persons shall be
deemed engaged in recruitment and placement."
Held:The posture of the petitioner is that the
private respondent is being prosecuted under
Article 39 in relation to Article 16 of the Labor Code;
hence, Article 13(b) is not applicable. However, as
the first two cited articles penalize acts of
recruitment and placement without proper
authority, which is the charge embodied in the
informations, application of the definition of
recruitment and placement in Article 13(b) is
unavoidable.
The number of persons dealt with is not an essential
ingredient of the act of recruitment and placement
of workers. Any of the acts mentioned in the basic
rule in Article 13(b) will constitute recruitment and
placement even if only one prospective worker is
involved. The proviso merely lays down a rule of
evidence that where a fee is collected in
consideration of a promise or offer of employment
to two or more prospective workers, the individual
or entity dealing
with them shall be deemed to be engaged in the act
of recruitment and placement. The words "shall be
deemed" create that presumption.
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At any rate, the interpretation here adopted should
give more force to the campaign against illegal
recruitment and placement, which has victimized
many Filipino workers seeking a better life in a
foreign land, and investing hard-earned savings or
even borrowed funds in pursuit of their dream, only
to be awakened to the reality of a cynical deception
at the hands of their own countrymen.
Now, one of the obligations of the recruiters to put
up security bond. The security bond is supposed to
answer for the liabilities of the contract that may
arise out of the contract that he has succeeded in
concluding with those whom he deployed and the
agency representing the foreign principal. What is
the liability of the bond? For example the agency
has several unpaid accounts in the travel agency for
tickets used for these clients deployed. Can they
be executed upon pay for these tickets? The SC said
no! This bond is supposed to answer for ee-el
relationship liabilities not for any other liabilities on
the surety. Because if you are an OFW and your
contract for one year or another is violated. You file
an illegal dismissal of violation of contract and what
can u recover? This is what sec 10 of 8042 says: in
case of termination of overseas employment
without just valid or cause as defined by law or
contract the worker shall be entitled to the full
reimbursement of his placement ☺fee with the
interest of 12% per annum. Plus his salary for the
unexpired portion of the employment contract or
for 3 months of every year of the unexpired term,
whichever is less (please read the law for
clarifications) That is the penalty for illegal
termination of contract in OFW. You can ask
repatriation, reimbursement of placement fee with
interest or 3-month salary of the year unexpired or
what is remaining to your contract. Which is
different from an ordinary contract wherein it does
not grant these kinds of remedies. So, who has
jurisdiction over this kinds of violations of OFW
contracts? It is the labor arbiter now and no longer
the POEA. It is the labor arbiter who has the
jurisdiction over the residence of the OFW or the
labor arbiter of the NCR. That is the rule now. So
with that we are through with placement, pre
employment, man power. And we just have to look
into at residents or resident aliens. The
employment of resident aliens. Title two.
Employment permits of non-resident aliens. There
are 3 arts there. Art 14, 41 prohibitions against
transfer of employment, art 42 submission. This
involves non resident aliens. If you are a non
resident alien, you can work if the DOLE issues you
a permit to work. The immigration will issue you a
working visa but that does not entitle you to work
because that is the case decided upon in General
Milling v NLRC. this involves the PBA coach Tim
Cone. Tim Cone had a working visa and he is made
to work with Alaska right away. So they said that he
is illegally working because he has no working
permit. The SC said that Under the present law, it is
he DOLE that grants you a right to work and issues a
permit before you can work (non-resident aliens)
however if our visa is a resident visa, you are
permanent resident here so they are no longer
entitled to the labor code. They can stay and work
here. You will be issued a permit if your country of
origin also allows you to work. The requirement of
reciprocity.
ART. 82. Coverage. - The provisions of this Title
shall apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, managerial employees,
field personnel, members of the family of the
employer who are dependent on him for support,
domestic helpers, persons in the personal service of
another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate
regulations.
As used herein, "managerial employee" refer to
those whose primary duty consists of the
management of the establishment in which they are
employed or of a department or subdivision
thereof, and to other officers or members of the
managerial staff.
"Field personnel" shall refer to non-agricultural
employee who regularly perform their duties away
from the principal place of business or branch office
of the employer and whose actual hours of work in
the field cannot be determined with reasonable
certainty.
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So these are the enumerations of those who are not
covered. It begins by saying that these provisions of
this title shall apply but then it goes to say but not
to x x x. So it lists those who are not covered. All the
enumerated there exists an employee-er
relationship beginning with managerial employees
down to the rest, there is er-ee relationship, and
yet they are not covered. So if you are given a
problem on hours of work, wages, compensable
hours etc., the first thing you have to determine is
whether or not it is covered by the Labor Code. Is
there is employee-er relationship, because it may
not be the LC that you can invoke, but the
Comprehensive Agrarian Reform Law. So you first
determine whether or not it is the LC.
Once you have determined if there is employee-
employer relationship, you have to reckon with
article 82. Is this one of those who are excepted?
Now all you have to do is to remember those
exceptions because if you know the exceptions, you
will know who are covered.
If you read Art. 82, it is very clear that it shall apply
to employees in all establishments and
undertakings whether for profit or not. So as long as
the employee-er relationship is covered even if it is
not for profit, except if it is covered by special
decisions of the Supreme Court like cooperatives.
You read Rural Bank of Davao City V NLRC. The
court says there that members of the coop who are
at the same time employees of the coop are not
covered by the minimum wage. So they are not
included in the minimum wage provisions.
I. GOVERNMENT EMPLOYEES
Now government employees first you have to take a
look at 1987 constitution article 9-b sec 2(1)
(1) The civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the
Government, including government-owned or
controlled corporations with original charters.
All branches meaning executive, legislative and
judiciary. Subdivisions meaning the cities,
municipalities, provinces. So employees of the
government in those subdivisions are not included.
Instrumentalities like ombudsman, human rights
commission. They do not belong either to the
legislative, executive and judiciary. Now agencies of
government like the BIR. They do not possess
separate personality-- they are agencies of the
government. If you are employed there, then you
are government employee.
Now, including government owned and controlled
corporation with original charter. The requirement
is you must have an original charter in other words
your fundamental law that brought you about in
existence is an act of the legislature or Congress.
But if you are a government owned and controlled
corporation but you do not have an original
charter – therefore you are no longer government
employees.
An example is: PNB used to be government owed
and controlled corporation with original charter
because its provision is a product of legislation. It
was the official depository of the government. So all
those who were in the PNB were government
employees. They were not covered by the labor
code. However, PNB was privatized. They applied
for incorporation with the Securities and Exchange
Commission pursuant to the Corporation Law. So
they were issued Articles of Incorporation and By-
Laws. So now they do not have an original charter,
but they have Articles of Incorporation pursuant to
a general enabling act, which is the Corporation
Code. Therefore, now they are no longer
government employees.
How about corporations which are formed by
corporations that are owned and controlled by the
government with original charter?
Suppose PNOC and it creates a corporation PNOC
Research and Development Corporation. Using the
money of PNOC, it creates a corporation without an
original charter, but under the Corporation Code.
Are the employee there government employee? It
used to be the decision of the SC that they are
government employees. That was the decision in
the case of NFA vs Juco. But subsequently the
decision has been overturned in the case of
Lumanta v NLRC. (170 SCRA 79, 1989)
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Remember under the debates of the old 1973
constitution-- the argument was that these
corporations (formed under the general enabling
act of the corporation code by corporations with
original charter owned and controlled by the
government) must necessarily be government
corporation and their employees must necessarily
government be government employees. Because if
they were not then it could be very easy to
circumvent the law about the salaries of the public
employees by using another corporation. It would
be very easy to escape audit requirements of
expenditures of the funds of government
corporation by simply creating another corporation
under the general enabling law. That was the
reasoning in NHA vs Juco.
But then the SC under Lumanta vs NLRC has stood
its ground and said: since the 1987 constitution is
explicit that it must be with original charter
therefore those which do not have original charter
-- even if they are controlled by the government,
(they) are no longer government owned or
controlled corporations. (Meaning, they are
governed by the Labor Code). That is the general
rule.
Let me give you two exceptions. The first exception
is Philippine Fisheries Development Authority vs
NLRC.(213 SCRA 261, 1990) Philippine Fisheries
Authority is a governmental agency. It owes its
creation from the law, but then PFDA went into a
contracting of janitorial services and the contractor
failed to pay the salaries of the janitors. Is PFDA
liable for the unpaid wages? That is what the Labor
Code says but PFDA says we are not covered by the
labor code because we are government. But the SC
says you are covered by the Labor Code. There is an
employee-er relationship imposed by law. It is the
law now that says you are an employer – not the
four requisites of employer-employee relationship.
It is the law itself --- so even if you are government ,
you must pay the salaries.
That has just been reiterated in a 2005 case of NFA
vs. NLRC. They were also made liable because the
contractor did not pay the increase in salaries of the
security guards that was mandated by the wage
orders. When the contractor did not pay the
security guards ask for money from the government
organization, the NFA. NFA said we should not pay
because we are not covered by the Labor code. But
then the SC said you are covered because it is the
law itself which provides.
 Cases declared by SC that certain
institutions or agencies are government and
therefore not covered by the Labor Code:
1. Boy Scouts of the Philippines vs NLRC (156 SCRA
176, 1991) – Believe it or not, the BSP is a
government institution. It is created by a
Commonwealth Act. The CA says that the number
one boy scout of the Philippines is the President.
Now, what happens if the President of the Phil is not
a he, but a she?
2. Another trail of cases is local water districts. And
the landmark case is Tanjay City Water District v
Gabaton (172 S 253, 1989). Because these water
districts were created by the water resource code
and yet the water district here continues to defy by
the fact that they have a union that signs a
collective bargaining agreement with the board of
the water district. Someday that will be brought to
courts and they will find out that contracts that they
have entered into are illegal.
3. PAGCOR V CA (202 S 191, 1991) PAGCOR is
engaged in the most mundane human activity. The
euphemistic term is gaming, but in legality it is
“sugal”. It has original charter therefore it is
government.
 Cases where the Sc said not covered by CS
because they are not government:
1. PNOC-Energy Development Corp. v NLRC (201 S
487)
2. Lumanta vs NLRC and Food Terminal Inc. -- Food
Terminal used to be NFDA. National Food Terminal
Dev’t Authority which used to be GMTFM (Greater
Manila Food Terminal Market). Now it has been
converted and its original charter has been
withdrawn and applied for an original article of
incorporation and by-laws with the Securities and
Exchange Commission under the corporation code
therefore it is no longer government.
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3. PUCP v National Housing Corporation (173 S 33,
1989). National Housing Corporation is not a
governmental corporation.
Now, it used to be, as a ruling, under Tolentino vs
CSC (1985), where the SC said: that a law exempting
GOCC decree is unconstitutional. Why? Because the
constitution says that if you are governmental
employee, you are subject to the CS law. That is in
article 9-b sec 2 sub sub par 1, you are covered by
the CS law. So if the congress passes a law
exempting a GOCC from CS then it is
unconstitutional. But sometime in 1993, there was
law passed by the Congress exempting a GOCC with
original charter from the standardization pay of CS
law -- the Land Bank of the Philippines. That was
not questioned. Thereafter, PNC also passed the
same law-- if we do not be exempted from the
standardization pay law then we might be losing all
our engineers and they will go abroad. So it would
seem that the exception to the Tolentino doctrine is
as to salaries—there can be an exception.
Now, let me bring to your attention the case of
PNOC- EDC, et al vs NLRC 1993, May 31. This
particular case has something to do with section 66
of the omnibus election code which says that
employees of GOCC are ipso facto deemed resigned
from the office upon their filing of their Certificate
Of Candidacy. Now the law does not distinguish
whether the corporation has originial charter or
incorporated under the enabling law. It is deemed a
GOCC because the Omnibus Election Code does not
distinguish. So even if you are in PNOC energy
development corporation, you are an analyst there
(as is the respondent in this case) and PNOC does
not have an original charter , section 66 of OEC still
has effect to the employees of PNOC-EDC.
Please remember that because as I have said before
Government employees, the basis of the rendition
of service and reception of remuneration of the
government is not contract unlike employee-er
relationship, it is law. Somehow you must be able
to place your position in the law. There must be a
plantilla. A certain position coupled with the
remuneration that goes with that position. The
position is either elective or appointive. The only
way you can become a government employee is
either you are appointed by the correct appointing
authority or you are elected. You cannot become an
employee by prescription. Why because
government is not bound by the mistakes of the
officers. If nay official diha nga nasayop, it cannot
be cured by sheer passage of time. It would be very
easy for government official to commit a mistake
and then later on be validated by prescription.
Government is not bound be the mistakes of its
officers. Even if you are an innocent 3rd party, the
law will leave you where you are because the evil
that is sought to be avoided is greater than the evil
you suffer personally.
That is government employees. Its an exclusion, it is
not technically an exemption. The next category is:
II. Managerial employees.
As used herein (Art. 82), managerial employees
refer to those whose primary duty consists of the
management of the establishment in which they
are employed or of a department or subdivision
thereof, and to other officers or members of the
managerial staff.
Two kinds of managerial employees: (1) Managerial
employee proper4 and (2) officers and members of
the managerial staff. 5
4 (b) Managerial employees, if they meet all of the following
conditions:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or sub-
division thereof.
(2) They customarily and regularly direct the work of two or more
employees therein.
(3) They have the authority to hire or fire employees of lower rank; or
their suggestions and recommendations as to hiring and firing and as to
the promotion or any other change of status of other employees, are
given particular weight.
5 (c) Officers or members of a managerial staff if they perform the
following duties and responsibilities:
(1) The primary duty consists of the performance of work directly
related to management policies of their employer;
(2) Customarily and regularly exercise discretion and independent
judgment; and
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Managerial employee proper is one whose primary
duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof.
Under the implementing rules it says customarily
and regularly direct the work of two or more
employees and they have the authority to hire, fire
other employees of lower rank or their suggestions
and recommendations as to the hiring or promotion
or as to any change in the status of the employee
given particular weight. The have effective
recommendatory power.
How about members of the managerial staff?
Members of the managerial staff -- they may not
lay down policy, they may not direct or supervise
anybody but they regularly and directly assist a
proprietor or managerial employee whose primary
duty consist of the management of the
establishment in which he is employed or
subdivision thereof. Or may execute under general
supervision special assignment or tasks.
So, they are employees who do not devote more
than 20% of their hours worked in a work week or
activities which are not closely related to the
performance of the work described in par 1, 2, 3 and
above.
This description has been validated by the SC in the
case of Villaluga vs NLRC 225 SCRA 537, 1993.
Example of a managerial employee: Chief finance
officer -- the chief finance officer has people to
supervise. They have the duty to first of all,
recommend the establishment of policies, the
(3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii)
execute, under general supervision, special assignments and tasks;
and
(4) Who do not devote more than 20 percent of their hours worked in
a work week to activities which are not directly and closely related to
the performance of the work described in paragraphs (1), (2) and (3)
above.
particular procedure in expending monies. They are
the managerial employees proper. They are not
covered by labor standards law because they are
not hired for the time that they put in. They are
hired for the special qualifications and for the
results that they achieve
Suppose an employer just gives you the title of
managerial employee—Sanitary Manager. This is
where the SC says that what makes you a manager
is not the title but the activity for which you have
been engaged to perform. If you are manager, you
engage in an activity that requires the exercise of
independent judgment -- discretion -- that is what
makes a manager. Managers are responsible for
over all results that they produce. Managers are
hired not for the hours that they put in but their
experience and knowledge which requires
discretion and independent judgment.
How about members and officers of the managerial
staff? The most common example given to a
member of a managerial staff is the cost accountant
who works with one computer. She has no assistant
and she just keeps track of the cost of the goods
produced. You are still a managerial employee and
you are not included in labor standards benefits,
you cannot claim overtime. Why? Because Art. 82
says so. These are people hired for their special
qualifications.
Now, I take pains to really bring this out because
when you go to labor relations, managerial
employee in relations is higher than managerial
employees in labor standards. Managerial
employees definition in labor standards is wider not
the same as the labor relations because there is
another definition there.
Now, salaries of managerial employees (which by
the way are under serious criticisms right now,
especially in the US.) Why? Because managerial
employees do not just receive wages – they receive
packages and benefits. And the package includes
benefits. One of the controversial benefits is what
we call options. You are given rights to purchase
shares of stocks in the corporation at discounted
rates. In other words, lower rates than the price
traded in the StEx. Why is that? To give you
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incentives to work so that the value of the shares of
stocks will go up because you yourself are a
shareholder.
The members of the managerial staff are different.
They are given a salary but they are also receiving
premiums because of their special skills. They deal
with managerial matters and usually it is
confidential in nature. For the confidentiality, they
have a premium to their salary that is the reason
why they are not included in the labor standards.
The reason for the law is the nature of your activity
– that it is confidential, sensitive, and you are not
just working with a material that is negotiable or
perishable. It is a matter that is highly confidential
and highly sensitive and you are as much as
custodian as an employee that works in that
establishment.
III. Field personnel.
Shall refer to non-agricultural employee who
regularly perform their duties away from the
principal place of business or branch office of the
employer and whose actual hours of work in the
field cannot be determined with reasonable
certainty.
There are three elements of a field personnel.
1. Non agricultural.
 If you re a farmer, planter, sower or a tractor
driver you can be sure you are not a field personnel
because a field personnel is non agricultural.
2. You regularly perform your duty outside the
office of the er.
 You do not sit behind a desk. You do something
else other than sitting behind the desk
3. Hours of work cannot be determined with
reasonable certainty.
 This is the most crucial element of all.
Is it just because you are outside the office that your
hour of work cannot be determined with reasonable
certainty?
Let me give you an example: Suppose you are a
member of a maintenance response team of Davao
light. You are a line man. Then there is a brownout
in Buhangin so the supervisor tells you to go to
buhangin. Then as you go out, the security guard
will record your udometer then the time as
recorded when you went out. You go to buhangin.
When you reach there you ask the people what
happened then you talk to the barangay captain.
You look for the captain. At the same time, your
radio is crackling, your supervisor is asking you
where you are. Is that the field personnel that the
LC is talking about? That is the issue. Because
technically speaking his hours of work can be
determined with reasonable certainty. You can look
at the udometer, the time they left and the time
they returned. There is a person who supervises the
job. Mamonitor man na nimo. Ug didtona sila sa
times beach nag inom ug tuba nagpahayahay.
Mahibaloan man na nimo kay ang
spemployeedometer layo naman na ug lakra. So
you can supervise. Field personnel refer to those
who work outside the office whose actual hours of
work are incapable of being determined with
reasonable certainty. Who are those workers? They
are sales personnel. Kanang mamaligya. Med rep.
mamaligya ka ug tambal and you convince the
doctor to buy the medicine so you invite him to eat
lunch para palitan ka ug tambal. That is a work (with
hours of work) which cannot be determined with
reasonable certainty. Dili man mahibaloan ug
namaligya ba jud ka or nagkaon ka.
You have to read the case of Union of Filipino
Employee vs Vivar 205 SCRA 200, and Mercidar
Fishing Corporation v NLRC 297 SCRA 440, 1998.
In Mercidar Fishing Corp, the fishermen, the fishing
crew, in deep sea fishing said that we should be
paid with overtime the whole time we out of the
principal office. Management says you are not
entitled to overtime because you are field
personnel. You are working away from the office
and your hours of work cannot be determined with
reasonable certainty. Dili mo entitled to overtime
because the Labor Code says. The SC said they are
not field personnel even if you are working outside
the main office and are non-agricultural.
Fishermen employed by petitioner have no choice
but to remain on board their vessel. Although they
perform non-agricultural work away from the
petitioner’s office, the fact remains that
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throughout the duration of their work, they are
under the effective control and supervision of the
petitioner through the vessels patron or master as
the NLRC correctly held.
But in union of Filipino Employee, salesmen ni sila,
the petitioner union maintains that the period
between 8 a.m. and 4 or 4:30 PM comprises the
sales personnel’s working hours which can be
determined with reasonable certainty. The SC does
not agree. The company has no way of determining
whether or not the sales personnel, even if they
report to the office before 8AM and come back at
4:30 really spent the hours in between in actual
labor. So there is no way it is capable of
determination with reasonable certainty.
If you are given a problem – there is a highway
being built by a contractor. The contractor’s main
office is in DAVAO CITY and there is a crew there,
there is a time but there is no Bundy clock they start
to work at 8 and end at 5. Suppose there is a
breakdown in the machinery and you work up to 7
in the evening. Are they entitled to over time pay?
Are they field personnel? Can it be determined with
reasonable certainty? Work of that nature can be
determined with reasonable certainty. The ruling of
the SC is with regard to sales personnel when the
very nature of the work -- the hours cannot be
determined with reasonable certainty.
IV. Members of the family of the Employer who
are dependent upon him for support.
Article 82, the operative clause is dependent on the
employer for support. Let us say that the owner of
the establishment is the father. He has a son who
works for him but the son is already married. The
son opens the store and all the sales help come in.
The son is also the last person to go home. At 7:30
when it is already dark, that is when they close. Pila
man sweldo nimo? Wala ko kabalo, wala man ko sa
payroll. Wala diay ka swelduhi? Aw, di man sad ko
ingon wala ko swelduhi kay ining bayad na sa
tuition, kana akong mga anak na nagskwela sa
Ateneo bayran man sa akong amahan. Ang gasoline
sa akong sakyanan nga gigamit, akong amahan man
gabayad. So unsaon man na? That means that there
is a prior more fundamental relationship before the
employee-er relationship entered into the picture.
And that relationships is already covered by law --
civil code. So therefore a subsequent legal
relationship cannot be superimposed on that which
is already covered. That is the reason why members
of the family dependent upon him for support is not
included among the employees to whom labor
standards covers.
Please make sure that they are dependent upon the
employer for support. If they are no longer
dependent on the er for support, that is a different
issue. This can be the husband, wife, parents,
children, ascendant, descendants, brother and
sisters according to the implementing rules.
Suppose I give you a case. Here is a doctor he has
one employee, a nurse/receptionist. After a few
years he marries the nurse so there is a new
relationship. Husband-wife. But the wife still
continues working. That is part of the condition of
their getting married because she wants
independent money. Before, she can claim
overtime. Now, can she claim overtime? No more,
it is complicated. In fact it becomes a question of
Jurisdiction. Because if you make the question of
pay into a case of money complaint and bring it to
the Labor Arbiter, certain issues as to family
relations come up, can the labor arbiter assume
jurisdiction over those issues? The labor arbiter has
limited jurisdiction. It is not a tribunal with general
jurisdiction.. you cannot. So therefore, it falls upon
the members of the family dependent upon him for
support.
Whether it is prior or it is subsequent, the familial
relations which is covered by family law is superior
to the labor code.
V. Domestics.
Shall mean services in the er’s home which is usually
necessary or desirable for the maintenance and
enjoyment hereof and includes ministering to the
personal comfort and convenience of the members
of the er’s household, including services of the
family drivers. (Art. 141)
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Remember it must be a household; a natural
family. In the case of Apex Mining V NLRC , a group
of Japanese expatriates who are living in a home
provided by the company and the company engages
house help to do household chores -- Clean the
rooms clean the bathrooms, beddings, do the
laundry and they are paid domestic rates. They
complain! They wanted to be paid 13th month. Are
they correct? Yes. SC said they are not domestic
servants because it is not household. They are all
bachelor’s there so you must be a natural
household.
What happens to Dean who has three maids and
one houseboy? He is alone, he is not a household.
Are they domestic? They are not domestics but
they fall under the 2nd succeeding category –
VI. Persons in the personal service of another --
They are also exempted. Persons who are in the
personal service of another--- that dates back to the
days of royalty. It antedates the industrial
revolution so therefore it is not considered part of
labor law. Labor law is concerned with industrial,
agricultural and commercial labor which came
about in the industrial revolution. They have their
own rules and rubrics. They are not covered by the
wage rates. They are not covered by the working
hours or the wage rates.
What are the working hours, therefore, of the
domestics? It is provided by Article 1695 of the
Civil Code. it says that the domestic’s working hours
must not exceed 10 hours.
And what is more, Article 145 prohibits assigning
domestics to non-household work. So if you assign
a domestic to a non-household work, to a
commercial work, let us say. What is the effect? He
is transformed into a commercial worker and
therefore he is entitled to commercial, industrial,
agricultural minimum wage rates.
For the domestics and the persons in the personal
service of another, they have their own minimum
wage law. Those domestics in Manila and first class
cities, the minimum wage is Php 800.00. Elsewhere,
Php 650.00 or Php 500.00. (This is an instance
where the market rates outweigh the minimum
wage). In the agricultural, industrial and
commercial, the minimum wage of the law is much
higher than the market wage because the unions
are pushing for that. They do not push for the
domestics. Hain man nang ilang pag-adjudicate sa
mga gidaugdaug? 
The minimum wage rate of domestics is in Article
143. Besides that there is a new law RA 7685
effective Sept. 1, 1993. Per SSS circular number 21-
B -- Domestics who are receiving at least 1000 pesos
a month is compulsory covered by the SSS. The
moment they are receiving at least 1000 pesos, you
must enroll them with the SSS.
 List of rights for house helps/domestics:
(See Art. 141-150)
1. THE RIGHT TO ORIGINAL CONTRACT FOR
NOT MORE THAN 2 YEARS. (ARTICLE 142)
(But may be renewed for such periods as may be
agreed upon by the parties. )
 Original first time contract of a maid is two
years after that, she is free. Ang utang nga wala na
bayari? That remains a debt. If ipabilin ka kay naa
kay utang that is indentured services --- Dugay na
kaayo na, it began with the age of discovery. Now,
our law says no involuntary servitude of whatever
nature shall exist. That is why personal obligations
cannot be demanded by specific performance.
2. RIGHT TO MINIMUM WAGE OF HOUSE
HELPERS (ARTICLE 143)
3. A RIGHT TO AN OPPORTUNITY FOR AT
LEAST AN ELEMENTARY EDUCATION (ARTICLE 146).
 If he is below 18 and it has not finished
elementary education. Notice how the law is
worded. You must have an opportunity for at least
elementary education.
4. RIGHT TO JUST AND HUMANE TREATMENT
(ARTICLE 147)
5. INDEMNITY FOR UNJUST TERMINATION OF
SERVICES (ARTICLE 149)
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 Actually this is a trick. It is giving the
domestics less benefits than the ordinary worker.
You will find out later on that ordinary workers,
industrial, agricultural or commercial, if he is
terminated, one of his privilege is full back wages.
All the wages that he should receive from the time
of unjust termination up to he time he is reinstated.
But a housemaid who was unjustly terminated is
only entitled to compensation already earned plus
15 days by way of indemnity.
6. THE RIGHT TO BOARD, LODGING, MEDICAL
ATTENDANCE (ARTICLE 148)
7. THE RIGHT TO LEAVE THE SERVICE UPON 5
DAY NOTICE IF THE ENGAGEMENT IS WITHOUT A
SPECIFIC TERM. (ARTICLE 150)
8. THE RIGHT TO EMPLOYMENT
CERTIFICATION (ARTICLE 151)
 This is the only right which the domestic has
over an agri, industrial and commercial worker does
not the right to demand employment certification.
-=hPs=-
Art. 82: Who are not included: We said that those
who are enumerated in Article 82 are not included.
These constitute exclusion.
1. Government employee
2. Managerial employee: they are excluded from
the labor code because they are not paid by the
time they put in but for the special qualifications
that they have and for the results that they are
supposed to obtain.
3. Field personnel: exempted even though there is
er-employee relationship because their hours of
work cannot be determined with reasonable
certainty, example: salesmen
4. Members of the family of the employer who are
dependent on him for support: the reason why
they are exempted is they are governed by a prior
and more basic law, the Family Code. Sometimes,
that family law will give them more than what labor
standards itself gives because of ties other than er-
employee contracts.
5. Domestics: they are also exempt primarily bec.
they are more ancient than the existence of
agricultural, industrial and commercial laborers.
Agricultural, commercial and industrial labor came
about only during the industrial revolutions, but the
domestic antedates those kinds of contracts. So
they are already governed by so much custom, non-
legal relations that they are not demployeemed to
be included in labstan.
6. Persons in the personal service of another
7. Pakyao workers. There are two kinds. (Take note
that you can actually use this term since this is
found in the Labor Code, provided you use the same
spelling). Pakyao workers are found in Art. 82;
"workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations."
[see also Article 101]
Why is the word used at all? Why did they not say
[simply] "workers paid by results"? Because there
are two kinds of workers paid by results:
1. paid on a piece rate basis, and
2. paid on a task basis.
Both are lumped together as pakyao workers.
(Murag buang ba, daghan klase.) Your output is
uniform in results and the basis of payment is per
piece. That is piece rate basis.
But if pabuhaton kag kalo kay daghan turista,
bayran ka ana per piece. But pasimentuhon kag
whole floor, pakyawon na, that is task basis. The
basis of payment is the completion because later on
you will find out that the law says that wages must
be paid at two weeks intervals but in no case more
than 16 days interval. Even if you are in a task or
piece rate basis, you must pay them at an interval
of not more than 2 weeks.
Suppose gipakyaw nimo pasemento ang tibuok
floor for 6thousand pesos (bisaya jud?!), 3 sila
katao, abtan 2 ka simana wala pa gihapon nila
nahuman, unsa man imo basis for payment? The
basis is the completion. Katunga pa gani, you pay
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1/2.. kung 1/4 you pay 1/4. That is the basis,
completion.
PAID ON A PIECE RATE BASIS: uniform; per piece;
uniform payment because the output is uniform. If
in a problem the output is not uniform, then it is
not on a piece rate basis. For example, a forwarding
company, they are paid on a per trip basis. The
amount of mileage, gas, the number hired, the
particular peace and order conditions of that
destination. So accordingly, there is that fixed
amount, lets say Davao to Iligan mao na imong
bayran. Is that piece rate? That is not uniform and
there is a formula involved. So that is task basis.
Bisan 3 ka-adlaw sya mabilin didto kay nibuto iyang
ligid, etc, he is not paid overtime because he is paid
on a results basis. He is exempted. So be careful
with this kind of problems. You must know the
difference.
Later on you will find out, 13 month pay is not
included in the Labor Code but Cory Aquino made it
in such a way that pakyao workers paid on a piece
rate basis are entitled to 13 month pay but paid on
a task basis are not entitled. Why is that? I don't
know but that is the law, PD 851. That's why you
must know how to distinguish the two.
Let me introduce certain cases to you bec. even the
SC is confused.
Rosario Bros. vs. Ople (1984): This is where the SC
ruled that tailors and similar workers hired in a
tailoring dept. although paid weekly wages on a
piece rate basis are employee paid on a piece rate
basis but they are not independent contractors but
are regular employee. And here the SC said that
they are not entitled to over time pay, holiday pay,
premium pay or holiday/rest day and service
incentive leave. This ruling is reiterated in Villuga
vs. NLRC (1993).
But then Labor Congress of the Philippines vs.
NLRC (1998), Hilario Davide 1st Div., ruled that pc.
rate employee are entitled to night shift
differentials, holiday pay, service incentive leave,
premium pay, 13 month pay in accordance with the
implementing rules. In that enumeration, isa ra sya
correct, kanang 13 month pay, the rest sayop sya.
But remember, he is the Chief Justice, so the Dept.
of Labor has been imposing that because it is in
favor of workers.
But then his archrival, Bellosillo, 2nd Div in the case
of Mark Roche Int'l vs. NLRC (1999) said this: "As
correctly held by the NLRC, private respondents as
pc. rate employee are not entitled to service
incentive leave pay and holiday pay, even as they
are entitled to other incentives like COLA and 13
mo. pay. Service incentive leave pay shall not apply
to employee whose performance are unsupervised
by the employer including those who are paid in a
fixed amount for performing work irrespective of
the time consumed in the performance thereof."
The best interpretation is the ancient case of Red V
coconut vs. CIR. There the SC laid down the rule. If
you are pc. rate or if you are paid on a task basis,
you have no time. You can spend as much time as
you want, kay pc. rate man or task basis. The
amount of your pay is dependent on your industry
that is why you are not covered by labor standard.
Its up to you really when you devote time.
So what is the difference if you are both paid in a
piece rate/result basis and you are also given time
[punch in ug punch out ka]. Unsa man ka? The
result is, the ambiguity is interpreted in favor of
labor. So you are a worker. You are entitled to over
time. So the moment you have hours [you are made
to punch in and punch out], the output
requirements [the number of cases you have to
produce] are for purposes only of discipline.It
cannot be the measure of payment. If you are given
number of pieces as output standards, that is only
for purposes of measuring efficiency, not measure
of payment. Because you cannot be a piece rate
worker and at the same time a time worker. [ok?]
For instance, [you have seen these] disposable
lighters.. they are made in assembly lines. Now you
are made to punch in at 8 and punch out at 5 and
you are given an output number of 65 lighters/day.
What does that make you? It makes you still a time
worker. What therefore is the 65 lighters that you
are expected to finish within one day? It is to
measure your efficiency for disciplinary purposes.
[because the quality of the assembly line is fixed].
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So if you produce less, disiplinahon ka pero bayran
gihapon ka sa imong sweldo anang adlawa na.
Ngano man? Kay imo man gihatag imong panahon
sa pagtrabaho, pag time in ug time out nimo.
Now, there is this particular provision in Art. 101.
"The Sc. of Labor shall regulate the payment of
wages by results....through time and motion
studies....." This particular provision is placed here
to address the particular problem of pc. rate or task
basis of payment of wages used by er to circumvent
the minimum wage. There are many er na dili
ganahan magbayad ug min. wage kay pc. rate ra
man mo. Now to get the equivalent of the minimum
wage, you have to work longer than the standard 8
hours. How do you guard against that? How do you
know that their rate per piece is the correct rate?
It is determined by time and motion studies
(operations research). That is the task of industrial
enginemployeering. So if you are a piece rate
worker and you want to know if tama ang
ginabayad sa imo, you write a request to the Sec. of
Labor, to conduct a time and motion studies
following Art. 101 to determine if your rate is
correct, on the basis of that result [if less ang
binabayad sayo] then you can file a money claims
complaint.
So, I am giving you the background so that you will
know how to apply the law. Hourly worker, it has its
own advantages and disadvantages. Piece rate
workers has its own advantages and
disadvantagesThe more skilled the work is, the
more demanding it is knowledge-wise and skills-
wise, it begins to move to the pakyao rate. Buang ka
kung mu-hire ka nga computer programmer dayon
bayran nimo syag per hour kay mahal kaayo na!
Pakyawon na nimo, dali dalion na dayon, dali ra pud
maguba! (harhar, ano na lang gawin mo?)
Low end work, you have supervision, put it in time
worker. Then when you come to no-brainer
work/repetitive work, you put it in piece. What do
you mean by no brainer work? Kana bitaw
construction dayon naay tao nga suguon nila
magtul-id ug lansang.. kung bayran nag per ora pila
man mahuman ana? Gamay ra. But if bayran na
syag per piece, daghan na syag mahuman, because
it is a no-brainer work.
So from the lowest rate to the highest rate, that is
pakyao. In between is the hourly worker.
8. Retail and service industries/ establishments
which do not have 5 employee. This is from Book 3
Rule 2, Sec. 1(b): "those of retail and service
establishments regularly employing not more than
5 workers" are exempt as to night shift differentials.
A retail establishment is an establishment which
sells goods for the purpose of consumption and not
for the purpose of resale. Because if it is for
purposes of re-sale, then it is a wholesale
establishemnt. Now, what if an establishment sells
both, what is it? It is a retail establishment.
A service establishment is that which tenders to the
satisfaction of the consumer as to a particular
service performed for him. Ex. beauty salon. You
pay for the satisfaction of something done to you.
This law was passed for the purpose of sari-sari
stores. Kani diay mga sari-sari store nga open till
10pm, do they have to pay night shift differentials?
No, because they are exempt.
A word about retail and service establishments: The
difference. This difference was highlighted in one
bar exam where Jose Diokno was the examiner.
Problem: Suppose you are in a restaurant and you
ordered oyster soup. And as you are about to sip
your soup, you see a whitish sphere at the bottom
of the bowl. As you fish it out you notice it is a
pearl. As you are about to pocket it, the waiter taps
you at the back and says that is not yours, it belongs
to the restaurant.
Q: Who has the better right to the pearl?
A: It depends whether the restaurant is a retail or a
service establishment. If it is a retail establishment,
you can buy take out. If you buy take out then you
can carry even the bone. If it is a service
establishment, you have no right to the pearl. But if
it is a retail establishment, the customer has a right.
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9. Health personnel are exempted as to the work
week. They have a shorter work week than the
regular worker.
10. Under Sec. 45 PD 704 (Fishery Act of 1975), the
crew of a fishing vessel who are made to work
more than 8 hours at the same straight time pay,
not over time pay. They are exempt as to the over
time rates.
So those are the 10 categories of workers exempted
in part or in whole of the labor standards
provisions.
Let us go to Art. 83. IT has something to do with
hours of work, normal hours of work.
ART. 83. Normal hours of work. - The normal hours
of work of any employee shall not exceed eight (8)
hours a day.
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least
one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the
exigencies of the service require that such
personnel work for six (6) days or forty-eight (48)
hours, in which case, they shall be entitled to an
additional compensation of at least thirty percent
(30%) of their regular wage for work on the sixth
day. For purposes of this Article, "health personnel"
shall include resident physicians, nurses,
nutritionists, dietitians, pharmacists, social workers,
laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other
hospital or clinic personnel.
This is the 8 hour law benefit.
Q: Is the normal hours of work 8?
A: NO. The normal hours of work cannot exceed 8..
so it can be lower.
If your employer gives you less than 8 hours of work
a day and that is for a period of time, and that
ripens as a right. Therefore, Article 100 applies.
[Article 100 provides prohibition against elimination
or diminution of benefits].
Illustration: Suppose your regular hours of work is
8-12, 12-1[lunch break], 1-5. So you have 8 hours.
Suppose your employer, by practice, says your
lunch break is 2 hours. What happens to the
working hours? It is reduced to 7. For 7 hours of
work, you are paid a whole day's pay. Now suddenly
the employer says, ibalik na nato, 1 hour na lang
ang lunch break, and there is not change in a pay.
That results into a diminution of benefits. You are
working for the same amount of pay for longer
hours.. gamay imong sweldo. He [employer] must
pay additional wage. Why? Because your maximum
hours of work for one working day is only 7 hours.
So what is the normal hours of work? The normal
hours of work for one working day does not exceed
8 hours. It can be less.
How do you know that you have exceeded 8 hours?
The reference point is the working day. This is a
technical term ha. A working day is NOT equivalent
to a calendar day. What is the definition of a
working day? The def'n is found in Rule 1-A, Sec.1:
"a working day is 24 consecutive hours beginning
at the same time each day from the first hour of
work."
That is your working day, within that time, you
cannot be made to work more than 8 hours.
Example: Suppose your working day begins at 8am.
Your working hours are 8 hours, so 8-5pm. One day,
your son received a note from the principal wanting
to see you in the [principal] office. So you go there,
you miss work, you have undertime by two hours.
So you begin work at 10am. At 5 pm, that is the end
of the working hours, but then the supervisor says
all of you have to stay for 2 hours (OT). Pag gawas
sa pay, tanan nakakuha ug overtime, ikaw wala ka
kakuha, you complain. It is because you did not
work more than 8 hours in one working day. You
cannot complain that you were not paid over time
kay bisan kuyog ka sa mga nag-overtime, but the
hours you put in just completed the maximum 8
hours.
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Let us take the case where you have a three shift
working day [round the clock]. How many hours do
you have in a calendar day? 24 hours; divide that by
3 you have 8 hours. So the maximum coverage work
in three shift is 8. The language in the industrial
world is that you have the day shift (7am-3pm),
night shift (3-11pm), and graveyard shift (11pm-
7am). If you go to the medical world, the lingo they
use are day shift, afternoon shift and night shift..
ayaw gamit anang graveyard.
Let us say your assignment of shift is good for 1
month, day shift ka. At the end of the month, you
are given another shift.. graveyard for example. So
for one month you've been reporting 7am-3pm.
Remember now that your working day starts at
7am. At the end of one month your shift changes,
your last day and your first day in your new shift is
the same day. What happens is you report to work
at 7am and go out at 3pm, but mao man na
beginning sa change sa shift, so by 11pm,you report
again and finish at 7am. So your working day began
at 7am. Your working at graveyard shift is still
within the 24 consecutive hours beginning each day
from the first hour of work. So that is overtime
work. Your first day in your first shift is overtime
pay. So be careful about that, because the
reference is the working day. That is in the law, and
that has not been changed! In fact, Art. 88 makes it
impossible to change it.
Art. 88: "Undertime work for any particular day
shall not be offset by overtime work on any other
day. Permission given to the employee to go on
leave on some other day of the week shall not
exempt the employer from paying the additional
compensation required in this chapter."
We go back to the first example.. kadtong imong
anak gitawag sa principal, etc.. let's say wala kay
overtime, uli ka ug 5. You say to your employer,
"ayaw lang ko deduct-i, kay ugma musulod lang ko
ug 7 and pauli kog 6pm". Sugot imong employer,
punch in kag 7am, and punch out kag 6pm. That is
prohibited! Why? Because your undertime work is
straight time pay, ordinary pay and you're paying
for it with over time rates and that is unjust to you,
bisan musugot pa ka coz that is prohibited.
That is why we have a problem because the
department of labor is proposing the CWW
(Compressed Work Week). An employer can go into
the regime of cww. Technically speaking, there are
only 5 working days if you are given Sat and Sun.
off. You put that in a work week, your work week is
only 40 hours. Now, suppose you work over time 2
hours everyday, what happens? You only show up 4
days to make 40 hours. That is compressed work
week but sweldo nimo parehos lang gihapon. That
is allowed by the DOLE. They have changed the law
in effect. They are making the work week the
reference point.. for as long as you do not go
beyond 40 hours a [work] week. Can the Sec. of
Labor do that? That is against the law.
So that is the first right with respect to the hours of
work. Then you have Art. 83, the working week.
What is the benefit of working week? The benefit of
working week is found in Art. 91.
Art. 91"It shall be the duty of the employer,
whether operating for profit or not, to provide
each of his employee a rest period of not less than
24 consecutive hours after 6 consecutive normal
work day."
So the working week is not the same as the
calendar work week. The calendar working week is
7 calendar days (consecutive) beginning Sunday and
ends on Saturday. 7 days. The working week begins
on your first day of work, 6 consecutive days.. So it
begins Monday if you are Monday- Saturday, and it
includes Saturday. If your employer gives you
Saturday free, that is an additional benefit. Labor
Standards does not grant you that. You work 6
consecutive working days and then the obligation of
the employer is to grant you 24 consecutive hours
of rest day.
So the working week is important to know when the
rest day is because it is 6 consecutive working days.
Is the rest day included in the working week? No, it
is not, the definition does not include it. It is the
benefit.
Go back to Art. 83, 2nd paragraph: Health
personnel's working week is 5 consecutive working
days, not 6. If they are made to work on the 6th
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day, then they must be paid a premium pay of an
additional 30% of their ordinary day time rate.
Health personnel ha.. not any ordinary health
personnel, but must be health personnel in (1) a
city of at least 1M population, or if that is not
complied with, (2) it must be a hospital with a bed
capacity of at least 100. So either of the two. Does
that cover Davao? Yes, because the population is
already 1M.
When are you considered health personnel? If you
are employed in either of the two situations above.
And then it says that for purposes of this Article,
"health personnel" shall include: resident
physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.
"...and all other hospital or clinic personnel" -->
does this follow ejusdem generis? The enumeration
above, from the doctor to the attendant, must it be
germane to their work? The problem is the
attendant is no longer a medical physician.. ang
nakamedical lang ana sa iya ang iyang gown nga
puti.. he is no more medical than the sales girl of
mercury drug! So there is a debate as to whether or
not gardeners hired by these hospitals are included
in this enumeration.
What is the reason behind this law? The reason
behind this is the delicate nature of the
practitioner’s work. But all of us know that doctors
who are in their residency, who are considered
under training, work 24 hours a day. They are not
covered by the labor code, why? They are receiving
allowance; They are under training. They are
covered under the implementing rules as students
who have to perform apprenticeship work.
So now you know a working day, a working week,
maximum hours of work, you know rest day benefit.
Compensable Hours
ART. 84. Hours worked. - Hours worked shall include
(a) all time during which an employee is required to
be on duty or to be at a prescribed workplace; and
(b) all time during which an employee is suffered or
permitted to work.
Rest periods of short duration during working hours
shall be counted as hours worked.
Let us now examine what are compensable hours.
Hours worked must be paid. There are two basic
rules here, A and B. This A and B is further
established by the implementing rules. Rule 1 book
3 sec 3, 4, 5, 6, 7, 8, 9. Let us take these two Rules in
Art. 84.
A. all time during which an employee is required to
be on duty or to be at the prescribed work place
This rule is used when you are asked to be in service
whether the time that the employee is not
productive, is considered completely worked. That
is the purpose of this rule. The normal 2nd one is:
B. all the time during which an employee is
suffered or permitted to work.
This is the rule that is used to determine whether
an employee is working (but not during his working
hours) whether or not that is compensable. This
time, not within the 8 hours of work of the
employee.
Example: a delivery van driver. Driver of purefoods
who delivers frozen goods. He delivers his goods.
The first thing you do is to go to the warehouse of
purefoods to load the goods. Does the driver also
load? Sometimes when the time a lacking. But there
is more time; the driver just sleeps in his van while
loading is going. The time that he is sleeping, is he
compensable or not? Bayran ka ana bsan natulog
ka. The law says: all time during which an employee
is required to be on duty or to be at the prescribed
workplace. D man ka maka lakaw dha so that is
compensable hours of work bisan wala ka mag
trabaho natulog ka because you are required to be
there.
Take a look the implementing rules because there
are other implementing principles. Sec 4 Rule 1.
The following general principles shall govern in
determining whether the time spent by an
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employee considered hours of work for purposes of
this rule.
A. All hours are hours worked which employee is
require to give to his er regardless of whether or
not such hours is spent in productive labor or
physical or mental session.
Regardless of whether or not such hours spent in
productive labor or involve physical or mental.
Suppose the truck driver example. Pag abot sa
10pm truck ban naman, they cannot stay in
highways and thoroughfares. Nasira imong truck.
You cannot leave your truck, you are required to be
there so that is compensable time regardless of you
are productive or not.
B: The employee need not leave the premises of the
workplace under that his rest period shall not be
counted, it being enough that he stops working,
may rest completely and may leave his workplace,
to go elsewhere, whether within or outside the
premises of his workplace.
That is declared in the case of Isac peral Bowling
Alley .
Facts: there are pin boys that are assigned in the
day. Nya dili man pirmi mapuno. Wala na costumer,
hudton na ng oras nimo? You are free already.
Tulog naka or free to leave the premises.
Question: is the time in between where you can
rest and leave compensable? In other words do you
have independent use of your time?
Held: not compensable. In order that the rest
period shall not be counted it being enough that he
stops working because there is no customer may
rest completely and leave his workplace to go
elsewhere whether within or outside the premises.
The difference between the bowling pin boy and
the truck driver? The difference is the driver cannot
leave his vehicle kay pag balik tingali wala nay ligid
iyang truck wala nay tender juicy hotdog. That is the
difference.
C. When the work performed was necessary or it
benefited the employer, or the employee could not
abandon his work at the end of his normal working
hours because he had no replacement , all time
spent for such work shall be considered as hours
worked, if the work was with the knowledge of his
er or his immediate supervisor.
That was taken from the case of Reotan V NARIC.
This is the case where there is labor management.
No overtime without prior permission from the
manager. Clear memo in the bulletin board. This is
an agri establishment. One day the tractor cannot
start anymore. The supervisor says ayohon na kay
dili na pwede pagabiihan diri. In other words they
work over the time of their regular hours of work.
Now they ask for overtime contrary to the memo.
Held: if the work performed was necessary or it
benefited the employer, or the employee could not
abandon his work at the end of his normal working
hours because he had no replacement , all time
spent for such work shall be considered as hours
worked, if the work was with the knowledge of his
er or his immediate supervisor. Therefore it is
compensable.
D. the time during which an employee is inactive by
reason of an interruption of his work beyond his
control shall be considered time if the imminence of
the resumption of work requires the employees
presence at the place of work or at the interval is to
brief to be utilized effectively and gainfully in the
employee own interest.
This is from Pan American Airways vs Pan
American Employee.
Facts: ground crew of Pan Am. We are talking about
here the lunch break 1 hour meal period. Now, the
planes are scheduled not to arrive during the break
periods. They arrive either before or after the break
periods. But the plane skeds are more not followed
than followed. So most of the time it encroaches
the meal period. So what happens if you are having
your break and the plane arrives? You leave your
meal and you attend the plane. Now, there are no
questions as to whether an interrupted meal is
compensable. Is it compensable? Gi byaan na gani
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nimo imong plato nga nag aso aso ang kan on kay
mo trabaho ka, kadto imong gi byaan bayaran to.
Klaro man na. Now, because of this uncertainty, is
all meal periods therefore compensable? That is the
issue. You have to leave your meal and it happens
now and then although not everyday. Are all meal
periods compensable?
Held: The time during which an employee is inactive
by reason of interruption -- Wala ka kahibalo nga
mu abot na ang eroplano pero kahibalo ka nga
umaabot cya nya inactive ka ga huwat huwat ka.
Nya muingon na ang radio nga padulong na dinhi.
Dili ka kasugod ug kaon kay biyaan sa na nimo. That
is compensable. All meal periods therefore are
compensable because of the uncertainty of the
interruption. That is the ruling in Pan Am.
I suggest you should read this Section 5 Waiting
Time. Section 6 Lectures and Training Programs
then Meal Periods. Remember if it is on a 3 shift
there are no meal period anymore. The law says
you are entitled to a 1 hour meal period. Now take
note that this is based on the Anglo Saxon day that
there are 3 meals. Breakfast, lunch dinner. Not the
Filipino Day or the Greek.
SECTION 5. Waiting time. — (a) Waiting time spent
by an employee shall be considered as working time
if waiting is an integral part of his work or the
employee is required or engaged by the employer
to wait.
(b) An employee who is required to remain on call
in the employer's premises or so close thereto that
he cannot use the time effectively and gainfully for
his own purpose shall be considered as working
while on call. An employee who is not
required to leave word at his home or with
company officials where he may be reached is not
working while on call.
SECTION 7. Meal and Rest Periods. — Every
employer shall give his employees, regardless of
sex, not less than one (1) hour time-off for regular
meals, except in the following cases when a meal
period of not less than twenty (20) minutes may be
given by the employer provided that such shorter
meal period is credited as compensable hours
worked of the employee:
(a) Where the work is non-manual work in nature or
does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not
less than sixteen (16) hours a day;
(c) In case of actual or impending emergencies or
there is urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious
loss of perishable goods.
Rest periods or coffee breaks running from five (5)
to twenty (20) minutes shall be considered as
compensable working time.
Now, the law can exempt you from meal period.
1. The work must not be manual in nature.
 Kung construction work ka, dili
pud nimo ma ingon nga bayran lang nako imong
meal period pero continue lang mo ug trabaho.
Manual gani, you cannot be excused from the meal
period.
2. You must be given 20 minutes to consume
your meal. That is compensable.
Those conditions for exempting you from the meal
periods. But technically you still have that right to
meal periods.
WAITING TIME: Assuming that you have 8 to 12
then you have the meal periods. Then you have the
next four hours work. Under the law you are given
rest periods. One in the morning and another in the
afternoon. How long? At least 20minutes.
Coffemployee break ba. 20 minutes. That is allowed
and that is compensable.
Let us say your type of work starts at 6 in the
morning but before you go to work you must
change clothes. You cannot work in you street
clothes. And before you can even change your
clothes you are even asked to take a shower. After
you take a shower you put on your working clothes
and then feed your pigs.. That is in the rules. The
question is when do your hours of work begin? The
moment you take your shower or at the time you
feed your pigs? These are compensable hours.
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Additional 30 minutes because it is a necessary
preparation for your work.
Let us say you are a mason kanang mag mix ug
simento. Suppose it is only 30 minutes to go and
your supervisor said lets go for one more mix. Then
5 oclock tolls naa pa gihapon simento nabilin.
unsaon man na biyaan ran na nato? You clean that
up. Mulapas ka sa oras nimo.
Question: there is no prior permission for that
overtime, is that compensable? Yes because it is
integral to the work. It is necessary otherwise the
pieces of equipment will be useless for the next
working day. If you are a carpenter, then you have
your materials. Mag baid baid ka sa imong gabas,
tigib ug usa pa. Is that compensable? No because
those are your personal tools. That is not integral to
the work.
Meal periods, breaks, rest day as a right after six
days, night shift deferential which is the addition of
pay that a worker receives for the worked
performed from 10 PM to 6 AM. Then the rules
with respect to compensable working hours.
Then there is Article 89 which says the addition of
the additional compensation for purposes of
computing overtime and other additional
compensation as required by this chapter by a
regular wage of an employee shall include the cash
wage without deduction for the facilities provided
by the er.
Remember again the word facilities because this
will come out again in the definition of pay. Now ,
additional compensation may be divided in to 2
classes. Overtime pay or premium pay.
Overtime pay. Additional compensation for the
overtime work in an amount equivalent to his
regular wage plus at least 25% thereof. It is in
excess if your regular working hours.
Premium pay is additional compensation for work
done on days when the work may be required like a
regular holiday or rest day. So if you are working on
a day when a work may be required the additional
compensation that you receive is called premium
pay. If you work more than the regular hours of
work which is 8 hours then you will get overtime
pay.
May additional compensation be both premium and
overtime pay? Yes. Suppose it’s your rest day and
you are made to work more than 8 hours than
regular day. So the first 8 hours you will receive
premium pay and In excess of that that is both
premium and overtime pay. If your overtime and
work during your rest day is also performed at 10 in
the evening to 6 am, in addition to your premium
pay and overtime pay you will receive additional
night shift differential (NSD). Remember that NSD
is not 10 %. It says at least 10 %. So it is open to
negotiation.
Pilots who have night fly their NSD is not just 10%
but double. You read the law closely, NSD it says at
least 10%.
Article 86: every employee shall be paid a night
shift differential of not less than 10% of his regular
wage for each hour of work performed between 10
o’clock in the evening and six o’clock in the
morning.
You are starting to work at 10PM that is already
overtime of your regular day. So your overtime rate
is 25% of regular pay, Art 87. . If you work on
holiday and rest day it’s 30% that is premium pay.
Beyond 8 hours on a holiday or rest day shall be
paid additional compensation equivalent to the rate
in the first 8 hours in the holiday plus 30% on your
overtime rate on your rest day. Suppose this falls
between 10 and six, there is an additional at least
10%. The question is do you compute the 10% first
plus the overtime rate? Normally you compute the
overtime rate and then the 10%. Which? The
answer is it does not matter mathematically.
The next group of rights begins with Article 91. The
right to a weekly rest day. Now there is this
particular rule that your religion depicts your day of
rest. However your religion and the er’s business
interest are in contradiction, that will be solved
mathematically. Half of the time is your preference
and will be given precedence and half of the time
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will be the ers preference. That is how the rest
periods are resolved or complied with.
Article 92: when aner may require a work on a rest
day. Practically the same as when overtime may be
demanded under Article 89 and 92. You put them
side by side and you have those instances. Overtime
is just a question of rate. Art 91 and 89 are for the
purposes of compelling you to overtime at the usual
rate. But if you are accorded regular wage, you will
do overtime.
The maximum working hour is determined by the
working day.
Compensation for Sunday, holiday rest day work,
according to
Article 93: where an employee is permitted to work
on his scheduled rest day, he shall be paid an
additional compensation of at least 30% of his
regular wage.
That is premium pay ha. But then
Article 87 says work performed beyond 8 hours on
a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first
hours on a holiday or rest day plus at leat 30%
thereof.
So there is another 30%. So if you do more than 8
hours of work on your rest day what is your over all
rate? So do not say 160% because your overtime
rate is 130 and you will get 30% of that 130.
Because if your day is 160 then, you just take it from
the regular pay. It’s always accumulative. Patong
patong ba.. First compute the 130 then you extract
30% of the 130 then you have your pay.
B. when the nature of the work of the employee is
such that there are no regular work days and no
regular rest day that is scheduled, he shall be paid
an additional compensation of at least 30% of his
regular wage for work performed on Sundays and
Holidays.
Example of this is the security guard. The security
guard works all the days of the year. So what does
the law dee? If you do not have a rest say, every
Sunday you will have to pay a premium of your
regular pay because the law assumes that Sunday is
your rest day and you are working on a Sunday, that
is your rate. So 30% and you multiply that with 52
because there are 52 weeks in a year. Then you add
premium pay for 10 days of the year because Art.
94 is holiday pay. Holiday means;
Article 94-c, you have to memorize these 10 days.
Calendar holidays. Remember the term regular
holiday is a technical term. Only those listed in
Article 94 are regular holidays. What are they?
1. new year’s day
2. Maundy Thursday
3. good Friday
4. 9th of April
5. first of may
6. 12th of June
7. 4th of July
8. 13th of November
9. 25th of December
10. first day after Ramadan
So, there is this case of Wellington vs NLRC. The
regular holiday fell on a Sunday. The issue is the
Monday considered to be a regular holiday because
normally Sunday is a rest day. The union claims that
it should be the rule other wise for that year, the
employees will be missing 1 holiday pay out of
those enumerated. The SC says no. if all the days of
the year are accounted for and you postulate an
extra holiday because the holiday falls on a Sunday
then you will be having an extra week day on a
calendar. The number of days there has been
judicial notice so that is not allowed.
Another division of the SC decided a case in 2005.
The two regular holidays fell on the same day.
When was that? The 9th of April which is also
Maundy Thursday. Question: does an employee
receive double holiday pay? This time the SC said
yes otherwise the employee will receive less than
the 10 regular holidays.
For the Autonomous Region, they were not giving
the Muslim holiday benefits to particular workers if
San Miguel Corp. Because according to tem them
are not Muslims. Is that correct? The SC said it’s
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wrong because in Autonomous regions even if the
you are a Muslim and you are working there, you
benefit from the Christian Holiday so you cannot be
deprived benefit of the Muslim holidays simply
because you are a Christian. That is the case of San
Miguel Corporation vs NLRC.
Take note of a holiday because now and then the
president issues a proclamation. A country is a
juridical person, without a nation, a country , a state
cannot act. For purposes of declaring a holiday the
president issues a proclamation. Suppose on the 9th
of April falls on a rest day and the president issues a
proclamation which says that we will move the
holiday so that there will be a long weekend. Can
she do that? She cannot do that. She cannot
change or amend. Only the congress can amend it.
But why is there nobody complaining? Because it is
inconsequential. But technically the president
cannot do that of if it means changing 94-C.
Right to a holiday pay. Every worker shall be paid
his regular daily wage during a holiday except in
retail and service establishments regularly
employing less than ten workers.
94-b.the er may require an employee to work on
any holiday but such employee shall be paid a
compensation equivalent to twice his regular rates
. days with pay.
This means that you receive pay in your work. So in
your work you will receive 200% of your regular
wage this is the highest premium pay. The highest
premium pay is for a regular holiday. Now, under
the implementing rules you will see the various
rules with respect to entitlement of a regular
holiday pay executed by the dept of labor.
Suppose tomorrow is a regular holiday. Some
workers mu absent para taas ang bakasyon. Then
the law says if you are absent immediately
preceding a regular holiday under 94-c you are not
entitled to a holiday pay. Otherwise you are
encouraging absenteeism.
Now, suppose there are to consecutive holidays,
when does that happen? Maundy Thursday and
good Friday. Suppose you do not show up for holy
Wednesday. But then you show up to work on Good
Friday. If you do not show up for holy Thursday that
means you do not receive your holiday pay for Holy
Thursday. But then you work Good Friday you
receive double pay. It doesn’t mean that you are
not entitled for Friday. There is logic there. The rule
is you must be present on the last working day
immediately preceding the regular holiday. You are
entitled to the regular holiday pay. Take a look at
the implementing rules.
Rule 4 holiday pay. Absences, sec 6. Letter c, when
the day immediately preceding the holiday is a non
working day in the establishment, all the scheduled
rest day of the employee he shall not begin on leave
of absence of that day. He is entitled to a holiday
pay if he works on the day immediately preceding a
non-working day or rest day. That is an additional
rule.
Regular holiday. Remember there are 10 regular
holidays, two special days. Then there are working
holidays. The president may declare a working
holiday. He commemorates some occasion but it is
a working holiday.
Article 95.Service incentive leave -- Every employee
who has rendered at least 1 year of service shall be
entitled to a yearly service incentive leave of 5
Please take note that there is no such thing as sick
leave. There is no such benefit as vacation leave.
That 15 days sick leave and 15 days vacation leave
asa na gikan? That is from the er. That is not
mandated by law. It is 5 days incentive leave. Who
are entitled? If you have already served for one year
then you are entitled.
Suppose you only have a 10-month contract tem
employment. You do not receive service incentive
leave at all? According to the implementing rules
the DOLE says you are entitled proportionate
service incentive pay. So 5 is to 12 as to x is to 10.
Therefore you have equivalent leave to the
proportion that you have.
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Now, is everybody entitled to service incentive
leave? Those who are already receiving more than
the 5 day incentive leave is no longer entitled.
If you are receiving 15 days sick leave, vacation
leave, 13th month pay? How much are you actually
receiving? Actually your annual pay basis is 14
months if you receive 15 days sick leave, 15 days
vacation and you receive 13th month. Who are
entitled? Those who have worked at least 1 month
for a given year.
Article 96 all service charges collected by hotel’s,
restaurants and other similar establishments shall
be distributed at the rate of 85% for all covered
employee and 15% for management. The share of
the employees shll be equally distributed among
them. In case the service charge is abolished, the
share of the covered employees shall be integrated
in their wages.
Let us define what service charges are. Service
chares are those items of receipted service that are
counted for as such of hotels, restaurants and
similar establishment. If there is a separate service
charge then that service charges is covered by
Article 96 and must be disposed of in accordance
with Article 96 and that is 85% for the rank and file
and 15 % for the management. If you remove
service charge then the share of the employees
shall be equally distributed among them and in case
the service charge is abolished, the share of the
covered employees shall be integrated in their
wages.
So you may remove the charge their but you cannot
be excused anymore from continuing the payment
of their average share of that which you abolished.
If wala ka nakasabot anang service charge that is
the standardization of tips. Mo ng ana sa Shakey’s.
Muhatag pa gain kg lain tip, nang hata gnaka ug
kwarta.
So 85% for the rank and file and 15% for the
management or er. The er may give it to the
management or kemployeep it. That is pooling of
tips so that their will be no bad days of good days
para fair and tips para sa tanan. The 85% will be
divided and it will be part of your salary.
TITLE II CHAPTER 1---WAGES
ART. 97. Definitions. - As used in this Title:
(a) "Person" means an individual, partnership,
association, corporation, business trust, legal
representatives, or any organized group of persons.
(b) "Employer" includes any person acting directly
or indirectly in the interest of an employer in
relation to an employee and shall include the
government and all its branches, subdivisions and
instrumentalities, all government-owned or
controlled corporations and institutions, as well as
non-profit private institutions, or organizations.
(c) "Employee" includes any individual employed by
an employer.
(d) "Agriculture" includes farming in all its branches
and, among other things, includes cultivation and
tillage of soil, dairying, the production, cultivation,
growing and harvesting of any agricultural and
horticultural commodities, the raising of livestock or
poultry, and any practices performed by a farmer
on a farm as an incident to or in conjunction with
such farming operations, but does not include the
manufacturing or processing of sugar, coconuts,
abaca, tobacco, pineapples or other farm products.
(e) "Employ" includes to suffer or permit to work.
(f) "Wage" paid to any employee shall mean the
remuneration or earnings, however designated,
capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating
the same, which is payable by an employer to an
employee under a written or unwritten contract of
employment for work done or to be done, or for
services rendered or to be rendered and includes
the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board,
lodging, or other facilities customarily furnished by
the employer to the employee. "Fair and
reasonable value" shall not include any profit to the
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employer, or to any person affiliated with the
employer.
The difference between an employer and employee
is that an employer may be a natural person or a
juridical person but an employee is always an
individual. He cannot be a juridical person. If you
later find out that if a juridical person is employed
that is known, in the corporation law, as a service
contract or management contact. That is not
covered by the labor code but by the corporation
code.
Please take note that there is a material difference
in juridical person in a sense that no matter who
controls the juridical person, legally speaking, your
employer does not change. What do you mean by
that? If San Miguel Corporation was owned by the
Soriano’s under their management corporation
Soriano y Compania and then Cojuangco came over
and took over and it s owed controlled by
Conjuangco; their employer is still San Miguel
Corporation. So there is actually no change of
employer. You start a business if you are a juridical
person and you own most of the shares so most of
the decision are dictated by you. Then, you sell your
shares so somebody comes in. With respect to
employment he is bound by the decisions of the
previous employer because there is continuity of
the employer.
But if there is proprietorship. Ikaw tag iya sa
restaurant ikay si nanay bebeng. Ibaligya nimo ang
restaurant. Lain na ang tag iya. Does it assume the
workers? Normally they separate. Baylo ang
workers kay naa nay bago. So normally there is a
settlement and you can start anew. Because you are
a new er.
Juridical persons, you are always subject to Article
100.
Nothing in this book shall be construed to
eliminate or in any way diminish supplements,
other employee’s benefits being enjoyed at the
time of promulgation of this code.
This is the prohibition against the diminution of
benefits. Article 100 is so impt that it bears
repetition and you will see it again in art. 127. it
provides:
No wage order issued by any regional board shall
provide for wage rate lower than the statutory
minimum wage rates prescribed by congress.
So dili gud na mu ubos. You cannot interpret this
provision in the labor code in a manner that will
diminish benefits already existing. Our law says
wages that are mandated cannot go down. It always
goes up. Later on you will see the exemption but for
now settle on that principle. It is a principle that is
repeated at least twice, 100 and 127 in the same
chapter on wages.
Why is the definition of agriculture necessary?
Because wage orders now are issued according to
sectors and normally there is a difference between
agricultural wage rates, industrial and commercial
wage rates. There are also domestic wage rates
because there is a minimum wage for domestics.
That is why agriculture is defined. Remember there
are two kinds of definitions of agriculture in 97 D:
(1)agriculture includes farming in all its branches,
and among other things, includes the cultivation
and tillage of soil, dairying, the production,
cultivation, growing and harvesting of any
agricultural and horticultural commodities, the
raising of livestock or poultry and any practices
performed by a farmer on a farm incident to or in
conjunction with such farming operations but does
not include the manufacturing of processing of
sugar, coconut, abaca, tobacco, pineapple or other
farm products.
So, what ever is connected with the soil and needed
for care of crops, that is one kind. The second kind
is
(2) “any practice performed by a farmer on a farm
incident to or in conjunction with such farming
operations .
If you are a driver, what do you drive? You drive a
tractor. What is your work? To plow the field? What
is your minimum wage? Minimum wage of a
commercial worker or agri worker? Agri worker
because you are performing far, operations. A
practice on a farm as an incident to or in
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conjunction with farming operations. If you go to
del monte, if you do accounting there in the field
operations of del monte, what is you wage?
Industrial. Commercial, or agricultural? Your
minimum wage is agricultural because you are
conducting work performed by a farmer on a farm
as an incident to or in conjunction with farming
operations. Kana accounting that is an incident to
the farming. Mag buhat man ng mga farmer diha
ug payroll baya. Therefore they are agri employees
because of the secondary definition of farming.
But then there is a hierarchy of the law. Suppose del
monte now contracts with a construction contractor
to construct irrigation. Now, they hire people for
the irrigation. What is the wage rate of those
people? Is it industrial or agricultural? They are no
longer agricultural because the er is the
construction contractor. They perform industrial
tasks. It does not do farming. So even if they are
working on a farm, they are doing construction
work and thus their minimum wage is industrial. So
take note of those differences.
The former name of del Monte is Philippine Packing
Corporation because they do not do anything to the
pineapple. They just peel and slice it so they were
exempted from sales tax. No processing. So they
were agricultural workers because they are doing
works incident to the farming. So they were not
subjected to sales tax. Sagulan gani na nimo ug
gamay nga organic matter madaot na. So they put
preservatives. So right their and then it becomes
processing that is why pineapple is now included in
this definition which removed them from agri
workers to industrial workers. Now it is processing
and they are removed from agriculture and they
are under the industrial minimum wage rates.
Kanang banana unsa man na? They are under
agricultural. Plantation but agricultural because
there is a sub-sub classification. Hugasan paman na
nimo to make it edible. So, it is essential to make
your agricultural products profitable. So you wash it
and it is still not processing. Apil ba diha ang
banana? Sugar processing, abaca, coconut. Notice
that there is no banana because the banana people
will claim that we do not process banana. There is
no chemical. They just weigh it and the name of the
place where they do it is the packing house. It’s the
same idea as the packing corporation. The workers
are still agri workers.
Take a look at wage and its definition. As a general
rule, wages must be paid in money. That is the
general rule. You cannot pay wages in credit or
kind. There is an exception. Facilities -- It includes
the fair and reasonable value as determined by the
secretary of labor, board, lodging and other
facilities.
What are facilities? Facilities may include board and
lodging which is given to the employee and counted
as part of the wage. When is that allowed? Take a
look the implementing rules. Rule 7-A. wages.
Memorandum Circular #2. November 7, 1992.
Facilities section 5. The term facilities as mentioned
in this rules shall include articles for services for
the benefit an employee or his family but does not
include articles of the trade or services primarily
for the benefit of the er or necessary for the
conduct of the er’s business.
The requirement therefore that facilities may be
given are
1. It is customary in the particular occupation or
industry and that facilities form part the wage.
Example of what is customary. Waiters, bus boys in
a restaurant. The meals that they eat form part of
their wages. So tagaan na cla ug fremployee meal.
If you’re la cook, part of your wage is the meal that
you eat. That is customary.
2. The value of the facilities is fair and reasonable.
There are certain regions that fix the value of meals.
The last memorandum of this region, the value of a
meal that you can charge as facilities was 12 pesos.
You cannot charge higher as part of facilities.
3. It must be in writing. It must be voluntary on the
part of the employee’s. they must agree.
4. The er does not make a profit out of the
facilities. This has been affirmed by the Sc in the
leading case of Mabeza vs NLRC.
This is a story of a chamber maid of a small town in
Baguio City. Reklamo cya sa iyohg sweldo kay below
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minimum wage di ay cya. File cya ug gcomplaint so
the inspectors came. The owner said that then
numerical task that you receive might be lower than
the minimum wage but she is receiving the
minimum wage. Why? Because she is receiving free
lodging and she is receiving food. This is customary.
The SC said that as to the food, that is customary.
As to the lodging, that is not customary to the
hotels and inns. If she is receiving it, she should
receive it voluntarily like in writing. Actually she is
receiving lodging because it is in favor of the inn. So
that is not a facility because that is given for the
benefit of the er. Read that case
Philippine Shipping corp. vs CIR. This was the day
of the first minimum wage law. It was passed in
1954 and the first minimum wage was 4 pesos a
day. We are talking here of an ordinary crewmen.
Instead of increasing their salary the company files
compliance by counting the meals that hey give to
the crewmen.
The SC said that cannot be facility because the
meals that you give the crewmen are given for free
for the benefit of the ship owner. Why? Ug dili nimo
na pakaonon ng crewmen, that endangers the ship!
So that is the issue.
What is the opposite of facilities? Supplements --
that are given in addition to wages. Example: You
are given a rice allowance. So that is supplement
because that is over and above the wage. Later on
when you study corporation Law, it is not enough
that you say that wage must be in cash. If you want
to be accurate, you say wage must be in legal
tender.
The best way to know wages is to know what are
PROHIBITED WAGES.
1. It cannot be paid less than the minimum.
ART. 99. Regional minimum wages. - The minimum
wage rates for agricultural and non-agricultural
employees and workers in each and every region of
the country shall be those prescribed by the
Regional Tripartite Wages and Productivity Boards.
Exceptions: if there is an approved apprenticeship
program. Learners/apprentices have lower
minimum wage but in no case lower than 75% of
the actual minimum wage.
What is the difference between learners and
apprentices? In the apprentice program, approved
by TESDA, and in the learners program there is no
theoretical component and in apprenticeship there
is an equivalent lecture and it is on the job training.
The list of apprenticeship of jobs are released by the
DOLE. Example of learners program is janitorial
services. Wala nay lecture. Unlike wilder, there is
apprenticeship and lecture. If that is approved,
apprenticeship and learners program you can
receive less than the minimum wage
Handicapped workers may be hired by a special
program less than the minimum wage. Take note of
the case of Metrobank vs NLRC. They hired blind
people as counters of money. They were classified
as handicapped and they were terminated. The Sc
said they are not handicapped workers. They are
masters than other people. If you are
disadvantaged, then you are a handicap. The
handicap must be related to your job performed.
To those are exceptions. There are exceptions to
payment than the minimum wage.
2. Prohibition against diminution of payment.
Collective bargaining agreement (CBA). For a new
term you may agree to lower wage rates but in no
case lower than the minimum wage. You will agree
in exchange for another benefit. Example they will
agree to less working hours. There is no lowering of
benefits.
ART. 102. Forms of payment. - No employer shall
pay the wages of an employee by means of
promissory notes, vouchers, coupons, tokens,
tickets, chits, or any object other than legal tender,
even when expressly requested by the employee.
Payment of wages by check or money order shall be
allowed when such manner of payment is
customary on the date of effectivity of this Code, or
is necessary because of special circumstances as
specified in appropriate regulations to be issued by
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the Secretary of Labor and Employment or as
stipulated in a collective bargaining agreement.
Then you ask if you can pay me through a bank.
Implementing rules say that there are requirements
before you can be paid through a bank.
(1) it must be within 1km radius from the bank
(2) you must be given time to go to the bank
(3) there must be transportation to go to the
bank
(4) their must be no pecuniary advantages
taken by the er
But then that was superseded. Now, even if the
bank is no longer in 1km radius, you can go through
the ATM provided it s a nominal account. That is
why the balance in your ATM is much lower than
the minimum balance required.
Later on you will find out that even if you are paid in
an ATM it requires a payroll receipt. It will contain
the
1. period covered
2. your basic time rate
3. Ordinary time pay (how much?)
4. Premium and OT.
5. deductions
6. take home pay
Deductions include withholding tax, SSS, Pag ibig.
ART. 104. Place of payment. - Payment of wages
shall be made at or near the place of undertaking,
except as otherwise provided by such regulations as
the Secretary of Labor and
Employment may prescribe under conditions to
ensure greater protection of wages.
3. Article 104 -- This is the prohibition against
payment of wages other than the place of
undertaking as the Secretary of Labor May
prescribe.
So, what are the exceptions? When you do not
have to be paid at the place of work?
(1) According to the implementing rules for greater
protection of wages. For instance, there have been
series of hold ups in that place, so many workers
have lost their wages. Then the Sec. of Labor
through his authorized representative the regional
director, prescribes a place other than the
workplace. The whole point of this prohibition is
that the workers would have been able to save from
additional expense of going to another place just to
collect their salary. So the first exception is for the
protection of wages.
(2) The second exception is the payment on a bank
or ATM
(3) The 3rd is the place of work is near a gambling
house. What is the exception to the exception to
that rule? If you work in a gambling house, that is
the exception to the exception.
4. Prohibition of payment of wages other than to
the employee, Art 105.
ART. 105. Direct payment of wages. - Wages shall be
paid directly to the workers to whom they are due,
except:
(a) In cases of force majeure rendering such
payment impossible or under other special
circumstances to be determined by the Secretary of
Labor and Employment in appropriate regulations,
in which case, the worker may be paid through
another person under written authority given by
the worker for the purpose; or
(b) Where the worker has died, in which case, the
employer may pay the wages of the deceased
worker to the heirs of the latter without the
necessity of intestate proceedings. The claimants, if
they are all of age, shall execute an affidavit
attesting to their relationship to the deceased and
the fact that they are his heirs, to the exclusion of
all other persons. If any of the heirs is a minor, the
affidavit shall be executed on his behalf by his
natural guardian or next-of-kin. The affidavit shall
be presented to the employer who shall make
payment through the Secretary of Labor and
Employment or his representative. The
representative of the Secretary of Labor and
Employment shall act as referee in dividing the
amount paid among the heirs. The payment of
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wages under this Article shall absolve the employer
of any further liability with respect to the amount
paid.
Wages should be paid directly to the employee, to
whom they are due. Exception, the next paragraph,
force majeure. Their is flood and the worker can not
go there so he writes a letter to the pay master
that bearer, his son is, is champion swimmer, that is
why he is able to swim though the flood. He is
authorized to receive and collect the payment by
approval.
Then the second exception is death of the
employee. Take a look at Article 105-B. where the
worker has dies his er may pay the wages of the
deceased worker in to the heirs of the later w/o the
necessary intestate proceedings. The claimants -- if
they are all of age shall execute an affidavit
attesting to their relationship to the deceased and
the fact that the are heirs to the exclusion of all
other persons. If any of the heirs is minor, the
affidavit shall be executed in behalf by his natural
guardian or next of kin. The affidavit shall be
presented to the er who shall make payment
through the secretary of Labor or his
representative. The representative of the DOLE
shall act as the referee in dividing the amount paid
to the heirs. The Sec of DOLE shall be exempt from
any liability with respect to the amount paid.
Now, take note that the wages of the employee
will not form part of his estate. These are the
nature of wages because wages are necessary for
the living of the employee and his family. That is
the same reason why wages are exempt from
execution because it is necessary for living.
Now, because that is the nature of wage, there is a
summary procedure of 5 years under 105-B. to
make sure that the heirs must continue to live,
there is a need for the release of wages right away.
How is that possible? You go to the DOLE right
away, then execute an affidavit, the undersigned,
then subscribe “pila ka buok and anak, then asawa”.
After release presentation of evidence, the er has
no liability. Suppose there is another one claiming
that siya ang asawa pero ka puyo-puyo di ay to, you
have liability? No more! Because you have been
granted under 105. You as the er is free from
liability and your shield is the DOLE.
Please remember that this applies only to accrued
wages. Suppose here he was paid retirement,
separation benefits, can that be released through
105-B? No! That goes to the estate. Art. 105-B
covers only accrued wages.
For the moment let us skip 106-109 because this is
contracting and sub contracting. Let us also skip
110, worker’s preference in case of Bankruptcy and
111 atty’s fees.
We will go to 112.
ART. 112. Non-interference in disposal of wages. -
No employer shall limit or otherwise interfere with
the freedom of any employee to dispose of his
wages. He shall not in any manner force, compel, or
oblige his employees to purchase merchandise,
commodities or other property from any other
person, or otherwise make use of any store or
services of such employer or any other person.
5. This is the prohibition against the interference
of the er in disposal of wages. The er cannot
influence the employee as to how he will dispose
his wages. No er shall limit the freedom of his ee to
dispose of his wages. Example, the er puts up a
canteen and owns it. That is a violation of 112. He
shall not, in any manner, force compel or oblige his
employee to purchase his merchandise,
commodities, other properties from er or from any
other person, otherwise make use of any store or
service of such er or any other person. Prohibition
against interference.
ART. 113. Wage deduction. - No employer, in his
own behalf or in behalf of any person, shall make
any deduction from the wages of his employees,
except:
(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;
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(b) For union dues, in cases where the right of the
worker or his union to check-off 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 and
Employment.
6. Prohibition against deduction of wages. The er
cannot make deductions from wages, that is the
gen rule. Exception to letter A, in cases where the
worker is insured with his consent, by the er and
the deduction is to recompense the er for the
amount paid by him as premium on the insurance.
This is called industrial insurance. The er can
deduct because the employee, before he can make
himself a member of the group insurance signs an
authorization for the deduction together with the
signing of the insurance policy.
Second, for union dues, in cases where the right of
worker or his union to check-off has been
recognized by the employer or authorized in writing
by the individual worker concerned. If there is a
union there is a security clause in the CBA, then
there may be a deduction of the equivalent of the
minimum wage.
Another exception in case where the er is
authorized by law or regulation issued by the Sec of
DOLE. What are those deductions allowed by law?
1. Withholding tax,
2. Second, counter part contributions of to the SSS.
3. Pag-ibig
4. Phil Health.
Those are the deductions authorized by law.
How about deductions for employee’s
compensation? Employees compensation provide
that only the er, contributes 10 pesos per month for
employee’s compensation. Remember employee’s
compensation is state insurance for what is called
work related injury, sickness or death. If your injury,
sickness or death is work related, as a gen rule, if it
occurs in the place of work or hours of work, then it
is the state insurance funds that pays for your death
benefits and if you suffer injuries, that is
rehabilitation. Those are the prohibition of
deduction of wages.
Let me bring to you a problem. Kanang mangutang
sa er, then bayaran by way of payroll deduction.
Why is that prohibited? This is under the Civil Code;
There is debtor and creditor relationship. Whatever
is agreed upon in the contract, that is the law. But
normally the er may limit the amount of the debt
and also the amount of deduction because the
employee can no longer receive salary so he has
lost his motivation to work. SC decisions applies,
there is an offsetting.
ART. 114. Deposits for loss or damage. - No
employer shall require his worker to make deposits
from which deductions shall be made for the
reimbursement of loss of or damage to tools,
materials, or equipment supplied by the employer,
except when the employer is engaged in such
trades, occupations or business where the practice
of making deductions or requiring deposits is a
recognized one, or is necessary or desirable as
determined by the Secretary of Labor and
Employment in appropriate rules and regulations.
7. Article114. Prohibition against the deduction for
loss or damage.
Five J Taxi vs NLRC. remember they are on a
boundary system. At the end of the day, they turn
over their boundary. Now, this Five J Taxi asked for
their shortage deposit. Every day aside from the
boundary muhatag ka ug 20 pesos, shortage
deposit. The 20 pesos is accumulated to your
account. When there comes a day that you will not
meet your boundary, your deficit will be taken from
your shortage deposit. Then the taxi operator
requires the taxi to pay 50 pesos for the washing. So
the drivers brought the case to the SC whether or
not this is unlawful deduction.
SC held that the deduction for washing is valid
because you yourself as a driver takes the
possession on the taxi clean, so that means it must
be returned in the same condition. So it is just
proper that you pay for the cleaning. If you do not
want to pay, you clean it and you will save from
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washing fee. The shortage deduction however is
illegal. That is not warranted by Art 113 and 114.
Now, in the implementing rules you have 4
requisites before you can make shortage
deductions, before you can make deductions due to
loss or damage.
Where the employer is engaged in a trade,
occupation or business where the practice of making
deductions or requiring deposits is recognized, to
answer for the reimbursement of loss or damage to
tools, materials or equipment supplied by the
employer to the employee x x x
It must be in an industry where the loss or damage
on the property of the er will be deducted from the
salary and that is an accepted practice,.
What is the example of this? In hotels and
restaurants, the waiters will be deducted if they
break a plate. Again, this delivery person, pizza
delivery, motorcycles are entrusted to them. They
have responsibility to it. In case of loss of the
motorcycle, due to negligence, that will be
deducted to the salary.
Requisites:
1. the employee concerned is clearly shown to be
responsible for the loss or damage;
2. The employee is given reasonable opportunity
to show cause why deduction should not be made;
3. The amount of such deductions is fair, and
reasonable and shall not exceed the actual loss or
damage;
4. The deduction from the wages of the employee
does not exceed 20% of the employee’s wages in a
week.
8. Article 116. Withholding wages and kickbacks
prohibited. It shall be unlawful for any person,
directly of indirectly, to withhold any amount from
the wages 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 worker’s consent.
9. Art 117. Deduction to ensure employment. It
shall be unlawful to make any deduction from the
wages of an employee for the benefit of the er or
his representative or intermediary as consideration
of a promise of employment or retention in
employment.
10. Article 118. Prohibition against retaliating
measures. It shall be unlawful for an er to refuse to
pay or reduce the wages and benefits, discharge, or
in any other manner disseminate against any
employee who has filed any complaint or instituted
any proceeding under this title or has testified or
has is about to testify in such proceedings.
11. Article 119. False reporting. It shall be unlawful
for any person to make any statement report or
record files or kept pursuant to the provisions of
this code knowing such statement, report or record
to be false in any material respect.
It is prohibited that you make employees sign blank
payroll. What is included in the payroll? Under the
implementing rules, Book III, Rule 10, Section 6,
record time
1. rate of pay
2. amount for the worker
3. amount due to additional compensations
4. deductions
5. take home pay
That is what you will look for. Those who do not
follow the law or pay the minimum wage, normally
they make people sign blank payroll.
Visitorial powers of the DOLE, art 128-129, they
have the power to examine. Take note, payroll
records must be kept by the er for at least 3 years.
Why? Because many claims prescribe in 3 years.
ART. 291. Money claims. - All money claims arising
from employer-employee relations accruing during
the effectivity of this Code shall be filed within
three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred.
All money claims accruing prior to the effectivity of
this Code shall be filed with the appropriate entities
established under this Code within one (1) year
from the date of effectivity, and shall be processed
or determined in accordance with the implementing
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rules and regulations of the Code; otherwise, they
shall be forever barred.
Workmen’s compensation claims accruing prior to
the effectivity of this Code and during the period
from November 1, 1974 up to December 31, 1974,
shall be filed with the appropriate regional offices
of the Department of Labor not later than March
31, 1975; otherwise, they shall forever be barred.
The claims shall be processed and adjudicated in
accordance with the law and rules at the time their
causes of action accrued.
Based on Article 291, all money claims arising from
employee-er relationships shall be filed within 3
years from the cause of action accrued, otherwise
they shall be forever barred.
Under the Internal Revenue Code, all business
transactions must be retained for at least 5 years.
Payroll is part of the business transaction.
In the present regime, Congress came with RA 6727,
the Wage Rationalization Act. By that law the
congress said that we will no longer determine
minimum wages. It will be the Regional Tripartite
and Wage and Productivity Board (RTWPB). The
RTWPB will determine the minimum wage of each
region even by province or city or just by the region
as a whole. By industry, it depends on them.
COMPOSITION:
Each Regional Board shall be composed of the
Regional Director of the Department of Labor and
Employment as chairman, the Regional Directors of
the National Economic and Development Authority
and the Department of Trade and Industry as vice-
chairmen and two (2) members each from workers’
and employers’ sectors who shall be appointed by
the President of the Philippines, upon the
recommendation of the Secretary of Labor and
Employment, to be made on the basis of the list of
nominees submitted by the workers’ and
employers’ sectors, respectively, and who shall
serve for a term of five (5) years.
So you have 6 all in all. Take a look at the
composition, 2 government employees, 2 worker’s
sector and 2 employees sector. Actually if you have
a set-up like that, who decides the minimum wage,
it’s only the government people. Why? Because the
one will propose is the labor sector, and 2 ers will
oppose.
The law provides that they may make wage
adjustments, they do not say increase but you know
the only way is to increase. Why? Because article
127 prohibit the non-diminution of benefits so you
cannot issues a wage order that decreases the
minimum wage you adjusted.
The law provides that there must be a hearing
before any adjustment of wages. And then you are
mandated in Art. 124, adjusting the minimum wage
that the basis is the ff criteria from letter A to J.
There are many criteria but the law does not say
which is more important but now and then in the
bar exam you are to give at least 3 or two in the
criteria. What are the criteria?
In the determination of such regional minimum
wages, the Regional Board shall, among other
relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-à-vis the consumer price
index;
(c) The cost of living and changes or increases
therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the
countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity
to pay of employers;
(i) Effects on employment generation and family
income; and
(j) The equitable distribution of income and wealth
along the imperatives of economic and social
development.
These are the different criteria on whether or not
the existing minimum wage should be adjusted
upwards.
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Besides the RTWPB, there is the National Wages
and Productivity Commission (NWPC). The
composition is the same. What is the job of the
commission? The job is not to promulgate wage
order, they cannot issue wage order. They can
review wage order coming from a region if the
RTWPB issues a minimum wage order. Those who
feel aggrieved, if the RTWPB issues minimum wage
order, may file an appeal to the commission, the
National Wages and Productivity Commission
located in Manila.
Now, can their appeal stay the effectively of the
minimum wage order? The answer is NO unless
they file a bond. Who fixes the bond? It is the
RTWPD and the bond must be sufficient to answer
for the entire sector who will be disadvantaged by
the appeal.
I still remember the wage order issued in 6727, 15
years ago. The banana growers and exporters
contested that and they filed an appeal and they do
not want the wage order issued by the commission
and the RTWPD fixed the bond. At that time the
bond was 60M pesos, you could not produce the
bond. In the first plea, there was no bonding
company willing to put up a bond. Probably it was
bigger than the capital of most bonding company.
So they could not stay the wage order. That is the
nature now of wage order. Once it is issued, the
only choice of the er is to pay. If you cannot pay,
you file for an exemption.
Normally, there are exemptions on the ground of
impairment of the employer’s capital.
Please, jurisprudence is filled with examples, the SC
said again and again that the best evidence is the
audited financial statement. The history of
corporation is based on generally accepted
accounting principles. That is the only proof that
the NWPC has accepted.
You know these 2 bodies now. You know, they have
certain criteria, they conduct hearing, anybody can
participate and they issue a wage order. Normally,
wage order has exemptions or exempting provisions
and that the non-impairment of working capital is a
good exemption.
Now, what is WAGE DISTORTION? Wage distortion
as defined in article 124(please memorize)
As used herein, a wage distortion shall mean a
situation where an increase in prescribed wage
rates results in the elimination or 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.
When is there wage distortion? (Elements)
1. There is a hierarchy of wages based upon
different experiences, qualifications, skills.
2. There is a mandatory increase or adjustment than
the minimum wage;
3. The increase does not apply to all groups in the
hierarchy but only to one so that it –
4. results to severe reduction or elimination of the
differences among workers;
5. The reduction or differences must occur in the
same region.
First, there is a wage order;
Second the wage order does not apply uniformly to
all workers in the company but only to a particular
group;
Third, It results in the contraction or elimination of
wage differences among workers;
Fourth, Employees affected must belong in the
same region.
From the case of Prudential bank 320 S 94, the SC
said that the employees must be located in the
same region. You cannot have a wage distortion if
the employees belong to different regions. If the
minimum wage increases in Manila, it cannot
include other regions.
There is this recent case of Bank Employee Union. If
there is a wage order, there cannot be a wage
distortion. The probationary welder, let us say, has
200 pesos, the regular is 250. Some welders go to
Saudi Arabia so now the company was on panic. So
they hire apprenticeship welder which has a salary
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of 250 equals the minimum wage. There is a wage

distortion because there is a severe contraction.
The SC said it is not wage distortion. There is no
wage order.

When does wage distortion occur? There are only 2

instances: (1) the work place has a union or (2) the
work place has no union. If the workplace has a
union, what is said in 124 is followed. The
procedure is through grievance. It says in the 4th
paragraph:

Where the application of any prescribed wage

increase by virtue of a law or wage order issued by
any Regional Board results in distortions of the
wage structure within an establishment, the
employer and the union shall negotiate to correct
the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance
procedure under their collective bargaining
agreement and, if it remains unresolved, through
voluntary arbitration. Unless otherwise agreed by
the parties in writing, such dispute shall be decided
by the voluntary arbitrators within ten (10) calendar
days from the time said dispute was referred to
voluntary arbitration.

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So what happens if there is no union? They
conciliate the NCMB to be called upon for help. If it
is still unresolved, then the workers can file a
complaint with the labor arbiter and the labor
arbiter will decide.
In cases where there are no collective agreements or
recognized labor unions, the employers and workers
shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through
the National Conciliation and Mediation Board and,
if it remains unresolved after ten (10) calendar days
of conciliation, shall be referred to the appropriate
branch of the National Labor Relations Commission
(NLRC). It shall be mandatory for the NLRC to
conduct continuous hearings and decide the dispute
within twenty (20) calendar days from the time said
dispute is submitted for compulsory arbitration.
What is the track record of the labor arbiter? Wala
pa gyud ka daog ug kaso ang labor arbiter. You
look at the 3 cases
Metro Transit v NLRC (245 S 767, 1995)
ALU PUCP v NLRC (206 S 297 (194)
Ilaw at Buklod ng mga Mangagawa vs NLRC (June
27, 1991)
Capitol Wirelss vs Barte (G.R. No. L-10462, July 14,
1995)
The er has no obligation to restore this historical
gap. A gap before the wage order was100 pesos.
The er is jut willing to maintain a gap of 130 pesos.
The SC held that it cannot held to restore the
historical gap.
Another case the SC held that if the difference is 50
pesos, no wage order comes out. The wage order is
10 pesos nalang. . The employee says restore the 50
pesos. The er says I will make you all regular na
lang.
In Ilaw case, since we are willing to restore the gap
of the wage order, we will conduct a slow down.
They conduct a strike. The SC said they illegally
conducted a strike; wage order cannot be a ground
for strike. The SC said that is illegal strike. Wage
distortion cannot be a ground for strike.
*How should wage distortion be settled?
A: If there is no CBA, then employer and employee
shall meet to adjust, and the NCA can be called
upon to mediate. If there is no decision, then NLRC.
If there is a CBA, then wage distortion is taken as a
grievance and it follows the grievance procedure.
Q: Can the issue of wage distortion be raised in a
notice of strike?
A: No. Wage distortion cannot be a ground for going
on strike because Art. 124 of the Labor Code
provides for the procedure of resolving particular
dispute eliminating strike as a method of resolving
the same.
-=o0o=-
The procedure dealing with wage distortion is found
in the Labor Code. 124.
We have taken up wage distortion. And we said that
there are two bodies created by RA 6727 which is
actually found in the wages provisions of the labor
code starting with art 120 to 127. The National
Wages Productivity Commission and the Regional
Tripartite Wage and Productivity Board which is
regional in character. It issues its order and you
appeal to the NWPC. No wage order issued from
the national body. Minimum wages are regional in
character. When you appeal in the commission
from the regional boards, and you want to stay the
execution of the wage order, you have to file a bond
to answer for the delay of the wage adjustment. IF
you cannot file the bond, then your appeal does not
stay the effectivity of the regional wage order. Does
not stay ha.
Let us go to article 127. Non-diminution of
benefits.
ART. 127. Non-diminution of benefits. - No wage
order issued by any regional board shall provide for
wage rates lower than the statutory minimum wage
rates prescribed by Congress.
So wage orders are always on the increase. It is not
lower. Remember the first time you saw non-
diminution of benefits is article 100 which says that
the labor code cannot be interpreted as to lower
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the wages obtaining before the effectivity of this
book.
Let us skip 128 and 129 for a while and let us go to
Title III, Chapter I beginning with Article 130. We are
now on women and there are many provision with
respect to women. Article 130 is nightwork
prohibition.
ART. 130. Nightwork prohibition. - No woman,
regardless of age, shall be employed or permitted
or suffered to work, with or without compensation:
(a) In any industrial undertaking or branch thereof
between ten o’clock at night and six o’clock in the
morning of the following day; or
(b) In any commercial or non-industrial undertaking
or branch thereof, other than agricultural, between
midnight and six o’clock in the morning of the
following day; or
(c) In any agricultural undertaking at nighttime
unless she is given a period of rest of not less than
nine (9) consecutive hours.
As a general rule women are prohibited to work at
night. Now, the heightened consciousness now of
women and equality of genders have left some
women’s group question the constitutionality of
this provision. Many women’s group are saying that
the prohibition against night work for women
discriminates women that they do not have the
same opportunity to work as men.. Is there a
rational connection between women and this
prohibition against nightwork? There used to be a
constitutional problem in the US which prohibits
women from working as bar tenders. The SC said
that there is a rational connection between the
purpose of the law and means to achieve that
purpose. It is germane to the purpose of the law.
The men may be overpowered by men if they had
too much drink.
Is it fair to women that they are not allowed to
work at night? There are exceptions here.
No woman regardless of age shall be employed of
permitted or suffered to work with or without
compensation.
a. In any industrial undertaking or branch thereof
between ten o’clock at night and 6 o’clock in the
morning the following day.
b. In any commercial of non-commercial
undertaking or branch there of, other than
agricultural, between midnight and six o’clock in the
morning of the following day;
That is why here you know the reason why gaisano
and SM does that midnight madness which closes at
midnight because they are commercial
establishments and women are supposed to stop
working.
c. In any agricultural undertaking at nighttime
unless she is given a period of rest of not less than 9
consecutive hours.
What are the exceptions? 131.
ART. 131. Exceptions. - The prohibitions prescribed
by the preceding Article shall not apply in any of the
following cases:
(a) In cases of actual or impending emergencies
caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or calamity,
to prevent loss of life or property, or in cases of
force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on
machineries, equipment or installation, to avoid
serious loss which the employer would otherwise
suffer;
(c) Where the work is necessary to prevent serious
loss of perishable goods;
(d) Where the woman employee holds a responsible
position of managerial or technical nature, or where
the woman employee has been engaged to provide
health and welfare services;
(e) Where the nature of the work requires the
manual skill and dexterity of women workers and
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the same cannot be performed with equal efficiency
by male workers;
(f) Where the women employees are immediate
members of the family operating the establishment
or undertaking; and
(g) Under other analogous cases exempted by the
Secretary of Labor and Employment in appropriate
regulations.
example of letter G is 138, classification of women.
Take a look at that. This is an employee-er
relationships provided by law.
ART. 138. Classification of certain women workers . -
Any woman who is permitted or suffered to work,
with or without compensation, in any night club,
cocktail lounge, massage clinic, bar or similar
establishments under the effective control or
supervision of the employer for a substantial period
of time as determined by the Secretary of Labor and
Employment, shall be considered as an employee of
such establishment for purposes of labor and social
legislation.
Article 132. Facilities for woman..
ART. 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:
(a) Provide seats proper for women and permit
them to use such seats when they are free from
work and during working hours, provided they can
perform their duties in this position without
detriment to efficiency;
(b) To establish separate toilet rooms and lavatories
for men and women and provide at least a dressing
room for women;
(c) To establish a nursery in a workplace for the
benefit of the women employees therein; and
(d) To determine appropriate minimum age and
other standards for retirement or termination in
special occupations such as those of flight
attendants and the like.
Letter A, they must be provided with their own
seats. An example of women who are not allowed
to sit are the bus conductress. Mu lingkod gain ka
dili ka ka collect sa pamasahe.
Then there must be a separate rooms and lavatories
for women, then nursery and determine the
appropriate age.
Now, Art. 133, maternity leave benefits. It is not
the er who grants this but the social security. But
the er advances maternity. What is the benefit? 2
weeks prior and 4 weeks after. You must report
your pregnancy, the moment you are medically
ascertained as pregnant, to the er and the er enters
it into his diary which is to be kept for he SSS. This is
to prevent simulated births. Remember this
benefits is paid by the er only during the first 4
deliveries by a woman employee after the
effectivity of this code. First four deliveries.
ART. 133. Maternity leave benefits. - (a) Every
employer shall grant to any pregnant woman
employee who has rendered an aggregate service of
at least six (6) months for the last twelve (12)
months, maternity leave of at least two (2) weeks
prior to the expected date of delivery and another
four (4) weeks after normal delivery or abortion
with full pay based on her regular or average
weekly wages. The employer may require from any
woman employee applying for maternity leave the
production of a medical certificate stating that
delivery will probably take place within two weeks.
(b) The maternity leave shall be extended without
pay on account of illness medically certified to arise
out of the pregnancy, delivery, abortion or
miscarriage, which renders the woman unfit for
work, unless she has earned unused leave credits
from which such extended leave may be charged.
(c) The maternity leave provided in this Article shall
be paid by the employer only for the first four (4)
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deliveries by a woman employee after the
effectivity of this Code.
Suppose you are not married and you got pregnant.
are you entitled to maternity benefits? Yes. The law
does not make any distinction as to whether the
woman must be married or not. The law says any
pregnant employee. ANY.
Article 134 family planning services; incentives for
family planning.
ART. 134. Family planning services; incentives for
family planning. - (a) Establishments which are
required by law to maintain a clinic or infirmary
shall provide free family planning services to their
employees which shall include, but not be limited
to, the application or use of contraceptive pills and
intrauterine devices.
(b) In coordination with other agencies of the
government engaged in the promotion of family
planning, the Department of Labor and
Employment shall develop and prescribe incentive
bonus schemes to encourage family planning
among female workers in any establishment or
enterprise.
ART. 135. Discrimination prohibited. - It shall be
unlawful for any employer to discriminate against
any woman employee with respect to terms and
conditions of employment solely on account of her
sex.
The following are acts of discrimination:
(a) Payment of a lesser compensation, including
wage, salary or other form of remuneration and
fringe benefits, to a female employees as against a
male employee, for work of equal value; and
(b) Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study and scholarship grants solely
on account of their sexes.
Criminal liability for the willful commission of any
unlawful act as provided in this Article or any
violation of the rules and regulations
issued pursuant to Section 2 hereof shall be
penalized as provided in Articles 288 and 289 of this
Code: Provided, That the institution of any criminal
action under this provision shall not bar the
aggrieved employee from filing an entirely separate
and distinct action for money claims, which may
include claims for damages and other affirmative
reliefs. The actions hereby authorized shall proceed
independently of each other. (As amended by
Republic Act No. 6725, May 12, 1989).
Article 135. discrimination prohibited. This is an
attempt to implement equal work for equal pay. It
provides that it shall be unlawful for an er to
discriminate against any woman employee with
respect to terms and conditions of employment
solely on account of sex. The following are acts of
discrimination:
1. payment of a lesser compensation,
including wage, salary or other forms of
remuneration or fringe benefits to a female
employee against a male employee, for work equal
of value.
2. Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study and scholarship grants solely
on account of their sexes. ( for work of equal value)
There is no law against discrimination of man but
there is a law against discrimination of women. You
also read the liability. It is simultaneous. You can file
a criminal action and you can file a separate claim.
Separately and simultaneously.
ART. 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.
ART. 137. Prohibited acts. - (a) It shall be unlawful
for any employer:
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(1) To deny any woman employee the benefits
provided for in this Chapter or to discharge any
woman employed by him for the purpose of
preventing her from enjoying any of the benefits
provided under this Code.
(2) To discharge such woman on account of her
pregnancy, or while on leave or in confinement due
to her pregnancy;
(3) To discharge or refuse the admission of such
woman upon returning to her work for fear that she
may again be pregnant.
Article 136. Stipulation against marriage. It shall be
unlawful for the er to require as a condition of
employment or continuation of employment that a
woman employee shall not get married,
In a problem years ago, the er wants, as a condition
for employment, you to be married. Is that
discriminatory? They have two alternative answers.
They said that it is not against the law to require to
be married. What is against the law is that you do
not get married. Like in Timex, if you are single they
will not hire you. What is clear discrimination is that
you make marriage as condition of the employment
or continuation of employment.
Article 137. prohibited acts. This is all about
protection.
-=o0o=-
Let us go to the ANTI-SEXUAL HARASSMENT ACT
OF 1995, RA 7877, approved on February 14, 1995.
This is not a labor law but a gender law, hence you
cannot apply the law on statutory construction that
the resolution of the doubt is in favor of labor.
It applies to three settings:
1. workplace related sexual harassment
2. educational related
3. Training related.
SECTION 3. Work, Education or Training -Related,
Sexual Harassment Defined. - Work, education or
training-related sexual harassment is committed by
an employer, employee, manager, supervisor, agent
of the employer, teacher, instructor, professor,
coach, trainor, or any other person who, having
authority, influence or moral ascendancy over
another in a work or training or education
environment, demands, requests or otherwise
requires any sexual favor from the other,
regardless of whether the demand, request or
requirement for submission is accepted by the
object of said Act.
I. WORK RELATED OR EMPLOYMENT SETTING
Sexual harassment is committed when:
1. The sexual favor is made as a condition in the
hiring or in the employment, re-employment or
continued employment of said individual, or in
granting said individual favorable compensation,
terms of conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee
which in any way would discriminate, deprive or
diminish employment opportunities or otherwise
adversely affect said employee;
2. The above acts would impair the employee's
rights or privileges under existing labor laws; or
3. The above acts would result in an intimidating,
hostile, or offensive environment for the employee.
An example of an acts by the employer which would
result in an intimidating, hostile or offensive
environment.
For example, if the office of your supervisor is full of
pictures of naked women. That is the set up of the
office. That is an offensive environment. That is
sexual harassment.
This law has certain obligations on the part of the
er. What are these? These are obligations created
by law.
SECTION 4. Duty of the Employer or Head of Office
in a Work-related, Education or Training
Environment. - It shall be the duty of the employer
or the head of the work-related, educational or
training environment or institution, to prevent or
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deter the commission of acts of sexual harassment
and to provide the procedures for the resolution,
settlement or prosecution of acts of sexual
harassment. Towards this end, the employer or
head of office shall:
(a) Promulgate appropriate rules and regulations in
consultation with and joint1y approved by the
employees or students or trainees, through their
duly designated representatives, prescribing the
procedure for the investigation of sexual
harassment cases and the administrative sanctions
therefor.
Administrative sanctions shall not be a bar to
prosecution in the proper courts for unlawful acts of
sexual harassment.
The said rules and regulations issued pursuant
to this subsection (a) shall include, among others,
guidelines on proper decorum in the workplace and
educational or training institutions.
(b) Create a committee on decorum and
investigation of cases on sexual harassment. The
committee shall conduct meetings, as the case may
be, with officers and employees, teachers,
instructors, professors, coaches, trainors, and
students or trainees to increase understanding and
prevent incidents of sexual harassment. It shall also
conduct the investigation of alleged cases
constituting sexual harassment.
In the case of a work-related environment, the
committee shall be composed of at least one (1)
representative each from the management, the
union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training
institution, the committee shall be composed of at
least one (1) representative from the
administration, the trainors, instructors, professors
or coaches and students or trainees, as the case
may be.
The employer or head of office, educational or
training institution shall disseminate or post a copy
of this Act for the information of all concerned.
In case of work related environment, the committee
shall be composed of one representative each from
management, union employees, supervisory and the
rank and file.
SECTION 5. Liability of the Employer, Head of Office,
Educational or Training Institution. - The employer
or head of office, educational or training institution
shall be solidarily liable for damages arising from
the acts of sexual harassment committed in the
employment, education or training environment if
the employer or head of office, educational or
training institution is informed of such acts by the
offended party and no immediate action is taken.
SECTION 6. Independent Action for Damages. -
Nothing in this Act shall preclude the victim of work,
education or training-related sexual harassment
from instituting a separate and independent action
for damages and other affirmative relief.
SECTION 7. Penalties. - Any person who violates the
provisions of this Act shall, upon conviction, be
penalized by imprisonment of not less than one (1)
month nor more than six (6) months, or a fine of not
less than Ten thousand pesos (P10,000) nor more
than Twenty thousand pesos (P20,000), or both
such fine and imprisonment at the discretion of the
court.
Any action arising from the violation of the
provisions of this Act shall prescribe in three (3)
years.
Section 5 of the law. Solidarity liability of damages
of the er or head office if the er or head office is
informed of such acts by the offended party and no
immediate action is taken. Take note ha, is
informed. It does not mean that he will file a
complaint. Even if he just hears it, the employer
must ac, otherwise, there will be solidary liability.
The victim of sexual harassment is not excluded
from instituting a separate Action for damages that
are suffered.
Then penalties and prescription. Imprisonment of
no less than 1 month but not more that 6 months
and a fine of not less than 10,000 or more than
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20,000. The right of action prescribes in 3 years. (Jut
like money claims. )
The SC in several cases has ruled that sexual
harassment is an additional ground for the
termination of the offending managerial employee.
It is a ground for termination.
Can a male be sexually harassed? Law does not
admit that.
Be aware of that because that is a fertile source of
bar exam question.
EMPLOYMENT OF MINORS
ART. 139. Minimum employable age. - (a) No child
below fifteen (15) years of age shall be employed,
except when he works directly under the sole
responsibility of his parents or guardian, and his
employment does not in any way interfere with his
schooling.
(b) Any person between fifteen (15) and eighteen
(18) years of age may be employed for such number
of hours and such periods of the day as determined
by the Secretary of Labor and Employment in
appropriate regulations.
(c) The foregoing provisions shall in no case allow
the employment of a person below eighteen (18)
years of age in an undertaking which is hazardous or
deleterious in nature as determined by the
Secretary of Labor and Employment.
ART. 140. Prohibition against child discrimination. -
No employer shall discriminate against any person
in respect to terms and conditions of employment
on account of his age.
The lowest age which you can employ a minor is 15
years. Lower than 15, it must be under the following
conditions: (Sec. 12, RA 7610 as amended by RA
7658)
Section 12. Employment of Children. - Children
below fifteen (15) years of age may be employed
except:
(1) When a child works directly under the sole
responsibility of his parents or legal guardian and
where only members of the employer's family are
employed: Provided, however, That his
employment neither endangers his life, safety and
health and morals, nor impairs his normal
development: Provided, further, That the parent or
legal guardian shall provide the said minor child
with the prescribed primary and/or secondary
education; or
Suppose your parents are high wire walking
artists? You as a minor, are part of the act. Is that
allowed? Yes, that is not considered as life
threatening because the parents are there.
(2) When a child's employment or participation in
public & entertainment or information through
cinema, theater, radio or television is essential:
Provided, The employment contract concluded by
the child's parent or guardian, with the express
agreement of the child concerned, if possible, and
the approval of the Department of Labor and
Employment: Provided, That the following
requirements in all instances are strictly complied
with:
(a) The employer shall ensure the protection,
health, safety and morals of the child;
(b) the employer shall institute measures to prevent
the child's exploitation or discrimination taking into
account the system and level of remuneration, and
the duration and arrangement of working time;
and;
(c) The employer shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing program for
training and skill acquisition of the child.
In the above exceptional cases where any such child
may be employed, the employer shall first secure,
before engaging such child, a work permit from the
Department of Labor and Employment which shall
ensure observance of the above requirement.
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The Department of Labor Employment shall
promulgate rules and regulations necessary for the
effective implementation of this Section.
Section 14. Prohibition on the Employment of
Children in Certain Advertisements. - No person
shall employ child models in all commercials or
advertisements promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts and
violence.
Under Civil Law, whatever the child earns is not the
property of the parents, but of the child and must
be in a separate account from that of the parents. It
is only by court order that the parents can dispense
of the property of the child.
When can a minor be exempt from parental
authority? Under the old law, by voluntary
emancipation on the age of 15, just like Nino
Muhlach who was emancipated at age 18. He
incorporated himself, just like Mike Tyson, Michael
Jackson. But now, once you reach 18, you are
already emancipated.
So that is employment of minors. We have taken up
employment of househelpers, let us go to
EMPLOYMENT OF HOMEWORKERS
ART. 153. Regulation of industrial homeworkers. -
The employment of industrial homeworkers and
field personnel shall be regulated by the
government through the appropriate regulations
issued by the Secretary of Labor and Employment to
ensure the general welfare and protection of
homeworkers and field personnel and the industries
employing them.
ART. 154. Regulations of Secretary of Labor. - The
regulations or orders to be issued pursuant to this
Chapter shall be designed to assure the minimum
terms and conditions of employment applicable to
the industrial homeworkers or field personnel
involved.
ART. 155. Distribution of homework. - For purposes
of this Chapter, the "employer" of homeworkers
includes any person, natural or artificial who, for his
account or benefit, or on behalf of any person
residing outside the country, directly or indirectly,
or through an employee, agent contractor, sub-
contractor or any other person:
(1) Delivers, or causes to be delivered, any goods,
articles or materials to be processed or fabricated in
or about a home and thereafter to be returned or
to be disposed of or distributed in accordance with
his directions; or
(2) Sells any goods, articles or materials to be
processed or fabricated in or about a home and
then rebuys them after such processing or
fabrication, either by himself or through some other
person.
Homework in labor is a technical term which refers
to homeworkers. Who is the employer for
homeworkers? Art. 155.
Distinguish between a househelper and a
homeworker. This has not yet been asked in the
Bar, but it might be during your time.
1. Both are engaged in the rendition of
services under an er-ee contract.
2. But a house helper is a domestic worker,
but a home worker is an industrial worker.
3. Both do their duties in a home, but a house
helper does his duties in the home of the
employer. The home worker does his duties
in his own home.
4. The duty of a house helper is to provide
services for the well being and comfort of
the homeowner or members of the
homeowner’s household. Whereas a
homeworker manufactures or fabricates
goods according to the specifications of his
or her employer.
Why are they classified separately? Because they do
not move out of their home. Dili man na sila mu-
gastog pliti padulong didto sa factory. So their rates
are different. In fact, they have duties of being a
trustee because they receive materials from their
employer – their employer delivers, or causes to be
delivered any goods x x x – so binlan na silag
materials.
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Monthly pay x 12 =
Ang nakadaot ana, dugay mubalik ang employer, Applicable
nahuman na nila ang ilang mga kalo. Karon naa’y Total No. of Actual working days daily
muabot nga laing tao, muingon ako na lang palit rate
ana, they cannot do that because they can be liable
for estafa.

Read the IRR, because if the instructions of the

employer is clear and the sample work is clear, but
the end product is different from the instruction Total No. of Actual Working days :
and the samples, the employer can require that the 365 days in a year
work be undone at no extra cost to him. The - 52 rest days in a year6
employer can make you re-do the work without 11 regular holidays
extra cost on the part of the employer. 302 total no. of actual working days

ITEMS OF COMPENSATION: Remember that “pay”
is a generic term.
1. Regular pay
ART. 90. Computation of additional compensation.
- For purposes of computing overtime and other
additional remuneration as required by this
Chapter, the "regular wage" of an employee shall
include the cash wage only, without deduction on
account of facilities provided by the employer.
In acceptable labor standards terminology, this is
called straight time pay. That is the more accurate
terminology, not regular wage. When you talk
about additional compensation, it means that you
are entitled to additional compensation (i.e.
overtime pay) meaning you are a time worker. If
you are not a time worker, your additional
compensation determined already -- written into
your agreement already, i.e. payment on piece rate
basis. But if you are a time worker, you are paid for
the time you devote, and that is when you are
entitled to overtime pay. And overtime pay is
computed as a percentage of regular wage. Regular
wage is straight time pay or daily wage. (BUT in the
states, the reckoning is the hourly wage).
Total No. of Actual Working days for security
guards and those employees without regular rest
days
365
- 22 (regular holidays x 2)
67.6 (Sundays is x 30%)
454.6 working days
If you are given daily rate, how do you know if you
are paid correctly in a month? Note that if you are
paid on a daily rate basis, the axiom of “no work, no
pay” applies to you. Your pay varies from month to
month depending on the number of actual working
days in a month.
( Applicable daily rate x Total No. actual
working days in a year ) = Applicable
12
monthly rate
2. ECOLA
It is not included in the computation of the 13th
month pay. It is not also included in the
computation of retirement pay because the
computation only involves regular pay.

Computation of regular pay:
If you are given monthly pay, how do you know that
your pay is in compliance with the minimum wage
order?
Suppose you go on vacation leave for 15 days, are
you entitled to ECOLA? Yes, if you are entitled to
basic pay, then you are entitled to ECOLA because
you still have to meet the cost of living for that pay.
6IF EE works on rest days, or if ee has no rest day, 52 x 2; If EE works
half day, 52 x 1.5
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So everytime you are paid regular wage, you should
be paid ECOLA.
Is ECOLA included in the computation of
withholding tax? No, because ECOLA is paid
precisely to meet the higher standards of living. If
you deduct from it, then it cannot meet the
increase. In Taxation, we know that all benefits
reduceable to their monetary equivalent are subject
to withholding tax. If you get travel allowance, and
it is a monthly feature, and it does not require
liquidation in the form of receipts, then that is
income subject to withholding tax.
3. 13TH month pay7
Sec. 2. Definition of certain terms. - As used in this
issuance:
(a) "Thirteenth-month pay" shall mean one twelfth
(1/12) of the basic salary of an employee within a
calendar year;
(b) "Basic salary" shall include all remunerations or
earnings paid by an employer to an employee for
services rendered but may not include cost-of-living
allowances granted pursuant to Presidential Decree
No. 525 or Letter of Instructions No. 174, profit-
sharing payments, and all allowances and monetary
benefits which are not considered or integrated as
part of the regular or basic salary of the employee
at the time of the promulgation of the Decree on
December 16, 1975.
So, 13th month pay does not include over time pay,
only straight time pay. Regular wage does not
include premium pay. If you are working on a
regular holiday and you get 200%, ½ of that is not
included because that is not regular pay.
What is the minimum number of days worked in a
year in order to entitle the employee to 13th
month? The minimum number of days is 30 days.
7Read: PD 851 (Dec. 16, 1975) and the guidelines for 13th month pay
promulgated by Pres. Aquino
You must have worked at least 30 days before you
can qualify for 13th month pay. Please disabuse
yourself from the idea that 13the month pay is
equal to 1 month pay automatically. It is not. It is
your regular wage received for the whole year,
divided by 12 and that is your 13th month pay.
When do you receive 13th month pay? The ER has 2
choices:
Sec. 5. Option of covered employers. - A covered
employer may pay one-half of the 13th-month pay
required by the Decree before the opening of the
regular school year and the other half on or before
the 24th day of December of every year.
In any establishment where a union has been
recognized or certified as the collective bargaining
agent of the employees therein, the periodicity or
frequency of payment of the 13th-month pay may
be the subject of agreement.
Nothing herein shall prevent employers from giving
the benefits provided in the Decree to their
employees who are receiving more than One
Thousand (P1,000) Pesos a month or benefits higher
than those provided by the Decree.
Under the revised guidelines, employees paid on a
piece rate basis are entitled to 13th month pay. But
workers paid on a results basis are not entitled to
13th month pay. So task basis/results basis are not
entitled to 13th month pay.
If you have more than one employer, from whom
are you entitled to collect 13th month? The
guidelines says from both/all your employees.
Question, when you resign or you are terminated or
when you are discharged – let us say you are
terminated June and started working on January.
You employer gives the 13th month pay only on one
basis (Dec. 23), are you entitled to 13th month?
Yes, at the time of your termination you are entitled
to your accrued 13th month pay. So your regular
wage from January up to June, divided by 12 that is
your 13th month pay.
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Please remember RA 7833 effective December 8,
1994 because this law exempts from withholding
tax Other benefits such as productivity incentives
and Christmas bonus in an amount not exceeding
Twelve thousand pesos (P12,000) which shall be
integrated in the 13th month pay solely for
purposes, Provided, however, That the exclusion
shall only apply to the first Thirty thousand pesos
(P30,000).
Remember, withholding tax is one of the
deductions from wages allowed by law.
4. Bonus
Included in the deduction for withholding tax. It is
not included in the computation of the overtime
pay; or in the computation of 13th month pay. It
does not form part of regular wage.
When does bonus ripen into a matter of right? Note
that bonus is supposed to be gratuitous in nature.
The cause for the bonus is the benevolence of the
employer. The cause for the granting of regular pay
is the labor that you grant. If in the course of your
rendering of labor, your employer is gratified and
gives you a bonus, that bonus never ripens into a
matter of right.
But when the bonus, let us say, is denominated as
PRODUCTIVITY BONUS .. let’s say the ER says that if
our income increases by 10%, then all will have
across the board bonus of 5% of their salary, the SC
says that the consideration of that bonus is not the
gratuity of the employer. The cause of that is the
increase in the profit/income. So, if the ER does this
year in and year out, practiced over a period of
time, then that ripens as a matter of right. That
practice becomes a matter of right and that
becomes part of demandable pay and you can file it
as a money claims.
th
Now, this is interesting. When the 13 month pay
law came out, there were already companies which
were paying their employees Christmas bonuses
equivalent to 13th month. The issue now, are they
still mandated to pay 13th month over and above
the bonuses they were issuing?
Of course, the DOLE said that you have to pay
because bonus is not counted as pay, so you have
to pay. The first decision of the SC was that it has to
be decided in favor of labor, so ERs were made to
pay the 13th month pay because the bonus that they
were paying were not counted. Now, after this
decision, the SC was swamped with so many
mandamus cases. So SC says, we have to take a 2nd
look and then they reversed themselves.
To require the employer to pay 13th month pay after
he has been paying Christmas bonus, which is the
same amount as 13th month pay, is penalizing a
generous employer. It is equivalent to mandating
that he pay a 14th month pay which is not the intent
of the law. So SC took back what it said in its earlier
ruling. (National Federation of Union Workers vs.
CA)
So when they took back their decision, the original
company who went to the SC went back because
sila na lang ang nag-lahi. Ngano kami gipabayad
man mi. So SC said that for you, that is the law of
the case, you are bound by that, you cannot change
that. So that is the difference between the law of
the case and res judicata.
Review on:
Overtime during ordinary working day:
From 6 am up to 10 pm, any 8-hour work within
that time merits only straight time pay provided
that it is a regular work day. If you work between 10
pm and 6 a.m., your regular pay is multiplied by
10% and that is added to your regular pay, so your
gross pay is 110% of regular pay.
Overtime work during your regular/ordinary
working day between 6 a.m. and 10 p.m. is =
regular wage x 25% . So it is 125% of regular pay.
How about if you perform overtime between 10 pm
– 6 am? You have 2 computations there.
1. Regular pay + 25% = 125%
2. 125% x 10% = night shift differential
Add them all up and then you have the total gross
pay. Please do not short cut (Regular pay x 135%)
because that is not the same.
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Rest day
If you are made to work on your rest day, your pay
is +30% premium pay. It is not overtime pay, but
premium pay.
Suppose you do work during your rest day, but not
in excess of 8 hours, but during 10pm-6 am, you
have 2 computations:
Compute straight premium pay: Regular pay + 30%
= premium pay x 10% = NSD. Add them all up, you
have the gross total pay.
Suppose you do OT work during your rest day: So
you get 30% for working on your rest day, so 130%
na. That 130% you multiply by another 30% because
that is the OT rate during your rest day (assuming
that your OT hours is not within the hours of 10 pm-
6am – because if it did, you compute 130% x 30% =
SUM x 10%, add them up= total gross pay). Dili i-
short cut ha, because this is cumulative. You can see
now why this is not asked in the bar exams. But this
is important because when you file a money claims
complaint, you have to attach the computation
otherwise the ER can move to dismiss. That is why
you have to know this because you have to explain
this to the Labor Arbiter, and there are Labor
Arbiters who do not know how to compute!
-o0o-
ART. 110. Worker preference in case of bankruptcy.
- In the event of bankruptcy or liquidation of an
employer’s business, his workers shall enjoy first
preference as regards their wages and other
monetary claims, any provisions of law to the
contrary notwithstanding. Such unpaid wages and
monetary claims shall be paid in full before claims
of the government and other creditors may be paid.
(As amended by Section 1, Republic Act No. 6715,
March 21, 1989).
This has undergone at least 3 amendments. How
are you to read this particular provision? There are
several decided cases here, principally DBP vs. NLRC
229 S 109 reiterating DBP vs. NLRC GR No. L-82763
(1990), the following are to be followed in
interpreting and applying this provision.
1. Art. 110 of the Labor Code must be viewed
and read in conjunction with the provisions
of the Civil Code on concurrence and
preference of credits.
Creditors are not of equal ranks. There are creditors
which are preferred and those which are not. There
is a hierarchy, and always, in the rank of creditors,
who is the highest? The highest is always the State.
Government taxes can never be partially paid.
So note that the SC has said that this Art. 110
cannot be read in isolation from the Civil Code on
concurrence and preference of credits. In effect, the
SC has amended the law because Art. 110 provides
that “any provisions of law to the contrary
notwithstanding”.
2. Art. 110 before it can be applied, there
must be a judicial pronouncement of
bankruptcy. If there is no proceeding in
rem and no declaration of bankruptcy,
then this cannot be applied.
3. The amendment to Art. 110 has the effect
of expanding the worker’s preference to
cover not just unpaid wages but also
monetary claims of workers to which even
claims of proprietary government must be
deemed subordinate.
Now, can it ever happen that the claims of
government will be made subordinate to the
employee’s claims? YES, if the claims of government
are proprietary claims. But if the claims of
government are sovereign claims such as taxes, Art.
110 does not apply. The preference in Art. 110 can
never be higher than sovereign government claims.
It can only be higher to government’s proprietary
claims.
The Government entered into a contract with Ong
Shuk Trading for supply of paper. The Government
advanced its payment for a year. Later, OS Trading
was declared bankrupt. The workers are filing
money claims for unpaid wages. The claims of the
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government must be subordinate to those of the
workers.
But if Government enters and demands payment
for VAT, all other claims must be made subordinate.
4. The amendatory effect of RA 6715 can
apply only prospectively and it applies only
to so-called free property; encumbered
properties are not covered by this
preference.
Suppose OS Trading has a delivery van which is
mortgage to a bank. Here comes the workers saying
we have preference! The bank says pay us or we
will foreclose this van. The workers says you cannot
do that, we have preference! That is why the
decided cases mostly involve banks. That van is not
free property. If the SC decides otherwise, there will
be chaos in the business world. No debt can ever be
secured. So this is a matter of practical necessity
that the SC ruled in this manner.
Alright, let us go to Art. 106-108. Read this in
relation with Department Order 18-02.
ART. 106. Contractor or subcontractor. - Whenever
an employer enters into a contract with another
person for the performance of the former’s work,
the employees of the contractor and of the latter’s
subcontractor, if any, shall be paid in accordance
with the provisions of this Code.
In the event that the contractor or subcontractor
fails to pay the wages of his employees in
accordance with this Code, the employer shall be
jointly and severally liable with his contractor or
subcontractor to such employees to the extent of
the work performed under the contract, in the
same manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of
workers established under this Code. In so
prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job
contracting as well as differentiations within these
types of contracting and determine who among the
parties involved shall be considered the employer
for purposes of this Code, to prevent any violation
or circumvention of any provision of this Code.
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of
tools, equipment, machineries, work premises,
among others, and the workers recruited and placed
by such person are performing activities which are
directly related to the principal business of such
employer. In such cases, the person or intermediary
shall be considered merely as an agent of the
employer who shall be responsible to the workers in
the same manner and extent as if the latter were
directly employed by him.
ART. 107. Indirect employer. - The provisions of the
immediately preceding article shall likewise apply to
any person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of any
work, task, job or project.
ART. 108. Posting of bond. - An employer or
indirect employer may require the contractor or
subcontractor to furnish a bond equal to the cost of
labor under contract, on condition that the bond
will answer for the wages due the employees
should the contractor or subcontractor, as the case
may be, fail to pay the same.
Neri vs. NLRC 224 S 717 where the SC says “The
Court has already taken judicial notice of the
general practice adopted in several government and
private institutions and industries of hiring
independent contractors to perform special
services. These services range from janitorial,
security and even technical or other specific
services such as those performed by petitioners
Neri and Cabelin. While these services may be
considered directly related to the principal business
of the employer, nevertheless, they are not
necessary in the conduct of the principal business of
the employer.”
So, if you contract out janitorial, security, technical
services, then the burden of proof falls upon that
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which challenges the contracting out as illegal
because of this pronouncement of the SC.
Let me just point out to you that the yardstick used
here (in Art. 106 last paragraph) is not the yardstick
used by the SC. That is the yardstick (supposedly). If
you are performing services which are directly
related to the principal business of the employer,
then you are engaged in labor only contracting.
However, the SC does not use that yardstick. It
explicitly denies and negates that yardstick! Both in
Neri vs. NLRC and Escario et al, vs. NLRC 333 S 257
(2000).
The SC says that even if these activities that have
been contracted out are directly related to the
principal business of the employer, they can still be
contracted out. Why? Because the SC uses the test
found in Art. 280.
ART. 280. Regular and casual employment. - The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has been
engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer, x x x
So you are a regular worker, and not a casual
worker, if you are engaged to perform activities
which are usually necessary or desirable in the usual
business or trade of the employer. Unsa man imong
employer? Construction Company. So if you are
engaged to perform work which is usual and
necessary for the construction company, then you
are a regular worker, you are not contractual. This is
the test used by the SC.
Why is the SC not using the “directly related test”
found in Art. 106? Because there are many
loopholes found in Art. 106. For example, janitorial
services are found in most businesses. It is directly
related. What about the security guards in the
bank? Is their work not directly related to the
business of the bank? If that is directly related, then
the bank cannot contract out security services,
because that would be labor-only contracting.
But if you obligate the banks to maintain their own
security agency, magproblema na! Example,
Metrobank – it has over 500 branches. So there is 3
guards per shift and lets say 3 shifts per day so that
is 9 already. Now, you multiply that with 500 and
what do you have? You have an army already! You
obligate the banks to hire military officers to train
the guards. You see the problem of this test? That is
why the SC uses Art. 280 test “usual and necessary
to the usual trade and business of the employer”.
I suggest that you read the cases because you
cannot read that from Azucena. Always, the SC uses
the Art. 280 test.
Let us go to Art. 128 and Art. 129: Art. 128 is the
visitorial and enforcement power. This is
distinguished from Art. 129 which is the quasi
judicial power of the Department of Labor. This is a
passive jurisdiction while Art. 128 is an active
jurisdiction.
ADMINISTRATION AND ENFORCEMENT
ART. 128. Visitorial and enforcement power. - (a)
The Secretary of Labor and Employment or his duly
authorized representatives8, including labor
regulation officers, shall have access to employer’s
records and premises at any time of the day or night
whenever work is being undertaken therein, and the
right to copy therefrom, to question any employee
and investigate any fact, condition or matter which
may be necessary to determine violations or which
may aid in the enforcement of this Code and of any
labor law, wage order or rules and regulations
issued pursuant thereto.
(b) Notwithstanding the provisions of Articles 129
and 217 of this Code to the contrary, and in cases
8 Who is that representative? The Regional Director of Labor. He has
several inspectors; he can send the inspectors to any workplace at
anytime of the day or night for as long as the work place is operational.
If there is work going on there, the inspector can go in. He will inspect
the place as to compliance with labor legislation. He can ask questions
and interview employees. He can inspect the records. So once he has
inspected the records and he has now the testimonies, he will make a
report. He reports to the Regional Director. The RD, once he receives
the report, immediately he will issue, according to Art. 128(b)
compliance orders. Comply with the minimum wage, pay your ees the
correct minimum wage!
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where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the
power to issue compliance orders to give effect to
the labor standards provisions of this Code and
other labor legislation based on the findings of labor
employment and enforcement officers or industrial
safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives
shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except
in cases where the employer contests the findings
of the labor employment and enforcement officer
and raises issues supported by documentary proofs
which were not considered in the course of
inspection. (As amended by Republic Act No. 7730,
June 2, 1994).9
An order issued by the duly authorized
representative of the Secretary of Labor and
Employment under this Article may be appealed to
the latter. In case said order involves a monetary
award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond
issued by a reputable bonding company duly
accredited by the Secretary of Labor and
Employment in the amount equivalent to the
monetary award in the order appealed from. (As
amended by Republic Act No. 7730, June 2, 1994).
(c) The Secretary of Labor and Employment may
likewise order stoppage of work or suspension of
operations of any unit or department of an
establishment when non-compliance with the law
or implementing rules and regulations poses grave
and imminent danger to the health and safety of
workers in the workplace. Within twenty-four
9 What will the ER do with the compliance order? If he ignores that, the
next thing he will receive is a writ of execution. Frozen and er’s bank
account. The only way you can argue against a compliance order is to
present documentary proof which was not considered in the course of
the inspection. For example, he shows the correct payroll. So that can
probably overturn the compliance order. But if you cannot produce
documentary proof then you have to comply with the compliance order.
Aha man ang due process ana? Are er’s not given due process? But
this is just like the TMG nga dakpon ka if you are violating traffic laws.
Aha man imong lisensya, he will ask you and will give you a ticket to
pay the fine. You cannot say I deserve due process because you are in
flagrante delicto and the TMG is just enforcing the law. If later on you
will challenge him, you can go to court. But the TMG has the right to
enforce the law against you.
hours, a hearing shall be conducted to determine
whether an order for the stoppage of work or
suspension of operations shall be lifted or not. In
case the violation is attributable to the fault of the
employer, he shall pay the employees concerned
their salaries or wages during the period of such
stoppage of work or suspension of operation. 10
(d) It shall be unlawful for any person or entity to
obstruct, impede, delay or otherwise render
ineffective the orders of the Secretary of Labor and
Employment or his duly authorized representatives
issued pursuant to the authority granted under this
Article, and no inferior court or entity shall issue
temporary or permanent injunction or restraining
order or otherwise assume jurisdiction over any case
involving the enforcement orders issued in
accordance with this Article.
(e) Any government employee found guilty of
violation of, or abuse of authority, under this Article
shall, after appropriate administrative investigation,
be subject to summary dismissal from the service.
(f) The Secretary of Labor and Employment may, by
appropriate regulations, require employers to keep
and maintain such employment records as may be
necessary in aid of his visitorial and enforcement
powers under this Code.
ART. 129. Recovery of wages, simple money claims
and other benefits. - Upon complaint of any
interested party, the Regional Director of the
Department of Labor and Employment or any of the
duly authorized hearing officers of the Department
is empowered, through summary proceeding and
after due notice, to hear and decide any matter
involving the recovery of wages and other monetary
claims and benefits, including legal interest, owing
to an employee or person employed in domestic or
household service or househelper under this Code,
10 Take a look at the power of the Sec of DOLE. It can order stoppage
of work x x x. Take note that there is no need for a hearing. IF in the
judgment of the safety inspector there is a serious threat to the health
and safety of the workers in the workplace, they can order the closure
of the workplace immediately. What is the obligation of the DOLE?
Their obligation is within 24 hours from the suspension/shutting down of
the operation, they must conduct a hearing. And there is only one issue
in that hearing: Whether or not to lift the order of suspension/closure of
operations. So that is for health and safety regulations.
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arising from employer-employee relations: Provided,
That such complaint does not include a claim for
reinstatement: Provided further, That the aggregate
money claims of each employee or househelper
does not exceed Five thousand pesos (P5,000.00).
The Regional Director or hearing officer shall decide
or resolve the complaint within thirty (30) calendar
days from the date of the filing of the same. Any
sum thus recovered on behalf of any employee or
househelper pursuant to this Article shall be held in
a special deposit account by, and shall be paid on
order of, the Secretary of Labor and Employment or
the Regional Director directly to the employee or
househelper concerned. Any such sum not paid to
the employee or househelper because he cannot be
located after diligent and reasonable effort to locate
him within a period of three (3) years, shall be held
as a special fund of the Department of Labor and
Employment to be used exclusively for the
amelioration and benefit of workers.
Any decision or resolution of the Regional Director
or hearing officer pursuant to this provision may be
appealed on the same grounds provided in Article
223 of this Code, within five (5) calendar days from
receipt of a copy of said decision or resolution, to
the National Labor Relations Commission which
shall resolve the appeal within ten (10) calendar
days from the submission of the last pleading
required or allowed under its rules.
The Secretary of Labor and Employment or his duly
authorized representative may supervise the
payment of unpaid wages and other monetary
claims and benefits, including legal interest, found
owing to any employee or househelper under this
Code. (As amended by Section 2, Republic Act No.
6715, March 21, 1989).
Art. 129 is now the regional director adjudicating on
money claims. The case is GUICO vs. QUISUMBING
298 S 666 (1998) written by Justice Puno, en banc
decision which overturned Servando vs. NLRC
(1991).
Art. 129 applies when a domestic, agricultural,
industrial or commercial worker files a money
claims complaint. Money claims means
nonpayment or underpayment of wages. For as
long as the complaint is coming from a domestic,
agricultural, industrial or commercial worker AND it
is NOT accompanied by a prayer for reinstatement,
(sa ato pa, wala pa sya natangtang sa trabaho, naa
pa sya sa trabaho), and the aggregate individual
money claim does not exceed P5,000, then the
jurisdiction is with the Regional Director and not
with the LA. 11
The moment there is dismissal, and there is a case
with a prayer for reinstatement and payment of
money claims, then the regional director no longer
has jurisdiction. Even if the aggregate money claim
is less than P5,000.00.
If you read very well Guico, it says that the question
of visitorial powers when a compliance order is
issued and it requires the employer to pay
underpayment of wages and the underpayment
aggregate of wages for each worker is in excess of
P5,000, before under the Servando ruling, you
cannot push it, you have to go now to the Labor
Arbiter. SC now says that Art. 128 visitorial power is
separate and distinct from Art. 129 quasi judicial
powers. There is no limit, no jurisdictional amount
to the enforcement of visitorial powers ONLY in the
quasi judicial powers in Art. 129. Please remember
that because the problem in Bar Exams will confuse
you between visitorial and quasi judicial powers.
Art. 129 has a limit: The individual aggregate money
claim must not exceed P5,000. Now, suppose 5 of
you are suing the same employer. 3 of you have
more than P5,000 only 2 of you have less than
P5,000 money claim. Who has jurisdiction?
The RD will pass that on to the Labor Arbiter, all 5 of
you. He cannot split it kay maglahi pa lang sila ug
decision sa Labor Arbiter, mag-away na nuon
11 Jurisdiction of the LA is found in Art. 217 ART. 217. Jurisdiction of
the Labor Arbiters and the Commission. - (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:
Xxx
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and other
terms and conditions of employment;
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samot. If there is only one in excess of P5,000.00 , in

many employees suing the same employer, and this
is a pure money claims, then it must go to the LA,
otherwise there may be a conflict of decisions.

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TERMINATION OF EMPLOYMENT
ART. 278. Coverage. - The provisions of this Title
shall apply to all establishments or undertakings,
whether for profit or not.
ART. 279. Security of tenure. - In cases of regular
employment, the employer shall not terminate the
services of an employee except for a just cause or
when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and
other
privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the
time of his actual reinstatement. (As amended by
Section 34, Republic Act No. 6715, March 21, 1989).
TERMINATION is putting an end to your job.
TENURE is your relationship to your job. Under Art.
3, Sec. 13 of the Constitution, it says that the right
to security of tenure is recognized.
What is SECURITY OF TENURE? Security of tenure is
the right to continue in one’s employment where
the engagement does not specify a term, provided
no just or authorized cause intervenes.
JUST/CULPABLE CAUSE – is cause attributable to the
employee; cause that is the fault of the employee,
either as malfeasance or misfeasance. (Misfeasance
is a negative act; malfeasance is a positive act). The
end result of just cause is dismissal and there are no
termination or dismissal benefits.
AUTHORIZED CAUSE –no fault attributable to the
employee. In other words, no fault on the
employee. There is termination and there are
termination benefits.
DISMISSAL is due to just causes; (naa’y sala).
TERMINATION is due to authorized causes (wala’y
sala).
What is the opposite of Security of Tenure? The
opposite is EMPLOYMENT AT WILL. It is defined as
the engagement of an employee often with or
without a definite term and such engagement may
be ended by either party with, or without cause. So
either the employee or the employer may end the
employment at any time, with or without cause.
The engagement of the open-ended.
Our jurisdiction has chosen security of tenure
because it is more in line with justice. In the
hierarchy of work, the more skills you have, the less
you need security of tenure. If you have less in skill,
the more you need security of tenure because you
can be replace anytime. Security of tenure does not
take into consideration the exponential pace of
change in the nature of work, process and
enterprise.
Problems regarding security of tenure? It breeds
complacency, it does not take into consideration
the obsolescence of skill which is normal because of
evolution of technology. Security of tenure is not
the natural law, it is INSECURITY OF TENURE.
What are the rules that ascertain security of tenure
in our jurisdiction? security of tenure is no
embodied in the rules. If you are a regular in the
job, you cannot be fired, dismissed or terminated
without just or authorized cause. There must be
substantial and procedural due process requisites
that must be complied with. Substantial due
process means that there must be just or
authorized cause. Procedural due process means
the correct procedure must be followed.
What is the procedure? It is found in Book V, Art.
277(B)
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected
against dismissal except for a just and authorized
cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is
sought to be terminated a written notice containing
a statement of the causes for termination and shall
afford the latter ample opportunity to be heard and
to defend himself with the assistance of his
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representative if he so desires in accordance with
company rules and regulations promulgated
pursuant to guidelines set by the Department of
Labor and Employment.
Any decision taken by the employer shall be
without prejudice to the right of the worker to
contest the validity or legality of his dismissal by
filing a complaint with the regional branch of the
National Labor Relations Commission. The burden
of proving that the termination was for a valid or
authorized cause shall rest on the employer. The
Secretary of the Department of Labor and
Employment may suspend the effects of the
termination pending resolution of the dispute in the
event of a prima facie finding by the appropriate
official of the Department of Labor and
Employment before whom such dispute is pending
that the termination may cause a serious labor
dispute or is in implementation of a mass lay-off.
(As amended by Section 33, Republic Act No. 6715,
March 21, 1989).
If you look at the first sentence, it says “Subject to
the constitutional rights of workers x x x”. It is a
constitutional right in the sense that it is found in
the Constitution but it is not a constitutional right
vis-à-vis the Bill of Rights, because only the rights
found in the Bill of rights are constitutional rights.
See: Bustamante vs. NLRC, Serrano vs. NLRC
(violation of the employee’s right to notice under
the labor code is not a violation of due process
under Art. 3, Sec. 2 of the Constitution)
As a result of the recognition of the constitution of
the right to security of tenure, the burden of
proving that the termination was for a valid or
authorized cause shall rest on the employer. All the
employee has to do allege in the illegal dismissal
case is that I am an employee and I am no longer an
employee because I was illegally dismissed or
terminated. The rest is for the employer because it
is recognized in the Constitution and the
Constitution is partial to the employee.
If you can, memorize Art. 277(b) because this
always comes out of the Bar.
So, before you can dismiss anybody under you, you
must give him Art. 277(b). What are the twin
requirements for a valid dismissal? Substantial and
procedural due process. (Or according to Chan, it
involves the question of the legality of the act of
dismissal and the legality in the manner of
dismissal).
What determines regular employment? If you have
been engaged to perform activities which are usual
or necessary to the usual business or trade of the
employer, you are regular. Why is it important to
know if you are regular? Because if you are regular,
you enjoy security of tenure. If you are not regular,
you are casual and you do not enjoy security of
tenure.
ART. 280. Regular and casual employment. - The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has
been engaged to perform activities which are
usually necessary or desirable in the usual business
or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which
has been determined at the time of the
engagement of the employee or where the work or
service to be performed is seasonal in nature and
the employment is for the duration of the season.
An employment shall be deemed to be casual if it is
not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one
year of service, whether such service is continuous
or broken, shall be considered a regular employee
with respect to the activity in which he is employed
and his employment shall continue while such
activity exists.
An employment shall be deemed to be casual if it is
not covered by the preceding paragraph – Sayop
man ni. Why? Because the Supreme Court said that
there are workers that enjoys a double security of
tenure. Who are they? The professors in the tertiary
level enjoys double security of tenure.
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If he is a regular employee, he enjoys security of
tenure mandated by the Labor Code, and second,
he enjoys security of tenure mandated by academic
freedom.
Academic freedom is the freedom to conduct
research no matter where it will lead you and to
disseminate the fruits of your research even if it is
contrary to the belief of man and you cannot be
terminated because what you teach is
unacceptable. This is so in order to push the
frontiers of learning, otherwise, nobody will
conduct research. This is the case of Montemayor
vs. CIR which became Montemayor vs. NLRC and
then finally People vs. Montemayor.
According to Justice Fernando (The effect of regular
tenure in a tertiary level) -- one who has achieved
regular tenure cannot be dismissed except for the
most serious and substantial cause.
If you read Book VI, you have classifications of
workers. Please remember that these classifications
are related to tenure and they have meaning and
significance only in relation to tenure. Payment of
the minimum wage does not require tenure. This
classification has nothing to do with Labor
Standards because tenure does not determine
payment of regular wage.
Classification of workers (according to tenure)
1. Regular
2. Casual
3. Project
4. Seasonal
5. Probationary
6. Managerial
7. Rank and File
Before the Labor Code took effect, there was no
security of tenure. What there was was a
termination law. Under the termination law, it is
provided that certain occupations and certain
industries before you can terminate somebody you
must give him one month salary (mesada). This is to
help him through the transition when looking for
work. That is not security of tenure. Security of
tenure is you cannot be terminated unless there is a
just or authorized cause.
Exceptions to the security of tenure:
1. Specific project worker -- where the employment
has been fixed for a specific project or undertaking
the completion or termination of which has been
determined at the time of the engagement of the
employee
Now, the question is when this law was passed, did
Congress intend to put an end to term employment
because the term employment is oppressive to the
working class? That is the issue in Brent School vs.
NLRC.
Is a bona-fide agreement of a term, even if the
activity is still continuing no longer allowed under
Art. 280?
Here, we are talking about an athletic director. He
was engaged to be an athletic director for 3 years.
At the end of 3 years, he was told by the Board of
Directors that your term is finished and then the
school started hiring another athletic director. So
the former director opposed saying that he was
engaged to perform a work which is usual or
necessary to the usual trade or business of the
employer and he has been serving for 3 years, so he
is already regular.
The SC said that Art. 280 did not put an end to all
term contracts. Bona fide term contracts are term
contracts that are usual practice of a particular
industry and among those are the educational
institutions and they ought to be respected.
Positions of administration in educational
institutions are by term. If dean ka, dili pwede nga
forever dean ka. You are given a term in which you
can implement your ideas. So if from the start of
the project, it is made known and you agree to the
term, at the end of the term, you leave. Are you
dismissed? No, your term has lapsed. Are you
entitled to termination benefits? No.
2. Seasonal Employees -- where the work or service
to be performed is seasonal in nature and the
employment is for the duration of the season.
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The decided case here is Manila Hotel vs. CIR. Here,
there is a chambermaid of the hotel. This
chambermaid was hired for an additional help
during the peak season in Baguio. After the season,
the made was terminated. The maid said that she
has become a permanent employee. Is that correct?
That is what the second paragraph says.. If you have
been working for more than 1 year, you become
permanent as to the activity.
Provided, That any employee who has rendered at
least one year of service, whether such service is
continuous or broken, shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while
such activity exists.
Remember that the season could be natural season
or industrial season. If you have served, broken or
continuous, you have become permanent with
respect to that activity if the activity still lasts.
In contracting and sub-contracting agreements
under Art. 106 and 107, it is assumed that the term
of the project worker is the same as the
contractor’s term, unless the activity is divisible.
What do you mean by divisible?
By way of example, there are two kinds of
carpenters: the finishing carpenter and the rough
carpenter. The rough carpenter is the one who does
the hammering, mixing of cement. The finishing
carpenter is the one who does the intricate works
like the making of cabinets. After all the concrete
(work) is finished, the rough carpenters’ work is also
finished. What is left is the finishing carpenter. The
rough carpenters cannot say that they have been
illegally terminated. Their work is coterminous with
that part of construction.
Cases: Figurin vs. NLRC – the SC said that a seaman
is a casual employee. They cannot be a regular
employee. Rabago vs. ESSO; PNB vs. Cabalansag.
-=o0o=-
The measurement given in Art. 280, about the
determination of regularity of employment is clear
that the measurement is not the written contract,
it’s not the oral contract, but it is the activity for
which the employee has been engaged to perform.
The employee is regular if the activity is usual and
necessary to the usual business or trade of the
employer. If it is not, then the employment or
engagement is said to be casual.
Procter&Gamble engaged the services of
carpenters and welders to repair an elevated water
tank for water reservoir. They worked for more
than 6 months. Now, these employees are engaged
to perform construction building. Now, what is the
usual trade or business of Procter&Gamble? It is a
manufacturer of toilet products and other
consumer goods. So the employees were not
engaged in the manufacture. So therefore, their
engagement cannot be said to be regular. If they
were engaged to be in the factory, shampoo
factory, to be engaged in the work process of
manufacture of Tide. The issue: Are they or are they
not regular? When you use Art. 280, maybe that
since the activity they were engaged to perform is
usual and necessary to the usual trade or business
of the employer. Therefore, they are regular. It is
important to determine whether they are regular
because regular employees enjoy the fullness of
security of tenure.
But then, Art. 280 says, "even if you are casual, if
you have been engaged to perform activities that
are not usual or necessary but it has lasted for a
year," then what is the result? The result is you
become regular as to that activity. "Provided, that
any employee who has rendered at least one year of
service, whether such service is continuous or
broken, shall be considered a regular employee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists." So that is a limited security of tenure. That
is available to the casual employee who has
actually been in service for at least a year.
Now, I told you there are several exceptions to the
rule. What are the exceptions to the rule that the
activity for which the employee is engaged to
perform is the measure of regularity of
employment?
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THE FIRST EXCEPTION IS SPECIFIC PROJECT
WORKER. That is given in the case of Figurin vs.
NLRC 120 SCRA 910 (1983). If you are engaged as a
carpenter in a construction company, the activity
for which you are engaged to perform is usual and
necessary to the business of the employer. So
therefore you must be regular whether you are just
engaged for a month or one year, because Art. 280
says, "oral or written contracts to the contrary
notwithstanding." So even if you are made to sign
that you will be only for one year, you are regular.
So you are hired as carpenter for a specific project,
construction of Marco Polo, your tenure is co-
extensive with the project of Marco Polo. In other
words, you are not a regular worker by the measure
of Art. 280.
Figurin vs. NLRC classifies 2 kinds of construction
workers: Project construction worker and the so-
called tool worker. A tool worker is hired without
reference to any project. So you are regular
because you are engaged to perform activity which
is usual or necessary to the trade or business of the
employer. Example: you are a civil engineer and
hired by EEI w/o reference to any project. You are
not told at the inception of your engagement that
you are for special project, you are just hired. Now,
EEI has several projects, you go from one project to
another, evaluate it whether the construction is
moving according to schedule. What are you? Are
you a project worker? No, you are not a project
worker. You are a tool worker. Non-project worker,
so you are a regular employee. The regular
measurement for Art. 280 applies to you because
the conditions12 of a project worker are not
applicable to you.
SECOND EXCEPTION IS A SEASONAL WORKER.
Remember, one who is engaged for an activity
which is usual or necessary to the usual trade or
business of the employer but on a seasonal basis. A
12 What are the conditions?
1. The project must be made known to you at the
inception.
2. The termination of the project must be determined from
the start.
3. Third requirement is from the decided case of PNCC vs.
NLRC 174 SCRA 191 (1989). You are reported that you
are no longer with the company, that you are terminated
at the end of the project.
season can be a natural season or an industrial
season. You are also told at the inception that you
are for the season only. It must be made known to
you. But when you are no longer allowed to
continue, there is no requirement of reporting to
the DOLE that you are no longer working at the end
of the season. Remember the case of Manila Hotel
vs. CIR 9 SCRA 184 (1963). The seasonal worker has
accumulated one year of service, broken or
continuous, then he becomes permanent as to the
season. The chambermaid was engaged for two
straight years (Dec.-May). On the third year when
she came back, she was not allowed to go back to
work. No, that's not correct. You have become
regular. Why? Because if you are a casual worker
and you have performed service for one year,
broken or continuous, you become regular as to the
activity.
THIRD EXCEPTION: EMPLOYEES THAT ARE RE-
HIRED AFTER RETIREMENT. In UST Faculty Union
vs. NLRC (1990), you have retired from service w/
the company. What was your work? For 35 years,
you were the telephone operator. Why did you
retire? Because you have reached the retirement
age of 65. You receive your pension every time,
then you beg the HR to re-hire you because you
want to continue working. He was allowed to go
back to his own job because he could still do it, he
was still healthy. But this time it is in contractual
basis, one year contract. Does he become regular?
He is performing an activity which is his regular
work before and he was a regular employee before.
Does he become regular? No more, he has already
retired. The Supreme Court said in UST Faculty
Union vs. NLRC that if you re-hire one who has
retired, even if he performed an activity which is
usual and necessary to the usual trade or business
of the employer, he does not become regular
anymore.
FOURTH EXCEPTION: EMPLOYMENT FOR A BONA
FIDE FIXED TERM. That is the en banc decision of
Brent School vs. Zamora.
FIFTH EXCEPTION to the rule is the Phil. Village
Hotel vs. NLRC 230 SCRA 423 (1994). What is that
case? Phil. Village Hotel was foreclosed by its
creditor the bank. So it told its employees that you
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all have to go, we're closing shop. They were given
separation benefit. After 6 months, they re-opened
but this time they were under a different franchise,
no longer Phil. Village Hotel. When another
franchise took over, the franchiser said they will
take the former employees provided that they are
probationary. When the old workers came in, they
did not meet the standards of the new franchise
operator so they were dismissed. They claimed
illegal dismissal. Why? According to them, we are
already regular. We were just interrupted by the
foreclosure and now we are coming back to reclaim
our post. Is that correct? The Supreme Court says
no, even if the rule says that you are engaged to
perform activities w/c are usual and necessary to
the usual trade or business of the employer, this is
an exception to the rule WHEN THERE IS A NEW
OPERATING OWNER.
SIXTH EXCEPTION is Rabago vs. ESSO Eastern
Marine 453 SCRA 381 (Mar. 14, 2005). The
seamen/sailors, crew of the boat who perform
activities w/c are usual and necessary to the usual
trade or business of the employer, overseas
crewmembers and seamen are casual employees
even if they have been employed for more than
ten years.
ART. 281. Probationary employment. - Probationary
employment shall not exceed six (6) months from
the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating
a longer period. The services of an employee who
has been engaged on a probationary basis may be
terminated for a just cause or when he fails to
qualify as a regular employee in accordance with
reasonable standards made known by the employer
to the employee at the time of his engagement. An
employee who is allowed to work after a
probationary period shall be considered a regular
employee.
Probationary employment is conditional
employment made known to you at the start. Here
are the standards w/c you must comply with. At the
end of the probationary period, the employer will
say you have met the standard and so now you are
made regular. If you did not meet the standards,
then they will say sorry you have not met the
standard. Therefore, you must go. There is no need
for investigation; there is no need for a hearing.
There is just a confrontation. It is important that the
probationary status of the employee is made known
from the very start.
Let me bring to your attention particular words in
Art. 281. It says probationary employment shall not
exceed 6 months from the date the employee
started working, unless it is covered by an
apprenticeship agreement stipulating a longer
period.
What is the meaning of shall not exceed 6 months?
From decided cases, the SC has said "shall not"
does not mean mandatory. It means permissive. It
is not true that all probationary periods is 6 months.
Why? Because for school teachers the probationary
period is not 6 months. The probationary period is 6
years, according to the manual of private education
put out by the old DECS, w/c was subsequently
affirmed by the SC in Bilboso et.al. vs. Victorias
Milling 76 SCRA 250 (1977) and also in Bongcar vs.
NLRC 294 SCRA 538 (1998). There is a decided case
for teachers where the SC again reiterated the 6 yr.
probationary period that is St. Mary's University vs.
CA Mar. 8, 2005. And the ruling is to the effect that
the probationary period must be for full-time
teaching because the teachers here have taught for
4 years. Two of them, full time and the other two,
part time. The SC said it must be 3 yrs. of full time
service.
Will the part time teacher ever get regular status?
Judicial notice may be taken that contracts of
employment of part time teachers are generally per
semester or term basis, in the absence of specific
agreement on the period of the contract of
employment, it is presumed to be for a term or
semester basis. You cannot claim tenure if you are
part time.
There are two cases where the SC allowed a bona
fide extension of the probationary period. What are
those cases? Oceanic Division vs. Romero 130 SCRA
392 (1984) and Mariwasa Manufacturing vs.
Leogaro, Jr. 169 SCRA 465 (1989). Here, the
employee after being notified that he did not pass
the probationary period, he begged that he be
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given one more chance. So the probation was
extended for 3 more months. At the end of the
extension, he still did not meet the standards so he
was asked to leave. That’s when he filed an illegal
dismissal case. And that claim was anchored on the
last sentence of Art. 281 - An employee who is
allowed to work after a probationary period shall be
considered a regular employee. When there is a
bona fide agreement, in other words the employer
here is not being sinistered by unilaterally
extending the probationary period, it is upon the
request of the employee (and still the employee did
not measure up with the standards), then the last
sentence of Art. 281 does not apply.
Let me bring to your attention the landmark case of
probationary employment that is Cebu Royal Plant
vs. Deputy Minister 153 SCRA 38 (1984). This is a
story of a bottling plant assembly worker. Before
the expiration of the probationary period, the HR
reviewed his records and found out that this guy,
who's probationary period is about to end, has not
ran thru physical examination. So he was examined
and thereafter went back to work. The probationary
period lapsed. One or two days after its lapse, the
results of the medical examination came out. The
results revealed that he has problems w/ his lungs.
So he was told that he did not meet the standards.
What did he say? The last sentence of Art. 281 - An
employee who is allowed to work after a
probationary period shall be considered a regular
employee. So he filed an illegal dismissal suit. What
did the SC say? The burden lies on the employer to
prove that he did not meet the standards, because
he was made to work beyond the probationary
period. That means prima facie evidence that he
has complied w/ the standards. The employer says
the picture of his lungs is the same as that during
the probationary period. So even during the
probationary period, he has not complied w/ the
standards. Then the SC said, why did you not make
sure that he was informed of that during the
probationary period.
So for that you can see that the bias of the
Constitution and the Labor Code is for regular
tenure because of the guaranty of security of
tenure. That was the finding of the SC but the SC did
not order outright an equivalent reinstatement. The
SC said subject to successfully passing a medical test
by an examiner, he shall be admitted back to work.
Why did the SC say so? Because there are other
health laws w/c could ban this particular employee
from being employed in the business of preparation
of food. There are special laws. You cannot be
allowed even if you've been preparing it for 15
years. Kung masakiton diay ka, that is enough to
ban you from work by special laws. That is why the
SC here did not directly order a reinstatement.
Now, question: Do you have a right as a
probationary employee to the whole period of
probation? In other words, if the probationary
period is 6 months, pag-abot sa 3 months gi-duol
naka dayun ingnan ka we are sorry you cannot
continue to work with us anymore. Obviously, you
cannot apply the standards. Can you not argue? The
SC says no. The probationary employee does not
have the right for the full length of the probation
because the employer has the option to cut short
the probation if he already sees that the employee
cannot meet w/ the standards. He can cut short
the probationary period. That is from International
Catholic Migration vs. NLRC.
ART. 282. Termination by employer. - An employer
may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by
the employee of the lawful orders of his employer
or representative in connection with his work;
(b) Gross and habitual neglect by the employee of
his duties;
(c) Fraud or willful breach by the employee of the
trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the
employee against the person of his employer or any
immediate member of his family or his duly
authorized representatives; and
(e) Other causes analogous to the foregoing.
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Now, let me go to Art. 282 - Temination by the
employer. These are dismissals, the grounds for
dismissals. An employer may terminate an
employee's employment for any of the following
causes: a) serious misconduct or willful
disobedience by the employee of the lawful orders
of his employer or representative in connection w/
his work; b) Gross and habitual neglect by the
employee of his duties; c) Fraud or willful breach by
the employee of the trust reposed in him by his
employer or duly authorized representative; d)
Commission of a crime or offense by the employee
against the person of his employer or any
immediate member of his family or his duly
authorized representatives; and e) Other causes
analogous to the foregoing.
With respect to serious misconduct, there is a case
that is a favorite in the Bar Examination. That is the
case of Chua Qua vs. Clave 189 SCRA 117 (1990).
This is a school setting. There is a female teacher
who fell in love w/ a student, 14 years her junior.
The school found out about this and the school
expelled the teacher, dismissed the teacher. So the
teacher and the student eventually married. The
Labor Arbiter found that the dismissal is regular,
valid. The NLRC affirmed the dismissal as valid.
When it went to the SC, the SC overturned the
Labor Arbiter and the NLRC. The point of the
ponente, Justice Regalado, is that, first, there is no
evidence that in fact a serious misconduct of this
nature occurred in the school. Wa man cya na-
caught-in-the-act. Second, they eventually married.
So you cannot discount that they truly fell in love w/
each other despite the age difference. And then
Regalado has this quotation in his decision: The
heart has its reasons w/c reason itself does not
know.
“SERIOUS MISCONDUCT” It is conduct w/c is not
only wrong but shows a depravity on the part of the
perpetrator.
So what is serious misconduct? There are times that
the late Justice Enrique Fernando would say that
the court looks w/ compassion on the solitary
individual worker. So much so that if there is a
penalty less grave than dismissal, the capital
punishment in labor, that should be the one meted
out against the employee. As much as possible it
should not be dismissal because when you mete out
dismissal, you are not only penalizing the employee
but also his family. You must look w/ compassion on
the erring employee. So it became a practice that
when somebody is caught stealing, the Labor
Arbiter will find that dismissal is correct but the
Labor Arbiter would award financial assistance.
Because this employer will consider if this is the first
time he commits. So this was the practice. But,
In PLDT vs. NLRC 166 SCRA 422 (1988), the
employee here is a female telephone operator. She
learned of the need of her neighbor for a telephone
line. So she told her neighbor if you will come
across w/ some money, I will make sure that you
will get your line. Now the neighbor came across w/
money, but then the neighbor did not get the
telephone line. So the neighbor reported her to
PLDT and she was investigated and was found to
have received money and there was no telephone
line. So PLDT had her dismissed. She filed an illegal
dismissal complaint in the Dept. of Labor because
there's a union behind her. The decision of the
NLRC was, alright there is cause for her dismissal
but we uphold the Labor Arbiter for ordering
financial assistance. Why? Because of her more
than 15 years of service and she seemed to have
committed no other irregularity except this.
Therefore, she was given financial assistance. This is
when the SC said, the dismissal is correct because
there is substantial cause, there is serious
misconduct. And then the SC said, if there is serious
misconduct, no financial assistance can be granted.
How about the length of service? Is that considered
in favor of the employee? The SC says no, that is not
in favor of the employee. That is aggravating. If you
have served for so long that means that you have
gotten so much money from your employer and
your employer has been sustaining you and your
family's life. Therefore, you owe loyalty to your
employer. You should not have done it. That is
aggravating. So what is serious misconduct? It is
conduct w/c is not only wrong but shows a
depravity on the part of the perpetrator.
Remember that particular ruling that in cases of
serious misconduct, there can be no award for
financial assistance.
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“WILLFUL DISOBEDIENCE”
That is the case of BLTB vs. CA 71 SCRA 470 (1976).
Elements of willful disobedience:
a) there must be a lawful order;
b) the lawful order must have been
made known to the employee;
c) the lawful order must be in relation to the job of
the employee; and
d) there must be contumacious
disregard of the order.
So not only disobedience can severe your
employment but it is serious disobedience. So what
is the story of this BLTB. He is a conductor of a bus.
It was shown that he has accumulated cash
advances, and so he was investigated and was
suspended. He was warned not to do this again.
And if you will still do this again then you will be
dismissed. So he went back to service. After a few
months, he again took cash advances. So he was
investigated and dismissed. He filed an illegal
dismissal complaint. The SC said there is nothing
wrong in asking cash advances, the problem was
that he was given cash advances. The employer
must have ordered that he should not be given cash
advance. Second, it does not have bearing on the
peculiar duties of the bus conductor, not directly
related to his duties. Therefore, it does not fulfill
the requirements of Art. 282.
There is another case: Caraan vs. NLRC 227 SCRA 33
(1993). This is an example where the SC said that a
series of irregularities can be such that if
accumulated it become a serious misconduct. Now
there are certain workplaces where an offense may
be grievous but in another workplace, it is not
grievous. Like reporting to work under the influence
of alcohol. If you are a teacher in grade school then
you report to school drunk, that is a cause for
dismissal. But let's say you work in the docks, the SC
takes judicial notice that work in the docks
sometimes requires the workers to take in liquor to
be able to do the work. That's what the SC said. Kay
ang nahitabo ato nag-inom na sya, gipainom pa
gyud nila ug dugang nya wla na sya nakakita. Then
he claimed under the State Assurance Fund for
compensation for work-related death. Then the SC
said yes, it should be granted. Another type of work
is those who work in Cosmopolitan. Katong gakuha
ug patay. So it depends on the type of workplace.
Like in SMC Brewery. If you are caught w/ a whiff of
liquor, and you are in the brewery, you are out
immediately. Why? Because that is not just under
the influence of liquor in the work. That is
adulterating the process. The general rule is there
are certain offenses by themselves do not cause
dismissal, but if accumulated would cause
dismissal.
Like in the case of Caraan vs. NLRC, this is the case
of shortages. He is a conductor and he has been
found to have incurred shortages. When he was
investigated, it was found that it was his 12th time
to have committed shortage. So the rule was
applied to him. The series of irregularities when in
themselves are not sufficient to cause dismissal,
now in its cumulative aspect is a valid ground for
dismissal. He filed an illegal dismissal complaint.
The SC said it is not a valid cause, because this court
takes judicial notice that the job of a bus conductor
is statistically prone to shortages. The SC counted
the amount of shortages and it was found that it did
not exceed P20.00. The SC said it is not sufficient
because that work entails shortages. That is similar
to a teller in the bank. At some point or the other,
ma-short gyud ka. Di man ka makina, di man ka
robot. You are subject to other influences. If you
penalize shortages, the employee is negatively
reinforced. Do not penalize shortages and reward
non-shortages. That is the new trend now towards
meeting statistical necessities of shortcomings.
“GROSS AND HABITUAL NEGLECT BY THE
EMPLOYEE OF HIS DUTIES”
I told you about the accumulation of tardiness that
can result to gross and habitual neglect. And here
we have an issue w/ respect to managerial
employees w/c is loss of confidence as distinguished
from habitual neglect or serious misconduct. By
definition, managerial employees are employees to
whom trust and confidence are reposed. And that is
ground for their dismissal because of loss of
confidence.
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An example is the case of MGG Marine Service vs.
NLRC (1996). The employee here is the controller of
MGG. The top management left abroad but before
leaving they left instructions to the controller. Here
is the list of our bona fide obligations. Here is the
check book and it is pre-signed by the signatories.
The controller is not a signatory but she can release
the checks. The instructions are you can release
only payment to these accounts and payables and
nothing more because if you do our cash position
will be impaired. While she was in duty, there were
other accounts from big corporations. She took the
checks out and verified if they could generate and
put out w/ the accounts, and they were. She asked
if they were now due in payment and they were.
Some of them were even overdue. So she issues
payment to those w/c are not in the list, and by the
time the top management came back, there's no
more cash because she made more payments than
the instructions given. So take note that she did not
make wrong payments. They were payments to
bona fide payables and the payables are already
matured. But she was dismissed for lack of
confidence. The SC said that for a managerial
employee, the basis for dismissal is wider than that
of an ordinary employee. This controller may be
dismissed for loss of confidence.
Here is a loss of confidence case: Reyes vs. Phil.
Duplicators 109 SCRA 489 (1986). Reyes is the
manager of Phil. Duplicators, engaged in
mimeographing equipments (Gestetner). Reyes,
while still the manager, formed a group that sells
competing products. Just before he was about to
retire, he was informed by the board that he was
dismissed for betrayal of trust and confidence.
Why? Because he was directly engaged in selling a
product directly in competition w/ the product of
Phil. Duplicators. He filed a case for illegal dismissal.
And the SC upheld this illegal dismissal because he
was able to prove that as early as two years before
he started, the board already knew of his business
and they did not do anything. In other words, he
received a tacit approval by the board of his
business of selling a directly competitive product.
So if there is a conflict of interest situation and
management does not act upon it, the possible
effect is there is condonation. So later on it cannot
be invoked as a ground for dismissal due to loss of
confidence.
You should read China City Restaurant vs. NLRC 217
SCRA 443 (1993), where the SC gives additional
guidelines for the application of the doctrine of
loss of confidence:
a) loss of confidence should not be simulated;
b) it should not be used as subterfuge for
causes w/c are improper, illegal or unjustified;
c) loss of confidence may not be arbitrarily
asserted in the face of overwhelming evidence to
the contrary; and
d) it must be genuine, not a mere
afterthought, to justify earlier action taken in bad
faith.
“CONSTRUCTIVE DISMISSAL”
Constructive dismissal is an employee who is placed
by an employer in a position where continued
employment becomes intolerable, impossible or
impracticable, so that this employee is forced to
resign. He is not dismissed but the effect is it is as if
he was dismissed, so there is illegal dismissal. That
is constructive dismissal.
The landmark case is: de Leon vs. NLRC 100 SCRA
691 (1980). He was the V-Pres. and the Pres. of the
company suddenly approached him and told him to
have a vacation. When he came back, he no longer
has an office. He still has his secretary but he no
longer has any duty. And then he filed an illegal
dismissal complaint, for constructive dismissal. It
was the company who put him in a position such
that continued employment became intolerable. So
the manner of your dismissal is in bad faith,
capricious, malicious. Therefore, you ask for moral
damages. The SC upheld the dismissal as
constructive dismissal.
For willful breach, this can also be a subject of
criminal prosecution. Where an employee admits
guilt of committing the offense w/ w/c he is
charged, that takes the place of investigation, you
do not have to investigate anymore. If an employee
admits guilt, normally what is done is the direct
supervisor will write a letter to the employee,
directing him to explain in writing why you should
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not be severely disciplined and possibly dismissed.
If you deny guilt, there is investigation. What
happens if there is also a criminal investigation
because the wrongdoing also involves a criminal
liability? For instance the employer is charged w/
rape, do you still investigate? The answer is yes,
there is nothing that prevents you from
investigating. But suppose the fiscal dismisses the
case, can you still continue w/ the investigation?
Yes, you still can continue. But the investigation of
the employer w/c is only to pass the test of
substantial evidence, may obtain the medical
examination of the victim if in fact the rape was
committed. But there have been instances where
the SC has said that you cannot go on w/ the
investigation because the fiscal has already
investigated. That is the case where the fiscal has
conducted a thorough investigation of the case,
where the parties had the chance to air their issues.
Therefore the SC said there's no need to go w/ the
investigation. In another case the SC says that the
fiscal's investigation does not count especially if
there is failure to prosecute. So make sure you
know those kinds of differences.
-=o0o=-
ART. 283. Closure of establishment and reduction
of personnel. - The employer may also terminate
the employment of any employee due to the
installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or
cessation of operation of the establishment or
undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving
a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month
before the intended date thereof. In case of
termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations
of establishment or undertaking not due to serious
business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.
Article 283-- the so-called AUTHORIZED CAUSES.
Remember authorized causes results in
termination, unlike Art. 282, just causes result in
dismissal. The main difference is in dismissal, no
benefits, in termination there are benefits. Except
for one case in Art. 283 -- that is termination due
to closure occasioned by serious losses or financial
reverses-- all the rest have benefits.
Under the amended article, it now says "in case of
retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment
or undertaking not due to serious business losses
or financial reverses, the separation shall be
equivalent to one month pay or at least one-half
month pay for every year of service, whichever is
higher."
If it is due to serious losses or reverses, then there is
no longer any benefits. Because the SC says you
cannot extract blood from a stone. If the ER ceases
operations due to serious business loss, at one time
the SC said that there must be impairment of capital
in order for there to be serious business loss. That is
why the best evidence of serious business loss are
not pictures.. you are a banana grower and you
present a picture of your bananas because of the
bagyo.. tuuhan ba mo ana? That is NOT the best
evidence of loss. The best evidence are AUDITED
FINANCIAL STATEMENTS.
Now you know very well that financial statements
are products of your employees.. so when is it
believable? It is believable if it is audited because
there is a third party who certifies that the financial
statement is an accurate and true representation of
the financial story of the company. If it is not
certified, it remains an allegation.. but if a CPA puts
down his name and certifies it unqualifiedly, then it
has greater probative value.
WHAT ARE THE AUTHORIZED CAUSES:
1. Retrenchment (loss, but not serious loss),
2. retrenchment to avoid losses,
3. installation of labor saving devices,
4. redundancy.
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I. “RETRENCHMENT”
If it is to prevent loss then the termination benefit
is one month salary or one half month salary for
every year of service whichever is higher. A
fraction of at least 6 months shall be considered
one year.
So if the loss has not yet occurred, it is one month
for every year of service. So if you have just served
for one week and the other has served for one
month, your termination benefit is the same
because the lowest benefit is one month.
Now if there is loss that is being sustained, what is
the benefit? The benefit is one month or one half
month salary for every year of service whichever is
higher. So if you have served only for one year? One
month because that is greater. Two years ka, pila
man na? One month lang gihapon kay one half
month man for every year of service. Pagbantay mo
ana ha.. kay balaod na.
 Requisites for Retrenchment (loss but not
serious loss) (Banana Growers case)
(a) the retrenchment is necessary to prevent losses
and such losses are proven;
(b) written notice to the employees and to the
Department of Labor and Employment at least one
month prior to the intended date of retrenchment,
and
(c) payment of separation pay equivalent to one
month pay or at least one-half (1/2) month's pay for
every year of service, whichever is higher.
 Requirements for retrenchment to avoid
loss (Uichico case)
1. The losses expected and sought to be avoided
must be substantial and not merely de minimis in
extent;
2. The substantial losses apprehended must be
reasonably imminent, as such imminence can be
perceived objectively and in good faith by the
employer;
3. The retrenchment must be reasonably necessary
and likely to effectively prevent the expected losses.
4. The alleged losses, if already realized, and the
expected imminent losses sought to be forestalled,
must be proved by sufficient and convincing
evidence.
5. There must be an objective criterion.
II. “LABOR SAVINGS DEVICES”
You computerize, therefore half of your finance
section has to resign because you are using
computers now. You have to pay them separation
pay. LSD means there is no loss, you are in fact
saving, therefore the benefit is one month salary or
one half month salary for every year of service
whichever is greater.
III. “REDUNDANCY”- When does this occur.. that is
the Wiltshire case. Unsa man imong trabaho?
Telephone operator.. karon naay bag-ong
installation, direct dialing. Mugamit kag operator
kay mas mahal man. So you are asked to go kay you
are redundant.
Wiltshire is very telling.. the SC said that a position
is redundant if it is superfluous and superfluity of a
position or positions may be the outcome of a
number of factors, such as over-hiring of workers,
decreased volume of business, or dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise.
Redundancy termination is based on the truism
that the employer has no legal obligation to keep
in his payroll more employees than are necessary
for his operation of his business.
So over-hiring can be a cause of redundancy ha.. so
there need not be a change in the sales figures;
there need not be a change in demand.. the defect
is in the over hiring.
Now, is the employer obligated to follow the FILO
(First In Last Out) rule in redundancy or in
retrenchment? FILO is a labor term. Accdg. to the
SC, there is NO such rule. The rule that is accepted
is the exigencies of the business of the ER.. what
kind of personnel does he have? For as long as
there is an objective criterion in the determination
of who will be first terminated, then it is a valid
exercise of managerial prerogative. But if you base
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the termination on exercise of self organization--
those who are most active in the union-- then that
is wrong. All that the law requires is an objective
basis which does not have to be FILO.
An ER has a much wider discretion in terminating
the employment of manegerial personnel compared
to rank-and-file EEs.
So many times the SC has said that when an ER
starts wavering in the cause of the termination for
example karon kay retrenchment then labor saving
devices then loss of confidence, then that is a mark
of illegal termintion. The SC will say that all these
causes are mere afterthoughts to justify the
extravagant, whimsical, malicious, malevolent
exercise of managerial prerogative. If you are not
consistent as to the cause, that is a mark.
Now, does 283 contain all the causes of
termination? Of course not. There are other
causes.. like Art. 284-- disease is a ground for
termination. Remember disease can be physical
and/or mental.
ART. 284. Disease as ground for termination. - An
employer may terminate the services of an
employee who has been found to be suffering from
any disease and whose continued employment is
prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least
one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is
greater, a fraction of at least six (6) months being
considered as one (1) whole year.
And what must be satisfied before you can
terminate somebody on the ground of disease?
a. there must be a certification by a public health
officer that your disease cannot be cured w/ rest
and medication for six months. So you must be
given a leave of 6 months. If at the end of 6 months
you are still not cured, then there must be a
certification from a public health officer.
b. Notice of termination based on this ground
should be served both to the EE and the DOLE at
least 30 days from effectivity of termination;
c. separation pay should be paid to him in the
amount equivalent to at least one month salary or
1/2 month salary for every year of service
whichever is greater.
But TAKE NOTE that the SC has said that the
termination pay is ONE MONTH SALARY FOR EVERY
YEAR OF SERVICE and NOT 1/2 month.
Now let me just point out that there are other
grounds for DISMISSAL in addition to Art.
282.(which are not found in the Labor Code).
1. Sexual harassment has been accepted by
the SC as a ground for dismissal;
2. Sec. 66 of the Omnibus Election Code with
respect to EEs in GOCCs. What is that? If you file a
certificate of candidacy, you are ipso facto deemed
resigned.
Now, how about a private ER who says I have this
policy, if any of you will file a COC, you are also
deemed ipso facto resigned.. is that valid? In one
case, the SC upheld that policy. CF: Mla.
Broadcasting Co. vs. NLRC (1998).
Now let me bring to your attention two new cases
which are controversial but have not been asked in
the Bar Exams but will have to be soon.
1. Duncan vs. Glaxxo Sept. 17, 2004
Facts: In the handbook of Glaxxo-- remember I told
you normally, in big corporations the employment
contract is made up of three parts: the
appointment, which gives you the salary, the person
to whom you are reporting. Second, there is the job
description. Finally, the blue book or handbook of
the company which covers everyone.
So there is this rule in the handbook of the
company, an EE is expected to inform mgt of any
existing or future relationship by consanguinity or
affinity with employees of competing drug
companies. So this is the non-competition clause of
the company. So in event of such relation, the mgt
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and the ee will explore the possibility of a transfer
or preparation for employment outside the
company after six months.
Held: SC says there is no violation of the equal
protection clause, because this is a mandate that
the STATE has to comply with and NOT ER. Second,
it is clear that Glaxxo does not impose an absolute
prohibition on the entering into relationships of
their ee's with those of their competitor's ee's. But
what Glaxxo seeks to avoid is conflict of interest
between the ee's. And that is valid. Third, there is
no constructive dismissal. The company gave
Tecson several chances to eliminate the conflict of
interest, hence there is no bad faith.
2. Star Paper Co. vs. Ronaldo Simbol et.al.
Issue: W/N the policy of Star banning spouses from
working in the same company violate the rights of
EEs under the Consti and the LC, or is it a valid
exercise of a managerial prerogative
Held: It is invalid. The mere fact that this rule exists
is arbitrary.. it is only enforceable if there is a clear
and specific conflict of interest. If it is just general,
then that is not enough. There must be this
circumstance of actual conflict of interest before
this rule can be enforced.
In the recent case of Duncan Association of
Detailman-PTGWO and Pedro Tecson v. Glaxo
Wellcome Philippines, Inc., we passed on the
validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees
of any competitor company. We held that Glaxo has
a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other
confidential programs and information from
competitors. We considered the prohibition against
personal or marital relationships with employees of
competitor companies upon Glaxo’s employees
reasonable under the circumstances because
relationships of that nature might compromise the
interests of Glaxo. In laying down the assailed
company policy, we recognized that Glaxo only aims
to protect its interests against the possibility that a
competitor company will gain access to its secrets
and procedures.
The cases of Duncan and PT&T instruct us that the
requirement of reasonableness must be clearly
established to uphold the questioned employment
policy. The employer has the burden to prove the
existence of a reasonable business necessity. The
burden was successfully discharged in Duncan but
not in this case.
Because the wife is not supervised by the husband
in actual work setting, nor the husband supervised
by the wife. Here there was no showing of danger
of loss to the company in their of trade secrets, or
strategies. So you read these cases because these
are additional causes for termination. These are not
found in Art. 282 or 283.
Remember that if it is just cause, there is a more
elaborate procedure. It is outlined in Art. 277 B. If
it is culpability, and it results to dismissal, then the
procedure is subject to the constitutional rights of
workers to security of tenure -- "the right to be
protected against dismissal except for just and
authorized cause and without prejudice to the
requirement of notice under Art. 283, the ER shall
furnish the EE whose employment is sought to be
termiinated a written notice containing a
statement of the causes for termination. "
So you must be informed in writing. It is the same
requirement as an information. The recitation of
facts in an information in a criminal case must be
such as to apprise the accused of the crime of which
he is charged so as to enable him to make his
defense. So if you just put that "you are under
investigation for being bad, really bad.." there is no
recitation of positive acts or omissions.
Do you need to specify or characterize whether it is
serious or casual? No. There is no need to specify
but there must be a recitation of facts. So that is the
first notice.
Then you are subjected to an investigation. During
that investigation, the EE can bring a lawyer or a
representative to help him.. he must be given
opportunity to air his side. Can he ask for a
postponement? Yes, because it says here "he must
be given ample opportunity to be heard and to
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defend himself with the assistance of his
representative if he so desires in accordance with
company rules and regulations.."
Q: Does he have the right to cross examine?
A: No, because the right to confrontation is
available only in criminal cases. The State is not
the one who is suing.
Now suppose he (EE) brings a lawyer and the ones
investigating are non lawyers, and the lawyer is
shouting.. ahh NO. The investigating body can say
okay, you have your lawyer, you can seek the advise
of your lawyer before you answer any question, but
your lawyer cannot say anything to this body. If he
wants to say something, he writes his question in a
piece of paper and gives it to the investigating body.
The investigation must be under the control of the
investigating body. That is the procedure in the
Labor Code. Who controls the investigation, it is the
management. Is it required that there be an EE that
will make up part of the investigating panel? No. It
is the ER that investigates and metes out the
penalty. Why is this so? Because this investigation is
for the benefit of the ER. The fact finding is for the
benefit of the ER, whether or not he will do away
with the services of his EE justly, correctly, validly.
so he must have the proof. And it only the lowest
quantum of proof that is required: only
SUBSTANTIAL EVIDENCE.
So, during the investigation (which is SUMMARY IN
NATURE) there need not be any confrontation.. So
the investigating body will decide. After they have
decided, the respondent is sent a copy of the results
of the investigation which contains two parts:
findings of fact and recommendation because the
investigating body recommends to the general
manager who acts in behalf of the ER. The ER is
normally a juridical corporation.. So the general
manager will write you the second time whether he
adopts in toto, or partially, the recommendation of
the investigating body. That's the second written
notice.
Rufi vs. NLRC says there must always be two
written notices. So that is the TWO NOTICE RULE.
That is different from Justice Fernando's twin
requirements for a valid dismissal, to wit: there
must be substantial cause or real ground, and
second the procedure must have been followed.
So there is no right of cross examination (Ravago vs.
NLRC 200 SCRA 158, 1991)
What is the meaning of ample opportunity to be
heard (Rufi vs. NLRC 1990)
Does an admission of guilt in writing by an EE
make the requirement of an investigation
unnecessary? There are two cases here:
1. Yes, no longer necessary (PAL vs. NLRC 1991)
2. No, it is still necessary (PAMELCO vs. NLRC 215
Scra 669)
Why the difference? Because in PAMELCO, they
made the accused EE admit right there and there.
He was pressured, that's why there is still a need for
an investigation. If it is in his own volition, then
there is no longer any need for an investigation..you
will only have to decide what punishment, whether
suspension or dismissal.
Suppose it is the wife who writes.. "sir pasayloa
tawon akong bana kay natintal...". Is that
admissible? Remember that the admission is NOT
admissible because you cannot admit for
somebody. An admission is personal. You can use
the testimony as evidence because this is not
covered by the technical rules of evidence. CF Art.
221--"technical rules not binding." If you look at this
pwede hear say evidence-- reasonably of course. So
you can use that as proof but you cannot use that to
do away with the investigation.
Now, please remember that that is the procedure
for JUST CAUSE.
But if it AUTHORIZED cause, what is the
procedure? You give notice (one month prior to
termination).What is the purpose of the one month
period is if the EEs want, they can question before
the DOLE the ground for the invocation of the
termination.
What can the Secretary of Labor do? Art. 277 B,
"The Sec. of DOLE may suspend the effects of the
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termination pending the resolution of the dispute in
the event of a prima facie finding by the
appropriate official of the DOLE before whom such
dispute is pending that the termination may cause a
serious labor dispute or is in implementation of a
mass lay-off".
Can you do away with that one month? NO. That is
mandatory. [CF: Serrano vs. NLRC 331 SCRA ; 2000
case]. What is the rule if you violate that? Before, in
Serrano, it was full backwages. Now that has been
changed.. it is no longer full back wages, it is only
fine. The termination is still legal but the ER is fined
(Between 30,000 and 50,000).
Note that the fine is higher if you do away with the
[procedure in] termination than if you do away with
the procedure in dismissal. Why? [Cf: Agabon and
Agabon vs. NLRC, Nov. 2004]
Four possible situations in dismissal/termination:
1. the dismissal is for a just cause (Art. 282) or for
an authorized cause (Art. 283);or for health reasons
and due process was observed;
2. dismissal is without just or authorized cause but
due process was observed;
3. the dismissal is without just or authorized cause
and there was no due process; and
4. the dismissal is for just or authorized cause but
due process was not observed.
The only true dismissal according to law is with just
and authorized cause and due process was
observed. If due process alone is lacking and it is
for just cause, then the ER is merely fined 20,000
pesos.
If it is termination if the procedure is not followed,
then the fine is 30,000 and above. Why? Because
the EE is deprived of his benefits. Therefore the fine
is higher. That is the reasoning in this case.
-=o0o=-
BENEFITS:
1. reinstatement
2. full back wages (Art. 279)
3. separation benefits
4. damages
a. moral
b. exemplary
REINSTATEMENT
Remember under Art. 217, 218, 233, 3rd par. 223
(appeals) "in any event the decision of the LA
reinstating a dismissed or separated EE in so far as
reinstatement aspect is concerned shall be
immediately executory even if pending appeal."
So even in ER appeals to NLRC, pending that appeal
of the decision by the LA that you have been
illegally dismissed, the EE is reinstated. The ER has a
choice: "The EE shall either be admitted back to
work under the same terms and conditions
prevailing prior to his dismissal or separation, or, at
the option of the ER, merely reinstated in the
payroll. The posting of a bond by the ER shall not
stay the execution for reinstatement provided
herein."
So:
1. Actual reinstatement
2. Payroll reinstatement
Suppose LA rules that the dismissal is valid, and the
EE appeals. NLRC reverses LA's decision, is there
payroll or actual reinstatement because ER wants to
go to the CA? No, only on the LA level.
Remember that this reinstatement is automatically
executory, it does not require a motion for
execution. How can that be? This is how it is
accomplished: EE goes to the ER, report na ko for
work. ER says actual reinstatement or payroll
reinstatement. If the ER does not make any
decision, the EE who has received the judgment
should file with the LA a motion to hold the ER in
contempt.
Are there instances where it had gotten to the
NLRC or SC where the final and executory decision
is reinstatement and it is not followed? Yes. In
these instances, instead of reinstatement, what is
awarded is separation pay.
1. ER has shut down, so asa pa ka i-reinstate?
2. your position has been abolished
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3. you have reached retirement age during the
proceedings;
4. animosity between ER-EE, and the EE holds a
position of trust and confidence.
FULL BACK WAGES [Cf: Equitable Banking Co. vs.
Sarat 2006 case]
The rule in back wages is found in Art. 279 "xxx An
ee who is unjustly dismissed from work shall be
entitled to reinstatement without full loss of
seniority right and other privileges and to his FULL
BACKWAGES, inclusive of allowances, and his other
benefits or their monetary equivalent computed
from the time his compensation was withheld from
him upto his actual reinstatement."
Allowances: there is the PICOP case where this
managerial ee used to receive hazard pay and
transportation allowance. When they were found to
have been illegally dismissed, they were adjudged
back wages. They claim they should be paid their
transportation allowance and their hazard pay
allowance together with their regular allowance.
The SC said that you were transferred from PICOP
to Makati.. what are the hazards in makati? These
allowances therefore are not fixed and
unconditional, so they are not part of
compensation. You are not entitled to this. But the
transportation allowance, you are entitled to that
because that is paid to you every time you are paid
your salary.
The rule therefore is you are entitled only those
allowances that are granted to you
unconditionally.
PALEA VS. PAL case. If you've served for a certain
period of time, you are entitled to free ticket
passes. They are granted to you NRSS -- NON
REVENUE SUBJECT TO SALES (?). Maghuwat huwat
ka ba, mangita kag flight na dili kaayo puno. So
when they were found to be illegally dismissed,
they also claimed that these tickets should be given
to them. SC said NO, these are not given
unconditionally, you apply for these tickets.
DURABuild Tree cutting case (?))-- illegally
dismissed sila, they're asking for their full back
wages, their entire full pay. But then the ER
manifested to the court that during the time the
case was pending, the company went through
energy conservation measures and did not have a
full work week. They only had four days of work per
week. So SC said they should only be paid to the
maximum of the energy conservation work week
schedule.
So when you say full back wages (Equitable case)
and it stretches for 15 years, before full back wages
means that we will compute your wages from the
time you were dismissed and we will add the
regular anniversary increases that are given to all
workers.
But now, the decision is the regular adjustment
pay are no longer included. Read this case because
it gives you the history of full back wages.
Mercury drug vs. CIR 155 Phil 636, 1974 -- see
concurring opinion of Teehankee. 3 years max ang
full back wages.
Pine City Educ vs. NLRC (1993) -- Full backwages ulit
minus the wages you have already earned
Bustamante vs. NLRC
Equitable case-- so ito na talaga ang totoo! Basta
read this because this is not in Azucena nor in Chan
SEPARATION PAY
Remember if you reach the age of retirement, you
also get retirement benefits;
And if you cannot be reinstated, can you be entitled
to retirement and separation benefits? SC says, YES.
Remember:
1. dismissal- just cause- no separation benefits.
2. Termination- authorized cause - separation
benefits
3. No reinstatement - illegal dismissal finding --
separation benefits in lieu of reinstatement
DAMAGES
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Awarded if the manner of dismissal is whimsical,
capricious, malevolent, in bad faith because that is
how you are entitled to damages. Memorize the
qualifiers found in the CC.
Let me tell you that the prescriptive period for
money claims is 3 years. Prescriptive period for
illegal dismissal is four years.. it is by decision in
Vallanta vs. NLRC, it is not found in the LC.
Issue: When does the right of action toll?
This issue arose in the case of BLTBC vs. PNR: The
driver of a bus nabanggaan sa train. Pagkaigo nya sa
train, nagkaso kay 18 man patay tapos 15 plus ang
injured. So the company sued the Phil. National
Railway. And wonder of wonders PNR was the one
adjudged at fault. (CF: LUZSTEVECO case)
So the case took mga 4-5 years, and in the
meantime, the driver was suspended kay gikuha
man iyang lisensya. So the decision came out, so the
driver went back to BLTB kay mudrive lagi syag
balik.. sus wala man sya dawata (haskang
kabisaya!). Nifile sya ug illegal dismissal.
BLTB said prescribed na na dong! Ang imong right of
action nag-accrue ato pang 1980, the time atong
bangga. Karon 1987 na!
SC said that it did not accrue at the time of the
accident.. why? They gave the three requisites
when a cause of action accrues:
1. there is a right by the plaintiff;
2. there is a corresponding obligation on the part
of the respondent
3. the respondent fails to do something or
commits an act which transgresses the right of the
plaintiff.
So kadtong pag-accidente, the respondent who is
the ER, did not do anything to transgress the right
of the EE. The EE has a right of tenure. In fact they
were together in suing PNR. Pagkadaog na, that was
the time BLTBC transgressed the driver's right so
that was when the action accrued. Principle of
Proportionality: Penalty must be proportional to
the offense committed (PAL vs. PALEA 57 SCRA;
1974)
Answers to the Labor and Social Legislation Bar
Exams 2006 – as discussed by Fr. Gus Nazareno
I. 1. What is the purpose of labor legislation?
(2.5%)
The purpose is no different from the
purpose of the social justice thrust. So you must
begin your answer this way: In the words of Chief
Justice Enrique Fernando, capital and labor do not
stand on equal ground. It is labor that is at
disadvantaged. To correct this imbalance there is
labor legislation so that labor will attain some
equality in dealing with capital. This is the same
purpose as social justice. Social justice is in the
Constitution to correct the basic fundamental
defect in our society.
2. What is the concept of liberal approach
in interpreting the Labor Code and its
Implementing Rules and Regulations in favor of
labor? (2.5%)
The concept of this particular rule in
interpreting the Labor Code is no different from
interpreting any piece of labor legislation. So first
there must be labor legislation. Second, there is an
ambiguity. And the ambiguity could either be
textual or factual. And the particular provision
involved is open to not just one interpretation but
more than one. In that case, the trier of facts, even
the Supreme Court, is mandated to choose the
interpretation which is in favor of labor. Given the
concept, you give the elements.
3. What property right is conferred upon
an employee once there is an employer-employee
relationship? Discuss briefly. (5%)
It is the same property right as that of
capital with respect to property. It is a property
right covered by the General Welfare Clause of the
Bill of Rights. So that just like a capitalist who
cannot be deprived of property without due process
of law, a laborer cannot be deprived of his right for
living without due process of law. However, labor,
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now, is not just a property right. It is a protected
right because the object of the Constitution is to
command the legislature to pass laws to grant more
rights to labor because the laborer has less in life. It
is not just a property right. It is also a protected
right. You can bring out this discussion. Remember
I told you that labor as a property right is a concept
from Roman Law Society where everybody is
presumed of equal footing. There is no
disadvantaged sector of the society. So, now in the
Constitution, that is changed.
II. Wonder Travel and Tours Agency (WTTA) is
a well-know travel agency and an authorized sales
agent of the Philippine Airlines. Since majority of
its passengers are overseas workers, WTTA applied
for a license of recruitment and placement
activities. It stated in its application that its
purpose is not for profit but to help Filipinos find
employment abroad. Should the application be
approved? (5%)
You know very well that there is a specific
provision in the Labor Code. Those engaged in
travel agencies are not eligible to be granted a
license or permit to place or recruit workers for
overseas whether for profit or not. If you can
remember the specific article, you say under Article
26. If you cannot remember, you say under the
Labor Code. That’s normally the answer.
III. Can the overseas worker refuse to remit
his earnings to his dependents and deposit the
same in the country where he works to gain more
interests? Explain. (5%)
Answer again is in the Labor Code. If you
want to be specific, Article 22. If you cannot
remember, you say under the Labor Code, no
overseas employee can depart without first opening
an account to which he will remit a fixed percentage
of his earnings because it is required by law to make
a mandatory remittance of his earnings.
IV. For humanitarian reasons, a bank hired
several handicapped workers to count and sort out
currencies. Their employment contract was for six
(6) months. The bank terminated their
employment on the ground that their contract has
expired prompting them to file with the Labor
Arbiter a complaint for illegal dismissal. Will their
action prosper? (5%)
Now, we took up in Book Two that there
are several exceptions to the minimum wage. If you
are in a learnership program or an apprenticeship
program or a handicapped program and that
program is approved by TESDA, then you can pay
less than the minimum wage but in no case less
than 75% than the minimum wage. That is what we
took up. Now, they give you this classification of
handicapped workers but then they asked you
about tenure. That is an old trick. They give a
classification that is related to labor standards. But
then they ask you about security of tenure.
Of course, they cannot be terminated
because being handicapped has nothing to do with
tenure. So, you will later on find out that under
Article 280 that what determines tenure, regularity
of employment, is whether or not the activity you
are engaged to perform are usual to the usual trade
or business, if it is usual or necessary to the usual
trade or business.
What is the trade of the employer, the
bank? It is handling cash. Counting bills is usual
and necessary to the bank. If you are engaged to
perform that activity, regardless of oral or written
contract to the contrary notwithstanding, you are
regular. That is the rule. You can say that the
handicapped workers cannot be terminated unless
there is just and authorized cause, which in this
case does not exist. Therefore, their action will
prosper. Remember the decided case which is
Bernardo vs. NLRC (310 S 126), Far East Bank hiring
deaf-mutes and blind workers.
V. Can an employer and an employee enter
into an agreement reducing or increasing the
minimum percentage provided for night
differential pay, overtime pay and premium pay?
(5%)
Reducing or increasing and covering three
types of pay. The first type of pay mentioned is
inaccurate because it is not night differential pay.
What is it? It is night shift differential pay. Why is it
important to be accurate? Because it is not denied
that it is determinative of the pay difference.. It is
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the night shift, which is from 10 to 6. That is 8
hours, that is a shift. Kung mag trabaho ka 9:00 na
sa gabii, you are not entitled. What does the law
say? What is the night shift differential pay? It is at
least 10%. It does not say 10%. It says at least 10%.
It is open to amendment. You can lower it, you can
increase it, as long as you do not go below than
10%.
Overtime pay and premium pay. So, as a
general rule, an employer and an employee can
enter into an agreement which may increase night
shift differential pay, overtime pay and premium
pay that is provided for in the Law. But it is
contrary to public policy for an employer and an
employee to enter into agreement reducing the
minimum rates provided for in Labor Standards.
The agreement is void and the employee is not
precluded from later on filing money claims for
underpayment of wages even if he has entered into
an agreement. This is the complete answer to V.
VI. 1. When is there a wage distortion?
So, Article 124. You see now, when I told
you about the elements of wage distortion, there is
a hierarchy of wages based upon different
experiences, qualifications, skills. Second, there is a
mandatory wage increase or adjustment of
minimum wage. Third, it does not apply to all the
groups in the hierarchy but only to one. So that it
results in reduction or elimination of the
differences. And fourth, additional requirement
under the Prudential Bank case, is that this
reduction of difference must occur within the same
region.
2. How should a wage distortion be
settled?
Again, still 124. If there is no CBA, then the
employees and employer shall meet to adjust and
the National Reconciliation Board (paki-verify) can
be called upon or by its own volition mediate
between the two parties. If there is no result the
aggrieved party may bring the action to the
appropriate branch of the NLRC, labor arbiter. If
there is a collective bargaining agreement, then the
issue of wage distortion is taken up as a grievance
and it follows the grievance procedure. We will
take up grievance later on in third year, Labor
Relations.
3. Can the issue of wage distortion be
raised in a notice of strike? Explain. (10%)
This is now partly labor relations. Decided
case, IBM(Ilaw at Buklod ng Manggagawa) of San
Miguel vs. NLRC (June 27, 1992). Supreme Court
said wage distortion cannot be a ground for
dismissal. Why? Because Article 124 of the Labor
Code provides for the procedure, the method for
resolving the particular dispute. Thereby setting
aside or eliminating a strike as a method of
resolving the dispute. So, you have to comply with
124. That is basically, the rest are labor relations
and termination law.
XIV. Determine whether the following minors
should be prohibited from being hired and from
performing their respective duties indicated
hereunder: (5%)
1. A 17-year old boy working as a miner at the
Walwaldi Mining Corporation.
Now, he is a minor because he is below 18.
Mining corporations are considered as hazardous
and minors cannot be allowed to work.
2. An 11-year old boy who is an accomplished
singer and performer in the different parts of the
country.
He cannot be prohibited, provided the
following conditions are met. The conditions are as
provided by special laws, RA 7610 as amended by
RA 7650, the law against exploitation and abuse of
minors. What does it say? If you will engage a
minor as a performer in the performing arts, the
minor must be covered by a written agreement.
Who signs the written agreement? The parents and
the consent of the minor is also obtained and an
intervention of an official from the Department of
Labor. The contract must provide that the formal
education of the boy concerned must not be
sacrificed. Second, he must not be placed in
hazardous situations or situations where he might
be endangered as to his morals. And in no case,
shall the written agreement undertake to make him
perform as a model or endorser of alcoholic
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products or products involving tobacco. Nor make
him participate in acts involving violence. Those are
the requisites of RA 7610.
3. A 15-year old girl working as a library
assistant in a girls’ high school.
This cannot be prevented because this is
not a labor contract. If you are a scholar in a school,
take a look at the Implementing Rules, they are not
covered. If you work part time in exchange for free
tuition that is not an employer-employee
relationship. That is outside the jurisdiction of Labor
Standards.
4. A 16-year old girl working as a model
promoting alcoholic beverages.
Of course, they are not allowed. They
cannot endorse.
5. A 17-year old boy working as a dealer in a
casino.
Of course, you cannot because that
endangers his morals. Gambling.
XV. As a condition for her employment,
Josephine signed an agreement with her employer
that she will not get married, otherwise, she will
be considered resigned or separated from the
service.
Josephine got married. She then asked
Owen, the personnel manager, if the company can
reconsider the agreement. He told Josephine he
can do something about it, insinuating some
sexual favors. She complained to higher
authorities but to no avail. She hires you as her
counsel. What action or actions will you take?
Explain. (5%)
Under the Labor Code, the provision is
Article 136, stipulation against marriage. The
agreement by which Josephine undertakes not to
be married is void because it is prohibited under the
Labor Code. Simple, in one sentence, you dismiss it.
Second, insinuation of sexual favors is a
violation of the Anti-Sexual Harassment Law, RA
7377. So, an action may be filed against the
personnel manager for making those sexual
advances and against the employer for making
Josephine sign an illegal stipulation against
marriage and for not acting on her complaint of
sexual harassment. The employer under RA 7377 is
solidarily liable with the personnel manager for
damages arising from the sexual harassment. So
you implead also the employer, not just the
personal manager.
IMPLEMENTING RULES PD 851
By virtue of the powers vested in me by law, the
following rules and regulations implementing
Presidential Decree No. 851 are hereby issued for
the guidance of all concerned.
Section 1. Payment of 13th-month Pay. - All
employers covered by Presidential Decree No. 851,
hereinafter referred to as the "Decree", shall pay to
all their employees receiving a basic salary of not
more than P1,000 a month a thirteenth-month pay
not later than December 24 of every year.
Sec. 2. Definition of certain terms. - As used in this
issuance:
(a) "Thirteenth-month pay" shall mean one twelfth
(1/12) of the basic salary of an employee within a
calendar year;
(b) "Basic salary" shall include all remunerations or
earnings paid by an employer to an employee for
services rendered but may not include cost-of-living
allowances granted pursuant to Presidential Decree
No. 525 or Letter of Instructions No. 174, profit-
sharing payments, and all allowances and monetary
benefits which are not considered or integrated as
part of the regular or basic salary of the employee
at the time of the promulgation of the Decree on
December 16, 1975.
Sec. 3. Employers covered. - The Decree shall apply
to all employers except to:
(a) Distressed employers, such as (1) those which
are currently incurring substantial losses or (2) in
the case of non-profit institutions and
organizations, where their income, whether from
donations, contributions, grants and other earnings
from any source, has consistently declined by more
than forty (40%) percent of their normal income for
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the last two (2) years, subject to the provision of
Section 7 of this issuance;
(b) The Government and any of its political
subdivisions, including government-owned and
controlled corporations, except those corporations
operating essentially as private subsidiaries of the
Government;
(c) Employers already paying their employees 13-
month pay or more in a calendar year or its
equivalent at the time of this issuance;
(d) Employers of household helpers and persons in
the personal service of another in relation to such
workers; and
(e) Employers of those who are paid on purely
commission, boundary, or task basis, and those who
are paid a fixed amount for performing a 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 be covered by this issuance insofar as such
workers are concerned.
As used herein, workers paid on piece-rate basis
shall refer to 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.
The term "its equivalent" as used in paragraph c)
hereof shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12th of the
basic salary but shall not include cash and stock
dividends, cost of living allowances and all other
allowances regularly enjoyed by the employee, as
well as non-monetary benefits. Where an employer
pays less than 1/12th of the employees basic salary,
the employer shall pay the difference.
Sec. 4. Employees covered. - Except as provided in
Section 3 of this issuance, all employees of covered
employers shall be entitled to benefit provided
under the Decree who are receiving not more than
P1,000 a month, regardless of their position,
designation or employment status, and irrespective
of the method by which their wages are paid,
provided that they have worked for at least one
month during the calendar year.
Sec. 5. Option of covered employers. - A covered
employer may pay one-half of the 13th-month pay
required by the Decree before the opening of the
regular school year and the other half on or before
the 24th day of December of every year.
In any establishment where a union has been
recognized or certified as the collective bargaining
agent of the employees therein, the periodicity or
frequency of payment of the 13th-month pay may
be the subject of agreement.
Nothing herein shall prevent employers from giving
the benefits provided in the Decree to their
employees who are receiving more than One
Thousand (P1,000) Pesos a month or benefits higher
than those provided by the Decree.
Sec. 6. Special feature of benefit. - The benefits
granted under this issuance shall not be credited as
part of the regular wage of the employees for
purposes of determining overtime and premium
pay, fringe benefits, as well as premium
contributions to the State Insurance Fund, social
security, medicare and private welfare and
retirement plans.
Sec. 7. Exemption of Distressed employers. -
Distressed employers shall qualify for exemption
from the requirement of the Decree upon prior
authorization by the Secretary of Labor. Petitions
for exemptions may be filed within the nearest
regional office having jurisdiction over the employer
not later than January 15, 1976. The regional offices
shall transmit the petitions to the Secretary of Labor
within 24 hours from receipt thereof.
Sec. 8. Report of compliance. - Every covered
employer shall make a report of his compliance
with the Decree to the nearest regional labor office
not later than January 15 of each year.
The report shall conform substantially with the
following form:
REPORT ON COMPLIANCE WITH P.D. NO. 851
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1. Name of establishment
2. Address
3. Principal product or business
4. Total employment
5. Total number of workers benefited
6. Amount granted per employee
7. Total amount of benefits granted
8. Name, position and tel. no. of person giving
information
Sec. 9. Adjudication of claims. - Non-payment of the
thirteenth-month pay provided by the Decree and
these rules shall be treated as money claims cases
and shall be processed in accordance with the Rules
Implementing the Labor Code of the Philippines and
the Rules of the National Labor Relations
Commission.
Sec. 10. Prohibition against reduction or elimination
of
benefits. - Nothing herein shall be construed to
authorize any employer to eliminate, or diminish in
any way, supplements, or other employee benefits
or favorable practice being enjoyed by the
employee at the time of promulgation of this
issuance.
Sec. 11. Transitory Provision. - These rules and
regulations shall take effect immediately and for
purposes of the 13th-month pay for 1975, the same
shall apply only to those who are employees as of
December 16, 1975
ANNEXES OF CASES:
LUZ LUMANTA vs. NATIONAL LABOR RELATIONS
COMMISSION and FOOD TERMINAL, INC.
FACTS: On 20 March 1987, petitioner Luz Lumanta,
joined by 54 other retrenched employees, filed a
complaint for unpaid retrenchment or separation
pay against private respondent Food Terminal, Inc.
("FTI") with the Department of Labor and
Employment.
Private respondent FTI moved to dismiss the
complaint on the ground of lack of jurisdiction. It
argued that being a government-owned and
controlled corporation, its employees are governed
by the Civil Service Law not by the Labor Code, and
that claims arising from employment fall within the
jurisdiction of the Civil Service Commission and not
the Department of Labor and Employment.
The petitioners opposed the Motion to
Dismiss contending that although FTI is a
corporation owned and controlled by the
government, it has still the marks of a private
corporation: it directly hires its employees without
seeking approval from the Civil Service Commission
and its personnel are covered by the Social Security
System and not the Government Service Insurance
System. Petitioners also argued that being a
government-owned and controlled corporation
without original charter, private respondent FTl
clearly falls outside the scope of the civil service as
marked out in Section 2 (1), Article IX of the 1987
Constitution.
ISSUE: Whether or not a labor law claim against a
government-owned and controlled corporation,
such as private respondent FTI, falls within the
jurisdiction of the Department of Labor and
Employment.
HELD: We conclude that because respondent FTI is
government-owned and controlled corporation
without original charter, it is the Department of
Labor and Employment, and not the Civil Service
Commission, which has jurisdiction over the dispute
arising from employment of the petitioners with
private respondent FTI, and that consequently, the
terms and conditions of such employment are
governed by the Labor Code and not by the Civil
Service Rules and Regulations. (karla deles)
Philippine Fisheries Development Authority vs.
NLRC
(213 SCRA 261)
FACTS: Petitioner is a Government Owned and
Controlled Corporation (GOCC) created by P.D. No.
977. It entered into a contract with the Odin
Security Agency for security services of its Iloilo
Fishing Port Complex.
During the effectivity of the SECURITY
Agreement, the private respondent requested the
petitioner to adjust the contract rate in view of the
implementation of Wage Order No. 6 which states:
Section 9: In the case of contracts for
construction projects and for security, janitorial and
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similar services, the increases in the minimum wage
and allowances rates of the workers shall be borne
by the principal or client of the construction/service
contractor and the contracts shall be amended
accordingly subject to the provisions of Section 3 ©
of this Order.
Requests for adjustments of the contract
price were reiterated but were ignored by the
petitioner.
Private respondent filed with the Office of
the Sub-Regional Arbitration a complaint for unpaid
amount of re-adjustment rate under Wage Order #
6.
Petitioner filed a motion to dismiss on the
ground that NLRC has no jurisdiction.
Labor Arbiter dismissed the complaint for
lack of jurisdiction. NLRC issued a resolution setting
aside the order and entered a decision granting
reliefs to private respondent.
ISSUE: Whether or not the NLRC has jurisdiction
over the case
HELD: The petitioner is a GOCC with a special
charter. This places it under the scope of the civil
service. However the guards are not employees of
petitioner. There being no employer-employee
relationship between the petitioner and the
security guards, the jurisdiction of the Civil Service
Commission may not be invoked in this case.
Notwithstanding that petitioner is a
Government agency, its liabilities, which are joint
and solidary with that of the contractor are
provided in Articles 106, 107 and 109 of the Labor
Code. This places the petitioner’s liabilities under
the scope of the NLRC.
NLRC DID NOT COMMIT GRAVE ABUSE OF
DISCRETION IN ASSUMING JURISDICTION TO SET
ASIDE THE ORDER OF DISMISSAL BY THE Labor
Arbiter. (norliza mamukid)
NFA vs. MASADA SECURITY AGENCY
FACTS:
Respondent MASADA Security Agency, Inc.,
entered into a one year contract to provide security
services to the various offices, warehouses and
installations of NFA. Upon the expiration of said
contract, the parties extended the effectivity on a
monthly basis under same terms and condition.
Meanwhile, the Regional Tripartite Wages and
Productivity Board issued several wage orders
mandating increases in the daily wage rate.
Respondent requested NFA for a corresponding
upward adjustment in the monthly contract rate
consisting of the increases in the daily minimum
wage of the security guards as well as the
corresponding raise in their overtime pay, holiday
pay, 13th month pay, holiday, rest day pay, Social
Security System (SSS) and Pag-ibig premiums. NFA,
however, granted the request only with respect to
the increase in the daily wage and denied the same
with respect to the other benefits and
remunerations.
Respondent filed with the RTC of Quezon City, a
case for recovery of sum of money against NFA.
The complaint sought reimbursement of the
amounts allegedly paid by respondent to the
security guards.
The trial court rendered a decision in favor of
respondent holding that NFA is liable to pay the
security guards’ wage related benefits pursuant to
RA 6727, because the basis of the computation of
said benefits, like overtime pay, holiday pay, SSS
and Pag-ibig premium, is the increased minimum
wage.
NFA appealed to the Court of Appeals but the same
was dismissed. The appellate court sustained the
ruling of the trial court that NFA is under obligation
to pay the administrative costs and margin and the
wage related benefits of the respondent’s security
guards. The Court of Appeals likewise denied NFA’s
motion for reconsideration.
ISSUE: W/N the liability of principals in service
contracts under Section 6 of RA 6727 (Wage
Rationalization Act) and the wage orders issued by
the Regional Tripartite Wages and Productivity
Board is limited only to the increment in the
minimum wage? YES
RULING:
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Payment of the increases in the wage rate of
workers is ordinarily shouldered by the employer.
Sec. 6 of RA 6727, however, expressly lodged said
obligation to the principals or indirect employers in
construction projects and establishments providing
security, janitorial and similar services.
BSP vs. NLRC (196 SCRA 176)
FACTS: BSP Secretary-General issued special orders
addressed to five private respondents informing
them that they were to be transferred from BSP
Camp in Makiling to Davao del Norte. These orders
are opposed by private respondents.
Petitioner filed a complaint for illegal transfer
with the Ministry of Labor and Employment.
BSP National President informed private
respondent that their refusal to comply with the
special orders was not sufficiently justified and
constituted rank disobedience.
Subsequently, by Special Order issued by the
BSP Secretary-General, private respondents'
services were ordered terminated. Private
respondents amended their original complaint to
include charges of illegal dismissal and unfair labor
practice against petitioner BSP.
In a decision the Labor Arbiter ordered the
dismissal of private respondents' complaint for lack
of merit. The ruling of the Labor Arbiter was
reversed by public respondent, NLRC, which held
that private respondents had been illegally
dismissed by petitioner BSP.
ISSUE: Whether or not the NLRC has jurisdiction
over the case
HELD: While the BSP may be seen to be a mixed
type of entity, combining aspects of both public and
private entities, we believe that considering the
character of its purposes and its functions, the
statutory designation of the BSP as "a public
corporation" and the substantial participation of the
Government in the selection of members of the
National Executive Board of the BSP, the BSP, as
presently constituted under its charter, is a
government-controlled corporation within the
meaning of Article IX. (B) (2) (1) of the Constitution.
The Administrative Code of 1987 designates
the BSP as one of the attached agencies of the
Department of Education, Culture and Sports
("DECS"). BSP is appropriately regarded as "a
government instrumentality" under the 1987
Administrative Code
It thus appears that the BSP may be
regarded as both a "government controlled
corporation with an original charter" and as an
"instrumentality" of the Government within the
meaning of Article IX (B) (2) (1) of the Constitution.
It follows that the employees of petitioner BSP are
embraced within the Civil Service and are
accordingly governed by the Civil Service Law and
Regulations.
In view of the foregoing, the Labor Arbiter and
public respondent NLRC had no jurisdiction over the
complaint. . (norliza mamukid)
DCWD vs. CSC (Sept. 13, 1991)
FACTS: Petitioners are among the more than 500
water districts existing through out the country
formed pursuant to the provisions of PD No. 198, as
amended by PD Nos. 768 and 1479, otherwise
known as the “Provincial Water Utilities Act of
1973”. It authorized the different local legislative
bodies to form and create their respective water
districts. The CSC issued a resolution that local
water districts, being quasi-public corporations
created by law to perform public services and
supply public wants, the matter of hiring and firing
of its officers and employees should be governed by
the Civil Service Law Rules and Regulations.
ISSUE: Whether or not local water districts are
GOCCs with original charter falling under the Civil
Service Law
RULING: Water districts are GOCCs with
original charter. A water district is a corporation
created pursuant to a special law and as such, its
officers and employees are governed by the Civil
Service Law. Local water districts are quasi-public
corporations whose employees belong to the Civil
Service. (jazzie sarona)
Tanjay Water District vs. Gabaton (172 SCRA 253)
FACTS: Two cases are consolidated as they involve
common issue.
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I. G.R. No. 63742
Petitioner Tanjay Water District,
represented by its manager, filed in the Regional
Trial Court an action for injunction with preliminary
mandatory injunction and damages, against
respondent Municipality of Pamplona and its
officials to prevent them from interfering in the
management of the Tanjay Waterworks System.
Respondent Judge issued an order
dismissing the complaint for lack of jurisdiction over
the subject matter (water) and over the parties
(both being government instrumentalities).
Petitioner filed a petition for certiorari in this Court
alleging that respondent Judge acted without or in
excess of jurisdiction or with grave abuse of
discretion in dismissing the case.
II. G.R. No. 84300
Petitioner Josefino Datuin filed a complaint
for illegal dismissal against respondent Tarlac Water
District in the Department of Labor and
Employment (DOLE) which decided in his favor. The
National Labor Relations Commission (NLRC)
reversed the decision and dismissed the complaint
"for lack of jurisdiction.
ISSUE: Whether or not water districts created
under PD No. 198, as amended, are private
corporations or government-owned or controlled
corporations.
HELD: Significantly, Article XIB Section 2(l) of the
1987 Constitution provides that "(t)he civil service
embraces all branches, subdivisions,
instrumentalities, and agencies of the government,
including government-owned or controlled
corporations with original charters." Inasmuch as
PD No. 198, as amended, is the original charter of
the petitioner, Tanjay Water District, and
respondent Tarlac Water District and all water
districts in the country, they come under the
coverage of the civil service law, rules and
regulations.
Inasmuch as Civil Case No. 8144 involves
the appropriation, utilization and control of water,
We hold that the jurisdiction to hear and decide the
dispute in the first instance, pertains to the Water
Resources Council as provided in PD No. 1067 which
is the special law on the subject. The Court of First
Instance (now Regional Trial Court) has only
appellate jurisdiction over the case.
Water districts are government instrumentalities
and that their employees belong to the civil service,
disposes of Datuin's petition in G.R. No. 84300. The
National Labor Relations Commission has no
jurisdiction over his complaint for illegal dismissal.
(norliza mamukid)
PAGCOR VS. CA
FACTS: PAGCOR terminated the services of
respondent Montoya on the ground of loss of
confidence. Alleging that he had been dismissed
without due process of law, Montoya lodged with
RTC a complaint for damages and atty’s fees against
PAGCOR. PAGCOR filed a motion to dismiss
challenging the jurisdiction of the court. The
movant contended that they, being a money claim
arising from the plaintiff’s alleged dismissal, the
complaint was cognizable only by the labor Arbiter
and the NLRC. Montoya insisted however that
PAGCOR was a govt controlled corporation created
under PD 1869 and therefore not covered by the
LABOR CODE.
The Solicitor General argues that PAGCOR is a
part of Civil Service and not a private corporation
governed by the Labor Code and that the complaint
filed by Montoya is cognizable by the Merit System
Protection Board and not the RTC.
ISSUE: W/N Civil Service has jurisdiction
RULING: It is now settled that government owned
or controlled corporation shall be considered part
of the Civil Service only if they have original charters
as distinguished from those created under general
law. CS has jurisdiction as against that of the labor
authorities in controversies involving the terms of
employment and other related issues of the Civil
Service officials and employees.
Labor arbiters exercise original and exclusive
jurisdiction over conflicts between employees and
their employers but NOT when Labor Code is not
involved. (angie malan)
PNOC-Energy Development Corporation vs. NLRC
(201 SCRA 487)
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FACTS: Private respondent Danilo Mercado was
first employed by herein petitioner Philippine
National Oil Company-Energy Development
Corporation (PNOC-EDC).
Private respondent was dismissed on the
ground of serious acts of dishonesty.
Private respondent Mercado filed a complaint for
illegal dismissal, retirement benefits, separation
pay, unpaid wages, etc. against petitioner PNOC-
EDC before the NLRC Regional Arbitration.
PNOC-EDC filed a Motion to Dismiss on
January 15, 1986 , praying for the dismissal of the
case on the ground that the Labor Arbiter and/or
the NLRC had no jurisdiction over the case.
Labor Arbiter ruled in favor of private
respondent which was affirmed by the NLRC.
ISSUE: Whether or not matters of employment
affecting the PNOC-EDC a GOCC are within the
jurisdiction of the Labor Arbiter and the NLRC
HELD: This issue has already been laid to rest in
the case of PNOC-EDC vs. Leogardo, 175 SCRA 26
(July 5, 1989), involving the same petitioner and the
same issue, where this Court ruled that the doctrine
that employees of government-owned and/or con
controlled corporations, whether created by special
law or formed as subsidiaries under the General
Corporation law are governed by the Civil Service
Law and not by the Labor Code, has been
supplanted by the present Constitution. "Thus,
under the present state of the law, the test in
determining whether a government-owned or
controlled corporation is subject to the Civil Service
Law are the manner of its creation, such that
government corporations created by special charter
are subject to its provisions while those
incorporated under the General Corporation Law
are not within its coverage."
Specifically, the PNOC-EDC having been
incorporated under the General Corporation Law
was held to be a government owned or controlled
corporation whose employees are subject to the
provisions of the Labor Code. . (norliza mamukid)
TUPAS VS NHC
FACTS: TUPAS, a legitimate labor organization, filed
a petition for the conduct of a certification of
election with the Regional Office of DOLE in order to
determine the exclusive bargaining representative
of the workers in NCH, a government owned and
controlled corporation organized under ACT 459,
the former corporation law. Their petition was
dismissed by the med-arbiter, contending that NCH,
being a government owned and controlled
corporation, its employees/workers are prohibited
to form, join or assist any labor organizations for
purposes of bargaining pursuant to Sec 1, Rule ll,
Book V of the Rules and Regulations implementing
the Labor Code.
ISSUE: W/N NHC employees are governed by the
Labor Code
RULING: Considering that NHC was incorporated
under Act 1459, the former corporation law, it is a
government owned/or controlled corporation
whose employees are subject to the provisions of
the Labor Code. It is within the jurisdiction of DOLE
it, being a government owned or controlled
corporation without an original charter.
The workers or employees of NHC undoubtedly
have the right to form unions or employee’s
organizations and that there is no impediment to
the holding of a certification elected among them as
they are covered by the Labor Code.
(angie malan)
UNION OF FILIPRO EMPLOYEES (UFE), vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS
COMMISSION and NESTLÉ PHILIPPINES, INC.
(formerly FILIPRO, INC.
FACTS: This labor dispute stems from the exclusion
of sales personnel from the holiday pay award and
the change of the divisor in the computation of
benefits from 251 to 261 days. Both Nestle Phil.
(formerly Filipro,Inc.) and the Union of Filipino
Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent
Benigno Vivar, Jr. as voluntary arbitrator.
The respondent arbitrator Vivar, issued an
order declaring that the effectivity of the holiday
pay award shall retroact to November 1, 1974, the
date of effectivity of the Labor Code. He adjudged,
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however, that the company's sales personnel are
field personnel and, as such, are not entitled to
holiday pay. He likewise ruled that with the grant of
10 days' holiday pay, the divisor should be changed
from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential,
vacation and sick leave pay due to the use of 251
days as divisor.
The petitioner insisted that respondent's
sales personnel are not field personnel under Article
82 of the Labor Code. Petitioner maintained that
the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours
which can be determined with reasonable certainty.
The respondent company controverts this assertion.
ISSUES: 1) Whether or not Nestle's sales personnel
are entitled to holiday pay; and
2) Whether or not, concomitant with the award of
holiday pay, the divisor should be changed from 251
to 261 days.
HELD: 1) The court did not agree on petitioner’s
contention. The law requires that the actual hours
of work in the field be reasonably ascertained. The
company has no way of determining whether or not
these sales personnel, even if they report to the
office before 8:00 a.m. prior to field work and come
back at 4:30 p.m, really spend the hours in between
in actual field work. The requirement that "actual
hours of work in the field cannot be determined
with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the
Implementing Rules which provides: Rule IV
Holidays with Pay: Sec. 1. Coverage — This rule
shall apply to all employees except: (e) Field
personnel and other employees whose time and
performance is unsupervised by the employer ..The
clause "whose time and performance is
unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause
"whose actual hours of work in the field cannot be
determined with reasonable certainty." The former
clause is still within the scope and purview of Article
82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours
in the field can be determined with reasonable
certainty, query must be made as to whether or not
such employee's time and performance is
constantly supervised by the employer.
2) The divisor to be used in computing holiday pay
shall be 251 days. The respondent arbitrator's order
to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the
prohibition on non-diminution of benefits found in
Article 100 of the Labor Code. To maintain the same
daily rate if the divisor is adjusted to 261 days, then
the dividend, which represents the employee's
annual salary, should correspondingly be increased
to incorporate the holiday pay. The Court declared
that Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9, issued by the
then Secretary of Labor on February 16, 1976 and
April 23, 1976, respectively, and which excluded
monthly paid employees from holiday pay benefits,
are null and void. The Court therein reasoned that,
in the guise of clarifying the Labor Code's provisions
on holiday pay, the aforementioned implementing
rule and policy instruction amended them by
enlarging the scope of their exclusion.
The Court thereby resolves that the grant of
holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from
the date of effectivity of the Labor Code, but from
October 23, 1984, the date of promulgation of the
IBAA case. (norhani mamukid)
MERCIDAR FISHING CORPORATION represented by
its President DOMINGO B. NAVAL, vs. NATIONAL
LABOR RELATIONS COMMISSION and FERMIN
AGAO, JR.,
FACTS: Private respondent had been employed as a
“bodegero” or ship’s quartermaster on February 12,
1988. He alleged that he had been sick and thus
allowed to go on leave without pay for one month
from April 28, 1990 but that when he reported to
work at the end of such period with a health
clearance, he was told to come back another time
as he could not be reinstated immediately.
Thereafter, petitioner refused to give him work. For
this reason, private respondent asked for a
certificate of employment from petitioner on
September 6, 1990. However, when he came back
for the certificate on September 10, petitioner
refused to issue the certificate unless he submitted
his resignation. Since private respondent refused to
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submit such letter unless he was given separation
pay, petitioner prevented him from entering the
premises.
Petitioner, on the other hand, alleged that it
was private respondent who actually abandoned his
work. It claimed that the latter failed to report for
work after his leave had expired and was, in fact,
absent without leave for three months until August
28, 1998. Petitioner further claims that,
nonetheless, it assigned private respondent to
another vessel, but the latter was left behind on
September 1, 1990. Thereafter, private respondent
asked for a certificate of employment on September
6 on the pretext that he was applying to another
fishing company. On September 10, 1990, he
refused to get the certificate and resign unless he
was given separation pay.
The Labor Arbiter ordered the respondent
to reinstate complainant with back wages, pay him
his 13th month pay and incentive leave pay for
1990.
On appeal, the NLRC dismissed petitioner’s
claim that it cannot be held liable for service
incentive leave pay by fishermen in its employ as
the latter supposedly are “field personnel” and thus
not entitled to such pay under the Labor Code.
ISSUE: WON THE RESPONDENT COMMISSION
PALPABLY ERRED IN RULING AND SUSTAINING THE
VIEW THAT FISHING CREW MEMBERSCANNOT BE
CLASSIFIED AS FIELD PERSONNEL UNDER ARTICLE
82 OF THE LABOR CODE.
HELD: The petition has no merit.
ART. 82 provides: Coverage. - The provisions of this
Title [Working Conditions and Rest Periods] shall
apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, field personnel, members
of the family of the employer who are dependent
on him for support, domestic helpers, persons in
the personal service of another, and workers who
are paid by results as determined by the Secretary
of Labor in appropriate regulations.
“Field personnel” shall refer to non-agricultural
employees who regularly perform their duties away
from the principal place of business or branch office
of the employer and whose actual hours of work in
the field cannot be determined with reasonable
certainty.
In the case of Union of Filipro Employees (UFE)
v. Vicar, this Court explained the meaning of the
phrase “whose actual hours of work in the field
cannot be determined with reasonable certainty” in
Art. 82 of the Labor Code. Moreover, the
requirement that “actual hours of work in the field
cannot be determined with reasonable certainty”
must be read in conjunction with Rule IV, Book III of
the Implementing Rules which provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all
employees except: (e) Field personnel and other
employees whose time and performance is
unsupervised by the employer xxx.
The clause “whose time and performance is
unsupervised by the employer” did not amplify
but merely interpreted and expounded the
clause “whose actual hours of work in the field
cannot be determined with reasonable
certainty.” The former clause is still within the
scope and purview of Article 82 which defines
field personnel. Hence, in deciding whether or
not an employee’s actual working hours in the
field can be determined with reasonable
certainty, query must be made as to whether or
not such employee’s time and performance is
constantly supervised by the employer.
In the case at bar, during the entire course
of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its
vessel. Although they perform non-agricultural
work away from petitioner’s business offices, the
fact remains that throughout the duration of their
work they are under the effective control and
supervision of petitioner through the vessel’s
patron or master as the NLRC correctly held.
(norhani mamukid)
APEX MINING COMPANY, INC. vs. NATIONAL
LABOR RELATIONS COMMISSION and SINCLITICA
CANDIDO
FACTS:
 Sinclitica Candido was employed Apex
Mining Company to perform laundry
services at its staff house located at Masara,
Maco, Davao del Norte.On December 18,
1987, while she was attending to her
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Property of: Hanniyah P. Sevilla
assigned task and she was hanging her
laundry, she accidentally slipped and hit her
back on a stone.
 As a result of the accident she was not able
to continue with her work. She was
permitted to go on leave for medication.
The manager of Apex offered her the
amount of P5,000.00 to persuade her to
quit her job, but she refused the offer and
preferred to return to work. Petitioner did
not allow her to return to work and
dismissed her on February 4, 1988.
 On March 11, 1988, private respondent
filed a request for assistance with the
Department of Labor and Employment.
After the parties submitted their position
papers as required by the labor arbiter
assigned to the case on August 24, 1988 the
latter rendered a decision in favor of
Candido, which was affirmed by the NLRC.
ISSUE: Whether or not a househelper in the staff
houses of an industrial company a domestic helper
or a regular employee of the said firm.
RULING:
 The term 'domestic servant' and shall refer to
any person, whether male or female, who
renders services in and about the employer's
home and which services are usually
necessary or desirable for the maintenance
and enjoyment thereof, and ministers
exclusively to the personal comfort and
enjoyment of the employer's family
 The foregoing definition clearly contemplates
such househelper or domestic servant who is
employed in the employer's home to minister
exclusively to the personal comfort and
enjoyment of the employer's family. Such
definition covers family drivers, domestic
servants, laundry women, yayas, gardeners,
houseboys and other similar househelps.
 The definition cannot be interpreted to
include househelp or laundry women working
in staffhouses of a company, like petitioner
who attends to the needs of the company's
guest and other persons availing of said
facilities. By the same token, it cannot be
considered to extend to the driver, houseboy,
or gardener exclusively working in the
company, the staffhouses and its premises.
They may not be considered as within the
meaning of a "househelper" or "domestic
servant" as above-defined by law.
 The mere fact that the househelper or
domestic servant is working within the
premises of the business of the employer and
in relation to or in connection with its
business, as in its staffhouses for its guest or
even for its officers and employees, warrants
the conclusion that such househelper or
domestic servant is and should be considered
as a regular employee of the employer and
not as a mere family househelper or domestic
servant as contemplated in Rule XIII, Section
l(b), Book 3 of the Labor Code, as amended.
(christ may andolana)
ROSARIO BROTHERS, INC vs. OPLE, NLRC, et al
(July 31, 1984)
FACTS: Private respondents are tailors, pressers,
stitchers and similar workers hired by the petitioner
in its tailoring department. Some had worked there
since 1969 until their separation on January 2, 1978.
For their services, they were paid weekly wages on
piece-work basis, minus the withholding tax per BIR
rules. They were registered with the SSS as
employees of petitioner and premiums were
deducted from their wages. They were members of
the labor union which has a CBA with the company.
They were required to report for work from
Monday through Saturday and to stay in the
tailoring shop for no less than 8 hours a day, unless
no job order was given them after waiting 2 to 3
hours, in which case, they may leave and may come
in the afternoon. Their attendance was recorded
through a bundy clock just like the other employees
of petitioner. Private respondents filed a complaint
for violation of PD 851 ( 13th month may) and PD
525, as amended by PD 1123 (Emergency Living
Allowance) against petitioner.
ISSUE: Whether or not an employer-employee
relationship exists between the petitioner and the
private respondents.
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RULING: Petition is devoid of merit. The
selection and hiring of private respondents were
done by the petitioner, through the master cutter
of its tailoring department who was a regular
employee. Private respondents received their
weekly wages from petitioner on piece-work basis,
which is within the scope and meaning of the term
“wage” as defined under Article 97(f) of the New
Labor Code. Petitioner had the power to dismiss
private respondents. Private respondents’ conduct
in the performance of their work was controlled by
petitioner and they were allowed to register with
the SSS as employees of petitioner. Petition is
DISMISSED for lack of merit. (jazzie sarona)
ELIAS VILLUGA, RENATO ABISTADO, JILL
MENDOZA, ANDRES ABAD, BENJAMIN BRIZUELA,
NORLITO LADIA, MARCELO AGUILAN, DAVID ORO,
NELIA BRIZUELA, FLORA ESCOBIDO, JUSTILITA
CABANIG, and DOMINGO SAGUIT vs. NATIONAL
LABOR RELATIONS COMMISSION (THIRD DIVISION)
and BROAD STREET TAILORING and/or RODOLFO
ZAPANTA
[GRN 75038 August 23, 1993.]
PETITION for certiorari of the decision of the
National Labor Relations Commission.
FACTS:
- Elias Villuga was employed as cutter in the
tailoring shop owned by private respondent
Rodolfo Zapanta and known as Broad Street
Tailoring located at Shaw Boulevard,
Mandaluyong Metro Manila. As cutter, he was
paid a fixed monthly salary of P840.00 and a
monthly transportation allowance of P40.00. In
addition to his work as cutter, Villuga was
assigned the chore of distributing work to the
shop's tailors or sellers when both the shop's
manager and assistant manager would absent. He
saw to it that their work conformed to the pattern
he had prepared and if not, he had them redone,
repaired or resewn.
- The other petitioners were either ironers,
repairmen and sewers. They were paid a fixed
amount for every item ironed, repaired or sewn,
regardless of the time consumed in accomplishing
the task. Petitioners did not fill up anytime record
since they did not observe regular or fixed hours
of work. They were allowed to perform their work
at home especially when the volume of work,
which depended on the number of job orders,
could no longer be coped up with.
- Petitioner Villuga failed to report for work
allegedly due to illness. For not properly notifying
his employer, he was considered to have
abandoned his work. Villuga claimed that he was
refused admittance when he reported for work
after his absence, allegedly due to his active
participation in the union organized by private
respondent's tailors. He further claimed that he
was not paid overtime pay, holiday pay, premium
pay for work done on rest days and holidays,
service incentive leave pay and 13th month pay.
- Other Petitioners also claimed that they
were dismissed from their employment because
they joined the Philippine Social Security Labor
Union (PSSLU). Petitioners Andres Abad, Norlito
Ladle, Marcelo Aguilan, Nelia Brizuela, Flora
Escobido, Justilita Cabaneg and Domingo Saguit
claimed that they stopped working because
private respondents gave them few pieces of
work to do after learning of their membership
with PSSLU.
- NLRC & LABOR ARBITER rendered a decision
that Villuga be paid the sum of ONE THOUSAND
TWO HUNDRED FORTY-EIGHT PESOS AND SIXTY-
SIX CENTAVOS (P1,248.66) representing his 13th
month pay for the, years 1976, 1977 and other
claims in this case are hereby denied for lack of
merit."The complaint insofar as the other eleven
(11) complainants are concerned should be, as it
is hereby dismissed for want of jurisdiction.
ISSUE: Whether or not the petitioners are
employees of the private respondent and whether
or not they are entitled overtime pay, holiday pay,
premium pay for work clone on rest days and
holidays, service incentive leave pay and 13th
month pay
RULING: The exclusion of Villuga from the
benefits claimed under Article 87 (overtime pay and
premium pay for holiday and rest clay work), Article
94, (holiday pay), and Article 95 (service incentive
leave pay) of the Labor Code, on the ground that he
is a managerial employee is unwarranted. He is
definitely a rank and file employee hired to perform
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the work of a cutter and not hired to perform
supervisory or managerial functions, the fact that
he is uniformly paid by the month does not exclude
him from the benefits of holiday pay. He should
therefore be paid in addition to the 13th month
pay, his overtime pay, holiday pay premium pay for
holiday and rest day, and service incentive leave
pay.
Private respondents claim that petitioner
Villuga abandoned his work acceptable, for
abandonment to constitute a valid cause for
dismissal; there must be a deliberate and
unjustified refusal of the employee to resume his
employment. Mere absence is not sufficient; it must
be accompanied by overt acts unerringly pointing to
the fact that the employee simply does not want to
work anymore.
The imposition of a sanction is justified, but
surely, not dismissal, in the light of the fact that this
is petitioner's first offense. In lieu of reinstatement,
petitioner Villuga should be paid separation pay
where reinstatement can no longer 'be effected in
view of the long passage of time or because of the
realities of the situation. But petitioner should not
be granted backwages in addition to reinstatement
as the same is not just and equitable under the
circumstances considering that he was not entirely
free from blame.
As to the other eleven petitioners, there is
no clear showing that they were dismissed because
the circumstances surrounding their dismissal were
not even alleged: However, we disagree with the
finding of respondent Commission that the eleven
petitioners are independent contractors.
For an employer-employee relationship to
exist, the following elements are generally
considered: "(1) the selection and engagement of
the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the
employes's conduct."
Noting that the herein petitioners were
oftentimes allowed to perform their work at home
and were paid wages on a piece-rate basis, the
respondent Commission apparently found the
second and fourth elements lacking and ruled that
"there is no employer-employee relationship, for it
is clear that respondents are interested only in the
result and not in the means and manner and how
the result is obtained." Respondent Commission is
in error.
In determining whether the relationship is
that of employer and employee or one of an
independent contractor," each case must be
determined on its own facts and all the features of
the relationship are to be considered." Considering
that petitioners who are either sewers, repairmen
or ironer, have been in the employ of private
respondent as early as 1972 or at the latest in 1976
faithfully rendering services which are des. able or
necessary for the business of private respondent,
and observing management's approved standards
set for their respective lines of work as well as the
customers' specifications, petitioners should be
considered employees, not independent
contractors. Independent contractors are those
who exercise independent employment, contracting
to do a piece of work according to their own
methods and without being subjected to control of
their employer except as to the result of their work.
By the nature of the different phases of work in a
tailoring shop where the customers' specifications
must be followed to the letter, it is inconceivable
that the workers therein would not be subjected to
control.
WHEREFORE, in view of the foregoing
reasons, the assailed decision of respondent
National Labor Relations Commission is hereby
MODIFIED by awarding (a) in favor of petitioner
Villuga, overtime pay, holiday pay, premium pay for
holiday and rest day, service incentive leave pay
and separation pay, in addition to his 13th month
pay; and (b) in favor of the rest of the petitioners,
their respective 13th month pay.
The case is hereby REMANDED to the
National Labor Relations Commission for the
computation of the claims herein-above mentioned.
SO ORDERED. (joann lim)
ROSARIO BROS. INC VS. OPLE
Fx: Private respondents are tailors, pressers,
stitchers and similar workers hired by the petitioner
in its tailoring department (Modes Suburbia). Some
had worked there since 1969 until their separation
on January 2, 1979 For their services, they were
paid weekly wages on piecework basis, minus the
withholding tax per Bureau of Internal Revenue
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(BIR) rules. Further, they were registered with the
Social Security System (SSS) as employees of
petitioner and premiums were deducted from their
wages; they were also members of the Avenida-
Cubao Manila COD Department Store Labor Union
which has a Collective Bargaining Agreement with
the company; and, they were required to report for
work from Monday through Saturday and to stay in
the tailoring shop for no less than eight (8) hours a
day, unless no job order was given them after
waiting for two to three hours, in which case, they
may leave and may come back in the afternoon.
Their attendance was recorded through a bundy
clock just like the other employees of petitioner. A
master cutter distributes job orders equally,
supervises the work and sees to it that they were
finished as soon as possible.
Once the job orders and the corresponding
materials were distributed to then private
respondents were on their own. They were free to
do their jobs either in the petitioner's shop or
elsewhere at their option, without observing the
regular working time of the company provided that
they finished their work on time and in accordance
with the specifications. As a matter of fact they
were allowed to contract other persons to do the
job for them; and also to accept tailoring jobs from
other establishments.
They subsequently filed with the DOLE for violation
of PD 851 (13th month pay). Labor Arbiter
dismissed the private respondents' claims for lack of
merit upon finding that they are not employees of
the petitioner within the meaning of LC. As a
consequence, they were dismissed. They then filed
a complaint for lillegal dismissal. NLRC affirmed LA's
dismissal but Sec. of Labor reversed the ruling of
the NLRC, also ruling that they were entitled to 13
month pay.
NLRC: "However, respondent (petitioner in this
case) contends that the employees are excluded
from the coverage of PD 525, 851 and 1123 because
of the nature of their employment, there being 'no
fixed time with regards to entry and exit' and no
fixed number of days of work, with respect to said
employees. We have, however, examined carefully
the decrees and find absolutely no indication
therein that the employees are indeed excluded.
Nor are the rules implementing the decrees
supportive of the respondent's contention. On the
contrary, the rules argue for the contrary view.
"Section 2 of the rules implementing PD 525
provides: 'The Decree shall apply to all employees
of covered employers, regardless of their position,
designation or employment status, and irrespective
of the method by which their wages are paid,
including temporary, casual, probationary, and
seasonal employees and workers.' And Section 3, of
the rules implementing PD 851 provides that 'all
employees of covered employers shall be entitled
to benefits provided under the Decree x x x
regardless of their position, designation or
employment status, and irrespective of the method
by which their wages are paid.' Section 2 of the
same rules explicitly provides that the rules apply to
'workers paid on piece-rate basis' or '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.'
"WHEREFORE, respondent is hereby ordered to pay
the emergency allowances under PD 525 and 1123
and the 13th month pay under PD 851 from the
date of the effectivity of said decrees but not earlier
than September 7, 1974."
Hence this petition for certiorari.
Held: There is er-ee relationship as the test in
determining the er-ee relationship is met.the
selection and hiring of private respondents were
done by the petitioner, through the master of its
tailoring department who was a regular
employee.Private respondents received their
weekly wages from petitioner on piecework basis
which is within the scope and meaning of the term
"wage" as defined under Article 97(f) of the New
Labor Code (PD 442).Petitioner had the power to
dismiss private respondents, as shown by the
various memoranda issued for strict compliance by
private respondents, violations of which, in extreme
cases, are grounds for outright dismissal.Private
respondents' conduct in the performance of their
work was controlled by petitioner, such as: (1) they
were required to work from Monday through
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Saturday; (2) they worked on job orders without
waiting for the deadline; (3) they were to observe
cleanliness in their place of work and were not
allowed to bring out tailoring shop patterns; and (4)
they were subject to quality control by petitioner.
NLRC decision is affirmed it being final and
executory already, the appeal having been filed out
of time.
[NATIONAL] LABOR CONGRESS OF THE PHIL. VS
NLRC
Fx: Petitioners were rank-and-file employees of
Empire Food Products and were hired on various
dates. They filed against private respondent a
complaint for money claims and for violaton of
labor standars laws. They also filed a petition for
direct certification of petitioner Labor Congress of
the Philippines as their bargaining representative.
On Oct. 23, 1990, petitioners represented by LCP
President and respondent entered into a
memorandum of agreement which provided that
Empire Food Products, Inc is now recognizing LCP as
the sole and exclusive bargaining agent and
representative of all rank and file employees and
that the pending case filed would be considered
withdrawn, and the issues regarding it will be
discussed in a CBA.
Subsequently, LCP was certified. LCP President then
submitted to the private respondents a proposal for
CBA. However, on Jan. 23, 1991, petitioners filed a
complaint [again] with NLRC for unfair labor
practice by way of illegal lockout or dismissal; union
busting through harrassments; violation of
memorandum of agreement and underpayment of
wages.
Labor Arbiter initially ordered the reinstatement by
the petitioners. NLRC remanded the case due to
technicalities overlooked. The second decision by
the LA, which was affirmed by the NLRC, dismissed
the petition for lack of merit. In finding that
petitioner employees abandoned their work, the
Labor Arbiter and the NLRC relied on the testimony
of Security Guard Rolando Cairo that on January 21,
1991, petitioners refused to work. As a result of
their failure to work, the cheese curls ready for
repacking on said date were spoiled.
Held: That petitioner employees are "pakyao" or
piece workers does not imply that they are not
regular employees entitled to reinstatement.
Private respondent Empire Food Products, Inc. is a
food and fruit processing company, the work of
processed food repackers is necessary in the day to
day operations of respondent. However,
reinstatement would be impractical and hardly
promotive of the best interests of the parties, so
instead separation pay at the rate of one month for
every year of service, with a fraction of at least six
(6) months of service considered as one (1) year, is
in order.
As to the other benefits, namely, holiday pay,
premium pay, 13th month pay and service incentive
leave which the labor arbiter failed to rule on but
which petitioners prayed for in their complaint,
[we] hold that petitioners are so entitled to these
benefits. 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, their job of
repacking snack food was 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, their
employment not having been dependent on a
specific project or season; 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, inter alia, "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."
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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, piece workers are specifically mentioned as
being entitled to holiday pay.
In addition, the Revised Guidelines on the
Implementation of the 13th Month Pay Law, in view
of the modifications to P.D. No. 85 by
Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those
exempted from paying 13th month pay.
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. Here,
private respondents did not allege adherence to the
standards set forth in Sec. 8 nor with the rates
prescribed by the Secretary of Labor. As such,
petitioners are beyond the ambit of exempted
persons and are therefore entitled to overtime pay.
MARK ROCHE INTERNATIONAL vs. NLRC (August
31, 1999)
FACTS: Petitioners were President and Vice-
President of their co-petitioner Mark Roche
International (MRI), a corporation engaged in the
garments business. Private respondents were
employed as sewers of MRI with lengths of service
varying from 3 to 9 years. On different dates,
private respondents filed separate complaints for
underpayment of wages and non-payment of
overtime pay. Petitioners received a notice of
hearing of the petition. 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. Private respondents refused. They
were then discharged from work. Private
respondents amended their earlier complaints to
include as additional causes of action their illegal
dismissal, unfair labor practice, non-payment of 13th
month pay, underpayment of legal holidays, and for
damages. Petitioners countered that private
respondents voluntarily abandoned their jobs.
Labor arbiter declared illegal the
constructive dismissal of private respondents. NLRC
affirmed the reinstatement, payment of back
wages, salary differentials and 13th month pay, but
set aside the award of service incentive leave pay
on the ground that private respondents were not
entitle as they were piece-rate workers.
ISSUE: Whether or not the private respondent
were constructively dismissed from their jobs,
hence, illegal
RULING: Abandonment, as a just and valid
ground for dismissal, means the deliberate and
unjustified refusal of an employee to resume his
employment. No overt act was established by
petitioners from which to infer the clear intention
of private respondents to desist from their
employment. An employee who takes steps to
protest his layoff cannot by any logic be said to have
abandoned their work.
There is ample proof showing that private
respondents were dismissed from their jobs for
their refusal to withdraw their petition for
certification election filed before the DOLE. The
dismissal was not a constructive dismissal but an
illegal dismissal. 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
diminution in pay. Private respondents were not
demoted in rank nor their pay diminished
considerably.
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. Award of
reinstatement and back wages belongs to an
illegally dismissed employee by direct provision of
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law and cannot be defeated by mere allegations of
inconvenience, inconceivability or implausibility.
Petitioners are given the alternative of paying
separation pay to illegally dismissed employees
where reinstatement is no longer possible. Private
respondents as piece-rate employees are not
entitled to service incentive leave pay as well as
holiday pay even if they are entitled to other
benefits like COLA and 13th month pay. Service
incentive leave pay shall not apply to employees
whose performance is unsupervised by employer.
(jazzie sarona)
ISAC PERAL BOWLING ALLEY VS. NLRC
Fx: On October 6, 1952, the United Employees
Welfare Association, a legitimate labor union,
presented a petition before the Department of
Labor on behalf of the 36 pinboys of the Isaac Peral
Bowling Alley, allegedly affiliated Assn., et al.with
said union. The petition made specific demands
from the company among which were the
conversion of the pinboy's wages from hourly to
daily basis, vacation and sick leaves; medical and
hospital bills; payment of their wage during a strike.
The company filed its answer denying the material
averments of the petition and contended that in
view of the nature of the business of the company,
the payment of the wages of its pinboys can not be
converted from the hourly to daily basis; that said
pinboys were receiving wages in accordance with
law and were being paid additional compensation
for any work rendered on Sundays; that the
company was actually shouldering medical and
hospital bills of those injuried or who become ill in
line of duty; that the pinboys were just casual
workers and not permanently employed by the
company.
August 22, 1955, the Court rendered decision
finding the petitioning pinboys as permanent and
regular employees and not merely casual workers
of the company; that from the start of its business
on March 1, 1951, to July 31 of the same year, the
company paid its pinboys wages at the rate of P80 a
month and that from August 1, 1951, to date, the
pinboys received wages at the rate of P0.50 per
hour of actual work; that the pinboys in said
company were working on 2 shifts, the morning
shift working or staying, at the instance of the
management, in their respective alleys from 8:00
a.m. to 5:00 p.m., or for 9 hours on ordinary days
and legal holidays, whereas the second shift began
their work from 5:00 p.m. until 12:00 midnight or
1:00 a.m. on regular days and legal holidays and
from 4:00 p.m. to 1:00 a.m. on Sundays. The Court
thus ordered the company to pay the pinboys in the
day shift 25 per cent additional compensation over
their basic wages for 1 hour overtime on ordinary
days and legal holidays to pay those in the night
shift 25 per cent additional compensation for 1 hour
overtime on Sundays, which should be computed
from the date they had been rendered; and another
25 per cent additional compensation over their
basic pay for those working from 6:00 p.m. until
12:00 or 1:00 a.m. as the case may be, to be
computed from the time the petition was filed in
court. The Court also held that the pinboys were
entitled yearly to 8 days vacation leave and 7 days
sick leave with pay.
Issue: W/N the hours spent by the pinboys in the
bowling alleys in between shifts can be considered
as compensable hours
Held: No. To constitute non-working hours for the
purpose of the Minimum Wage Law, the laborer or
worker need not leave the premises of the factory,
shop or boat (or establishment) in order that his
period of rest shall not be counted, it being enough
that he 'cease to work', may rest completely and
leave or may leave at his will the spot where he
actually stays while working to go somewhere else,
whether within or outside the premises of said
factory, shop or boat (establishment). If these
requisites are complied with, such period shall not
be counted". In view of what appears in the payrolls
and vouchers signed by the pinboys, We are
inclined to believe that such requisites had been
satisfied, there being no evidence to the contrary.
Such being the case, the conclusion arrived at by
the lower Court to the effect that for the period
abovementioned the pinboys worked for 9 hours a
day just because they remained in the premises of
the Bowling Alley, finds no support to stand on and,
consequently, said conclusion should be adjusted to
what the evidence really show.
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REOTAN VS. NARIC
Fx: Reotan et. al were guards-watchment in the
agencies or branches of NARIC (National Rice and
Corn Co.). Being tasked to work in 2 shifts of 12
hours daily, they demanded for overtime pay.
NARIC maintains that there was a memo by the
President that OT work must be approved by the
mgt. to be compensable.
Issue: W/N the hours worked overtime, even
without the approval of the immediate supervisors,
is compensable
Held: Yes. If the work performed was necessary, or
that it benefited the company or that the employee
could not abandon his work at the end of his, eight
hour work because there was no substitute ready to
take his place and he performed overtime services
upon the order of his immediate superior,
notwithstanding the fact that there was a standing
circular to the effect that before overtime work may
be performed with pay, the approval of the
corresponding department head should be secured,
such overtime services are compensable. inspite of
the fact that said overtime services were rendered
without the prior approval of the Department Head.
PAN AMERICAN WORLD AIRWAYS SYSTEM vs. PAN
AMERICAN EMPLOYEES ASSOCIATION
FACTS:
 The employees in question here are
fourteen (14) aircraft mechanics and the
two employees from the Communication
Department of Pan American Airways. As
ground crew of the airline company they
are required to attend to the plane even if
arrives during their meal period.
ISSUE:
Whether or not their entire meal periods
are compensable?
RULING:
 The Supreme Court ruled that their entire
meal periods are compensable because
they have ceased to enjoy the right to have
a 1 hour meal time. They are no longer
granted that right because when a plane
arrives they are required to leave their meal
to attend to the planes. Thus, that time is
not really theirs.
 Therefore, it is compensable working time.
Although it doesn’t happen everyday, the
nature of their work necessitates that they
should be prepared at all times for the
arrival of the planes. (christ may andolana)
WELLINGTON INVESTMENT AND
MANUFACTURING CORPORATION vs.
CRESENCIANO B. TRAJANO, Undersecretary of
Labor and Employment, ELMER ABADILLA, and 34
others [GRN 114698 July 3, 1995]
FACTS:
- The case arose from a routine inspection
conducted by a Labor Enforcement Officer on
August 6, 1991 of the Wellington Flour Mills
- The officer thereafter drew up a report, a
copy of which was "explained to and received by"
Wellington's personnel manager, in which he set
forth his finding of " nonpayment of regular
holidays falling on a Sunday for monthly-paid
employees."
- Wellington sought reconsideration of the
Labor Inspector's report, by letter dated August
10, 1991. It argued that "the monthly salary of the
company's monthly-salaried employees already
includes holiday pay for all regular holidays x x x
(and hence) there is no legal basis for the finding
of alleged non-payment of regular holidays falling
on a Sunday.
- It expounded on this thesis in a position
paper subsequently submitted to the Regional
Director, asserting that it pays its monthly-paid
employees a fixed monthly compensation " using
the 314 factor which undeniably covers and
already includes payment for all the working days
in a month as well as all the 10 unworked regular
holidays within a year.
- Wellington's arguments failed to persuade
the Regional Director who, in an Order issued on
July 28, 1992, ruled that "when a regular holiday
falls on a Sunday, an extra or additional working
day is created and the employer has the
obligation to pay the employees for the extra day
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except last Sunday of August since the payment
for the said holiday is already included in the 314
factor," and accordingly directed Wellington to
pay its employees compensation corresponding
to four (4) extra working days
ISSUE: "whether or not a monthly-paid employee,
receiving a fixed monthly compensation, is entitled
to an additional pay aside from his usual holiday
pay, whenever a regular holiday falls on a Sunday."
RULING: In Wellington's case, there seems to
be no question that at the time of the inspection
conducted by the Labor Enforcement Officer on
August 6, 1991, it was and had been paying its
employees "a salary of not less than the statutory or
established minimum wage," and that the monthly
salary thus paid was "not x x x less than the
statutory minimum wage multiplied by 365 days
divided by twelve,"
There is, in other words, no issue that to
this extent Wellington complied with the minimum
norm laid down by law.
Apparently the monthly salary was fixed by
Wellington to provide for compensation for every
working day of the year including the holidays
specified by law - and excluding only Sundays. In
fixing the salary, Wellington used what it calls the
"314factor"; that is to say, it simply deducted 51
Sundays from the 365 days normally comprising a
year and used the difference, 314, as basis for
determining the monthly salary. The monthly salary
thus fixed actually covers payment for 314 days of
the year, including regular and special holidays, as
well as days when no work is done by reason of
fortuitous cause, as above specified, or causes not
attributable to the employees.
The Labor Officer who conducted the
routine inspection of Wellington discovered that in
certain years, two or three regular holidays had
fallen on Sundays. He reasoned that this had
precluded the enjoyment by the employees of a
non-working day, and the employees had
consequently had to work an additional day for that
month. This ratiocination received the approval of
his Regional Director who opined that "when a
regular holiday falls on a Sunday, an extra or
additional working day is created and the employer
has the obligation to pay its employees for the extra
day except the last Sunday of August since the
payment for the said holiday is already included in
the 314 factor."
He pointed out that in 1988 there was "an
increase of three (3) working days resulting from
regular holidays falling on Sundays"; hence
Wellington "should pay for 317 days, instead of 314
days." By the same process of ratiocination,
respondent Undersecretary theorized that there
should be additional payment by Wellington to its
monthly-paid employees for "an increment of three
(3) working days" for 1989 and again, for 1990.
What he is saying is that in those years, Wellington
should have used the "317 factor," not the "314
factor."
The theory loses sight of the fact that the
monthly salary in Wellington - which is based on the
so-called "314 factor" accounts for all 365 days of a
year; i.e., Wellington's "314 factor" leaves no day
unaccounted for; it is paying for all the days of a
year with the exception only of 51 Sundays.
The respondents' theory would make each
of the years in question (1988, 1989, 1990), a year
of 368 days. Pursuant to this theory, no employer
opting to pay his employees by the month would
have any definite basis to determine the number of
days in a year for which compensation should be
given to his work force. He would have to ascertain
the number of times legal holidays would fall on
Sundays in all the years of the expected or
extrapolated lifetime of his business. Alternatively,
he would be compelled to make adjustments in his
employees' monthly salaries every year, depending
on the number of times that a legal holiday fell on a
Sunday.
There is no provision of law requiring any
employer to make such adjustments in the monthly
salary rate set by him to take account of legal
holidays falling on Sundays in a given year, or,
contrary to the legal provisions bearing on the
point, other-wise to reckon a year at more than 365
days. As earlier mentioned, what the law requires of
employers opting to pay by the month is to assure
that "the monthly minimum wage shall not be less
than the statutory minimum wage multiplied by 365
days divided by twelve," and to pay that salary "for
all days in the month whether worked or not," and
"Irrespective of the number of working days
therein." That salary is due and payable regardless
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of the declaration of any special holiday in the
entire country or a particular place therein, or any
fortuitous cause precluding work on any particular
day or days (such as transportation strikes, riots, or
typhoons or other natural calamities), or cause not
imputable to the worker. And as also earlier pointed
out, the legal provisions governing monthly
compensation are evidently intended precisely to
avoid recomputations and alterations in salary on
account of the contingencies just mentioned, which,
by the way, are routinely made between employer
and employees when the wages are paid on daily
basis.
Their argument assumes that there are
some "labor standards provisions of the Code and
the other labor legislations" imposing on employers
the obligation to give additional compensation to
their monthly-paid employees in the event that a
legal holiday should fall on a Sunday in a particular
month with which compliance may be commanded
by the Regional Director when the existence of said
provisions is precisely the matter to be established.
In promulgating the orders complained of
the public respondents have attempted to legislate,
or interpret legal provisions in such a manner as to
create obligations where none are intended. They
have acted without authority, or at the very least,
with grave abuse of their discretion. Their acts must
be nullified and set aside.
WHEREFORE, the orders complained of,
namely: that of the respondent Undersecretary
dated September 22, 1993, and that of the Regional
Director dated July 30, 1992, are NULLIFIED AND
SET ASIDE, and the proceeding against petitioner
DISMISSED. (joann lim)
SAN MIGUEL CORP. vs. CA
FACTS:
DOLE conducted a routine inspection in the
premises of SMC in Sta. Filomena, Iligan City. In the
course of the inspection, it was discovered that
there was underpayment by SMC of regular Muslim
holiday pay to its employees. SMC failed to submit
proof that it was paying regular Muslim holiday pay
to its employees. Hence, Alan M. Macaraya,
Director IV of DOLE Iligan District Office issued a
compliance order directing SMC to consider Muslim
holidays as regular holidays and to pay both its
Muslim and non-Muslim employees holiday pay
within thirty (30) days from the receipt of the order.
RULING:
Petitioner asserts that Article 3(3) of
Presidential Decree No. 1083 (Code of Muslim
Personal Laws) provides that “(t)he provisions of
this Code shall be applicable only to Muslims x x x.”
However, there should be no distinction between
Muslims and non-Muslims as regards payment of
benefits for Muslim holidays. The Court of Appeals
did not err in sustaining Undersecretary Español
who stated:
Assuming arguendo that the respondent’s position
is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to
holiday pays on Christian holidays declared by law
as regular holidays. We must remind the
respondent-appellant that wages and other
emoluments granted by law to the working man are
determined on the basis of the criteria laid down by
laws and certainly not on the basis of the worker’s
faith or religion.
In addition, the 1999 Handbook on Workers’
Statutory Benefits, approved by then DOLE
Secretary Bienvenido E. Laguesma stated:
Considering that all private corporations, offices,
agencies, and entities or establishments operating
within the designated Muslim provinces and cities
are required to observe Muslim holidays, both
Muslim and Christians working within the Muslim
areas may not report for work on the days
designated by law as Muslim holidays.
MABEZA VS. NLRC, Peter Ng
Fx: Norma Mabeza contends that around the first
week of May, 199 1, she and her co-employees at
the Hotel Supreme in Baguio City were asked by the
hotel's management to sign an instrument attesting
to the latter's compliance with minimum wage and
other labor standard provisions of law. Petitioner
signed the affidavit but refused to go to the City
Prosecutor's Office to swear to the veracity and
contents of the affidavit as instructed by
management. The affidavit was nevertheless
submitted on the same day to the Regional Office of
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the Department of Labor and Employment in Baguio
City.
On the same day the affidavit was submitted to the
Regional office of DOLE, Mabeza averred that she
was ordered by the hotel mgt. to turn over the keys
to her living quarters and remove her belongigs
from the hotel premises. She thereafter reluctantly
filed a leave of absence from her job which was
denied by management. When she attempted to
return to work on May 10, 1991, the hotel's cashier,
Margarita Choy, informed her that she should not
report to work and, instead, continue with her
unofficial leave of absence. Consequently, on May
13, 1991, three days after her attempt to return to
work, petitioner filed a complaint for illegal
dismissal before the Arbitration Branch of the
National Labor Relations Commission - CAR Baguio
City. In addition to her complaint for illegal
dismissal, she alleged underpayment of wages,
nonpayment of holiday pay, service incentive leave
pay, 13th month pay, night differential and other
benefits.
Ng's answer to the allegations was that petitioner
abandoned her work without notice to the mgt.,
and that she has no basis for money claims for
underpayment and other benefits as these were
paid in the form of facilities to petitioner and hotel's
other employees. Labor Arbiter and NLRC ruled in
favor of respondent. In addressing in the affirmative
the issue of whether petitioner is entitled to the
benefits and other money claims in her complaint,
the SC
HELD: Labor Arbiter Pati accepted hook, line and
sinker the private respondent's bare claim that the
reason the monetary benefits received by petitioner
between 1981 to 1987 were less than minimum
wage was because petitioner did not factor in the
meals, lodging, electric consumption and water she
received during the period in her computations.
Granting that meals and lodging were provided and
indeed constituted facilities, such facilities could not
be deducted without the employer complying first
with certain legal requirements. Without satisfying
these requirements, the employer simply cannot
deduct the value from the employee's wages. First,
proof must be shown that such facilities are
customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntarily
accepted in writing by the employee. Finally,
facilities must be charged at fair and reasonable
value.
These requirements were not met in the instant
case. Private respondent "failed to present any
company policy or guideline to show that the meal
and lodging ... (are) part of the salary"; he failed to
provide proof of the employee's written
authorization; and, he failed to show how he
arrived at the valuations.
More significantly, the food and lodging, or the
electricity and water consumed by the petitioner
were not facilities but supplements. A benefit or
privilege granted to an employee for the
convenience of the employer is not a facility. The
criterion in making a distinction between the two
not so much lies in the kind (food, lodging) but the
purpose. Considering, therefore, that hotel workers
are required to work different shifts and are
expected to be available at various odd hours, their
ready availability is a necessary matter in the
operations of a small hotel, such as the private
respondent's hotel.
It is therefore evident that petitioner is entitled to
the payment of the deficiency in her wages
equivalent to the full wage applicable from May 13,
1988 up to the date of her illegal dismissal.
Additionally, petitioner is entitled to payment of
service incentive leave pay, emergency cost of living
allowance, night differential pay, and 13th month
pay for the periods alleged by the petitioner as the
private respondent has never been able to adduce
proof that petitioner was paid the aforestated
benefits. However, the claims covering the period
of October 1987 up to the time of filing the case on
May 13, 1988 are barred by prescription as P.D. 442
(as amended) and its implementing rules limit all
money claims arising out of employer-employee
relationship to three (3) years from the time the
cause of action accrues.
FIVE J TAXI vs. NLRC (August 22, 1994)
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Property of: Hanniyah P. Sevilla
FACTS: Private respondents Maldigan and Sabsalon
were hired by the petitioners as taxi drivers and
they worked for 4 days on a 24-hour shifting
schedule. Aside from the daily boundary, they were
also required to pay P20 for car washing and to
further make a P15 deposit to answer for any
deficiency in their “boundary” for very actual
working day. In les than 4 months, petitioners
learned that Maldigan rarely reported for work
since he was working for “Mine of Gold” Taxi
Company. Sabsalon, on the other hand, was
hospitalized but was re-admitted by petitioners. He
failed to report for work and it was revealed that he
was driving a taxi for “Bulaklak” company. In 1989,
Maldigan requested for the reimbursement of his
daily cash deposits for 2 years but petitioners told
him that not a single centavo was left of his
deposits as these were spent for the repairs of the
taxi he was driving. This was allegedly the practice
adopted by petitioners. When Maldigan insisted on
the refund, petitioners terminated his services.
Sabsalon claimed that his termination was effected
when he refused to pay for the washing of his taxi
seat covers. In 1991, private respondents filed a
complaint charging petitioners with illegal dismissal
and illegal deductions.
ISSUE: Whether or not the deductions were illegal
RULING: Article 114 of the Labor Code
provides the rule on deposits for loss or damage to
tools, materials or equipment supplied by the
employer. Clearly the same does not apply to or
permit deposits not do defray any deficiency which
the taxi driver may incur in the remittance of his
boundary. When private respondents stopped
working for petitioners, the alleged purpose for
which petitioners were required such unauthorized
deposits no longer existed. Any balance due to
private respondents after proper accounting must
be returned to them with legal interest.
The accounting shows that Sabsalon
incurred shortages such that he mentioned
questioning the same. The evidence shows that he
had not withdrawn the same, thus, he should be
reimbursed the amount of his accumulated cash
deposits.
Private respondents are not entitled to the
refund of the P20 car wash payment they made.
There was nothing to prevent private respondents
from cleaning the taxi units themselves. Car
washing as a tour of duty is a practice in the
industry and is in fact, dictated by fair play. . (jazzie
sarona)
PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK
& TRUST COMPANY (January 25, 1999)
FACTS: The Regional Tripartite Wages and
Productivity Board of Region V issued Wage Order
No. RB 05-03 which provided COLA to workers in
the private sector who ha[d] rendered service for at
least 3 months 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, 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: P10.00
in the cities of Cebu, Mandaue and Lapulapu; P5.00
in the municipalities of Compostela, Liloan,
Consolacion, Cordova, Talisay, Minglanilla, Naga
and the cities of Davao, Toledo, Dumaguete, Bais,
Canlaon and Tagbilaran.
Respondent 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.
Prubankers Association wrote the
respondent 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. Petitioner then demanded that
the respondent 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 respondent's employees nationwide.
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Property of: Hanniyah P. Sevilla
ISSUE: whether or not a wage distortion resulted
from respondent's implementation of the
aforecited Wage Orders.
RULING: No. The statutory definition of wage
distortion is found in Article 124 of the Labor Code,
as amended by Republic Act No. 6727, which reads:
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.
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
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, length 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.
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. 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.A
disparity in wages between employees holding
similar positions but in different regions does not
constitute wage distortion as contemplated by law.
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. A wage distortion arises when a
wage order engenders wage parity between
employees in different rungs of the organizational
ladder of the same establishment. Wage distortion
involves a parity in the salary rates of different pay
classes which, eliminates the distinction between
the different ranks in the same region.
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. 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.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.
Petitioner also avers that the
implementation of the Wage Order in only one
region violates the equal-pay-for-equal-work
principle. 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.
(lendl floyd montes)
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE
TRADE UNIONS vs. NATIONAL LABOR RELATIONS
COMMISSION and BANKARD, INC(February 17,
2004)
FACTS: Bankard classifies its employees by levels. Its
Board of Directors approved a "New Salary Scale",
for the purpose of making its hiring rate
competitive in the industry’s labor market. The
"New Salary Scale" increased the hiring rates of new
employees, to wit: Levels I and V by P1,000.00, and
Levels II, III and IV by P900.00. Bankard Employees
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Union-WATU pressed for the increase in the salary
of its old, regular employees. Bankard took the
position, however, that there was no obligation on
the part of the management to grant to all its
employees the same increase.
ISSUE: Whether the unilateral adoption by an
employer of an upgraded salary scale that increased
the hiring rates of new employees without
increasing the salary rates of old employees
resulted in wage distortion within the
contemplation of Article 124 of the Labor Code.
RULING: No. To determine the existence of wage
distortion, the "historical" classification of the
employees prior to the wage increase must be
established. Likewise, it must be shown that as
between the different classification of employees,
there exists a "historical" gap or difference. The
employees of private respondent have been
"historically" classified into levels, i.e. I to V, and not
on the basis of their length of service. It is thus clear
that there is no hierarchy of positions between the
newly hired and regular employees of Bankard,
hence, the first element of wage distortion provided
in Prubankers is wanting.
While seniority may be a factor in
determining the wages of employees, it cannot be
made the sole basis in cases where the nature of
their work differs. Moreover, for purposes of
determining the existence of wage distortion,
employees cannot create their own independent
classification and use it as a basis to demand an
across-the-board increase in salary. It is properly a
matter of management judgment and discretion,
and subject, perhaps, for bargaining negotiations
The third element provided in Prubankers
is also wanting. Even assuming that there is a
decrease in the wage gap between the pay of the
old employees and the newly hired employees, said
gap is not significant as to obliterate or result in
severe contraction of the intentional quantitative
differences in the salary rates between the
employee group. As already stated, the
classification under the wage structure is based on
the rank of an employee, not on seniority.
Petitioner cannot legally obligate Bankard
to correct the alleged "wage distortion" as the
increase in the wages and salaries of the newly-
hired was not due to a prescribed law or wage
order. The wordings of Article 124 are clear: Where
the application of any prescribed wage increase by
virtue of a law or Wage Order issued by any
Regional Board results in distortions of the wage
structure….. The mere factual existence of wage
distortion does not, ipso facto result to an
obligation to rectify it, absent a law or other source
of obligation which requires its rectification.
Bankard’s right to increase its hiring rate, to
establish minimum salaries for specific jobs, and to
adjust the rates of employees affected thereby is
embodied in the parties’ CBA, to wit: Section 2. Any
salary increase granted under this Article shall be
without prejudice to the right of the Company to
establish such minimum salaries as it may hereafter
find appropriate for specific jobs, and to adjust the
rates of the employees thereby affected to such
minimum salaries thus established.
In fine, absent any indication that the
voluntary increase of salary rates by an employer
was done arbitrarily and illegally for the purpose of
circumventing the laws or was devoid of any
legitimate purpose other than to discriminate
against the regular employees, this Court will not
step in to interfere with this management
prerogative. (lendl floyd montes)
Metro Transit v NLRC (JULY 11, 1995)
FACTS: Metro is the operator and manager of the
Light Railway Transit System in Metro Manila. It
employs close to 1,000 rank-and-file and over 200
supervisory employees. Private respondent SEAM is
a union composed of supervisory employees of
petitioner Metro. In May 1989, SEAM was certified
as the sole bargaining unit for the supervisory
employees of Metro.
On 1 December 1989, the first collective
bargaining agreement between petitioner Metro
and private respondent SEAM took effect. 1 Prior to
December 1989, Metro had a CBA only with its
rank-and-file employees. During the period when
no CBA governed the terms and conditions of
employment between Metro and its supervisory
employees, whenever rank-and-file employees
were paid a statutorily mandated salary increase,
supervisory employees were, as a matter of
practice, also paid the same amount plus P50.00.
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Property of: Hanniyah P. Sevilla
On 17 April 1989, Metro paid its rank-and-
file employees a salary increase of P500.00 per
month in accordance with the terms of their CBA. 2
Metro, however, did not extend a corresponding
salary increase to its supervisory employees.
On 1 December 1989, Metro, in compliance with its
CBA with SEAM, paid its supervisory employees a
salary increase of P800.00 per month.
ISSUES:
1. W/N supervisory employees should be given
wage increases based on company practice (50
more to the increases given to rank and file)
even when they already have their own CBA
which provides for their annual salary
increases?
2. W/N the wage distortion was effectively
corrected after the grant of increases to
supervisory employees based on their CBA?
DECISION:
1. No. The issue of whether increases in wages
essential for correcting wage distortions may be
credited against CBA-mandated increases, is not an
issue of first impression. In National Federation of
Labor v. National Labor Relations Commission, 21 the
Court rejected the argument of the NLRC that wage
increases resulting from collective bargaining
negotiations should not be regarded as constituting
compliance with the direction to correct wage
distortions arising from the effectivity of Wage
Orders. In National Federation of Labor, the Court,
after quoting the following excerpt from Apex
Mining Company, Inc. v. National Labor Relations
Commission 22
It is important to note that the creditability
provisions of Wage Orders Nos. 5 and 6 (as well as
the parallel provisions in Wage Orders Nos. 2, 3
and 4) are grounded in an important public policy.
The public policy may be seen to be the
encouragement of employers to grant wage and
allowance increases to their employees higher
than the minimum rates of increases prescribed by
statute or administrative regulation. To obliterate
the creditability provisions in Wage Orders
through interpretation or otherwise, and to
compel employers simply to add legislated
increases in salaries or allowances without regard
to what is already being paid, would be to
penalize employers who grant their workers more
than the statutorily prescribed minimum rates of
increases. Clearly, this would be counter-
productive so far as securing the interests of labor
is concerned. The creditability provisions in the
Wage Orders prevent the penalizing of employers
who are industry leaders and who do not wait for
statutorily prescribed increases in salary or
allowances and pay their workers more than what
the law or regulations require. 23 (Emphasis partly
in the original and partly supplied)
said:
We believe that the same public policy requires
recognition and validation, as it were, of wage
increases given by employers either unilaterally or
as a result of collective bargaining negotiations, in
the effort to correct wage distortions. 24 (Emphasis
supplied)
In the instant case, the CBA-stipulated
increase of P800.00 a month was intended as the
countervailing increase for supervisory employees,
the rank-and-file employees having already
received their own increase approximately eight (8)
months earlier. In other words, the wage distortion
in the present case arose not because of a
government-decreed increase in minimum wages or
because Metro simply refused to treat its
supervisory employees, differently from its rank-
and-file workers, but rather because of a failure to
synchronize the CBA-stipulated increases for rank-
and-file and for supervisory employees. Moreover,
as more than once pointed out above, the P800.00
monthly increase given to supervisory employees
should be taken in conjunction with the P550.00
month increase already awarded to supervisory
employees under Part I above. When these are
taken together, the wage distortion which occurred
on 17 April 1989 was completely and permanently
corrected. There is no legal basis for requiring
Metro to pay not only the P800.00 month increase,
but also, on top thereof, the P550.00 monthly
increase to supervisory employees, after 1
December 1989 and forever after.
2. Yes. We consider the difference of P1,500.00 per
month a significant differential that clearly
distinguishes, on the basis of pay scales, a rank-and-
file employee from a supervisory employee.
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Applying the above increases to the actual
salaries being received by rank-and-file and
supervisory employees of Metro, we find that
indeed the distortion caused by the CBA-stipulated
wage increase granted rank-and-file employees on
17 April 1989 was rectified by 1 December 1991.
(cherry canda-melodias)
ALU-TUCP v NLRC (GR No. 109328 8/16/94)
FACTS: In implementating RA 6727, Del Monte
Philippines, Inc. gave a P25.00/day increase to the
P54.00/day wages of its temporary employees or
"broilers." Because the regular employees,
members of petitioner union, who were then
receiving P100.80 a day were not granted a similar
increase, they complained to the management of
private respondent.
Because of the complaint, the parties executed a
Memorandum Agreement wherein Del Monte, "in
positive response to the union's representations
and notwithstanding that it has no legal or
contractual obligation," granted the members of
petitioner union a P10.00/day wage increase
effective January 1, 1990, subject to the latter's
right to claim P15.00/day as balance, through
compulsory arbitration. 2
ALU-TUCP then filed a complaint against Del
Monte in the NLRC Regional Arbitration Branch X in
Cagayan de Oro City alleging that a wage distortion
3
had been created by the grant to its temporary
employees of a P25.00/day salary increase under
Republic Act No. 6727, thereby reducing to P21.80
from the previous P46.80, the difference in salaries
between the regular employees and the temporary
employees.
ISSUE: W/N the wage distortion was corrected by
the MOA entered into by the parties?
DECISION: Art. 124 of the Labor Code, as
amended by Republic Act No. 6727, expressly
provides that where the application of any
prescribed wage increase by virtue of a law or wage
order issued by any Regional Board results in
distortions of the wage structure within an
establishment, the employer and the union shall
negotiate to correct the distortions.
The law recognizes, therefore, the validity
of negotiated wage increases to correct wage
distortions. The legislative intent is to encourage
the parties to seek solution to the problem of wage
distortions through voluntary negotiation or
arbitration, rather than strikes, lockouts, or other
concerted activities of the employees or
management. 4
Recognition and validation of wage
increases given by employers either unilaterally or
as a result of collective bargaining negotiations for
the purpose of correcting wage distortions are in
keeping with the public policy of encouraging
employers to grant wage and allowance increases
to their employees which are higher than the
minimum rates of increases prescribed by statute or
administrative regulation. 5 As this Court stated in
Apex Mining, Inc. v. NLRC: 6
To compel employers simply to add on
legislated increases in salary or allowances
without regard to what is already paid, would
be to penalize employers who grant their
workers more than the statutorily prescribed
minimum rates of increases. Clearly, this would
be counterproductive so far as securing the
interest of labor is concerned.
Thus in Cardona v. NLRC, 7 it was held that there
was no wage distortion where the employer made
salary adjustments in terms of restructuring of
benefits and allowances and there was an increase
pursuant to the CBA.
There is thus, to use the language of the
law, no "effective obliteration of] the distinction
embodied in [private respondent's] wage structure
based on skills, length of service, or other logical
basis of differentiation" in this case. For it is
undisputed that the difference in wages between
petitioners and the temporary employees is now
even greater than it used to be prior to the grant of
the P25.00/day increase to the latter pay pursuant
to Republic Act No. 6727 (cherry canda-melodias)
Capitol Wireless v. Bate and Kilusan Maka-
Manggagawa sa Capwire (NAFLU) (July 14, 1995)
FACTS: On November 15, 1990, petitioner and
respondent Kilusan Maka-Manggagawa sa Capwire
(NAFLU) signed a collective bargaining agreement
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Property of: Hanniyah P. Sevilla
(CBA) with a duration of five years or from July 1,
1990 to June 30, 1995.
Included in the CBA is Section 2 of Article
XIV on wages, which provides:
The COMPANY shall grant to all rank and file
employees covered by this Agreement the following
across the board increases:
First Year — July 1, 1990 to June 30, 1991 an across
the board increase of P200.00 per month to basic
rate;
Second Year — July 1, 1991 to June 30, 1992 an
across the board increase of P250.00 per month to
basic rate;
Third Year — July 1, 1992 to June 30, 1993 an across
the board increase of P300.00 per month of basic
rate.
Should there be any government mandated
wage increases and/or allowances, the same shall
be over and above the benefits herein
granted.(Rollo, p. 31; Emphasis supplied).
Subsequent to the signing of the CBA, the
Regional Tripartite Wages and Productivity Board of
the National Capital Region issued several orders
providing for an across-the-board increase in the
statutory minimum wage of all workers and
employees in the private sector. The Wage Orders
are:
a) Wage Order No. NCR-01 mandating an across the
board increase per day effective November 1, 1990.
b) Wage Order No. NCR-01-A supplementing Wage
Order No. NCR-01, and providing that the P17.00
increase also applied to all private sector workers
and employees in the National Capital Region
already receiving wages above the statutory
minimum wage rates up to P125.00 per day.
c) Wage Order No. NCR-2 mandating that all
employers in the private sector at NCR shall provide
all employees and workers receiving the minimum
wage rate up to P142.00 per day a provisional wage
increase of P12.00 per day effective January 8,
1991.
Petitioner implemented the wage increases
as mandated by law only to those employees
covered by the said wage orders, that is — those
employees receiving not more than P125.00 under
Wage Order No. NCR-0l as supplemented by Wage
Order No. NCR-01-A, and those employees receiving
not more than P142.00 under Wage Order No. NCR-
02.
Private respondent felt aggrieved by the
increases given by petitioner, contending that any
and all government-mandated increases in salaries
and allowances should be granted to all employees
across-the-board without any qualification
whatsoever pursuant to paragraph 2, Section 2 of
Article XIV of the CBA.
ISSUE: W/N the increases provided under the wage
orders should be granted across the board to all
employees of Capitol Wireless?
DECISION:The wage orders did not grant across-the-
board increases to all employees in the National
Capital Region but limited such increases only to
those already receiving wage rates not more than
P125.00 per day under Wage Orders Nos. NCR-01
and NCR-01-A and P142.00 per day under Wage
Order No. NCR-02. Since the wage orders specified
who among the employees are entitled to the
statutory wage increases, then the increases
applied only to those mentioned therein. The
provisions of the CBA should be read in harmony
with the wage orders, whose benefits should be
given only to those employees covered thereby.
Private respondent also contends that a
substantial wage distortion will result in petitioner's
interpretation is upheld. The Wage Orders issued by
the Regional Tripartite Wages Productivity Board
and Article 124 of the Labor Code of the Philippines,
as amended, provide for the procedure to follow
when the application of the prescribed minimum
wage increase results in distortions of the wage
structure in any establishment. Hence, any wage
distortion created by the wage increase granted to
specified employees pursuant to the wage order
can be remedied.
(cherry canda-melodias)
ILAW AT BUKLOD NG MANGGAGAWA SA NLRC
(June 27, 1991)
FACTS: The controversy at bar had its origin in the
"wage distortions" affecting the employees of
respondent San Miguel Corporation allegedly
caused by Republic Act No. 6727, otherwise known
as the Wage Rationalization Act.
Upon the effectivity of the Act on June 5,
1989, the union known as "Ilaw at Buklod Ng
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Manggagawa (IBM)" — said to represent 4,500
employees of San Miguel Corporation, more or less,
"working at the various plants, offices, and
warehouses located at the National Capital Region"
— presented to the company a "demand" for
correction of the "significant distortion in . . . (the
workers') wages." In that "demand," the Union
explicitly invoked Section 4 (d) of RA 6727 which
reads as follows:
xxx xxx xxx
(d) . . .
Where the application of the increases in the wage
rates under this Section results in distortions as
defined under existing laws in the wage structure
within an establishment and gives rise to a dispute
therein, such dispute shall first be settled
voluntarily between the parties and in the event of
a deadlock, the same shall be finally resolved
through compulsory arbitration by the regional
branches of the National Labor Relations
Commission (NLRC) having jurisdiction over the
workplace.
It shall be mandatory for the NLRC to
conduct continuous hearings and decide any
dispute arising under this Section within twenty (20)
calendar days from the time said dispute is formally
submitted to it for arbitration. The pendency of a
dispute arising from a wage distortion shall not in
any way delay the applicability of the increase in the
wage rates prescribed under this Section.
But the Union claims that "demand was
ignored: 1
The . . . COMPANY ignored said demand by offering
a measly across-the-board wage increase of P7.00
per day, per employee, as against the proposal of
the UNION of P25.00 per day, per employee. Later,
the UNION reduced its proposal to P15.00 per day,
per employee by way of amicable settlement.
When the . . . COMPANY rejected the
reduced proposal of the UNION the members
thereof, on their own accord, refused to render
overtime services, most especially at the Beer
Bottling Plants at Polo, starting October 16, 1989.
ISSUE: W/N a concerted mass action (in this case
refusing to work overtime and changing 12-hour
shift to the regular 8-hour shift unilaterally, as in
without approval from SMC) is a method for
correcting the wage distortion
DECISION:Among the rights guaranteed to
employees by the Labor Code is that of engaging in
concerted activities in order to attain their
legitimate objectives. Article 263 of the Labor Code,
as amended, declares that in line with "the policy of
the State to encourage free trade unionism and free
collective bargaining, . . (w)orkers shall have the
right to engage in concerted activities for purposes
of collective bargaining or for their mutual benefit
and protection." A similar right to engage in
concerted activities for mutual benefit and
protection is tacitly and traditionally recognized in
respect of employers.
The more common of these concerted
activities as far as employees are concerned are:
strikes — the temporary stoppage of work as a
result of an industrial or labor dispute; picketing —
the marching to and fro at the employer's premises,
usually accompanied by the display of placards and
other signs making known the facts involved in a
labor dispute; and boycotts — the concerted refusal
to patronize an employer's goods or services and to
persuade others to a like refusal. On the other
hand, the counterpart activity that management
may licitly undertake is the lockout — the
temporary refusal to furnish work on account of a
labor dispute, In this connection, the same Article
263 provides that the "right of legitimate labor
organizations to strike and picket and of employer
to lockout, consistent with the national interest,
shall continue to be recognized and respected." The
legality of these activities is usually dependent on
the legality of the purposes sought to be attained
and the means employed therefor.
It goes without saying that these joint or
coordinated activities may be forbidden or
restricted by law or contract. In the particular
instance of "distortions of the wage structure within
an establishment" resulting from "the application of
any prescribed wage increase by virtue of a law or
wage order," Section 3 of Republic Act No. 6727
prescribes a specific, detailed and comprehensive
procedure for the correction thereof, thereby
implicitly excluding strikes or lockouts or other
concerted activities as modes of settlement of the
issue. The provision 11 states that —
. . . the employer and the union shall negotiate
to correct the distort-ions. Any dispute arising
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from wage distortions shall be resolved through
the grievance procedure under their collective
bargaining agreement and, if it remains
unresolved, through voluntary arbitration.
Unless otherwise agreed by the parties in
writing, such dispute shall be decided by the
voluntary arbitrator or panel of voluntary
arbitrators within ten (10) calendar days from
the time said dispute was referred to voluntary
arbitration.
In cases where there are no collective
agreements or recognized labor unions, the
employers and workers shall endeavor to
correct such distortions. Any dispute arising
therefrom shall be settled through the National
Conciliation and Mediation Board and, if it
remains unresolved after ten (10) calendar days
of conciliation, shall be referred to the
appropriate branch of the National Labor
Relations Commission (NLRC). It shall be
mandatory for the NLRC to conduct continuous
hearings and decide the dispute within twenty
(20) calendar days from the time said dispute is
submitted for compulsory arbitration.
The pendency of a dispute arising from a wage
distortion shall not in any way delay the
applicability of any increase in prescribed wage
rates pursuant to the provisions of law or Wage
Order.
xxx xxx xxx
The legislative intent that solution of the
problem of wage distortions shall be sought by
voluntary negotiation or abitration, and not by
strikes, lockouts, or other concerted activities of the
employees or management, is made clear in the
rules implementing RA 6727 issued by the Secretary
of Labor and Employment 12 pursuant to the
authority granted by Section 13 of the Act. 13
Section 16, Chapter I of these implementing rules,
after reiterating the policy that wage distortions be
first settled voluntarily by the parties and eventually
by compulsory arbitration, declares that, "Any issue
involving wage distortion shall not be a ground for a
strike/lockout."
Moreover, the collective bargaining
agreement between the SMC and the Union,
relevant provisions of which are quoted by the
former without the latter's demurring to the
accuracy of the quotation, 14 also prescribes a
similar eschewal of strikes or other similar or
related concerted activities as a mode of resolving
disputes or controversies, generally, said agreement
clearly stating that settlement of "all disputes,
disagreements or controversies of any kind" should
be achieved by the stipulated grievance procedure
and ultimately by arbitration. The provisions are as
follows:
Section 1. Any and all disputes, disagreements
and controversies of any kind between the
COMPANY and the UNION and/or the workers
involving or relating to wages, hours of work,
conditions of employment and/or employer-
employee relations arising during the effectivity
of this Agreement or any renewal thereof, shall
be settled by arbitration in accordance with the
procedure set out in this Article. No dispute,
disagreement or controversy which may be
submitted to the grievance procedure in Article
IX shall be presented for arbitration unless all
the steps of the grievance procedure are
exhausted (Article V — Arbitration).
Section 1. The UNION agrees that there shall be
no strikes, walkouts, stoppage or slowdown of
work, boycotts, secondary boycotts, refusal to
handle any merchandise, picketing, sit-down
strikes of any kind, sympathetic or general
strikes, or any other interference with any of
the operations of the COMPANY during the
terms of this agreement (Article VI).
The Union was thus prohibited to declare and hold
a strike or otherwise engage in non-peaceful
concerted activities for the settlement of its
controversy with SMC in respect of wage
distortions, or for that matter; any other issue
"involving or relating to wages, hours of work,
conditions of employment and/or employer-
employee relations." The partial strike or concerted
refusal by the Union members to follow the five-
year-old work schedule which they had therefore
been observing, resorted to as a means of coercing
correction of "wage distortions," was therefore
forbidden by law and contract and, on this account,
illegal.
(cherry canda-melodias)
DBP v NLRC G.R. Nos. 82763-64 March 19, 1990
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FACTS: NLRC directed DBP to remit the sum of
P6,292,380.00 out of proceeds of the foreclosed
properties of Lirag Textile Mills Inc., sold at public
auction in order to pay the separation pay, 13th
month pay, gratuity pay, sick leave and vacation
leave pay and emergency allowance of the
terminated employees of LIRAG.
On 15 April 1983, a Writ of Execution was
issued. On the same day, DBP extra-judicially
foreclosed the mortgaged properties for failure of
LIRAG to pay its mortgage obligation. As the only
bidder at the foreclosure sale, DBP acquired said
mortgaged properties for P31,346,462.90. Since
DBP was the sole mortgagee, no actual payment
was made, the amount of the bid having been
merely credited in partial satisfaction of LIRAG's
indebtedness.
ISSUE: W/N the the proceeds of LIRAG's properties
foreclosed by DBP may be garnished to satisfy the
payment of terminated employees’ benefits
DECISION:
We opine in the negative, upon the following
considerations:
1. Because of its impact on the entire system of
credit, Article 110 of the Labor Code cannot be
viewed in isolation but must be read in relation to
the Civil Code scheme on classification and
preference of credits.
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. . . .
Republic vs. Peralta (G.R. No. L-56568, May 20,
1987, 150 SCRA 37).
2. In the same way that the Civil Code provisions on
classification of credits and the Insolvency Law have
been brought into harmony, so also must the
kindred provisions of the Labor Law be made to
harmonize with those laws.
3. In the event of insolvency, a principal objective
should be to effect an equitable distribution of the
insolvent's property among his creditors. To
accomplish this there must first be some
proceeding where notice to all of the insolvents's
creditors may be given and where the claims of
preferred creditors may be bindingly adjudicated
(De Barretto vs. Villanueva, No. L-14938, December
29, 1962, 6 SCRA 928). The rationale therefore has
been expressed in the recent case of DBP vs.
Secretary of Labor (G.R. No. 79351, 28 November
1989), which we quote:
A preference of credit bestows upon the
preferred creditor an advantage of having his
credit satisfied first ahead of other claims which
may be established against the debtor.
Logically, it becomes material only when the
properties and assets of the debtors are
insufficient to pay his debts in full; for if the
debtor is amply able to pay his various creditors
in full, how can the necessity exist to determine
which of his creditors shall be paid first or
whether they shall be paid out of the proceeds
of the sale the debtor's specific property?
Indubitably, the preferential right of credit
attains significance only after the properties of
the debtor have been inventoried and
liquidated, and the claims held by his various
creditors have been established (Kuenzle &
Streiff (Ltd.) vs. Villanueva, 41 Phil 611 (1916);
Barretto vs. Villanueva, G.R. No. 14938, 29
December 1962, 6 SCRA 928; Philippine Savings
Bank vs. Lantin, G.R. 33929, 2 September 1983,
124 SCRA 476).
4. A distinction should be made between a
preference of credit and a lien. A preference applies
only to claims which do not attach to specific
properties. A lien creates a charge on a particular
property. The right of first preference as regards
unpaid wages recognized by Article 110 does not
constitute a lien on the property of the insolvent
debtor in favor of workers. It is but a preference of
credit in their favor, a preference in application. It is
a method adopted to determine and specify the
order in which credits should be paid in the final
distribution of the proceeds of the insolvent's
assets. It is a right to a first preference in the
discharge of the funds of the judgment debtor.
In the words of Republic vs. Peralta, supra:
Article 110 of the Labor Code does not purport
to create a lien in favor of workers or
employees for unpaid wages either upon all of
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the properties or upon any particular property
owned by their employer. Claims for unpaid
wages do not therefore fall at all within the
category of specially preferred claims
established under Articles 2241 and 2242 of the
Civil Code, except to the extent that such
complaints for unpaid wages are already
covered by Article 2241, number 6: "claims for
laborers wages, on the goods manufactured or
the work done;" or by Article 2242, number 3:
"claims of laborers and other workers engaged
in the construction, reconstruction or repair of
buildings, canals and other works, upon said
buildings, canals and other works, upon said
buildings, canals and other works." To the
extent that claims for unpaid wages fall outside
the scope of Article 2241, number 6 and 2242,
number 3, they would come within the ambit of
the category of ordinary preferred credits under
Article 2244.
5. The DBP anchors its claim on a mortgage credit. A
mortgage directly and immediately subjects the
property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the
obligation for whose security it was constituted
(Article 2176, Civil Code). It creates a real right
which is enforceable against the whole world. It is a
lien on an identified immovable property, which a
preference is not. A recorded mortgage credit is a
special preferred credit under Article 2242 (5) of the
Civil Code on classification of credits. The
preference given by Article 110, when not falling
within Article 2241 (6) and Article 2242 (3) of the
Civil Code and not attached to any specific property,
is an ordinary preferred credit although its impact is
to move it from second priority to first priority in
the order of preference established by Article 2244
of the Civil Code (Republic vs. Peralta, supra).
In fact, under the Insolvency Law (Section 29) a
creditor holding a mortgage or lien of any kind as
security is not permitted to vote in the election of
the assignee in insolvency proceedings unless the
value of his security is first fixed or he surrenders all
such property to the receiver of the insolvent's
estate.
6. Even if Article 110 and its Implementing Rule, as
amended, should be interpreted to mean "absolute
preference," the same should be given only
prospective effect in line with the cardinal rule that
laws shall have no retroactive effect, unless the
contrary is provided (Article 4, Civil Code). Thereby,
any infringement on the constitutional guarantee
on non-impairment of the obligation of contracts
(Section 10, Article III, 1987 Constitution) is also
avoided. In point of fact, DBP's mortgage credit
antedated by several years the amendatory law, RA
No. 6715. To give Article 110 retroactive effect
would be to wipe out the mortgage in DBP's favor
and expose it to a risk which it sought to protect
itself against by requiring a collateral in the form of
real property.
In fine, the right to preference given to
workers under Article 110 of the Labor Code cannot
exist in any effective way prior to the time of its
presentation in distribution proceedings. It will find
application when, in proceedings such as
insolvency, such unpaid wages shall be paid in full
before the "claims of the Government and other
creditors" may be paid. But, for an orderly
settlement of a debtor's assets, all creditors must
be convened, their claims ascertained and
inventoried, and thereafter the preferences
determined in the course of judicial proceedings
which have for their object the subjection of the
property of the debtor to the payment of his debts
or other lawful obligations. Thereby, an orderly
determination of preference of creditors' claims is
assured (Philippine Savings Bank vs. Lantin, No. L-
33929, September 2, 1983, 124 SCRA 476); the
adjudication made will be binding on all parties-in-
interest, since those proceedings are proceedings in
rem; and the legal scheme of classification,
concurrence and preference of credits in the Civil
Code, the Insolvency Law, and the Labor Code is
preserved in harmony. (cherry canda-melodias)
ALCANTARA & SONS vs NLRC AND DURAN (January
5, 1994)
FACTS: Duran is an employee of Alcantara and
Sons. He was hired as a crawler operator for its
logging operations. While operating the crawler, it
tilted to one side or somethine (basta, nasira niya!).
Duran claims it was excusable negligence. And that
he was illegally dismissed. Petitioner vehemently
insists that it did not terminate its employer-
employee relationship with private respondent.
After all, he was merely placed under preventive
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suspension pending termination of the investigation
re the engine failure of the Crawler .
In fact, it was private respondent who
severed the relationship when he instituted a
Complaint for Illegal Dismissal against the company.
Since private respondent did not wait for the
outcome of the investigation, petitioner maintains
that private respondent was deemed to have
abandoned his work.
ISSUE: W/N Duran abandoned his work?
RULING: The rule is that before
abandonment can be considered a valid cause for
dismissal, there must be a concurrence of the
intention to abandon and some overt acts from
which an employee may be deduced as having no
more intention to work. 9
But, in this case before us, no such
intention to abandon his work can be discerned
from the actuations of private respondent. Neither
are there overt acts which could be considered
manifestations of his desire to abandon his work.
On the contrary, the actions of private respondent
demonstrate a desire on his part to continue his
employment with petitioner rather than to abandon
it. For, the charge of abandonment does not square
with the recorded fact that twelve (12) days after
being served a copy of Personnel Action Form No.
3-08-3 placing him under preventive suspension
effective 14 July 1983, private respondent filed a
complaint with the labor authorities. 10 And, if it was
true that private respondent simply left his job,
petitioner could have very well charged him for
abandonment. But, it did not. The filing of the case
for illegal dismissal therefore negates the allegation
of abandonment. 11
(cherry canda-melodias)
NERI vs. NLRC
ISSUE: WON BBC is and independent job-
contractor or not?
FACTS: Respondents are sued by two employees of
BBC to compel Far Eastern Banking Corporation
(FEBTC) to recognize them as its regular employees
and be paid the same wages which its employees
receive.
It was established in the proceedings that
BBC had substantial capitalization of P1 million or
stockholders equity of P1.5 million. Thus, the Labor
Arbiter ruled that BBC was only job contracting and
that its employees were not of FEBTC. The factual
findings were affirmed by NLRC.
BBC is a corporation engaged in providing
technical, maintenance, engineering, housekeeping,
security and other specific services to its clientele.
Petitioners were assigned to work in Cagayan
Branch of FEBTC as radio telex operator and janitor.
Petitioners instituted complaints against
FEBTC and BBC to compel the bank to accept them
as regular employees and for it to pay the
differential of between the wages being paid by BBC
and those received by FEBTC employees with
similar length of service. It is the petitioner’s
assertion that BBC is engaged in “labor-only”
contracting, hence, they conclude, they are
employees of the respondent FEBTC; that it failed to
adduce evidence purporting to show that it
invested in the form of tools, equipment,
machineries, work premises and other materials
which are necessary in the conduct of its business;
that they perform duties directly related to the
principal business or operation of FEBTC.
The Labor Arbiter dismissed the complaint
for lack of merit. Respondent BBC was considered
an independent contractor because it proved that it
had substantial capital. Thus, the petitioners were
held to be employees of BBC and not of FEBTC. On
appeal, the NLRC affirmed the decision of the Labor
Arbiter.
RULING: BBC need not prove that it made
investments in the form of tools, equipment,
machineries, work premises, among others,
because it has established that it has sufficient
capitalization; it was no longer necessary for BBC TO
further adduce evidence to prove that it does not
fall within the purview of labor-only contracting.
There is even no need for it to refute petitioners’
contention that the activities they perform are
directly related to the principal business of the
respondent bank.
It is well-settled that there is labor-only
contracting where: (a) the person supplying the
workers to an employer does not have substantial
capital OR investment in the form of tools,
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equipment, machineries, work premises, among
others; and, (b) the workers recruited and placed by
such person are performing activities which are
directly related to the principal business of the
employer.
Based on the foregoing, BBC cannot be
considered engaged only in labor only contracting
because the law does not require both substantial
capital and investment in the form of tools,
equipment, machineries, etc. This is clear from the
use of the conjunction “or”. If the intention was to
require the contractor to prove that he has both
capital and the requisite investment, then the
conjunction “and” should have been used.
(kim mamontuan)
MONTEMAYOR VS. ARANETA UNIVERSITY
Facts: Felix Montemayor was a full time professor of
Araneta Univ. Foundation and the head of its
Humanities and Psychology Dept. A complaint for
immorality was lodged against him. The President
of AUF created a committee to investigate the
charge. The report and recommendation of the
investigating committee came on July 8, 1974. It
was adverse to petitioner, who was found morally
responsible for the act complained of. The
recommendation was for his demotion in rank by
one degree. The then President Juan Salcedo, Jr., on
August 5, 1974, adopted such recommendation and
thereafter referred the same to the Board of
Trustees of private respondent for appropriate
action.
Subsequently, new charges were filed against him
for conduct unbecoming of a faculty member and
another committee was appointed. He was
preventively suspended until the administrative
investigation could be concluded. The committee
found him guilty and recommended for dismissal.
Montemayor's dismissal was then ordered effective
on the date of his preventive suspension. The
University then filed with the NLRC a report of his
suspension and an application for clearance to
terminate his employment. The petitioner in turn
lodged a complaint with the NLRC for
reinstatement, payment of back wages and salaries.
Both the labor arbiter and the National Labor
Relations Commission found in favor of petitioner.
He was ordered reinstated to his former position
with back wages and without lose of seniority and
other privileges. Petitioner's complaint for unfair
labor practice was, however, dismissed. Private
respondents appealed to respondent Secretary of
Labor who, on July 14, 1976, set aside the
Commission's order for his reinstatement. He found
petitioner's dismissal justified. Nor was he
persuaded by the plea that there was denial of due
process. He was satisfied with the procedure
followed by private respondent. Moreover, he could
not have ignored the fact that the controversy
between the parties was passed upon and the
parties heard. Hence this petition.
Issue:
Held: The present Constitution, as noted, expanded
the scope of the protection to Labor mandate by
specifying that the State shall assure the right of
workers to security of tenure. An instructor or
member of a teaching staff of a university was held,
in the leading case of Feati University v. Bautista, to
be an employee. As such, he is entitled to that
security of tenure guaranteed by the Constitution.
While a faculty member such as petitioner may be
dismissed, it must be for cause. What is more, there
must be clearance from the Secretary of Labor. So it
is provided in the Labor Code.
The stand taken by petitioner as to his being
entitled to security of tenure is reinforced by the
provision on academic freedom which, as noted, is
found in the Constitution. The charge leveled
against petitioner that of making homosexual
advances to certain individuals, if proved, did
amount to a sufficient cause for removal. The
crucial question therefore is whether it was shown
that he was guilty of such immoral conduct. He is
thus entitled to the protection of procedural due
process. To paraphrase Webster, there must be a
hearing before condemnation, with the
investigation to proceed in an orderly manner, and
judgment to be rendered only after such inquiry.
The procedure followed in the first investigation of
petitioner, conducted in June of 1974, did satisfy
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the procedural due process requisite. The same
cannot be said of the November, 1974 inquiry when
the petitioner had to face anew a similar charge of
making homosexual advances. As admitted in the
exhaustive comment of the Solicitor General: "On
November 16, 1974, Montemayor, through counsel,
moved for the postponement of the hearing set for
November 18 and 19, 1974 but the same was
rejected by the committee. The hearing proceeded
as scheduled in the absence of Professor
Montemayor and his counsel. In said hearing, Prof.
Luis Almazan and Jaime Castaneda testified. On
December 5, 1974, the Committee submitted its
report finding the charges against Montemayor to
have been sufficiently established and
recommending to the President and the Board of
Trustees of the Araneta University Foundation his
separation from the University, in accordance with
Sections 116 and 351 of the Manual of Policies of
the University.” It does appear therefore that the
members of such investigating committee failed to
show full awareness of the demands of procedural
due process. A motion by petitioner for
postponement of the hearing, apparently the first
one made, was denied. What is worse, in his
absence the matter was heard with the committee
losing no time in submitting its report finding the
charges against petitioner to have been sufficiently
established and recommending his removal. If that
were all, respondent Secretary of Labor cannot be
sustained. Certiorari would lie. But such deficiency
was remedied, as pointed out in the same comment
of the Solicitor General, by the fact "that petitioner
was able to present his case before the Labor
Commission."
WHEREFORE, the petition for certiorari is dismissed
Brent School Inc. vs. Zamora
Facts: Alegre was engaged by Brent School as
athletic director at a yearly compensation of P20,
000. The contract fixed a specific term of 5 years
from July 18, 1971 to July 17, 1976. Subsequent
subsidiary agreements dated March 15, 1973,
August 28, 1973, and September 14, 1974
reiterated the same terms and conditions, including
the expiry date, as those contained in the original
contract of July 18, 1971.
On April 20, 1976, Alegre was given a copy of the
report filed by Brent School with the Dept. of Labor
advising of the termination of his services effective
on July 16, 1976. The ground stated for the
termination was "completion of contract, expiration
of the definite period of employment." On May 26,
Alegre accepted the amount of P 3177. 71 and
signed a receipt containing the phrase, "in full
payment of services for the period of May 16, to
July 17, 1976 as full payment of contract."
However, at the investigation conducted by a Labor
Conciliator of said report of termination of his
services, Alegre protested the announced
termination of his employment. He argued that
although his contract did stipulate that the same
would terminate on July 17, 1976, since his services
were necessary and desirable in the usual business
of his employer, and his employment had lasted for
five years, he had acquired the status of a regular
employee and could not be removed except for
valid cause.
The Regional Director considered Brent School's
report as an application for clearance to terminate
employment (not a report of termination), and
accepting the recommendation of the Labor
Conciliator, refused to give such clearance and
instead required the reinstatement of Alegre, as a
"permanent employee," to his former position
without loss of seniority rights and with full back
wages. The Director pronounced "the ground relied
upon by the respondent (Brent) in terminating the
services of the complainant (Alegre) x x x (as) not
sanctioned by P.D. 442,".
Brent School filed a motion for reconsideration. The
Regional Dir. denied the motion and forwarded the
case to the Sec. of Labor who sustained the
Regional Director. Upon appeal to the Office of the
President, it was dismissed and affirmed the
Secretary's decision that Alegre was a permanent
employee who could not be dismissed except for
just cause, and expiration of the employment
contract was not one of the just causes provided for
in the Labor Code for termination of services. Hence
this appeal.
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Held: The employment contract between Brent
School and Alegre was executed on July 18, 1971, at
a time when the Labor Code of the Philippines (P.D.
442) had not yet been promulgated. Indeed, the
Code did not come into effect until November 1,
1974, some three years after the perfection of the
employment contract, and rights and obligations
thereunder had arisen and been mutually observed
and enforced.
At that time there was no doubt whatever about
the validity of term employment. In cases of
employment, without a definite period, in a
commercial, industrial, or agricultural establishment
or enterprise, the employer or the employee may
terminate at any time the employment with just
cause; or without just cause in the case of an
employee by serving written notice on the
employer at least one month in advance, or in the
case of an employer, by serving such notice to the
employee at least one month in advance or one-half
month for every year of service of the employee,
whichever is longer, a fraction of at least six months
being considered as one whole year.
It is plain then that when the employment contract
was signed between Brent School and Alegre on
July 18, 1971, it was perfectly legitimate for them to
include in it a stipulation fixing the duration thereof.
The status of legitimacy continued to be enjoyed by
fixed. period employment contracts under the
Labor Code. Article 320, entitled "Probationary and
fixed period employment," originally stated that the
"termination of employment of probationary
employees and those employed WITH A FIXED
PERIOD shall be subject to such regulations as the
Secretary of Labor may prescribe " The asserted
objective was "to prevent the circumvention of the
right of the employee to be secured in their
employment as provided. Art. 321 prescribed the
just causes fro which an employer could terminate
"an employment without a definite period". Art.
319 defined "employment without a fixed period:
"An employment shall be deemed to be without a
definite period for purposes of this Chapter where
the employee has been engaged to perform
activities which are usually necessary or desirable in
the usual business or trade of the employer, except
where the employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at the
time of the engagement of the employee or where
the work or service to be performed is seasonal in
nature and the employment is for the duration of
the season."
Issue: The question is whether or not a voluntary
agreement on a fixed term or period would be valid
where the employee "has been engaged to perform
activities which are usually necessary or desirable in
the usual business or trade of the employer"
Held: From the premise-that the duties of an
employee entail "activities which are usually
necessary or desirable in the usual business or trade
of the employer"-the conclusion does not
necessarily follow that the employer and employee
should be forbidden to stipulate any period of time
for the performance of those activities. There is
nothing essentially contradictory between a definite
period of an employment contract and the nature
of the employees duties set down in that contract
as being "usually necessary or desirable in the usual
business or trade of the employer." The concept of
the employee's duties as being "usually necessary
or desirable in the usual business or trade of the
employer" is not synonymous with or identical to
employment with a fixed term. Logically, the
decisive determinant in term employment should
not be the activities that the employee is called
upon to perform, but the day certain agreed upon
by the parties for the commencement and
termination of their employment relationship, a day
certain being understood to be "that which must
necessarily come, although it may not be known
when.” Seasonal employment and employment for
a particular project are merely instances of
employment in which a period, where not expressly
set down, is necessarily implied.
Indeed, not only is the concept of regular
employment not essentially inconsistent with
employment for a fixed term, as above pointed out,
Article 272 of the Labor Code, as amended by said
PD 850, still impliedly acknowledged the propriety
of term employment: it listed the "just causes" for
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which "an employer may terminate employment
without a definite period, " thus giving rise to the
inference that if the employment be with a definite
period, there need be no just cause for termination
thereof if the ground be precisely the expiration of
the term agreed upon by the parties for the
duration of such employment.
A narrow and literal interpretation of Art. 280 not
only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would
be an anomaly, but would also appear to restrict,
without reasonable. distinctions, the right of an
employee to freely stipulate with his employer the
duration of his engagement, it logically follows that
such a literal interpretation should be eschewed or
avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its
application. Outlawing the whole concept of term
employment and subverting to boot the principle of
freedom of contract to remedy the evil of
employers' using it as a means to prevent their
employees from obtaining security of tenure is like
cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the
head.
Accordingly, and since the entire purpose behind
the development of legislation culminating in the
present Article 280 of the Labor Code clearly
appears to have been, as already observed to
prevent circumvention of the employee's right to be
secure in his tenure. the clause in said article
indiscriminately and completely ruling out all
written or oral agreements conflicting with the
concept of regular employment as defined therein
should be construed to refer to the substantive evil
that the Code itself has singled out: agreements
entered into precisely to circumvent security of
tenure. It should have no application to instances
where a fixed period of employment was agreed
upon knowingly and voluntarily by the parties,
without any force duress or improper pressure
being brought to bear upon the employee and
absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the
employer and employee dealt with each other on
more or less equal terms with no moral dominance
whatever being exercised by the former over the
latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than
those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects
and apt to lead to absurd and unintended
consequences.
FEGURIN VS. NLRC
Facts: Francisco Cacho & Co. (Company, for short) is
engaged in the construction business which hired
petitioners either as carpenters, masons or
laborers, on different dates.
On January 11, 1978, petitioners, together with the
Federation of Free Workers (Francisco Cacho & Co.,
Inc. Chapter), filed with the National Capital Region
of the Ministry of Labor a complaint against the
Company alleging that they were all its regular and
permanent workers and were illegally dismissed for
union activities on September 28, 1977. They
prayed for reinstatement with back wages and
other benefits. Petitioners take the position that
they are regular and permanent employees as they
had been employed since 1968 or 1969; that they
are members of the SSS; and that in the Collective
Bargaining Agreement between the Union to which
petitioners are affiliated and the Company, they
were considered as permanent and regular
construction workers.
The Company traversed the complaint by stating
that petitioners were project workers assigned to
different projects as stated in their individual
contracts of employment and that pursuant to the
same, their employment was ipso facto terminated
upon completion of the project or the phase of
work requiring the services of
mason/carpenter/laborer; that on September 28,
1977, petitioners' services were terminated due to
the completion of the phase of work in the projects
where they were individually assigned; and that the
required Report of Termination, dated September
17, 1977, was duly submitted to the Ministry of
Labor.
Labor Arbiter dismissed the petition. On appeal, the
NLRC affirmed the Labor Arbiter but ordered the
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company to rehire petitioners in any of its future
projects.
Issue: whether petitioners are regular and
permanent employees or project workers whose
employments were terminated at the completion of
the project to which assigned or any phase thereof.
Held: Petitioners are regular employees. Under
Article 281 of the Labor Code, any employee who
has rendered at least one year of service, or who
performs activities usually necessary or desirable in
the usual business of the employer, is considered a
regular employee, the provision of written
agreement to the contrary notwithstanding.
In this case, four of the petitioners had been
working with the Company for nine years, one for 8
years, and another for 6 years, the shortest term
being 3 years. The Company has not rebutted
petitioners' averments that they had been
employed for several years before their services
were terminated. The Notices of Employment,
therefore, do not reflect accurately petitioners'
respective lengths of service as they give the
starting point of petitioners' employment as
between 1975 and 1977 or just a few months
before their dismissal. Moreover, they performed
activities usually necessary or desirable in the usual
business of the Company, their employer, hence,
their employment is deemed regular.
Generally, there are two types of employees in the
construction industry, namely: 1) Project
employees, and 2) Non-Project employees.
Project employees are those employed in
connection with a particular construction project.
Non-project employees arc those employed by a
construction company without reference to any
particular project.
Members of a work pool from which a construction
company draws its project employees, if considered
employees of the construction company while in
the work pool, are non-project employees or
employees for an indefinite period. If they arc
employed in a particular project, the completion of
the project or of any phase thereof will not mean
severance of employer employee relationship.
(Policy Instructions No. 20 of the Minister of Labor)
Considering the nature of the work of petitioners,
that of carpenter, laborer or mason, their respective
jobs would actually be continuous and on-going.
When a project to which they are individually
assigned is completed, they would be assigned to
the next project or a phase thereof. In other words,
they belonged to a "work pool" from which the
Company would draw workers for assignment to
other projects at its discretion. They are, therefore,
actually "non-project employees."
Manila Hotel vs. CIR
Facts: The Pines Hotel Employees Association filed
on February 24, 1960 before the Court of Industrial
Relations a petition praying, among other things,
that its employees who were working at the Pines
Hotel be paid additional compensation for overtime
service rendered due to the exigencies of the
business, as well as additional compensation for
Sunday, legal holiday and night time work.
Presiding Judge Jose S. Bautista rendered judgment
stating that the employees were entitled to the
additional compensation demanded, including that
for overtime work, because an employee who
renders overtime service is entitled to
compensation even if he rendered it without prior
authority.
In compliance with the order of the court, the
Examining Division of the Court of Industrial
Relations submitted a report in which it stated that
the amount due the employees as additional
compensation for overtime and night services
rendered from January to December. The
management filed its objection to the report on the
ground that it included 22 names of employees who
were not employees of the Pines Hotel at the time
the petition was filed. These 22 employees were
hired only during the summer season.
Issue: W/N these 22 employees were regular
employees
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Held: Yes. The questioned employees were never
separated from the service. Their status is that of
regular seasonal employees who are called to work
from time to time, mostly during summer season.
The nature of their relationship with the hotel is
such that during off season they are temporarily
laid off but during summer season they are re-
employed, or when their services may be needed.
They are not strictly speaking separated from the
services but are merely considered as on leave of
absence without pay until they are re-employed.
Their employment relationship is never severed but
only suspended. As such, these employees can be
considered as in the regular employment of the
hotel.
UST vs. NLRC
Facts: Private respondent, Dr. Borja was first
appointed as "affiliate faculty" in the Faculty of
Medicine and Surgery at the UST on Sep. 29, 1976.
In the second semester of the school year 1976-77
he was appointed instructor with a load of twelve
(12) hours a week. He was reappointed instructor
for the school year 1977-78 with a load of nine (9)
hours a week in the first semester and two (2) hours
a week in the second. On June 10, 1978 he was
appointed as Instructor III for the school year 1978-
79. His load for the first semester was eight (8)
hours a week, and for the second semester, seven
(7) hours a week.
On March 19, 1979 Dean Gilberto Gamez observed
that Dr. Borja should not be reappointed based on
the evaluation sheet that shows his sub-standard
and inefficient performance. Nevertheless in view
of the critical shortage of staff members in the
Department of Neurology and Psychiatry, Dr.
Gamez recommended the reappointment of Dr.
Borja, after informing the latter of the negative
feedbacks regarding his teaching and his promise to
improve his performance. Thus on July 27, 1979 he
was extended a reappointment as Instructor III in
the school year 1979-80. He was given a load of six
(6) hours a week. In all these appointments he was
a part time instructor.
At the end of the academic year, it appearing that
Dr. Borja had not improved his performance in spite
of his assurances of improvement, his
reappointment was not recommended. He then
filed with the NLRC a complaint for illegal dismissal.
The LA rendered a decision for Borja and ordered
immediate reinstatement with full back wages,
rights and benefits plus 500,000 by way of moral
damages. NLRC affirmed the decision modifying the
back wages to 3 years w/o deduction and to pay
Borja with 100,000 for actual damages and 300,000
for moral damages. NLRC found that Borja had
earned his to his credit 8 semesters or 4 academic
years of professional duties with the UST and he has
met the requirements to become a regular
employee under the 3 years requirement in the
Manual of Regulations for Private Schools.
Issue: W/N Borja's total working day was devoted to
the school and he had no other regular
remunerative employment and was paid on a
regular monthly basis regardless of the number of
teaching hours (to be considered regular employee)
Held: The appealed decision is correct insofar as it
declares that it is the Manual of Regulations for
Private Schools, not the Labor Code, that
determines the acquisition of regular or permanent
status of faculty members in an educational
institution, but the Court disagrees with the
observation that it is only the completion of three
(3) years of service that is required to acquire such
status.
Paragraph 75 of the Manual of Regulations for
Private Schools: Full time teachers who have
rendered three consecutive years of satisfactory
service shall be considered permanent.
The legal requisites, therefore, for acquisition by a
teacher of permanent employment, or security of
tenure, are as follows:
1) the teacher is a full time teacher;
2) the teacher must have rendered three (3)
consecutive years of service; and
3) Such service must have been satisfactory.
The Manual of Regulations also states that "a full-
time teacher" is "one whose total working day is
devoted to the school, has no other regular
remunerative employment and is paid on a regular
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monthly basis regardless of the number of teaching
hours"
It follows that a part-time member of the faculty
cannot acquire permanence in employment under
the Manual of Regulations in relation to the Labor
Code.
It cannot be said that respondent's total working
day was devoted to the school alone. It is clear from
the record that he was practising his profession as a
doctor and maintaining a clinic in the hospital for
this purpose during the time that he was given a
teaching load. In other words, he had another
regular remunerative work aside from teaching. The
record also discloses that he never had a normal
teaching load of eighteen (18) hours a week during
the time that he was connected with the university.
The private respondent, therefore, could not be
regarded as a fulltime teacher in any aspect. He
could not be regarded as such because his total
working day was not devoted to the school and he
had other regular remunerative employment.
Moreover, his average teaching load was only 6.33
hours a week.
In view of the explicit provisions of the Manual of
Regulations above-quoted, and the fact that private
respondent was not a full time teacher, he could
not have and did not become a permanent
employee even after the completion of three (3)
years of service.
PLDT vs. NLRC (1988)
Facts: Marilyn Abucay, a traffic operator of the
Philippine Long Distance Telephone Company, was
accused by two complainants of having demanded
and received from them the total amount of
P3,800.00 in consideration of her promise to
facilitate approval of their applications for
telephone installation. Investigated and heard, she
was found guilty as charged and accordingly
separated from the service. She went to the
Ministry of Labor and Employment claiming she had
been illegally removed. After consideration of the
evidence and arguments of the parties, the
company was sustained and the complaint was
dismissed for lack of merit. Nevertheless, the
dispositive portion of labor arbiter's decision
declared that Abucay be given one month pay for
every year of service as financial assistance.
PLDT assert that an employee dismissed for just
cause is entitled to neither reinstatement nor back
wages and is NOT allowed any relief at all because
the dismissal is in accordance with law. Sol Gen.
claims that Abucay is sufficiently punished with her
dismissal and the grant of financial assistance is not
intended as a reward for her offense but merely to
help her for the loss of her employment after
working faithfully in the company for 10 years.
Issue: W/N Abucay is entitled to financial assistance
Held: NO. The rule embodied in the Labor Code is
that a person dismissed for cause as defined therein
is not entitled to separation pay. The cases cited by
the Sol. Gen. are based on considerations of equity
and grounded on the precepts of conscience and
not on any sanction of positive law. Hence, it cannot
prevail against the expressed provision of the labor
laws allowing dismissal of employees for cause and
without any provision for separation pay.
However since the decisions granting separation
pay has not been consistent, the Court felt that
distinctions are in order in the justification for the
grant of separation pay and the amount or rate of
such award.
Separation pay shall be allowed as a measure of
social justice only in those instances where the
employee is validly dismissed for causes other
than serious misconduct or those reflecting on his
moral character. Where the reason for the valid
dismissal is, for example, habitual intoxication or
an offense involving moral turpitude, like theft or
illicit sexual relations with a fellow worker, the
employer may not be required to give the
dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on
the ground of social justice.
A contrary rule would, as the petitioner correctly
argues, have the effect, of rewarding rather than
punishing the erring employee for his offense. And
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we do not agree that the punishment is his
dismissal only and that the separation pay has
nothing to do with the wrong he has committed. Of
course it has. Indeed, if the employee who steals
from the company is granted separation pay even
as he is validly dismissed, it is not unlikely that he
will commit a similar offense in his next
employment because he thinks he can expect a like
leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in
general any good as it will encourage the infiltration
of its ranks by those who do not deserve the
protection and concern of the Constitution.
BATANGAS LAGUNA TAYABAS BUS CO. VS. CA
(1976)
Issue: W/N an employee who has already received
his separation pay can still recover retirement
benefits from his employer
Facts: De Mesa was first employed as a bus
conductor by BLTBC on July 1, 1933 and worked
with it until Dec. 31, 1941 when it ceased operation
in its transportation business due to the outbreak of
WWII. When the petitioner resumed its business
after the war, the private respondent rejoined the
company on May 22, 1945. From a mere bus
conductor, the private respondent rose to the
position of administrative officer of the petitioner
with a basic salary of P1,000.00 a month. His total
length of service was for 30 years, 9 months and 17
days which under Republic Act No. 1787 amounts to
31 years. Sometime in the month of September,
1967, the private respondent drew two cash
advances or "vales" of P100.00 each or a total of
P200.00 from the company's station at Infanta,
Quezon where he was then on vacation without the
prior approval of the petitioner, in violation of a
memorandum restricting cash advances of
confidential employees to P100.00 each payroll
period. Due to this infraction, the services of private
respondent were terminated in a Special Order
issued by the petitioner's Acting General Manager
effective September 9, 1967. As a result of his
dismissal, the private respondent was constrained
to file a complaint before the Court of First Instance
of Laguna against the petitioner to recover the
sums of P19,987.56 as separation pay; P17,050.00
as retirement benefits; P35,018.53 as 'would be
earnings" had he not been separated and reached
the compulsory retirement age; P13,720.50 for loss
of Social Security benefits; P200,000.00 as moral
damages; P100,000.00 as exemplary damages;
P10,000.00 for attorney's fees and P2,000.00 as
expenses for litigation.
CFI found the dismissal to be for just cause and that
De Mesa was not entitled to separation pay.
However, it ordered the petitioner to pay the
private respondent the sum of P17,050.00 as his
retirement pay with interest thereon at the legal
rate from filing of the case until fully paid, plus
attorney's fees of P2,000.00 and the cost of the suit
and dismissed all other claims of the private
respondent.
CA modified the decision of the trial court by
ordering petitioner to pay respondent, in addition
to the retirement benefit, separation pay with legal
interest from the date of filing minus the
indebtedness of De Mesa. Hence this appeal.
Held: One of the fundamental duties of the
employee is to yield obedience to all reasonable
rules, orders and instructions of the employer and
willful or intentional disobedience thereof, as a
general rule justifies rescission of the contract of
service and the peremptory dismissal of the
employee. However, in order to constitute
disobedience, the employee's conduct must have
been willful or intentional, willfulness being
characterized by a wrongful and perverse mental
attitude rendering the employee's act inconsistent
with proper subordination. The rules, instructions
or commands in order to be a ground for discharge
on the score of disobedience, must be reasonable
and lawful, must be known to the employee, and
must pertain to the duties which the employees
have been engaged to discharge.
Here can be no doubt that the private respondent
here has repeatedly abused the "vale" privilege and
therefore in this respect can be considered willful.
He cannot claim that he is ignorant of the
memoranda and the circulars limiting the cash
advances of employees to not more than P100.00
each payroll period. But the rules, instructions or
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commands limiting the cash advances of
confidential employees, do not pertain to the duties
which the petitioner has been engaged to
discharge. Said rules, instructions or commands are
primarily intended for the benefit of the company
itself and have nothing to do with the duties of its
employees and therefore cannot be a valid ground
for their discharge on the score of disobedience.
The records do not show that private respondent
was ever given any hearing for the alleged violation
of the memorandum of July 1, 1967. He was not
given a chance to give his side. Besides the
memorandum of petitioner of July 1, 1967 is
inconsistent with the Table of Penalties which fixes
the penalty for violation of the "vale" privilege was
indicated in the above table. The table does not
provide for dismissal. It simply mentions warning
for the first and second offense and discipline for
the third, fourth, fifth, sixth offense, etc. The word
"discipline" is by itself vague. It is doubtful if it
includes outright dismissal and in case of such
doubt, the doubt should be resolved in favor of the
employee. Besides, the memorandum allegedly
violated by the private respondent cannot prevail
over the Table of Penalties which is the result of the
mutual agreement of the petitioner and its
employees, unlike the memorandum which is only
prepared by the petitioner. The fact that the private
respondent obtained two cash advances in the total
amount of P200.00 without previous approval of
the petitioner does not warrant his summary
dismissal considering his length of service and
considering further the fact that had he not been
dismissed summarily, the salary which he expected
to receive for the quincena of September 1967
would be more than enough to cover the advance
of P200.00 to private respondent.
After finding private respondent's dismissal from
the service to be without cause and arbitrary and
upholding his right to separation pay, is he also
entitled to retirement benefits pursuant to the
Labor Agreement entered by petitioner with its
employees
CARAAN VS. NLRC, Batangas, Laguna , Tayabas
Bus. Co (1993)
Facts: Bencio Caraan was employed by BLTBCO on
April 19,1984 as a bus conductor, with a salary of
P103 00 per day plus five (5%) percent commission
on ticket sales. On September 30, 1989, he was
dismissed from the service for having incurred a
cash shortage of P98.55 on his fare collections for
the preceding day, September 29, 1989.
he records show that on September 29, 1989,
Caraan was assigned as bus conductor of BLTBCO
Aircon Bus No. DL- 749 which left Plaza Lawton at
7:30 in the evening with 100 passengers, more or
less, all of whom were issued tickets. A group of
three passengers did not have enough money for
the fare and pleaded with Caraan that they be
allowed to pay their fares of P32.85 each upon
reaching the Chavez Pharmacy in Batangas City.
However, he was dismayed to discover later that
while he was so occupied, the three passengers
who promised to pay their fares upon reaching
Batangas City had already left the bus. Caraan
immediately submitted a "shortage slip' for P100.00
to the company's preaudit section in Batangas City,
after which he went home to Talisay to procure
money to enable him to redeem his shortage slip
from the company's main office in San Pablo City.
Upon reaching the office, he was informed by the
administrative officer, Mr. Escaño, that the payroll
had already been prepared, hence, the
corresponding deduction for his shortage would just
be effected in the next payroll.
An investigation of Caraan was conducted in writing
in the form of questions and answers. Caraan
explained the cause of his shortage. But thereafter,
Caraan was no longer given any trip assignment. On
November 25, 1989, an official termination letter
signed by Max Potenciano, Jr., Vice-President for
Operations of BLTBCO, was received by Caraan. It
mentioned the fact that his shortage of P100.00 on
September 29, 1989 was his 33rd offense, the
thirty-two other shortages, involving minimal
amounts, totalled P146.80.
Thereafter a complaint for illegal dismissal was
filed. LA ruled that the termination was illegal and
ordered that Caraan be reinstated to his position
with full back wages. NLRC reversed the LA's
decision hence this appeal.
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Issue: W/N Caraan was illegally terminated
Held: Yes. While it is clear that the petitioner
incurred a shortage of P100.00 in his fare
collections on September 29, 1989 for failure to
collect the fares of three (3) absconding passengers
to whom he had issued tickets, or for failure to
remit the full fares corresponding to the number of
tickets issued during that particular trip, Caraan was
not guilty of misappropriation or dishonesty
meriting the company's loss of trust and confidence
in him.
The labor arbiter correctly observed that the nature
of Caraan's work as a bus conductor involves
inherent or normal occupational risks of incurring
money shortages and uncollected fares. A
conductor's job is to collect exact fares from the
passengers and remit his collections to the
company. While, ordinarily' failure to do that may
look like a case of misappropriation of funds, or
gross neglect of duty on the part of the employee,
resulting in his employer's loss of trust and
confidence in him, in the particular circumstances
of this case, we find only a case of simple
negligence not deserving the severe penalty of
dismissal from the service.
Caraan was not guilty of misappropriation because
the proceeds of the tickets which he gave the three
passengers had not yet come into his hands. He
had received nothing from them that he could
misappropriate. The most that he was guilty of was
that he was a poor judge of the character of his
passengers and that he neglected to do his duty to
discharge them from the bus when they could not
pay their fares.
While we do not condone Caraan's neglect of duty,
we believe his negligence deserves a commensurate
penalty short of the loss of his job. Labor Arbiter's
decision is reinstated.
REYES VS. PHILIPPINE DUPLICATORS INC, NLRC
Facts: In 1953, petitioner was employed by
Gestetner Limited, Philippines. In 1962, private
respondent Philippine Duplicators, Inc. took over
the business and operation of Gestetner Limited,
Philippines.
A collective Bargaining Agreement was entered into
which provided for the retention of petitioner's
services with full recognition of petitioner's ten (10)
years of service with Gestetner Ltd. Philippines. Said
CBA likewise established a retirement scheme
pursuant to which an "employee, who has reached
the age of fifty-five (55) or completed twenty (20)
years of continuous service has an option to retire
in accordance with the PDI Plan.
Petitioner opted to retire after 24 years of
continuous service to both Gestetner and PDI and
notified PDI of his option. On February 18, 1977,
private respondent after admitting to have received
the notice of petitioner to retire notified him that
his services were terminated on grounds of lack of
confidence and conflict of interest. The reason
behind private respondent's refusal to grant
petitioner's retirement benefits, and its termination
of petitioner's services is the alleged fact that the
latter appears as one of the incorporators of
another corporation, MOSECOR (Modern System
and Equipment Corporation) and that MOSECOR is
engaged in the selling of stencils and duplicating
machines, the very same equipment and supplies
which Philippine Duplicators, Inc. sells.
Labor Arbiter ruled in favor of Reyes stating that PDI
had knowledge of Reyes' membership in MOSECOR
since 1975 and still respondent retained petitioner
in its employ. Hence applying the principle of
estoppel, PDI is now estopped from claiming that
such relation is in conflict with its interest.
On appeal by the Company, the Commission
reversed the arbiter's decision, ruling that
petitioner and his other companions took over
MOSECOR for the purpose of competing with
respondent company; that there is nothing in the
transcript of stenographic notes that indicate
respondent's knowledge of petitioner's business
interest as early as June 1975; and that respondent
came to know about MOSECOR when it was able to
obtain from the Securities and Exchange
Commission the pertinent papers relating thereto.
Hence this appeal.
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Property of: Hanniyah P. Sevilla
Issue: W/N Reyes is entitled to retirement benefits
pursuant to the CBA
Held: Yes, the company acted in bad faith in
denying the petitioner his retirement benefits.
Respondent company is now estopped from
questioning the involvement of petitioner in
another corporation, for by its own omission, it
failed to apprise petitioner of his supposed
detrimental acts immediately upon knowledge
thereof, considering petitioner's length of service,
having been in the company's employ for twenty
(20) years.
As adverted to earlier, petitioner's dismissal is not
justified for being arbitrary since he was denied due
process and therefore, he is entitled to the benefits
provided for in the collective bargaining agreement.
Time and again, the court has ruled that without
any showing that the findings of the Arbiter are not
supported by substantial evidence, such findings are
conclusive with this Court.
MERCURY DRUG CO., VS. CIR
Facts: Nardo Dayao was employed on Feb. 13, 1965
by petitioner originally as a driver and later assigned
as a delivery man, then checker and then assistant
chief checker with a salary of P225/mo until his
separation on April 10, 1961.
Dayao's appointment as checker states that his
annual compensation was P2,400.00 "which
includes the additional compensation for work on
Sundays and legal holidays, Our firm being a Service
Enterprise, you will be required to perform work
every day in a year as follows: 8 hours work on
regular days and all special holidays that may be
declared but with 25% additional compensation; 4
hours work on every other Sunday of the month; 4
hours work on all legal holidays. For any work
performed in excess of the hours as above
mentioned, you shall be paid 25% additional
compensation per hour."
Days before April 10, 1961, Dayao in vain urged
herein petitioners to pay them overtime pay,
critized their employees' association for failing to
protect the welfare of the employees by not
securing such additional compensation for
overtime, and campaigned among his co-employees
to organize another labor union. Hearing of Dayao's
union activities, petitioner Mariano Que called for
Dayao on April 10, 1961; told him to resign and
persuaded him to accept the amount of P562.50 as
termination pay and to sign a clearance stating to
the effect that he has no claims whatsoever of any
kind and nature against herein petitioners.
On April 25, 1963, exactly two years and fifteen
days from his separation on April 10, 1961, Dayao
filed a complaint for unfair labor practice against
herein petitioners for dismissing him because of his
having campaigned among his co-employees to
become members of a new labor union that the was
then organizing. Que on the other hand testified
that Dayao had a fight with the Union President,
Ranin, in the Apollo Restaurant which was outside
the office or premises of the petitioner.
Issue: W/N Dayao was illegally terminated
Held: YES. The quarrel could not be a sufficient basis
for discharging from employment Dayao. The The
quarrel admittedly took place in a restaurant far
from the company premises and, therefore, did not
and could not have prejudiced and affected in any
manner the normal course of business of the
corporation nor, to say the least, has it relevant
bearing on the complainant's employment as there
is no showing that the incident happened during
complainant's official working time.
Anent Dayao's resiagnation, there was actual
display of force employed by Que on Dayao. the act
of the president and general manager of the
corporation in telling complainant herein that
whether or not he signs the documents he would be
dismissed just the same could be said a direct threat
and a display of force and authority which afforded
Dayao no alternative but to obey as he was bided to
do. But acceptance of termination pay does not
divest a laborer the right to prosecute his employer
for unfair labor practice acts, much less the signing
of clearance paper.
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It is true that unfair labor practice charge with the
prayer for reinstatement with back wages should be
filed within a reasonable period of time. But laches,
like estoppel, should also be alleged as a defense in
the answer, otherwise the same is considered
renounced. Petitioners failed to expressly allege the
same in their answer to the ULP charge, in their
memorandum and in their motion for
reconsideration of the CIR decision.
However, the lapse of two years and 15 days from
the dismissal from the service to the filing of the
ULP charge is not an unreasonable period of time
under the circumstances.
In this respect, the statute of limitations prescribed
by the Civil Code of the Philippines should apply in
the absence of any other specific legal provision.
Article 1146 of the Civil Code of the Philippines
directs that the action upon an injury to the rights
of the plaintiff must be instituted within four years.
An action upon a contract should be filed within 10
years (Art. 1144, CCP). All other actions whose
periods are not fixed in the Civil Code or in other
laws must be brought within five years from the
time the right of action accrues (Art. 1149, CCP).
Whether the ULP charge is based on an injury to the
rights of Dayao or placed under the category of all
other actions for which no law prescribes the time
limit for their institution, the filing by respondent
Dayao of the ULP charge against herein petitioners
was well within either the prescriptive period.
Finally, if the dismissal of herein private respondent
Dayao was for just cause, then there was no reason
for petitionersemployers to give him termination
pay; because under the Termination Pay Law,
otherwise known as Republic Act No. 1052, as
amended by Republic Act No. 1787, the employee
whose services are terminated for just cause is not
entitled to termination pay.
Even under the Termination Pay Law, the alleged
quarrel between private respondent Dayao and one
Ranin, the president of the labor union, in the
presence of herein petitioner Mariano Que as
manager of petitioner corporation, is not one of the
grounds justifying the dismissal of private
respondent Dayao. It is not even analogous to
"serious misconduct or willful disobedience of the
orders of his employer or its representative in
connection with his work." Even if it were conceded
that private respondent Dayao verbally quarrelled
with the former president of their employees'
association in the presence of manager Mariano
Que and that both ignored the latter's admonition
for them to stop quarrelling, at most the same was
discourtesy which was not intended considering the
origin of their quarrel - the failure of Ranin, former
president of the labor union, to fight for overtime
pay for services rendered on Sundays and holidays.
Such discourtesy, at most, merits merely a
reprimand or admonition but not outright dismissal,
since it did not involve the efficiency nor honesty of
private respondent Dayao. The fact that Dayao had
been in the service for five years and ten months,
during which period of time he was promoted from
driver to delivery man, to checker and finally to
assistant chief checker in the Checking Department
with a salary of P225.00 a month demonstrates his
efficiency, competence and trustworthiness.
[RETRENCHMENT] Banana Growers Collective at
Puyod Farms vs. NLRC (1997)
Facts: Federico Puyod, Sr. operated a banana farm
in Mabuhay, Carmen, Davao del Norte. In 1988,
Puyod Farms hired private respondent workers.
Private respondents worked on the farms with such
assignments as spraying, bagging, injecting
chemicals, weeding, pruning and "deleafing."
Because eleven farms were fully planted with
bananas for export, the Banana Growers Collective
was formed.
Petitioners claim that upon the demise of Federico
Puyod, Sr., his heirs, partitioned Puyod Farms
among themselves. They individually managed their
respective shares in the banana farms with each of
them maintaining separate payrolls for his or her
workers. Such partition allegedly led to the
dissolution of the Banana Growers Collective.
In the course of its more than 20 years' existence
planting giant Cavendish banana variety, Puyod
Farms entered into various contracts. One was with
STANFILCO which entailed the marketing of
produce, with STANFILCO providing technical
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assistance in the planting and development of the
banana farms. Apparently in pursuance of the
contract, STANFILCO sent the heirs of Federico
Puyod, Sr. a letter which stated that approximately
50has of the farm to ecuadorian dwarf this year.
Starting on Jan 1990, "we will have to stop some
regular farm operations until conversion is fully
completed. Our selected contractors will take over
most of the conversion labor requirements in all
operations like nursery, land preparations and care
of young plants until flowering. This means you
have to reduce your regular force from the time of
chopping up to the time of harvest."
On February 2, 1990, petitioners notified private
respondents of their retrenchment on account of
STANFILCO"s directive for the reduction of workers
which would take effect "30 days from February 2,
1990." Meanwhile, in September 1989, private
respondents organized a labor union. On October
17, 1989, they filed a petition for certification
election. A few months thereafter, their employer
notified them that their employment would be
terminated on account of a retrenchment program.
Hence, on March 12, 1990, private respondents
filed with the Labor Arbiter a complaint for illegal
dismissal with prayer for reinstatement and
payment of back wages and attorney's fees. They
alleged that the contract was nothing but a sham
since petitioners converted farms 1, 2, and 3 from
cavendish banana to Ecuadorian variety, and in fact
respondents themselves did the planting. They then
concluded that the real reason for their dismissal
was their having engaged in union activities.
The Labor Arbiter dismissed the complaint for illegal
dismissal. His finding was that procedural due
process was observed in dismissing the workers
concerned; that the organization of the labor union
had to give way to the right of the employer to
retrench its workers for economic reasons and in
furtherance of managerial prerogative, and that
failure to retrench would violate contractual
obligations with STANFILCO which might eventually
lead to total cessation of business operations. He
added that the dismissal was based on an
authorized cause and that the system of conversion
of the farm did not violate the provisions of law on
the security of tenure of workers.
NLRC reversed the decision of the LA. The
Commission stressed that "(t)he termination of
complainants on the pretext of retrenchment which
was closely timed with the conduct of certification
election is not mere coincidence or accident." It
added that because petitioners could not explain
why herein private respondents were singled out
for dismissal, there was no doubt that the
termination of their services was "motivated by
anti-union feelings."
Issue: W/N private respondents were illegally
dismissed
Held: YES. Retrenchment is a management
prerogative, a means to protect and preserve the
employer's viability and ensure his survival. This
Court has always respected this prerogative during
trying times but there must be faithful compliance
by management with the substantive and
procedural requirements laid down by law and
jurisprudence.
Under Art. 283 of the LC, there are three basic
requisites for a valid retrenchment. These are: (a)
the retrenchment is necessary to prevent losses and
such losses are proven; (b) written notice to the
employees and to the Department of Labor and
Employment at least one month prior to the
intended date of retrenchment, and (c) payment of
separation pay equivalent to one month pay or at
least one-half (1/2) month's pay for every year of
service, whichever is higher.
It is undisputed in instant case that the second
requirement of written notice to the DOLE and the
employees concerned at least a month before the
retrenchment has been satisfactorily fulfilled by
petitioners. What needs close examination is the
first requirement, i.e, that the retrenchment is
necessary to prevent losses and that such losses are
proven.
There are four standards of retrenchment that must
be observed to comply with the law. First, the
losses expected should be substantial and not
merely de minimis. Second, the substantial loss
apprehended must be reasonably imminent, as
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perceived objectively and in good faith by the
employer. Third, because of the consequential
nature of retrenchment, it must be reasonably
necessary and likely to prevent the expected losses.
Fourth, the alleged losses, if already incurred, must
be proved by sufficient and convincing evidence.
Unfortunately for petitioners, there is no proof of
such imminent and substantial losses that they
would incur in the event that the retrenchment of
private respondents is not enjoined. Petitioners'
broad and sweeping conclusion that there would be
total cessation of business operations should
STANFILCO's condition of retrenchment is not
implemented, which the Labor Arbiter blindly
accepted as fact, is their sole basis in filing this
petition. What is on record, however, is simply that
they are expecting losses in the event that the
retrenchment should not be pushed through on
account of the contractual obligation they have
with STANFILCO. However, under the law, even
such expectation must be supported by sufficient
evidence.
It should be observed that Art. 283 uses the phrase
"retrenchment to prevent losses." This phrase
means that retrenchment or termination of the
services of some employees must be undertaken by
the employer sometime before the anticipated
losses are actually sustained. The lawmaker did not
intend that the losses shall have in fact
materialized, otherwise the law could be vulnerable
to attack for nonobservance of the constitutional
mandate against undue taking of property for the
benefit of another.
Not every asserted possibility of loss is sufficient
legal warrant for the reduction of personnel. The
possibility of incurring losses is constantly present in
carrying on of business operations, hence the need
for concrete and substantial proof of imminently
expected losses. Business losses as a just cause for
retrenchment must be proved for they can be
feigned.
The employer bears the burden of proof to how the
dismissal is for a just cause, otherwise the dismissal
is unjustified. Petitioners should have at least
presented financial statements by independent
auditors on the possible imminent and substantial
losses they would incur should private
respondents be retained as workers. More
importantly, they should have shown they had
instituted cost reduction measures before
undertaking retrenchment that, under the law, is
a remedy of last resort.
However, the SC did not agree that petitioners'
decision to retrench was impelled by the union
activities in the farm, thereby exposing petitioners
to the charge of union-busting, the Court is
convinced that the compelling reason for
retrenchment is the contract between petitioners
and STANFILCO. However, they (petitioners and
STANFILCO) must observe the law such as those
mandating security of tenure of workers and the
law against unlawful retrenchment.
Therefore, the private respondents were illegally
dismissed and are entitled to reinstatement without
loss of seniority rights and with back wages for the
full time that they have remained unemployed.
Receipt of full back wages, not just for a threeyear
period as decreed by the NLRC, is mandated by
Republic Act No. 6715.
Separation pay may, however, be awarded in lieu of
reinstatement if reinstatement can no longer be
effected, as when the positions previously held by
the employees no longer exist or when strained
relations result from loss of trust and confidence.
But none of these circumstances has been proven in
this case. While we are aware that there may be
other reasons for denying reinstatement have not
established any which could provide them basis for
the termination of private respondents'
employment.
[RETRENCHMENT] UICHICO vs. NLRC, Santos,
Porras, et. al
Facts: Private respondents were employed by
Crispa, Inc. for many years in the latter's garments
factory located in Pasig Boulevard, Pasig City.
Sometime in September, 1991, private respondents'
services were terminated on the ground of
retrenchment due to alleged serious business losses
suffered by Crispa, Inc. in the years immediately
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preceding 1990. Thereafter, respondent employees,
on November, 1991, filed before the NLRC, National
Capital Region, Manila, three (3) separate
complaints for illegal dismissal and diminution of
compensation against Crispa, Inc., Valeriano Floro,
and the petitioners.
On July 20, 1992, after due hearing, Labor Arbiter
Aquino rendered a decision dismissing the
complaints for illegal dismissal but at the same time
ordering Crispa, Inc., Floro and the petitioners to
pay respondent employees separation pay
equivalent to seventeen (17) days for every year of
service. The Second Division of the NLRC found
Crispa, Inc., Valeriano Floro, together with the
petitioners liable for illegal dismissal, and modified
the award of separation pay in the amount of one
(1) month for every year of service instead of
seventeen (17) days.
On August 8, 1994, private respondents sought a
clarification of public respondent NLRC's Resolution
dated September 30, 1993 insofar as the
computation of separation pay by the Examination
and Computation Division was concerned as well as
the failure of the Resolution to award them full back
wages despite the finding of illegal dismissal. The
NLRC treated the motion to clarify judgment as an
appeal and granted the same (it included six
months of back wages). Hence this petition.
Issue: W/N the private respondents were illegally
terminated
Held: YES.
The law recognizes the right of every business entity
to reduce its work force if the same is made
necessary by compelling economic factors which
would endanger its existence or stability. In spite of
overwhelming support granted by the social justice
provisions of our Constitution in favor of labor, the
fundamental law itself guarantees, even during the
process of tilting the scales of social justice towards
workers and employees, "the right of enterprises to
reasonable returns of investment and to expansion
and growth." Where appropriate and where
conditions are in accord with law and jurisprudence,
the Court has authorized valid reductions in the
work force to forestall business losses, the
hemorrhaging of capital, or even to recognize an
obvious reduction in the volume of business which
has rendered certain employees redundant.
Retrenchment, or "lay-off' in layman's parlance, is
the termination of employment initiated by the
employer through no fault of the employee's and
without prejudice to the latter, resorted to by
management during periods of business recession,
industrial depression, or seasonal fluctuations, or
during lulls occasioned by lack of orders, shortage
of materials, conversion of the plant for a new
production program or the introduction of new
methods or more efficient machinery, or of
automation. Simply put, it is an act of the employer
of dismissing employees because of losses in the
operation of a business, lack of work, and
considerable reduction on the volume of his
business, a right consistently recognized and
affirmed by this Court.
Nevertheless, while it is true that retrenchment is a
management prerogative, it is still subject to
faithful compliance with the substantive and
procedural requirements laid down by law and
jurisprudence. And since retrenchment strikes at
the very core of an individual's employment, which
may be the only lifeline on which he and his family
depend for survival, the burden clearly falls upon
the employer to prove economic or business losses
with appropriate supporting evidence.
The NLRC reversed the LA's decision ruling that the
Statement of Profit and Losses submitted by
petitioners does not bear the signature of a
certified public accountant or audited by an
independent auditor. As such, the alleged financial
losses has not been sufficiently established. The
Statement of Profit and Losses submitted by Crispa,
Inc. to prove its alleged losses, without the
accompanying signature of a certified public
accountant or audited by an independent auditor,
are nothing but self-serving documents which ought
to be treated as a mere scrap of paper devoid of
any probative value. For sure, this is not the kind of
sufficient and convincing evidence necessary to
discharge the burden of proof required of
petitioners to establish the alleged losses suffered
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by Crispa, Inc. in the years immediately preceding
1990 that would justify the retrenchment of
respondent employees.
In labor cases, particularly, corporate directors and
officers are solidarily liable with the corporation for
the termination of employment of corporate
employees done with malice or in bad faith. In this
case, it is undisputed that petitioners have a direct
hand in the illegal dismissal of respondent
employees. They were the ones, who as high-
ranking officers and directors of Crispa, Inc., signed
the Board Resolution retrenching the private
respondents on the feigned ground of serious
business losses that had no basis apart from an
unsigned and unaudited Profit and Loss Statement
which, to repeat, had no evidentiary value
whatsoever.
[REDUNDANCY] WILTSHIRE FILE CO. VS NLRC, Ong
Facts: Vicente T. Ong was the Sales Manager of
petitioner Wiltshire File Co., Inc. ("Wiltshire") from
16 March 1981 up to 18 June 1985. As such, he
received a monthly salary of P14,375.00 excluding
commissions from sales which averaged P5,000.00 a
month. He also enjoyed vacation leave with pay
equivalent to P7,187.50 per year, as well as
hospitalization privileges to the extent of
P10,000.00 per year.
On 13 June 1985, upon private respondent's return
from a business and pleasure trip abroad, he was
informed by the President of petitioner Wiltshire
that his services were being terminated. Private
respondent maintains that he tried to get an
explanation from management of his dismissal but
to no avail. On 18 June 1985, when private
respondent again tried to speak with the President
of Wiltshire, the company's security guard handed
him a letter which formally informed him that his
services were being terminated upon the ground of
redundancy.
Private respondent filed, on 21 October 1985, a
complaint before the Labor Arbiter for illegal
dismissal alleging that his position could not
possibly be redundant because nobody (save
himself) in the company was then performing the
same duties. Private respondent further contended
that retrenching him could not prevent further
losses because it was in fact through his remarkable
performance as Sales Manager that the Company
had an unprecedented increase in domestic market
share the preceding year.
In its answer, petitioner company alleged that the
termination of respondent's services was a cost-
cutting measure: that in December 1984, the
company had experienced an unusually low volume
of orders: and that it was in fact forced to rotate its
employees in order to save the company. Despite
the rotation of employees, petitioner alleged; it
continued to experience financial losses and private
respondent's position, Sales Manager of the
company, became redundant.
During the proceedings before the LA, petitioner
sent a letter to the Regional Director of the MOLE
notifying the latter of the company's permanent
closure due to substantial financial losses. On
March, LA declared the termination of Ong illegal
and ordered the payment of back wages, unpaid
salaries, accumulated sick and vacation leaves,
hospitalization benefit packages, unpaid
commission, moral damages and attorneys' fees.
NLRC affirmed LA's decision. Hence this petition.
In this Petition for Certiorari, it is submitted that
private respondent's dismissal was justified and not
illegal. Petitioner maintains that it had been
incurring business losses beginning 1984 and that it
was compelled to reduce the size of its personnel
force. Petitioner also contends that redundancy as a
cause for termination does not necessarily mean
duplication of work but a "situation where the
services of an employee are in excess of what is
demanded by the needs of an undertakingxxx."
Issue: W/N Ong was illegally terminated
Held: NO.
We are unable to sustain public respondent NLRC's
holding that private respondent's dismissal was not
justified by redundancy and hence illegal. In the first
place, we note that while the letter informing
private respondent of the termination of his
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services used the word "redundant", that letter also
referred to the company having "incur[red] financial
losses which [in] fact has compelled [it] to resort to
retrenchment to prevent further losses". Thus, what
the letter was in effect saying was that because of
financial losses, retrenchment was necessary, which
retrenchment in turn resulted in the redundancy of
private respondent's position.
Redundancy in an employer's personnel force
necessarily or even ordinarily refers to duplication
of work. That no other person was holding the same
position that private respondent held prior to the
termination of his services, does not show that his
position had not become redundant. Redundancy,
for purposes of our Labor Code, exists where the
services of an employee are in excess of what is
reasonably demanded by the actual requirements
of the enterprise. Succinctly put, a position is
redundant where it is superfluous, and superfluity
of a position or positions may be the outcome of a
number of factors, such as over-hiring of workers,
decreased volume of business, or dropping of a
particular product line or service activity
previously manufactured or undertaken by the
enterprise. The employer has no legal obligation to
keep in its payroll more employees than are
necessary for the operation of its business.
It is of no legal moment that the financial troubles
of the company were not of private respondent's
making. Private respondent cannot insist on the
retention of his position upon the ground that he
had not contributed to the financial problems of
Wiltshire. The characterization of private
respondent's services as no longer necessary or
sustainable, and therefore properly terminable, was
an exercise of business judgment on the part of
petitioner-company. The wisdom or soundness of
such characterization or decision was not subject to
discretionary review on the part of the Labor
Arbiter nor of the NLRC so long, of course, as
violation of law or merely arbitrary and malicious
action is not shown.
Anent the issue that the termination was done in
bad faith as Ong was not given a chance to defend
himself, the court held that termination of an
employee's services because of retrenchment to
prevent further losses or redundancy is governed by
Article 283. On the other hand, termination of
employment by reason of some blameworthy act or
omission on the part of the employee is governed
by Art. 282.
Sec. 2 and 5 of the Implementing Rules of Book 6
requires that the notice to specify the particular
acts or omissions constituting the ground for an
employee’s dismissal-- a requirement which is
applicable where the ground for dismissal is the
commission of some act or omission falling within
Article 282 of the Labor Code. Again, Section 5 gives
the employee the right to answer and to defend
himself against "the allegations stated against: him
in the notice of dismissal". It is such allegations by
the employer and any counter-allegations that the
employee may wish to make that need to be heard
before dismissal is effected. Thus, Section 5 may be
seen to envisage charges against an employee
constituting one or more of the just causes for
dismissal listed in Article 282 of the Labor Code.
But where the ground for dismissal or termination
of services does not relate to a blameworthy act or
omission on the part of the employee, there
appears to us no need for an investigation and
hearing to be conducted by the employer who does
not, to begin with, allege any malfeasance or non-
feasance on the part of the employee. In such case,
there are no allegations which the employee should
refute and defend himself from. Thus, to require
petitioner Wiltshire to hold a hearing, at which
private respondent would have had the right to be
present, on the business and financial
circumstances compelling retrenchment and
resulting in redundancy, would be to impose upon
the employer an unnecessary and inutile hearing as
a condition for legality of termination.
This is not to say that the employee may not
contest the reality or good faith character of the
retrenchment or redundancy asserted as grounds
for termination of services. The appropriate forum
for such controversy would, however, be the
Department of Labor and Employment and not an
investigation or hearing to be held by the employer
itself. It is precisely for this reason that an employer
seeking to terminate services of an employee or
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employees because of "closure of establishment
and reduction of personnel", is legally required to
give a written notice not only to the employee but
also to the Department of Labor and Employment at
least one month before effectivity date of the
termination.
Manila Broadcasting Co. vs. NLRC
Facts: Bangloy was production supervisor and radio
commentator of DZJC-AM radio owned by MBC. He
applied for an LOA for 50 days in order to run for
Board Member in Ilocos Norte under KBL. He made
his application pursuant to §11(b) of R.A. No. 6646.
After a week, private respondent's application was
returned to him, together with a copy of an office
memorandum of Eugene Jusi, Assistant Vice-
President for Personnel and Administration, to Atty.
Edgardo Montilla, Executive Vice-President and
General Manager of the FJE Group of Companies, in
which it was stated that as a matter of "company
policy, "any employee who files a certificate of
candidacy for any elective national or local office
would be considered resigned from the company.
When he lost in the election, he tried to return to
work but was not allowed to. He then filed a
complaint for illegal dismissal against petitioner. LA
ruled in favor of private respondents. NLRC affirmed
the LA's decision.
Issue: W/N the company policy is valid.
Held: Yes. The policy is justified on the ff. grounds:
1. Working for the government and the company at
the same time is clearly disadvantageous and
prejudicial to the rights and interest not only of the
company but the public as well. In the event an
employee wins in an election, he cannot fully serve,
as he is expected to do, the interest of his
employer. The employee has to serve two (2)
employers, obviously detrimental to the interest of
both the government and the private employer.
2. In the event the employee loses in the election,
the impartiality and cold neutrality of an employee
as broadcast personality is suspect, thus readily
eroding and adversely affecting the confidence and
trust of the listening public to employer's station.
These are valid reasons for petitioner. No law has
been cited by private respondent prohibiting a rule
such as that in question. Private respondent cites
the Local Government Code, §90(b) of which
provides that "Sanggunian members may practice
their profession, engage in any occupation, or teach
in schools except during session hours." This
provision, however, is merely permissive and does
not preclude the adoption of a contrary rule, such
as that in question. The company policy is
reasonable and not contrary to law.
Issue: W/N private respondent was illegally
terminated.
Held: Yes. Petitioner has rules governing leaves of
employees, but the policy concerning employees
who wish to run for public office has never been
formally embodied in the rules. As important a rule
as one which considers an employee who runs for
public office resigned must be written and
published so as to lend certainty to its existence and
definiteness to its scope. Otherwise, the impression
may be fostered that the enforcement of the policy
is discretionary on the part of the heads of the
various offices and units of the company. Moreover,
such an unwritten rule is susceptible of
misinterpretation and is not likely to be taken
seriously by those to whom it is addressed. The fact
that a memorandum stating the policy in question
had to be issued because of an inquiry by Atty.
Edgardo Montilla, petitioner's executive vice-
president and general manager, tends to show that
the policy was not well-known even to the ranking
officials of the company. Indeed, as the NLRC found,
private respondent believed in good faith that
notwithstanding the company policy in question, he
could go on leave without resigning in order to run
for a seat in the Sangguniang Panlalawigan because
of assurances given by the station manager of DZJC-
AM, Medy Lorenzo, that he could do so.
It may be true that private respondent was aware
that leaves must be for thirty (30) days only despite
the absence of any written rule limiting leaves to
such number of days. However, private respondent
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applied for fifty (50) days, believing that since
§11(b) of R.A. No. 6646 requires mass media
commentators and announcers who run for public
office to go on leave, he could apply for leave for a
number of days coterminous with the period for the
campaign. For local elective positions, such period is
for forty-five (45) days. He indeed exceeded the
number of days for which he had applied for leave
by eleven (11) days, but dismissal would be too
severe a penalty for such infraction.
WHEREFORE, the decision of the NLRC is AFFIRMED
with the MODIFICATION that the award of
backwages shall be for the period beginning June
24, 1992 until private respondent is actually
reinstated.
Star Paper Co. vs. Simbol
Facts:Petitioner Star Paper Corporation (the
company) is a corporation engaged in trading –
principally of paper products. Josephine Ongsitco is
its Manager of the Personnel and Administration
Department while Sebastian Chua is its Managing
Director.
Ronaldo Simbol (Simbol), Wilfreda N. Comia
(Comia) and Lorna E. Estrella (Estrella) were all
regular employees of the company.
Simbol was employed by the company on
October 27, 1993. He met Alma Dayrit, also an
employee of the company, whom he married on
June 27, 1998. Prior to the marriage, Ongsitco
advised the couple that should they decide to get
married, one of them should resign pursuant to a
company policy promulgated in 1995:
1. New applicants will not be allowed to
be hired if in case he/she has [a] relative, up to [the]
3rd degree of relationship, already employed by the
company.
2. In case of two of our employees
(both singles [sic], one male and another female)
developed a friendly relationship during the course
of their employment and then decided to get
married, one of them should resign to preserve the
policy stated above.[3]
Simbol resigned on June 20, 1998 pursuant to the
company policy. A similar situation happened with
Comia and Estrella.
The respondents each signed a Release and
Confirmation Agreement. They stated therein that
they have no money and property accountabilities
in the company and that they release the latter of
any claim or demand of whatever nature.
Respondents offer a different version of their
dismissal. Simbol and Comia allege that they did not
resign voluntarily; they were compelled to resign in
view of an illegal company policy. As to respondent
Estrella, she alleges that she had a relationship with
co-worker Zuñiga who misrepresented himself as a
married but separated man. After he got her
pregnant, she discovered that he was not
separated. Thus, she severed her relationship with
him to avoid dismissal due to the company policy.
On November 30, 1999, she met an accident and
was advised by the doctor at the Orthopedic
Hospital to recuperate for twenty-one (21) days.
She returned to work on December 21, 1999 but
she found out that her name was on-hold at the
gate. She was denied entry. She was directed to
proceed to the personnel office where one of the
staff handed her a memorandum. The
memorandum stated that she was being dismissed
for immoral conduct. She refused to sign the
memorandum because she was on leave for
twenty-one (21) days and has not been given a
chance to explain. The management asked her to
write an explanation. However, after submission of
the explanation, she was nonetheless dismissed by
the company. Due to her urgent need for money,
she later submitted a letter of resignation in
exchange for her thirteenth month pay.
Respondents later filed a complaint for unfair
labor practice, constructive dismissal, separation
pay and attorney’s fees. On May 31, 2001, Labor
Arbiter Melquiades Sol del Rosario dismissed the
complaint for lack of merit. On appeal to the NLRC,
the Commission affirmed the decision of the Labor
Arbiter on January 11, 2002. The Court of Appeals
reversed the NLRC decision,
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 Labor Standards and Cases
Based on the Lectures of Atty. Augustin Nazareno
Property of: Hanniyah P. Sevilla
Issue: Is the company policy valid?
Held: NO, the company policy is invalid.
The case at bar involves Article 136 of the Labor
Code which provides:
Art. 136. 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.
It is true that the policy of petitioners
prohibiting close relatives from working in the same
company takes the nature of an anti-nepotism
employment policy. Companies adopt these policies
to prevent the hiring of unqualified persons based
on their status as a relative, rather than upon their
ability. These policies focus upon the potential
employment problems arising from the perception
of favoritism exhibited towards relatives.
In the recent case of Duncan Association of
Detailman-PTGWO and Pedro Tecson v. Glaxo
Wellcome Philippines, Inc., we passed on the
validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees
of any competitor company. We held that Glaxo has
a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other
confidential programs and information from
competitors. We considered the prohibition against
personal or marital relationships with employees of
competitor companies upon Glaxo’s employees
reasonable under the circumstances because
relationships of that nature might compromise the
interests of Glaxo. In laying down the assailed
company policy, we recognized that Glaxo only aims
to protect its interests against the possibility that a
competitor company will gain access to its secrets
and procedures.
The cases of Duncan and PT&T instruct us that the
requirement of reasonableness must be clearly
established to uphold the questioned employment
policy. The employer has the burden to prove the
existence of a reasonable business necessity. The
burden was successfully discharged in Duncan but
not in PT&T.
We do not find a reasonable business necessity in
the case at bar. If we uphold the questioned rule
without valid justification, the employer can create
policies based on an unproven presumption of a
perceived danger at the expense of an employee’s
right to security of tenure.
The questioned policy may not facially violate
Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate
impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite
the discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy
cannot prejudice the employee’s right to be free
from arbitrary discrimination based upon
stereotypes of married persons working together in
one company.
Lastly, the absence of a statute expressly
prohibiting marital discrimination in our jurisdiction
cannot benefit the petitioners. The protection given
to labor in our jurisdiction is vast and extensive that
we cannot prudently draw inferences from the
legislature’s silence that married persons are not
protected under our Constitution and declare valid
a policy based on a prejudice or stereotype. Thus,
for failure of petitioners to present undisputed
proof of a reasonable business necessity, we rule
that the questioned policy is an invalid exercise of
management prerogative.
-oOo-
Never get discouraged when things go beyond
expectation. Always remember that the greatest
glory in life is not in winning, but rising everytime
we fall.
HPSEVILLA© 184